Amazon acquires One Medical, Elemy drops patients, Centivo raises funding, & more
HTN Member Happenings:
We included our take on the Amazon / One Medical deal here. Obviously this news dominated the conversation of the week, and if you're anything like us, you might be a little tired of alllllll the takes on the deal, so this is all you'll see from us on it this week. At the end of the day, who knows if this is the first step in broader strategy emerging (which could go any number of ways), or just another Amazon initiative that it'll let sink or swim on its own in a confusing sea of healthcare initiatives. Either way, it seems like a big moment for Amazon to plant a flag in care delivery. Link
It may seem like a year ago given the Amazon news above, but UHG's Q2 earnings was just last week - here is our take on what we learned. As we mentioned in the last newsletter, UHG's solid earnings were a reflection of the seemingly unstoppable force that is UHG’s flywheel. In this article, we share our perspective on various topics covered during the call for HTN members, including thoughts on the expansion into home health, provider acquisition activity, Optum Venture’s investment momentum, and more. Link
We hosted a conversation for community members with on our recent HTN / OMERS Ventures survey on the health tech funding environment. Check out the post for our summary of the dialogue and a link to watch it. Link
Elevance, the company formerly known as Anthem, reported Q2 earnings. Analysts seem worried about Elevance's low operating margin in its commercial book of business, at 7.6%, and its ability to hit a target of 11% in 2025. It's worth noting their comments about the commercial selling environment and how conversations with employers are shifting insurance conversations to think about it as a piece of their human capital strategy to attract and retain talent. It was interesting to see an analyst note UHG's activity in the home health space and ask Elevance its perspective on home health. Elevance stopped short of sharing UHG's perspective that home is going to be the center of care in the future, but do highlight a number of initiatives they have ongoing. Link
Elemy stopped providing services last week in Georgia and Illinois while also laying off team members. It is now focused on providing services only in Florida, California, and Texas, seemingly a far cry from the startup that raised $219 million from Softbank at a $1.15 billion valuation less than a year ago in order to scale nationally and hire 2,000 clinicians... seriously. Apparently, only 87 families were impacted by this change from Elemy, hinting at Elemy's struggles in expanding markets. Those 87 people represented a "single digit percentage" of Elemy's patients. So even assuming that single digit percent was 1%, that means that Elemy has ~8,700 patients today. Regardless, the article highlights how hard Elemy's pullback is on the families impacted, at least one of whom was notified via email only a few minutes before a scheduled visit. The most fascinating - and disheartening - part of the article was the response from Elemy's clinical team leader when pressed by Forbes on whether the patient terminations were done in an ideal way for patients and their reply was: "I don’t think that’s ideal, of course not. … I'm not the only voice at the table when making the business decisions, obviously, you understand that?” Needless to say, it seems deeply problematic that Elemy's clinical leader apparently disagreed with this decision but was overruled by business leaders - I'm not sure there's a clearer example of an org putting patient interests behind business interests. I'm really not sure how we've gotten to a place where this sort of behavior is viewed as acceptable, but the evidence seems pretty clear at this point that we'd all be better off if Softbank were barred from investing in care delivery moving forward. What a mess. Link / Slack (h/t Michael Luo)
In the event you read the above Elemy story and wonder whether it is reasonable (or even possible) to expect more from venture backed startups in scenarios like this. I'd suggest that Bicycle Health demonstrated this week that the answer to that question is pretty clearly, "yes". They flew staff into Alabama after a change in state regulation in order to ensure patients didn't lose access to care. Kudos to them for supporting their patients. Link / Slack (h/t Arpan Parikh)
Apple released a report suggesting that it is making big strides in healthcare, both by helping empower people on their personal health journeys and working with the medical community on research. It provides a good perspective into how Apple is thinking about the impact it is making in the industry, although I don't think this report exactly proves that Apple is making a major impact in healthcare. Still, it's not hard to look at the consumer capabilities and imagine Apple continuing to build on this over time. Link / Slack (h/t Rik Renard)
Mass General Brigham is expanding a hospital at home program in order to "contain health care spending and manage an ongoing capacity crunch at its hospitals." The article shares that MGB currently has 25 patients in its hospital at home program and will be scaling to 200 patients over the next two and a half years. It should serve as a friendly reminder how hard it can be to scale programs in healthcare when an organization like MGB is talking about 200 patients as a "massive expansion". Link
Adventist Health and Emcara Health are teaming up in California to launch a new care primary care model that will treat complex Medi-Cal members, including the unhoused population. Link
Centivo, a TPA for self-insured employers, raised $30 million from Morgan Health. As the both the funding market and employers continue to evolve, it will be interesting to watch which employer focused models continue to find success. Centivo's primary care centric health plan that looks like a narrowed network aligning local PCP incentives though direct contracting seems like a differentiated approach to many of the virtual first provider, plan and point solutions that employers often feel need to be coupled with navigation companies. Note that Centivo is also only in 13 markets. This seems like a prudent approach to slowly and selectively activate new markets and provider partnerships to create local momentum across different employer segments / sizes in those markets. The typical admin fee revenue model for TPA’s limits margin growth, so it'll be interesting to watch how Centivo tries to drive additional revenue and margin - potentially through risk sharing contracts or starts thinking about taking on risk in the fully-insured space with a larger balance sheet. Link / Slack (h/t Neil Sanghavi)
Healthie, a platform building back office infrastructure for virtual care, raised $16 million. Link / Slack
Nucleus Genomics, a DTC genetics company, raised $14 million. Link / Slack (h/t Niko Fotopoulos)
Humanity Health, a career platform for underrepresented leaders in healthcare, raised $6 million. Link
SCAN Health invested in SafeRide, a non-emergency medical transport broker. Link
Here's a really interesting look at some of the challenges Medicare Advantage is facing in Puerto Rico as its penetration there has become so high it is creating problems with benchmark rate setting. The Puerto Rico market appears to be relatively unique versus other markets, but it is interesting to use as a case study when thinking about implications for the broader MA market. It's not hard to envision a scenario a decade from now where MA penetration continues to increase but rates are not keeping pace and payors are complaining about profitability, as is the case in Puerto Rico. Link
Slow Ventures shared its perspective this week on whether digital care delivery models are venture-backable, essentially arguing that the infrastructure supporting care delivery is, but care delivery itself is not. It's worth checking out for a VC perspective, but this isn’t a particularly convincing argument to me (even if I tend to agree with the conclusion). Slow suggests that the "consensus playbook" for VC-backed care delivery is to: 1. start D2C cash pay with narrow service, 2. improve CAC by going payor / employer, 3. expand to new treatments, and 4. flip from FFS to VBC. Certainly a group of companies has attempted to take that route, but calling it consensus seems to ignore the many investors in the space who had serious questions about that general approach. Slow suggests opportunities lie in infrastructure, provider networks, and marketplaces, which all do seem like very investable opportunities in healthcare. Link
This is an interesting follow up to the recent article on the state of New Jersey's $34 million failed rollout of Horizon's care coordination service for the state public employee plan. This failed rollout is just one item contributing to higher rates for state employees moving forward, as the actuarial consultant Aon is no longer assuming any savings in their rates. The Aon document is really interesting as it includes savings estimates for other vendors to the state public employee plan, including Livongo, Hinge, Amino, and others. Link (article) / Link (Aon)
This is an interesting summary of the approaches of a number of mental health startups, including practice administration (Alma, Headway, Heard, etc), mental wellness (Circles, Real, Sesh, etc), mental health services (BetterHelp, Cerebral, Two Chairs, etc), and combo plays (Spring Health, Lyra Health, etc). Link
J2 posted an article looking at how changing network adequacy regulations in the ACA will require insurers to move away from narrow networks and include multiple leading health systems in network, which will inevitably cause premiums to increase, but also create more access for patients. The map below is a helpful visualization of the Atlanta metro market. Link / Slack (h/t Josh Poretz)
Speaking of ACA rate increases, KFF did an analysis of 2023 price hikes based on data insurers have submitted. There's a median proposed price increase of 10%, and the article looks at drivers of the increases, including inflation, COVID-19, and policy changes. Link
This is an interesting survey of Gen Z's views on healthcare. It includes some interesting insights, including the fact that Gen Z's #1 reason for selecting a PCP is that they have a convenient location as many want to see their providers in person. In case you needed any data to buy into the notion that every telehealth company is going to need to figure out a strategy for either buying, building, or partnering its way into a physical footprint, here it is. Link (Survey Data) / Link (Fortune Summary) / Slack
Arise, a startup building a virtual care and community platform for eating disorders and mental health, is hiring a 1) Head of BD & Partnerships and 2) Head of Engineering. Link 1. Link 2.
Enhabit, a large home and hospice health provider, is hiring a Chief Corporate Development Office, M&A. Link.
Headspace, a digital mental health and mindfulness company, is hiring a Principal, Brand Marketing. Link.
Humana, the large insurer, is hiring an Experience Design Lead. Link.
Nomi Health, a startup building a direct care ecosystem, is hiring a VP of Product. Link.