Weekly Health Tech Reads | 11/20/22

The Summit / VillageMD deal, reflections on Oak, Oscar, Bright, Clover earnings, & more

News of the Week:

  • After a false start last week, Amazon formally announced its Amazon Clinic this week. While on stage at HLTH this week, Amazon leadership shared that this is a key step in the direction they're heading in healthcare, leaning into consumer engagement. The thesis here makes sense and builds on what Amazon is really good at - aggregating consumer demand of a service and driving them to various third party sellers of the service. It also provides a bit of clarity on how Amazon views its role as aggregator in healthcare, rather than a care provider (or insurer) itself. Assuming that lands as the central thesis for Amazon, it should help provide some clarity on swim lanes - i.e. we shouldn't expect Amazon to be participating heavily in deals like Signify or Summit Health. The One Medical acquisition is interesting to fit within this narrative, as obviously you could imagine a different scenario where One Medical is the provider group staffing the Amazon Clinic, as opposed to the more marketplace style approach Amazon is taking with SteadyMD and HealthTap here. It seems like a continuation of Amazon's approach of letting different initiatives play out internally, which will present an interesting conflict for Amazon if both of these efforts continue growing successfully. Link / Slack (h/t Chris Vossler)

Other News:

  • In big Minnesota news, Sanford Health announced it is again planning to move into the Twin Cities via a merger with Fairview Health. The combined entity would create a $13.5 billion health system. Sanford and Fairview attempted to merge back in 2013, only for the deal to be quashed as Sanford faced significant public backlash at the time. Sanford has had a history of attempted but failed mergers, notably with Unitypoint in 2018, and Intermountain in 2020. Sanford has always been regarded as a very efficiently run health system, which is likely viewed as a positive for Fairview, which has posted large operating losses the last three years.  Link / Slack (h/t Chris Vossler)

  • DispatchHealth raised $330 million in a combo debt / equity round, bringing it to over $700 million raised. Given the size / timing of this round you have to imagine Dispatch looked long and hard at going public and decided against it, a reminder that it could be a while before we have another healthcare S-1. Dispatch is a really interesting example of a company creating a wedge by driving a consumer behavior in FFS medicine via in-home urgent care visits and using that to expand quickly to a much broader set of services in the home. Seems like a really valuable asset for any of the vertical consolidators looking to manage risk - i.e. UHG, CVS, or Walgreens - as a key lever for managing costs by diverting care to the home. Worth noting that Optum Ventures and Humana both participated in the round here. Link / Slack (h/t Neha More)

  • Virtual women's health clinic Maven raised $90 million at a $1.35 billion valuation. Maven seems to be gaining traction with large employers while also continuing to expand services, citing that 95% of new clients are offering 2+ programs to employees. Of course, as with most startups targeting employers, it'd be helpful to see more details about the number of people using these services rather than employers offering them. It's also interesting to note in the announcement the heavy emphasis on international growth - it's a step we haven't seen many digital health startups take, and raises some questions about how well these organizations can provide culturally competent care both for pregnant women in rural America and working parents in India.  Link / Slack (h/t Suzy Goldenkranz)

  • General Catalyst this week announced its fifteen health system partner in the Health Assurance program. Continuing in the theme of recent newsletters, this press release seems to inadvertently call out all of the challenges that will likely derail this effort once the initial excitement subsides. In it, the press release details the interests of the fifteen ecosystem partners, which is seemingly intended to highlight how great of a group this is. And to be clear, it's an impressive list of health systems, all of which have interesting initiatives. But it also draws attention to how different the needs of these fifteen systems are. OhioHealth wants to co-create things via its new ventures arm, Banner wants to advance its VBC strategy, Guy's and St Thomas want to usher in a new model of care for the NHS, UCI Health wants to drive precision medicine, MetroHealth is focused on the opioid epidemic, and so on. Mind you, according to GC's website, the Health Assurance Ecosystem team has one employee, although the press release indicates there are two. On the other hand, the fifteen organizations they've partnered with have by my count roughly 580,000 employees. How many of those 580,000 employees could explain what this is about? My guess is 0.01%. And that's really the issue for these health systems in driving the adoption of innovation - it's not that they need GC to serve up 90 companies on a platter for their execs to choose from, it's that they need to drive organizational change that brings along thousands of employees in adopting these new tools. And unless GC starts getting paid as a consultant here, I'm not quite sure how I see that happening. Link

  • Evolent Health acquired NIA, aka Magellan Specialty Health, from Centene. Centene will receive $600 million in cash and stock at closing with an additional earn out of $150 million in 2024. As part of the deal, Evolent and Centene are launching a strategic partnership. Link / Slack (h/t Duncan Reece)

  • A merger in the interoperability space this week as DirectTrust acquired EHNAC Link / Slack (h/t Samuel Roods)

Opinions:

  • Propublica shared its perspective on the UHG and Change Healthcare merger, highlighting a McKinsey presentation that was cited in a recent lawsuit suggesting that data from Change could help UHG improve benefit design. The end of the article presents the most interesting food for thought, discussing how vertical mergers are the hardest to tackle from an antitrust perspective. You'd imagine that will need to change before the vertical integration going on in healthcare slows down. Link / Slack (h/t Frederik Mueller)

  • Here's a good market map of the "family tech" space by Betty Chang, highlighting companies working across fertility planning, childbirth, infant care, and adolescent care. Link / Slack (h/t Betty Chang)

  • WSJ highlighted how hospitals make it challenging for patients to access financial aid. It seems like a number of different health systems have a number of different processes in place to collect payment from patients and make it harder for patients to access financial aid. It sure doesn't seem consistent with the idea of being a not-for-profit that is there to serve the community. Link / Slack (h/t Duncan Reece)

Data:

  • The upcoming resumption of Medicaid renewals as the PHE winds down seems like a recipe for disaster. The Urban Institute analyzed survey data from June 2022 highlighting how little people know about Medicaid renewals. Link

  • Commonwealth Fund released a survey of PCPs from 10 high-income countries looking at the effect of the pandemic on burnout. Link

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