Optum is shutting down its digital care enterprise after a three-year run. Business consultants aren’t very stunned by the information.
Healthcare leaders agree that this closure displays broader traits within the telehealth market, by which saturation and differentiation challenges are main some suppliers to wrestle. Sooner or later, consultants consider essentially the most profitable digital care corporations will likely be those who present personalised affected person experiences and concentrate on area of interest group wants — in addition to those who adapt to a hybrid mannequin of care moderately than relying solely on digital.
What occurred?
Optum’s digital care unit gives 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 Well being.
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, major and specialty care choices. We frequently evaluation the capabilities and companies we provide to satisfy the rising and evolving wants of our companies and the folks we serve. As at all times, we are going to help affected staff members with job placement sources and search to deploy them the place potential to any open roles throughout the firm,” the spokesperson wrote.
At UnitedHealth Group’s investor convention final November, Optum Well being CEO Amar Desai declared that Optum has practically 90,000 employed or affiliated physicians, in addition to one other 40,000 superior observe clinicians. Optum has not disclosed what number of of those healthcare staff will likely be affected by the shutdown.
Has the telehealth hype worn off?
Well being programs’ information exhibits that digital go to quantity has been reducing since 2021, and market analysis stories launched the previous couple years have predicted the difficulty within the telehealth house.
For instance, a Trilliant Well being report from August confirmed that the telehealth market is turning into oversaturated, making it tougher for corporations to face out. Basically, the growth 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 choose 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 information means that digital care is utilized by a distinct segment phase 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 major care companies.”
Jain additionally mentioned it’s vital to notice that 30% of non-behavioral well being digital visits outcome within the affected person needing to schedule a follow-up in-person go to for a similar cause, 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 staff, it’s “no shock that Optum was possible 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 numerous 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 determine long-term care the place they may also 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 search out its footing in a post-pandemic world. For example, two of the nation’s largest digital care suppliers have already enacted important job cuts this yr. Teladoc Well being laid off employees in January following a spherical of job cuts in 2023, and Amwell introduced it had let go of about 10% of its workforce in February.
‘All digital care is just not 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 Accomplice Chirag Shah.
“Healthcare is extremely private, but the common healthcare expertise is commonly deeply impersonal. We now have at all times believed within the energy of digital care to succeed in folks past the 4 partitions of a clinic, however all digital care is just not created equally,” he remarked.
This perception is mirrored within the telehealth corporations Outline Ventures has chosen to spend money on, Shah added. For example, Tia gives care tailor-made to girls’s wants, Discovered supplies personalised weight reduction applications, and Folx Well being delivers individualized care to the LGBTQ+ group, he famous. Discovered and Folx provide virtual-only care, and Tia supplies hybrid care.
In an e-mail to MedCity Information, Faatin Chaudhury, head of payer technique and partnerships at Folx Well being, 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 simply have to tailor care to the communities they service and acknowledge the significance of optimizing the affected person expertise.
“The digital well being trade has seen important development and evolution over the previous few years, taking part in an important position in increasing entry to care for a lot of, particularly for LGBTQ+ and marginalized communities. Digital care is commonly a lifeline, offering accessible and inclusive healthcare to those that face limitations accessing conventional healthcare companies,” Chaudhury wrote.
As a result of Folx supplies care tailor-made to the LGBTQ+ group, it supplies a differentiated expertise to its customers. Greater than half of transgender folks within the U.S. dwell in states which might be primarily rural — and the place telehealth is essential for entry — Chaudhury identified.
Not all telehealth suppliers have that type of area of interest affected person focus, although — Optum’s digital care unit didn’t. That might be a key cause 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 Well being — agreed with Chaudhury, saying there’s a noticeable pattern of digital care suppliers emphasizing their affected person expertise amid rising competitors. That mentioned, plainly Optum is strategically adjusting its focus to “enter markets the place it could possibly 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 strategy to care administration. By choosing particular lanes and refining its ongoing care technique, I’d consider UnitedHealth Group is aiming to enhance the member expertise by providing a extra tailor-made and seamless digital care service,” Gowda said.