The Healthy Muse (hospitalogy)

healthy muse healthcare news.

• This week in healthcare: agilon announces a major partnership with MaineHealth, Cano Health might go private, Anthem rebrands to Elevance (wtf), hospital earnings round-up, and Q4 earnings roundups continue.

agilon announces a major partnership with MaineHealth

Agilon is partnering with MaineHealth, an integrated nonprofit health system with at least 9 hospitals and plenty of other outpatient care settings, to transition MaineHealth’s primary care delivery system to agilon’s platform.

• We’ve seen a handful of partnerships form between these tech-enabled care platforms and health systems. Privia Health and Surgery Partners partnered in the Montana marketplace earlier this year.
• These care platforms are now reaching a pretty solid scale. Agilon expects to reach 80k additional MA lives with the partnership and will now expand to 12 states, 25 markets, 23 physician groups, and 2200 primary care physicians. (Link)

More: Agilon just held its investor day too, chock full of interesting information about the business model. Give it a glance here. (Link)

Activist Investors push Cano Health to consider a public-to-private sale

• P2P: After SPAC’ing back in June 2021 and poor public performance since (down 60%), activist investor group Third Point bought a pretty decent-sized stake in Cano Health and is pushing the firm to consider a sale. (Link)

The week the activist news dropped, Cano finished up 26% on the week alongside CareMax, which finished up 30%. The obvious takeaway here is that private investors think there’s serious value to unlock in these businesses.

Despite the poor stock performance, these facility-based operators are executing on their fundamental operations JUST fine. In fact, Cano released its earnings today, providing strong 2022 guidance for the business despite some accounting irregularities related to Medicare Risk adjustments. (Link)

• I’m positive that there’s serious private equity and insurance company interest in assets like CareMax and Cano Health.
• Healthcare companies are kind of notorious for public-to-private transactions. Why is that? Are public investors too antsy / impatient to see the long-term fundamentals in healthcare companies? Do they get disappointed in how hard it is to scale operations in healthcare? Is it just easier to be a private company?

Health Systems Form Staffing Alliance to Combat Shortages, and Earnings Round-ups

Six health systems (and I’m soon many more will join soon) are partnering to create a staffing agency called Evolve Health Alliance. Since staffing shortages have been SO bad, these health systems, which include giants like AdventHealth and Intermountain, will share their resources with one another in the instance that one of them is dealing with a COVID surge while the other systems aren’t. (Link)

• It’s a pretty smart and effective way of addressing shortages while largely getting around travel nursing fees – essentially cutting out the middleman agencies. (Thread)

Along with the staffing news, here’s your one-stop shop for everything hospital related to 2021 earnings.

• HCA: Heavy battle-tested hospital titan HCA released earnings in late January:
  • HCA is building 5 acute care hospitals in Texas in areas with hot population growth and 3 others in Florida.
  • Amid broader staffing issues, HCA is still slowly integrating post acute assets into its portfolio, including Brookdale’s home health biz that HCA bought last year for $400 million
  • For 2022, HCA is expecting revenue just north of $60 billion and EBITDA around $13 billion, a consolidated margin north of 21%. (Link) (Presentation)
• UHS: Universal Health execs had a lot of interesting context to say around COVID and recovery. For one, while some other hospital operators shrugged off staffing challenges, UHS sees the staffing shortage and unwind happening more gradually over time than being a singular event. Secondly, UHS execs expect discharge rates for patients to other post-acute care settings to right-size as skilled nursing, long-term care, nursing homes, and other sites of care get back on their feet.
  • Overall, UHS expected muted growth for 2022 given the staffing and ‘Rona headwinds but noted optimisim as cases and outbreaks become less severe. UHS also signalled on the call that they’re only going to allocate capital to M&A where it makes sense strategically in their two fundamentally strong segments. (Link) (Transcript – soft paywall) (Presentation)
• Tenet: Tenet finished the quarter and year in a really solid spot, beating 2021 estimates. Its build-out of USPI continues to scale quickly through acquisitions. The hospital and outpatient giant announced the acquisition of 30 more ASCs from SurgCenter Development expected to take place this year.
  • Here’s a fascinating point from the transcript – in his opening remarks, Ronald Rittenmeyer noted that he’s perplexed by the market’s and analyst’s decisions to continue to value Tenet as a hospital-based company despite their deleveraging and the growth of USPI. He thinks they’re worthy of a higher multiple. Do you? By reporting very clear, transparent segmented financial statements publicly, it’s clear what Tenet wants.
  • Despite prior announcements to spin off Conifer, Tenet disclosed in early March that it intends to retain the revenue cycle management arm – AKA, kinda sounds like there were no sellers. Hmm…(Link) (Transcript – soft paywall) (Presentation)
• CHS: Community Health initially dropped after releasing Q4 earnings that showed weak same-store admissions growth and the expected challenges from ‘Rona. Interestingly, the hospital operator did signal expectations for lower travel / contract staffing costs later on in 2022.
  • Community finished the year with $12.4bil in revenue and adjusted EBITDA of 16%, or $1.97bil.
  • For 2022, CHS expects revenue around $13 billion and EBITDA around $1.9 billion, or consolidated margin just shy of 15%.
  • The operator noted its main avenues for growth included increasing market share and bed capacity in existing markets, further investment into ACOs, and enhancing provider outreach programs.
  • CHS also wants to crack down expense management related to its supply chain, purchased services, and nurse staff pipeline. Overall, though, it seems as if CHS has really turned things around and it’s full steam ahead for the operation. Now, to get to HCA’s level might take some time 😉 (Link) (Presentation)

Not for profit health systems round-up:

• Baylor Scott & White (Link)
• Providence (Link)
• Ascension (Link)
• CommonSpirit (Link)
• Cleveland Clinic (Link)
• UPMC (Link)
• Trinity (Link)
• Mayo Clinic (Link)

Anthem Rebrands to Elevance Health

Since we all love managed care organization rebrands, I figured “why not?” and dropped this here. Anthem is rebranding to Elevance Health to symbolize the fact that it’s …hair flip… not just another health insurer – Anthem is now a vertically aligned behemoth with investments and segments in provider orgs and other initiatives outside of the traditional insurer footprint.

Just like every company is now a software / tech company, every healthcare company is becoming a payor these days.

• Link to press release (Link)
• Check out the new Elevance site here: (Link)

public market update.

Top 3: Skylight Health, CareMax, Cano

Bottom 3: One Medical, Doximity, Teladoc

YTD performance: (Link)

$LFST: Lifestance Health (Link)

$TOI: The Oncology Institute (Link)

$HCAT: Health Catalyst announced a partnership with Tallahassee Memorial HealthCare to scale its data analytics platform across TMHC’s entire system. (Link)

$DCGO: After skidding more than 30% this year, DocGo reported 239% revenue growth to $318 million, which is pretty impressive. DocGo was actually profitable in 2021, but expects a slowdown in revenue growth to a more reasonable 30% clip for 2022 with adjusted EBITDA sitting around $40mil. (Link)

$CVS: CVS fired several executives after an anonymous report disclosed workplace misconduct in late 2021. Yikes. (Link)

Biz Hits

Trend Watch:

Medicare Advantage continues its insane enrollment growth as fewer seniors opt for traditional Medicare and boomers age into the program. (Link)

Strategy & Partnerships:

Telehealth operator Amwell is partnering with LG (yeah, consumer electronics LG) to create new digital health devices and tools. (Link)

Integration: As Omada continues to build out its virtual and remote patient care offerings, the firm announced its decision to integrate its behavioral health segment into its chronic care platform. AKA – members in those programs can now access mental health providers. (Link)

Blue Cross announced a partnership with Amazon to provide drug discount cards in 5 states. (Link)

M&A:

More on Akili’s plans to go public via SPAC at a more than $1 billion valuation through one of Chamath’s funds. Close peer Pear Therapeutics went public late last year – essentially as a pre-revenue company – and is down over 30% YTD. (Link)

Fundraising, Execs, & VC:

Luv: Founder of Bolt Ryan Breslow is launching Love . com, a new ‘people centered’ pharmaceutical company. Check out the tweet thread here: (Link)

Policy Hits

Opioids: 16 doctors and clinic owners were busted in a $250 million opioid scheme this week. (Link)

Fraud: The DOJ is estimating about $8 billion in fraud stemming from pandemic relief funds, which is an impressively small percentage when you think about the scope of the $2.2 trillion relief package. (Link)

Telehealth: The House is expected to pass a $1.5 trillion spending package which would fund the government through the rest of the year AND maintain current telehealth provisions in place as a result of the public health emergency.

• Hopefully that extra runway would give lawmakers time to institute a more permanent solution for telehealth and the relaxed waivers. (Link)

Sutter: Sutter Health BEAT its antitrust lawsuit this week, alleging that the health system engaged in monopolistic practices in its markets. I’m sure Sutter is extremely relieved with the result given its recent history. (Link)

• Last August, Sutter settled a monopoly lawsuit for over $500mil
• A year before that, Sutter settled a False Claims lawsuit for $90mil

Other Hits

In what might be the best story of the week, it turns out that affection from dogs has medicinal benefits. (Link)

A group of 9 physicians mostly experienced in trauma is headed to the Polish-Ukraine border with $500k in medical supplies. (Link)

A dude from Dallas jokingly sold toilet paper-based NFTs and wiped out $7 million in medical debt lmao. (Link)

Hot Takes

Here’s another slam piece related to mental health unicorn Cerebral and its allegedly aggressive prescribing practices. Is this the price you pay for scale? (Link – soft paywall)

Does Big Pharma have a duty to remain in Russia and continue to produce drugs there? It’s an interesting ethical question. (Link)

Healthy Muse Top Picks

This was a great overview of physician services M&A from Provident across all specialties – an extremely comprehensive report. (Link)

I really enjoyed this read highlighting Epic’s CEO Judith Faulkner at ViVe: (Link)