Ido Schoenberg: Hi, Jessica to your voice. So behavioral health was always part of what the DHA wanted to deploy. In fact, the taking care of people initiatives is really focusing on behavioral health for our men and women in uniform. So that’s why it was always the plan. And indeed, the plan was executed to start with the automated behavioral health, which we deployed. The product basically allows providers to prescribe different treatment plans that are highly automated but with a hybrid approach, together with coaches, around things like depression, anxiety, and a list of other ailments that are behavioral health specific. So we’ve done that. And if you remember, in the initial year, it’s about deploying the services in five demonstrative sites across the DHA and, once this is done and working well, to go to an enterprise expansion.
So this first milestone is deploying those services in the site of the DHA, and we went live with it and its operating. The other two milestones are the Converge deployments that we’re focused on right now. And the last one is the automated care opportunities that I mentioned earlier. All that is done complying with a long list of requirements for cybersecurity, for staff credentials, for the GovCloud operation, and many other things. So we are really investing here in capabilities that would be very relevant across the government market and now also a very nice showcase that some of our commercial customers are looking at. As far as the contract and the budget, as a reminder, the $180 million budget for this is part of the $4 billion task order of vehicle for the DHA.
And all that was granted. This budget is both for the initial deployment that I mentioned but also for the enterprise expansion that is planned to take place on the fourth quarter. While the clients, of course, have always the right to delay or stop anything that we are doing, we believe that so far, everything that we are doing is going very well and generating much value. And there is no budgetary or contractual barrier for the enterprise expansion as part of the existing funded vehicle.
Operator: Your next question comes from Jailendra Singh with Truist Securities. Please go ahead.
Jailendra Singh: Thank you. And thanks for taking my question. So I want to follow up on your comment earlier about visit volumes being impacted by Change Healthcare and the temporary disruption from the large client migration. First, are you willing to quantify how much was the revenue impact in the quarter? And the second, did Change Healthcare impact, in any way, decision-making process at your potential prospective clients in terms of, as they were preoccupied with this problem, the Change Healthcare issue? And then also, the client migration disruption, any other color you can provide what exactly happened?
Ido Schoenberg: Sure. I’ll give you the details on what took place, and then Bob can add his view on the impact, to the extent we can share. So essentially, I think what’s happened in Change is evident to everybody. As it relates to us, when we went live with the likes of Elevance and Highmark, the experience was the consumers logged in and they were not able to continue with the visit because they were not able to see their co-pay really going forward. So we had lots of doctors waiting to see patients that could go in and lots of patients that couldn’t see their doctors. Obviously, that’s a serious barrier. Our initial solution was to find an alternative to Change. It took some time but we pulled it through. And of course, after a while, Change brought a solution, and we were able to resume the service.
Many, many participants in the ecosystem were affected by this. We certainly were not the only one. So I don’t think that this has an impact. I don’t remember any example of an impact on our pipeline or a discussion with potential customers or with existing clients. Maybe it’s a little bit in the reverse, the fact that we’re able to recover from such a major challenge is somewhat of a plus in our reliability in the market. Generally, the migration itself was the largest migration we had in our history. It was very interesting because it took place at the beginning of the year, at a time where access to providers is the hardest and demand is the highest. In addition to that, we also launched a new product with Elevance, the virtual primary care, that we had to stop.
So that was really an interesting stress test to all our operations, both technical and building two-way integration with a lot of client systems that were ramping up over time. And in addition to that, we had to manage a network that was in full capacity and in very high demand. Pleased to report that we were able to execute, and the system did go live and scaled and is now in full production for both a Highmark and Elevance. Bob, maybe you have some more comments.
Robert Shepardson: Jailendra, we estimate that has Change not happened, we would have been flat from a visit perspective year-over-year. So that cost us the volume decline that we saw in the first quarter here. And so I think that was the question you asked. But absent that, we would have been at least flat. And then what Ido described about the migrations, that was also a onetime event that cost us some volume, but that would have been the growth on top of being flat vis-a-vis the change issue.
Operator: Your next question comes from Ryan MacDonald with Needham & Company. Please go ahead.
Matthew Shea: Hi, this is Matt Shea on for Ryan. Thanks for taking the question. Just wanted to circle back on the Optum shuttering their digital health as well as Walmart closing their digital health operations, do you see this as creating a potential opportunity for Amwell to move more into the retail space or see kind of some greenfield opportunity that wasn’t there before? And maybe kind of in conjunction with that, do these announcements change at all how CVS thinking about their digital health program, either seeing more opportunity or anything to call out there?
Ido Schoenberg: So Matt, these are really great questions. And of course, I cannot opine or share anything about specific clients of ours, but more generally. So zooming out for a second, do we believe that people who will use digital care is an opportunity to act as a health care system. And I think that everybody agrees that the answer is a very strong yes. We don’t think that, that trend is going anywhere with so much potential: convenience, cost savings, improvement of outcome, access to higher quality care, that is possible when you use a hybrid care. I think that some of the events that you mentioned demonstrate that this is really complicated. And the solution is not very, very easy not only for a single organization but it really requires integration.
The answer is not by having one here or do it all but rather have a solution that is working across the ecosystem to build bridges and really combining in a hybrid way the solutions that exist. There is no substitute to the trusted brands of providers. There is no substitute for very sophisticated network management that take into account process of considerations. There is no substitute to reinvest in what it would actually take to allow patients and consumers to navigate to this very important complex set of options. So having said all that, we believe that we built an infrastructure that facilitates that connection and does not overlap with the traditional roles or traditional players that we believe continue to be there. Saying it another way, we believe that what we build is positioned very well to benefit from everything we said.
Just to give you an example, UnitedHealth Group was very vocal saying, after what they announced, that they are very committed to telehealth, to hybrid care. They definitely plan to continue and sponsor it and they said it to us, they said it to the world. So in many ways, my short answer, after the long detail, is that we are here, we’re still serving a big part of the U.S. ecosystem. When there are going to be less players, the math is that we are likely to net benefit it. But it’s early days, and we’re not trying to suggest right now how quickly this trend is going to evolve from our vantage point.
Operator: Your next question comes from Stan Berenshteyn with Wells Fargo Securities. Please go ahead.
Stan Berenshteyn: Hi. Thanks for taking my questions. Ido, first, maybe just a follow-up on your comments regarding the go-to-market strategy. You mentioned there are some changes there. Can you maybe just expand specifically what are the changes? What are the focal points that are different versus historically? And maybe if you can also comment on how is your sales team now splitting their time between upselling existing clients versus going to market for new clients?
Ido Schoenberg: Sure. So as I mentioned earlier, the market today is so different from a few years ago. Essentially, buyers want complete solutions. When you think about those solutions, it’s helpful to, I think, talk about it in a way of what do patients want, what do consumers want. And we all want to go digital, go online, either proactively or reactively, and have the richest set of options from trusted sources with a combination of in-person, automated and digital. In addition to that, providers are key to that solution. So providers want to have a solution that is very intuitive, very easy, that is fully embedded in their workflow, protects the licensure, allows them to get paid for the time in a fair way. And all those things are not very easy.
