- Health Tech Nerds
- Posts
- Weekly Health Tech Reads | 6/25/23
Weekly Health Tech Reads | 6/25/23
PCP enablement platform, HTN Talent Collective, digital front doors & more!
Amanda DiTrolio & Kevin O'Leary
June 25, 2023
Welcome to this week’s free weekly newsletter, where we share our perspectives on some of the key healthcare related news of the week.
If you want to get the most out of HTN, consider joining our community, where you’ll be able to hang out virtually with 4,000+ other nerds to discuss the trends and impacts below. Check out what you’re missing in the HTN community by signing up here!
NEWS OF THE WEEK
Sharing our perspective on the news, opinions, and data that made us think the most this week
News
Summary: Aledade's CEO Farzad Mostashari noted in a tweet that Aledade intended to raise $100 million but was struggling to do so until Lightspeed came along as a lead investor, resulting in a larger, oversubscribed round. Aledade now has 1,500 independent primary care practices in its network and 150 value-based contracts. They've almost doubled the number of practices in the network over the last two years, growing from 800 in June 2021. Lightspeed shared its rationale for investing, articulating multiple flywheels it sees Aledade benefitting from (network, engagement, and data). Blake Madden also shared some helpful deets on the transaction, including implied revenue multiples of 10.3x in 2021 and 7.8x in 2022.
Our Reaction:
The MSO market continues to be red hot in terms of investor interest. Yes, Mostashari's tweet noted that it was hard to find a lead investor, but closing on an oversubscribed round at a slightly increased valuation in this market feels like an incredible feat. It still shows the bullishness of investor sentiment in the market moving to value, and Aledade's approach of supporting independent PCPs.
Aledade seems to be picking up the mantle of the company that is the One Great Hope for health tech innovation driving meaningful change in healthcare. Oscar, Iora, Cityblock (among others) all feel like they've held that title at various points in time over the last decade, but it is hard to sustain. Now Aledade feels like it is taking the lead as the company doing everything right in navigating how to build a successful health tech giant the right way. Decisions like converting to a public benefit corp, being more transparentthan other private companies, giving money back to RIP Medical Debt, and generally being thoughtful abouthow it supports care delivery. All of it is exactly what you'd want to see from a leadership team in this position. The challenge as always will be sustained success as the market evolves. It'll be fun to see where Aledade is in 5 - 10 years - hopefully the decisions it is making now enable it to drive sustained success.
Lightspeed's articulation of three distinct flywheels in their report doesn't make a ton of sense to me, in that none of those flywheels actually exist on their own - they're all reliant on each other. I'd argue this is because Aledade is reaping the rewards of a single flywheel, which happens to be the same flywheel as every other healthcare organization: driving efficiencies through scale. More providers leads to more money (better contracts) leads to more investment in product (data & workflows) which leads to more providers.
I think it's interesting to ask yourself the question what would cause the flywheel (or flywheels if that's your cup of tea) to break here? I can think of three things off the top of my head: 1. the PCP market becomes saturated and it becomes hard to attract new docs into Aledade's ACOs; 2. the margins in VBC contracts start getting squeezed as payors seek to negotiate rates down (and/or competition with other MSOs creates a race to the bottom); 3. the VBC contract performance that data and workflows are supporting are low-hanging fruit that everyone goes after, making outperformance on contracts much harder. All of those seem like challenges Aledade will inevitably face, and it will be interesting to watch how they navigate those changing market conditions.
HTN Slack Convo (h/t Geoff Matous)
Introducing the HTN Talent Collective
The collective pairs interested companies with talent from the HTN network, who are invested in growing their healthcare knowledge and building a lasting impact in this space.
If you’re looking for a new gig actively or passively, apply to join (contractors included!).
If you’re hiring, let us know and we’ll notify you as soon as we’re ready to open up to companies.
News
Summary: DexCare, a digital front door platform for health systems, raised $75 million. DexCare announced earlier this year they're seeing some good traction with health systems which isn't super surprising when they articulate a succinct value-prop like this (from the article): "DexCare-powered digital experiences attract 30% more new patients, 85% of whom are commercially insured, capture 8x downstream revenue, generate over 20% per patient encounter in cost savings, and deliver net promoter satisfaction greater than 90%."
Our Reaction:
I'd imagine there's going to be a lot of activity for health systems on the digital front door topic as virtual care settles into a new normal post-COVID. As the Panda report we discussed the other week highlighted, health systems seem like they're going to be rethinking startup partnerships en masse over the coming months. Platforms like DexCare with a clear use case and value prop to health systems ("you're going to attract more of the new commercial patients you want!") will be well positioned to grow quickly with health system partnerships.
HTN Slack Convo (h/t Lisa Bari)
CHART(S) OF THE WEEK
Sharing a visual or two from the week that made us think
HCA came under scrutiny this week for its practice of moving patients to hospice and palliative care, which was summed up nicely here in Fierce Healthcare. SEIU and NBC News both shared reports raising concerns about whether HCA is intentionally moving patients to hospice too soon to game metrics. The SEIU chart above highlighting the percent of hospital transfers to hospice where the patient died the day they were transferred struck us as particularly concerning in this context.
Join the Slack conversation
QUICK HITS
A round-up of other newsworthy items we noticed during the week
Babylon's creditor Albacore accepted a deal from MindMaze to pay off Babylon's debts and acquire Babylon's operating businesses. MindMaze is a Swedish digital neurotherapeutics business, making for a very confusing strategic combination with Babylon's remaining assets.
Link / Slack (h/t Jack Needham)
This is a good Substack post looking at generative AI in healthcare, various companies that are implementing it, as well as opportunities and challenges ahead.
Link / Slack (h/t David Mou)
Oschner Health and MD Anderson partnered on a cancer treatment model to give Oschner's patients in Louisiana access to MD Anderson resources.
Link
CNN takes on the issue of Medicaid redeterminations, highlighting some particularly problematic individual stories about the issues with administrative terminations.
Link / Slack
DocGo's investor day was this week, providing helpful insight into the business model of mobile healthcare and how DocGo is seeking to scale.
Link (slides) / Slack
PM Pediatric Care raised $50 million to scale its pediatric urgent care model. It currently has 78 locations and has treated over 6.5 million patients.
Link
Caraway, a virtual health platform focused on Gen Z, raised $16.75 million.
Link
Outbound AI, an AI-chat platform supporting rev cycle automation, raised $16 million.
Link
DUOS, a platform helping seniors navigate health benefits, raised $10 million. There's a distinct language shift from its $15 million funding announcement last year, which seems indicative of the funding environment we're in. I.e. DUOS now appears much more focused on member engagement for MA plans as its core revenue driver.
Link / Slack
Reply