Kevin's Weekly Health Tech Reads 8/16

The virtual primary care race is on as One Medical Now launches, Livongo again states its interest, & Eden raises $25 million for its virtual / physical model; a new CMS model for rural care; & more

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News:

  • One Medical posted better-than-expected Q2 earnings and announced they’ve decided to join the virtual primary care party, launching a new product called One Medical Now in geographies where they don’t have a physical footprint. The discussion of the virtual product in the earnings call is super interesting - analysts had lots of questions about the specifics of the program, particularly how it’s paid for, and there were only some very vague answers in response. Despite the excitement around the large employer interest, the vague responses make it feel like it is still early days for One Medical figuring out the virtual model. Will be curious to watch how they roll it out over time, and how / if they include the health system partners in the product. One Medical also shared some new health system partnerships - they’re entering Raleigh / Durham market with Duke and somewhere in Wisconsin with (presumably) Advocate / Aurora. Link (earnings transcript).
  • Teladoc / Livongo filed a transcript from their internal town hall related to the merger this week. It’s full of interesting comments about the justification for the acquisition - and repeatedly early on Gorevic calls out the desire to provide virtual primary care. He also cites Livongo’s experience working with PBMs (which Teladoc has not) as a major driver of interest. On page 22 Gorevic discusses how Livongo’s penetration of health systems is a huge opportunity for the combined entity - leveraging Livongo’s entry point with the employee population to start providing care for the entire patient population. I believe this is what is referred to as a Trojan Horse. Health system folks… y’all ready for this? In unsurprising other news, the team is not worried about the market’s negative reaction to the news of the deal. Link.
  • Eden Health, an employer-focused primary care startup, raised $25 million at a valuation close to $100 million. The strategy of partnering with commercial real estate companies to determine where to build clinics is a really cool twist on go-to-market strategy for Eden. Seems like a really good way to de-risk the build out of a clinic. While I still have my questions about whether these models will save costs for employers, I’m not sure that matters all that much with a company like Eden where they’re really going after landlords looking to attract employers to their buildings. Smart. Link.
  • Here’s a good piece by Dan Gebremedhin at Flare on why they led the investment in Eden. It’s interesting to think about the distinction drawn here between virtual primary care and telehealth 1.0 - while I’m in agreement with the argument, I’m not so sure employers are going to understand the difference when Teladoc comes knocking arguing the opposite (which I think then means it makes all the more sense to target smaller employers like Eden). Link.
  • CMS announced a new payment model for rural health providers that will provide upfront payments and investment in fifteen rural communities over the next few years attempting to create a more viable financial model for rural providers. Will be super cool to see how this evolves over the coming years, and hopefully this can spur more startup activity in the space. Link.
  • Health Catalyst announced Q2 earnings and the acquisition of Vitalware, a company that provides revenue cycle optimization software for health systems, for $120 million. The space seems like a no brainer for Health Catalyst to get into given all the activity there. This is Health Catalyst’s second acquisition in the last few months. Link (acquisition). Link (earnings transcript).
  • Sentara and Cone, two regional health systems, announced their intent to merge and create a $11.5 billion, 17 hospital system. Link.
  • Thirty Madison, a relatively new entrant to the DTC pharmacy space with brands targeting hair loss (Keeps), migraines, and acid reflux, raised $47 million. Interesting to see Johnson & Johnson in the round, as well as the Pfizer relationship. Link.
  • ReifyHealth raised $30 million for its platform that speeds up clinical trials. Link.
  • Nurx, the DTC birth control startup, raised $22.5 million. Link.
  • CancerIQ raised $4.8 million for its precision treatment platform for oncology. Link.

Opinions:

  • This is a great piece on the 21st Century Cures act and the info blocking rule as it relates to payors. It goes very deep into the weeds on the Patient Access API portion of the rule. Link.
  • This is a good quick summary of Oak Street’s value prop by Paul Keckley. As some of you noticed, Oak Street was the subject of some excitement last week as it priced it’s IPO and the stock immediately jumped something like 100%. Keckley’s article outlines the thesis to be excited here. Link.
  • The CB Insights team shared its list of the Top 150 digital health startups. While I remain a bit confused by the distinction between a ‘top 150’ list and a market map generally, it does provide a nice overview of a bunch of startups up to interesting stuff in the space. Link.
  • Here’s a interesting look behind the scenes at Aledade as they attempt to support the independent primary care practice. The article does a nice job articulating the benefits of having independent primary care practices, and some of the challenges facing those practices (which Aledade helps solve!). Link.

Data:

  • The Commonwealth Fund again looked at visit patterns post COVID-19. Telehealth has come off its peak of 14% of total visits and appears to be settling in at just under 8% of visits. Overall visits have rebounded, down only 10% from where they were, and notably primary care visits are basically back to normal. Link.
  • Here’s an interesting read on how COVID-19 is starting to impact small group health insurance, with one third of small businesses that offer health insurance unsure that they’ll be able to pay premiums a few months from now. Link.
  • UHG published a study suggesting that primary care docs that receive global capitation payments - instead of fee for service - provide higher quality care in a Medicare Advantage population. Ya think? Link.