HTN Weekly Health Tech Reads 12/19

Cerebral in hot water, virtual first health plans enter the limelight, 2022 predictions, & more!

News:

  • Mental health unicorn Cerebral is in hot water for how its treatment of therapists after this Forbes report. It highlights how Cerebral changed 200+ therapists from salaried to hourly workers, making their health insurance contingent on hitting quotas that seem rather difficult to hit. According to the article, Cerebral initially hired clinical staff as contractors and then, in order to meet demand, it began hiring full-time employees earlier this year as the company was expanding rapidly. It's not a great look for a company that just raised a massive round of funding from Softbank, and makes it seem as though they are struggling with some financial modeling basics around the costs of maintaining their clinical staff. Cerebral is at risk of becoming a case study on the drawbacks of blitzscaling in healthcare. It should also be a reminder for a number of the care delivery startups that are viewing clinical staff as a cog in the machine of a tech centric consumer brand - the core asset of care delivery organizations generally is the clinical workforce. Link.
  • Enterprise software giant Oracle is rumored to be in talks to acquire Cerner for $30 billion. Seems like Cerner is always popping up in acquisition talks these days, perhaps this is the deal that gets done, although the timing seems a bit odd with Cerner's new CEO at the helm. Link.
  • Hearing aid startup Lively is being acquired by GN Hearing, in part to augment Lively's virtual-only experience with GN Hearing's physical footprint. This certainly looks like it will be a trend over the next few years - these virtual-only plays getting folded into a physical footprint to drive growth of both platforms. Link.
  • Cigna dropped Livongo from its preferred formulary spot for diabetes management and replaced it with Omada Health. You have to wonder how these sorts of decisions are made - is any part of the decision related to clinical outcomes, or is it entirely business related? The article notes that Teladoc / Livongo decided not to pay Cigna for the premium spot this year, and Teladoc is a competitor to Cigna's MDLive platform. There are a lot of conflicting business incentives at play, with two diabetes management companies whose outcomes are hard to tell apart. Link.
  • Phreesia acquired Insignia, a patient engagement startup which created the Patient Activation Measure, a commonly used survey to assess how confident patients are in managing their care. Link.
  • Midwestern supermarket chain Hy-Vee is getting into the telehealth game, launching RedBox Rx. Link.
  • Health tech investor Health Velocity Capital raised a new $300 million fund. Link.

Funding:

  • Health insurance enrollment site Healthcare.com raised $180 million. Link.
  • Innovaccer, a data analytics platform for clinical care, raised $150 million at a $3.2 billion valuation. It cites an interesting roster of 50 clients in the press release - from health systems (Providence, Commonspirit), to next gen care delivery (One Medical), to infrastructure plays (Zus Health). Link.
  • Found, a weight-loss startup that came out of stealth mode just 2.5 months ago, raised $100 million at a $600 million valuation. It's another win for the venture studio model, as Found was incubated at Atomic. Will be interesting to watch how they scale the business model to meet growth needs. At an average cost of $100 per month, I have to imagine there's a "B2C2B" plan in its future. Link.
  • Remote care management platform Cadence raised $100 million at a $1+ billion valuation, after coming out of stealth mode in August. Cadence is focused on working with large hospitals to deliver care outside of the hospital, and has inked a partnership with LifePoint Health, a PE-backed health system, which will give Cadence access to 100,000 patients when fully scaled. Cadence is starting with the standard hospital remote monitoring use case, treating heart failure patients. Yet if you pitched this company as a startup with a heart failure remote monitoring platform with a pilot in one market... I don't think you'd be raising $100 million at $1+ billion. Crazy times. Link.
  • Tasso, a patient centric blood testing startup, raised $100 million. Link.
  • Well, a member engagement platform for employers, raised $70 million. Interestingly, Well notes in the press release that it is also working with community health organizations and D2C brands as they expand. Link.
  • Ophelia, a digital clinic for opioid use disorder, raised $50 million. Ophelia, which has grown to 27 states, cites having contracts with insurers covering 75 million lives, which seems like its becoming the ultimate digital health vanity metric. It's way more helpful to see they're at 70% 6-month retention rates, versus typical addiction treatment retention rates around 30%. Link.
  • Garner Health, an analytics platform that provides employers / employees with data to navigate to the right provider, raised $45 million. The TechCrunch article provides some good insight into the model - Garner has 100 clients, and is targeting small / mid-sized employers that have been traditionally ignored by vendors serving the large market. Link.
  • Belong Health, a new care model for Dual Eligible populations, raised $40 million. For those with a Business Insider subscription, the slide deck provides some good insight into the Belong approach. It is launching in 2022 in New York via a partnership with MVP HealthCare, planning to serve 3,000 members. Link.
  • Akido Labs, a startup building a tech platform that supports safety net organizations in addressing health inequities, raised $25 million. Link.
  • Embold, an analytics platform similar to Garner that helps employers / employees with data to navigate to the right provider, raised $20 million. Link.
  • Prolucent, a healthcare workforce management platform, raised $11.5 million. Link.
  • Mental health startup Tava Health raised $10 million. to match employees with therapists. Link.
  • Mental health startup Uplift raised $8 million to build a marketplace that helps patients by finding therapists, and therapists by managing the practice admin. Link.
  • Marigold Health raised $3.5 million seed extension for its AI-supported chat groups for opioid use disorder. Link.

Opinions:

  • A tell-tale sign that innovation in a space is starting to take off is lobbying pressure starting to heat up from the groups that perceive it as a threat. And this post on the threat posed by virtual first health plans by Stamford Health's CEO is an early sign that the virtual first plans are hitting the mainstream. The argument she makes against these plans seems like it will be the standard argument against them - that they're recreating, perhaps even worsening, the dreaded HMO dynamics of the 1990s. Insurers are going to gate care using telehealth vendors, which limits a patient's ability to choose providers, silos data in what are often proprietary tech platforms, and makes health equity worse. It's interesting to see the data sharing argument used against telehealth vendors, when I think it's always been a presumption that these new tech enabled platform would usher in a new era of data sharing. And while the equity issue with digital health solutions is very real, I also think it masks the fact that care delivery has always had equity issues (i.e. go ask your local hospital for patient education materials in anything other than English and see what kind of response you get). Regardless of whether you agree or disagree with the argument, though, it seems like one that is going to become more prominent as virtual plans take off and start posing a real threat to local providers. Link.  
  • It wouldn't be a week in December without 2022 predictions, and so this week we'll feature the predictions from the 7wire Ventures team. Leaving aside the existential questions I have around what actually constitutes a prediction, it is interesting to see the trends they're looking at in the healthcare meets consumer space - a focus on addressing health equity, healthcare in the home, hybrid virtual + in-person models, more M&A, etc. Also worth noting the prediction at the end around startups seeking strategic partners more than just capital. You don't need to look very far to see that there's been an influx of capital in digital health, and it seems like many VCs are migrating to more "hands on", studio-esqe approaches as a value add, in additional to just providing capital. Will be interesting to see what the VC landscape looks like a year from now. Link.
  • The Commonwealth Fund shared a good summary of the financial strain facing our primary care system is facing and the need to rethink both how and how much we pay for primary care. It's certainly interesting to read this article while thinking about the broader context of all the industry interest in acquiring primary care docs. I can't help but scratch my head wondering whether we're really creating a better healthcare system for ourselves by letting independent docs fail while being backfilled by large, profit-minded organizations. Link.

Data:

  • PwC released an interesting report looking at 2022 health services deals trends. It notes that this past year, there were over 400 physician medical groups acquired, up from an average of 200 - 250 the previous few years. Link.
  • Rock Health released its annual report on consumer telehealth preferences. Link.
  • KFF survey data suggests that almost half of adults struggle to afford out of pocket medical expenses and dental care. Link.

Featured Jobs:

  • Cedar, a revenue cycle management startup for health systems, is hiring a Director of Commercial Strategy & GTM. Link.
  • Cleo, a family health startup focused on fertility to early parenthood employer benefits, is hiring a VP of Clinical Strategy & Programs. Link.
  • Oscar Health, the tech enabled health insurance startup, is hiring a Corporate Strategy Manager. Link.
  • Oura, the wellness ring and app startup, is hiring a Business Operations Manager. Link.

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