Weekly Health Tech Reads | 5/2/21

News:

• Humana acquired the remaining 60% interest it doesn’t already own in Kindred, the largest home health care provider in the country, at an $8 billion valuation. Kindred has over 43,000 caregivers delivering services to over 500,000 patients each year. Humana will be rebranding Kindred moving forward as CenterWell, and intends to divest the non-home health business (hospice and personal care services). Link.

  • This article does a very nice job covering the rationale of Humana’s move here, which not surprisingly feels very Optum-esqe. The ability to stitch together services like Kindred, Dispatch, Papa, Heal, and others starts to present a very interesting portfolio of home health care options that help Humana better manage risk in value based contracts. Given Humana’s interest in putting these services under one brand, you have to think they’re looking at Dispatch, Papa, and Heal as acquisition targets at the right price. The right price being the key caveat in that sentence in today’s startup valuation environment. Link.

• Humana hosted earnings this week and shared a bit more on how they’re moving all their care delivery assets under the CenterWell brand with the Partners in Primary Care initiative (now CenterWell Senior Primary Care) being the first move there. In the Q&A they describe building out a health care services business over time with the three core profit generators being pharmacy, primary care, and home health. Also some interesting comments about post-pandemic seniors being more weary of receiving care at places like SNFs and receiving care in home (which makes sense given the Kindred acquisition). Link.

• Teladoc hosted its earnings call, discussing a number of interesting topics to unpack. Not surprisingly, the first analyst question was on the changing competitive landscape with all the activity in the space. Teladoc seems pretty secure in its competitive position given the breadth of its product offering as it sells to employers and health plans. The quote below from Teladoc’s CEO is an interesting one - it seems to be directed at Amazon Care, which was mentioned in the question along with MDLive, and Grand Rounds / Doctor on Demand:The Q&A also included a lot of interesting comments on customer growth across various products, including the virtual primary care offering, where they’ve signed up a number of Fortune 1000 clients and are exploring moving towards risk contracts. The conversation around the positive uptake inside health systems is interesting too - the traditional sales call by Livongo to HR departments has shifted to C-suites in hospitals to help manage their at-risk patient populations. While that sounds really intriguing, the nice part about selling to hospital employees is that hospitals are generally very large employers in their local areas (i.e. its a huge population for Livongo to sell into). The at-risk patient populations for hospitals are a smaller population and generally a harder nut to crack… will be curious to watch how that evolves. Link.

• Medicaid insurer Molina also reported earnings, and there were a few interesting comments about the exchanges, where Molina has built a nice business on top of its Medicaid network rates. There was a question about competition and Molina referenced that while some of the new entrants are entering their markets, Molina is not particularly concerned given the different strategies at play in terms of customer segment (affluent suburban versus working poor). Link.

• For those like me who sometimes wonder why there’s less activity in health plan innovation in the Medicaid space, my hunch is it probably has to do with the state-by-state regulatory dynamic that the Kentucky bidding saga has highlighted. This week, a judge ruled that Kentucky must re-bid it’s Medicaid contract for a *third* time because of irregularities in the process. Link.

• CVS announced a new $100 million corporate venture fund. Their site suggests they’ve already made 20 investments so it appears they’ve been at this a while informally and are now formalizing the work. Link.

• GoodRx acquired HealthiNation, a health video content platform that allows pharmaceutical manufacturers to reach customers, for $75 million. The move makes sense strategically, although I always get very queasy about the idea of pharmaceutical companies paying for consumer facing content about health conditions. I personally wouldn’t design a healthcare system where the manufacturer of Humira is the one paying for content about rheumatoid arthritis for patients. That… seems like a conflict. Link.

• DispatchHealth acquired Professional Portable X-Ray, one of the few startups in healthcare I write about on this newsletter that has a name that actually describes its business so I don’t need to. Link.

• Cigna now offering Ginger as an in-network behavioral benefit to 14 million members. Link.

Funding:

• Digital pharmacy startup Capsule raised $300 million at a $1+ billion valuation. Interesting to see them articulate a vision of a “one-stop shop” for accessing a curated set of products / services, which I suppose would literally make them a digital version of the CVS / Walgreens of the world. Link.

• CareSyntax, a technology platform for the operating room, raised $100 million. Link.

• Kaia Health, an MSK startup, raised $75 million. The lead investor in the round is unnamed, and Kaia’s CEO explanation of how the round came together seems like a perfect encapsulation of the funding market at the moment: “We didn’t really actively raise but met an investor who wanted to invest really quickly, so we decided to raise the C round much earlier than expected.” Link.

• CareRev, a healthcare staffing platform, raised $50 million. Link.

• Sesame, a direct-pay marketplace with over 1,000 providers on it currently, raised $24 million. Their business has grown 25x over the last year. Link.

• Summus raised $21 million to expand its virtual specialist network. Link.

• Vector Remote Care, a remote patient monitoring startup in the cardiology space, raised $12.5 million. Link.

• Outcomes4Me, a platform helping cancer patients navigate their care, raised $12 million. Link.

• CareCar raised $3 million to help manage supplemental benefits including non-emergency medical transport and in-home care. Link.

• Votive Health raised $2.5 million to bring value based care arrangements to complex care patients leveraging a home based care model. Link.

Opinions:

• For anyone innovating in the primary care space, this is a very thorough white paper from CHQPR that explores different potential ways to pay for primary care in this country. It does a really nice job outlining the financials of primary care practices and why they are struggling today. The article suggests PCPs should receive separate payments for wellness care, acute care, and chronic condition management, and that by breaking those out it helps solve a lot of the challenges we have today in PCP payments. The discussion on capitated payments not being the answer is also quite interesting to think through (with two basic problems - 1. rates being set on FFS baselines that were already too low; and 2. the incentive to deliver less care). Definitely worth checking out. Link.

• Whenever we talk about the promise of value-based care / capitated payments improving the state of primary care in this country, I’m always inclined to look at the lived experience with the NHS (which, by my understanding, provides capitated payments to its GPs) to see what might happen here. This article highlights how GPs are slammed by appointments and are burnt out by the demand and it is an interesting reference point. Seems to validate some of the points CHQPR makes around capitated payments not being the answer here. Link.

• Aledade shared a blog post this week on why it views MSSP as a more viable program than Direct Contracting for existing independent primary care physicians. The argument seems to be three pronged: 1. DC is a new program with uncertainty; 2. DC ties you to a middleman between you and CMS; 3. the baseline targets might cause issues. Interesting to note their view that practices in the Global Direct Contracting model will have to achieve 4% savings off benchmark to avoid writing a check back to CMS, while in MSSP they’re only achieving 1.8% savings on average in year 1. Another data point implying the Direct Contracting model was heavily aimed at venture-backed startup models rather than incumbent providers working on implementing value-based models. Link.

• This article provides a good critical lens on the rise of telehealth, posing a number of questions as to the value of video visits in scenarios where they actually may lead to increased costs and over-treatment. Seems like there is going to be a lot of questions to work through in this space over the coming years. Link.

Data:

• KFF released data this week suggesting that healthcare spending for 60-64 year olds would be lower under Medicare than large employer plans. A helpful reminder for all the health policy conversations: those 60-64 year old patients with large group employer coverage are a lucrative population for health care delivery orgs across this country. And those health care delivery orgs are not going to accept losing that revenue without putting up a major fight. Link.

  • Here’s a good summary of a recent study looking at the impact of telehealth on nurses workloads, finding nurses have twice the amount of activities for patients using telehealth versus in person. While we obviously need to figure out workload and burnout questions with providers, in general the results of this study seem to indicate telehealth is a good thing for patients, i.e. check out this sentence: “While in-person visits led to follow-ups about once every three months, the patients using telehealth submitted their blood glucose and blood pressure levels multiple times a week.” That seems like a good thing, no? Link.

  • This is an interesting look at outpatient visits at Allina Health, a health system in Minneapolis, over the course of the pandemic. Check out the jump in video visits right as the pandemic started, which then appear to have remained fairly consistent since then. Meanwhile phone visits spiked significantly early in the pandemic and have declined substantially since. Link.