Weekly Health Tech Reads | 5/24/20

Optum buys NaviHealth; Omada raises $$$, makes an acquisition; some depressing reads on how broken our health system is; and lots of data on primary care spend, health system utilization & more


  • Optum purchased NaviHealth this week for a rumored $2.5 billion, providing for another great example of Optum’s war path to grab up every type of care delivery asset outside of the hospital itself. NaviHealth manages post-acute care services for 4.5 million Medicare Advantage members - over 20% of the total Medicare Advantage market. It manages post acute care for 9 of the top 10 health systems in the country, and also serves more than 140 hospitals in CMS’s bundled payments program BPCI. There’s a bunch of good articles out there describing the acquisition, but I’ve linked here to a video UHG’s CEO, Dave Wichmann did with NaviHealth’s CEO, Clay Richards, this week. While it’s a bit fluffy, it’s also really interesting hearing Wichmann talk about his interest in getting care into the home, his focus on having clinicians practice at the top of their license, etc. You could almost forget for a second he’s the CEO of the largest insurer in the country. If I’m one of the hospitals working with NaviHealth at the moment I’m thinking long and hard about what it means for me strategically to have Optum own my post-acute care partner. Link.

  • Humana announced its third separate partnership with a kidney care startup this week, this time with Healthmap Solutions to manage kidney care in Florida. This means Humana has now announced trials with Somatus in Georgia and Virginia, Monogram in Louisana and Mississippi, and Healthmap in Florida. If you’re Humana this seems like a nice way to ensure optionality by checking out all of these various vendors in the space that look relatively similar to scale, see which one(s) work, and pick a winner to scale. Or, just learn the model from the startups and built it internally, a bit like they’ve done in the primary care space. I can certainly understand the appeal if you’re Humana. Link.

  • Omada Health raised $57 million and used $30 million of that capital to purchase Physera, entering the MSK digital therapy space. It’s worth revisiting Brian Dolan’s article from last week that suggested Omada should buy Physera for some really good thoughts on the rationale behind this move. Will Livongo be following suit soon and enter the MSK space via acquisition? Interesting moves to watch in the race to be the one stop shop for employer benefits teams. Link.

  • AmWell, a telehealth company, raised $194 million in funding to capitalize on the increased demand for telehealth services. Link.

  • Mindstrong, a digital therapy program for mental health, raised $100 million. Link.

  • Holmusk raised $21 million for a real world evidence platform. Link.

  • Big Sky Health raised $8 million for its fasting app. Link.

  • Tava Health raised $3 million for its mental health telehealth platform. Link.


  • Iora’s CEO Rushika Fernandopulle penned a good piece on what Iora, one of the leading Medicare Advantage primary care startups, sees as the new normal moving forward for their care delivery model. Lots of interesting thoughts on how their care model changes over three different horizons. Check out the graph on their expectation of visit distribution in the future - it’s crazy that two months ago they basically had no video visits and are now projecting a future state where something like two thirds of visits are video. How the world has changed. Link.

  • Bloomberg published a piece this week called ‘Private Equity is Ruining American Healthcare’. Even with the slightly melodramatic title, it’s a really good piece highlighting the landscape of private equity investment in medical practices, some of the practical details of how these investments play out, and the challenges that are presented by trying to balance investor interests with patient interests. The example of skin care and how private equity owned dermatology practices make more money by doing more stuff to people provides a really tangible example of how backwards fee for service incentives are. Link.

  • On the topic of ruining healthcare… this is a gut-wrenching article on the state of healthcare in America. You have to read this thing. It focuses on a cardiologist in Mississippi who is trying to prevent amputations in black patients with diabetes by giving them angiograms to help blood flow. Perhaps not surprisingly, but quite depressingly, this physician is fighting a huge uphill battle for an underserved population in a healthcare system that doesn’t seem to care. How is this ok? To the point of the article above… who owns the Bolivar Medical Center referenced in the article? Apollo, a massive private equity firm. Gah. Link.

  • Also on the topic of ruining healthcare… Medicaid clinics are last in line to get COVID-19 funding. Ok I have to get off this topic now this is all too depressing for a Sunday morning. Link.


  • This is an excellent paper by Milliman on the cost of direct primary care models, and really anyone thinking about this space should read this. It’s a really helpful piece to go through the cost and savings assumptions of primary care models, particularly Figure 13, which walks through an actuarial table of where specifically DPC models can drive savings. One of the more challenging assumptions to me in all of this is that when adopting DPC, all non-DPC primary care spend goes to $0. As the One Medical study recently showed, 57% of people who used One Medical still used *more* primary care elsewhere. If your model is reliant on the DPC primary care doc having the influence to drive down utilization in ED and specialist visits that dynamic presents a huge challenge for the cost savings assumption. And then there’s the issue of double paying for those primary care services. Anyways, lots of fun stuff to dig through in here and think through. Link.

  • Commonwealth Fund published an update to their recently released data on the decline in outpatient visits, suggesting that outpatient visits are bouncing back pretty fast, again using data from Phreesia. Interesting to see how quickly outpatient visits are rebounding - as of 5/10 they were back up to 30% down from pre-COVID-19 levels. Also interesting to see telehealth visit growth flatten and decline a bit since the explosion in March / April. Link.

  • Kaufmann Hall released an update on hospital finances, calling April the worst month ever for hospitals financially. EBITDA Margins were -19%, versus the normal 6 - 10% (check out the chart on page 5). Link.

  • This JAMA article provides a good look at primary care spending in the US between 2002 and 2016, declining from 6.5% in 2002 to 5.4% in 2016. See the chart pasted below. Also interesting to see the decline in inpatient spend and rise in prescription spend. Link.

  • Strata posted a bunch of data on the declines in utilization due to COVID-19. Check out the huge increase in self pay / uninsured patients described on slide 55 - jumped 6.8% in January 2020 to 14.8% in May 2020. Link.

  • Oscar’s CEO shared some data regarding their call center use and what they’re seeing from members in terms of pain points with Oscar. At a high level it’s the issues you’d imagine - cost (30% of issues), network (22%), care (19%), onboarding (14%), and benefits (8%). Link.

  • There was a study out looking at digital health investment in companies focused on improving patient health between 2011 and 2018, leveraging Rock Health’s data classifying different types of digital health startups. Link.

  • A team at Kaiser Permanente published data from Kaiser where they saw a 48% decline in inpatient admissions for heart attacks during COVID-19. Crazy. Link.



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