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 developments within the telehealth market, through which saturation and differentiation challenges are main some suppliers to battle. Sooner or later, consultants consider probably the most profitable digital care firms shall be those who present customized affected person experiences and deal with area of interest neighborhood wants — in addition to those who adapt to a hybrid mannequin of care relatively than relying solely on digital.
What occurred?
Optum’s digital care unit affords 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 had been nonetheless prevalent and telehealth enthusiasm ranges had been excessive.
Former Amazon govt 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 workers started posting on social media about layoffs on the firm. Optum confirmed the information in a Tuesday electronic 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 strong community of suppliers for digital pressing, major and specialty care choices. We frequently overview the capabilities and providers we provide to fulfill the rising and evolving wants of our companies and the folks we serve. As at all times, we’ll assist affected crew members with job placement assets and search to deploy them the place doable 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 follow clinicians. Optum has not disclosed what number of of those healthcare staff shall be affected by the shutdown.
Has the telehealth hype worn off?
Well being programs’ information exhibits that digital go to quantity has been lowering since 2021, and market analysis studies launched the previous couple years have predicted the difficulty within the telehealth area.
For instance, a Trilliant Well being report from August confirmed that the telehealth market is changing into oversaturated, making it tougher for firms to face out. Basically, 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 — creator of the report and Trilliant’s chief analysis officer — mentioned that Optum’s determination to shutter its digital care enterprise comes as no shock.
“The information 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 had been for behavioral health-related causes with a small proportion of utilization attributed to major care providers.”
Jain additionally mentioned it’s vital to notice that 30% of non-behavioral well being digital visits end result 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 providers are offering to their staff, it’s “no shock that Optum was doubtless 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 instances for virtual-only care, and sufferers like to determine long-term care the place they may also be seen in individual when wanted. The way forward for healthcare is hybrid, not digital,” Sharma wrote in an electronic 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 illustration, two of the nation’s largest digital care suppliers have already enacted vital job cuts this yr. Teladoc Well being laid off workers 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 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, based on Outline Ventures Accomplice Chirag Shah.
“Healthcare is extremely private, but the common healthcare expertise is commonly deeply impersonal. We’ve at all times believed within the energy of digital care to achieve 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 firms Outline Ventures has chosen to put money into, Shah added. As an illustration, Tia affords care tailor-made to girls’s wants, Discovered supplies customized weight reduction applications, and Folx Well being delivers individualized care to the LGBTQ+ neighborhood, he famous. Discovered and Folx supply virtual-only care, and Tia supplies hybrid care.
In an electronic 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 greater than pre-pandemic ranges total.
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 well being business has seen vital development and evolution over the previous few years, taking part in a vital function 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 boundaries accessing conventional healthcare providers,” Chaudhury wrote.
As a result of Folx supplies care tailor-made to the LGBTQ+ neighborhood, it supplies a differentiated expertise to its customers. Greater than half of transgender folks within the U.S. dwell in states which can be primarily rural — and the place telehealth is crucial for entry — Chaudhury identified.
Not all telehealth suppliers have that form of area of interest affected person focus, although — Optum’s digital care unit didn’t. That could possibly be a key cause why the corporate has chosen to close the enterprise down, based on one other healthcare chief. Rishi Gowda — CEO of healthcare AI firm Crosby Well being — agreed with Chaudhury, saying there’s a noticeable development of digital care suppliers emphasizing their affected person expertise amid rising competitors. That mentioned, evidently Optum is strategically adjusting its focus to “enter markets the place it may have a bigger footprint,” he wrote in an electronic 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 consider UnitedHealth Group is aiming to enhance the member expertise by providing a extra tailor-made and seamless digital care service,” Gowda acknowledged.