Weekly Health Tech Reads | 4/10/22

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News:

• Optum announced the acquisition of Kelsey-Seybold, a large multi-specialty practice in Houston. Private equity firm TPG previously had purchased a majority stake in Kelsey-Seybold in 2019 at a rumored $1.3 billion valuation. Kelsey-Seybold has been managing risk-based contracts in Commercial and Medicare Advantage markets, making it a Kaiser-like entity in the Houston market. Kelsey's Medicare Advantage plan was rumored to be generating $100 million in EBITDA in 2019, which of course is quite impressive, particularly when compared to the startups in the space burning piles of money to get there. Optum's flywheel is in overdrive at the moment as it reaps the benefits of scale and it uses free cash flow to buy up assets across the healthcare landscape (which generate more free cash flow, allowing it to buy more assets). With Kelsey, Optum now owns a Kaiser-like asset in the Houston market. It is interesting to think about Optum doing this in markets across the country, essentially backing their way into the scaled version of Kaiser everyone has always dreamed of.  Link / Slack 

• Walmart announced it is launching five new clinics in Florida, which is an oddly small number to announce given the pace at which other organizations are expanding. You have CVS and Walgreens rolling out what seems like five clinics every few days, meanwhile Walmart has been testing 20 clinics across a few states since 2019. It seems like now is the time to either lean in to expanding quickly, or move on. Launching five more clinics feels like an unsteady middle ground, raising questions about how bought in Walmart leadership is. It does appear Walmart is taking a slightly different strategy now with new leadership in place, instead of focusing on low, cash-pay prices, they're contracting with payors and aiming to be competitively priced in market. Implicitly, this shift seems to indicate some challenges they had with the previous strategy, so perhaps the new clinics are a first step in testing this new strategy.  Link / Slack (h/t Jake Fishbein)

• Village MD acquired two primary care practices in Colorado, adding 80 primary care providers across 10 locations. This brings VillageMD to 22 markets serving 1.6 million patients. It would be interesting to see the split of partner, de novo and Walgreens clinics and patient volume as it seems like a pretty compelling test on how the different approaches impact patient acquisition, retention, as well as general clinical and financial performance.  Link

• Walgreens is partnering with Blue Shield California to launch twelve new Health Corner locations across San Francisco and Los Angeles.  Link / Slack (h/t Lois Drapin)

• Medicare Advantage plans will see an 8.5% revenue increase in 2023.  Link 

Funding:

• Oura, makers of the consumer wearable Oura ring, raised a "meaningful amount of capital" at a $2.55 billion valuation. Link / Slack (h/t Krish Maypole)

• Value-based care analytics provider Clarify Health raised $150 million. Clarify, which recently acquired Embedded Healthcare, seems to be establishing itself nicely in the VBC analytics space. Link / Slack

• IntelyCare, a nurse staffing platform focused on the post-acute space, raised $115 million at a $1.1 billion valuation. It's interesting to think about the rise of a gig-based workforce and its impact on care delivery orgs that are trying to deliver on integrated, team-based care models. While it certainly can be done, it feels like a looming challenge (not that it hasn't always been one, I suppose) for large care delivery orgs struggling with staffing. Link / Slack

• Viz.ai, an AI imaging platform, raised $100 million at a $1.2 billion valuation. Link / Slack 

• Eleanor Health raised $50 million for its value-based care model for addiction treatment. Link / Slack

• German startup Avi Medical raised 50 million euros as it seeks to build 100 new primary care clinics in Germany.  Although note the funding will be to build out the tech platform, as Avi uses debt to finance clinic build-outs. Avi is free to patients, as its covered by the German healthcare system, and it now has over 20,000 patients.  Link / Slack

• Season Health, a food-as-medicine startup, raised $34 million. According to the article, Season is currently working with Geisinger, CommonSpirit Health, and Cricket to deliver meals to people with diabetes and CKD. Link / Slack (h/t Rik Renard)

• Evernow, a telehealth platform for menopause, raised $28.5 million Link / Slack (h/t G Skalli)

• Eleos Health raised $20 million to use voice data from physician / patient interactions to better inform care delivery.  Link / Slack (h/t Zona Liu)

• GOQii raised $10 million to build some sort of healthcare metaverse with all of blockchain tokens and NFTs you'd expect. Link / Slack (h/t Rik Renard)

• Conceive, a new peer-support model for fertility, raised $3.7 million. We continue to see community-based approaches with education and coaching that feels like a really good way drastically improve, and even redefine, how we think about empathetic care. Link / Slack

• StationMD raised an undisclosed amount to build a telehealth platform for people with intellectual and developmental disabilities.  Link

Opinions:

• Axios did an in depth report looking at Olive's model, finding that its claims of AI are overblown and it is not driving as the savings promised for customers. I'm not exactly shocked to learn that a company thats been claiming to be building "internet of healthcare" might be over its skis in terms of what it is marketing versus the reality of its product. At the same time, consulting orgs and others have been selling to health system leadership teams forever the promise of savings via process improvement that never materialize, and Olive doesn't seem that notable in that regard. It turns out that overpromising and underdelivering might actually be a great way to build a services business with incumbent healthcare orgs. Zooming out a bit, this piece feels notable in its willingness to ask tough questions of digital health unicorns. It seems like a sure sign that 1. digital health is maturing to a place where people are expecting real results, and 2. the tide is starting to go out post-COVID hype cycle. We should expect to see more critical questions being asked of startups regarding their impact. While that may be uncomfortable, this scrutiny should ultimately be a good thing for the space. Link / Slack

• This is a fascinating read on the "Hispanic Paradox", the concept that Hispanics' have higher overall health risks yet have overall lower rates of heart disease than the general population. It explores the idea that the Spanish language itself can actually positively influence health by supporting resiliency, and over time that having positive effects on minimizing stress and driving a more optimistic world view. A good reminder for me, despite all the advancements of Western medicine over the past two hundred years, that there's still a lot we don't understand about what drives health outcomes. Link (h/t Erik Cardenas)

• Julie Yoo and Justin Larkin at Andreessen shared a piece on value-based care business models with perspectives from a number of their founders. This is such a meaty topic that it is hard to get into sufficient depth in an article like this, but it provides for a good starting point for folks new the space in terms of where to think about diving in from here. Link / Slack (h/t John Prendergrass)

• Sachin Jain penned a piece looking critically at the phrase "practicing at top of license". Jain's core argument appears to be that financially-motivated organizations can use the phrase to justify financial benefits via labor arbitrage at the expense of quality care, particularly for complex populations. It's interesting to see this argument being made publicly by Jain, who previously ran CareMore, an organization that leveraged top of license (and Jain seems to acknowledge here has room for improvement). Seems like we all have work to do to ensure that "practicing at top of license" doesn't just become a euphemism for increasing margins in care delivery.Link / Slack

• George Halvorson, Kaiser's former CEO, added another salvo to his impassioned critique of MedPAC for its critique of Medicare Advantage savings. Halvorson asserts a number of things that appear to be more opinion than fact without providing justification, which is unfortunate because it doesn't help to clarify anything in this debate around the value of Medicare Advantage, other than to make it very clear Halvorson feels very strongly that MA has lots of value. It'd be great to see Halvorson share more data that helps the layperson decipher for themselves, rather than just informing us that "MA costs less."  Link / Slack

Data:

• Rock Health released its usual digital health quarterly funding report, and as usual does a nice job summarizing activity in the space. The chart below does a nice job breaking down funding activity by clinical indication and value prop. This quarters report has a bit more of a cautionary-vibe ahead, and wraps with what should probably be an evergreen statement: "entrepreneurs and investors are safest to place their bets on solutions that deliver tangible clinical and economic outcome measures." The fact that Rock feels the need to write that sentence says a lot about where the space has been recently.  Link 

• This is interesting research using the Butterfly ultrasound to accurately predict gestational age in North Carolina and Zambia, with interesting implications for care in low income countries. Link / Slack