HTN Weekly Health Tech Reads 1/2

Duke sued as it attempts to acquire docs, congress investigates One Medical's COVID-19 vaccine rollout, & more!

News:

  • Duke University is being sued by a provider after attempting to takeover a large "independent" multi-specialty practice, DPC. DPC, which has had close ties to the university for decades, has ~1,800 clinicians and does around $1 billion of revenue annually. It appears from the case that Duke has tried a few times over the years to acquire the group, but the two parties could never agree on a purchase price. Recently Duke decided to terminate the contract with DPC, effectively allowing it to buy the group for $0. DPC had an outside valuation firm opine as well, suggesting that DPC should be valued between $700 million - $1.1 billion. It's pretty wild that DPC is essentially worth either $0 or close to $1 billion. The deal terms upset some DPC providers enough that one is suing. The case provides an interesting lens into the challenges presented by acquiring provider groups. Link.
  • A congressional report was released detailing an investigation into One Medical's COVID vaccine rollout. The report critiques One Medical's opportunistic use of COVID vaccines to drive new members to its services, but really what else would you expect as a result when outsourcing a public utility to a for-profit publicly traded company? Of course One Medical is going to use vaccines as a way to sign people up for its service. I would think their investors wouldn't be very happy if they did anything different. Yes, One Medical seems to have botched aspects of the rollout, but I'd guess there are a number of very similar email threads among leadership teams at a number of other organizations in the space. It does raise a much larger question for us all to grapple with, though, regarding whether we collectively want the public health infrastructure in this country to be provided by for-profit public companies. It seems like we're heading that direction very quickly. Link.
  • Oracle announced it is acquiring Cerner for ~$28.3 billion. The joint press release provides some interesting insight into the deal as Oracle apparently plans to redesign the Cerner user interface, centered around Oracle's Virtual Digital Assistant as the primary interface for clinicians. Seems pretty bold to talk about redesigning the entire user experience of an EMR to be voice driven. Oracle also sees significant growth opportunity for Cerner internationally. Link.
  • BD acquired at-home diagnostic testing startup Scanwell Health. Scanwell raised a seed round back in 2019 focused on UTI tests, but appears to have found a bigger market in COVID testing. Another sign that the at-home diagnostic testing market is going mainstream pretty quickly. Link.
  • UPMC announced it is launching a travel staffing agency so that it can rely less on outside staffing agencies and have its RNs and surgical techs rotate across hospitals where they're needed most. It seems like provider staffing shortages are going to be a major topic of discussion in 2022 - I can't imagine this is the last we'll hear from hospitals looking to address the challenge. Link.

Funding:

  • Brazilian health care startup Alice raised $127 million from Softbank. Alice appears to be building a care coordination / navigation platform that it is selling to employers. Link.
  • Zing Health, a Medicare Advantage plan, raised $25 million. Zing's focus is on integrating SDOH-services into its plan, focused on serving vulnerable populations. Link.
  • Apella raised $21 million for an AI platform for operating rooms that helps hospitals capture data on what happens between procedures. Link.

Opinions:

  • NEJM Catalyst featured an article applying Clayton Christensen's theory of disruptive innovation to telehealth. I'm not actually sure the disruptive innovation references help my understanding of the article, and at times feels like it adds complexity. For instance, I'm still not entirely sure I grasp the distinction between new market disruption versus low-end disruption in this case, or why Omada is categorized as a remote patient monitoring company versus a virtual clinic, or why any of that even matters. Regardless, the article presents some good examples of ways different organizations are attempting to disrupt care delivery, from Omada to Teladoc to Firefly to CVS. I find the examples of patient archetypes and "jobs to be done" to be the most helpful section of the article, serving as a good reminder for folks building in this space that we should be thinking about what job the patient needs done. Link.
  • This is a good perspective from Jan-Felix Schneider on the telehealth landscape. This article is a less academic and more practical read than the NEJM article above on the topic, sharing thoughts on both virtual provider models and the enablement layer, as well as a number of companies in each.

  • The segmentation exercise bucketing different virtual care providers highlights the challenges of doing so - what makes Galileo a pure virtual company, versus Cityblock as a virtual first / hybrid, versus Oak Street as virtual enabled? I'm not sure what the distinction actually is between them, and I'm not sure it's actually going to matter in 5 years. Everyone is going to eventually realize they need to provide both virtual and in-person care, and their specific care models and patient segments will dictate how much they do of each. Said differently, the subcategories depicted here are more meaningful than the high level categories - virtual will just become a part of delivering care, and some will do it better than others. Sure is going to be interesting to watch this market evolve while it gets there. Link
  • CRV's Kristin Baker Spohn was featured this week in a Business Insider article discussing the sky high valuations in digital health and the impact on exit activity - fewer large companies will be able to make tuck-in acquisitions given the valuations, but we might see more startups acquiring other startups as the space matures, pointing to examples like Ginger / Headspace. Link (behind BI paywall).
  • This is a fascinating read on Noom, the weight loss app that has big expansion plans, and how it got started. Noom apparently has over 3,000 coaches that have a few hundred clients each and is expecting to hit $600 million in revenue in 2021. It feels like the whole quantified self / wellness app craze from a decade ago is gaining steam again this year, with Noom's recent $540 million funding round a leading proof point. Will be interesting to watch them scale over time and see if they can successfully expand into mental health and other conditions. Link.
  • In news that is likely to be confusing for everyone except hospital finance teams, it appears that hospitals are now attempting to charge facility fees for video visits. Because, you know, hospitals have heat and power and maintenance charges that they should be able to bill for when a provider does a virtual visit while sitting inside a warm hospital. Link.
  • This is a quite good, albeit hard, read from ProPublica on the impact of the pandemic on dialysis patients. There was a 20% increase in dialysis patient deaths from 2019 to 2020 as people delayed treatment. Of course, the impact was more pronounced for those without access to in-home dialysis, further exacerbating social inequity issues. It's really hard to read the articles about telehealth above and then this one and figure out how we're not going to fail a massive population for whom the telehealth discussion isn't particularly relevant. Link.
  • Here's a piece looking at Medi-Cal, California's version of Medicaid, and the confusion it causes for patients attempting to navigate its services. Care delivery is subcontracted to a confusing set of organizations that creates barriers in accessing care for patients. L.A. Care, the largest of the 24 Medi-Cal managed care plans with 2.4 million members, has 58 subcontractors it works with for members. A helpful reminder that value-based care isn't necessarily a cure-all, and there are many iterations of it that can cause more administrative complexity, more profits for healthcare orgs, and worse care for patients.  Link.
  • Former FDA Commissioner Scott Gottlieb penned an article in JAMA on the merits of diagnostic testing in-home, and how the FDA is supporting a path for more diagnostic testing in-home in the future. It sure seems promising for entrepreneurs building in this space. Link.

Data:

  • This is a helpful tweet from Michael Barnett on twelve academic papers he found the most interesting in 2021, not related to COVID. The papers cover a number of topics - SNAP, insurance denials, impact of public transport on no show rates, and more. Link.
  • Kidney care startup Cricket Health shared some data on six months of experience with a Medicare Advantage population - it is seeing a PMPM spend reduction of 27% in Stage 4 CKD patients.  While it's hard to know anything about how the comparison is made from the press release, it is notable to see folks measuring success in terms of PMPM spend reduction, as opposed to MLR improvements. Link.

Featured Jobs:

  • FirstHand, a mental health startup focused on underserved populations with serious mental illnesses, is hiring a Head of Risk Adjustment. Link.
  • Humana, the large Medicare Advantage insurer, is hiring a Director of Strategic Growth. Link.
  • Mindbloom, a mental health startup focused on psychedelic therapies and medicine, is hiring for three key "Head of" roles: 1) Head of Finance, 2) Head of Product and 3) Head of Brand.
  • Oscar Health, the technology enabled health insurer, is hiring a Manager of Corporate Strategy. Link.
  • Spring Health, the mental health and well-being startup that sells to employers, is hiring a Director of Corporate Strategy and Development. Link.

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