Announced a dedicated public sector group - another step forward in streamlining care delivery
TSX: WELL | CAD 4.01 | Outperform | Price Target CAD 5.50
Sentiment: Positive
Our view: This morning, WELL announced the creation of a dedicated public sector group to help public health systems and related large enterprises with technology enablement. We view this news positively as this should further solidify WELL's dominant position in the CDN market and more importantly, aid in the digitization and modernization of healthcare systems in Canada. A recently published paper by CMAJ noted that the primary care attachment rate of ~83% in Canada is the lowest among 11 OECD countries. The paper highlighted that countries where physicians have “excellent digital tools and information systems” have high rates of attachment. We believe the lack of digitization has weighed on physician efficiency in Canada as the number of weekly hours worked by GPs rose ~10% between 2019 and 2022 but the number of patients seen declined 10%, as per CIHI. We think WELL's leading provider-centric technology platform could aid in improving efficiency of the healthcare system in Canada and that should ultimately drive improved patient outcomes. Please see our recent initiation report (here) for more details on our positive thesis on WELL Health.
Creation of a dedicated public sector group: WELL announced the creation of a dedicated public sector group to help public health systems and related large enterprises operating at scale with technology enablement. WELL has a broad public sector product offering which includes both technology and care providers, a robust virtual care delivery platform and provider productivity applications (including eReferral, eConsult, eOrder, Online Patient Booking, Waiting Room Automation, AI-enabled ambient scribe, Clinical Decision Support, and Inbox solutions among several others). The company has appointed Shane Sabatino, WELL's CPO as Head of Public Sector Partnerships, who will closely work with WELL's COO, Amir Javidan, who oversees the public sector division to deliver for public health authorities.
Need for digitization and modernization of healthcare systems in Canada: As highlighted in our recent initiation report on WELL Health (here), the digitization of CDN medical practices remains well below international averages. A recently published paper by the Canadian Medical Association Journal (CMAJ) has noted that the primary care attachment rate of ~83% in Canada is the lowest among 11 OECD countries. Key relevant points highlighted in the paper noted that: (i) Canada spends less of its total health budget on primary care than the average among OECD countries (5.3% vs. 8.1%); (ii) a greater burden is placed on general practitioners (GPs) due to a low total physician/100k population ratio; and (iii) countries where physicians have “excellent digital tools and information systems” have high rates of attachment. Unfortunately, we believe this underinvestment has weighed on physician efficiency, and according to the CIHI, the number of weekly hours worked by GPs rose ~10% between 2019 and 2022 but the number of patients seen declined 10%. In our view, this is directly tied to the proportion of a GP’s time spent on administrative tasks (40%) vs. seeing patients (60%) and underscores the 57% of GPs who “are not at all satisfied with the time spent on administrative work.” We believe this environment is ideally suited to WELL, which can leverage health-tech capabilities and improve efficiencies, to increase Canada’s poor primary care attachment rate and ultimately patient outcomes. "Modernized Health System" is also one of the four key investment pillars in the announced $46.2B federal commitment into the provincial healthcare systems.
Recent contract win to empower providers with digital interoperability tools: In August 2023, WELL's subsidiary OceanMD entered into a five-year $38.5MM contract with British Columbia’s Provincial Health Services Authority (PHSA) to provide an array of digital services, such as eReferrals, eConsults, and eOrders to help further empower providers with digital interoperability tools. Prior to the BC contract, the Ocean Platform supported almost ~1MM eReferrals and eConsults annually. In Ontario, the implementation of OceanMD’s platform resulted in a 12% reduction in medically unnecessary MRIs, highlighting the importance of such systems to improve efficiency and reduce costs.