Navigating Better Outcomes With Quantum Health’s Zane Burke

Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Charles Rhyee:
Hello, my name is Charles Rhyee, Cowen's healthcare technology analyst. And welcome to The Cowen FutureHealth Podcast. Today's podcast is part of our monthly series that continues Cowen's efforts to bring together the thought leaders, innovators, and investors to discuss how the convergence of healthcare technology and consumerism is changing the way we look at health, healthcare, and the healthcare system. Over the past five to 10 years, digital health has emerged as an integral part of healthcare delivery, introducing a whole host of new services from virtual care to fertility benefits, to chronic condition management and more.
Charles Rhyee:
And more often than not, these services have been designed as employee benefits. But with so many choices in the market and with many saying they do the same things, how do employers and employees know what is real and what isn't, and what's working and what's not? To help us discuss this topic and more, I'm joined by Zane Burke, CEO of Quantum Health, one of the leading healthcare navigation companies in the US. Zane's an internationally recognized healthcare IT leader with decades of experience, with Zane formerly the CEO of Livongo and was also president of Cerner prior to that. Zane, thanks for joining us today.
Zane Burke:
Great to be with you, Charles.
Charles Rhyee:
You've been part of multiple successful healthcare technology companies, obviously as we mentioned, the likes of Cerner, Livongo, and now Quantum. Maybe a little of your background, how'd you get into this industry? What drew you to healthcare technology in the first place?
Zane Burke:
Oh, wow. Healthcare technology, it's one of those places where you can have an impact on so many people at a personal level because ultimately, healthcare is personal for all of us. And whether it's your family, or whether it's you, it's something that is I think needs a better experience, a more definitive outcome. It gets harder and harder all the time, more complex all the time, and so I started in healthcare because I felt like that was a place where I could make a difference, and where you could see the experience needed to be better. And that led me first to Cerner and had a variety of roles in Cerner, over 20 plus years, and leaving there as president, left to go to Livongo, and be on that journey. And what I saw there was this opportunity to really create a different kind of healthcare experience with demonstrable outcomes, and that was ...
Zane Burke:
We're having a lot of fun and really having a lot of success along the way. And we had just reached EBIDTA positive and gross margins 70 plus percent. We had 100% plus top line growth and Teladoc came and called, and we went through that merger acquisition piece, and I exited that and really had taken up a search for appropriate boards and investing my money on the journey when I got a call around Quantum Health. And I really wasn't looking for another operating role, but as I got into Quantum Health, I'm like, "Dang it, it's right in the spot where I've longed to be," which is: How do we make a ... None of us want to be in the healthcare system. We wall want to be as close to home in the best health status we can possibly be in. And I really felt like Quantum was the right place to create scalability and make a difference in people's lives, and at the same time fund the healthcare operations from the existing pool of funds that we have out there today.
Charles Rhyee:
You mentioned that Quantum is kind of where you want to be at, people want to be at, closer to home. And it's interesting you say that because I go back with you into the Cerner days and healthcare IT, I always thought very provider centric. You go to [inaudible 00:04:15] and it's all about hospitals and what they're buying. But that's really changed with the advent of digital health and really this more consumer centric world we live in. What's been the biggest surprise for you as you've watched this transformation in the industry?
Zane Burke:
Well, I'll start with what the challenge is. It's that there's multiple stakeholders here, and the failure to recognize all the stakeholders have input in the situation, whether it's the provider, whether it's whoever the plan sponsor or payer is in the model. And then the member themselves, who by the way, doesn't want to be ... None of us want to be a patient. We actually all want to stay out of the system. So how do we think in that way? And I think it's been this very long journey towards this recognition that all three of these pieces have to come together. And I think healthcare is unbelievably humbling because it's so complex.
Zane Burke:
And I think just when you think you've got it figured out, you turn the gemstone a different way and you see another inclusion. You see it from a different perspective, and you realize that there's so much more to this. And I think that's also what makes healthcare so invigorating for me and for others, which is the complexity of this is so challenging. And I think that's really kind of the ultimate side of this, is you can never quite figure it all the way out. But I do think it's super important to think about: How do we engage people in their life flow to make a difference in their healthcare, and then all the stakeholders around it, understand that they have a role to play? And how do we ... We can't just pick and choose which one of those stakeholders we're going to cut out, which I think that's been some of the mistakes made along the way, both from the provider centric space, to the consumer centric spaces. You have to have a value proposition for all the stakeholders.
Charles Rhyee:
Yeah. I think that makes sense. And it certainly adds ... I think it adds that dimension where people need to be engage and need to take kind of ownership of their health, but maybe before, they didn't feel empowered to. Right? It seems like, but at the same time, being empowered doesn't mean that you have all the information necessary to take advantage of that. Right?
Zane Burke:
Charles, it's funny, I think empowerment's important, for those that are on a journey, at the right times. And so you want empowerment when it's on your journey. Nobody actually chooses a healthcare journey, and I think that's what's so uniquely different from the rest of consumerism out there, which is nobody wants to really be on this journey. It's not like buying a car. It's not like traveling. When you buy a car, you want that car. When you go to travel, you're trying to get somewhere so you can go on vacation, or go to your kid's graduation, whatever that is. There's a purpose for it that you want.
Zane Burke:
Healthcare is different. Healthcare is like, "I have to do healthcare so I can do all those other things." And I think that's what's so unique about what it is. It's usually a journey that no one selects for themselves and that you ... It's the empowerment in the moment that's so critical. And then you need some guidance along the way because you don't have the knowledge for these, particularly as things turn complex. You just don't have that knowledge built up, and so you need somebody, something to help you along the journey here. So I think it's super unique in that regard from a consumerism perspective.
Charles Rhyee:
Yeah. So maybe let's jump into things. So for those that aren't familiar with Quantum Health, maybe we can start there and help listeners understand. What does Quantum do?
Zane Burke:
Sure, I'd be happy to touch a little on that. Quantum Health invented the healthcare navigation market over 20 years ago. What we do is take the data science technology combined with a personal touch to help guide our members through their healthcare journey. We do that today for over 500 self insured employers, or about 2.7 million members. And it's really taking everything from the simple to the most complex and accumulating those health signals along the way, so that we can create the best experience and the best outcomes for those members along their journey.
Charles Rhyee:
And Quantum, obviously you said it's the first. It's not the only one in the market today. What do you think makes Quantum so unique though in the market?
Zane Burke:
What makes Quantum very unique is really what we do with the health signals. And so we, first off, we're the only ones that combine member, provider, and whoever, the plan sponsor. And it's fascinating to me in healthcare, I think the easiest way to talk about this is if provider checks your benefits, Charles, today and say, "Is Charles eligible for this PET scan?" Okay, that's a really bad thing that's likely to be something's going on in your body. If the provider is checking to see if you have a PET scan, typically that's for a cancer scan. And in healthcare today, in every place except for Quantum Health, that benefit check would hit the cutting room floor of a health signal. And I think that's super profound and just the lack of the connectedness of the stakeholders.
Zane Burke:
So what's super unique about Quantum Health is first, we're aggregating all the data points, whether it's claims data, PBM data, digital health data, but also information from the providers, from the members, and using what we call real time intercept to engage upfront with our members in their live flow on their journey to get them the best possible outcomes, both clinically and financially, and the best kind of ... With a great experience. And so a couple of results out of that, that makes us unique, is our net promoter scores for our members are in the 70s, which is incredibly high for those of you that know net promoter scores. But also, for providers, providers' net promoter scores in the 70s as well. And in fact, there's a little joke that I talk about here at Quantum health. It's the thing that actually got me, my interest piqued upfront at Quantum was I saw net promoter scores in the 70s. I said, "I don't believe it. Providers don't love anything."
Zane Burke:
And it was one of those elements that I really had to come test and just make sure it was accurate. But that unique capability of creating a great experience, great promoter scores, and then having a hard ROI. So we have a three to one ROI, at least in year one, and improving over time. And so the ROI's incredibly important, and the engagement of what we do. So it's how how we do it is using those health signals before a member has spent $1000 on their way to spending $10,000, we've engaged with them 87% of the time. So it's early engagement and helping people get on the right kind of journeys to make sure they stay in-network, to make sure they get the second opinions that they need, to make sure they get the right kind of care, closest to home, the best experiences. Kind of my simplest thing is we all want to be as close to home as possible and the best health status we can be in. And that's what Quantum Health is enabling.
Charles Rhyee:
The way you kind of talk about it just brings to mind things like care coordination, closing gaps in care. And it's maybe perhaps frightening, you're saying if that kind of signal for the PET scan falls on the cutting room floor. Isn't this what the payer should be doing?
Zane Burke:
I have a lot of respect for what the payers do.
Charles Rhyee:
Don't want to get you in trouble here.
Zane Burke:
I have a lot of respect for what the payers do, but frankly, none of these digital health businesses, nor my business would exist if the payers were doing these things with great experience level or great outcomes. They have been engineered to process in silos over many, many, many years. That processing in silos has created these massive gaps in experience and in terms of outcomes side of this. And really, they're just manufacturing geared to do something totally different than what many of the digital health solutions do out there. When I was running Livongo, I used to say United Healthcare, which is an incredible company, had people ask me, "Why don't they do what you do?" And I said, "Well, they could." And it's not that I didn't realize diabetes was a big deal, but this would be the ... They had 28 diabetes program, maybe 29 will be the right one.
Zane Burke:
Healthcare navigation simply is, they're just not organized to drive navigation, and almost every attempt to try to do that is really not been, really created the kind of experiences because they're just not organized to create that kind of experience where you put all the pieces together. In our world, what we do, we're taking that data, you have a centralized ... We use the data to drive the best next experiences, and if you want to do a digital experience only, that's great. But oftentimes, here it's healthcare, it requires a personal touch. In our world, you call the same people that know your benefits inside and out. They know, they have your data and information available. They're working in a group that has benefits people together, that has nurses together, the clinical side, the claims specialist, all those folks, where they're all in a tight situation where they can get the best course of action right there at that time. Payers are not organized in that fashion. And it just is a massive move for them to think about something different. They have a lot of other things on their plate.
Charles Rhyee:
Yeah. So Zane, you've been at Quantum now about a year and a half. How has the model evolved over that time since you've been there?
Zane Burke:
Well, what I saw when I got to Quantum Health was this incredible culture of do the right thing for the member. And doing the right thing for the member turns out creates better experiences, shocker, but also saves money and for our clients. That's not the primary focus of what our warriors, which is what we call out frontline people, our healthcare warriors. They literally are doing the warrior-ing on behalf of the member. But it turns out doing the right thing does save money, so that's great. But what I saw was all this amazing data. And we're using that data to create better experiences and create better outcomes for our members. But we really had to [inaudible 00:15:42] is weaponize that on behalf our clients to say, "Gosh. What are the best digital health solutions out there, for instance?"
Zane Burke:
We actually know. We actually know which ones have efficacy and which ones don't based off real data, based off our 2.7 million members. And how can we create a better experience for our clients who are looking at digital health solutions out there, whether that is creating better contracting vehicles, whether that's creating single reporting capabilities, whether that's making sure that people know what benefits they have when they need them? That's actually one of the key elements. Oftentimes, Charles, I'm sure this happens to you, happens to me, I sign up for my benefits once a year. I kind of forget exactly what I signed up for until I need to go to the physician or something happens to me. And we can't remember which digital health solution we have in those moments. Who's in the network? Who's not? Those are all things that we do naturally as part of our workflows. And so we can create better, more curated set of digital health solutions.
Zane Burke:
But I also saw there was an opportunity to be more flexible, and so we created a new solution called Access, which is really just a skinny down version of our complete solution to really allow for our larger clients to come in and enjoy the experience of a Quantum Health and get them on a journey towards a model that we know works. We know we have the best model as it relates to ROI, relates to the experiences and relates the the clinical outcomes. But oftentimes, the box was a little rigid, so we created a little more flexibility. And that's served us very well. So what you've seen is us going after the digital health solutions on behalf of our clients to make that simpler. Using the data, what I call to take on more of the hard stuff. So we're looking at: Can we take on full service lines like behavioral health, like musculoskeletal, like oncology. Oncology's the one that we publicly have put our first foot forward. We're working towards a couple of the other two. We've been fairly public about that, where we think we can do some things that are unique in taking on full service line activities.
Zane Burke:
And because we are not afraid to do what I call the hard stuff and get very dirty, not just do the digital piece, it really lends itself to where all the money is in the marketplace. And what I mean the money, the cost side and the poor experiences are really in the complexity of healthcare. And that's where we really aim the company over the last 18 months.
Charles Rhyee:
I'd like to get back to the oncology part in a second. But before we move on, because you're talking about what I think makes a lot of sense, which is ... It's even to your point, I did my open enrollment a few months back. And my wife is taking my kids to get braces. And it's like, "Is this covered?" I'm like, "I know we got something." And I've been spending the last couple days checking for it. It's like, "Yeah, we got ... Part of it's covered at least." And it kind of jives a little bit. Right? I think you guys put out a study or you sponsored a study not too long ago that showed something like 67% of employees navigate the healthcare system without expert help. Right? So that means employees aren't getting access to resources to help them make any kind of quality decision about the care received. Why is this still the case, you think?
Zane Burke:
Well, again, because we're not consumers of healthcare, we consume the healthcare so we can do everything else. And you just think about how the models are put together, and that's not because the HR department's not effective. Right? They oftentimes, they've been very thoughtful about: What is the best benefit package I can put together for our employees? And then how do I look at the cost benefit trade-offs of that? Be very thoughtful about those elements. And I know and I can assure having sold into CHROs and benefit teams for the last four or five years, it's super thoughtful process. The challenge is until we have that need as people, we're not going to engage in that. And it's also where we are, uniquely positioned in the life flow of the member. If you make that call, Charles, in our world, that gives us an opportunity to say, "Yes, this person is in network. These are the out of pocket costs to you."
Zane Burke:
If maybe you were looking for a new clinician, hey, I see that your wife takes your kids to school here. Here's a couple opportunities to be closer to home, to be in network, et cetera. But oftentimes, answering those questions upfront around the benefit side allows us to build trust to talk to them about some other things that you might not otherwise be as engaged in or willing to accept an outbound call. And I think that's one of the things that's super unique about our ability to engage. And we engage with almost 90% engagement of households on an annual basis, which is just super amazing, gives us a unique opportunity to create trust. Most of it starts around: Is this a covered benefit?
Charles Rhyee:
Yeah. I mean, it sounds like you're really trying to bring this kind of comprehensive experience for the members. When you speak with clients, how important is it for your clients to have this kind of comprehensive kind of that brings all the benefits together?
Zane Burke:
It's super important. In fact, it's becoming a must have. There's some McKinsey studies out there that have shown that many, 70% of employers are going to look, over 70% of employers are going to be looking at navigation over the next 24 months as one of those elements. I had the pleasure to be on stage with the president of the National Business Group on Health. And she literally said, "We have to have something like Quantum Health or navigation to really create the kind of centerpiece for our benefit plan designs because all the benefits we accrued together, whether they're digital health pieces, whether they're narrow networks, all sorts of things in that design. It only matters if I can get it to where it's in the life flow of the member." And that's where we're kind of super uniquely position on a go forward basis.
Charles Rhyee:
You talk about positioning to the life flow of the member. How do you ensure that those benefits are utilized? Maybe talk about sort of your position sort of as a digital front door kind of to direct patients to the right services. How do you ensure that that's effective?
Zane Burke:
Well, we do it in multiple ways. First off, you mentioned the digital front door piece of it. We start digitally, so if you engage with us digitally, you can quickly and easily see what your benefits are. You can understand that if you type in A1C, it might pull up and say, "Omada is part of your opportunity," if you have the right qualifications, et cetera. So we use a lot of ... We've invested a ton into technology since I've joined. We're continuing to invest on that side. We've created a great experience to really make it seamless from the digital all the way through to the person side. And what in that design piece, kind of the crux of this, is I think about every other call center experience I have, and I think this is what I do not want to have. I don't want to have the member have to re-explain their situation every single time.
Zane Burke:
And you think about every other call center experience you have in life out there today. Literally, you get to re-explain your situation to the next person or to the next thing. Where you probably logged in to check something out online, I want, the way we've designed the solution, literally it will say if you've typed in A1C, and let's just say you click right then, I want to talk to a representative, it's going to ... My rep's going to literally pull that up and say, "Charles, I can see you've typed A1C. Is there a reason you're concerned about your blood sugar? Or I can see your blood sugar has got your ... Your A1C has been out of control lately, et cetera. Did you know you have access to this solution in your benefit plan? Do you need help with scheduling at your primary care physician?" Which we will take on some of those things around scheduling.
Zane Burke:
We'll take some things on around the social aspects of this. Do you have access to the right food? All those kinds of conversations, our warriors are ready to take, all the way from the digital front door, the simplest types of things, all the way through to the personal interaction and we're contextually aware of everything you've touched along the way. So it's a different design to create a different kind of experience and outcome on the backside. And so that's some of the technology investment we've been making since I joined as part of the Quantum team.
Charles Rhyee:
And maybe just to follow up there, I think sometimes people look at these high touch model, great service, but I think sometimes people ask, "Is this scalable?" Maybe talk about how you make it scalable.
Zane Burke:
Well, you make it scalable with the combination of the right technology pieces. So we utilize technology so that people can literally engage at the highest set of their capabilities. Obviously, often in our business you'll say, "Top of their licensure." But I think it's really the top of their capabilities. Oftentimes, people want to just see what their benefits are. They can do that electronically, et cetera. But if they want somebody to ask that question, we have that scaled to do that. And so you think about how we staff, first off, we get the technology so we get that right, so people can do self-service how they want to. If they don't want to do self-service, that's fine. We're going to have the person that has ... We're going to match the skillset of the question to the pay variant of that. And we've created a scalable model with what we call our pod system. And that's the personal service representatives, that's the benefit specialists, that's the access to the nurses and the docs. And we have a scalable model around that.
Zane Burke:
So if you think about our business today, we've been EBITDA positive for the past most all our time, almost from inception of the company. We've had great growth and been able to make it a scalable level. And the way that we continue to drive higher gross margins and EBITDA positive is really around the technology and having the pods staffed at the right levels to the skillsets, and we do a significant amount of training. And we do a significant amount of upfront elements around the hiring of our warrior pods to really make sure we got the right people engaged and have the right tools at their disposal. And so it can be profitable. It is profitable, we're proof of it. And it is scalable, even in a ... We're not immune to inflation. And we've been able to absorb those kind of wage inflation elements, and at the same time use the technology side to offset many of the inflationary sides of this.
Charles Rhyee:
That's pretty impressive. You talked before, I mean, these HR departments, by and large, very thoughtful group of people because they're really trying to do right by their employees. Right? And so they are adding solutions that they think are needed, right now, behavioral health is a big focus for many people. So you're adding this and you're adding that. And if you think about your role to help provide, to navigate that employee when they need it to the right place. As you've been watching this, do you think digital health has made a difference here? Are employers really seeing an ROI on some of these solutions?
Zane Burke:
Definitely believe digital health has made a difference here. There's no doubt that digital health has made a significant impact on ROI and on the experiential side of this. I do think that CFOs are going to get stronger, are stronger and getting stronger. And ROI is a critical component on a go forward basis. And during the pandemic, behavioral health is still a big challenge, but during the pandemic, it was literally I'm going to get any kind of tool necessary and buy it because that's what we're going to do.
Zane Burke:
In this world coming out of the pandemic time period, people are going to evaluate and say, "Gosh. Did I really get all the value? Did I accumulate a set of solutions that make sense on a go forward basis?" And I think there's going to be some curation as part of that dynamic. I know I would just say if you're not driving ROI, it's going to be tough sledding on a go forward basis. And it needs to be hard, it can't just be soft. Although, the HR groups are going to give you a lot of value for creating a different kind of experience for their members on the softer side. The CFO is going to look for the hard ROI.
Charles Rhyee:
Yeah, I could imagine. When we think of ROI though, obviously, a lot of these are investments upfront. Given the current macro environment, we're obviously hearing differing expectations around the demand for digital health. What are you hearing from clients? What's some of the biggest pain points they're asking you to help them address?
Zane Burke:
We had our best year ever last year, so I always feel a little awkward when people say, "It's a troubling environment." And it is, again, we're not immune to inflation in interest rates, and our clients are not immune to inflation or interest rates. I think what you're seeing is though is: How do I make an impact across my employee base? Versus the point solution piece, which is kind of where we were during the pandemic and a little bit prior to that, which is I'm going to go after diabetes, I'm going to go after cardiovascular, I'm going to go after MSK. I think you're seeing a much more holistic view of this, which is from the buyer perspective, just simplify this. Tell me what the answer is. Which ones of these work? Which ones don't work? How do I know it's bulletproof? Because if I go all in, this means every person is going to be impacted by this solution set, which is different than the digital health starter days.
Zane Burke:
If you think about diabetes where I came from, there had been a challenging condition that had never been well managed, had never had great experiences. And so if you're an HR buyer, just the thought that you might be able to create a different kind of experience and different kind of financial outcome, I'll take a chance on that. That was 8% of your population. So if it didn't work out, well, it only impacted 8% of the population anyway, which they were being treated pretty poorly to start with. What I would say about in the world order today is with 11,000 different point solutions and vendors coming at these HR providers, they're looking for simplification. How do I know that I have a tried and true product here? How do I know that my members are going to be treated to the best experiences possible? And then how am I going to answer my CFO that I'm getting an ROI? That's where the market is and that's what they're looking for. And that's what all of us in digital health really have to figure out how to make that happen.
Charles Rhyee:
Yeah. I mean, it sounds like what you're saying, it seems pretty consistent with some of the things we've heard. Right? It's maybe fatigue of all these different point solutions and a desire to simplify down to looking at more platforms or whatever that ... It's obviously a big term.
Zane Burke:
Whatever that magic term is.
Charles Rhyee:
Right, yeah, exactly. But in other words, try to consolidate as many solutions onto a single type of platform so that they're dealing with less people, but at least getting as much of these services as they were before. It sounds [inaudible 00:33:49], and I would imagine it kind of fits right into your wheelhouse.
Zane Burke:
It's why I'm here. This is what I saw. I see this as a ... And again, that term gets used fairly liberally, so I'm almost hesitant to use it. But I literally see navigation done properly as a platform by which to deliver the best care and experiences at the right time. And it becomes a necessity as we move forward, and that's really how I see navigation on a go forward basis. How do you create these higher, better engagement? How do you get the value out of the investments you've made? What's the experience that you have as part of that? And then it's got to be about clinical and financial outcomes on the backside. And using all the data in the right way, with all the stakeholders, providers, plan sponsors, and members together, understanding that each one of those has a different motivator. And understanding those motivations, how do you bring that together in a platform where you make sense for everybody? And that's what I'm so excited about from an opportunity perspective.
Charles Rhyee:
And here, I'd like to come back to, you talked about earlier that there are certain service lines that you feel like you want to get in yourself. Right? Talked about ... I know you guys recently announced an expansion in your behavioral health offering. You talked about oncology a little bit earlier, specialty care. Can you go a little bit into that? And how does that differ from what maybe you're normally doing as a navigation kind of solution for employers?
Zane Burke:
Well, let's talk about all these point solutions. What the industry has historically done is say, "We'll connect to these digital health solutions," and there's value in that. And we're going to continue to do that. We'll continue to connect with anyone and everyone because it's the right thing to do. But there really needs to be a bit more of a curation, and that's when we launched our preferred partner program to say, "We know these solutions work based off the data. And we'll provide a set of standard reports to the clients." If you agree to this preferred set, we'll share the APIs with each other. We'll share the data. We're create consolidated reporting.
Zane Burke:
You can understand which piece of ROI comes from Quantum Health, which piece of the ROI comes from fill in the blank, NSK provider or today, we have partnerships with Hinge or behavioral health solutions, or otherwise, and really create that curated set of solutions that our members will known understand. And we can create the kind of workflow I spoke about earlier around the experience feeling seamless to the member because the member doesn't want to have to know if we've got Omada, Livongo, Verda, fill in the blank. The member doesn't really want to know that. They just want to know, I want to take care of my diabetes. I want to know as much as my friends at Hinge or Sword would want to say. They're so unique except different.
Zane Burke:
What the member wants to know is: What's in my plan and how do I get access to it? And they might not even know. In a preferred marketplace, it's really created a kind of integration that creates that single experience, both for clients and members at the end of the day. And what I would say in ours, and this is the aspirational side, so this would be to be more on to delivered. How about we give the provider a little something? Because the provider has zero insight into the benefits allowed. So even just simple cues like coming back to the provider to let them know that this patient is eligible for some conservative care capabilities as well. A provider often doesn't know that. In fact, they rarely know what the benefit plans are of their patients. And so how can we provide some different information?
Zane Burke:
Gosh, what if we could actually close real gaps in care? God forbid we really do that and provide a little information back. That's something digital health companies have been reticent to really engage with is on the provider side. That's something we will be doing on a go forward basis. We are doing it a little bit today, not to my aspirational views. We take it to a further place, which is really our premier partnerships. How do we get serious about taking on a full service line like oncology I mentioned? We have a great working relationship with a second opinion provider today in our preferred network. How do we create the right kind of centers of excellence? How do we know when it's the right ... How do we help advise when it's the right time to stay in the community? How do we advise when it's the right time to actually go to a center of excellence for cancer? How do we think about palliative care versus aggressive treatment? And really think about the experiential side of that on a go forward basis.
Zane Burke:
There's a lot of complexities there. I think those are really in many of ... Think about oncology is one of the scariest journeys that you can possibly be on. And it's up to oftentimes the patient to figure these things out on their own. What we're really contemplating here is: How do we do a carve out entirely on the service line elements and put together the best attributes of digital health married with an oncology centric navigation solution, thoughtful use of community services, and appropriate use of centers of excellence, whether those are centers of excellence on additional, such as a Carrum or a Surgery Plus, or whether that is the centers of excellence around a City of Hope and a Sloan Kettering. Those are the kinds of things that need to be very thoughtfully thought forward and looking at a total view. And that's when we talk about taking on these big service lines, we really mean the whole shooting match from a service line perspective to create a different kind of experience, a different kind of outcome. What kind of connections do the family members need as part of that?
Zane Burke:
Because oftentimes, it's the scariness and the family members are taking care of the person that's in these tough situations. So we're literally thinking about kind of the Nth degree. What's the best experiential side that will deliver the right kind of clinical outcomes? And our belief is it'll also drive a better ROI. But that's actually to be proven. We're starting with what's the best experience side of this, given that dynamic.
Charles Rhyee:
When you think that through and you start taking on more of this experience plus really driving towards this idea of outcomes, it really smacks into that idea of value based care and taking risk. You don't typically think of a lot of digital health companies as risk based kind of organizations. Is this something that if you follow this path and you kind of think logically through, extrapolate it out, is that what you could see Quantum heading towards? And how would that kind of risk sharing work? Because providers are still the ones delivering the clinical care. Not to jump the gun a little bit too much, but at a high level, how would you think about it? Or am I sort of on the right path, I guess?
Zane Burke:
You're absolutely on the right path. We're seeing more, I'll say acceptance of some risk sharing out there. Although, I think risk sharing is a fascinating dynamic in our core navigation space. We have about a little over 10% of our revenues are at risk today. I would think as you go to more of a premier service line like an oncology, we'd anticipate that something more like 50% of the revenues are at risk in that dynamic. And so we have thought about some of the models in that scenario, and you really literally elongating out how that works and figuring out who should accept risk and who should have a fee for service along the way, and putting together those dynamics. Everybody needs alignment on the journey.
Zane Burke:
I think clients are ... It's fascinating. Quantum Health actually started as a fully at risk model back in the day around navigation. And you already know what happened, Charles. We proved the value and then all of a sudden people will say, "We don't really love paying the upside piece of that." And also, CFOs don't love unpredictability. So oftentimes, it's hard to budget for some of those kinds of things. So what we've found in our core business is this balance on monthly fees versus fees at risk that seem to work effectively. I think when you do the carve out piece, my anticipation is we'll have much more at risk around that than our book of business, although it's kind of uncharted territory for us. And so we're not uncomfortable with that thought process, but we recognize it too will be a journey.
Zane Burke:
My view is once we prove the value and understand the models, et cetera, that it'll probably come back a little closer to the mean, much like our navigation business, which is less at risk truly, and more on a monthly basis because of the predictability elements of this. And it interestingly serves all the parties very well at the end of the day, but that's going to be more of a journey that we're going to be on.
Charles Rhyee:
Yeah. I see. Maybe before we kind of wrap up here, just because we're talking about oncology, and the fact that you're really helping members understand and be able to access the benefits when they need it. The population that jumps out at me is Medicare. Right? You have seniors who are obviously more often than not, on a healthcare journey constantly. And it's sort of the fact as we age, and it becomes more complex for them. Right? Obviously, MA has been great for our seniors. Do you see a role for you guys within the Medicare market to further kind of support that?
Zane Burke:
Well, we do. Today, we sell primarily to self insured employers and that's about a $12 billion TAM. We have made investments to go after other verticals, government, health plans, which adds another $12 billion or so plus to the TAM. But Medicare Advantage and Medicare, and frankly, Medicaid, fit our vision. We adjust our vision to be adjust for no one should navigate their healthcare journey alone. Our vision doesn't say, "Only self insured employees, members of self insured employees should not navigate their healthcare journey alone." Our vision is no one should navigate their healthcare journey alone. And we fundamentally believe there are business models for each one of these elements. Medicare Advantage, we have done some significant work around that. The experiential side, we match up incredibly well on the stars piece of this.
Zane Burke:
So when I think about the HCAPs and really impacting stars from an HCAP perspective, we have the opportunity to do some unique things. And so we're in some early conversations around that, we're excited about the future of this. We're just barely touching this marketplace. We're at less than 10% of our core marketplace today. We've added the capabilities around going after the government and plan side. Medicare Advantage is yet another realm which we are anxious to engage in. And we're having some early conversations and we've done the work to say, "This is how we match and this is how we can impact your HCAPs." And so you're absolutely right, Charles. Every person should have this. It gets more complex as we age, unfortunately. And we believe there are business models for kind of everyone at the end of the day.
Charles Rhyee:
Maybe just to close out, what's next for Quantum? What should we be looking out for over the next six to 12 months, any kind of big road markers that you'd want to kind of flag for us to keep an eye out?
Zane Burke:
I think you'll see progress on the future state pieces of this. I think you'll continue to see us execute and grow in our core self insured employer marketplace. You're seeing us execute on our additional market space. We just went live with our first state government here in the last month. Our progress we've made around the jumbo market has been pretty significant with some very large employers and the go lives on that side. And so we continue to focus there. But I think looking for that next space around the launch of our oncology solution, which I think you'll see that come out here in the next 12 months, followed closely by musculoskeletal and behavioral. And then we're going to continue to add to our preferred partner ecosystem, such that we continue to grow the capabilities and make it simpler for our clients every day to have a curated single experience across their member profile, and so look for more of those. It's a very, very busy and active time at Quantum Health.
Charles Rhyee:
It certainly sounds like it, sounds very exciting. So Zane, as always, it's great to catch up and really happy to have you join us to provide your thoughts here today.
Zane Burke:
Appreciate it, Charles, great to see you.
Charles Rhyee:
Thanks for joining us, and thanks, everyone, for tuning in on this episode. And we look forward to having you join us in future podcasts.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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