Weekly Health Tech Reads | 9/4/22

+Oscar loses its client, 98point6 pivots, a GoodRx / Kroger explainer, Medicaid waits & more

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News of the Week:

  • Oscar's platform play took a major hit this week as it filed an 8-K sharing that Health First, which appears to be +Oscar's only external platform client, is terminating its contract as of Jan 1, 2023. It is the latest example of how poorly the rollout of the +Oscar platform has been going, as this news comes only a few months after Health First was featured at Oscar's investor day as an example of a happy client. It seems pretty clear at this point that the platform version of +Oscar is dead in the water, and you have to wonder if the modular SaaS version they're now pivoting to is destined for a similar fate, particularly given Oscar's lack of transparency in sharing details about any customer pipeline. The +Oscar rollout, or lack-thereof, continues to be a staggering miscalculation on Oscar's part as to the market's receptivity to a new technology platform. As we discussed in Slack, it will be interesting to see how the market views their target of reaching InsuranceCo profitability in 2023. At this point, if the platform business doesn't have any external clients, essentially that's another 4% of admin costs currently being allocated to the platform that should be allocated to the insurance business, making profitability much more unrealistic in 2023. Any way you look at it, this is a major blow to Oscar's broader strategic narrative - if you have a struggling insurance plan that can't get to profitability in part because of bloated operating costs associated with your technology stack and nobody else finds your technology stack worth licensing, what do you do? Link / Slack

  • Virtual primary care startup 98point6 announced it is pivoting to sell its platform to incumbent care delivery providers and raised $20 million to execute on the pivot. Its first customer is Indigo Health, an urgent care model within MultiCare Health System. It's a fascinating change in strategy for 98point6, which has previously raised $247 million to sell its virtual primary care model to employers and others. It seems indicative of the broader challenge we're seeing in the space - we're past the peak virtual primary care hype cycle and the promise of scale is looking like more like a mirage for many of these companies. So, if you've spent hundreds of millions of dollars building a new tech platform for primary care, why not at least try licensing that tech platform to incumbent providers, who at least theoretically have the opposite problem of these startups - they have the patient populations, but don't have the nice tech experience. Seems like we're going to see many companies making this pivot over the next 12 - 18 months as they struggle to grow care delivery models. The Oscar experience above highlights how challenging of a shift this is, in many ways requiring a full organizational redesign of the startup to succeed.  Link / Slack (h/t Paulius Mou)   

  • This is a sobering article on the state of Missouri's Medicaid agency, where the processing time for an application is currently around 85 - 90 days, after being at over 100 days at the beginning of August, a number that has ballooned from eight days last year. For startups focused on the Medicaid market, the article provides a glimpse into the challenges at least one state agency is facing - it has ~1,000 job vacancies and one division has an annual turnover rate of ~35%. With a starting salary of only $36,000 a year it's not hard to imagine why. Link

  • The Biden Administration has distributed almost $100 million across 59 navigator organizations that are supporting individuals in the open enrollment process in 2023. The largest recipient is a group in Florida that received $12.9 million targeting vulnerable and uninsured populations. When you read this article and then the WSJ article in the Opinions section below about MA celebrity advertising shenanigans, it seems pretty clear which route results in better outcomes, albeit while harder to finance as a public good. Gotta love capitalism in healthcare! Link

Other Announcements:

  • Psych Hub, a startup building training and education for mental health providers, raised $16 million. According to the article, CVS Health put more than 280,000 mental health practitioners through Psych Hub's suicide awareness training, which seems like it has to mean that Aetna is offering it to their network of providers - I'd love to know what percent of those 280,000 actually pay attention to and complete that training. Link / Slack (h/t Kyle Copeland)

  • eHealth has launched an ICHRA product, perhaps a sign that the ICHRA market is starting to gain some traction with employers after a long slow burn. Not hard to imagine that the current state of the economy has small employers looking at options to provide reasonable coverage to employees at a reasonable cost. Link

  • Elevance and Molina won the Medicaid contract in Iowa and will join Centene in offering insurance to the 790,000 people on Medicaid in Iowa. Link

  • CMS released data suggesting ACOs saved Medicare over $1.6 billion last year, with 58% of ACOs participating in MSSP generating shared savings. Link 

  • AWS announced a class of 10 companies that will be taking part in its accelerator that will be focused on health equity. Link / Slack (h/t Tamra Lair)

  • MedMinder, a connected pillbox, raised $35 million. Link

  • Olio Health, a platform helping value-based care entities manage post-acute care, raised $13 million. Link / Slack

  • Theranica raised $45 million for a new digital therapeutic for migraines. Link / Slack


  • An investor shared a great perspective on why they exited their position in GoodRx below their average purchase price. It provides a really good explainer of what happened with the Kroger relationship in particular. Basically, it sounds like Kroger simply told GoodRx it was no longer going to accept GoodRx discounts, and there wasn't anything GoodRx could do except negotiate higher prices. And as this investor concluded, that's not a great spot to be for an organization. This excerpt from the article seems like a a good reminder of how challenging it is to innovate in healthcare: "Taking away lessons from the GoodRx experience, I think it is essential to invest in business models that create value for all stakeholders, rather than rely on regulation and contracts to keep them in-line. Healthcare is a huge industry and is plagued with misaligned incentives and inefficiencies. I believed that GoodRx was well-positioned to create change because it created a solution that benefited PBMs and end-consumers that needed help the most, but I underestimated the impact this would have on pharmacies and their ability to respond." Link / Slack

  • The WSJ covered the challenges in the Medicare Advantage broker market at the moment, highlighting how celebrity ads for seniors on Medicare Advantage plans are causing confusion for seniors. If one thing is clear here its that a lot of organizations / people are making a lot of money off the growth in Medicare Advantage enrollment at the moment. It will be interesting to see how much investor excitement there is about MA when that dynamic subsides - and it does seem like a when, not if. Link (WSJ Paywall) / Slack (h/t Frederik Mueller)

  • While a number of startups selling ADHD medications online have reversed course after facing deserved backlash over the last few months, Done appears to be going the YOLO route and doubling down on the market - according to the article it has doubled spending on TikTok ads from May to July. For as much flak as Cerebral caught here, at least it has attempted to change course, while Done appears to be standing its ground suggesting there's nothing wrong with the approach.  Link / Slack (h/t David Cooper)

  • Ari Gottleib suggested on LinkedIn this week that Bright has been misleading investors regarding its liquidity, pointing to Georgia and Texas as two states in particular where it appears to have problems. He suggests that without additional capital, regulators should be stepping in to transfer Bright's membership to other insurers that are on surer financial footing and can reliably pay claims for members. Similar to Oscar above, Bright seems to be in a really tough position at the moment. It's hard to imagine any capital raise for them at the moment coming with anything other than some really draconian terms. Link / Slack


  • CMS shared data looking at how slowly Medicaid applications are processed across various states, and it is wild to see the range of outcomes here. Out of 47 states reporting data, only 45% process over 60% of applications within seven days.  Link 

  • A new JAMA study looks at PE ownership of various provider practices (derm, gastro, and opthamology) and finds that PE ownership is associated with more spending and utilization. It's almost like PE-groups are financially incentivized to drive up spending and utilization or something.  Link / Slack

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