Healthtech Roundup: The big bill, CMS gets WISeR and more

It’s been another momentous week in healthcare, particularly from the world of policy. Here’s the news I found most interesting.

What’s been reported: The Bill will now be sent to President Trump’s desk for signature, and it includes massive spending cuts, including to Medicaid. Millions of people will lose health coverage, and hospitals will see significant cuts to their Medicaid funding – as high as 18%. It goes without saying that those who will be hit the hardest are the underserved, rural populations that already struggle with access to care. 

What the GOP said: Only 2 Republicans voted against the bill in the House. Reports from the Hill claim that the final vote was hard-fought, with some holdouts fearing the impact to their constituents that value their access to Medicaid coverage.

What the Congressional Budget Office estimates: The CBO estimates that the bill would increase the deficit by $3.4 trillion and that more than 12 million people in America would lose their health insurance by 2034. 

Expert POV: We may think that we won’t see much direct impact outside of Medicaid. But I spoke with Dickon Waterfield from Lantern a few days ago on the Second Opinion podcast, who made the excellent point that health systems will likely react to cuts in Medicaid by driving up prices with its commercial population. Employers are already facing huge pressures related to rising medical costs, given cell and gene therapies, complex cancer and surgical cases, GLP-1s and more. This could create an environment where employers increasingly say no, and we continue to see demand for Point Solutions and other vendors to prove ROI in the form of cost savings. 

The news: The Centers for Medicare & Medicaid Services (CMS) launched a request for applications for a new initiative called the Wasteful and Inapprate Service Reduction (WISeR) Model, to be implemented in Texas, Arizona, Oklahoma, Ohio, New Jersey, and Washington. The six-year project aims to test whether AI enabled technology can reduce unnecessary spending for Medicare services. 

The deal: The vendors won’t be paid a specific fee, and instead share the savings their technology is able to deliver. Other metrics, such as accuracy, and ability to limit use of downstream healthcare services, will be considered in determining compensation, too.

What vendors can apply: In order to qualify, technology vendors need to have demonstrated experience in handling prior authorization, have infrastructure that safely protects sensitive data, a panel of licensed physicians who would review applications, and a track record of working with health plans. 

Expert POV: Some of the smartest attorneys in my network - including several that used to work at CMMI - have offered to advise companies that need support with their application. Reach out to me if you’d like a connection. 

The news: The large Indian hospital chain plans to separate its telehealth and pharmacy operations from its business, launching them as a yet-to-be-named separate company. Apollo Hospital Enterprise will retain 15% ownership of the new company, which plans to launch within 18 to 21 months, and will name one of the company’s board members. 

The deal: Current shareholders will get 195.2 shares of the new company per 100 Apollo shares they own. The company’’s expectation is that the new company will bring in close to $3 billion in revenue by the end of 2027. 

Expert POV: I’ve long been fascinated and intrigued by opportunities in India, particularly in telehealth because of the vast opportunity to reach people in more rural areas. There’s also massive potential to use AI, and Apollo has also indicated that it will increase its digital spend. Manatt consultant and Managing Partner Melindah Sharma, who spends a lot of time in India, thinks there’s huge potential for India to even leapfrog the U.S. in terms of AI because of its “under-penetrated health infrastructure and digital-first innovation culture,” she said. “India can build AI systems from the ground up - faster, cheaper and more equitably.” 

The news: Current Health is independent again, after Christopher McGhee, a co-founder of the home care business company that had been acquired by Best Buy in 2021 for $400 million, bought it back from the retailer. 

The deal: Details of the deal remain undisclosed, but Current has not been driving profits for Best Buy, nor has its broader Best Buy Health division. Corie Barry, the company’s CEO, blamed slower-than-expected adoption of hospital-at-home.

What McGhee said: “I didn’t come back here out of sentimentality, I came back because I think I can build a massive company and deliver value back into the system,” the new CEO told STAT’s Mario Aguilar. McGhee is focused on high acuity services that are expensive and very much in need, such as providing at-home monitoring to patients during oncologic or other advanced treatments. 

Expert POV: Sumit Nagpal, CEO of Cherish Health, which builds a device to monitor seniors at home, notes there’s light ahead in the market given momentum around moving delivering care in community-based settings, while reducing avoidable ambulance rides and emergency room admissions. For now though, it’s a challenging space, as he notes that provides have little time for prevention of illness or its early detection and management in less expensive care settings. 

The news: Cadence, a health tech company backed by Thrive Capital, General Catalyst and Coatue, is adding a new service to its chronic condition management offering. The product, already in use with Lifepoint Health and Community Health Systems, is an AI-powered Proactive Care Engine that identifies gaps in primary care delivery based on patients’ charts, and recommends best follow-up actions. 

How it works: The Advance Primary Care Model (APCM) works as a monthly bundle subscription with the company’s remote monitoring services (RMS), and offers services such as 24/7 provider availability, follow-up after hospital discharge, and secure messaging. One physician, paid ahead for the month of service, will be in charge of one patient. 

The uptake: Expectations are that the APCM service will get even more traction than Cadence’s RMS. The latter was adopted by 1,000 patients in its first year, while APCM reached the same milestone in about two months.

My POV: The devil is in the details. I’ve seen lots of companies and products like this that haven’t taken off because there’s no clear accountability plan related to who is doing what. It’s useful to provide follow-up actions, sure, but how are they implemented? Who is following up? And what is the optimal way to follow up with each patient? Not everyone, for instance, wants to be communicated with on an app or even has a smartphone (although that’s rapidly changing). And some patients don’t have a PCP they have a trusted relationship with. I’d be eager to evaluate how this goes over the next few years! 

$12m for blood cleaning service Circulate Health: The company delivers a service called Therapeutic Plasma Exchange, and is backed by Khosla Ventures. It claims it can reduce a persons’ biological age by an average of 2.6 years.

$20m for nurse practitioner mentoring and matching service NPHub: Job matching service NPHub raised capital from Edison Partners to fuel the growth of its nurse practitioner matching tool. As an aside, I’d love to see more investment in companies that supporting nurses, given that there’s expected to be a big rise in employment for NPs in the coming years to meet the needs of the aging population.

(this is a new section that we’ll expand on in coming weeks)

Our series where we ask smart people in our network just four questions! Next up is Kate Ryder, CEO of Maven Clinic, one of the most successful companies in the women’s health market.

SO: What's your view on this evolution a lot of digital health companies have gone through where they've started out as "vendors" and become "providers?" Maven is a provider. What are some of the pros and cons of each type?

KR: When you start out as a vendor, you're offering tools to help others deliver care. But over time, if you're serious about driving real outcomes, you realize U.S. healthcare is a Russian nesting doll of players. To drive impact you need to step into care delivery. The pro of being a provider is that you can actually get things done. The con is that you must parse through a lot of red tape to get there, and following compliance and regulation drains cash that could go to other things.

SO: How challenging is it to start out selling to employers and then expand into other payers - and any lessons learned there for other founders?

KR: I don’t know that it is a challenge so much as it is a standard go-to-market motion. Employers are like the White Knights of healthcare—they are one of the few purchasers incentivized to manage risk, improve experience, and push for health equity. When you build a digital health solution with employers in mind, you’re also helping them make their employees more productive. If done well, it’s a compelling sell because it is a true double bottom line benefit. For us and I know for other digital health companies, once we had a book of business with employers, then we were finally in a position to gather the clinical outcomes necessary to start selling to payers. I still remember when a big employer signed with us early on. We were thrilled, and then he told me this was actually his favorite part of the job - finding innovative solutions and then calling his payer friends to say, “You’ve got to work with this company!” It was a great reminder: while early stage companies depend on benefits leaders taking smart risks, these risks might also be their greatest career milestones. Like all good partnerships, it’s a two-way street.

SO: What do you view as the biggest missing area of women's health that remains under-invested in?

KR: Research, without a doubt. As our Chief Medical Officer Dr. Neel Shah often says, you can't fix what you aren’t seeing and you can't see what you're not measuring. Durable businesses are nothing without good data, and our space is still leagues behind so many specialties—from birth control to embryos to menopause, only 1% of global R&D goes to women’s health. This creates the perfect environment for misinformation to grow, which forces startups to play offense and defense at the same time: trying to educate people, while also correcting what’s already been misunderstood. It can make progress harder and slower than it should be.

SO: Some digital health companies are moving to "outcomes based" pricing like Sword and Virta Health. Do you think that's going to be a bigger trend in the future, or will it be isolated to a subset of companies where the model makes sense?

KR: Yes, I believe this is the future, but also our current reality. In a healthcare system that remains exorbitantly expensive, with overall costs growing at 5–10% annually for the last 3+ years, the only way to succeed is to bring costs down. That means the best digital health companies have always focused on outcomes in one way or another — whether it’s tying payments to real-time performance, taking on total cost of care risk, or backing specific clinical results with guarantees. Some call it value-based care, others call it outcomes-based pricing, or something totally different. The marketing might change, but the goal is the same: proving you work, and getting paid when you do.