You know, I’m finishing up my Tuesday send with some nice stories, and then Biden decides to go and end the public health emergency on May 11. I mean c’mon prez, I was almost done!

This week’s stories:

  • Amazon launches RxPass but it’s more fluff than snuff (I think I just made that saying up?)
  • Tia partners with Cedars-Sinai in LA
  • PHE to end on May 11

I’m not lying with you guys when I say that this newsletter was an absolute doozy…so if you find this one valuable, I’d really appreciate you sharing it with colleagues.

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Tia Partners with Cedars-Sinai

Focused on all things women’s-health, Tia announced a partnership with Cedars-Sinai, a premier $7.0B academic health system in the greater LA area. Through the partnership, Tia will open its seventh women’s clinic in Santa Monica and will look to create a holistic offering for women’s healthcare in the LA market. According to the announcement, Cedars will help co-fund Tia’s clinic expansion to other California cities including Pasadena, Studio City, and Culver City.

Context: After announcing its first partnership with CommonSpirit Health in April 2021, Tia raised $100M in a Series B led by Lone Pine Capital in September 2021. With CommonSpirit, Tia plans to open women’s specialty primary care clinics in Phoenix (overlapping with CommonSpirit’s legacy Dignity Health footprint). Tia opened its first clinic with the partnership in October. Then in May 2022, Tia announced a second partnership with UCSF Health in the Bay Area. At the time of announcement, the UCSF JV plans to serve 40,000 women in the Bay Area starting with a single clinic and expanding to 10 built (de-novo) sites. Now with its Cedars-Sinai partnership, Tia has notched three major health system partners. At the time of its second funding announcement in late 2021, Tia set a goal to serve 100,000 women by 2023. This partnership alone aims to reach 100,000 women – albeit on a slower timeline.

Madden’s Musing: The partnership seems to be a classic joint venture between health system and services co, but with a twist. Tia can transform women’s experiences in healthcare and benefits from Cedars’ scale, capital, reach, and, I assume, rates. Meanwhile, Cedar benefits in the classic sense from downstream specialty care as well as attaching itself to the Tia brand, and vice-versa. Along with the traditional playbook, the two sides plan to integrate more deeply in order to deliver more coordinated care between Tia providers and Cedars specialists.

Tech enabled services should continue to pursue deals with health systems (although easier said than done). Digital health players can deliver innovative care models with higher patient satisfaction and have much more flexibility than health systems to try new things. Partnerships benefit each player, achieving things they cannot on their own with clear value props for both sides. As a woman-led org, Tia is one I want to see win over patients.

Final point – Cedars-Sinai is a nice partner to have from a strategic and financial standpoint:

  • Payor mix is 70% commercial – likely commanding premium rates
  • Outpatient visits totaled over 1.6 million
  • Deliveries reached over 11,000
  • Major – if not premier – player in the greater LA market

Amazon Launches RxPass, bundles with Prime

Amazon set the healthcare world ablaze on January 24 by announcing its latest healthcare offering – RxPass. For $5 a month added on to an existing Prime membership, consumers can get as many generic medications eligible under RxPass as they need. Right now, RxPass covers around 53 generic medications. It’s a direct-to-consumer offering that doesn’t accept insurance.

Context: As I’ve highlighted several times before, Amazon is moving into healthcare in areas it knows best, attacking low-hanging fruit – platform plays focused around the consumer. Along with AWS Health growth happening in the background, its activity from 2022 reinforces this strategy:

  • In mid-2022, Amazon bought One Medical, both a concierge/primary care play and also a ‘call option’ on the growing senior care market (Iora);
  • In late 2022, Amazon launched Amazon Clinic, a telehealth platform powered by SteadyMD and HealthTap to cover low acuity conditions and funnel into Amazon Pharmacy; and now,
  • In early 2023, Amazon formed RxPass

Retail health and telehealth aside, there’s also lots of activity brewing in generic medications right now. Mark Cuban’s Cost Plus Drug ventures are well documented – much broader in scope – and its growth is strong for such a young company. Walmart has offered $4 generics (PER script) for a while. Meanwhile, GoodRx partnered with Express Scripts to launch a price comparison tool. OptumRx followed suit this week, launching Price Edge. With RxPass and the price comparison tools, are we headed toward a race to the bottom?

Madden’s Musing: To set the record straight, this move is nothing more than an incremental, but deliberate step for Amazon. At its current ~200M membership base, RxPass has a max $12 billion addressable market ($5 * 200M * 12 – I really hope that math is right). That’s notable, but a smudge on the accounting sheet for the $500B/revenue company. But the TAM really isn’t even that big. RxPass isn’t available in California or Texas. So…all that fanfare for not a whole lot?

Not quite. Marissa Moore’s commentary in a recent MedCity News article seems the most directionally correct – “Those who stand to reap the most value from RxPass are those with complex chronic conditions — and those tend to be older adults,” she said. “Meanwhile, it’s these age groups where Prime penetration is lowest. If it can use RxPass to convert more of this demographic into active Prime members, that’s an additional $14.99/member/month in revenue that Amazon can earn ($19.99/member/month including RxPass).” Amazon’s strategy seems clear here: use generics and RxPass as a loss-leader to attract seniors to to the Prime platform. Maybe we’ll even see Amazon partner with a health insurer (Cigna?) to offer an MA plan, attaching Prime + RxPass as a supplemental benefit through Express Scripts – although, that may get confusing considering it’s a DTC offering.

Since the average Prime user is around 37 years old, Amazon is probably (1) trying to attract an older demographic to Prime, or (2) playing the ultra long game with consumer behavior to lock consumers into the Prime ecosystem. Amazon is well-known for having a long-term mindset. That’s needed big-time in healthcare. Amazon will continue to incrementally move the needle forward. We’re going to look back in 10 years and see them as a major player in the healthcare consumer landscape.

Either way, looks like PillPack may have been one of the best health tech acquisitions of all time, eh?

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Biden to end Public Health Emergency in May

In a press release late yesterday, the White House stated its intention to end the public health emergency for good on May 11.

Context: We all know how long the PHE has been dragging on since March 2020. Previously, HHS had said the agency would give a 90-day heads up prior to ending the PHE and well…here it finally is. The announcement will leave healthcare organizations scrambling given that 90 days is quicker than a lightning bolt in our industry. But what do you, a classy individual working in healthcare, need to know about what’s next?

KFF put together a solid overview of major PHE provisions that will unwind, most around ‘Rona:

  • Cost sharing for at-home testing
  • Increased state spending on Medicaid once higher federal matching ends
  • Certain state licensure requirements
  • KFF doesn’t seem to mention it, and don’t quote me on it, but I do believe that the 20% reimbursement bump for ‘Rona admissions will go away, along with certain relaxed criteria for admissions to IRF and LTACH facilities.

You should also know that the 2022 year end Omnibus Bill solved some of the larger PHE problems, many of which covered by Second Opinion and Brendan Keeler:

  • It separated Medicaid redeterminations from the end of the PHE, meaning that states can start processing Medicaid redeterminations as soon as April 1. This change is extremely significant. HHS estimates that 15 million people will lose coverage as a result of the change here. It’ll be up to patients themselves, insurers, and providers to transition into new plans. Practically overnight, healthcare organizations could see their payor mix flip from Medicaid to uninsured populations if these individuals fail to transition or if administrative complexity gets in the way, which is so often the case in healthcare.
  • It extended certain telehealth flexibilities through 2024
  • It extended the hospital-at-home waiver through 2024 (250 hospitals have signed up for the program)
  • Notably missing: a solution to virtual mental health providers and the Ryan Haight Act cliff. During the PHE, DEA-registered providers could use telehealth to prescribe controlled substances. Now that the PHE is ending, patients will have to attend an in-person evaluation to receive prescriptions for controlled substances.
  • Read the rest here.

Partnerships and Strategy Updates:

Intermountain Health’s rebrand looks straight off a Microsoft Word Word art template. I’m sorry Intermountain folks – you know I love you – but I don’t know about this logo!! (Read more)

Novant Health Enterprises and TPG announced the formation of a new national radiology and imaging company – MedQuest – with the intention of expanding it across the country. Interesting timing. (Read more)

Midwest Orthopaedics at Rush and OrthoIllinois announced a merger to create the newly formed OrthoMidwest, two of the three largest practices in Illinois. (Read more)

Ardent Health Services partnered with SwitchPoint Ventures to launch a healthcare innovation studio (Read more)

Signify Health and Prospect Medical Holdings announced a partnership in which Prospect’s Connecticut facilities will participate in MSSP by joining what I assume is Signify’s Caravan Health ACO, moving into the enhanced MSSP track. (Read more)

Orlando Health partnered with Biofourmis to help enable its hospital-at-home program. (Read more)

UCM Digital Health launched an at-home emergency care program with MVP Health Care. (Read more)

Parkview Health System and UCHealth finalized their partnership. (Read more)

Here’s an interesting piece on Acadia’s strategy: more joint ventures, expand existing facilities (Read more)

Duncan Reece broke down insur-tech Devoted’s execution in 2022 in a nice concise read. (Read more)

Finance and M&A Updates:

Elevance released its Q4 and 2022 results (Read more) and Business Insider provided some nice updates on its purchase of BCBS Louisiana – $4.5B in revenue, 1.6M members, and a whole host of consolidation implications. (Read more)

ScionHealth, the recent spinoff from Kindred and LifePoint, completed its acquisition of Cornerstone Healthcare Group comprised of 15 specialty hospitals, 8 senior living locations, and 3k FTEs. (Read more) Lifepoint Health also acquired Cornerstone Behavioral Health El Dorado. (Read more)

VillageMD acquired Dallas Internal Medicine and Geriatrics Specialists. VMD has become a formidable player in very short order on the heels of the Summit Health acquisition. (Read more)

GI Alliance partnered with Connecticut GI, which is the largest gastroenterology practice in Connecticut. The deal included 82 physicians, 45 APPs, 25 practice locations, and 25 locations for procedures – I assume to be mostly in-office suites. This is another massive transaction for an active GI group. In 2022, GI Alliance’s physician owners bought out Waud Capital’s stake with help from Apollo Global Management implying a value of over $3.1M per physician assuming 700 physicians at the time. With this affiliation, GIA is up to 800 physicians across 15 states (Read more)

Sentara Health bought AvMed, a nonprofit health plan with 200k members in Florida. Sentara’s total membership is now up to 1.2 million. (Read more)

The IMA Group acquired Clinical Trials of America. (Read more)

Concentra acquired the Connecticut occupational health service line from PhysicianOne. (Read more)

Digital Health and Startup Updates:

Enablement platform Pearl Health raised $75M led by a16z in a Series B. (Read more)

This was a good read re: the gobs of investment dollars flowing into fertility technology (Read more)

Vizient formed strategic partnership with MDsave to power its national direct-to-employer surgical-bundle solution. (Read more)

Yet another staffing company – ConTemporary Locums – launched this week. (Read more)

Cascade Health Alliance partnered with with Valera Health on virtual behavioral health in Oregon. (Read more)

PointClickCare and the Georgia Hospital Association expanded their partnership on data sharing. (Read more)

Arrive Health acquired acquired UPMC’s medication adherence technology. (Read more)

US Acute Care Solutions and Array Behavioral Care announced a partnership to delivery virtual psych care in ERs. Pretty cool. (Read more)

Innovaccer laid off 245 employees, about 15% of the data analytics startups’ total FTEs. (Read more)

Kroger Health launched clinical trial site network. Who isn’t getting into clinical trials these days? (Read more)

Policy and Payment Updates:

CMS released its final rule for the Medicare Advantage Risk Adjustment Data Validation (RADV), which appears to be slightly more stringent than thought – payors may owe Medicare almost $5 billion following a CMS audit. This rule has implications not only for payors and Medicare Advantage, but also risk players participating in sub-capitated arrangements. Extent of the damage remains to be seen, as payors will surely sue the ruling into the ground for as long as they can muster. (Read more)

After some review, InnovAge was released from sanctions in Colorado PACE program and can enroll patients again in its largest footprint. (Read more)

CMMI Director Liz Fowler: Expect advance primary care, total cost models to be released in 2023 (Read more)

Something to watch – rising scrutiny of OBLs and ASCs for over utilization. (Read more). Meanwhile, the shift from inpatient to outpatient utilization appears to be accelerating. (Read more)

Here’s a nice read from the Commonwealth fund on how states are approaching their own public option health insurance programs. (Read more)

First Dollar had a nice writeup on the good ramifications of expanding the scope of the HSA (report). (Read more)

Costs, Data, and Other Updates:

BCBSA’s plan to reduce healthcare costs by $767 billion: it’s so easy guys. All we need to do is improve competition by implementing site-neutral payments, crack down on anti-competitive behavior, implement transparent billing policies, increase access to lower-cost prescriptions, close regulatory loopholes, move away from fee for service models, and basically fix everything that can be exploited in healthcare! (Read more)

Marquee medical schools like Stanford, Mount Sinai, and Penn are withdrawing themselves from US news medical school rankings. (Read more)

Allscripts changed its name to Veradigm. Sigh. (Read more)

Open enrollment for 2023 – 16.3 million people have signed up for individual market health insurance coverage. (Read more)

60% of consumers don’t have immediate access to their medical records. (Read more)

Websites selling abortion pills are sharing sensitive data with Google. (Read more)

Miscellaneous Maddenings

  • So apparently after the verdict, Elizabeth Holmes bought a one-way ticket to Mexico! Unbelievable! Don’t be surprised to see an ‘Isabella Holmes’ pop up with a new healthcare startup from Guadalajara in a few years!
  • Mr. Beast used his platform to pay for and restore the sight of 1,000 people. So cool to see.
  • So on my birthday I tied my lowest round ever with a 74. Gotta say it was a fantastic ball striking round. My goal this year is to break par, then if I do that, get down to scratch. I’m around a 4 right now so it’ll be a slog!

Hospitalogy Top Reads

  • Florence Healthcare released a superb report on the state of clinical trials operations technology. As someone who doesn’t know a ton about this space, it was super interesting to dive into. (Read more)
  • Bain released a nice overview of the healthcare private equity market 2022: year in review and outlook. (Read more)
  • Packy and Elliott’s recent post and investment thesis on Atomic AI and the capabilities of RNA was a great read. (Read more)
  • The VMG team released a great report on the ASC’s year in review, covering a wide array of topics and everything that ASC operators would need to know headed into 2023. (Read more)

That’s it for this week! Join 17,200+ executives and investors from leading healthcare organizations including Privia, ApolloMed, and Cedars-Sinai, health systems including Providence, Ascension, and Atrium, as well as leading digital health firms like Cityblock, Oak Street Health, and Turquoise Health by subscribing here!

Blake Madden
Blake Madden
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