The Louisville-based payer removed the interim tag from Susan Diamond's title.
Humana Inc. announced Monday morning that Susan Diamond has transitioned to the role of CFO, effective immediately.
The Louisville-based payer removed the interim tag from Diamond's title. She has been with the company since 2006 and has also served as Segment President for the Home Business.
"Susan is a seasoned and experienced financial executive with extensive knowledge of our business, including deep operating experience from her leadership of key areas of our Retail Business, and most recently, her leadership of our Home Business, growing it into the largest offering of its kind," Bruce Broussard, CEO of Humana, said in a statement.
Humana announced the promotion two weeks after signing an agreement to acquire One Homecare Solutions from WayPoint Capital Partners in another deal that Diamond led.
Humana also disclosed that an "Office of Home Solutions" that includes Diamond and other Home Business leaders will be established to "maintain focus and continuity on building a transformational, best-in-class, value-based home health business."
Louis DeStefano, head of small group business and senior vice president of growth at Oscar, said the partnership provides both payers with the opportunity to combine their respective strengths to benefit consumers.
Earlier this spring, Cigna Corp., the insurance company based in Bloomingfield, Connecticut, and Oscar Health Inc., the New York-based insurance company, announced "Cigna Administered by Oscar" to offer small group health insurance in several states.
As part of the arrangement, the two insurers have agreed to "share risk equally under a reinsurance agreement for solutions" offered through the partnership.
Currently, this project is operating in Tennessee, the Atlanta metro area, 14 counties in California, and will go live on July 1 in both Connecticut and Arizona.
In a press release, Bruce Grimm, senior vice president of segments at Cigna, said that the partnership with Oscar will provide more choices for affordable healthcare coverage to small businesses "at a time when they need it most."
Louis DeStefano, head of small group business and senior vice president of growth at Oscar, told HealthLeaders that the partnership provides both payers with the opportunity to combine their respective strengths to benefit consumers.
"It's going to be a great combination of both Cigna's provider relationships and network [with] Oscar's consumer-centric, tech-driven approach around customer service and 24/7 telemedicine care navigation," DeStefano said. "[The partnership] brings the best traits of both companies, which is somewhat unique when you see a Cigna + Oscar product in the market."
DeStefano said that Oscar's "superpower" is member engagement, which is tied to the patient experience as well as the total cost of care.
Given the pandemic's substantial impact on the economy, especially for small businesses, DeStefano said that it is important for Oscar to offer employers a differentiated product compared to other payers.
He added that Oscar's offerings, coupled with Cigna's efforts, meet the needs of employers related to price point, plan design, and customer experience.
"One thing that we're seeing are employers based in major metro areas have employees living everywhere due to the pandemic, so whether that's a permanent or temporary solution, having that national breadth of access is extremely critical," DeStefano. "Where Oscar comes is in is bringing that member experience, telemedicine care routing, and tech-driven, member-centric engagement approach for a small employer while also hitting the price point that employers need."
Looking forward, DeStefano said that Oscar is evaluating opportunities to expand the partnership's offerings to non-medical products with the hopes of approaching employers with a "more well-rounded full employee benefits package."
PwC attributed the increase in deal activity to several factors, including "capital availability, regulatory shifts, evolving competitive dynamics, promising technologies and commitments to patient-centricity."
Deal volumes in the health services sector this year are "unprecedented," according to a PricewaterhouseCoopers (PwC) report released Tuesday afternoon.
Following a slump in early 2020, coinciding with the start of the domestic spread of COVID-19, health services deals rebounded with 352 transactions in Q4 2020, a record for one quarter, only to be topped by 426 deals in Q1 2021. Additionally, the sector has seen six 'megadeals' valued at more than $5 billion.
PwC attributed the increase in deal activity to several factors, including "capital availability, regulatory shifts, evolving competitive dynamics, promising technologies and commitments to patient-centricity."
The report was released less than two weeks after a PwC study projected that the medical cost trend will be 6.5% in 2022.
While PwC highlighted vulnerabilities in the long-term care deal volume, the broader health services sector is expected to continue pursuing transactions going forward thanks to activity in the physician groups and behavioral health subsectors.
"Looking ahead, we anticipate ongoing interest in the public markets, given recent activity. For years, there were no pure health services IPOs, but 2021 has already seen four," the report stated.
PwC also released a report analyzing the pharmaceuticals and life sciences sector, which has seen deal activity return to "normal" levels after a volatile 2020.
In the first half of 2021, the value of deals in this sector increased 410% compared to the first half of 2020, while deal volumes increased 101% year-over-year.
PwC added that many deals in 2021 have centered around efforts to shore up supply chains after the COVID-19 pandemic exposed industry-wide weaknesses.
While there have been some limitations on deal activity through the first half of 2021, such as regulatory uncertainty, PwC stated that M&A will continue to be used to "innovate and maximize" the potential of participant portfolios.
"In the second half of the year, we expect M&A activity to continue to be a focus for the sector. Large pharmaceutical companies have strong balance sheets and capital continues to be readily available," the report stated. "Biotech funding continues to trend well, pushing valuation up. Special purpose acquisition companies (SPACs) have continued to move towards the mainstream as a viable alternative to traditional M&A and IPOs continue to be a hotspot for investors and companies looking for the capital needed to fuel growth."
Paul Brient, Chief Product Officer at the Watertown, Massachusetts-based electronic health records vendor, underscores the goals of working with Apple and promoting healthcare innovation.
Earlier this month, athenahealth announced that it would support a new iOS15 feature that would allow patients to share their Apple Health data with their providers.
The company stated that the move was made as part of an effort to "enable bringing external insights and innovations to the point of care" while also leveraging athenahealth's FHIR Launch and App Tab experience so that providers "can view their patients' shared data within their native athenaClinicals workflows via an Apple-provided app."
Paul Brient, Chief Product Officer at the Watertown, Massachusetts-based electronic health records vendor, spoke with HealthLeaders to underscore the goals of working with Apple and promoting healthcare innovation.
This transcript has been edited for clarity and brevity.
HL: Can you give a high-level overview of the Apple Health news for our audience of healthcare executives and how athenahealth is supporting this?
Brient: Recently, Apple announced that they are working with several HIT partners, including athenahealth, on an upcoming feature that will enable patients to securely share data from the Apple Health app – including data from certain health records categories like lab test results and immunizations, as well as health information, such as exercise minutes, heart rate, or hours of sleep, from iPhone, Apple Watch and third-party connected devices — directly with their providers. We’re excited to offer this option to empower the patient as a critical part of the care team with control of their data.
athenahealth is supporting this feature as part of our broader Platform Services strategy and our corporate vision to create a thriving ecosystem that delivers accessible, high-quality, and sustainable healthcare for all. By driving connections and the free flow of information between technologies, our solutions enable providers with the necessary insights to help patients become more actively engaged with their care plans, improve healthcare outcomes, and control costs.
The new Apple Health app feature, which will be available this fall, will leverage our FHIR Launch and App Tab experience so that providers can view their patients’ shared data within their native athenaClinicals EHR workflows via an Apple-provided app. In addition, we continue to invest in platform capabilities that empower our customers and their patients to choose from the best tools and services across the healthcare ecosystem and look forward to enabling other applications to bring external insights and innovations to the point of care. Enhancing the interoperability of health data is critical in redefining the future of healthcare.
HL: As the industry pivots to a post-pandemic landscape, what sectors are primed to see the most amount of innovation?
Brient: The new ways providers have engaged with their patients during the pandemic have certainly yielded efficiencies and exposed the inefficiencies of the “traditional” patient engagement model. There will be significant innovation as these new techniques and tools are adopted and adapted to a post-pandemic world. At long last, patients will soon be able to engage digitally with the healthcare system in the same way they engage with services they receive in non-healthcare industries.
I expect that in the coming months and years, we will see more technology and applications emerge that will build on telehealth and remote care. There is still a lot of opportunity for healthcare technology, as AI, machine learning, virtual reality, and other technologies become more mainstream. We are just beginning to see the impact that AI and machine learning can have on enabling the EHR. Right now, EHRs are built to serve up the text on the screen and let the user interpret it. However, we will start to see more advancements in AI to help the computer understand what those things on the screen mean, avoid asking redundant questions, and suggest shortcuts – all of which will make the provider and patient experience more seamless.
Before the pandemic, it was assumed that any new technology would take months or even years to be implemented, just based on previous experience. The pandemic has shown us how capable we are as an industry to adapt and implement new technologies and strategies in a matter of days.
HL: How should leaders at payer and provider organizations approach investments in technology and digital health offerings?
Brient: While digital health has the power to help connect patients, providers, and payers, we must remember there’s no one-size-fits-all approach in healthcare. To prosper in a post-pandemic world, healthcare leaders across payer and provider organizations must build on their innovative responses to COVID-19 and rethink their current strategies to include the right technology and digital health offerings that meet the unique post-pandemic needs of their communities.
When evaluating an investment in new technologies, payers and providers should examine their complete ecosystem to identify the challenges the community is facing and what technologies will help bridge those gaps. This can be anything from recognizing a need for faster revenue cycle management and less paperwork or investing in technology to send alerts to patients to reduce no-show appointments. Over the past year, we have seen many advancements in technology, but not everything will be perfect for every organization. Instead, the right investment will build on the current strategy, creating a more seamless experience for all parties.
HL: What are the forward-looking plans for athenahealth, both in the short-term and long-term?
Brient: As we look to the future, there are several trends that we are tracking and that will be central to our decisions on product development and customer support. One of these is the advent of real, experiential interoperability where we are poised on the verge of tangible improvements in the way providers, payers, patients, and everyone in the healthcare ecosystem exchange information—the growth in the API economy in healthcare is reshaping what’s possible. Interoperability is about a lot more than just defining technical standards. Although that’s very important, at its most basic level, interoperability matters because it allows for a better-connected healthcare ecosystem.
Second, we are making major investments in both the patient and provider experience. The reality is that patients have a very different level of digital engagement with the 82% of the economy that is not healthcare – we seek to change that. Providers today still sometimes talk about EHRs as getting in the way of care or maybe just not being as cumbersome as others. Given the complexity of medicine, the rate that knowledge changes, and the information intensity inherent in practicing in today’s world, EHRs should be viewed as an essential and critical tool in the care delivery process. We are working hard to make our EHR fit naturally into any physician’s workflow and, by making it intelligent, anticipate what is needed and proactively provide it at the right time in the right context.
Third, we are working to integrate population health tools into our EHR ecosystem. Today the state-of-the-art separates these two products ironically in the name of coordinating care. We believe that patients and providers will be best served with a truly integrated care management/population health platform that allows for a single, shared care plan, visibility by care managers into the point of care and vice versa and allows the extended care team to collaborate easily and effortlessly.
Total enrollment for both Medicaid and CHIP programs topped 80.5 million people by the end of January.
Almost 10 million Americans enrolled in Medicaid and the Children's Health Insurance Program (CHIP) during the COVID-19 public health emergency (PHE), according to data released by the Centers for Medicare & Medicaid Services (CMS) Monday afternoon.
CMS found that enrollments increased by nearly 14% from February 2020, which the PHE was declared, through January 2021.
The total enrollment for both Medicaid and CHIP programs topped 80.5 million people by the end of January, including more than 38.3 million children.
The first monthly Medicaid and CHIP Enrollment Trends Snapshot released by CMS in October found that Medicaid and CHIP added more than 4 million new enrollments between February and June 2020. In the Snapshot, CMS stated that overall enrollment "sharply increased with the COVID-19 PHE," as well as with the passage of the Families First Coronavirus Response Act (FFCRA).
CMS attributed the increased enrollment to the COVID-19 PHE, specifically referencing the enactment of the FFCRA, which provided states with a temporary 6.2% increase in Federal Medical Assistance Percentage funding.
"The Biden-Harris administration is using every lever to ensure any American needing access to quality health coverage receives it. Now more than ever, people need the peace of mind of knowing that they have health coverage,” HHS Secretary Xavier Becerra said in a statement. "This report reminds us what a critical program and rock Medicaid continues to be in giving tens of millions of children and adults access to care. This pandemic taught us that now more than ever, we must work to strengthen Medicaid and make it available whenever and wherever it’s needed using the unprecedented investments Congress provided."
The data was released one week after another CMS report found that more than 1 million consumers have coverage through HealthCare.gov that costs $10 or less per month.
"Medicaid and CHIP serve as a much-needed lifeline for millions of people throughout this country. The increase we are seeing is exactly how Medicaid works: the program steps in to support people and their families when times are tough," CMS Administrator Chiquita Brooks-Lasure said in a statement.
Jonathan Bush, former CEO of athenahealth and current executive chairman of Firefly Health, discussed his new healthcare venture.
Zus Health, a digital health company based in Watertown, Massachusetts, announced its launch and close of a $34 million Series A financing round late last week.
Zus, founded by Jonathan Bush, former CEO of athenahealth and current executive chairman of Firefly Health, aims to create "the industry’s first shared development platform backed by a shared data record," according to a company press release.
The fundraising round for Zus was led by several notable organizations, including Andreessen Horowitz, a Silicon Valley-based venture capital firm, and Rock Health.
In an email Q&A with HealthLeaders, Bush discussed his new healthcare venture and thoughts on industry innovation as the COVID-19 pandemic subsides.
This transcript has been edited for clarity and brevity.
HealthLeaders: At a high level, what should our audience of hospital and health insurance executives understand about the launch of Zus?
Bush: Zus is a platform company that provides a set of tools that builders can use to build their own software across the healthcare ecosystem from virtual care, hospitals, labs, doctors, and payers, all backed by a shared data record. Zus will help builders and engineers underserved by tools on market today to frictionlessly participate alongside the legacy healthcare ecosystem and create extraordinary patient experiences.
HL: What lessons from your time at athenahealth, along with your work at Firefly, will influence your plans for Zus?
Bush: Athena was focused on the back end for traditional providers, doing billing and management and generally reducing the back-office workload of doctors. Zus is working with next-gen digital health startups (like Firefly) to create healthcare’s first development platform backed by a shared data record. By exposing some of the most common workflows in the health journey, Zus plans to support and accelerate developers working to innovate on patient and provider experiences through solutions such as patient relationship management systems for doctors’ practices and other apps.
HL: How is healthcare innovation poised to change as the pandemic subsides? Which areas are going to be the most popular for investment?
Bush: A huge growth area is a connection between technology and healthcare. Today, we’re sitting at the intersection of information sharing-friendly policies, like the 21st Century Cures Act, never before seen levels of investment from PE and VC into digital-first healthcare companies, and, like you said, the pandemic, which has all come together to create a thriving young healthcare movement. We plan to support this new generation of healthcare companies to develop their offerings at considerably greater speed and less cost while enabling them to share appropriate health information to improve care.
Augustine M.K. Choi, M.D., Stephen and Suzanne Weiss Dean of Weill Cornell Medicine, said the effort will support the organization's missions to improve "research, clinical care, and education."
Weill Cornell Medicine launched a $1.5 billion campaign to change medicine Thursday.
The New York-based academic medical center announced the launch of the "We're Changing Medicine" campaign, with more than half of the fundraising amount already raised.
Among the $750 million raised, the campaign has received $215 million in foundational gifts from longstanding benefactors and a $55 million gift from Jeffrey Feil, vice-chair of the Board of Fellows, which will be used to support the "construction of a new student residence hall four blocks from the institution’s main campus."
Augustine M.K. Choi, M.D., Stephen and Suzanne Weiss Dean of Weill Cornell Medicine, told HealthLeaders that the effort will support the organization's missions to improve "research, clinical care, and education."
"We are focusing on all three missions and we are going to leverage what we have now to make sure that we follow the trends in our community," Choi said. "At the end of the day, to have a positive and beneficial impact on our patients, we need to research the best way to provide care and state-of-the-art treatment."
Choi said that a cornerstone of Weill Cornell's new campaign will focus on boosting diversity within the organization and healthcare in general.
He noted that the COVID-19 pandemic highlighted the effects of widening healthcare disparities on vulnerable patient populations. He added that having diverse clinical staff can improve the experience of handling diverse patient populations.
"New York City is arguably the most diverse city in the country, so diversity is important in terms of not only the highest quality care but access to make sure that all of our patients have equal access," Choi said. "For education and training, we are proud of the diversity in our education office. We launched debt-free medical education financial needs assistance about two years ago, and it's moving the needle in providing equity for all students who want to be a doctor if they come to Weill Cornell and have financial needs. We feel that diversity is a common denominator in all three major missions that we're focusing on in this campaign."
In evaluating the impact of the COVID-19 pandemic on the academic medical center sector, Choi said that these providers had to leverage strengths to meet the critical clinical demands of the moment.
He said that Weill Cornell was "well-suited" to handle the rush of patients during the start of the coronavirus outbreak, mentioning that the hospital established new ICU pop-up spaces to handle 250 patients.
Additionally, having the research capabilities of the organization allowed for a more data-driven response to a virus that was still relatively unknown at the time, according to Choi.
The research efforts and clinical infrastructure that were crucial to responding to the pandemic can also be applied to non-COVID diseases, Choi said, such as cancer, diabetes, and heart disease, among others.
"This is why the 'We Are Changing Medicine' campaign is so timely and important, as we are touching upon all these areas," Choi said. "We're focusing not only on just the pandemic issues, but on heart health, brain health, children's health, women's health, and so forth. So, this is how academic medical centers like Weill Cornell are well-suited and prepared not only for this pandemic but for the future."
Following Thursday's ruling, industry observers are analyzing the effects of the ACA remaining intact and what it means for healthcare going forward.
The Affordable Care Act (ACA) survived its third major legal challenge on Thursday, as the U.S. Supreme Court ruled 7-2 in the case of California v. Texas that the plaintiffs did not have standing to sue over the law's individual mandate.
The decision was warmly received by many stakeholders across the healthcare industry, including major organizations like the American Hospital Association, America's Health Insurance Plans, and the American Medical Association, among others.
Similarly, Democratic political leaders who have long championed the landmark legislation heralded the Court's ruling, including HHS Secretary Xavier Becerra, who led a coalition of nearly 20 states in defense of the law as part of his role as California Attorney General.
Now, industry observers are analyzing the effects of the ACA remaining intact and what it means for healthcare going forward.
Ratings agencies were quick to evaluate Thursday's decision and what the potential impact will be on providers and payers.
Fitch Ratings stated that the decision was "neutral" to ratings for nonprofit hospitals, adding that the ruling "maintains the status quo" established since the individual mandate was zeroed out in the Tax Cuts and Jobs Act of 2017 (TCJA).
"Today's ruling maintains healthcare coverage for tens of millions of Americans under the ACA, and we expect this to prevent a decline in operating margins associated with a shift in payor mix that would have reversed the positive margin trend evidenced at hospitals in the years following the ACA rollout," Fitch stated. "Fitch's not-for-profit (NFP) hospital operating margin median rose during those years the ACA was fully implemented, increasing from 2.2% in 2013 to 3.0% in 2014 and again in 2015 to 3.5%. Operating margins have continued to benefit since then, due to the incremental revenue from patients enrolled in the healthcare exchanges or under expanded Medicaid programs."
Meanwhile, Dean Ungar, vice president of Moody's Investors Service, said the Court's decision is "credit positive" for payers.
"The US Supreme Court dismissed the lawsuit against the Affordable Care Act. This is credit positive for US health insurers as it removes the risk of disruption in the individual market and preserves Medicaid expansion," Ungar said. "An adverse ruling would have put the health insurance of over 20 million people at risk and resulted in reduced enrollment for health insurers. Instead, we expect enrollment growth in the individual market, driven by supportive policies from the Biden administration."
Additionally, Myra Simon, principal at Avalere Health, said that the decision "providers needed certainty" as payers plan for 2022.
In an interview with HealthLeaders, Michael Kolber, a partner at Manatt Health, said that the Court's ruling was a "great outcome" and noted that it was unlikely the ACA would be struck down because the individual mandate was zeroed out.
"This [decision] allows the healthcare industry to proceed and it allows policymakers to think about how they build on the ACA foundation [regarding] how healthcare and health insurance is regulated," he said.
Kolber said he expects opponents of the ACA to move on from fighting the mandate and instead focus future litigation efforts on other aspects of the law, though he did not know how much political interest remains in challenging the law again.
Robert Henneke is General Counsel at the Texas Public Policy Foundation, which represented two Texas men who joined the plaintiffs in the case.
Henneke told HealthLeaders that he was "perplexed and unsatisfied" by the Court's decision, adding that it "resolves nothing."
"The court has kind of ducked the central question, left the core constitutional issue unresolved, and Americans remain stuck with a broken, expensive healthcare system," Henneke said.
Henneke said the ruling "perpetuates the status quo," though he noted that the ACA will continue to be challenged in the courts.
In response to healthcare leaders who have cheered the Court's decision, Henneke said that some may have on "rose-colored blinders" about the current status of the industry.
"We know that people are going bankrupt as a result of healthcare costs, we know that people are foregoing care because they can't afford it. That's not a healthy system that's not something to celebrate," he said. "Until the policymakers get realistic about the state of health insurance and healthcare in America today, millions of Americans are going to continue to suffer under the expensive, broken system that we're forced to live under."
The Court ruled that states challenging the ACA have not suffered an "injury fairly traceable to the defendant’s allegedly unlawful conduct."
"For these reasons, we conclude that the plaintiffs in this suit failed to show a concrete, particularized injury fairly traceable to the defendants’ conduct in enforcing the specific statutory provision they attack as unconstitutional," Breyer wrote in his opinion. "They have failed to show that they have standing to attack as unconstitutional the Act’s minimum essential coverage provision. Therefore, we reverse the Fifth Circuit’s judgment in respect to standing, vacate the judgment, and remand the case with instructions to dismiss."
The Court did not rule on the validity of the individual mandate or the issue of severability.
Timeline of California v. Texas
Thursday's ruling brings an end to a legal saga that began nearly four years ago when the individual mandate was zeroed out as part of the Tax Cuts and Jobs Act of 2017 (TCJA).
In December 2018, U.S. District Judge Reed O'Connor in Fort Worth ruled that the entire ACA was unconstitutional because the individual mandate is invalid, citing the elimination of its financial penalty as part of the TCJA.
In March 2019, the Department of Justice dropped its partial defense of the ACA . This change in legal approach was criticized by several hospital groups, including the American Hospital Association, which called it "unprecedented and unsupported by the laws or the facts."
The Fifth Circuit Court of Appeals heard arguments in July 2019 and ruled in a split decision in December 2019 that the individual mandate is unconstitutional but did not strike down the law.
Following that ruling, then-California Attorney General Xavier Becerra, who led a coalition of nearly 20 states in defense of the law, filed a petition of certiorari with the Supreme Court to hear the case on an expedited basis.
The DOJ argued in official court filings in June 2020 that the ACA must be struck down in its entirety.
In November 2020, days after the presidential election, the Supreme Court heard oral arguments in the case.
This is a developing story that will be updated as more information becomes available.
Even prior to the pandemic, health systems and hospitals were keeping their eyes on non-traditional players entering the American healthcare system.
In addition to major companies like Google, Apple, and Amazon making in-roads in various aspects of the industry, there is another technology company eyeing opportunities in the U.S.: Babylon Health.
In late February, the London-based health technology company announced three U.S.-based leaders will be added to its C-suite, including Paul-Henri (PH) Ferrand, who formerly served as president of Google Cloud.
The company has already rolled out its Babylon 360 app to establish a value-based care model in both California and Missouri, while also offering app-based services in New York, Nevada, and Iowa, with plans to build a nationwide network.
Two weeks ago, Babylon announced that it will go public as part of a $4.2 billion special purpose acquisition company (SPAC) deal with Alkuri Global Acquisition Corp.
In an interview with HealthLeaders, Ferrand discusses Babylon's goals to promote value-based care in the U.S.
This transcript has been edited for clarity and brevity.
HealthLeaders: PH, can you give our audience a high-level overview of Babylon Health and explain its goals as it relates to the U.S. healthcare system?
Ferrand: Babylon is the leading digital-first, value-based care provider that was founded in 2013 by Dr. Ali Parsa. Our mission is to deliver accessible healthcare to every person on Earth; we work with providers across the globe to offer people what we call ‘around the clock access to all-in-one, personalized healthcare.’
We do this by bringing together our AI-powered, highly scalable platform and modern quality clinical expertise to help our members lead healthier and longer lives at a lower cost.
Today we're serving 24 million lives globally with a range of digital health services. We launched in the U.S. last year, [which] now represents about 70% of revenue, and we offer Babylon 360, our digital-first, value-based care tens of thousands of Medicaid lives in California and Missouri, and we have plans to widely expand over the next couple of years.
HL: What are some of the most pressing challenges facing the U.S. healthcare system? How is a U.K.-based technology company like Babylon best positioned to offer solutions to these issues?
Ferrand: The U.S. healthcare system is one that has been suffering from the focus on fee-for-service (FFS), which we think is not really working. By having FFS in place, the healthcare system is focused on sick care where we mostly treat people once they become ill; it's expensive and inefficient.
If you're looking at numbers, for instance, healthcare expenditures in the U.S. represent 18% of the GDP, which is quite dramatic. But when you compare U.S. healthcare to OECD countries, while [America] spends twice as much on average, it has among the lowest life expectancies among the top 11 nations.
That’s one of the issues; the access to healthcare is also not ubiquitous, [around] 3% of U.S. healthcare expenditures are going to 50% of the population. We can’t say that this is fair access to healthcare. The costs are also ballooning; there are two major areas, in our view, creating this bubble. One is that you have highly trained, expensive resources like medical professionals. You want them to be focused on the high-value activities, not just high-value and low-value activities, and then you have chronic diseases. [Half] of the U.S. adult population has a chronic disease, and more than two-thirds are considered obese, so it’s important to discuss owning a big issue and how all of this is converging to deliver poor outcomes.
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These statistics are basically saying that the system itself is probably not working as well as it could, and in the face of this, we're seeing three major trends happening. One [trend] is that technology and AI are coming in to disrupt the healthcare system, in a good way. The second thing is value-based care, you want to focus on healthcare, being much more preventative, and making sure that you're staying healthy; when you’re in good health and [you get] sick, you can get put back on your feet as quickly as possible at the lowest cost possible. Then the third is consumerization, which comes with technology and means more consumers are going to be in control of how they consume their healthcare.
HL: Your background has largely been shaped by your time at Google, Dell, and Nokia, so what was the attraction to make the move to healthcare?
Ferrand: First, I think healthcare is a fascinating industry… having worked in technology for a long time, I realized after having long discussions with [Parsa], that the time is right for technology to truly disrupt, in a good way. That was one of the reasons that I wanted to get into healthcare and help a company such as Babylon grow.
The second reason is that everybody wants to get up in the morning and have a purpose that gets you excited, and, frankly speaking, [working at Babylon] can touch the lives of millions of people and give them access to healthcare. This is something that is both fascinating and inspiring, which is why I wanted to be there and have a chance to reshape the way healthcare is being delivered to people.
The last [reason] is the team of people I've met at Babylon, which are talented people. The one thing that I appreciate that technology companies probably don't appreciate is that you can't get into healthcare as a technology company and be successful if you're not, at your heart, a healthcare company. You saw what happened with Haven, backed by Amazon, JPMorgan Chase, and [Berkshire Hathaway], even though [these companies] have great track records, these people were not able to perform in healthcare. This is due to the fact that in healthcare, you have to be a healthcare company before being a technology company.
What I like about Babylon is [Parsa] has been leading hospitals in the past, we have a lot of great clinicians with us, we just recruited a new chief medical officer, and it's all about how you marry your clinical operations with technology to deliver some magic. This is why I've joined not just Babylon, but now I’m happily in [the industry] and feel like we can revolutionize healthcare from sick care to preventative care.
HL: If we were to have a follow-up conversation in a year's time, where do you see Babylon within the U.S. healthcare system? Additionally, do you have a message to share with those in our audience on the provider or payer side who might be skeptical of the company's ambitions?
Ferrand: We hope that we'll have solidified our position as the global leader in digital-first integrated care and that we build a growing network of partners and providers around the world who share our mission of sharing information and putting accessible, quality healthcare into the hands of everybody on Earth.
I think a year from now, the Babylon 360 model of emphasizing preventative care to avoid costly sick care is going to become the new normal in healthcare. So, we're happy to lead that momentum. Clearly, there will be other companies doing it, this is a huge market, but we think that we don't have to be alone in doing this but we're happy, we're happy taking the lead on that front.
In terms of the folks who are skeptical about Babylon, I would say we were founded in 2013 and we’re a pretty massive company. We're covering 20 million lives globally, we are the [top] primary care provider in the U.K., we're handling 1 million lives in Asia, we've started our business right here in the U.S., and a year from now, we’ll probably be the leading digital-first value-based care [provider] in the U.S. with more than 100,000 lives of Medicaid and Medicare under management.
We’re still humble but we’re looking at building this business step by step. We're looking forward to working with the payers and providers out there, we feel like we have good traction, but we think that our track record will speak for itself.
Lastly, coming from technology, I think what matters is to have a differentiated business model. We think with our AI, our scalable platform combined with our remote clinical operations, we can deliver a type of integrated value-based care that no one can deliver, and hence we can take the full risk on the cost of care for payers and providers, and that's something that is attractive for them.