Monday, September 26, 2022

Babylon Disrupted the UK’s Health System. Then It Left

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Rideout says about 7,000 patients had signed up to the RWT service. “It’s just not generating sufficient funds for us to be able to justify the expenditure or system integration the trust wants us to do,” Rideout says. “We just couldn’t afford to continue to invest.”

The transition to a new provider won’t impact patient care, RWT stresses, and Babylon will continue to support the trust until it finds a new provider as well as cover the costs of transferring the service, Rideout says. “It’s not as if we’re cutting and running,” he says.

Cost cutting has led the company to reconsider the profitability of all of its contracts as it expands its operations in the US, Parsa noted in a recent results call with analysts. “Those two or three small NHS contracts that you refer to—and those are not our significant primary-care contracts— those are marginal contracts for us, more in that category of contracts where we could not see a significant contribution to our profit margin,” he said. “And they also had a rather small contribution to our revenue. And therefore we saw them as a distraction and terminated those contracts.”

GP at Hand also isn’t making money, but is seen by Babylon as core to its business in the UK. In 2016, Babylon took over a GP office in Fulham, London, to run as a digital-led practice, sparking concerns that it was favoring younger, easier-to-treat patients and had too many people on its books—it recently topped 115,000 patients, when a standard GP is less than a tenth of the size. The new model meant Londoners from across much of the city could sign up, rather than stay with a local GP, sparking that £22-million shortfall in the budget of the local West London health authority.

Babylon is retaining GP at Hand, though it’s not making a profit. In the NHS, GP practices are run as private businesses and doled out a flat fee per patient that works out to an average £155 per capita annually. Rideout claimed that GP at Hand patients have six appointments per year versus an average three for patients with standard GPs; however, the Royal College of GPs suggests patients actually see their GP an average seven times a year.

GP at Hand states that its system reduces secondary care visits, such as to hospitals. However, Rideout says Babylon doesn’t earn the benefit of those cost reductions—which is true for other efficient GP practices—and also doesn’t qualify a specific type of funding related to reimbursement for premises.

That adds up to an operating loss for GP at Hand, and until that situation changes, the practice will shut its Birmingham branches, which treat 5,000 patients, and not expand further. “We’re fully invested and committed to maintaining GP at Hand, and we’re continuing to work with the NHS to try and change the way that they fund it so it’s more viable,” Rideout says. “Internally, we’re working to make sure we’re as efficient as we can possibly be, and once we get to a place where it breaks even, then we’ll start to expand.”

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