Weekly Health Tech Reads | 8/7/22

This week's newsletter is sponsored by Ro.

Ro published an article last week arguing that it should be labeled as a “Direct-to-Patient” company, offering up some defining principles for this new category and an Index of 50+ similar companies that fit into the DTP segment.

The three defining principles are all laudable: putting patients in control, using technology to enable access, and using innovation to reduce costs. The translation of those principles into an Index spurred a lot of debate for us regarding why certain companies were included or excluded. We think it’d be fun to see this Index of companies work together to move this conversation from a subjective definition of “good” to define more objective success criteria and report on that publicly. Link - share your thoughts in the article comments!

HTN Happenings:

This week featured a number of earnings calls from companies across the health tech landscape. We shared our strategic takeaways from the following earnings calls in the link below for HTN members:

• agilon continues to see a strong pipeline of PCP partners

• Alignment shared a good deal about its market entry strategy as it intends to enter Florida and Texas in 2023

• Amwell highlighted its powering CVS's virtual primary care offering and also fully focusing on being a SaaS platform for other providers

• CVS made waves suggesting they'll be making a large primary care acquisition this year

• Oak Street had a solid quarter but the Walmart partnership isn't progressing

If you’re not currently a member, but want access to the HTN content above, upgrade today.

News:

• Aledade and Elevance, the insurer formerly known as Anthem, announced a partnership where Aledade is now offered to independent physicians in Elevance's affiliated plan networks in order to help drive those PCPs to more value-based care. Aledade and Elevance seem like very natural partners in this regard, with both positioning themselves as the partner to help providers remain independent. While the economics might be worse in the short term with this approach versus owning the provider, it seems like the long term dominant strategy, assuming you believe that success in value-based care ultimately relies on enabling good clinicians to provide the care they think is best. Link / Slack (h/t Chase Jones)

• Rural care delivery startup Homeward raised a $50 million Series B only 5 months after announcing its $20 million Series A deal. In addition to the financing, Homeward announced a value-based care partnership with Priority Health in Michigan serving Medicare Advantage members. The press release includes the stat sharing that 90% of rural Medicare members are covered by only 7 payors, which should give some indication of what it's like to execute a go-to-market strategy in this space - negotiate VBC deals with those 7 payors and you've got a meaningful business on your hands. It's both as easy, and as hard, as that (and then of course, you have to build a profitable care model within those contracts). It's a cool model that has the potential to do a lot of good for rural healthcare in this country.  Link / Slack

• WSJ is reporting that Signify Health is apparently seeking strategic alternatives, including a potential sale. This comes not long after it announced it is exiting BPCI. Life must be quite good for health tech investment bankers as I would imagine most companies in the space are similarly evaluating strategic options given the market downturn. Link (WSJ Paywalled) / Slack (h/t Michael Ceballos)

• Turquoise Health continued its spate of recent partnerships, announcing a new relationship with the actuarial consulting group Milliman this week. It seems like Milliman is doing some analytics on top of the price transparency data Turquoise is pulling. It's not clear to me whether it's one or both parties who are then selling this data to their client base. It seems like both are, in which case this seems like a feature Milliman might just want to integrate into its offering over time.  Link / Slack (h/t Deanna Bell)

Other Announcements:

• London-based Cera Care raised $320 million to scale its in-home NP care delivery model from 15,000 patients to 100,000 patients. Link

• ResMed acquires mementor, a German digital therapeutic startup focused on insomnia.  Link

• Carrum Health, a startup building a Center of Excellence network for employers, partnered with City of Hope to offer a bundled payment for breast cancer.  Link

• Real world evidence platform Aetion announced a partnership with Evio, a pharmacy solutions company launched by 5 BCBS plans. Link / Slack (h/t Evan Cohen)

• Annexus raised $33 million to help providers identify and offer financial assistance programs for patients. Link

• Atropos raised $14 million to build a platform that leverages real world evidence to answer clinician questions on care pathways at point of care. Link / Slack

• Sanford Health and Sharp Healthcare partnered with  Dandelion Health to build a data platform for clinical AI. Link / Slack (h/t Thorsten Wirkes)

• MedArrive partnered with Brave Health to provide Medicaid patients access to behavioral health services at home.  Link / Slack

Opinions:

• This MedCity News article on Teladoc's strategy featured a pretty incredible statement from former Livongo CEO Glen Tullman, who appears to lay blame for the post-acquisition issues squarely at the feet of Teladoc leadership for not executing on the momentum that Livongo had and losing the "culture, people and market lead Livongo had built." Obviously only insiders really know what happened here, but this seems a bit... one sided. It's not hard to imagine the opposite narrative, one where Tullman knew Livongo was a flawed asset, recognized the market was close to a peak, got an offer too good to pass up, cashed in, and then immediately left to go create a new, better company based on feedback he had gotten from employers all along while at Livongo. Of course, the post-acquisition integration of the two entities has had a lot of issues, but it sure seems like a case could made that Tullman could/should take more accountability for what is shaping up to be one of the bigger failed mergers in corporate history, as only two years after Livongo was purchased for $18.5 billion by Teladoc, the combined entity is now worth only ~$7 billion today. Link / Slack

• This is a nice read on CMS initiatives to drive value-based care in the oncology space, looking at the old Oncology Care Model and new Enhanced Oncology Model. The piece does a good job highlighting some opportunities for innovation within the new model.  Link

• Interesting read about two companies working to improve birthing experiences in NYC, Boram and Oula. Both are really interesting ideas, even if I struggle to understand the idea of how these experiences will trickle down from wealthy commercial populations to Medicaid populations as discussed in Slack. The more innovation we have in this space the better, obviously, but as the article notes, when companies are opening locations in Brooklyn Heights, Soho, and in 5-star hotels, those actions speak pretty clearly to who the target customer is (and isn't).  Link / Slack

• The Amazon / ONEM content continues to trickle in. Not surprisingly, there is a wide variety of opinions on this one. On the one end you have Scott Galloway arguing about how Amazon is going to change healthcare, suggesting it will bring speed and convenience to the space. On the other hand, the HBR piece suggests how difficult it will be for Amazon to actually change anything. Further, Ari Gottlieb highlighted that Amazon is putting $300 million into ONEM as a cash infusion. Link (HBR) / Link (Galloway) / Link (Gottlieb)

• Paul Keckley shared his perspective that healthcare is headed into financial purgatory over the next 12 to 18 months, with some interesting commentary on companies that are best positioned to weather the storm.  Link / Slack

• John Oliver, in typical John Oliver fashion, completely eviscerated the current state of mental healthcare in this country, explaining a number of key challenges in a very approachable manner. It's a depressing reminder of how screwed up the system is, and how little progress it seems we're making to fixing it (startups and incumbents alike).  Link / Slack (h/t Bryce Platt)

Data:

• This was a good read from the Bessemer team looking at valuation benchmarks for two different types of health tech business models -  Healthcare SaaS and Tech-Enabled Services. Interestingly, Bessemer makes the case that Gross Profit should be the north star metric for tech-enabled services businesses in healthcare, versus EBITDA. The article notes this is one of the primary differences in venture investing versus private equity, noting that private equity focuses on EBITDA because it invests in companies with lower (<30%) growth. This in many ways highlights the debate of whether care delivery can and should be venture backed. Bessemer answers both of those in the affirmative - while I agree it seems clear they can be, it remains unclear to me that they should be. Link / Slack (h/t Sofia Guerra)

• Crossover Health's model was featured in a study looking at how primary care can reduce specialty care costs in an employer population by better managing the referral process. It does a nice job describing how a primary care org manages the referral process, highlighting how organizationally complex the work is. A well managed referral directory is probably one of the bigger assets a primary care organization looking to manage financial risk can maintain. Link / Slack (h/t Justin Rutherford)