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One Medical’s innovation chief on Amazon, Medicaid and more

One Medical’s innovation chief on Amazon, Medicaid and more
One Medical’s innovation chief on Amazon, Medicaid and more

Amazon sent shockwaves through the health tech sector when it announced plans to acquire primary care network One Medical for $3.9 billion over the summer, as retail-focused companies continue to pursue primary care M&A. However, San Francisco-based One Medical, which operates more than 200 medical offices across 25 markets, was making news well before the acquisition as it expanded its business beyond the healthy, wealthy well and into the riskier — but potentially more lucrative — Medicare environment last year.

At HLTH in Las Vegas, Healthcare Dive interviewed One Medical’s Chief Innovation Officer Rushika Fernandopulle in a conversation that touched on Amazon, how remote work trends are affecting the business, One Medical’s ongoing shift toward risk and its interest in Medicaid.

Here are the three biggest takeaways.

  • ‘Excited’ about Amazon

    Fernandopulle largely declined to speak about Amazon, citing the ongoing antitrust review. In September, regulators asked Amazon and One Medical for more information about the proposed tie-up, extending the investigation.

    But “we can say we’re really excited,” Fernandopulle said. “I think they’re a great potential partner for all the obvious reasons.”

    If the acquisition is cleared, Amazon will bring One Medical’s clinical network, subscription telehealth service, electronic health record and thousands of employer contracts in-house. Despite the recent demise of employer-facing care delivery business Amazon Care, the ecommerce giant’s launch of telehealth marketplace Amazon Clinic this week shows the company isn’t done trying to enable healthcare delivery.

    Linking with Amazon gives One Medical access to a deep pool of capital, and potential assistance with risk management in its Medicare business, which One Medical acquired last year through its $1.4 billion buy of Iora Health.

    Amazon has already agreed to provide One Medical with up to $300M in financing, according to an Securities and Exchange Commission filing on Monday.

  • Recession not affecting employer demand

    Many U.S. employers are cutting jobs and budgets as they brace for a financial downturn. Although healthcare is more insulated from recessions than other industries, the economic downturn is already causing ripple effects within the sector — for example, payers are airing concerns that widespread job losses could cut into commercial enrollment and revenue.

    But a potential recession hasn’t yet affected healthcare benefits. One Medical, which has roughly 8,500 employer clients, hasn’t seen any effect on its sales cycle, Fernandopulle said, arguing its employer clients realize that offering easy access to primary care lowers healthcare costs in the long-term.

    “We’re less concerned about that,” Fernandopulle said.

    A headshot of Rushika Fernandopulle

    One Medical CIO Rushika Fernandopulle

    Permission granted by One Medical

     

    Shifting employment trends and the rise of remote work have also had a notable effect on employer interest for clinical locations. According to McKinsey, 58% of Americans work from home at least one day a week. Surveys have shown workers prefer to work at home — but their bosses want them to come into the office.

    One Medical offers both onsite and near-site clinics, which are located near worker hubs, for interested employers. The near-site clinics have been useful for populations as they move away from the office, but remote work hasn’t decelerated employer demand for onsite clinics, Fernandopulle said — instead, it’s accelerated, as employers look for ways to entice employees back to the office.

    “That’s where I think one of our strong point is — we have onsites for some big employers” like Google, Fernandopulle said. “What’s interesting is we’re getting a bunch of employers saying they want onsites as a way to get people back in the office.”

  • Expanding into Medicaid ‘a huge interest,’ but structural barriers in way

    One Medical brings in a growing share of revenue from Medicare Advantage plans and through Medicare direct contracting. The company entered into capitation in 2021 with the Iora acquisition.

    With the buy, One Medical now has the ability to capture members’ care as they age, from pediatrics to privately insured adults to Medicare seniors.

    “One of the things we’re trying to do at One Medical is say, we would love to serve everyone, regardless of choices. So imagine a world where we can serve you when you’re young through our pediatrics programs. And then you start getting your first job and work for an employer who’s paying for One Medical. You happen to leave that employer, you can pay a membership fee yourself. You become a senior, you join a plan, we serve you. If you decide not to join a plan, we can serve you in direct contracting,” Fernandopulle said.

    One major area of white space for One Medical is Medicaid, according to Fernandopulle. “It’s a huge interest,” the CIO said.

    When Fernandopulle was CEO of Iora, the value-based provider tried several times to work with state Medicaid programs, but ran into structural barriers. For one, the high volume of churn among Medicaid patients, or the temporary loss of coverage when enrollees disenroll and reenroll in a short period of time, makes impacting their care over a long period of time almost impossible, Fernandopulle said.

    “You need them to be your problem. You need them to be with you for years,” Fernandopulle said. “And many Medicaid programs, people cycle on and off every month.”

    Another roadblock for Iora’s efforts in Medicaid was that states need to zero out their Medicaid budget every year, which makes it difficult to figure out a way to invest in one year to see a return in the next, according to the CIO.

    “It’s ridiculous. Completely dumb,” Fernandopulle said. “So we are working with a variety of people to try and fix some of these structural problems.”

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