We've closed the books on another hectic J. P Morgan Healthcare Conference where investors, executives, startup founders and reporters all battle rain, hail, and in this year's case, flight disruptions to be at one of the top industry events.
The conference included presentations from industry incumbents like Mayo Clinic, Walgreens, CVS and Cigna as well as smaller digital health companies such as Cityblock Health and Aledade. The Fierce Healthcare team also did plenty of interviews on the sidelines of the conference to get more executive-level insights.
We covered some of the biggest headlines from the four-day conference and after parsing through all the presentations, interviews and panel discussions, we tracked a handful of key trends dominating the conversations.
Read below for our recap of the 2024 JPM conference and the major issues that will likely shape healthcare in the coming year.
Providers
Reporting by Staff Writer Dave Muoio
Nonprofit systems double down on payvider structure
The COVID-19 pandemic was a learning experience for large healthcare delivery systems, Jefferson Health CEO Joe Cacchione, M.D., told attendees. When volumes dropped and fee-for-service revenue streams evaporated, providers “were left holding the bag in many ways and the insurers were riding high.”
The answer for Cacchione and the leaders of other large nonprofits? Diversifying their revenue stream by ramping up their insurance arms.
Leaders from Jefferson Health, Henry Ford Health and Corewell Health said that the chance to grow their integrated networks was a factor in recent or future dealmaking. Corewell — the result of a recent merger of Beaumont Health and Spectrum Health — views its payvider structure as “a natural hedge” against care delivery disruptions and an opportunity to test new care models using “house money,” Chief Financial Officer Matthew Cox said.
The system’s revenue contribution is currently split 56-44 in favor of care delivery over coverage, though Cox said the goal is to reach an even split “so that we’re focused on great outcomes at an affordable cost.”
Jefferson Health Plans currently claims 22% of the organization’s revenue mix, and Chief Financial Officer John Mordach was hesitant to answer an audience question on the ideal split. However, he agreed with his CEO that “disproportionately” growing the insurance arm will be a winning approach for Jefferson Health, both in terms of revenues and strategic partnerships.
Outpatient expansion is top of mind
Prognosticators have called out the steady shift in consumer preference from hospital-based care to cheaper, more convenient outpatient sites for years.
Providers attending this year’s conference made sure to let potential investors know that they’ve heard the warnings loud and clear. Several nonprofit systems like Sutter Health, Jefferson Health, CommonSpirit Health and Novant Health noted ongoing plans or likely opportunities to grow their outpatient networks.
The former among these outlined 25 new ambulatory care center sites it wants to open within the new three months. The plan will require hundreds of millions to pull off, Sutter executives said, and will shift the organization’s historical ambulatory care capital investment spread from 16% between 2012-2022 to a target 32% from 2023-2032.
After some recent hospital acquisitions, Tampa General Hospital said that its system-wide growth strategy is now underpinned by an “asset light” push into the community. “We do not believe in building big boxes, spending $60 to $80 to $100 million on fancy buildings in the ambulatory space,” Tampa General Hospital President and CEO John Couris said. “We think there was a time for that — that time does not exist any more.
“It’s all about convenience, it’s all about accessibility, and it’s all about price, and it’s all about passing that on to the consumer. We deliver that through an asset-light, very, very efficient model of care out in the communities that we take care of.”
And for all those systems working to increase their out-of-hospital presence, Hartford HealthCare — which today has almost 500 care locations to just seven acute care hospitals- — stressed the need to prioritize consistent quality across all locations.
“That’s why we’re growing,” Okey Agba, EVP and chief financial officer at Hartford, said.
“When a patient visits one of our ambulatory clinics or visits one of our hospitals, they receive exactly the same experience from one place to another. And as a result of that, they recommend others, they recommend their families to us, and that helps us to improve volumes and then improve our financial outcomes.”
Nonprofit systems tapping academic partners to curtail labor woes
Workforce shortages and high-price contract labor stopgaps have been near-unavoidable for the hospital sector. While some of that pressure has let off across later 2023, care delivery organizations know that talent shortages will be a long-term reality for the healthcare industry and could tank their margins at a moment’s notice.
During their presentations, several nonprofit health systems addressed these concerns by pointing to a unique asset: their long-running partnerships with academia and a pipeline of healthcare workers in training.
Indiana University Health executive highlighted relationships with its namesake institution’s medical school and nursing school, respectively the first- and second-largest in the country, as a boon when recruiting. The academic system is already seeing the benefits of its recent decision to fund more grants and scholarships for nurses, they said.
Others like Mass General Brigham, Hartford HealthCare and Jefferson Health made sure to tout their in-house or partnered learning institutions when addressing their workforce pipelines. And Corewell Health CEO Tina Freese Decker highlighted $50 million of recent investments alongside higher education institution partners to bolster the nursing pipeline and introduce apprenticeships for positions where they’re facing shortages.
Payers
Reporting from Senior Editor Paige Minemyer
Spotlight still on GLP-1s
There was no shortage of conversation about GLP-1 drugs at the conference.
Cigna CEO David Cordani said that the demand and interest in these therapies tracks with the company’s expectations around the need to manage new and exciting drugs come to market.
“Our view several years ago was that the largest portion of healthcare innovation over the forthcoming decade in advance of us was going to be pharmacological in some way, shape or form,” he said.
Express Scripts has launched a program called EncircleRx, which aims to manage the cost of cardiovascular disease and diabetes, including GLP-1 drugs, said Evernorth CEO Eric Palmer. The program includes the “first ever financial guarantee from a PBM” for these products, according to Evernorth’s website.
The program seeks to connect people who are most likely to benefit from GLP-1s with those products, while also promoting lifestyle change and other medically beneficial options.
“That program works to target the individuals who are at the highest risk and would have the most benefit from meaningful changes, from access to the GLP-1s,” he said.
Policy experts also discussed the rise in interest of these therapies, as well as the impacts on employers at a conference panel.
PBMs are optimistic about reform
It is inevitable that some kind of reform will come down the pike for pharmacy benefit managers, and the leaders at major firms are optimistic about what they’re going to see.
The top brass at Express Scripts and CVS Health were both asked about a pending Federal Trade Commission investigation, which aims to dig further into PBM business models and practices. Both assured investors that the reports would show the value these companies provide.
“We consistently have demonstrated savings with the PBM,” CVS CEO Karen Lynch said. “Time and time again, we kept the costs low. My expectation is that with all the data that they’ve been receiving, I can’t imagine a different outcome.”
Cigna CEO David Cordani said he didn’t want to “play games” by speculating too heavily on the eventual contents of that report, but said “the PBM ecosystem generates a significant amount of value.”
He said early bills that sought to reform the PBM market included “everything in the kitchen sink” but legislation on the slate now is more targeted to key issues policymakers want to address.
“There’s been more precision brought to bear against it,” Cordani said.
Payers are locked in on the MA star ratings
The Medicare Advantage program has seen several major policy overhauls in the past several years, and changes to the methodology for its star ratings had a major impact on scores this year.
The changes have been controversial, and even attracted a lawsuit from Elevance Health, which was one of the biggest losers in the 2023 ratings.
The feeling at JPM was mixed. CVS CEO Karen Lynch discussed Aetna’s massive rebound on the star ratings, saying that it took initiative from across the entire company to improve. Aetna had just 21% of its members enrolled in plans with four or more stars for the 2023 plan year, and that jumped to 87% for 2024.
“We had every touchpoint in the company focused on improving service,” she said.
Executives at Centene, meanwhile, acknowledged that they still have plenty of work to do. The company is aiming to get back to having 85% of its members enrolled in plans with at least three and half stars by October 2025.
CEO Sarah London said Centene is putting a focus on HEDIS measures as well as patient experience scores. For example, by giving people a nudge to see their providers regularly, their docs can close key care gaps.
And, visits to see providers are linked to better experience scores, she said, making it a “twofer” win. The company is also addressing network gaps identified in prior member surveys.
“We have significantly upped our resources around member outreach, around our provider engagement to make sure folks are getting in to see their providers,” London said.
Health tech and digital health
Reporting by Senior Editor Heather Landi
Healthcare is all-in on gen AI but the roadmap is still being drawn
Generative AI dominated a lot of conversations and presentations at the conference as major players like Mayo Clinic and smaller startups are plotting their AI strategies to leverage the technology in innovative ways.
"I think one of the remarkable things about the presentations that I saw today at this conference was that literally 100% of the payers and providers who presented today mentioned AI as a prominent part of their strategy for 2024," said Julie Yoo, general partner at Andreessen Horowitz, while moderating a conference panel discussion on AI.
"Not only that, when you look at the actual stats that they all were showing off, some of these organizations are saying we now have 67 use cases of AI deployed across our enterprise, and much of that has actually been homegrown, surprisingly."
Mayo Clinic unveiled a new partnership with AI startup Cerebras Systems. The pair will develop a foundation AI model upon Mayo Clinic’s various structured and unstructured data.
“Our first effort will be to use over 100,000 patients that we have complete genomic sequencing [for] to build a language model around genomics data,” said Matthew Callstrom, M.D., Mayo Clinic’s medical director for strategy and chair of its radiology department.
Option Care Health, a provider of post-acute care and infusion services, inked a multi-year partnership with analytics company Palantir Technologies to use its AI platform. The company's will Palantir's AI and large language models to optimize nurse scheduling, patient onboarding, purchasing and supply chain execution.
And Innovaccer, maker of digital tools for providers, launched an AI assistant that transcribes, analyzes and summarizes conversations between providers and patients.
Kindbody founder Gina Bartasi also told me during an interview that the fertility startup planned to make investments in AI this year to build out predictive analytics for fertility care.
But many health systems are still grappling with foundational issues like developing their AI strategy and data governance, many executives said during the conference.
"One of the things I've been noticing over the last year that I think is distinct from what we saw with the adoption of predictive analytics is that folks are evolving their governance processes around these applications in parallel to adopting the technology," Seth Hain, senior vice president of R&D at Epic, said during the AI panel at JPM.
Early last year, Epic launched a new feature that uses generative AI to draft responses from healthcare workers to patient messages.
"We saw health systems approach that by starting with small groups and closely monitoring and measuring it in a responsible way and then rolling it out in a consistent manner, rather than needing to establish a full governance process without having gotten their hands on the technology and used it. As a result of that, we've seen over 60-plus health systems already beginning to use it in production," Hain said. "That's a very different model than what we saw say six or seven years ago with predictive analytics."
Nevertheless, optimism about AI in healthcare continues to be high.
Yoo says a16z is "unabashedly bullish about healthcare AI." There is a "leapfrog" opportunity in healthcare that doesn't exist in other industries, she noted.
"Historically, we have viewed the lack of adoption of enterprise software within our industry as a bit of a liability, but we are actually viewing that as an asset as we go into this age of AI."
Growth opportunities in specialty care
Virtual specialty care continues to see strong growth and high demand as patients face barriers to seeing in-person specialists. Patients face long wait times to book appointments with specialists, and these physicians also tend to be located in bigger cities, which poses challenges for patients in rural areas.
There is expected to be a shortage of anywhere between 37,800 and 124,000 physicians by 2034, according to the Association of American Medical Colleges. The shortage has been and is expected to be more acute among specialties.
Bridging the access gaps was a topic that came up quite a bit at the JPM conference.
On the first day of the conference, Amazon announced plans to collaborate with digital health companies to connect customers with virtual care benefits for managing conditions like diabetes and hypertension. The online retail giant tapped virtual-first chronic care provider Omada Health as its first partner.
Amazon's new health conditions program, which officially launched on Monday, aims to help customers find and enroll in virtual care benefits available to them through their employer or health plan at no extra cost. Omada will be the first virtual diabetes prevention, diabetes and hypertension provider available in Amazon’s health conditions program.
Amazon's move to branch out into chronic condition management, via digital health partnerships, was generating a lot of buzz at JPM.
During an interview on the sidelines of JPM, Robin Glass, president of Included Health, said the company, which offers virtual care and clinical navigation services, plans to expand its capabilities in specialty care.
Also announced during JPM, virtual care company Hims & Hers is expanding its health system partnerships to include Hartford HealthCare. Through the collaboration, Hims & Hers will connect patients in Connecticut with in-person primary and specialty care services.
Hims & Hers offers virtual care services for sexual health, mental health, hair loss, weight loss and dermatology. Hims & Hers customers in Connecticut who have more complex health histories or medical needs can be referred to Hartford HealthCare's specialist network, as the health system is known for its clinical care in areas like cardiovascular health, diabetes and prostate care, executives said.
The partnership is part of a larger trend to offer hybrid care as health systems team up with digital health companies.
Gunning for profitability
Many public health tech companies and digital health and insurance startups had a clear message for investors this week -- we have profitability in our sights.
In the current economic environment and funding market, path to profitability remains the focus area for investors across both public and private business.
Investment in digital health startups began to cool off in 2022 after hitting record highs in 2021 fueled by the shift to telehealth and digital technology during the COVID-19 pandemic. The flow of new capital into the sector continued to decelerate in 2023 and companies have been forced to reorient their business models and rein in costs as the focus turns to profitable growth rather than growth at all costs, investment bank Leerink Partners noted in a report last year.
Companies able to deliver both growth and profitability are capturing market interest and that trend is expected to continue in 2024.
Phreesia, a software company that helps providers with administrative and point of care services and manages 10% of patient visits nationally, said during its session at JPM that its prior investments should lead the company back to a profitable fiscal year 2025 for the first time since fiscal year 2021, Noah Tong reported.
While Phreesia expects revenue to hit approximately $356 million (a 27% increase year-over year), with a near breakeven adjusted EBITDA, the company hopes to hit its stride the following year by reaching $434 million in total revenue and being in the green by $10-20 million in adjusted EBITDA.
Executives at fertility startup Kindbody said the company is on track to be EBITDA positive in 2024 and free cash flow positive in late 2024 or early 2025. The company's 2024 revenue guidance is for 50% year-over-year growth, with a top-line range of $270 million to $300 million.
Ahead of its fourth quarter earnings next month, Oscar Health CEO Mark Bertolini expects 2024 to be a profitable year, the executive said during JPM.
The insurtech recorded a $65.7 million net loss last quarter, but he expects the insurtech will reach 1.3 million members once open enrollment concludes this year, marking a 31% increase year-over-year, Noah Tong reported.