Weekly Health Tech Reads | 3/13/22

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News:

• agilon health hosted its analyst day, articulating a very bullish case for the organization. It's hard not to be impressed by the way agilon is executing on its growth story at the moment and the analyst day was a good representation of that. It's a really straightforward story in many respects - they're essentially creating a market for payors who want more MA growth and provider groups that want global cap arrangements but are too small to manage them on their own. And it turns out that being that market-maker is a pretty lucrative business for agilon - they're turning the corner on Adj EBITDA profitability in 2022 and growing to ~$600 million of Adj EBITDA in 2026, while getting to 3,800 PCPs on the platform. Interestingly, agilon announced as part of the session that they've partnered with their first health system, Maine Health, which has 12 hospitals and 1,700 providers in Maine / New Hampshire. While I understand the desire to demonstrate the platform can be used by a variety of provider types looking to take on value-based contracts, I'm curious to see how this extension goes. You don't need to look further than agilon's experience in California to understand that not every partnership goes well, and given the track record of hospital-led ACOs I'd be wading into those deals very cautiously if I'm agilon. For folks interested in more, keep an eye out in Slack early in the week as we'll post a much more detailed review there. Link (slides) / Link (video). 

• CanoHealth's stock jumped this week on the news that an activist investor has taken a substantial stake in the business and is encouraging Cano to explore going private. This note provides a good summary of potential buyers - Humana apparently has a right of first refusal, but the article suggests CVS and private equity as other potential buyers. I'd put my money on private equity making a move here - but crazier things have happened. Link / Slack

• Babylon posted earnings, and its growth in lives under value based contracts shows the benefits of growing by acquiring practices - it has grown from 58k Medicaid lives at YE2020 to 140k Medicaid lives at YE2021. The analyst questions are really good here trying to understand how exactly Babylon is winning and performing on value-based care contracts, and the answers aren't super clear.  Link / Slack 

• Anthem announced it is planning to change its name to Elevance Health. Leaving aside opinions on the new name, it does seem like a clear sign of Anthem's ambitions to redefine itself as more than just a health insurer.  Link / Slack (h/t Dan Erstad)

• Sutter won a class-action antitrust case this week as a jury found that it was not illegally tying all of its hospitals together in all-or-nothing contract negotiations with payors. Given everything that's come out on Sutter over the last few years, this outcome is a head scratcher for me. Reading this article makes it seem like Sutter basically won the case by confusing the jury. And that speaks volumes to the current state of healthcare in this country - it always seems like a winning strategy to make the conversation as confusing as possible for the layperson. Link.

• Epic is launching Garden Plot, a new SaaS product aimed at independent medical groups. Lots of good discussion in Slack about the challenges Epic has had in expanding to smaller practices previously, and potentially will face here in doing so. Link / Slack (h/t Martin Cech)

• Caregiver support platform BetterUp is teaming up with Walmart to offer the service exclusively through Walmart's Wellness Hub (yes, Walmart apparently has a Wellness Hub). It's always good to see more caregiver support tools available, but at a price point of $124.99 per month, I have a lot of questions about who is going to pay that much for the service. Link.

• GoodRx is acquiring VitaCare for $150 million, a pharmacy services platform.  Link.

Funding:

• Elemy, a startup that provides pediatric behavioral health / autism treatment, raised $192 million at a $1.15 billion valuation from Softbank. It's yet another Softbank investment that invites questions about how quickly the model scales - the article suggests that Elemy is projecting to hit $100 million of revenue in the next year and hire ~2,000 clinicians. As mentioned in the Slack dialogue, it seems like they need to see a lot of growth to justify the $1.15 billion valuation, and it'll be curious to watch how quickly they can bring on providers.  Link / Slack 

• Gravie - a Minneapolis(!!!!) startup that provides a marketplace for employees to choose insurance products, raised $75 million. In the past few years Gravie has also launched its own health plan, although the article doesn't make it totally clear whether Gravie is growing in the health plan or marketplace space. Link.

• Health Gorilla, an interoperability platform, raised $50 million. Link

• Nice Healthcare, another Minneapolis (two in one week!) startup, raised $30 million to scale its in-home primary care model. Nice, which has been taking a rather unique approach in targeting smaller employers as its go-to-market strategy, seems like it has a lot of room to run with that model.  Link / Slack (h/t Neha More).

• Wildflower Health, a maternity care platform that helps providers implement bundled payments for a maternity episode, raised $26 million. Link.

• Homeward Health launched and raised $20 million. This is a rather interesting rural healthcare play from a number of former Livongo execs.  Link / Slack (h/t Kevin Wang).

• SmithRx raised $20 million to disrupt the PBM space.  Link.

• Vivante Health, a virtual care delivery platform for GI diseases, raised $16 million. Link.

• Synapse Medicine raised $28 million for its platform that provides reliable drug information. Link / Slack (h/t Martin Cech).

• Avant-Garde Health raised $12 million for a surgical analytics platform. Link.

• MDisrupt raised $6 million to help digital health companies build out clinical evidence. Link.

• Credo raised $3 million to create a more efficient chart chase process in Medicare Advantage. Link

• Noula Health, a D2C provider for virtual reproductive health, raised $1.4 million. Link.

Opinions:

• Solome Tibebu shared a thoughtful post on International Women's Day highlighting the work of Black women who are working to change maternal health care. The work these women are leading at companies like Candlelit Therapy, Wolomi, Expectful, and Mahmee is quite cool to see, and I'd encourage all of you to check them out. Link / Slack (h/t Solome Tibebu)

• This is a really good video from folks at Health Management Associates explaining ACO REACH and what is changing from Direct Contracting. It highlights the changes around health equity, provider leadership, and beneficiary protections. It also goes into a lot of the technical changes, i.e. how CMS is changing risk score calculations, health equity benchmarks, and quality withholds. Around minute 31 it provides a really helpful summary of current state of DCEs who are participating in the program. Not surprisingly, California, Florida, and Texas have by far the most DCEs. Clover has the largest footprint of all payor led DCEs at 23 states.  Link / Slack (h/t Carlos Rodarte).

• This article provides a nice overview of the Medicare / Medicaid funded Program of All-Inclusive Care for the Elderly (PACE). It describes nicely the positive impact the program makes for patients, and yet, despite it showing improved clinical outcomes, it has very little adoption on the whole. PACE programs currently serve ~60,000 people, of a 1.6 million Medicare beneficiaries who are potentially eligible for it. There are currently 144 PACE programs operating 272 centers in 30 states. A number of startups are targeting this space, which is great to see as this is one of those programs it seems we should seek to scale. Link / Slack (h/t Geoff Matous)

• There's yet another article out this week calling into question Cerebral's approach to providing D2C mental healthcare services. A lot of this covers similar topics already reported on, but it includes some good new color on those topics that raise a number of questions. As we mentioned when discussing one of the recent articles about Cerebral, its many recent public missteps are a real shame not only because it reflects poorly on Cerebral, but it distracts from all of the good work being done in the space more broadly. It seems only a matter of time before there is political backlash associated from all of this coverage - you can imagine incumbent provider orgs sharing articles like these with politicians highlighting their concerns that for-profit, D2C approaches create. Articles like this with examples of Cerebral patients being dropped at the moment they need it most certainly don't help the broader narrative.  Link / Slack (h/t Rik Renard)

• There was a fun conversation in the Slack this week exploring why we're not seeing more innovative attempts at expanding access to medical education for clinical roles of all types. Given the shortage of providers we hear about all the time, it'd seem like an opportune time for someone to rethink the process. Slack.

Data:

• Fair Health's updated data on telehealth sure seems to indicate that telehealth has settled into a new normal at around 4% - 5% of medical claims. While a significant improvement over pre-pandemic telehealth utilization, it's not exactly the tectonic shift many were expecting back in 2020. Link.

• An Oak Street paper in NEJM Catalyst (paywalled) looks at whether clinicians or machine learning is better at risk stratifying patients. As noted in the Slack conversation, machine learning is more predictive in the highest tier of patient risk, but not in the second highest.  Link (paywalled) / Slack (h/t Josh Heurung)

• Peterson-KFF Health System Tracker took a look at the current burden of medical debt on the population - finding that 23 million adults have over $250 in medical debt, with 3 million adults owing over $10,000. They estimate total medical debt is over $195 billion, which is a staggering number. I always struggle reading articles like this and then thinking about the number of startups helping health systems collect more money from patients. Link / Slack (h/t Geoff Matous)