Agilon Health: US Physician Enablement Market Dynamics

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Did the physicians they hired between 2018 and 2019 differ significantly from those they brought on in 2021 and 2022? I'm trying to understand if there's a reason to think that, because they are a relatively young company and didn't hire many physicians in their early days compared to recently, the general performance has worsened. I'm trying to figure out if it's merely environmental or if it could be due to hiring different physicians or something else.

Think about it this way. You could bring on a medical group in a market, say, 50 physicians, who have been a medical group and performed well in a market for a long time, all employed. Your initial relationship in a market might be with that medical group, and because it's a group with some experience and longevity, all the things we've talked about that are markers of higher performance, that first cohort is going to perform pretty well. But then, they look for other opportunities to grow that market with other relationships. Maybe the next one they bring in is a large IPA. Generally, the IPA is not going to perform as well. It doesn't have the leadership structure or the infrastructure. So, that second cohort comes in and performs a lot worse. I think that's what's happening with these guys. They're bringing in different types of organizations into a market, and then they're giving you a medical margin number for that market. The first cohort does well, the second cohort does horribly. It looks like the market is doing worse rather than better. The trick for them is trying to figure out how to bring in cohorts that are performing well to begin with.

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