Evolent Health, Inc. (EVH) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Evolent Investor Day. I'd like to welcome to the stage, Seth Frank, Vice President of Investor Relations.

I'll stand back here. If anyone has questions about the non-GAAP measures or definitions contained in today's presentation, please see the back of the presentation. And with that, I'm going to introduce Evolent's CEO, Seth Blackley.

All right. Welcome. We are glad you're here, just orient you right across the street is the Evolent worldwide headquarters. And you're here in D.C., it's 70 degrees, no humidity. It's a very typical summer DC day. If you're not from D.C., this is exactly what it's like all summer, so come see us. We started Evolent 12 years ago, and the future really has never been brighter for the company. And I think we have a fantastic morning put together, and I want to dive into the agenda and orient you the overview for the day. So I'm going to spend about 15 minutes going through briefly what Evolent does and how we create value for our shareholders, for our customers, for our employees and for our patients. I'll then turn it over to Dan McCarthy, our President, who will go deep into our focused strategy around value-based specialty care. After that, we're going to go deep across a number of spotlights around customers, value proposition and our underlying infrastructure and technology. I'm thrilled you'll then get to hear from Kali Beyah, who is our Chief People and Brand Officer about why talent is a differentiator for the company. And of course, we'll finish with John and a deep dive into the numbers. Certainly, save time for Q&A at the end as well. So let me just start by orienting you to Evolent, what we do and how we do it for those of you particularly who may be new to the business. If you think about who our customers are in the bottom right, health plans and risk-bearing providers. What we do for them is help lower cost and improve quality for patients with complex conditions. So think about cancer, think about cardiology, musculoskeletal and the like. Our users, our doctors, these are oncologists, cardiologists, orthopods and the like. And at the top, last but not least, certainly, our motivation is the patient. Our mission is about patient and increasingly, we're doing more to engage with the patient. And you certainly can see on the right-hand side of the page, an overview of the types of organizations we work with, they're going to be both health plans but also organizations that are in the kind of risk-bearing provider category. I do want to take a second just to give a little bit of history on Evolent for those of you who are again new to the story. If you think about 2011, we founded the company, the early days of Evolent, our customer base was actually the provider community. We built a lot of experience working directly with providers. That is in our DNA. One of the big themes you're going to hear today is about how we influence physicians. Not telling them what to do, we're not telling them no, but influencing their care. Think of it as a B2B second opinion service in a lot of ways, how do we influence their care to make the care better for the patient and cheaper for the plan. And we built a lot of that DNA in the early years of Evolent. In the middle -- 2017, 2018, 2019, Evolent really began to focus on value-based specialty care. I'd say we learned 2 things during that time period. One is that we had a unique ability to influence specialists through the New Century asset, but a lot of the other things that we did in our DNA, we had a real ability to make change happen, change the way health care was delivered. Second thing we noticed is that if you're a payer, you had a lot of options for risk-bearing primary care, right? They are great companies like Oak Street, like Agilon, like Aledade that began to crop up during that period. And I think we saw a huge opening in what I would call value-based specialty care, right? And both because I think there weren't as many options for payers, it's a huge problem, and primary care is necessary but not sufficient, right? So we spend a lot of time, 2018, 2019, 2020. We had new team and many of the people you're going to meet today in seat for a lot of the opportunities. But I'd say more importantly, we've really focused our strategy, our capital, everything we did around value-based specialty care. And I'm excited today, we, in some ways, are unveiling the next chapter of Evolent. One that we've been talking about, you've heard about it, think about it as value-based specialty care. But we also have a logo, as you can see here on the bottom right-hand side of the page that is meant to symbolically identify the next chapter for Evolent. We'll talk about that logo in a second. Interestingly, at the bottom, our mission hasn't changed. It won't change, it's going to remain the same through all of this. So just a moment on the logo. You saw it probably when you walked in today. This is our new logo. You're going to see this going forward. The wave is really about a pathway to better health for patients. And if you look at the tagline at the bottom, specializing is obviously a reference to our product. And Connected Care is because our mission is making health care less siloed and making it more connected. When you hear from our customers today, when you hear from Dan, you hear from Dr. Hertler and others, listen for the connection. The connection should be throughout everything we do. And I think it's one of the things that differentiates our product. So again, just a couple of numbers here to kick us off, everyone at a glance, we're roughly $2 billion of revenue. We've been growing quickly. We're strongly profitable, strong renewal rates, which, to me, matters because it means your customers like what you're doing, they want to do more with you. We have a huge TAM, $150 billion, but I think interestingly, we have a $50 billion cross-sell opportunity, which you've seen that number. 5,000 employees, you're going to hear from Kali about why those people are special, 300 of them are physicians. 1,100 others are licensed clinicians, 1,400 clinicians out of 5,000. It's a heavily clinical organization. You think about the consistent operating priorities that we've hit over and over again, may have even bored you with each earnings call, every investor interaction, every decision we make goes through the lens of these 3 operating priorities. Let me just hit those quickly because I think they're core to our investment case. Strong organic growth. It is a very big market with a $50 billion cross-sell. We are less than 5% penetrated and we have, we think, a differentiated product that is winning, that formula is powerful. Expanding margins, I think here, we have a track record, thanks to the team and all the work you've seen us do around executing on margin expansion. We also have a balance between our tech and services portfolio, those that are higher-margin products that are more subscription-based, with our performance suite. It gives us an ability to grow quickly and deliver margins. And then finally, capital-efficient business. We have a strong cash flow profile. We're going to release some more information today about what that's going to look like over time and we're clearly very focused on deleveraging in the short and medium term. Just a moment on the product, just to tee us up, make sure everybody's oriented with the product. You think about what we do, we really focus on 4 specialties at the top, oncology, cardiology, musculoskeletal and complex care. We have these 3 cross-cutting capabilities of advanced care planning and end of life, radiology and genetic testing. And at the bottom, underpinned by our technology and administrative platform, I want to take just a second to connect the past to the future. If you think about Evolent Care Partners is a term you've heard from us. That was really on the primary care side. That is the dark blue box on the top right. You'll hear about that as Complex Care going forward. It really is like another specialty when you think about it. And because of the way we're running the business now in an integrated fashion, you're going to hear about it more in this fashion versus as a separate Evolent Care Partners, still a crucial part to our future. And at the bottom, if you remember, Evolent Health Services, you're going to hear about that as our administrative and technology platform. Yes, we still have some customers and we'll have customers that do that kind of work that we've done. But as you'll hear today, increasingly, that platform is really supporting our specialty strategy. So this is how you're going to see our product laid out going forward and we're really excited about it. I'd make one note on the ability to successfully integrate M&A, which we've done over the last few years with lower risk. In my opinion, part of that is because we've had the box at the bottom, which was our former EHS business, a lot of glue, a lot of talent, a lot of capability that's allowed us to tie this together. From Dan, you're going to hear a lot about our differentiation, why do you win as a company? It is a breadth and depth of this product. It is that we are trusted and we're independent, and we are willing to guarantee results. That's pretty unique in the marketplace and Dan and the team will talk a lot about that. Quickly, our growth formula, our growth algorithm. Why do we have so much confidence in the ability to grow over time? Today on the left, there are 4 ways we can grow. On the left, we can add unique customers, partners. We have 73 of those to them today. There are obviously several hundred opportunities in the market. There's a lot of running room there, and unique new logos, if you will. Second, we can add unique members. We have 41 million today. There's a possible opportunity in the U.S. of roughly 300 million that we view as our target opportunity. So running room there. 1.6 products on the PMPM side. There are 6 total products that we have on the PMPM side. We are 1.6 out of 6 penetrated there. That multiplies together to create your unique -- your product members of 66 million. When you think about the total number of product members, possible, it's about 1.8 billion. It's the 300 million times the 6 products on the PMPM side. So we are penetrated 66 million out of 1.8 billion. Obviously, a bit of running room left there. And then not to leave them out, but we have 2 case rate products, right? And we have about 15,400 cases in Q1. We'll talk about that a little bit different than our PMPM products, but not to leave those out. We can also add those that will be formally known as IPG as an example. And fourth and finally, we -- on top of all that, we can add Performance Suite. Only about 5% of our product members are in the Performance Suite today. We obviously added 2 states with Humana recently that are very significant. That's an example of that kind of addition that can add significantly to our growth. Across all those things, you're going to hear a lot of confidence today about long-term sustainable growth. Margins, let me just orient you here. John will have a lot more detail later. If you think about the 2 basic ways that we make money in the business, at the top of the page, the Performance Suite is a more of a risk-based capitation model that has mature margins, 12% to 18%. That is about 25% of the company's profitability today. It's about half the revenue, about 25% of the profitability. It's still maturing as we'll talk about. On the bottom part of the page, our technology services and case rate products, these are subscription-based. These have mature margins in the, say, 50% range as 75% of our profitability today, about half of our revenue, as John will talk about, this should orient you well to the day, but really kind of keep these 2 categories in mind. Going forward, you're going to see us sunset the brands on the left. So you're not going to hear us talk about Vital or IPG or some of the names that you've heard in the past. Going forward, we are Evolent. We are one integrated product, one integrated solution. I think that's really important for our customers, right? They want to buy an integrated product. They're going to -- we're going to show up as an integrated organization. It's important for marketing. It's important for brand investment. But what is really important for my opinion is on the right-hand side of the page, where we have gone from a business unit management methodology to an integrated methodology over the last 6 months. Dan and the team will talk a lot more about this, but it's allowed a lot of scale in terms of shared capabilities. So if we're going to invest in machine learning or AI, we're going to do it once. We're going to spread it across all of our products. If we're going to have a team, we're going to have the best team possible, they're going to manage all of the functions around that particular software, one team. And I think we've already seen a lot of efficiency from this. But interestingly -- and it will help us make more money. But interestingly, I'm a believer that as things become more lean, often they become more nimble. We can move faster. We can actually innovate more quickly, and I think you're going to hear about that today. Finally, I just want to take a second on the team. A lot of the feedback and asking you all what you want to hear from today, most people say, I don't want to hear from you, Seth. I want to hear from the team. I didn't take that personally, but you are right to ask because there are a lot of really talented people in this organization. We have a deep and broad bench of talent. You can see here a number of the people that are in the senior leadership team, many of whom you're going to hear from today. I want to take one second to just introduce each of the people you will hear from today, Dan McCarthy, our President. Dan has been running our New Century business since 2019. That business has done pretty well. I give you a sense of Dan's leadership there and he's taken on a much bigger role over the last year. John, everybody knows and has done a fantastic job running finance and a lot of other things of the company. Kali Beyah, ran talent for Delta Airlines and decided she wanted to spend time in health care for a whole host of reasons. When you think about scale and growing this business, the experience at a place like Delta Airlines brings a different level of understanding of scale, thrilled that she wanted to join us. She's been here for 8 months. She's been unbelievable. And you're going to hear some nice things today about how we use talent as a differentiator. Dr. Andrew Hertler, 30 years as a practicing oncologist, ran in oncology group. So he's been on the front lines, has been in a position to actually work with a whole group of oncologists and then certainly been our Chief Medical Officer for, I think, close to 5 years now and has incredible depth one of the world's experts on the topics you'll hear from today. Jordan Silvergleid, Chief Product Officer, you'll hear from today, Jordan and I worked together first 20 years ago. Jordan has a career in marine product with outcomes for customers and through the advisory Board company and now been at Evolent for a long time. Scott Pritchard, clinical background, spent time at McKinsey, has been Evolent for close to a decade, a really important part of the success we've had, and you'll hear from he and Emily Rafferty. Emily has very, very deep operational expertise, new role in Chief Operating Officer of the company, and I think you'll be impressed with what you hear today. And then Dr. John Tam, our Chief Strategy Officer, has been here since the beginning. So you're going to hear a lot of interesting things for the team. You can see the scores on the right. This team has been together, and we are committed to playing for the long term, and we're going to continue to, I think, drive a lot of success. In terms of outlook, as my last slide, and I'm going to pass it to Dan. Nothing new at the top. You understand what the outlook is for the year. We're reiterating that. We feel very confident in that, in the middle. Also numbers you've seen before, numbers we feel confident in that we're reiterating today. We'll go into detail on. And at the bottom, we are introducing a couple of new metrics today in terms of what I would think of as a sustainable consistent long-term numbers that we can put up, kind of after reaching that $300 million profitability level, mid-teens growth plus-plus. Everybody asks, what does plus-plus mean. That means that 15% is a floor for us. Some years will be significantly higher, and the performance suite dynamic plays into that, and we'll talk about that today. And then we feel really confident in sustainably growing the EBITDA line after we hit that $300 million, and certainly, we'll grow a lot faster than that on EBITDA in the next several years, but in the long term at 20% plus. Excited about these numbers, feel good about them, and I'm really thrilled you're going to get to hear from the team. So with that, I'm going to pass it to Dan McCarthy.

Thank you, Seth, and good morning, everyone. I'm excited to discuss the immense opportunity we have in value-based specialty care. We stand here today oriented around a strategy that's truly 5 years in the making. I remember the strategic offsite we had in early 2018, where we talked about how payers at the time were heavily indexed on their primary care investments. And yet eventually, they would realize that they need deep specialty solutions to drive quality and cost effectiveness. So we had conviction that the next wave of value-based care would be focused on specialty. And ever since then, we've moved decisively at every step in that direction. It started in early 2018 when we acquired New Century Health to get into oncology and cardiology. We built and innovated around that asset in important ways and eventually, based on voice of customer, added key capabilities in end-of-life and surgical management and most recently, MSK radiology and genetic testing. There's no greater validation of this strategy than the strong growth we've experienced from our specialty customers in the last 5 years. So you can see here the specialty business has grown at a 54% CAGR since 2018 and now represents more than 80% of Evolent. So here we are in 2023, poised to accelerate our market leadership based on the combination of our differentiated products in the strong market demand. We moved with conviction against the strategy because fundamentally, we see a tremendous mission and market opportunity in value-based specialty care. If you look on the left side of this slide, there is a large TAM for us to go run after, including importantly a $50 billion cross-sell opportunity within our specialty customers. On the right side, there is significant dissatisfaction with the status quo. If you think about the affordability crisis in U.S. health care, much of it comes from skyrocketing costs in areas like oncology, cardiology and MSK. In terms of quality, we see wide variation in evidence-based medicine with 75% of low-value care coming from a specialist. And finally, the experience leaves much to be desired as payers, providers and members, all struggle to navigate a system that's plagued by fear, friction, frustration and fragmentation. So lots of unmet need in value-based specialty care, which is a direct result from the fact that trying to manage specialty care is extraordinarily difficult. First, the clinical complexity is almost beyond comprehension, as 2 examples, there are more than 75,000 genetic tests on the market and more than 6,000 medical devices regulated by the FDA. So payers naturally look for external help, but the existing solutions in the market tend to be broad, but thin or deep but fragmented. Number two, payers typically try to manage specialty care through utilization management. But the problem with traditional UM is that it causes a lot of abrasion and friction with providers. So even if it works a little bit in the short term, it's generally not a winning, sustainable strategy for the long term. Number three, specialists generally are not aligned around quality and cost outcomes. So the fee-for-service mentality in Specialty Care is pervasive. You can see some stats here on how a substantial portion of the economics of a cancer practice come from things like buy and bill, rebates and consulting fees. And fourth and finally, the member voice sadly is often not included in their care journey despite ample evidence that's what members want. So in the end, shared decision-making ends up being a buzzword that's an exception rather than the norm. So as we look to accelerate our market leadership and truly transform specialty care in the United States, we believe it's imperative that we tackle head on each of the challenges that I just walked through. So to address clinical complexity, we have specialty expertise that is broad, deep and integrated, powered by our 1,400 clinicians in the organization, complemented by our independent scientific advisory boards who ultimately work together to create the core intellectual property of the business, which is our value-based pathways and initiatives. To address the friction from traditional UM, we have a decision support tool that is purpose-built for specialists and purpose-built for value-based care, trying to make it as easy as possible for specialists to make high-value treatment choices. To address the fever service mentality in Specialty Care, we have a comprehensive suite of provider alignment capabilities around things like alternative payment models, quality benchmarks and peer-to-peer consultations. And lastly, to address the unfortunate truth that the member voice is often not included in their care, we believe it's important to integrate the member voice through the entire care journey and, therefore, put a strong emphasis on things like advanced care planning. This is a visual depiction of what I just walked through. So in essence, at the top, this is our set of broad, deep, integrated clinical solutions across specialty care. And number two, we take that clinical IP and try to get it in front of the provider at the right time, in the right way and make it as easy as possible for the provider to make the high-value choice. Number three, in terms of provider alignment is removing any and all obstacles and supporting the provider in every way we can to make the high-value choice. And number four, around member journey is making sure that, that high-value choice importantly includes and reflects the values and goals and preferences of the member. All of this ultimately at the bottom is powered, enabled and supported by the global technology and infrastructure of Evolent laser pointed against the specialty care strategy. Here's an illustrative case study from one of our advanced markets that aims to bring to life what we just walked through. So here is a patient who is 81 years old, has congestive heart failure and unfortunately, just found a lump on his neck that turned out to be cancerous. So as we think about driving as much clinical value for that patient as we can, it's important to think longitudinally across the entire care journey. So what does that mean? That means upstream in the pre-treatment phase, we're going to engage with and support that patient's PCP in every way we can. That might mean that we are consulting with that PCP and providing data and information that helps them avoid what would otherwise be an unnecessary cardiology referral. It also means that we'll likely provide quality data to the PCP on the oncology network so they know where to make a high value referral decision. And given the fact that this patient has an underlying heart condition, we want to make sure that we're engaging that patient early and often around their values, their goals and their preferences even before they hit the oncologist office. Once that patient ends up in the office of a high-value oncologist, then we're in the middle treatment phase. And here, our comprehensive pathways aim to bring together the various puzzle pieces of the oncology journey to make the best treatment decisions we can for the patient. So that means, we will likely recommend proactively genetic testing so that we can get this patient on the right checkpoint inhibitor, the first time and not the second. And once they're on that right regimen, let's make sure after a few months that we proactively recommend advanced imaging to see if the tumor is growing. Because if the tumor is growing, the treatment is not working and we need to find an alternative for that patient. We also need to take into account the cardiotoxicity profile of the regimen given the underlying heart condition of the patient. Ultimately, as I talked about before, our decision support tool is going to nudge the oncologist to make the best decisions they can. So we're going to do things like automatic dose rounding. We're going to highlight the preferred regimens. We're going to show patient co-pays, we're going to show black box warnings in terms of toxicity, to provide all of that at the right time and the right way to the oncologist. We're not going to stop there, though. In terms of number 3 in the middle, we want to make sure we wrap an alternative payment model around this patient's oncologist, so they can focus purely on quality without any concerns about income degradation. Giving an APM is necessary but not sufficient. We also need to make sure we're getting clear performance data to the oncologists so they understand how they are performing on the quality measures relative to their local, regional and national peers. And when necessary, we're going to support that local practice. Oncologists and pharmacists at Evolent are going to engage in a true peer-to-peer way with the local practice on scientific literature, on the interaction between the anticancer treatment and the cardiac meds the patient is taking and make sure that we are providing that B2B second opinion service that Seth talked about earlier. And finally, the last row in the middle, it's great that the patient had an early advanced care plan, but we want to make sure that doesn't live on an island. So with the patient's consent, we're going to make sure that advanced care plan is shared with the oncologist, so everybody is on the same exact page. And finally, let's fast forward a couple of years and sadly, and unfortunately, at that point, the patient is no longer responsive to treatment. At that point, we're in the post-treatment phase. Here, where we are focusing, is making sure that we are honoring and enabling the goals, preferences and values of the member, supporting the patient in all the conversations they need to have with their family, their caregivers and their providers. Ultimately, the sum total of this case study is higher quality care. It's more cost-effective care, it's a better experience for the PCP who's kept in the loop as well as the oncologists who supported. But most of all, it's better for the patient who has their goals, preferences and values, honored and reflected in the care journey. As we deploy our model, ultimately, it results in higher value decision making by specialists. We are extremely proud of that, and we see that over and over and over again. We see it in oncology as Level 1 pathway adherence increases over time. You can see this example going from 49% to 90%. We see it in MSK as surgeons tend to make higher-value device selection decisions over time when they work with us. And we see it in cardiology as the appropriate use criteria score improves over time. That last example, in particular, I think, nicely encapsulates the power of our model. So let me spend one minute on it. The AUC scoring system was developed by the American College of Cardiology, effectively trying to assess the clinical appropriateness of all procedures, tests and interventions in cardiology. It's a 9-point scale, 9 is the highest quality score, 1 is the lowest quality score. And as you look at this chart with the purple outline, you'll notice 2 lines. There's a light green line at the bottom, which is the initial starting AUC score of what the cardiologist submits. The other line, the dark blue line above it is the final AUC score once Evolent engages with the cardiologist around high-quality decision-making. So there's 2 takeaways I would encourage us to have from this chart. Number one, as shown by number one, is that the blue line is always above the green line. So we are literally lifting up the quality of cardiac care over the entirety of the data set. But number two, and in my opinion, more importantly, we are teaching, we are training, and we are coaching the cardiologist to make better decisions on their own. So you can see the initial starting AUC score improving over time from 6.6% to 7.7%. So as we think about sustainable, long-term value creation in a market over a 10- or 20-year period, we believe voluntary behavior change by physicians is paramount to making that happen. So extremely proud of what this AUC score represents. As we improve decision-making by specialists, ultimately, that allows us to deliver on the comprehensive value prop to our customers, that comprehensive value prop always starts with quality. We just talked about Level 1 pathway scores in oncology, we just talked about AUC scores in cardiology, but we track a litany of quality measures at Evolent and extremely proud of that. So here are 2 examples. 79% of our clinical interventions in oncology lead to a less toxic regimen choice. Any of you with loved ones who've had cancer in the past knows how important that is. At the bottom, we had a 15% adherence improvement with guideline-directed medical therapy, effectively using medical therapy instead of something that would be far more invasive and interventional and unnecessary in cardiology. In the middle, a long sustained track record of delivering outsized savings to our partners across all specialties. So we've got a couple of examples there. And then all the way to the right, again, as we think about long-term sustainable savings and value in a market over a 10- or 20-year period, which is our ambition, we believe the how is just as important as the what. So as we're trying to create this value, it's important to us that all stakeholders in specialty care are part of the solution. So we are deeply proud of the 84% provider satisfaction rate in the 78th Net Promoter Score for members who have gone through our advanced care planning program. That's a good segue to how we think about growth at Evolent. Our philosophy is that ultimately, it comes down to 3 simple elements. First is building the right products that actually solve customer problems. Number 2 is once you've built those products, let's make sure we deliver differentiated value to our customers across all those dimensions I just mentioned, quality, cost effectiveness and experience. And number 3, once we build those products, once we deliver the value, let's make sure we can capture the resulting business opportunities that come by selling based on our results. So we emphasize in our go-to-market approach, all the win themes that Seth talked about earlier, and we believe over the last 5 years on the specialty care side, we've developed a core competency in terms of how to solution sell into enterprise payer accounts. Thinking about how to engage the top of the house, how to think about all the different stakeholders up, down and across that you need to engage to get to guests. But principally, it starts with delivering value to our customers. Here's 2 recent and powerful examples of earning the right to grow by delivering strong results. And I use those words intentionally earning the right to grow by delivering strong results. So on the left side, you see Centene and rewind 4 years ago, we worked with Centene in one state with one product in one line of business and here we are 4 years later, national footprints, all lines of business, several different products. On the right side, you see Molina, a similar story over a similar time line. 4 years ago, we started small, a couple of states, just cardiology, tech and services. And here, we have oncology, cardiology and Performance Suite across several states now. Ultimately, what we see in these charts in 2023 and beyond for Centene and Molina is a direct reflection of the results and relationships that we created in 2020 and 2021. So earning the right to grow with these accounts by delivering strong results in quality, cost effectiveness and experience. Even with all of the growth we've had with Molina and Centene over the last 4 years, there is still a ton of runway with both accounts. And more broadly, a ton of runway across our entire customer set. So this slide shows the product penetration rate of our top 10 customers as defined by their total health plan membership and you'll note the footnote that this excludes our national health plan customers that are vertically integrated. So when you look at the top 10 customers, as we define it right here, only a 14% weighted average product penetration, if you look on a revenue basis, it falls to something like 3%. So a ton of runway here to earn the right to grow through delivering value across quality, cost effectiveness and experience. That is what we feel is an exciting growth strategy across both tech and services and Performance Suite. So on tech and services, we're going to run head on at that last slide we just showed. So another way to think about the data from the last slide is that on average, out of our 6 products in terms of how we classify them, our customers only use 1.6. So again, a focused cross-sell plan to take that 1.6 and increase it in the years ahead. On the new logo tech and services side, we've done a lot of voice of customer work. You can see the quote in the bottom left. We have heard loud and clear from our health plan prospects that they are looking for a more comprehensive, broader solution. We feel as though we have that now. So really excited about going to market that way on the new logo side. If you look on the right side of the slide with Performance Suite, first order of business there is integrating and innovating our capabilities to drive even more value in oncology and cardiology because the more value we drive in oncology and cardiology, the more growth we'll have because we'll be able to deliver more savings to payers and providers. We will be incubating an MSK performance suite product this year and next. In terms of growth from Performance Suite, we see it coming from a number of different areas, but one in particular we're excited about is the idea of pursuing market density for the Performance Suite. So what I mean by that is we believe our performance and our stickiness both improve when we work with multiple payers in a market. It's also what providers want. If you read the quote at the bottom from a large cancer practice, it's much easier for a conduit to multiple payers as we think about having consistent alternative payment models. I think a nice testament to the power of market density is the fact that our Florida Oncology Performance Suite business has grown at a 30% CAGR since 2019 in terms of membership. So again, really excited about the opportunity ahead of us to drive growth in both tech and services and Performance Suite. So let me leave you with 3 takeaways. First, the value-based specialty care opportunity, which we've been after for 5 years now is a large and growing market with a $50 billion cross-sell opportunity in strong dissatisfaction with the current alternatives in the market. Number two, we have a differentiated set of products, both broad and deep and more importantly than that, a clear set of proof points of delivering sustained value to our partners across quality, cost effectiveness and experience. And number three, a focused cross-sell plan as well as new logo opportunities to drive growth in both tech and services and Performance Suite. You've heard a lot from me over the last 20 minutes. You probably heard me say voice of customer a few times. It's core to our DNA at Evolent is making sure to build the products that customers need. We're engaging with them over and over and over again. So you've heard a lot from me, what we're going to do over the next 10 minutes is allow you to have voice of our customer. So really excited to share the next video clip which, as I mentioned, is 10 minutes long. It's a compilation of interviews we've done with the following 3 leaders at their health plan. So Kim Henriksen is SVP of Population Health at Centene, Dr. Yvonne Collins is Chief Medical Officer of CountyCare Health Plan; and finally, Pat Garanti, President and CEO of Florida Blue and GuideWell. [Presentation]

Specialty care ranks pretty high amongst our pain points here at Centene. And one of the reasons is because we see a great deal of fragmentation in specialty care. Some of the challenges in managing specialty care for our members go back to the fact that our goal is to have our members connected with a primary care provider. Oftentimes, however, that primary care doesn't -- primary care provider does not even recognize or see what specialty services that member is accessing. That's where, again, the importance of solutions to help reduce that fragmentation and bring that full picture into play for that patient and that member. So while at Centene, we have a lot of specialists across our organization. We know that partnering with a company who can -- who is bringing together specialists, again, in a concentrated way, staying up to date on all of the literature that is coming out on an hourly basis almost these days, about best treatments and most appropriate care pathways would take quite a bit of burden off of our team from having to develop that ourselves. One of the benefits that we have found in partnering with a company that provides multiple services that are related, if you will, in some way or another makes it much easier for us as a company to work with one company who is overseeing services for a variety of conditions because it really does help us as we are thinking about our members, helping our members navigate. It really helps stitch together some of those clinical pain points and having a partner who can evaluate imaging for an example, and how that imaging relates to a cardiology procedure that might need to occur. It is important for Centene to work with an independent company. So we chose to work with Evolent as a partner for a couple of reasons. One, probably a primary reason was we've had great experience working with New Century Health, which is one of the Evolent companies. We like the model that they use in really thinking about the member experience, the provider experience and how we can navigate from really a clinical perspective in ensuring those high-quality outcomes that, again, the lowest appropriate cost. With the acquisition of NIA, NIA has been a long-term partner with Centene, and we've had great experience in working with NIA. Again, similar values and mission driven. And our partnership has been a very positive one over the years. I have had a lot of confidence in the partnership with Evolent and our desire to expand into additional markets and additional programs and services that Evolent offers from oncology to end-of-life to cardiology, imaging services, et cetera. As we look at specialty care, it's a high priority. Primary care physicians may not be as strategically placed to deal with these conditions unless they're part of a bigger group. When we look at oncology and value-based care, when providers know that they -- we are constantly looking at the data, that we're looking at only at quantity of the care they provide, but the quality of that care that is -- are they prescribing antiemetics appropriately? And are they sticking to evidence-based chemotherapy regimens? That there is imaging when necessary and not just because something is going on. When we look at value-based care in oncology, a lot of studies have shown dependent on the study that you look at, anywhere from a 25% to a 35% decrease in comps. So Evolent works with us in terms of oncology care via New Century Health. New Century Health is our specialty benefit manager specifically for oncology. What they've done a really good job with is number one, trying to remove that transactional UM relationship that we very commonly see and making that process more relational, and what do I mean by that? They're going into physicians' offices. They're talking to physicians, they are talking to the nonclinical staff and very often are so many authorizations, they're educating in their training. And then when we look at the provider side, New Century Health has taken all of the data that we know for oncology, and it's been massive over the last year. I think we had 22 new drugs come out just for oncology last year, and so what they've also done is allow our providers to continue with the art of medicine within the lives of looking at pathways. And so as we talk about value-based care, especially for oncology, pathways are going to be key. And that's what Evolent and New Century has helped us do. They've improved and constantly looked at the data to hone those [ M1 ] pathways. If we continue to be proactive, which Evolent helps us do, then we eliminate that burden that so many providers, I think, associated with utilization management and the PA process and really pull in -- or we want to again make sure that the patient is getting the right treatment at the right time in the right setting. IU utilization management before I came to CountyCare. I oversaw our oncology program, and I'll tell you, when an oncologist called and they will have a conversation with one of our primary care doctors, it was very different than having a conversation with an oncologist. And so the depth and breadth of knowledge is so different for specialty care that you have to have that specialist who hones in on a specific disease because it's a mix of difference. The other part of that, and I'm just going to focus on oncology for a minute, as partners, we've also partnered with Vital Decisions. As an oncologist, palliative care and hospice is crucial to oncology, palliative care, we know begins at the moment of diagnosis. The other part of that hospice and palliative care is that we know that there are a significant number of members who get chemotherapy in their last week of life, which is probably unnecessary and waste it not only resources, but drugs and funds. And so really looking at Ms. Jones. You have metastatic uterine cancer. I'm never going to cure your disease. You have significant side effects. Let's talk about options. And so I think that part of the partnership with CountyCare and Evolent and Vital Decisions has become more impactful. I think members are beginning to understand. Yes, we will take care of you. Let's look at congestive heart failure as an example. Congestive heart failure, again, a very costly disease. We know that in order to keep those members, not only having a quality of life, but out of the hospital, it takes a team, so not only does it take the primary care doctor, it takes a cardiologist, it probably takes the physical therapist. This is going to take the dietitian, it's going to take the pharmacist. But you're going to work with a vendor who's working with an array of members that have that disease and are able to focus and hone in specifically on that disease. When you look at vendors who are either covering one specialty versus those covering multiple specialties, I will say the ones that cover multiple specialties, although they may have separate teams, you're having one main entity that you're working with. I would have to oversee one entity. I would work with one account executive. I will work with one overarching medical director. So it's -- you're getting a lot of services under that bulk bucket of multiple subspecialties. The partnership with Evolent is successful because of transparency. Number 2, the teamwork. And then the last one I'll mention is trust. Those are things that come to mind readily in terms of the CountyCare relationship with Evolent.

Specialty is a very high priority on our list. And we've done some significant work across our team to really tackle in various ways, care management, medical policy and work with other trusted relationships. Value-based specialty management is increasingly important. So in particular, if you're looking at cancer care, cancer diagnosis takes a horrible toll even when it's curable or in a treatable stage, we've seen some tremendous bad fallout from suicide after a diagnosis, and it's one that's really tragic. And so there's a great deal of value for a member to have a navigator and a trusted resource to answer their questions and help them move through this very complex area. The first thing I think of is trust. The second thing is trust and the third thing is trust. It really is about the relationship, the integrity of that relationship and the ability to feel confident that you're going to be on the same page with the partner that you have and that collectively, you're on the same page with the member that's being served. So that is the most critical thing. I mean we have relationships that are payer owned, and some of them can work fine. But in general, I think the objectivity of not being associated with the payer and having that trusted relationship is one that we think is sort of an optimal case and one that we value very, very high. I think it is in the best interest of patients to have somebody who plays a role as the middle person who pulls all of those answers and resources and services together for our patients. Some of those things we can do ourselves other issues we're going to have to pull in the best partners that we can. But really trying to create an environment that's a single point of contact for the member is critical to not having hundreds of touch points that a member would have to navigate on their own. Again, when you're talking about building trust with your member of your customer, your patient, it is about the transparency on information, on cost, on quality so that they are brought into the equation of really being part of the decision-making process and feeling that they're empowered as they navigate through what are very difficult and complex circumstances. And so all of that comes together in this -- in the type of ecosystem that we're trying to create with the very best partners and certainly, Evolent is one of our most important partners in that equation.

Please welcome to the stage, Dr. Scott Pritchard, President, Performance Suite, and Dr. Andrew Hertler, Chief Medical Officer.

Thank you very much. Dr. Hertler and I in this next section are going to focus on a deeper dive into our cardiology and oncology management solutions. So oncology and cardiology either separately or often together and increasingly paired with our end-of-life care offering, represent the bulk of what we call our Performance Suite business, where we're taking capitated risk with our health plan partners. So over the next 15 to 20 minutes, we're going to try to bring to life. First of all, our deep specialty specific clinical expertise, and then we're going to really, again, bring to life the notion of how we drive the higher value care through, first of all, a next-gen decision support system based on proprietary content in our pathways and a platform that is built for purpose for specialists. We're going to talk about how we align in an influence-based model with physicians and build trust, and then finally, we're going to talk about a differentiated member journey. I personally find really validating to hear from our partners. So I hope you enjoyed that last section, and we'll carry some of those themes into the presentation here. So first of all, why oncology and cardiology. I think the obvious first answer is the sheer cost of those two specialties. Dan talked about specialty in general as a massive driver of growth in cost in this country. Cardiology and oncology alone will soon surpass $0.5 trillion of health care spend. Despite this massive investment in treatment, significant questions still remain around the quality and appropriateness of the care delivered. So for a cardiology example, a full 1/3 of cardiac stress tests with imaging are likely inappropriate, leading to $0.5 billion in waste. And then on the cancer side, over the last 25 to 30 years of the cancer drugs granted accelerated approval by the FDA. Only 16% of those actually showed validated clinical benefit in practice. So a lot to be desired in terms of what we're getting from that nearly $0.5 trillion of cost. And then finally, oncologists and cardiologists operate in a really challenging environment that is highly complex and fraught with misaligned incentives. So one example just what is like to be a busy specialist trying to keep track and keep up with this relentless pace of innovation and clinical research. It can take nearly 17 years for evidence-based cardiac guidelines to find a solid foothold in clinical practice, 17 years. That's almost as long as I've been working. And then finally, for a cancer practice, and Dan referenced this earlier, nearly 30% of revenue is derived from margin from chemotherapy drugs, perversely incentivizing the use of high-cost options. So with an aging population, and Dan touched on this a little bit as well, issues of the intersection of cardiology and oncology are increasingly challenging. Many have -- the treatments for cancer actually lead to downstream cardiovascular conditions, and nearly 5% to 15% of cancer survivors will develop heart failure downstream of cancer treatment. And then finally, cancer patients are at higher risk of heart failure and also a higher risk of death from cardiovascular conditions than their noncancer counterparts. So we're actively trying to address this in our program. First of all, by integrating data and clinical guidelines across the two specialties to inform our treatment approach. Second is education, going ahead to our oncologists and sharing with them the importance of adherence to cardiotoxicity guidelines as they're thinking about choosing a regimen. And then increasingly, we're really trying to push for treatment options that are noncardiotoxic in nature, especially for high-risk patients. So let's talk a little bit about our team and our deep clinical expertise. So highlighted on this slide, you see a subset of our oncology and cardiology clinical leadership, including providers, pharmacists and other health professionals. So this leadership team directs and shapes the work then of the 1,400 clinical colleagues across the organization that Dan referenced earlier, many of which who have specialized experience in cancer and heart disease. Dan referenced our scientific advisory boards. We have specialty specific scientific advisory boards in radiation oncology, medical oncology and cardiology that are comprised of practicing specialists from both academic and community settings and have representation across the country. And all of this clinical expertise and experience has led to long-standing accreditation of our clinical work by bodies such as URAC and NCQA. So I'm going to tee up a little bit just to frame for the rest of the presentation that Dr. Hertler will walk us through. I want to start at the bottom in terms of what are our goals in cardiology and oncology management. So ultimately, we want to ensure that every patient gets the optimal, most evidence-based care for their unique clinical condition. And we want to do this engaging with providers in a friendly and an influence-based way where denial of a treatment request is seen as a failure and is a rare occurrence versus the established norm and you'll see a stat here on the bottom on average, less than 2% of the treatment request that we receive result in a denial. In most cases, we're innovating through a peer-to-peer discussion and driving to the right answer through influence and aligned incentives. So how do we do this? And again, I'll link back to a frame that Dan introduced. First, our pathways in our platform that are loaded with proprietary content and are easy to use by physicians. The second is an influence based model with our specialists, where we're aligning incentives. We're meeting them where they are. We are a trusted adviser and educator, and we're building trust and behavior change over time. And then finally, we aspire to a shared decision-making model where member goals are actively reflected in decision treatments as they are made. So with that, I'm going to hand off to Dr. Hertler to bring these concepts to life.

Our pathways are the heart and soul of our clinical program. Cardiology and oncology represent two specialties characterized by dramatic innovation and rapidly escalating costs. No individual provider can keep up on the evolving medical evidence. In fact, it was recently quoted in a paper that for an oncologist to keep up weekly on the new literature being released, they would spend 40 hours a week going over the medical literature, which is obviously impossible for any individual provider. What we attempt to do with our pathways is curate that medical evidence and put it in a form that is easily accessible and usable for decision support by providers. I've got an example on this slide in medical oncology. And if you direct your attention to the center of the slide. An oncologists will have multiple different chemotherapy regimens or treatment plans to use for any individual patient. In this example, we've got 9 labeled A through I sometimes there's even more than that, and they're obviously not all equivalent. The first thing we do is look at the quality of the medical evidence. What were the studies that led to the approval of these drugs, were they randomized clinical trials have actually compared the new therapy to the standard of care, which unfortunately rarely ever occurs. But that's the kind of study we look at. And what's most important to the patient. First of all, is efficacy. They want to live longer. That's overall survival. When the study is done with that as an endpoint, we give that extra weight. We know that when a surrogate endpoint, an accelerated approval is used, such as progression-free survival, which is how long until the X-ray worsens or response rate, how often does the tumor shrink less than half the time, does that translate into an overall survival advantage. So a study that looks at overall survival extra weight. We then look at the second thing that patients want. They want to live better. They want to live longer and they want to live better and this is toxicity. So some of these regimens will have more toxicity. They'll put people in the hospital or have permanent long-term side effects. We will exclude some of the regimens because of this toxicity. And last and only last, do we look at costs. And you can see in this example, we lost Regimen G because it was significantly more costly than B and E. That being said, those final approved regimens still are very frequently more costly than those in that very top row. One final point, everything in that top row is "meet medical necessity, " i.e., we would approve it in a prior authorization model, and our goal is to take a step beyond prior authorization and medical necessity to what is the best outcome for the patient. On the far right, you'll see some of the results. On the left-hand side, you'll see the cost of care of metastatic HER2 new positive breast cancer. A regimen of our pathway cost $68,000. That's for a quarter for 3 months of therapy. Our pathway choice, $42,000. This is where the savings come in play from following our pathway. On the right, metastatic colon cancer decreasing the cost from $14,000 to $8,000. So it's great to have pathways. How do we get physicians to use them. That is the key behavior change. And what I can tell you is it takes multiple different tactics and it takes time. It does not occur overnight. It is a process. We use five different methods to try to create this behavior change. The first is our technology, our CarePro platform clearly highlights our Level 1 pathways. It also clearly highlights a few different regimens, which we consider very low value. It automatically applies dose rounding. So if a provider is using a dose that requires a third or fourth vial, but it's only -- it's 10% or less above the dose, which is required. That means you're going to discard and waste and bill for over 90% of the drug. We round to the vial size, and that is in accord with guidelines. We also give instant auto approval of the regimens that are chosen that are on our pathways. Second pillar, education. We create white papers, which outline all of the medical evidence. We share them with providers. We have our pharmacists meet with the pharmacists of practices. These pharmacists and practices have a great deal of influence over the treatments that are utilized. We share these white papers and we share this data with those pharmacists to educate them. The third is influence. When a provider picks a low-value regimen or is off our pathway, we have another -- one of our clinicians of the same specialty, medical oncologists to medical oncology, radiation oncologists to radiation oncologists, reach out to the provider and discuss the evidence with them. This is colleague to colleague. It's very similar to when you pull your colleague across the call and say, what would you do with this patient? We know that when we reach that provider for one of these period to peers, more than 85% of the time, we get the change we need. This is not a denial model. It feels much better to collaborate. The fourth pillar is financial alignment. Our intent is not to decrease the financial viability of community practices. You can see in this example here, given that, as Scott referenced, about 30% of a practice's revenue is dependent up on drug margin. When we decreased the cost of a chemotherapy regimen from $20,000 to $500. We're decreasing the cost of their margin from $1,200 to $300. We make that up with alternative payment plans, and these plans generally create a bonus pool. They increased their bonus pool by following our Level 1 regimens, and when they pick one of these very low-value regimens, it subtracts from the pool, but it gives them an opportunity to not lose margin by doing the right thing and following our pathways. And last is scorecards. We meet with the practices we share our data. There are quality metrics, adherence to our Level 1 Pathways, cost of care. Physicians are very competitive. They've been achievers all their life. They hate to be below average, and if we can show them our data and show them they aren't performing as well as their peers, this will drive change. I'm going to give two examples that show this in action. The first is an oncology example. I mentioned before the multiple different choices that they have. This is a case of a patient with recurrent small cell lung cancer, 2 different drugs, one that's been around for quite some time, topotecan, the other a new drug, lurbinectedin. It's got a lot of play. It's the sexy new choice. But if you look at the data, median overall survival, progression-free survival, objective response rate, very, very similar, but look at that cost difference $42,800 for 3 months versus $620. Our approach, first, we highlight the lurbinectedin regimen is low value in our portal. We have a white paper that summarizes all this evidence in great detail. If the provider still wants to use that regimen, we reach out to them for a peer to peer discussion, we don't always get the change we need. But even if we don't, they may have already talked to the patient told them how they were going to be treated, they don't want to call the patient back in and have another discussion, but we've had an opportunity to educate the patient -- or the physician, and they may not use it the next time. We have our financial incentive, which rewards following our pathway subtracts for using these low-value regimens and finally, the data, benchmarking against their peers. They are using this, no one else is, that may drive change. And results, improve quality with increased use of our Level 1 pathways, decreased use of our low-value regimens. and every time we avoid this low-value regimen, we saved $42,000 every 3 months. Here's an example in cardiology, a patient with congestive heart failure, the request is for -- the patient is on 3 drugs for that congestive heart failure and has had 2 hospitalizations in the last 6 months, request this for pulmonary hypertension monitoring something called CardioMEMS. However, the patient is on 3 drugs, but that doesn't meet guideline-directed medical therapy. The doses have not been optimized and there's 2 other drugs that have not even been used. Our approach, use our portal to make sure they use guideline-directed medical therapy, education of the practices, meeting with them, sharing our guidelines and policies. When our nursing staff identifies someone using not having optimized guideline-directed medical therapy, we reach out to them and have a peer-to-peer discussion, cardiologists to cardiologists, alternative payment plans, which reward for following guideline-directed medical therapy and last again, sharing performance data and metrics. Final result, improved quality, a 29% decrease mortality when guideline-directed medical therapy is optimized. And every time we make certain that this is utilized rather than the MEMS procedure, $15,000 in savings. I'm going to turn briefly from the provider to the member. We use predictive mortality and modeling to identify patients who are at increased death within the next 6 months. We use claims data and the data we collect clinically off our prior authorization portal, and this data is used to identify those patients who are specialists can reach out to them. We have strong endorsement of this program by our cardiologists and oncologists to encourage patients to participate, and we can utilize their names when we reach out to the patient. Our behavioral specialists are trained in motivational in mock and motivational interviewing and they walk the patient through, meeting their goals, preferences and values and shared decision making, how aggressive do they want their care and we outlined that for them and help them put that down. And is there a critical change point, a point where, okay, you want very aggressive care now, but if your condition where they deteriorate, would you want less aggressive care, more concentration on quality of life. All of this is put into an advanced care planning document, which is then shared electronically with the provider. So they have a copy of this. Additionally, we use that technology to refer patients to palliative care and hospice when appropriate. And finally, when they hit one of those critical change points where the care is deteriorated, we communicate with the physicians, so the care itself can change. I believe a story will illustrate this far better than I can walking through that previous slide. Do the patient confidentially concerns, we cannot have a patient here to share the story, but we do have one of our advanced care planning specialists here on video to share that story. [Presentation]

This is the experience of Diane, a 42-year-old mother preparing for her son's high school graduation, diagnosed with lung cancer. She found herself scared, overwhelmed, confused and immersed in a complex web of our health care system. We were working with a partner of ours who we do integrated oncology and end-of-life navigation with utilizing our predictive model. We identify Diane as a patient who could benefit from our services. Our partners rely on us to act as an extension of their clinical staff. They trust us to use their practice names and positioning during our outage, which builds an immediate sense of trust partnership and report with their patients. Throughout our engagement with Diane, she shared that her priority was maximizing the quality of time she would have with [indiscernible]. Through our specialist education, she decided that a palliative care program would provide the quality of life she designed in accordance with her wishes, our team helped her navigate enrollment on the program. She also found the strength to document a detailed advanced direct, alleviating the decision burden that otherwise would have fallen on her husband. We, in turn, ensured that these documents were uploaded to their medical records and alerted her oncologist as well as the other partners involved in for plan of care to its presence to prompt further discussion on their next step. Diane went through to follow our program description and at the end, she shared these words. You gave me a voice. You connected my care teams, you listened, you cared and most importantly, you continuously gave me a reason to keep living.

So I anticipated it might be hard to follow that, but I did want to close the section just with a few key takeaways. And also reference, it's hard not to get up in the morning with a mission that is attached to that level of care and compassion for patients and for members. So in terms of our oncology and cardiology program, we are deeply clinical and have a bench of leaders and experts driving meaningful improvements in cost and quality. We have proven capabilities to engage and satisfy providers, both initially and increasingly over time, and we are more and more moving the number to the center of the care journey. So with that, let me welcome to the stage two of my colleagues, Dr. John Tam, our Chief Strategy Officer; and Dr. Matthew Walker, a practicing spine surgeon and Medical Director.

Thanks, Scott. So Dr. Walker and I will talk about our musculoskeletal solution, and you'll hear a lot of common themes that Seth, Dan, Scott and Dr. Hertler as well as our clients have talked about earlier today as well. So just to orient to, when we think about musculoskeletal, we think about all the specialties within that as well as incorporating our radiology solution in advanced imaging. These pieces come together to form our Aptis case solution and are supported by the elements you see below in terms of our next-generation clinical support, provider alignment models and our technology platform. So why MSK? Well, the first component is obviously cost. MSK is typically a top 3 spend area for both employers and health plans. And as we all know, we're all getting older, aging hips, back, shoulders, knees, these parts wear out. So there is a lot of cost pressure on MSK going forward. On top of that, the journey itself is incredibly complicated. We looked at a health plan partner of ours, and we mapped out the patient journey for back pain, which is one of the most common reasons people see the doctor. As you can see from the middle of this page, it is a jumbled mess. There is no standard of care. Patients bounce around from specialists to specialists across disciplines, Dr. Walker will talk more about this. But with the end result of this is uneven quality, uneven outcomes, increased cost and a worse patient experience for everybody. And on the right side of the page, further complicating matters are just as in oncology, this is true in MSK as well. There are misaligned incentives. Surgeons, manufacturers, they want to use the latest shiny toys, which tend to be the most expensive devices. And furthermore, the majority of spine surgeons and orthopedic surgeons tend to be affiliated with manufacturers and receive consulting payments in some form or fashion. So all these together make MSK very challenging to manage. So how do we do it? It starts with the team, it starts with our clinical intellectual property. And as I just mentioned, because patients can bounce around from PT to pain to spine, to chiropractor, it requires multidisciplinary expertise. And some of the faces you see on this page here represent that multidisciplinary expertise. We have surgeons, we have physical therapists, go down the list. Many of whom are still in practice such as Dr. Walker. Again, supported by our accreditations and our Scientific Advisory Board. So it starts with deep clinical expertise, multidisciplinary approach, to be able to manage cases in patients no matter where they show up in the journey, no matter which specialists they end up seeing in their journey. So 3 -- 4 pillars represent our solution in MSK. On the left-hand side, Think of this as trying to avoid or redirect unnecessary or inappropriate procedures. These represent maybe 10% to 20% of the cases. A lot of literature suggests that maybe 10% to 20% of cases are inappropriate or can be avoided. So as I mentioned, we have multiple points of entry to be able to catch members no matter where they may start their MSK journey, and then we try to improve clinical decision-making to get them on the right course of care. So that's on the 10% to 20% side. What about the 80% to 90% of cases for whom procedures are appropriate. This is where most people's solutions tend to not address this part of the problem. So this is a solution we have that represents trying to make sure that the appropriate cases do occur in the appropriate care setting, the lowest cost care setting, which is typically the ambulatory surgery center. And on top of that, if the case needs to occur to make sure that the optimal clinical device is selected. This represents our holistic solution and our approach to ensure evidence-based medicine is applied to MSK. So with that, I'll turn it over to Dr. Walker.

Thanks, John. So John had alluded to this image that you see on the left-hand side earlier, and it's a pathway taking a back pain patient through initial encounter with the health care system and running them all the way through potentially to surgery. And so if we look at the entry points, they're multiple, right? They can go to a chiropractor -- they can see a surgeon, like myself. They could go to the ER. They could go through physical therapy. No one path clearly delineated here. As you move through this, and this is my daily life, helping people to navigate through this system. It can be very confusing. Among practitioners themselves, the communication is poor. We're all busy. We don't all work out of the same location, so to communicate is a challenge. The care pathway to put together a succinct care pathway patients rarely ever happens following through on this diagram. What does this create? Well, this creates a very confusing path for patients. If you were a patient and I told you look at this diagram and track your path through your -- the care of your back pain, what would you do? How would you move yourself through. And so the high variability in this process really leads to confusion. As a practitioner, oftentimes, when people come to me, I don't have the information to know where they've been. So lots of confusion in the process for patients and a very inefficient process overall, as you can see. So how do we try to improve upon this? How do we optimize this process for patients. If you look on the right-hand side of this slide, you'll see multiple different aspects of care that come into play. We've got pain management, imaging, physical medicine and then the surgery side. In order to do this well, you need to understand deeply each of these areas. You need to bring all these areas under one roof. You need all of these areas, communicating well with one another, and then in that process, we can create a much clearer path for patients as they move through diagnosis again, such as back pain. In order to do this well, you've got to know each of these areas very well. So when the patient comes in and surgery as indicated, you need to move the patient on to surgery. But for most patients, immediate surgery isn't indicated. You need to know which patients will then benefit from conservative care, conservative treatments. So as John mentioned, I'm an orthopedic surgeon, and I live in this world. I was just in this world yesterday morning, doing surgery. So this is my every day. I submit requests for surgery to insurance companies and I get approvals, and I also get denials. And there's a right way to go about this process of guiding care, and there's a wrong way. The right way is engaged with providers, and our model does that. It engages with providers. The wrong way is to send a denial to a surgeon and not clearly explain why the case is being denied and then also to not allow the surgeon to have a conversation with a surgeon to explain why this case is unique and why this case needs to be approved. Very frustrating as a provider to live in a world where you're being told no, and you feel like you have no opportunity to speak with someone who understands what you're trying to accomplish for your member for your patients, it's very frustrating. As Dr. Hertler mentioned earlier, our process is deeply rooted in the clinical evidence. That's where things start. We bring this process to life through this digital platform that you see here, and then also through our specialty matched peer-to-peer process, and we'll go through some of that. We have algorithms so that when surgeons request or providers request services, if everything lines up well, if the information that's submitted, it's a very straightforward case. That case then moves on to approval. So as a provider, I love that. Less time of my staff having to make phone calls, we can expedite caring and get things moving. We allow in our process for images to be uploaded. So it's a case that is complicated, that is hard to explain in a note. We allow providers to actually upload images through our system. Our clinical reviewers can sit and have a conversation with providers based on the actual images. We're not relying on interpretation of a radiologist to determine whether or not something is there. We can see the actual pictures. That helps to expedite care as well. We also, through our digital process, allow for some nudging for where the cases are performed. If the patient is a healthy individual that could benefit from having a case done in an ambulatory surgery setting, which is oftentimes more convenient, less costly, we nudge the care to be performed there. Obviously, there are circumstances where that shouldn't happen. And we try to make sure that the place of service is correct according to the patient's clinical background. All cases though, don't fit nicely into this digital platform. There are some cases that require more personal touch, more human touch. And that's where our specialty matched peer-to-peer process really comes into play. When I talk about a specialty match process, what I mean is, as a practicing orthopedic spine surgeon, I would really like to be able to talk to another practicing spine surgeon if we're going to get into the details of a complicated case. When I have -- when I'm in the middle of a busy office, and I've got 3 patients waiting on me, and I've set up a time for a peer to peer, and I pick up the phone and the person I'm talking to is a primary care physician or maybe a nurse that's never performed a spine surgery, and I'm trying to explain to them why this case needs to be done, and I can tell that they're reading off an algorithm on a page that is extremely frustrating, right? I'm trying to take care of my patient, and I'm trying to take care of these other 3 patients and you're wasting my time, really. So as a surgeon who's lived in it to have the opportunity to sit down, schedule a time with a practicing surgeon to discuss the intricate details of the case, it's as good as it gets in the world in which I live, and practice. We make sure with our peer to peer process that you're talking with a true colleague. So if you're a physical therapist, you're talking with a physical therapist. If you're a surgeon, you're talking with a surgeon. And it allows for a level of clinical exchange that oftentimes doesn't happen. And unfortunately, where I practice, the health plans that we work with don't serve. So I don't get to take part in this process, unfortunately. I wish I could -- wish I could.

Thanks. We talked in the last section about creating the right set of financial incentives. The same thing is true in MSK. This is an example of how we help [ incent ] shifts to ASCs, which are a lower cost site of care. So think about ASCs as being small businesses owned by surgeons and local entrepreneurs. They think about what cases can they perform that are profitable. And what oftentimes determines the profitability of the case, is the case rate that is paid by the payer and the cost of the medical device, which is the most expensive component of the case. So payers have an incentive to try to lower unit costs as much as possible, but that ends up having some unintended consequences. If the case rate becomes so low, the case becomes unprofitable due to the high cost of the medical device, and as a result, instead of performing the case at their ASC, they'll send the case to the hospital, and there is going to cost twice as much money. So what do we do? We have a solution that carves out the cost of the medical device from the reimbursement that the payer gives to the ASC and we're financially accountable for the cost of medical device. The ASC isn't responsible for the cost medical device, and therefore, every case that they perform is profitable. So they -- we've reacquired their financial incentives, and they start to perform more cases at their ASC. So does it work? Well, let me show you an example. So here is an example of where we looked at 2 payers, one, 1 of our clients; and 2, a prospective client. Both in the same state looking at the same ASCs controlling from membership size. What we found, unsurprisingly, is that the payers that we were seeing 3x as many cases being performed in that ASC compared to the payer who wasn't working with us. Very powerful. And on top of that, we would suspect, would hypothesize that the other payers cases were actually getting performed adversely selected into the hospital outpatient department. So this is why payers use to work with us. On top of that, score carding and theme that we heard about earlier, because we are responsible for sourcing and paying for all the devices, we have full transparency into the devices that are being selected. This is something that payers don't have because they're paying a case rate, they don't know what's being selected. So we have this level of transparency, and we use it. It creates scorecards and dashboards, looking at specific surgeons, specific procedures and the intensity of the device that they're selecting. And here's just an example on the left side of such a scorecard, and we highlight the outliers. I think we all know that surgeons are competitive, physicians are competitive. If they're being ranked and judged, they don't want to be an outlier. And that's what you see on the right side. We present this information to them and educate them on their practice patterns compared to that of their peers, they tend to get a mine. We also share this information with payers, and they use this as well when they come up with providers with renegotiation. So they can reward the better performers and also withhold from the ones who are not as strongly performing.

All right. So let's get into something that I'm a lot more comfortable with, which is going through a patient scenario here, okay? So this is a 59-year-old. For the last year, he's been having a lot of right knee pain. He's going through all the appropriate conservative treatment. So he has tried therapies, tried anti-inflammatories, tried ice, tremendous amount of limiting knee pain, something more needs to be done. So sees his physician, they order some imaging studies, order an MRI scan of the knee, ordered some x-rays of the knee, shows a degenerative meniscal tear. Meniscus is a cartilage that pads within the knee joint. And also then the articular cartilage showed some significant wear, so you'd see some joint space narrowing on the X-ray. So the patient sees a surgeon, surgeon recommends, "hey, let's go in. We'll do a knee scope, Quick easy procedure." it's just a little trim up. We'll trim up that degenerative meniscal tear. We'll trim up your arthritis, or wash everything out. You're going to feel great, that's the procedure that's requested. Unfortunately, the literature says that's a bad idea. The likelihood of that given you prolonged relief of knee pain is very low. And a lot of those patients end up within 3 to 6 months, having recurrence of significant knee pain requiring surgery, and the evidence also shows, by the way, if you have a knee replacement surgery done after the knee arthroscopy, the likelihood of you having an infection, having failure of that knee replacement is much higher. So bad decision, right? Just to take a step back, 20 years ago, when I was an orthopedic residency, it was very common on Fridays for our joint surgeons to have a scope day. And they would do 15 to 20 of these procedures, and then in 3 to 6 months, we'd see the same names come through, and that's how I learned how to do knee replacement surgery. So this was a common practice 20 years ago. The evidence based over time though has shown us that was a poor practice. That should not have been done. And so following our patient through here, we have our rules engine, evidence-based comes in and says, "Hey, this is not a good idea. This is not the right procedure for this patient." So instead of just denying surgery, we then have a specialty match peer to peer like we talked about before. So we have a knee surgeon talking to a knee surgeon, right? And we have this clinical conversation. During that clinical conversation, our reviewer can share with that reviewer, "Hey, latest evidence base shows that these patients benefit much more from a knee replacement than they do from a knee scope. Have you considered that? Have you thought that through?" The knee replacement is a more expensive procedure at the outset. So I think this really illustrates we're trying to get to the right decision for the patient. We're not trying to go with something that provides significant initial upfront savings. We're looking at the long play here for knee replacement. After that peer to peer, the surgeons agree, yes, knee replacement is the right way to go. That surgeon then says, Well, I'd like to do this operation in the hospital. That's just where I typically do it. Our process allows for a nudge to say, "This is a healthy, young patient, would likely have a great experience in an ambulatory surgery center. And oh, by the way, it's going to cost a lot less. There'll be significant savings associated with it." So a gentle nudge is then given to the provider to move toward the appropriate care setting for this patient. Patient ends up having a total knee at the ASC, has a really nice experience, lower cost for everyone, and comparable quality that we've also assured. So just a case example here to show how this whole process works for a real patient. So I appreciate that.

Let's just wrap it up here. Can you guys hear me? Okay. First off, we talked about a very fragmented journey. It's really critical to have all the disciplines under one roof so you can catch patients no matter where they start their journey, no matter how they navigate their journey. Secondly, we talked about the ability to address unnecessary spend as well address the spend that is necessary to make sure it's in the right location with the right devices. And third, transparency to improve clinical decision-making. Thank you. I'd like to introduce Emily Rafferty, our Chief Operating Officer; and Jordan Silvergleid, Chief Product Officer.

All right. Good morning, everyone. I'm excited to be here with my colleague, Jordan. And what we hope to do over the next several minutes is to provide visibility and share a little bit into how we are powering everything you just heard throughout the day. And when you really think about our global operating model, our technology platform, it's really the underpinnings of everything you've heard today. And it's how we are driving both operational scale and driving continued innovation and growth throughout our organization. So as Seth mentioned earlier today, we have come together as One Evolent. We are aligning under a single brand. And that's powerful in and of itself. But what I want to emphasize is it's more than just aligning under a single brand. We are truly integrating as an integrated operating entity and organization. And so many of you may be top of mind of it's more than just integrating the recent acquisition of NIA. It's really looking at all of our capabilities, all of our technology, all of the legacy business units and integrating them and pointing and channeling all of them towards our value-based specialty strategy. So it's been a really powerful, big moment for Evolent over the last several months, and we'll continue to be on this transformation journey over the next several months and years to come. But when you really think about what were we trying to do? Why was this -- why was this transformation required? And what's interesting about it is we've been operating as under a BU structure for the last several years. So independent business units, with different flavors of focus, one more focused on operational and technical capabilities, one more focused on clinical innovation and growth, one more focused on building deep provider relationships and networks. And what's really powerful is that, we are now positioned today to execute more than we ever have on this -- on value-based specialty strategy, not in spite of that structure, but because of, because of, because we are now able to take all those capabilities that we have been building and harnessing over the last several years to align them together against our strategy. And so what really led us to recognize why this transformation was required was one, to be able to leverage our deep bench of operational and technology expertise and leaders across the organization and truly be able to leverage and optimize all those capabilities that we've been building to really integrate our global operating model and drive the operational scale and efficiency and to fully capitalize on the global model that we have today. To really harness all of the technology and automation capabilities that sit across our organization and channel them to drive administrative scale and to execute on our innovation road map, which Jordan will talk through here in a few minutes. What this slide represents is really the face of One Evolent. So we have been cultivating talent and skills across the organization. And this leadership team here is a direct reflection of that. So we have leaders here that not just represent the core tenets of our strategy from operating capabilities to technology, to product, to clinical, to medical operations. But these faces represent also the legacy business units that -- and a reflection of what we're trying to do is to take the talent that has been living, channeled in different directions and align them towards our value-based specialty strategy. So we have leaders here representing the legacy NIA organization, leaders representing from the legacy New Century, from the legacy Evolent Health Services. And so while we're moving away from those brands in aligning, I think it's important that we have leveraged our internal mobility strategy to really channel all this talent and integrate as a united integrated operating leadership team. The expertise run deep throughout our organization. It's not just this leadership team. As you've heard today, the stats on the number of physicians and clinicians and data scientists and operators and technologists that exist throughout our organization, and again, we have been cultivating and bringing all those together is really what allows and gives this team the power to deliver consistent results over the last several years. So the integrated operating model, I think, spending a few minutes diving deep into what is the intent behind the integrated operating model. One of the most first targeted results is to be able to recognize and drive both financial and operational synergies as a result of the operating model. When we look across the organization, we had over 60 capabilities that we are bringing together and integrating across the organization, 60. One of them in particular is call center, and that's the example highlighted on the bottom of the slide here. So just within call center, we have 4 call centers that we are integrating into a single global call center model. We are migrating to a single telephony technology platform. We are centralizing all of our workforce and performance management. And what that does is really allows us to drive scale and that we can flex our staff, we can have a single view across all of our products, all of our specialties, all of the partners we serve. But it also allows us to connect the dots for our members, for our providers. You've heard connection is a huge theme today and deliver a single voice to our partners. So it's both driving simplification, scale, but also improving the experience to ultimately those we are interacting with day to day. As you saw on this -- on the last slide, we have a deep bench and a lot of individuals focused on operational excellence and operational efficiency. And I think we think about efficiency and scale in 2 different ways. So internally, we're looking at how do we remove manual touch points? How do we automate standardized processes within our operations today to lower the cost to deliver, to make us better able to scale. And Jordan will talk through a couple of those exciting examples here in a few minutes. But also it's externally focused to how do we remove low-value touch points to our providers and members, how do we streamline their interaction. So when we think about operational efficiency and scale, it's both pointed at internal and external operations. And we've really been able to, through this integration, centralize and optimize, our process engineers, our data-driven capabilities to really harness a focus -- a deep focus on operational efficiency. So one just example of this is where you have -- we had our process engineers partnering with our provider teams that we're directly interacting with providers, with our account teams who are day-to-day interacting with our clients, our operators, our products and our technology team on an initiative that was designed to increase the amount of electronic off submission. And through this one initiative, over a 12-month period, we saw an 18% increase in electronic off submission and also a 13% decrease in the amount of calls per off. So just one initiative that drove huge efficiency, not only for removing the manual touch within an internal operation, but obviously providing a better experience for our providers and increasing the turnaround time on off submissions. Another key component of lowering our cost to deliver is obviously having tight consolidation of our vendor costs, not just to lower the price point of our vendors, but tighter control of the vendors we rely on through a centralized view, which is another key focus of our integration. When we think about our integrated operating model, another key design choice was to better power and enable the cross-sell opportunity to increase, how do we help better position ourselves to increase the product per member as Dan shared, that's a huge part of our growth strategy. And so when we think about integrating capabilities, it's not just our operating capabilities, it's integrating our account, our growth teams. It's looking at all of our clinical teams where that historically may have been focused on a specific specialties, so radiology or cardiology and bringing them together because what we have heard from our clients and what we know to be true is, you can't just have all the capabilities. You have to actually integrate and connect all the capabilities. That's what will really unlock the power. And so having our account team have access and represent the full breadth of what we do positioning our operating teams to be connected and to be able to deliver a connected story and experience to our partners and providers was a key design element of our operating model as well. And then integrating our technology strategy to have effectively ruthless prioritization so that every dollar we spend, every tech decision we are making is designed to move the needle on our specialty-led strategy. And that has been a key element that, again, is kind of a theme here today of our integration is really aligning all of our capabilities, all of our talents against the specialty vision. So our differentiator -- one of our differentiators has been our global model. I think oftentimes when folks hear about a global model, they think that it is only a lever to drive cost. And while that's certainly a key element of a global model, what we have found is our global model is not just about lowering our cost. It's about delivering increased and improved service levels to our providers, to our members, to our customers. So we have -- today, our global model is 2 key geographies, 1 in India and 1 in the Philippines. And within India, most of the capabilities that we are building there are focused on our administrative back-end capabilities, IT operations, product and engineering, analytics, data science, which is complemented by our Philippines operation, which is deeply focused on clinical operations. They follow U.S. education patterns, and so we can actually extend our global model and have extended it into our clinical operations as well as customer service. As I referenced earlier, having a global customer service center. And so again, to emphasize, we believe we have a truly differentiated global model in that, one, we have scale. So approximately 25% of our workforce is actually through our global model. And all of them are Evolent badged. That's a really important distinction because we have found that the captive model where you are leveraging and employing and standing up your own operations in a global market is how you actually attract and retain the best talent. And we've seen that through our engagement through our retention of our global talent and certainly earning us one of the top 100 places to work, workplaces in India. Second is, because of our scaled and employed model, we obviously realize significant labor arbitrage. So that's not just a mechanism to lower our cost to deliver but certainly allows us to offer competitive economics to our partners. And then lastly, as I mentioned, it's not just about cost. It's also about increasing our service levels. So we have -- it's partially due to not just having a 24/7 operating model. But when you think about what we do and the tight turnaround times and listening to Dr. Walker share the frustrations of wait times, having that 24/7 operating model is certainly critical, but we also have unlocking access to highly skilled workforce. So a lot of our production staff actually have higher education degrees. And so we not only are accessing talent at a lower cost point, but also a highly skilled. So this global model, again, we've seen it have huge dividends and where we've deployed it and the large opportunity that sits in front of us is expanding that into our specialty strategy and to the theme of what we have been talking about of integrating towards One Evolent. This is one of those capabilities that has the opportunity to make a huge impact in our specialty strategy and we are underway in rolling out and expanding our global model into our specialty strategy. So with that, I think you've probably heard a common theme that our integrated operating model is driving both administrative scale and allowing us to drive innovation and growth. And I think as Dr. Walker said to him, our clinical interactions and peer model is as good as it gets as a COO, driving operational efficiency and the integrated operating model is as good as it gets. So I'm going to pass it over to Jordan, who's going to share more about our technology strategy.

Great. Thank you, Emily, and good morning. You've heard over the last several hours about a number of the challenges that our customers have in managing specialty care. I'm going to underscore 2 of them as it relates to clinical reviews. The first is it's a very labor-intensive process. But unfortunately, our payer customers are broad but not deep. And so they're often deploying generalists across multiple specialties. In highly complex areas like oncology, cardiology and MSK, that means these generalists can miss subtle but very important details. They're not up to date on the latest evidence, and they can fail to engage specialists who, if they want to talk to the payer at all, want to talk to a peer, not a generalist. The second problem is that these clinical reviews are very cumbersome for both payer and provider. Typically, a provider will fax in a lot of information. The payer will pour through it, have follow-up questions, more phone calls, more faxes, a lot of friction. Our decision support tool, which was purpose-built for specialists, simplifies this information gathering, and we're pleased to see an 85% national utilization rate compared to fax and phone. But over the last several years, we've also been leveraging more advanced technologies to streamline the process even further while maintaining our deep specialty expertise. I'm going to go into 2 examples. First in the clinical and second in nonclinical. On the clinical side, specialists today can use our decision support tool to upload patient records. Normally, this would require human beings to pour through those records looking for the key pieces of information. But for the last 2 years, Evolent has been leveraging natural language processing to pull out, to extract key structured data to review that against our carefully coded clinical criteria, which is constantly changing. And then if it passes a certain probability threshold, to approve the case automatically. We've seen dramatic results. As you can see on the right, within imaging, where we first deployed this, a 10% increase in auto approval rates which allows our clinician team to focus on more sophisticated tasks. But we've also brought this capability out to providers to improve their experience and ultimately, the experience for patients. So we, today, can enable instantaneous suggestions and approval within the physician EMR, dramatically reducing time to treatment and providing a much better experience for those providers. We're very pleased with the results that we've seen, and we are expanding into additional specialties as well as exploring other types of AI, including generative AI. Our efforts here are going to look very similar to what you see on this page. We're going to be leveraging artificial intelligence to complement and scale our human intelligence. And we're very bullish on AI to help extend our leadership position in specialty care, value-based specialty care. I also want to emphasize that we do not automate denials or recommended denials ever. Second, in the nonclinical area, there's a lot of manual processes, and we have been leveraging robotic process automation to wipe these out. First, in claims processing and adjudication, there are a number of steps which are manual today because there's a lot of edge cases and nontraditional claims that come in. We have been singularly focused on automating those processes, including pulling out edge cases to allow for more streamlined processing. Second, we have a number of data interfaces internally and externally with our providers and customers. Historically, we've had human beings monitor these, but we have now nearly 100 bots that are monitoring these data exchanges and alerting us to any issues. These 2 examples have enabled us to do more with less in these areas. But more importantly, they enable us to increase consistency and quality, reducing manual errors, improving our auto adjudication rate and reducing issue resolution times. The Evolent Health Services division has really refined the use of RPA. They have a center of excellence that we are excited to broaden now throughout Evolent. I'd like to step back now from these 2 examples to share a little bit about our overall technology innovation strategy and the number of benefits it provides to stakeholders. As you can see on the left, we have a layered or modular architecture. So the application layer is separate from the data layer, separate from the infrastructure layer with services, connecting these. This type of architecture enables faster, new product development, scaling cross-selling because we don't have to build the whole stack when we have a new use case that we want to address. Second, the centralized data layer enables a 360-degree view of patients and providers and enables us to support the use cases that you heard earlier today. This is what prevents siloed care, it enables connected care. Third, the streamlined infrastructure enables us to narrow the focus for our InfoSec Group, it enables us to narrow the types of tools and capabilities that we need to build and deploy. So highly efficient. And then finally, because it's a services-oriented architecture, we're able to push those insights directly into our users' workflows, as I mentioned earlier. So in conclusion, 3 takeaways that I'd like to leave with. Number one, we have a deep bench of leaders within the technology and operational area that will enable us to execute our exciting vision. Number two, we have a proven global operational model that will deliver financial and operational synergies and number three, a really significant opportunity to continue leveraging advanced technologies and that global scale. Thank you. And I'd now like to introduce Kali Beyah who is going to talk about human capital.

Thanks, Jordan. I get to talk about the people who make all of these things we just talked about happen every day. And you got to see a great selection of them today already, really the leaders and strategic minds at play, and I'm excited to unpack that a little bit more and how we prioritize human capital at Evolent and how it really is a differentiator for us. So I think a few folks have stolen some of my favorite highlights here, Seth Blackley. But in a time where people have been talking about resignation and quiet quitting, we've had very much the opposite at Evolent. And I think we should feel really excited about having created that. We have 89% engagement and people in the midst of being fully engaged in their work are also giving 19,000 hours in 2022 to their communities where we live and work. In addition to that, we've got 5,000 employees now, 95% retention of high performers, right? You need ambitious, high-performing people to deliver on ambitious high-impact strategies like we've outlined today. And clinical expertise and depth, you've -- we've talked before about 1,400 people who are clinicians in our organization. You've gotten to hear from 2 of them today. We feel really proud about that as a differentiator along with being a diverse and global workforce to power some of the operational excellence that Emily talked about. And we're increasingly structured and aligned as both in terms of our org and what our charts sort of look like and how we bring it all to life, but also as a brand. So we make sure we're bringing our full capabilities to deliver on the strategy. So if our people are a differentiator, right, as human capital is where it's at for us in a lot of ways in terms of how do we bring it to life? How are we making sure we build on and develop that strategic advantage. Well, our human capital strategy is really a reflection and intended to accelerate our business strategy. That means that our priorities include becoming One Evolent, right, becoming a sharpened focus on specialty care and specialty -- the specialty value-based care opportunity and organizing ourselves to deliver on that. Attracting, growing and retaining the best talent to do that. And then sparking joy and nurturing culture in a way that keeps people glued and wanting to be a part of this in the midst of a changing world and busy priorities. I'm going to unpack each of these a little bit, but we spent most of the day talking about the specialty care opportunity and about how we have really sharpened our focus. So then it makes sense that a big piece of this and a huge mile marker on that journey was the acquisition of NIA earlier this year. We closed on that in January, and we got after really quickly making sure we integrated folks intentionally, the NIA 1,500 people that joined us, right? So 1,500 out of our 5,000 people joined us from NIA. And we worked to make sure they felt like they had what they needed. They understood what they were becoming a part of because the faster they integrate it, the faster they understood the larger picture here at Evolent, the faster they could get to impact and continuity and the work they were doing for our customers and ultimately for patients. And they've told us, and we've measured that we're on the right path on that, right? So 80% of the folks said, we continue to feel welcome that they feel supported and informed and that they understand what's expected and they have the tools they need to be successful. Our leaders, the folks you've heard from today took time out of their schedules to make sure they met with those folks, showed the NIA team that they're part of the journey and that we're building something that takes all of us together. So we'll continue to work on that, right? It's a few months in, but we're on the right path. We'll continue to work at it and also measure how we're doing. Someone asked me this morning, I joined Evolent 8 months ago and someone said, "What have you liked most about being here? What have you found most different about being here?" I think, look, lots of places we'll say, our people, right, are what's special. But I think it is really true that Evolent punches above its weight when it comes to high-performing, high-EQ, high-IQ mission-driven people. And that has been different in the thing I liked the best and continue to like the best about it. And what I -- especially like in part because of my role, is that we do it with intention that it's not just good fortune and happen stands, right, that we're building a high-performing culture that's focused on attracting, growing and retaining the best talent. And we need that to deliver on the ambitions of changing healthcare for the whole nation. So let's talk about how. First, internal growth and mobility, that's a focus for us in this year to continue to do that, but we've got a good track record already. And lots of places can tell you about programs and things that they're doing. And we can do that, too. But I think what tells you even better is to take a look at a few of our folks who've grown with us, who've been wonderful, who demonstrated a wonderful capability here and then seen that really poured into and cultivated. Jessica White started with us really early on in our -- in the Evolent journey as a leader in IT -- I'm sorry, as the analyst in IT actually, and she was a Director just as recently as 2013. Today, she leads as CIO. Brian Sze, who works in performance, which you heard about with Scott earlier, he started out as a Senior Director in our transformation space. He's now our SVP of Performance. And then Jess Summers who started out as a Senior Director in Corporate Development and is now our SVP of Finance. These -- it's like a Bruno Mars, don't believe me just watch, right? If people say, we attract people, we grow people, we retain people, this is our just watch for our talent and our people. So we feel really proud about that. And I think it's a reflection of our philosophy, which is some of the best minds in healthcare are already here. And so our job is to make sure they then see their future here, too. So that's why we're focused on internal mobility. That's why you see that 77% of our most senior leaders were internal promotions that you can build, you can buy, you can borrow talent. We lean hard and to build. And we're setting the ethos to keep building so that's why we have diverse leadership across our company as well as in our Board. As Seth mentioned earlier, we have the right values that we continue to be anchored in. And then we're inclusive. We want people to be able to bring their whole selves to work because we want your whole cognitive load given to the work we've got to do and not given to figuring out how to navigate in a place where you can't be your whole self. So we think we're hitting the mark and working hard each day to keep hitting that mark. And being open and honest when we miss it, so that we can get back on it. So I know every Investor Day must have a spark joy slide. I'm sure this is not uncommon. But I think it's one of my favorites and one of the things I think is exciting for us to differentiate as a workplace. And we have, I think, a unique opportunity because of the work we're in to be thoughtful about how we make the workplace a special place. And let me tell you why it makes sense to have this, right? There are a couple of reasons. One is, let's be honest, the talent game has changed. People are choosing how to spend their work and give their talent in a way that is maybe different than they would have just a few years ago, pre-pandemic, right? So people often talk about the great resignation, it was also often called the great reevaluation because people are evaluating differently what it was and what you expected in a workplace. And so our strategy reflects that in part. The second reason it makes sense is, look, we're in the healthcare space. And at the end of the day, all of the work that the team has talked about is about centering the patient so that they don't have to see themselves as a patient, so they can see themselves as a grandparent who spends time with their grandkids. So they can see themselves as a person who can go to work and doesn't need to be on leave. So that they can live a life that is thriving for them. And so it only makes sense then that in our own workspace, we get to try to model a little bit of that, too, right? What's the life people might want to live on that would be at least as fulfilling as our part can do to contribute to it. So we're doing that in a few ways. One, we're investing in the moments that matter. That's everything from onboarding to highlighting our brand reveal and bringing employees along on that journey. On the brand reveal, we've talked about the brands we're sunsetting. And it's more than sunsetting a name, right? People have a sense of, "I built this company that you're now sunsetting the name." A sense of it stands for some piece of the journey that I was really a part of. So we engaged employees in that process. Just like we went out to market and talked to decision makers at providers and said, "Tell us what you think of our brands, so that when we knew both inside and outside the equities we were pulling into our future as Evolent and in our future with a focus on specialty care." We also celebrate each other in a day to day. So we have recognition platform that 75% of our employees are engaging in. Those are the little moments that matter. And those moments matter even for continuity of the business. When you get onboarding right, for example, as a little moment that matters, 20% increase in 3-year retention, right? So that we have long retention. We want to be continuous about investing in that, so that we can keep getting after the work that we want to for our clients and ultimately for patients, our customers and patients. And then differentiated benefits and flexibility. This only makes sense, right? We're doing benefits management. We want to be serious about how we show up and the benefits for our employees and we do a lovely job at that offering. Most recently, I'm excited to share we've added mental health benefits and 100% of our people had mental health coverage can get 12 visits a year with access usually within a few days. Given sort of the all that has happened in the world, that is a difference maker. And it matters that recent study shows, 81% of folks say, their choice of employer for their -- for the future will factor in the support for mental wellbeing. And our people work on heavy stuff, they work on cancer. They work on cardiac issues. We want to make sure they and their loved ones have that support, and we've done a nice job on that. We also have a flexible workplace and allow people a day, a quarter to spend -- it's a personal impact day that they can work in the communities, and they're doing that. And then lastly, effective listening and communication. That's important, especially in a hybrid world. But I think it's also important, really kind of for the reasons that Pat Garrity talked to us about earlier, right? He said, "for our business and why, a guy will trust us, right? It's about trust, trust and trust." We're also building trust inside, right? It's a virtuous circle of building trust inside just as our employees that are building trust and partnerships with our -- with the providers they work with every day. So to build trust, we talk with our employees. We're listening regularly. What you see here on the right side of the -- I think that's the right -- the left side of the screen for me is feedback on how we're doing when we have a form. So we're reorganizing -- reorganized ourselves, as Emily mentioned, to deliver on an integrated operating model. That's a lot of change. So we're talking regularly and listening regularly with folks about how does that resonate? What works, what's not, what would you like to understand more so that you know the strategy that your data day contributes to. And we're tracking well into the 80s with each of the different forums that we've had so far this year. And then at the end of the day, look, we want to see how we're doing. In addition to measuring internally, we're excited that folks have said externally, we're doing all right. We're on the right track and we get to keep nurturing this advantage. So whether being a best place to work as measured by HRC, the Human Rights Campaign, Best Places to Work in India, an important factor for our global model and our global advantage as we look at arbitrage opportunities, et cetera. And then for [indiscernible] on the parity, one of the best places for women to advance. So we just found out last week that this is our fourth year in a row as being recognized for parity in the workplace. So all of these things really are the differentiators for us and an advantage that we're keeping after. And so takeaways about Evolent and the people who get to bring the strategy to life every day. We've got a diverse and engaged global workforce and we're structured to deliver on our mission to be focused and bring our full talent density to the specialty care opportunity. We've got strong leadership in a great leadership bench, a history of successful integration of employees and fostering a shared identity and then a differentiated talent experience with a culture that's actively fostered each day. With that, I will bring up Seth Frank to tell us about some next steps in logistics. Seth?

Thanks, Kali. That was great. All right. So we're running a smidge long, but we're going to keep the trains running. We're going to stop the webcast for 15 minutes. So at 25 minutes past, we'll start off with John Johnson and then go into Q&A and try and preserve all the time. These doors will fly open here in a minute, and there's lunch outside. Please grab it, but definitely please be in your seats at 25 after so we can start right on time. Thanks.

Ladies and gentlemen, we will begin shortly. Please take your seats. We will begin shortly. Ladies and gentlemen, I'd like to welcome to the stage, John Johnson, Chief Financial Officer.

All right. We will bring this to a close now. I'll talk for about 15 minutes, 15, 20 minutes, and then we'll do some Q&A. We designed this day to hopefully really start to give this community some insight into how we're creating the value that we're creating on a -- from a clinical perspective, from a partner perspective and from a member perspective. And now we're going to talk about shareholder value and how all of that translates into consistent and sustained earnings growth over a long period of time. So I'm going to hit 4 things. When you hear me say that some version of the word diversified a number of times over the next few minutes because it's very important to us. We're going to talk about the growth algorithm a little bit more using the same framework that Seth introduced earlier. We'll talk about our gross margin performance in our different business lines and talk a little bit about capital allocation. Early on in the day, Seth talked about our 2 basic economic models, one being our capitated product, the performance suite, where we're making a margin based on ultimately lowering the clinical costs for claims cost in those particular specialties with the rest of our products, largely being subscription-based, where we're driving our margin based on differentiation and volume. We really like having these 2 models together, they play off of each other, the willingness on our part to take risk in the performance suite supports the tech and services sale and the volume within tech and services, where we have 60 million product members really provides an innovation engine for the performance suite. Seth intro'd this slide, I thought I'd do a little bit more math on it. This is how we get paid with a particular focus on the subscription-based products where we get paid per member per month. For example, in the performance suite, we had 3.2 million product members in the first quarter of '23. On average, the fee for those members, the capitation fee, was $24.66, which would annualize to $960 million of performance suite revenue. In the same quarter, we had $60.5 million tech and services members -- product members, with an average fee of $0.36 per month. Now why is that so different than $24.55? Ultimately, there are 2 reasons. The first and largest is the $24.66, includes the claims cost that Evolent takes responsibility for in a subcapitation model. We also provide and do more intensive work in the performance suite than we do in the tech and services suite to drive ultimate value creation, again, both for us and for the plan and for the member. Lots of ways we can grow here -- what might that look like going forward? Seth intro'd an expectation that we continue to grow this business in the mid-teens plus-plus. What does plus-plus mean? Plus-plus means we expect the mid-teens year in, year out, to be a floor. We believe there will be some years where we have particularly strong growth in the performance suite that could allow us to grow significantly in excess of that number. We'll talk a little bit more when we talk about margins on why we really like this balance. But here's the growth algorithm in more detail. the first 3 columns, adding partners, expanding members within those partners. So for example, adding a new state with a national partner. We're adding products to an existing partner. For example, adding cardiology where we're already doing oncology services. Those 3 together, we target 6 to 8 new partners or significant expansions per year and believe that, that level of growth can drive baseline member and revenue growth of 10% to 14%. The upside in our model, both historically and as we look out into the future, comes from shifting tech and services members to the performance suite, where each 1% shift in the product member mix, recall that we had 66 million product members in Q1. Each 1% shift from tech and services to the performance suite would represent revenue growth of almost $200 million, which is about 10% on this year's guidance midpoint. That together gives us the confidence to be able to project multiple years of sustained meaningful growth on the top line. Now let's talk about translating top line growth into bottom line growth. And here, for simplicity, I'm going to focus just on these 2 key PMPM-based products. We also, as you know, have case-based products, which have a slightly different structure and do not have members in the denominator. So for simplicity, I'm going to focus on these. Our performance suites, we've articulated a multiple year margin maturation curve, which you see here on the right. We have given broad ranges for these products between 4% and 6% in year 1, ramping up to between 12% and 18% in year 3. We continue to expect those to be our target margins for this maturation curve. What we're showing you here today is the actual experience of all of the clients that have gone live with us since 2019 since we've owned this particular part of the business. So to dig in a little bit, 2.5 million lives have launched on this platform since 2019. In the first 12 months of operations for those 2.5 million product lives, they averaged a margin of 6%. We have 1.4 million lives that have been on the margin for more than a year during the -- been on the platform for more than a year. During the first -- during that second year, they averaged a margin of 11%. And -- and we have 0.5 million lives that have been on the platform for more than 2 years. They have gone live since 2019. They are now at our target margins of 15% or better, which is also where we see our mature markets that have been with us since before 2019. I think there are 2 points that I would make on this graph. The first is this is not a small data set. This is millions of members in large plans and small plans, national plans, and regional plans, Medicaid, Medicare, commercial. The second is this is an average. And within any given partner within any given year because this is a risk-based product, there will be variation. That variation typically can come in 1 of 2 key ways. The first is geographic idiosyncrasy which can impact this curve. And the second is there are distinctions between Medicare and Medicaid that can change how a particular regional plan can evolve over time. Where we feel particularly comfortable is in these averages, which again, are across a diverse group of partners, our targets going forward based on our history in the past. The second key piece of our product suite is our specialty tech and services products. We have 60 million product lives in this particular part of the business running a gross margin of about 50%, which is around our target -- we think about why we believe it is very valuable to our sustained earnings path to have both of these growth opportunities, growing in capitation models like the Performance Suite and growing in services models like the tech and services suite. I like to think about it in terms of what size deal does it take to grow earnings by a specific amount. And you see here on the page, we can grow our gross profits by about $13 million in 2 ways. We could add 0.15 products per member. That would be, for example, selling one product to a large [indiscernible] 6 million lives or we could add 300,000 new capitation members in the performance suite. Those have the same bottom line dollar impact and a pretty different top line impact. And so the faster that we grow the performance suite, the faster the business will grow on the top line, the faster that we grow the tech and services suite, the faster our percent margin will increase. I like this from the CFO's chair because it means that we can remain extremely disciplined in our underwriting, in our capitation products because it is not our only way to drive earnings growth in the business. That combination, along with what we spent the bulk of the day on in terms of how we're creating value has led to this performance over the last several years on both the top and the bottom lines. The last thing to talk about is translating that profitable growth into cash flow. We've put out an expectation starting today that at scale, we will convert between 65% and 70% of our adjusted EBITDA into cash that we can deploy for organic and inorganic investments. This is consistent with our recent history, which you see on this chart, where we generated $133 million in adjusted EBITDA in the TTM period. We used a portion of that for interest. A portion of that was eaten up by working capital. And the rest, 56% was deployable for organic and inorganic investments. We made some inorganic investments during that time. And so our final reported operating cash flow for that period was $38 million. Over the next several years, we would expect our working capital dynamics to be somewhat variable consistent with our history based on specific partner dynamics and needs. And we'd expect in a few years once our NOLs are exhausted to become a federal cash taxpayer. We've had 3 clear capital allocation priorities for the last several years, and we are reiterating them today. They are first continuing to invest in the business that we have, driving some of the product and innovation that you heard, for example, Jordan talk about so that we can continue to have what we believe to be a real lead in value-based specialty care. The second is disciplined and strategic M&A as most recently evidenced by the NIA and IPG acquisitions. And third is accomplishing those 2 objectives within a disciplined and efficient capital structure. Now we've been quite clear since the close of the NIA acquisition that our near-term priority in capital allocation is delevering, and we continue to reiterate that today. With a goal of being below 2x net levered by the end of 2024. We also continue to expect to generate this year more than $120 million in cash before paying interest. And we just talked about our long-term expectation of EBITDA to cash. Seth opened the day reiterating our $300 million exit run rate target coming out of 2024. This is the bridge to get there. We had $106 million of adjusted EBITDA in 2022. That $106 million included $10 million of EBITDA from the IPG acquisition. On top of that, on a fully synergized basis, we had $85 million from NIA and another $15 million from IPG. We expect, based on the curve, we talked about a little bit ago, we would expect maturation between $40 million and $50 million by the end of 2024 coming from our Performance Suite contracts. That gives us a strong line of sight into EBITDA with no new growth on our current business of approximately $250 million. Between now and the end of 2024, we do plan to continue to grow the business, we would expect a growth in our EBITDA of an incremental $50 million to hit our exiting run rate of exiting '24 at $300 million in adjusted EBITDA. Finally, before we open it up for Q&A, to reiterate our financial framework, as we think long term, we really are highly focused on sustainably growing the EBITDA of this enterprise. And here, having an outlook once we have achieved the $300 million target exiting next year to continue to grow that EBITDA by at least 20% a year. We expect that to be supported by revenue growth in the mid-teens or better with possibility to meaningfully outperform that number in any given year based on strong growth in the Performance Suite. We expect to generate a nice amount of cash from our adjusted EBITDA, and we continue to expect a steady state net leverage ratio of approximately 2x. With that, I think I'm going to ask Seth and Dan to come on up, Seth Frank has a microphone, and we're going to launch into Q&A.

All right. Okay. So here's this is going to work. I'll just go around raise your hands and we'll take questions. John just did a great job with capital reallocation by giving us an extra 5 minutes. So thank him for that when we're done. Direct your questions up on stage, if we need to bring in our other speakers, we'll do that. All right. So we'll go first, Charles.

Charles Rhyee with TD Cowen. John, I just wanted to just follow up on your presentation there where in the bridge that you gave to get to the $300 million, the $50 million is where the -- is implying -- is there a combination of both growth in the base business plus any additional let's say, tech and services deals? Or what -- how much of that do you expect to come from maybe new tech and service contribution because, obviously, we had the Centene 1 just earlier this year?

Yes. So focusing in on that last $50 million in the chart, right? We expect the majority of that to come from new tech and services deals. Now that could be specialty tech and services, so adding oncology tech and services to a cardiology partner, for example. It can also be growth in IPG, surgery management solution and anything else that delivers near-term EBITDA. It's not likely to meaningfully come from the performance suite given that maturation curve that we looked at. It's mostly going to be on the fee side.

And then just a follow-up. In that long-term guidance, you're talking about at least 20% adjusted EBITDA growth from 2025 onwards that, that's using 2025 as the baseline. So we're kind of really looking out to '26 and beyond because that's I'd imagine the $300 million at the end of '24 is still annualizing at a much greater rate in '25. Is that fair?

That's correct, Charles. Yes.

Anne Samuel, JPMorgan. You guys spent some time today talking about the integrated operating model a lot of efficiencies. And I was wondering if you could maybe touch on how much of that is embedded within your synergy guidance and if maybe there's any incremental opportunity for cost savings?

Good question. Most of it is fully embedded. You may recall back in November, we outlined a $15 million synergy target for the NIA acquisition and important component of that $15 million was the global model and leveraging the model that we had at Evolent for those NIA operations, which were Allstate side at the time. So the majority of that is already captured in our guidance. Now I'd love there to be upside but think of it as included in that $15 million.

Just had to check. And then maybe one more. You talked about opportunity to convert some of your tech and services customers to Performance Suite over time. Just wondering how big is that opportunity? How many of your customers right now really makes sense to make that change, how do we think about what proportion of that makes sense.

Yes, I'll start and Dan may add on to that. I think, Anne, it's very significant in the sense that the percentage we showed today, it's 5% penetrated effectively within the current base and I think the litmus test for why would I want the performance suite is if I'm a health plan that is struggling to make the numbers work. And have an MLR issue, I have a profitability issue. And I think nobody is immune to that. And I think in particular, everybody has looked at the risk adjustment changes that are coming down the pipe. There's a number of other changes that are similar to that. I think what that does is creates more pressure and it creates a need to address the savings through utilization. You can't do it through coding anymore in the same ways that you could over the years. So I think what we're hearing from our customers is that, that pressure is likely to ramp up the focus on specialty care. And again, I don't think there's immunity to that anywhere in the marketplace. I think you're not going to have a specific formula Anne on which type of plan and which market it's going to be based on that kind of pressure that we look for.

Yes, Sean Dodge, RBC. John, on the margins on the Performance suite, you talked about at maturity, there can be some variation in those. Maybe just give us a sense of how much variation there are. And then I think you mentioned too that it can vary by payer. And so how much variation kind of do you see at maturity amongst the different payers?

Yes. It's within a range of a couple of percentage points at maturity is what we tend to see. It's not a big variation at maturity. Now where you can see more variation, Sean, is in the path to maturity. So we've seen, for example, customers in areas that are sort of ripe for this ramp to 15% quite quickly, and we've seen them take a little bit longer. You tend to see more variation in the pacing than you do in the final outcome.

Okay. And then you talked about early on incubating a performance suite program for musculoskeletal. So maybe just, should we think about that operating much like cardiology and oncology and then when do you kind of work to scale that up?

Yes. I'll start and Dan can chime in as well from a product perspective. On timing, the sales cycles with these performance suite deals, as we've talked about before, are relatively long, taking 6 to 12 months. And so as we contemplate when might a product like that be live in the market, you're probably talking about '25 at the earliest on a realistic basis. Dan, do you want to talk a little bit about how we might sell it.

Yes. I would add a few points to that. So as we have our voice of customer, and we're engaging with health line executives, MSK is always a top 3 pain point along with areas like oncology and cardiology. We feel like we have the ingredients to create a lot of value in MSK. So just to remind the group of what we talked about earlier, 4 ways we create value in MSK. We can prevent unnecessary surgeries from happening in the first place. Number two, for the surgeries that do need to happen. We can make sure they happen at the most appropriate site of care; number three, we can work with the surgeon to optimize their device choice; and number four, we can engage with device manufacturers to optimize unit cost of those devices. So again, 4 different levers we have. Right now, we sell MSK on a tech and services basis, but certainly, we see opportunity to stitch those 4 levers together. And over the next 18 months or to build out that solution such that in 2025 and beyond, that could be a third meaningful performance suite solution for our business.

We heard in the customer testimonials kind of a lot about care navigation for what I think was the first time. It seems like a new but very reasonable capability. So is that broadly deployed across all of the performance suite today? And then is there incremental margin potential relative to that 15% as you deploy navigators and drive increased patient compliance with the Level 1 path lease?