Optum is shutting down its digital care enterprise after a three-year run. Trade specialists aren’t very stunned by the information.
Healthcare leaders agree that this closure displays broader tendencies within the telehealth market, by which saturation and differentiation challenges are main some suppliers to battle. Sooner or later, specialists imagine essentially the most profitable digital care corporations might be those who present customized affected person experiences and concentrate on area of interest neighborhood wants — in addition to those who adapt to a hybrid mannequin of care slightly than relying solely on digital.
What occurred?
Optum’s virtual care unit presents digital pressing and first care visits and prescription refills throughout all 50 states. Optum, which is owned by UnitedHealth Group, based its digital care enterprise in April 2021 — when pandemic restrictions have been nonetheless prevalent and telehealth enthusiasm ranges have been excessive.
Former Amazon government Kristi Henderson served as CEO of the digital care unit till final June, when she departed to take over as CEO of musculoskeletal care supplier Confluent Health.
Information of the unit’s closure first emerged final week when Optum staff started posting on social media about layoffs on the firm. Optum confirmed the information in a Tuesday e-mail to MedCity Information.
An Optum spokesperson wrote that digital care “has been and can proceed to be a core half” of the corporate’s built-in care supply mannequin.
“As an enterprise, we’re dedicated to offering sufferers with a sturdy community of suppliers for digital pressing, main and specialty care choices. We frequently evaluate the capabilities and companies we provide to fulfill the rising and evolving wants of our companies and the folks we serve. As all the time, we are going to help affected crew members with job placement sources and search to deploy them the place potential to any open roles inside the firm,” the spokesperson wrote.
At UnitedHealth Group’s investor conference final November, Optum Health CEO Amar Desai declared that Optum has practically 90,000 employed or affiliated physicians, in addition to one other 40,000 superior follow clinicians. Optum has not disclosed what number of of those healthcare employees might be affected by the shutdown.
Has the telehealth hype worn off?
Health-plan-and-hospitals-report-2023-financial-results”>Health methods’ information exhibits that digital go to quantity has been lowering since 2021, and market analysis experiences launched the previous couple years have predicted the difficulty within the telehealth area.
For instance, a Trilliant Health report from August confirmed that the telehealth market is changing into oversaturated, making IT more durable for corporations to face out. Primarily, the increase of telehealth suppliers that got here in 2020 and 2021 was a results of pandemic-era compelled telehealth adoption — and now the market has to select up the items, the report mentioned.
Sanjula Jain — writer of the report and Trilliant’s chief analysis officer — mentioned that Optum’s choice to shutter its digital care enterprise comes as no shock.
“The info means that digital care is utilized by a distinct segment section of the inhabitants and inside that small inhabitants, practically half of customers solely used IT as soon as,” she mentioned. “Furthermore, greater than 60% of telehealth visits have been for behavioral Health-related causes with a small proportion of utilization attributed to main care companies.”
Jain additionally mentioned IT’s necessary to notice that 30% of non-behavioral Health digital visits end result within the affected person needing to schedule a follow-up in-person go to for a similar motive, which suggests a level of service duplication or friction.
When contemplating these information factors in tandem with the truth that employers are questioning the worth that digital care companies are offering to their employees, IT is “no shock that Optum was probably struggling to generate a return on their investments in digital care,” she declared.
One other healthcare exec — Anu Sharma, CEO of hybrid maternity care startup Millie — agreed with Jain.
“There was lots of pleasure round digital care, particularly with the surge in adoption throughout Covid. However there are only a few use circumstances for virtual-only care, and sufferers like to ascertain long-term care the place they can be seen in particular person when wanted. The way forward for healthcare is hybrid, not digital,” Sharma wrote in an e-mail.
Optum’s digital care unit is actually not the one telehealth supplier that has struggled to seek out its footing in a post-pandemic world. As an example, two of the nation’s largest digital care suppliers have already enacted important job cuts this yr. Teladoc Health laid off staff in January following a spherical of job cuts in 2023, and Amwell announced IT had let go of about 10% of its workforce in February.
‘All digital care just isn’t created equally’
Within the post-pandemic market, the digital care suppliers that succeed would be the ones that personalize the affected person’s expertise round their wants and preferences, in accordance with Outline Ventures Companion Chirag Shah.
“Healthcare is extremely private, but the common healthcare expertise is usually deeply impersonal. We’ve got all the time believed within the energy of digital care to succeed in folks past the 4 partitions of a clinic, however all digital care just isn’t created equally,” he remarked.
This perception is mirrored within the telehealth corporations Outline Ventures has chosen to put money into, Shah added. As an example, Tia presents care tailor-made to girls’s wants, Discovered offers customized weight reduction packages, and Folx Health delivers individualized care to the LGBTQ+ neighborhood, he famous. Discovered and Folx supply virtual-only care, and Tia offers hybrid care.
In an e-mail to MedCity Information, Faatin Chaudhury, head of payer technique and partnerships at Folx Health, identified that whereas telehealth adoption has decreased in comparison with the early days of the pandemic, utilization stays larger than pre-pandemic ranges general.
In her view, telehealth suppliers aren’t headed right into a world of doom — they only have to tailor care to the communities they service and acknowledge the significance of optimizing the affected person expertise.
“The digital Health business has seen important development and evolution over the previous few years, enjoying an important position in increasing entry to care for a lot of, particularly for LGBTQ+ and marginalized communities. Digital care is usually a lifeline, offering accessible and inclusive healthcare to those that face boundaries accessing conventional healthcare companies,” Chaudhury wrote.
As a result of Folx offers care tailor-made to the LGBTQ+ neighborhood, IT offers a differentiated expertise to its customers. Greater than half of transgender folks within the U.S. stay in states which might be primarily rural — and the place telehealth is important for entry — Chaudhury identified.
Not all telehealth suppliers have that sort of area of interest affected person focus, although — Optum’s digital care unit didn’t. That could possibly be a key motive why the corporate has chosen to close the enterprise down, in accordance with one other healthcare chief. Rishi Gowda — CEO of healthcare AI firm Crosby Health — agreed with Chaudhury, saying there’s a noticeable development of digital care suppliers emphasizing their affected person expertise amid rising competitors. That mentioned, IT appears that Optum is strategically adjusting its focus to “enter markets the place IT can have a bigger footprint,” he wrote in an e-mail.
“Given UnitedHealth Group’s partnerships with a number of digital care suppliers throughout totally different specialties, IT’s comprehensible that the group is honing in on its method to care administration. By deciding on particular lanes and refining its ongoing care technique, I might imagine UnitedHealth Group is aiming to enhance the member expertise by providing a extra tailor-made and seamless digital care service,” Gowda said.