General Catalyst and WellSpan’s Digital Transformation

One of healthcare’s biggest venture capital hot streaks is adding fuel to the fire, with General Catalyst and WellSpan Health entering a new partnership to drive digital transformation.

General Catalyst and Pennsylvania-based WellSpan are aiming to improve care models and patient engagement by embedding tech from the VC firm’s “health assurance network” into the health system’s operations.

GC’s health assurance network is comprised of portfolio companies with broad expertise in everything from employer benefits to population health, and includes marquee names such as Aidoc, Cadence, Olive, Sword Health, and Transcarent.

  • The partnership involves no financial commitment from either party, but provides GC with insights from real-world clinical applications and allows WellSpan to invest in any co-developed solutions.
  • The formula appears to be working. This is GC’s fourth health system partnership of this kind, adding to collaborations with Intermountain Healthcare, Jefferson Health, and HCA Healthcare.

General Catalyst originally found success with grandslam investments in Airbnb, Instacart, and Snapchat, but it’s been pretty hard to miss the huge waves it’s been making with its dive into healthcare.

  • In July, GC raised its second $600M+ healthcare fund, which it followed up by tapping then-Intermountain Healthcare CEO Marc Harrison to helm its investment platform.
  • That also wasn’t exactly GC’s first hospital exec hire, with former Jefferson Health CEO Stephen Klasko joining the firm in February… Looking back up to the names of GC’s health system partners, WellSpan might want to take a hard look at its incentive packages if it wants to hold onto its leadership.

The Takeaway

General Catalyst couldn’t make its stance on healthcare transformation any more clear: incumbents hold the keys to the innovation kingdom. The VC firm is also keen on catalyzing its own thesis, so expect plenty more health system partnerships to be inked before the end of the year.

Mental Health Startup Alma Raises $130M

Digital health’s recent momentum saw another boost this week as mental health startup Alma hauled in a massive $130M Series D round. Between the return of nine-figure funding rounds and a new string of mega-acquisitions, it’s almost starting to feel like 2021 again. 

Alma helps mental health practitioners manage their practices and contract with payors, equipping them with teletherapy software, automated billing and scheduling tools, as well as a directory to help patients find in-network providers.

  • The platform is offered through a $125/mo membership, which allows clients to keep all earnings generated from patient visits. Over the past 12 months, Alma has tripled the size of its network to 8,000 providers licensed to practice in all 50 states.
  • Nearly 40% of providers in Alma’s network self-identify as Black, Hispanic, or Asian, and the company said that one of its main goals with the fresh funding will be to connect its diverse clinicians to underserved patient populations.

Originally founded in 2018, Alma’s taken a pretty interesting path to end up at its current managed services membership model.

  • The company started as a coworking space for therapists prior to the pandemic, then began adding support tools to make its users’ lives easier as it evolved into an MSO.
  • Now Alma is aggregating those independent therapists into its own provider network that it can leverage to negotiate directly with payors.

The Takeaway
At a time when payors are clamoring to improve access to mental healthcare, Alma’s unique approach to provider enablement and payor negotiations seems like it might be part of the solution. Alma is only the third mental health startup to raise a $100M+ round so far this year, following Lyra Health and Brightline.

Amazon Ends Amazon Care, Pursues Signify

What a week for Amazon. Just when you think that entering the bidding war for Signify Health would be enough excitement for one top story, the tech giant had to overshadow the news with another major announcement:

Amazon Care will shut down at the end of the year.

In an internal memo obtained by The Wall Street Journal, Amazon Health Services SVP Neil Lindsay explained that the primary care offering wasn’t “the right long-term solution” for its enterprise customers.

  • The move comes as quite the surprise given that CEO Andy Jassy recently highlighted Amazon Care in his first letter to shareholders, as well as the fact that we just covered a new partnership with Ginger that would’ve brought behavioral healthcare to the service.
  • Although Lindsay didn’t give too many details on the matter, earlier this month The Washington Post reported on a growing tension over Amazon Care’s ability to balance growth with proper medical safeguards, as well as a nursing shortage that’s been hampering expansion. 

Amazon said that its decision to pull the plug on Amazon Care was made prior to last month’s $3.9B acquisition of One Medical, but the company’s second major headline from this week might cast some light on the course correction:

Amazon is on the list of heavy hitters competing for the Signify Health acquisition.

  • Other companies vying for Signify include CVS Health and UnitedHealth Group, with the latter bringing the highest reported offer (so far) to roughly $8B – implying a 20% premium at $34 per share.
  • We covered Signify’s core home care business in our initial writeup, but Amazon’s angle could center more around the treasure troves of data that the company collects on the Medicare Advantage population that just so happens to be the same patients served by the Iora segment of One Medical.

The Takeaway

Regardless of the outcome of the Signify acquisition, Amazon’s interest in the company and the abrupt end to Amazon Care seem to signal that it’s done its diligence and has decided to hone its focus on a combination of senior care (Signify + Iora), primary care clinics (One Medical), and prescription delivery (Pillpack). 

We’ll leave further speculation alone for now since we luckily shouldn’t have to wait too long for an official update. Signify is set to have a board meeting on Monday to discuss the offers, and negotiations are expected to conclude shortly after Labor Day.

Incredible Health Closes $80M Series B

Nurse staffing platform Incredible Health landed $80M in Series B funding as it looks to flip the script on the healthcare worker shortage by having hospitals apply for nurses, rather than the other way around.

The round brings Incredible Health’s total funding to $97M and vaults it into the unicorn club with a $1.65B valuation.

Incredible Health’s hiring platform uses machine learning algorithms to match candidates to open nursing positions at health systems, focusing on permanent placements as opposed to temporary ones.

  • The platform first gathers information on each nurse’s licenses and certifications, then asks candidates about their goals, working preferences, and any skills they wish to gain.
  • This allows provider organizations to streamline hiring with highly curated lists of best-fitting candidates, which Incredible Health reports has reduced its average hiring time to 14 days (vs. an industry average of 82 days).

The fresh funding is earmarked to scale the platform from 35 states to 90% of the US nurse workforce while adding more support for users (skill growth, educational scholarships, cross-training) to help attract talent away from increasingly well-financed competition.

Here’s a snapshot of activity in the space within just the last year:

  • June 2022 – Nomad Health raised $105M in growth financing ($218M total funding)
  • April 2022 – Clipboard Health raised an $80M Series C ($94M total funding)
  • April 2022 – IntelyCare raised a $115M Series C ($171M total funding)
  • December 2021 – connectRN raised a $76M venture round ($96M total funding)
  • November 2021 – Trusted Health raised a $149M Series C ($175M total funding)

The Takeaway
Incredible Health’s funding arrives at a critical time, with 100k registered nurses leaving the workforce in 2021 alone. This has created a huge demand for solutions that can help address the problem, but it’s also led to a crowded competitive landscape that makes differentiated features like Incredible Health’s hospital-to-nurse application structure a necessity.

Why Healthcare Needs a Flywheel

Big tech took a week off from major healthcare acquisitions, giving us a rare chance to highlight some of the thought leadership coming out of Providence’s Digital Innovation Group.

A new blog post co-authored by Sara Vaezy and Doug Grapski – DIG THIS: Why HealthCare Needs a Flywheel – lays out how incorporating business flywheels into health system strategies can lead to lower churn, higher capacity, and a better patient experience.

Vaezy is Providence’s newly appointed CDO (she also spices things up with an awesome craft hot sauce side gig), and Grapski is the Director of Digital Strategy within the innovation group (unclear whether he likes hot sauce).

For those unfamiliar with the flywheel concept, it’s a business mechanism that pulls consumers to a platform and drives continued use, thereby adding stability and increasing momentum much like a mechanical flywheel. Notable examples include Amazon’s Prime membership and Starbucks’ loyalty program.

Despite their success in other industries, flywheels are seldomly implemented in healthcare, and most patients rarely interact with their providers outside of moments of individual need.

  • Vaezy and Grapski emphasize that a portfolio of modalities (3rd party apps, care navigation, personalized experiences) is needed to create flywheels that are effective at providing proactive healthcare experiences.
  • By integrating these tools in a single platform, health systems can begin eliminating the gap between “sick care” and “healthy care” – especially important for those in value-based arrangements.

Providence’s flywheel revolves around leveraging various data sources to deeply understand its patients as consumers with identities outside of their clinical data, allowing it to create highly personalized engagement programs.

  • This 360-degree view of its consumers lets Providence operate more like a D2C startup than a giant health system, with strong direct relationships that draw people to its services and keep it top of mind between visits.
  • Only once this flywheel is in place would the authors suggest augmenting it with non-traditional offerings such as a durable medical equipment business or concierge-level care.

The Takeaway

The consumerization of healthcare is one of the biggest trends in digital health, and it makes sense that forward-looking health systems will be borrowing plenty of plays from the consumer-tech playbook. Flywheels are the foundation of some of the most successful consumer businesses, and Providence’s digital health leaders make a strong case that it’s time for healthcare to start putting them to use.

Privia Health Reports Strong Momentum in Q2

Privia’s a tough company to pin down with a one sentence definition. It’s a physician enablement platform, a multi-specialty medical group, and a risk bearing entity rolled into one.

It’s also one of the best performing digital health IPOs of the past few years, and the wide scope of its operations made its Q2 earnings report a solid bellwether for some of healthcare’s biggest themes.

Here’s the quarter in three bullets:

  • Privia’s total Q2 revenue was $335.5M (+49%), adjusted EBITDA came in at $15.5M (+55%), it repaid all outstanding debt, and it raised its full-year guidance. Not bad at a time when layoffs are growing more common than funding rounds.
  • Privia’s platform helps physicians strengthen their practices while preserving their independence, and part of its success can be attributed to the fact that it caters to all provider types, all care settings, and all reimbursement models. 
  • This flexibility has helped Privia scale to nearly 900 locations, 4M patients, 3,500 providers, and over 850k lives under value-based contracts. It operates in 8 states, leaving 42 to go.

Unlike many of its peers, Privia’s asset-light approach doesn’t involve building out its own clinics, even though it technically has all the pieces in place to do so. This has played to its advantage as the market cools off and profitability becomes the flavor of the month.

  • Instead, Privia forms its providers into regional medical groups then equips them with its full technology stack and management services, enabling them to generate shared savings.
  • Privia then takes it a step further by forming the risk bearing entity that leverages the provider network and payor relations to enter value-based contracts, giving it one of the most robust strategies of any “physician enablement” company.

The Takeaway

The main takeaway from Privia’s Q2 call probably depends on your corner of the market, but the broad-based momentum it reported makes it an interesting case study on a unique model that appears to be firing on all cylinders. Privia’s role at the intersection of SaaS, management services, and value-based care makes it worth keeping an eye on, and so far it looks like there’ll be plenty more news to keep up with.

CVS In Talks to Acquire Signify Health

“People familiar with the matter” are hitting a hot streak with market moving healthcare news, especially after one of them informed the Wall Street Journal that CVS Health is in talks to acquire tech-driven value-based care enabler Signify Health.

The setup for this headline barrage started last week when the WSJ ran a separate piece about Signify enlisting Goldman Sachs and Deutsche Bank to help identify “strategic alternatives” that included a potential acquisition.

  • Signify’s platform helps payors and providers establish in-home care programs and transition to VBC – a combination that could draw interest from both private equity and managed care organizations.
  • The initial offers are due this coming week, and although there’s no guarantee any agreement will be reached, there’s also a non-zero chance that something gets announced and makes this old news before it reaches inboxes on Thursday.

It would be tough to come up with a better company than Signify to meet CVS Health CEO Karen Lynch’s description of an ideal acquisition target: “primary care, provider enablement, and home health… with a robust management team, background in tech, and that can grow quickly.”

  • Signify’s core VBC business already checks a lot of boxes, and its recent $300M acquisition of Caravan Health added ACO management and population health icing to the cake.
  • With a $135B market value and plans to expand its in-home operations by the end of this year, it makes sense why CVS has emerged as a frontrunner to scoop up Signify, which popped 20% to a ~$6B market value on the announcement.

The Takeaway
As CVS looks to expand into primary care and in-home health, it can either build or acquire the pieces to make it happen, and it’s been pretty transparent about which strategy it prefers. That said, the last time CVS threw its hat in the ring to acquire a high-profile company was for primary care provider One Medical, and we all know how that turned out.

Homeward Raises $50M to Rearchitect Rural Care

Homeward’s “no disruption is the best disruption” strategy is picking up steam with $50M in Series B funding to rearchitect healthcare for the 60M Americans living in rural communities by augmenting local providers rather than replacing them. 

It’s the company’s second capital raise in the five months since it debuted under the leadership of former Livongo execs Amar Kendale and Jennifer Schneider, bringing its total funding to $70M.

Homeward is an in-network provider with the ambitious goal of evolving both payment models and care delivery models in rural communities hardest hit by the hospital closure crisis.

  • To accomplish this, Homeward utilizes telehealth services, in-home visits and mobile clinics for physical exams, as well as cellular-based RPM technology to monitor patients in areas without broadband.
  • The Series B follows shortly after a partnership with Rite Aid to send Homeward’s mobile clinics to rural locations and provide primary care services to Medicare members, referring patients to regional health systems and local specialists for complex needs.

The fresh funding will help Homeward scale its on-the-ground and virtual care teams while expanding into new markets through value-based contracts with health plans, the first of which was just announced with Priority Health out of Michigan.

  • Priority’s 30k Medicare Advantage members will have access to Homeward’s full suite of services, including its physicians and mobile clinics. 

The Takeaway

Homeward is one of the first comprehensive providers to take on full risk in rural markets, and its Series B will allow it to reach these populations even faster through new partnerships. This expansion will likely be focused on only a small handful of payors, with Homeward reporting that seven health plans cover 90% of Medicare-eligible beneficiaries living in rural communities.

Optum: Patient Expectations vs Reality

It’s difficult to quantify exactly what a perfect healthcare consumer experience looks like. That’s why most coverage of rising patient expectations involves pointing out differences between broken care experiences and Amazon Prime, and why it’s worth taking a closer look when a company like Optum puts out an in-depth report on the topic.

Optum surveyed over 1,000 consumers to explore how payors and providers can adapt their digital on-ramps to healthcare (online portals, websites, mobile apps) to optimize for patient satisfaction.

Highlights from the report centered around the expectation vs. reality gaps for these digital front doors, with the largest rifts found between: finding information about providers (i.e. ethnicity, gender, and licenses), ability to schedule an appointment online, and booking telehealth visits.

  • Scheduling disconnects were most acute for consumers ages 25 to 34, with 45% preferring online scheduling, but only 28% doing so today.
  • The cross-generational divide for engagement preferences has shrunk, with 44% of 55-64 year olds preferring text messages for post-appointment provider communication – just a few percentage points behind phone calls (47%) and email (49%). 
  • 52% of respondents missed a scheduled appointment in the past year, suggesting that there’s plenty of room for payors and providers to improve engagement. The most cited reason for missing an appointment was that they simply forgot (33%).

The Takeaway
The consumerization of care has been one of the biggest themes of digital health for years, and the past few weeks were no exception. Although the core idea is no longer a surprise, Optum did a great job wrapping numbers around areas where healthcare experiences are falling short, and drove home the point that removing friction for those seeking care is one of the best ways to attract and retain new patients.

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-- The Digital Health Wire team