Weekly Health Tech Reads | 7/26/20

News:

• HCA, the for-profit mega hospital chain, reported its Q2 results this week. Not surprisingly, revenue was off Q2 last year by $1.5 billion, coming in at $11.1 billion this year. However, profit was up to $1.1 billion for the quarter, increasing from $783 million last year. Wait… hold up. HCA somehow managed to increase profit in the three month initial peak of COVID-19, when the American Hospital Association said hospitals were facing “catastrophic financial challenges”? Uhhhh… where are those catastrophic challenges again? Oh, oh, wait, HCA received $822 million of federal government stimulus dollars from the CARES Act to help out their net income for the quarter! Now I’m really confused. Why does an organization making hundreds of millions of dollars in a quarter need a government bailout? Is that how this is supposed to work? I suppose we can all rest assured knowing that those stimulus dollars are going to the folks who really need it the most - I mean, can you imagine how rough it would be on HCA execs and shareholders if net income for the quarter was only a couple hundred million? The horror! Link.

  • In case you wanted some more detail on HCA’s surprisingly good financial quarter, the earnings transcript provides some really good color on what transpired. While April and May were hard months in terms of inpatient admissions, admissions in June were up 1% over last year. There was also a 10% increase in revenue per inpatient admission year over year in the quarter (hmm… seems a little convenient). Oh and if you were worried about the clinical impact of patients deferring procedures, don’t be, HCA has already recouped 40 - 50% of that volume. Man… I find it really hard to read the transcript and then think about all of the for-profit money going into care delivery models and figure out how this is going to end up well. Link.

• Molina makes another small Medicaid acquisition, announcing the acquisition of Passport, a Kentucky Medicaid plan (and Evolent Health subsidiary) that covered ~20% of the Kentucky Medicaid market last year, for $20 million. Molina just won a bid to enter the state and Passport lost on the bid, so Molina scooped up the Passport brand & assets for cheap to avoid some of the startup costs in the space. Basically they paid $66 per member to acquire Passport’s 300k+ existing lives ($20m / 300k) onto Molina’s new contract and avoid losses from entering the state. Smart. Link.

• Fifty North Carolina independent primary care practices that signed up for the Aledade ACO program in partnership with BCBS NC are getting over $10 million in shared savings payments and quality bonuses, as they demonstrated cost reductions of 5% in commercial patients and 6% in MA patients. Medicare STAR ratings also went up from 3.0 to 4.5. Nice to see positive results like this coming out of North Carolina - hopefully it’ll cause more states to follow their lead. Link.

• SPACs are in the health tech news landscape again this week as Hims, one of the direct to consumer pharmacy startups, is considering going public via an acquisition by a SPAC that would value the company at over $1 billion. Link.

• Humana apparently has decided it will not rest until it has partnered with every kidney care company possible, as this week announcing a partnership with REACH Kidney Care in four states. This, mind you, is in addition to its existing partnerships with Healthmap, Monogram Health, and Somatus. The multiple partnership approach has worked well for them in the primary care space (Oak Street, Walgreens, Partners in Primary Care, Iora), so it seems like they’re following that playbook here. Link.

• Walmart announced it is adding health centers in Atlanta and expanding into Florida, targeting Jacksonville as its first market there. It sure is going to be interesting to watch this roll-out. Link.

• Sidecar Health, a startup that leverages provider’s cash pay rates to help patients price shop and pay for care using Sidecar’s Visa card, raised $20 million. It’s an interesting approach to creating price transparency for patients assuming they can get people (and providers) to use the service. Link.

• Sprout, a teletherapy platform for autism care, raised $10 million. Link.

• StuffThatWorks, an Israeli startup that is crowdsourcing information on medical treatments from patients, raised $9 million. Very cool. Link.

• Roundtrip, a healthcare transportation company, raised $4 million. Link.

• LumixDx, an AI platform for dermatology, raised a $2 million seed round. Link.

Opinions:

• This is a really good read on how we should think about investing more in community based organizations in order to improve health outcomes for our communities. It goes into how Medicaid Managed Care Organizations have the most incentive to make these investments today, and provides some good examples of states / organizations that are doing interesting work here. Link.

• Physician leaders at Beaumont, a Michigan hospital system that just announced a merger with Advocate-Aurora, are circulating a vote of no confidence petition against Beaumont’s CEO and CMO with a goal of getting them fired by the Board. It’s an interesting article to read through, highlighting the challenges that hospital system executive teams face in navigating organizational changes that impact influential physician leaders. It’s an insightful situation in terms of understanding the power dynamics at play in these organizations. Link.

• Digital pharmacies are a very hot space at the moment, with a number of companies raising funding. This article provides a nice rundown of the different startups in the space - NowRx, Medly, Truepill, Capsule, Alto, etc. Link.

  • If you’re looking for a really good deep dive on the digital pharmacy model, NowRx recently closed its funding round on SeedInvest and shared its business plan there. It’s a really helpful document to look at explaining NowRx’s model. Well worth checking out if you’re interested in the space. Link.

• If you’re looking for something to fret about in addition to everything else going on in the world today, I’ll leave this here for ya: Medicare is on a path toward insolvency, potentially as soon as 2022 - 2023. Wonderful. Link.

• Here’s a look at post COVID-19 startup investment opportunities from some of the crew at Flare Capital on startup investment opportunities they’re seeing in the wake of COVID-19. This does a nice job laying out the investment theses they’re looking at and some relevant startups in each space. Link

Data:

• A group of employers were surveyed on how much they think health plans are driving quality, safety, and value for their employer customers. The results show some opportunity for improvement (I think that’s a nice way of putting it?). Overall, health plans got a C+ grade from employers, which I suppose is a passing grade at least. I got a C+ once myself in college so I know what it feels like. Only 32% of employers surveyed think health plans are putting their needs over needs of the provider network (UHC is down at 14% - oof), which seems like a problem. Link.

• Here’s an interesting look at providers adoption of telehealth tools during COVID-19. Providers are commonly adopting Doxy.me, Zoom, and Microsoft. But there’s also a long tail of tools being used - of the 174 respondents to the survey they’re using 43 different telehealth vendors. Link.

• Here’s an interesting recap of a study on individuals’ increasing comfort with using telehealth services. Link.

• Rural health providers are getting older, as a new NEJM study highlights. Link.