HTN Weekly Health Tech Reads 7/4

Contessa acquired, Ro makes another acquisition, BCBS NC launches a new venture, Main Street Health launches & more

For access to exclusive content, join the community

News:

  • Hospital-at-home startup Contessa was acquired for $250 million by a publicly traded home health company, Amedisys. This is an interesting deal from a timing perspective, given the impact COVID-19 should have had in terms of increasing demand for hospital-at-home services. Medically Home seems to have taken off, if its recent round from Mayo Clinic and Kaiser is any indication. But this deal seems to hint that Contessa was having some growth challenges in the space. Per the investor deck, Contessa has only been able to sign up 7 health systems to date as clients. Amedisys expects Contessa to generate $9-$12 million of revenue in the second half of 2021 with an EBITDA loss of $6-$9 million. Both revenue and number of customers seem quite low, likely an indicator of how hard it is for health systems to wrap their heads around adopting new models like this. Amedisys is projecting some significant growth for Contessa in 2022, estimating revenue around $65 million (a 3.9x revenue multiple). Given the cross selling opportunity across customer bases it makes sense that the combined org sees a huge opportunity for growth, but the track record here suggests that will be hard to achieve. Contessa has been blazing the trail in this space, going back to 2018 (and before) when Marshfield Clinic submitted this incredible report to PTAC on the HaH model. Link (Press Release). Link (Investor Presentation).
  • BCBS NC partnered with Deerfield to launch a joint venture aimed at supporting independent PCPs by providing them with tech / infrastructure, support services, and flexible ownership / management structures of practices. This thing is so early that they're still working on a name for it, which makes you wonder why they felt the need to announce it now. It's not as though this is a new idea - Blue Shield California has been working on a very similar sounding concept for some time now via Altais, which acquired a 2,700 provider group back in 2019. It also sounds very similar to what BCBS NC has already been doing with Aledade in the value-based care arena, a partnership that has generated positive results in terms of savings and quality improvements. Of course there's good sense in payors attempting to keep these providers away from the lure of employment by a health system (or another payor or PE group), even if there remains a slight irony in a payor pitching to independent docs something along these lines: "Hey provider friend! All your headaches are now cured so you can remain independent by... letting us, the benevolent payor - along with our friendly neighborhood private equity colleagues - foot your bill to make your life easier. We may be paying your bills but you definitely don't work for us, nope nope nope. You are still independent!" Link.
  • Ro made another acquisition this week, this time acquiring an at-home diagnostics startup, Kit. It is fascinating to watch Ro stitch together its recent acquisitions - Modern Fertility, Workpath, and now Kit. In Workpath and Kit, you have two infrastructure plays that make sense as Ro attempts to build out a platform for virtual-first care delivery. In Modern Fertility, you have a care model that theoretically sits on top of those platform capability. Ro seems to be emerging as a very credible player in the race to build a digital-first health system. Will be interesting to watch how it digests all of these acquisitions ¬†especially if/when it moves into less discrete, harder to manage conditions. Link.
  • The city of San Diego is suing three health insurers for inaccuracies in their provider networks. It's a friendly reminder of just how inaccurate some of this stuff is - HealthNet (Centene), Kaiser, and Molina had error rates of 18%, 19%, and 58% respectively. A 58% error rate is absolutely wild - and we expect patients to effectively navigate through this garbage? Link.
  • CMS put out an interim final rule to ban surprise billing, implementing certain provisions of the No Surprises Act signed last December. This is a great step in getting rid of what are terrible billing practices that literally ruin peoples' lives. But it's unlikely payors and providers will make this an easy change given they have the most to lose in this financially, along with the numerous implementation challenges that KFF laid out nicely back in Feb. The key will be on how these rules are enforced. There a lot of individual transactions for gov't to effectively monitor already stating a consumer complaints process will be required, and self-regulation by payors and providers has conflicting incentives, so this will likely fall back on the patient. Again, how are patients suppose to navigate this billing mess? Queue up investor interest in companies that can act as the real-time, automated flag for these surprise / balance bills and help resolve disputes for patients (and the payor/providers). Link.
  • Papa and Gateway Health partner to provide Papa Pals to Gateway's D-SNP members in Pennsylvania. Papa is making some really interesting moves lately. Link.
  • UK-based retailer Boots partnered with Lemonaid to launch a video visit service. Link.
  • UniteUs partnered with AlohaCare and Kaiser to launch a coordinated care network in Hawaii. Link.

Funding:

  • Olive, a back-office automation platform for providers, raised $400 million at a $4 billion valuation. Olive has now raised $832 million in a little over a year, an amount that makes my head hurt. But you can see why investors are drooling as Olive is now working with more than 20 of the top 100 health systems in the US. It is such a straightforward opportunity (and sales process) to help health systems manage their back office functions more efficiently. Link.
  • Virtual MSK startup SWORD Health raised $85 million as its seeing 600% revenue growth. Link.
  • XOLIS raised $75 million for its utilization management platform. Link.
  • Cortica, a new care delivery model for kids with autism, raised $60 million. Link.
  • Novocardia, a new platform to help cardiologists manage value-based reimbursement models, raised $53.7 million. Link.
  • Tendo Systems, a startup building a digital patient engagement platform, raised $50 million. Link.
  • Caregiving startup Wellthy raised $34 million to help employees navigate caregiving at home. It sounds like a cool idea, although it remains a curiosity to me that in US healthcare our answer to the burden and stress of people being caregivers for family members is to have employers pay for services that help employees spend less time caregiving so that they can get back to work. For startups like Wellthy I get that it's the only way for them to gain traction, it's just a really strange conflict. Link.
  • Syllable raised $28 million to modernize the call center model for healthcare. Link.
  • Main Street Health raised $26.4 million to build a value-based care model for rural healthcare, helping independent PCPs to manage risk. It's led by former Aspire founder and CMMI head Brad Smith, who is partnering up again with Bill Frist as the primary backer. This seems like such a straightforward opportunity for folks like Smith and Frist - take what Agilon, Privia, and Aledade have shown can work in terms of contracting with existing PCPs to help them manage risk, and leverage your network in Tennessee to launch a similar offering with some friendly PCPs. It doesn't even really matter what Main Street Health's product is at the moment - as long as they have some relationships with PCPs that will sign a contract with Main Street, they're off to the races. I'm not so sure this is what changes rural healthcare in this country, but I am pretty sure it's a good way to make a lot of money. Link.
  • Hospital IQ, a platform helping hospitals efficiently manage resources, raised $25 million. Link.
  • Osmind, a startup building an EHR for mental health practices, raised $15 million. Link.

Opinions:

  • The Rock Health crew shared a solid report on digital health approaches to meeting the needs of the LGBTQ+ population, looking at four approaches companies are currently taking (see image below), as well as a handful of white space opportunities. Link.
  • This is a good read about how PCPs need to prepare for rising patient demand for continuous glucose monitors. It's an interesting narrative - there aren't enough endocrinologists, so as more people want to get CGMs, naturally you try to get PCPs to prescribe more CGMs. It's interesting to think about this article from a more macro perspective too - as we encounter physician shortages in various specialties across the country, the natural inclination is to have PCPs take on more. It doesn't quite seem sustainable to keep asking PCPs to do more, though. Link.
  • On the heels of UHG's emergency room policy fiasco, Vox took a look at whether those types policies (i.e. an insurer only paying for ED care when it's deemed appropriate by that insurer) are actually getting at the right problem. It does a nice job highlighting that inappropriate ED utilization by patients likely isn't actually the problem that needs to be addressed here. The problem lies in the price of ED care. UHG's approach to addressing this problem with hospitals unfortunately puts patients in the middle of the issue, but of course why would anyone expect anything else in this wonderful healthcare system we've created? Link.
  • This is a interesting piece from Olivia Webb on the specialty pharmacy landscape wondering why there aren't more startups in this space. I'm excited six months from now to see a whole bunch of VCs talking about their interest in the specialty pharmacy market and tie it back to this piece - thanks Olivia :). Link.

Data:

  • Trilliant put out a really interesting report with a ton of data looking at both consumer and provider views of healthcare. It's a lot to unpack - the slides on consumer loyalty (starting at 13) to providers are particularly interesting, with a couple charts that are the opposite of what I'd expect. Loyalty appears to decline consistently by age (I'd expect a u-shape). Medicaid patients are the most loyal to provider networks (I'd expect them the lowest). Link.

Featured Jobs:

  • Eleanor Health, a startup that provides comprehensive mental health and substance use disorder care, is hiring a Senior Software Engineer. Link.
  • HealthRhythms, a startup that helps care providers and clinical researchers measure and improve mental and behavioral health, is hiring an Android Engineer. Link.
  • Iora Health, a primary care provider for the Medicare population, is hiring a Lead Software Engineer. Link.
  • Medallion, a startup building a platform for licensing, credentialing and payer enrollment, is hiring a Senior Software Engineer. Link.

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