HTN: Weekly Health Tech Reads 7/11

Bright, Cano, and Caremax all gobble up South Florida PCP practices, One Medical / Iora’s S-4 filed, Dollar General gets into healthcare & more

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News:

  • South Florida primary care provider acquisitions by Medicare Advantage orgs that recently went public are so hot right now:
  • Cano Health buys Doctor's Medical Center, a Miami-based group of 18 clinics with ~52,000 patients (7k in MA plans) for $300 million. Doctor's Medical expects to do $194 million of revenue in 2021, with $22 million of EBITDA. Not a bad little business. Btw check out Cano's Medical Claims Expense Ratio for patients by tenure in the investor presentation associated with this deal - 73% for members <6 months vs 40% for members >36 months. That is wild. Link (press Release). Link (Investor Presentation).
  • Caremax purchased DNF Medical Centers, a group in the Orlando area with six practices and ~4,000 MA members, for $110 million. Link.
  • Bright Health continues down the acquisition path, with the NeueHealth division acquiring what appears to be a single practice location in Miami. It's curious to see that Bright is losing out on the deals above but still actively acquiring a single practice like this. Is Bright losing out on those deals to Cano / Caremax, or not pursuing those groups for some reason? Bright also shared that Neue has plans to expand to Texas and North Carolina. Link.
  • One Medical filed the S-4 for its acquisition of Iora, and if you're interested in Iora's model its actually quite worth reading through the management discussion (pg 135) as well as the financial information (pg 92). The financial information section includes ten year projections, which you don't see often for public companies. They hint at One Medical's views of long term growth - by 2030 the standalone projections suggest Iora will be at $5.53 billion of revenue, while One Medical will only be at $3.73 billion. Value based primary care for the win! The Iora management discussion is also quite interesting - with a number of details about Iora's background and relationship with Humana in the MA space. Iora and Humana ended exclusivity just last year in 2020 - which happens to coincide with Humana's partnership with Welsh Carson to build out Partners in Primary Care. It appears Iora had demonstrated some meaningful results with Humana - they saw 10% cost savings in 2020 versus a matched Humana population, and were serving 34% of Humana's MA members in Phoenix. As discussed on the Slack channel this week, there's a lot to unpack in this chart below - look at how quickly Iora grew back in 2016 from its partnership with UHG via Harken Health. Link.
  • Dollar General's leadership team finally was convinced that it, too, should leverage its vast footprint of retail stores in the US to get into the healthcare game. It announced this week it has hired a CMO, focusing on turning Dollar General into a rural health destination, initially focused on selling some of the basics - cough and cold, dental, nutritional, etc. It makes sense that they'd start there, and it'll be interesting to watch how their ambitions evolve from there. The logic of increasing store traffic by leveraging real estate proximity and adding hard-to-access healthcare services makes sense, but it may prove challenging to execute on as Dollar General diverges from its core competencies - as Walmart and others have shown. Link.
  • SCAN Health Plan is launching a new startup called Healthcare in Action to address homelessness. You have to applaud the idea, although I'm not convinced it's a good thing we have regional Medicare Advantage plans launching and incubating new ventures as if they're venture capital firms. Copy + paste the comment about Dollar General and core competencies. Link.
  • Ochsner, a Louisana health system, continues to make interesting moves in the digital health space as they've announced they're expanding remote monitoring services to payors nationwide. Link.
  • Walgreens and VillageMD are opening 29 new clinics in Texas this year, still on track to open 600 clinics across 30 markets in the next four years. Link.

Funding:

  • Otter, a daycare startup for stay at home parents (not to be confused with pediatric mental health startup Little Otter), raised $23 million. Link.
  • Aging-in-place startup Assured Allies raised $18 million. Starting to get a bit crowded in the aging space (nice market map here) but having dealt with aging parents and grandparents, the more shots on goal, the better. Link.

Opinions:

  • This Vox piece looks at overall health outcomes in America, arguing that the gap in health outcomes between the US and other wealthy nations will grow because of the COVID-19 pandemic and the disparities in our health care system, at least in part caused by our relative underinvestment in social services compared to other countries. Link.
  • A KHN reporter lamented this week about how hard it is to make sense of hospital prices after attempting to make sense of price transparency data. It's a good read on just how confusing this all is for even folks who spend their days doing this - highlighting just how far the concept of price transparency rules has to go before becoming useful to patients. Until we make more progress with providers and/or payors guaranteeing / clarifying prices ahead of time, these attempts at price transparency feel like an exercise in futility. Link.
  • Business Insider (paywalled) is reporting Amazon is having some challenges in conversations with payors about adopting its virtual primary care solution because Amazon hasn't built it to process fee-for-service claims, but the payors are asking Amazon to work in a fee-for-service construct. Gotta love healthcare! Link (paywall).
  • McKinsey took a look at how employers can leverage digital health tools to support the mental health of employees. Link.

Data:

  • This is an interesting paper looking at how patients cycle in and out of the top decile of Medicare patients over a number of years. It breaks out a few different subgroups - catastrophic, persistent, and semi-persistent to identify different drivers of what causes patients to be in the top decile of spend. Presents some interesting implications for payors attempting to manage the costs of this population. Link.
  • Fair Health published its monthly report on telehealth and found it has declined for the third month in a row, down to 4.9% of claims in April 2021. Of course this is up quite a bit from pre-pandemic levels, but it's also a reminder of how much (or little) care is happening virtually across the country. Link.
  • Digital Health funding continues its tear - hitting $14.9 billion in 1H 2021 according to Rock Health. Seems like everyone recognizes we're at high tide at the moment, only question is how much longer is this going to last. Link.

Featured Jobs:

  • CityBlock Health, a primary care startup building a tech-enabled care model for Medicare / Medicaid populations, is hiring a Senior Product Manager. Link.
  • MemoryWell, a startup attempting to bring empathy to EHRs and helping providers better understand their patients as people, is hiring a Product Manager. Link.
  • Tempus, a startup working on commercializing precision medicine through data and AI starting in oncology, is hiring a Growth Marketing Lead. Link.  

Access the HTN Jobs Board for the full list of job postings