Weekly Health Tech Reads | 8/21/22

News of the Week:

• KeyCare announced $24 million in funding to build a virtual care platform on top of Epic that partners closely with health systems. This seems like a really meaningful move as it is a flavor of one of the pie-in-the-sky ideas I've heard floated around health system innovation circles the past few years: what if a network of health systems could get their act together and build a Teladoc competitor that wins by being a friendly partner to incumbent providers, instead of a competitor like Teladoc is perceived as? Many of the recent challenges in the telehealth space highlight why building a new virtual care platform centered around health systems should succeed. As articulated well from this post: "I like this doctor in my living room thing, but now Dr. Johnson, who I have been seeing for 5 years offers it. I think I will just get it from her rather than switch to this new Teladoc thing.” KeyCare certainly seems like an attempt to compete with Teladoc, Amwell, and other virtual care players by partnering with health systems to build a virtual care platform centered around the needs of health systems. Additionally, the Epic / Spectrum quotes from the press release seem to indicate as much. Of course, this comes with its pros and cons, since health system interests are not exactly always aligned with patient interests. Lots of interesting discussion within the community on how exactly KeyCare is going about this. Link / Slack

• BI featured two interesting reads on Devoted this week. The first piece highlighted Devoted's 1H 2022 financials, and apparently Devoted's insurance business was profitable, generating $7.7 million of net income off $538 million of revenue, with a 92% MLR. Given the state of other startup insurance businesses, it certainly is an accomplishment for Devoted to hit profitability, particularly given the membership growth they're driving at the moment. Although, it's also worth remembering every large insurer seemingly has done quite well this year, and a 92% MLR still leaves a lot of room for improvement. It'd be quite interesting to see what Devoted's overall profitability looks like including the Devoted Medical Group. As the article indicates, the Medical Group has 400 "clinicians and other staff" and will be growing to 1,000 next year (meanwhile, Devoted's website suggests there are only 40 clinicians working there). If both of those numbers are right, I'd be interested to see the financials of that group. Of course, this is where Devoted astutely laying low in the private markets has a huge benefit as it doesn't have to share the same level of information as its public peers.Link (BI Paywall - Financial) / Link (BI Paywall - Medical Group) / Slack

• It's unfortunate to see this report out suggesting that the reason for failed Medicaid expansion efforts in North Carolina was due in large part to health system lobbyists, who refused to support one proposal that would have loosened the states strict Certificate-of-Need law because it would have threatened hospital revenue. It'd almost be disappointing if it weren't so entirely predictable. It's yet another reminder of how the health system has been built to meet the needs of so many different stakeholders, except for one key one - patients.  Link / Slack (h/t Martin Cech)

• Dr. B raised $8 million to build a telehealth service for "visit-less prescriptions" that is at least initially focused on COVID-19 treatments, but has aspirations to quickly expand to every day medications including dermatology, reproductive care, and heart health. You may recall that Dr. B was originally set up as a service at the peak of COVID-19 by one of the ZocDoc cofounders as a waitlist to help people find extra COVID vaccines. I was one of those people who signed up when trying to find a vaccine, but then nothing helpful ever came of it. I wasn't the only one, as MIT Technology Review highlighted last year that 2.5 million people signed up for the service, but it couldn't find anybody who seemed to actually benefit from it. Yet in the press release, Dr. B is claiming to have offered vaccines to millions of people via 700 providers. Of course, if you read the MIT Tech Review article, this should raise a whole bunch of red flags, because a year ago they weren't willing to share that data, suggesting it was a patient privacy violation. Even before this recent news, Dr. B was already quite suspect, as Olivia Webb covered nicely last year about how this seemed like a ploy to sell patient data. It sure seems a lot like Dr. B took advantage of a public health crisis to collect health information on 2.5 million people who were frantic to find vaccines, and it is now pulling a bait-and-switch and going to use venture capital dollars to sell those 2.5 million people cheap prescriptions. Of all of the times I've felt gross about business interests taking advantage of healthcare recently, this is up there. Link

• BI is reporting that ChenMed is considering selling its stake in JenCare, a decade-old JV it operates with Humana in 11 states and has 50,000 patients. Humana's role in the MA primary care space has obviously evolved a lot over the last decade, initially seeding the market as the key customer for MA primary care startups, before more recently deciding to build it themselves in partnership with Welsh Carson. It certainly seems like Humana would be the most logical buyer for the JenCare clinics given Humana's aspirations to grow the CenterWell business. ChenMed seems to be in a tough negotiating spot here as I'm not sure why exactly others would be jumping to buy into this JV knowing that Humana has another JV it seems more interested in growing.  Link (BI paywall) / Slack (h/t Frederik Mueller)

Other Announcements:

• Nurse staffing platform Incredible Health raised $80 million at a $1.6 billion valuation. 600 hospitals across 25 states are leveraging Incredible, which is adding 10,000 nurses per week to the platform by focusing on social media platforms including TikTok to attract millennial and GenZ healthcare workers. Link / Slack

• Upfront Healthcare acquired PatientBond in what seems like a logical combination of capabilities as each seeks to help health systems drive better patient engagement, leveraging Upfront's communications platform with PatientBond's consumer insights.  Link

• Maven launched a new menopause product, an interesting signal the employer market might be taking that space more seriously. Link / Slack (h/t Rik Renard)

• Violet, a digital platform that allows clinicians to take courses to become skilled in DE&I, raised $5.3 million. Very cool idea. Link (Forbes paywall) / Slack

• HCSC acquired Trustmark Health Benefits, a TPA providing flexible benefits to smaller employers. Link / Slack (h/t Kyle Copeland)

• Arine, a medication therapy management platform for payors, raised $29 million. Link

• CareHarmony raised $15 million for a virtual care coordination platform. Link

Opinions:

• This is a good read on some of the challenges facing rural hospitals as well as organizations attempting to revive them. It highlights the efforts of a new organization called Braden Health that is attempting to swoop in and turn around rural hospitals, focused on buying and re-opening rural hospitals in Tennessee and North Carolina, and then sharing services across them to in order to better manage costs and turn a profit. It helps that Braden is buying these hospitals for next to nothing - it paid $100 for one hospital and $20,000 for another. Hopefully, Braden will prove it is able to manage these hospitals better than other groups that have attempted this route before. As the article highlights, generally it hasn't turned out well when groups with little-to-no hospital operating experience buy these entities (both for-profit groups and also local governments).  Link / Slack (h/t Michael Ceballos)

• Chris Chen of ChenMed penned a blog recently highlighting his case for providers to seek full capitation payments. He suggests that providers have Stockholm Syndrome with respect to fee-for-service medicine, as a recent survey showed that over 60% of providers view value-based care as having a negative impact on their practice. Essentially, the argument seems to be that various VBC programs have been poorly implemented, and that capitation is the answer. Or, perhaps more accurately, it has been the answer for ChenMed and other organizations. The post seems like it glosses over a lot, in particular that if an individual primary care doctor actually moved their population over to a fully capitated contract, that they might face financial ruin for things entirely outside of their control (i.e. actuarial risk with a risk pool that is too small). Certainly, MSOs can help individual providers manage this and take on more actuarial risk, or those providers can go work for an organization like ChenMed that aggregates that risk. But as it turns out, it seems like the crux of the argument here has nothing to do with VBC versus FFS, but that PCPs are underpaid relative to the value they provide within the system. Look no further than the experience of GPs in the NHS to see how capitated payments don't solve much when the payment is low - it's all about getting the whole healthcare dollar included. So while the blog isn't exactly a convincing argument to me, it still is helpful to see how the case is being made to PCPs regardless. Link

• Marissa Moore shared an interesting perspective on the current state of telehealth lobbying. The article does a nice job summarizing the change afoot, and why it might behoove virtual care startups to get more involved in driving legislative change. The piece included this interesting data looking at disclosed lobbying spend from a number of venture backed startups. The numbers are minuscule - not a single company on this list spent more than $500k in lobbying over the last 3+ years. I'd be curious to compare that to what the North Carolina hospitals spent this year alone to stop that Medicaid expansion bill referenced above.  Link / Slack (h/t Marissa Moore)

Data:

• This article highlights some good data and implementation learnings from a hospital-at-home program in Florida run by Health First using Current Health as a tech vendor. Over the past year, 238 patients have been enrolled across three hospitals. It also provides some interesting insight into the practical side of rolling out these programs - how they're staffed, challenges with wifi in homes, etc.  Link / Slack