{ "docId": "019dd923-622c-750b-8b97-1ab4276c66b3", "docSlug": "cc2ab32a5b10", "documentTitle": "MultiPlan Corp (MPLN)", "authorId": "51_Muddy_Waters", "authorName": "Carson C. Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-11-11 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 4, "pageCount": 14, "prevPage": 3, "nextPage": 5, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 6, "notes": "The text serves as a research note exposing potential flaws and hidden costs in MPLN's business model, supported by interviews with former executives.", "elementsJson": [ "paragraph", "footnote" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b97-1ab4276c66b3/4", "deckHref": "/decks/019dd923-622c-750b-8b97-1ab4276c66b3", "deckJsonHref": "/decks/019dd923-622c-750b-8b97-1ab4276c66b3.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b97-1ab4276c66b3#slide-4", "components": [ { "bbox": null, "kind": "callout", "text": "One former MPLN executive explained to us the apparent secret of MPLN's 76.3% Adjusted EBITDA margin.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f3c-7011-a9a3-12b58ba71a43", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Adjusted EBITDA margin: 76.3%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-3f3c-7011-a9a3-1a7cd0d2df9d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.11, "w": 0.78, "x": 0.11, "y": 0.39 }, "kind": "paragraph", "text": "For MPLN's analytics-based services and complementary network segments, which form the majority of its revenue, the company contracts primarily with insurers' commercial plans to lower out-of-network bills. These commercial plans are mostly self-insured, meaning that the employer pays the costs of healthcare claims, which incentivizes employers to use MPLN to lower healthcare costs. However, unlike Naviguard, which takes no fees from United customers at present, MPLN tries to extract significant profits from employers.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "220fe85b-6aca-4e50-9d7c-d1df16eca2f3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "described MPLN's fee structure as a \"scam\", while complaining of persistent member balance billing in claims where MPLN was involved. We learned from two former MPLN executives and a MPLN customer that MPLN's billing model may enable it to get paid more per claim than the healthcare providers whose bills it reprices. We understand that major insurers have forced MPLN to reduce its take rate in recent years, in some cases reportedly cutting MPLN's take rate from 12% to 6% of \"savings\". MPLN has not disclosed this development in its bullish presentations.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4eae39da-12cc-43bd-9fbe-dca4fedea58b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.17, "w": 0.78, "x": 0.11, "y": 0.65 }, "kind": "paragraph", "text": "One former MPLN executive explained to us the apparent secret of MPLN's 76.3% Adjusted EBITDA margin. The executive stated that MPLN's most profitable type of user tends to utilize the Data iSight functionality only, without involving MPLN's negotiations team, thus eliminating almost all human intervention by MPLN. If a provider or facility accepts the lower bill generated by Data iSight, MPLN can report significant savings to the carrier and employer, collecting a fee for virtually no additional work. The twist is that providers and facilities can balance bill the member to recoup the rest of their billed charges. This hidden cost has led to acrimony between MPLN and its customers, per ex-executives. The reality is that MPLN's", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8284cf10-a7f4-4e67-b266-77b5ea4bd285", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.13, "w": 0.78, "x": 0.11, "y": 0.25 }, "kind": "paragraph", "text": "Naviguard seeks to improve significantly on MPLN's shortcomings by eliminating fees, providing deeper cost savings, and preventing member balance billing. Naviguard uses a statistical pricing methodology that examines costs of services on a per-location basis based on UHC claims data, while factoring in Medicare and Medicaid rates to yield an appropriate price. According to employer feedback during a Naviguard pilot involving 125,000 UHC members, Naviguard had a 30% to 40% pricing advantage over MPLN.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "874010fe-a859-4ab7-98c8-bbcb51e95747", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.13, "w": 0.78, "x": 0.11, "y": 0.51 }, "kind": "paragraph", "text": "MPLN's analytics-based service revenues rely on the company's pricing tool, which is called Data iSight. Data iSight generates a claim price that serves as a basis for claims resolution, which may include negotiations with the provider or facility. MPLN typically takes between ~6% and ~20% of the difference between the billed and resolved amounts, even as national plans have squeezed significant price concessions out of MPLN in recent years. Naviguard, on the other hand, not only offers its services for free to UHC customers, but Naviguard does not have the significant indebtedness that pressures MPLN to try to maintain a high take rate.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9ca6142c-b4f8-47d0-aaab-b2b56eb94615", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "The executive stated that MPLN's most profitable type of user tends to utilize the Data iSight functionality only, without involving MPLN's negotiations team, thus eliminating almost all human intervention by MPLN.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f3c-7011-a9a3-152616432079", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.45, "x": 0.11, "y": 0.82 }, "kind": "source-note", "text": "1-6: Interviews with Naviguard and former MPLN executives, 2020.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "639e4f95-dae1-4c49-a24f-013ae1123203", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }