Ochsner Chief Consumer Officer Jennifer Bollinger

Primary Care

VillageMD Acquires Summit Health for $8.9B

Sometimes when there’s smoke, there’s fire, and that was definitely the case with the recent rumors suggesting that VillageMD was getting set to acquire Summit Health.

Walgreens-backed VillageMD locked in the acquisition of Summit for the cool sum of $8.9B, immediately establishing it as one of the largest primary care providers in the country.

Summit Health was formed in 2019 by the merger of multi-specialty Summit Medical Group and urgent-care center operator CityMD, and has since doubled in size to 370 locations and 2,800 providers.

• The general idea behind combining the companies is that adding Summit’s specialty care operations to VillageMD’s value-based primary care business will allow Walgreens to better manage patient spend throughout their care journey. Capturing that extra revenue probably doesn’t hurt either.

• The combined reach of the joint company now includes 4,100 providers (2,150 PCPs), 7M patients, and 125,000 full-risk Medicare Advantage lives – all backed by an expansive 680 location footprint.

• The transaction was made possible through a $3.5B investment from Walgreens, which retained a 53% stake in VillageMD, as well as a minority investment from Cigna-subsidiary Evernorth.

With only so many high quality primary care assets available, it’s easy to see how VillageMD’s acquisition of Summit, not to mention Amazon’s acquisition of One Medical, might be making other would-be acquirers feel pretty motivated to get something done sooner rather than later.

• CVS recently took some heat in the Q&A portion of its Q3 earnings call for its own primary care acquisition (or lack thereof), originally promised before the end of the year.

• Although acquiring Signify gave CVS momentum within patient homes, negotiations to scoop up Cano Health apparently fell through, leaving CVS without a true beachhead in the primary care market.

The Takeaway

VillageMD is already Walgreens’ largest driver of revenue growth, and adding Summit’s huge physician base will only help with Walgreens’ transition from corner drugstore to bona-fide health services company. Other pillars of that strategy include specialty pharmacy company Shields Health Solutions and in-home care provider CareCentrix, meaning Walgreens is well on its way to being a major force in retail healthcare… assuming it can integrate all those moving pieces.

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The Wire

• State of Virtual Care: Omada and DiMe published a great report on the findings of a 764 buyer survey that set out to understand how these decision makers view virtual care in 2022. The research included responses from 528 employers, 107 payors, and 129 benefits consultants, and it was interesting to see the areas where the different groups agreed and disagreed. It was also surprising to see how strong the correlation was between understanding of virtual care and forecasts for the technology, with deeper understanding leading to far more bullish outlooks.

• September Hospital Margins: Hospitals continued to operate in the red during September, with Kauffman Hall’s latest National Flash Report showing that we’re now in our tenth straight month of negative operating margins. This year’s hospital margins stand at -0.1% through September, with slight expense decreases doing little to offset a 3% month-over-month decline in admissions, ED visits, and patient days.

• Guaranteed’s Hospice Funding: Hospice care startup Guaranteed raised a $6.5M seed round, bringing its total funding to $9.25M as it looks to add more solutions designed to make end-of-life care more accessible and personalized. Guaranteed currently serves Medicare and Medicaid patients in Los Angeles, offering hybrid hospice services through a network of care teams and on-demand virtual visits with palliative care nurses.

• Healthcare Hiring Boost: The October Jobs Report revealed that the healthcare sector added 53k jobs just last month, with ambulatory services, hospitals, and nursing and residential care facilities leading the job gains (31k, 11k, 11k). The industry has now fully recovered any jobs lost during the pandemic after accelerating hiring during 2022, adding an average of 47k new jobs each month (vs. 9k per month last year).

• PROM Clinical Use: New research in the American Journal of Medical Quality found that patient-reported outcome measures are rarely used in clinical settings, and not due to commonly-cited barriers like low response rates and poor integration. A study of a large orthopedic practice showed that only 1% of physicians incorporate PROMs in clinical workflows (despite a 68% PROM response rate and existing EHR integration), leading the authors to call for more research into poor adoption (specifically time constraints and data reliability).

• Ochsner’s CCO on Connected Health: A HealthLeaders interview gave a great peek into the mind of Ochsner’s Chief Consumer Officer Jennifer Bollinger and why she’s ditching the term ‘digital health’ in favor of ‘connected health.’ The whole interview is worth a skim, but this quote did a good job summing up her point of view: “Consumers really don’t know how to figure out that they don’t want a lot of choices. They want ease and guidance. They want someone to guide them.”

• Hospital-Payor Relationships: The American Hospital Association published survey findings revealing that 78% of hospitals feel their relationship with commercial payors is worsening. The survey of AHA members representing 772 hospitals found that 95% of them are reporting increases in staff time spent on prior authorizations, while 84% said the cost of complying with payor policies is also on the rise. The survey makes hospital-payor relationships seem tense all-around, with <1% of hospitals saying their relationship is improving.

• Neurotrack’s Cognitive Decline Tool: Neurotrack launched a new three-minute cognitive decline assessment tool that can be used during wellness exams or independently by patients to identify cognitive decline and early indicators of neurodegenerative conditions like Alzheimer’s disease. Buried in the press release was Neurotrack’s announcement that it also secured $10M in fresh funding to accelerate the development of a provider-based solution for patients with cognitive decline.

• Patient Telemedicine Satisfaction: A Mayo Clinic analysis of 307k patient experience surveys showed that patient satisfaction with telemedicine was on par with in-person care during the pandemic. Although patients under age 17, over age 80, and men were slightly more satisfied with telehealth, the researchers found no significant difference in overall satisfaction between virtual visits and in-person clinic visits (p=0.67).

• iRhythm Cost Effectiveness: An economic analysis of a 2018 randomized clinical trial found that systematic screening for AFib with iRhythm’s FDA-cleared Zio XT patch is cost-effective. In a three-year study of 2.7k at-risk individuals, those prescribed the Zio XT heart monitor patch were less likely to visit the ED or require hospitalization, contributing to an incremental cost-effectiveness ratio of $17k per quality-adjusted life year gained.

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