The Healthy Muse (hospitalogy)

healthy muse healthcare news.

This week in healthcare: A big week for healthcare news. A slew of public digital health announcements including Babylon, Doximity, and LifeStance Health, HCA and Google’s big data partnership, Cerner buyout rumors, One Medical buys Iora Health, Medline gets taken private for $30 billion, the first Alzheimer’s drug in 20 years, and much more.

IPOs and SPACs from Babylon, Doximity, and more.

We’ve seen a flurry of healthcare activity since our last write-up, with multiple big-name companies announcing or beginning trading on the public markets:

Babylon: announced its intention to merge with Alkuri Global Acquisition Corp at about a $3.6 billion enterprise value.

• About Babylon: Since starting as a virtual chatbot service in the UK, Babylon has since expanded into value based primary care (aka, Capitation). The firm recently acquired two provider groups in the U.S. and is expecting continued growth in membership with a similar strategy to that of Oak Street Health or One Medical’s latest acquisition…more on that in a sec.
  • (Link to Investor Presentation) – provides a solid, rosy overview of Babylon’s business and market
  • (Link to a good analysis from Kevin O’leary)

Doximity: Is going public the traditional way, via IPO with the goal of raising up to $100 million as of this writing.

• About Doximity: It’s essentially the Facebook of physicians, APPs, and graduating medical school students with a few bells and whistles attached – including free telehealth and scheduling tools for its members. According to its S-1, the firm has 1.8 million users which makes the platform a compelling advertising opportunity for recruiters, health systems, and pharma organizations trying to reach medical professionals. Notably, Doximity is profitable and growing, which lends itself to a potentially robust valuation once it hits the public markets later this year. Most interesting – Doximity is reserving a portion of its shares for users of its platform – similarly to Uber drivers or AirBnB hosts.
  • (Link to S-1)
  • (Link to article write-up)

LifeStance: Also going for the IPO route, LifeStance operates outpatient mental health facilities and employs about 3,300 mental health clinicians.

• About LifeStance: LifeStance was founded in 2017 and has since grown to operate in 27 states and 370 facilities with almost 2.3 million patient visits in 2020. Notably, the firm operates under a fee-for-service model – 89% of its $377 million in 2020 revenue was derived from commercial in-network payors. The growth and number of increasingly larger players in the mental health spaces confirms bullish sentiment around this particular sector of healthcare, and I’m curious to see how Talkspace, LifeStance, and others grow and execute on their strategy.
  • (Link to S-1)
  • (Link to Press Release)

One Medical acquires Iora Health.

Two Medicals: In big news released today, One Medical announced its intention to acquire value-based primary care chain Iora Health for $2.1 billion.

• Why you should care: One Medical’s typical business model to this point has been to focus on fee for service primary care. This acquisition fully plunges the firm into the value-based Medicare Advantage side of things, which is a notable play to say the least. (Link)
  • Matthew Holt had some decent initial thoughts on the acquisition on Twitter (Link)

Google Plows further into Hospital Data with HCA Partnership

It’s been a hell of a couple of weeks, hasn’t it? Google and HCA are partnering to focus on building a healthcare data analytics platform. The end goal here is to streamline HCA’s provider workflow to improve decision making and cut down on admin time. Of course, the data uploaded to Google’s cloud healthcare offerings would be de-identified.

• Why you should care: Google seems to be building a treasure trove of healthcare data after announcing recent partnerships with the Mayo Clinic, Meditech, Allegheny Health Network, Ascension, and now HCA. I’m not an expert here, but I also wouldn’t be surprised if the search giant made some compelling moves over the next 5 years. (Link)

The Last Coronavirus Update.

So Long: With reputable media firms like Axios publishing stories like this, I’ve made the executive decision to discontinue the Coronavirus Updates section of this newsletter.

• If you joined the Healthy Muse during the pandemic (which is a LOT of you), thanks for trusting me to provide you with unbiased and quality content in the midst of a hyper-politicized event.

What’s next: A new section will replace ‘Rona reads within the next few weeks primarily focused on trends in the public markets.

• Specifically, I’ll be launching the Healthy Muse Health Tech Index (tm – lol jk), a made-up ETF that will be tracking recently gone-public digital health firms and its performance compared to the broader healthcare sector and the broader market. More details to come.

Now for the last ‘Rona update…

Cases: Are at their lowest levels since this thing began. The U.S. seven day average is 14k – down from last week’s report of 25k – as of this writing. (Link).

Vaccines: are trending at 1 million per day, down from last week’s 7-day average of 1.8 million. (Link). Fully vaccinated = 41% of Americans (+2%). At least one dose administered = 51% of Americans (+2%).

Quick Hits

Biz Hits

Medline: Several private equity firms combined forces to purchase a majority stake in Medline – a medical supplier akin to Cardinal Health or Stryker. The deal values Medline at around $30 billion and also goes to show that private equity is still out there looking for undervalued assets in healthcare. The deal marks the largest leveraged buy-out in a decade. (Link)

Cano Health: started trading on June 7th under the symbol ‘CANO’. I feel like this guy is flying under the radar a bit, but the firm focuses on managing low-income patients in underserved communities through value-based primary care contracts. (Link)

Rumor Mill: Could Cerner be an acquisition target for one of the big tech firms? The rumor mill thinks so. (Link)

Merger Denials: Sentara Healthcare and Cone Health have decided to scrap their previously announced merger in the North Carolina and Virginia area stemming from internal pushback and pressure from external voices.

• Bigger picture: Several other health systems have called off mergers in the past couple of years. Merger announcements will continue, and I’d wager that mergers will be called off more often than not as hospital consolidation remains in lawmaker focus. (Link)

Merger Approvals: Three previously announced healthcare mergers were cleared for takeoff this week.

• First, shareholders gave the green light to the UpHealth and Cloudbreak SPAC. The newly formed company will start trading on June 9 under the ticker ‘UPH.’ (Link)
• Second, Microsoft’s $16 billion purchase of Nuance won antitrust approval. (Link)
• Finally, Deerfield’s SPAC shareholders approved its acquisition of senior care provider CareMax. (Link)

Surprise! Following in the footsteps of other large payors, UnitedHealthcare will start evaluating member visits to the ER to determine whether those visits were truly ‘necessary’ (meaning that the person should have gone to an urgent care or elsewhere instead). If UHC determines that the visit was non-emergent, then the insurer will reimburse significantly less – or not at all – for the ER visit.

• The direct result of this action, of course, is that the provider or hospital may opt to bill the patient the difference instead. Policies like these have been implemented before and are pretty unpopular with consumers. (Link)

FIGS: Scrub maker FIGS completed its IPO on June 1. The healthcare apparel brand is built on a direct-to-consumer model and currently trades at a $5 billion market cap as of this writing. (Link)

Labor: Seems like the tight labor market is affecting healthcare as well – health systems are offering large signing bonuses to combat nursing shortages. (Link)

Policy Hits

Budget: Biden released his budget proposal, which includes more oversight for the 340B program, permanently implementing expanded ACA subsidies, more rural healthcare funding, and more incentives for the 12 remaining holdout states to expand Medicaid. Notably missing: public option funding and drug pricing reform. (Link)

Something to keep in mind: A decision on the fate of the ACA is expected any day from the Supreme Court

Public Option: Nevada is set to become the second ever state to implement a public option. The insurance plan aims to keep premium costs 5% lower than silver ACA plans in each zip code along with other certain provisions and would begin in 2026. (Link)

Other Hits

Alzheimer’s: Today, the FDA approves Biogen’s Alzheimer’s drug, the first new therapy for the disease in nearly two decades. Based on the reaction, the news appears to be mixed – the drug seems to work just OK, and it’s priced extremely expensively. (Link)

Apple’s WWDC: Apple unveiled 3 interesting new healthcare features related to monitoring personal health: Measuring your risk of falling (walking steadiness rating), more digestible information related to lab data & test results, and trends – health analysis over time (steps, etc).

• But what I found more interesting is its continued push to share actionable health data with physicians and family members. In iOS 15, family members will have to option to receive notifications when something significant – like a heart rate spike – happens in a loved one.

Thought-Provoking Editorials

Platforms: This was a good read into the opportunity to disrupt the EHR market and Google’s foray into the EHR space. (Link)

Cancelled: This week, a top JAMA editor stepped down after a colleague questioned whether racism exists in health care on a related podcast. Lots of controversy surrounding a very sensitive subject here. I’ll let you read and form your own opinions. (Link)

Healthy Muse Top Picks

One Medical: This was a good read from the Washington Post on One Medical, and diving into whether a subscription model is the right approach for primary care in the U.S. (Link)

Value-Based: Since we’re apparently obsessed with value based care this week, Olivia Webb posted a good write-up on primary care capitation. (Link)

Patient Outcomes: Following up on that whole value-based care thing, here’s an equally good article from Kevin Wang about how patient surveys are converted into an actionable performance measure for providers. (Link)

Women’s health: This was a great overview of the women’s health space and a solid attempt at killing off the buzzword ‘Femtech’ (Link)

Thanks for reading.

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