If you’re reading this when it gets sent, I’m quite literally playing Pinehurst No. 2 right now! Yes, a 7am tee time, I know. Rough. Yesterday I shot an 84 at #4 with…38 putts.

The game is feeling decent; we’re trying not to putt it off the green today. No 4-putts for me, no sir-ee.

So, as you can imagine, this send is going to be pretty abbreviated! I’ll quickly cover the major stories in past newsletters that have taken place so far this year.

Depending on if I have enough time to do it justice, I will either cover the Kaiser-Geisinger deal on Thursday or next Thursday – stay tuned for that. It’s gonna be epic.

Yes I just called health system M&A analysis epic.

Intermountain and UC Health Partner, form CIN

In early January, Utah-based health system Intermountain Healthcare announced plans to partner with Colorado-based UC Health. Under the joint venture, the two powerhouse health systems will form a clinically integrated network (CIN) in the Colorado area.

Within the CIN, the venture will include 700+ primary care physicians, hundreds of clinics, hospitals, and specialist support. Over time, Intermountain and UC Health will accelerate the transition to value-based care in Colorado, initially targeting 300,000 residents. Finally, Intermountain’s SelectHealth insurance segment will enter Colorado in 2024, also supported by the partnership. The CIN itself will remain insurance-agnostic.

  • Intermountain gets: Access to a new market (Colorado) in a state with a growing population. New membership & expansion for SelectHealth. And finally, a CIN for its value-based care enablement platform, Castell, to partner with (presumably) for continued growth.
  • UC Health gets: Agency to enter a substantial population health strategy with an experienced player in Intermountain, a strategy that would be difficult for them to pursue on their own time and dollar.

Dollar General: The Rural Healthcare Savior, or a Fraud?

In late January, Dollar General announced it’s partnering with non-emergency medical transportation provider DocGo under its DG Wellbeing brand to begin providing care outside its stores in mobile clinics. The pilot will start with 3 stores at Dollar General locations outside of Nashville, Tennessee and will mostly care for low-acuity, urgent care level conditions. The mobile clinic will rotate between each site every two days – closed Tuesdays – with hours from 10am – 8pm.

Amazon Launches new service RxPass

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.

CVS buys Oak Street Health for $10.6B

On February 8, 2023, CVS Health announced its intention to acquire Oak Street Health (”OSH”) for $10.6 billion in an all-cash deal, or $39 per share and a robust 3.4x revenue multiple on 2023 estimated revenues north of $3 billion. (Link to my analysis)

In late March, Oak Street Health also announced a JV with chronic kidney disease player InterWell Health, officially launching OakWell. The partnership plans to integrate primary care to end-stage renal disease patients directly in the dialysis clinic. This deal makes a lot of sense when you consider that dialysis patients on average spend around 12 hours in the clinic and very often have other chronic, complex conditions that Oak Street can leverage to improve patient care while boosting the bottom line. Looks like InterWell has contributed centers in Chicago, DFW, and Houston. (Press Release)

CommonSpirit and AdventHealth unwind Centura Health

In mid February, CommonSpirit Health and AdventHealth, two of the largest nonprofit health systems in the U.S., decided to end their joint operating agreement (JOA) Centura Health – on Valentine’s day, no less! The two will unwind Centura Health’s 20 hospital footprint, with 5 hospitals sitting with Advent and the remaining 15 under CommonSpirit (legacy Catholic Health Initiatives) operation.

Context: Centura Health formed in 1996 as a joint operating company between CommonSpirit and AdventHealth and operates throughout Colorado and Kansas. As recent as mid 2022, Centura was acquiring hospitals as a 20-hospital system with $5B in revenue and 6,000 physicians, with plans to hit $7 billion. Historically, CommonSpirit received 70% of Centura revenues while Advent got the remaining 30%.

Humana Irish exits the commercial market

In late February, Humana announced it will call it quits on the employer group insurance business altogether. The segment includes all fully insured, self funded, and Federal Employee Health Benefit Medical plans. Humana is all in on Medicare Advantage. (Link to my analysis)

North Carolina reaches agreement to Expand Medicaid, Repeal CON Laws

On March 2, North Carolina lawmakers reached an agreement to expand Medicaid to 600,000 additional individuals. According to AP, the agreement won’t be voted on til later in March at the earliest, but if passed, North Carolina would start providing expanded coverage to citizens starting in 2024.

Just as notable is the decision to reverse much of North Carolina’s very stringent Certificate of Need (CON) laws. The state holds some of the strictest restrictions around new healthcare investment and facility development in the state. As part of the bill, much of the CON would be repealed in areas including imaging centers, ASCs and other outpatient facilities (although hospital bed-based CONs will likely remain). Repeal of the CON will result in investment entering North Carolina – renovating outdated facilities and introducing competition to the market. For instance, when Florida lifted its CON on specialty hospitals, post-acute players like Encompass flooded the space with inpatient rehabilitation development plans. Expect a similar gold rush land grab in North Carolina if these changes go through.

Join the thousands of healthcare professionals who read Hospitalogy

Subscribe to get expert analysis on healthcare M&A, strategy, finance, and markets.

This field is for validation purposes and should be left unchanged.

No spam. Unsubscribe any time.

UnityPoint, Presbyterian announce merger intent

Des Moines based UnityPoint and New Mexico based Presbyterian Health announced their intention to merge in what would create a system with $11 billion in annual revenue and a footprint including 40 hospitals, hundreds of clinics, 40k FTEs, 3k providers, and more. The structure is similar to Advocate-Atrium in the sense that the two health systems would layer on a joint operating company (JOC) on top of existing operations.

Walmart Health announces expansion plans

In early March, Walmart announced a significant expansion of its centers. By 2024, Walmart aims to have more than 75 clinics and will tack on two more states – Missouri and Arizona. New center composition and location (Walmart):

  • 10 locations in Dallas metro area
  • 8 locations in Houston metro area
  • 6 locations in Phoenix metro area
  • 4 locations in Kansas City, MO, metro area

More recently, Walmart announced a health expansion into Oklahoma and will be a key healthcare player in rural markets.

VillageMD acquires Starling Physicians

Also in early March, VillageMD acquired a substantial platform, multispecialty physician group in Connecticut. Starling Physicians operates over 30 locations with ~30 specialties, 150+ physicians, 60+ APPs, and delivers care to 200,000+ patients annually along with lab and infusion centers. Along with the Summit acquisition, VillageMD is developing a formidable footprint throughout the Northeast – New York, New Jersey, Connecticut. (Press Release)

Best Buy partners with major health systems on hospital-at-home initiatives

In the ever-advancing encroachment of retail players onto healthcare, Best Buy announced a 3-year deal with Advocate Health to partner on legacy Atrium Health’s hospital-at-home (HaH) program, one of the largest in the country having served 6,000+ patients since the program began. The Atrium HaH program will provide care coverage to a population of around 6 million people while serving around 100 patients at a time as an extension of the hospital. Along with Atrium, Best Buy’s Current Health now holds “‘relationships’ with 5 of the top 10 largest health systems in the US including Geisinger, Mount Sinai, NYU Langone Health, and others” according to comments from their Q4 earnings call on March 3.

Best Buy’s strategy in healthcare revolves around enabling – but not directly providing – care in the home, which is highly complementary to its existing Geek Squad operation further compounded by its $400M acquisition of Current Health. It has dabbled in the senior ‘AgeTech’ market for a while now, acquiring GreatCall in 2018 and Critical Signal Technologies in 2019.

Contigo, Lionrock form innovative new partnership to combat SUD

In March, Premier Health’s Contigo Health announced a really interesting partnership with virtual substance use disorder (SUD) provider Lionrock. The partnership creates a center of excellence aimed at removing the stigma of SUD. I was fortunate enough to catch up with Contigo’s Chief Medical Officer Dr. Jonathan Slotkin, who broke down the major points:

  • Lionrock is a specialized telehealth provider of SUD treatment and will handle the virtual aspects of the partnership.
  • For patients with more complex needs, Lionrock hands off patients to Hazelden Betty Ford, which will handle the facility-based inpatient and outpatient SUD treatment.
  • Alongside the two, Premier & Contigo will coordinate the patient’s care through its team of expert nurses and care navigators.
  • Some other notable tidbits: 24/7 care available after patient self-referral, care continues 12 months post-program admission, and integration with patients’ existing carrier plans

“This program brings employees the best care across the treatment continuum and for a year after program admission. Industry-leading virtual care from Lionrock Recovery, the best in-person and inpatient care from Hazelden Betty Ford, and all seamlessly orchestrated by Contigo Health’s expert nurses and care navigation,” he told me.

Oscar goes old school, hires industry vet as CEO

In late March, Oscar Health announced that Mario Schlosser is transitioning to President of Technology at Oscar. Who’s replacing him as CEO? Mark Bertolini. If that name sounds familiar, it’s because he’s the former CEO of Aetna, which sold to CVS for $69B in 2018 which begs the question…might we see Oscar prep for a sale? Something to keep an eye on, especially as Oscar shares skyrocketed 60+% as of this writing. Can’t wait to write about Oscar’s sale in 12-18 months! (Oscar)

Medicaid Redeterminations begin

Starting April 1, states have begun the process of redetermining Medicaid eligibility for existing beneficiaries. An estimated 18 million individuals are about to lose Medicaid eligibility, and it’s likely going to be tough for insurers and state healthcare officials to track them down for re-enrollment.

The somewhat good news is that many of these individuals will be eligible for coverage under either their employer health plans OR the ACA subsidies that Biden extended through the Inflation Reduction Act.

Still, the impact will be felt nationwide as each state implements its own way to determine updated Medicaid eligibility. Expect most state redeterminations to happen over the course of 2023. In Florida, for instance, redetermination screens are happening based on the month of the individual’s enrollment.

Optum acquires Crystal Run Healthcare

Optum has acquired its latest physician practice platform in Crystal Run Healthcare. The practice operates 40+ specialties, 15+ clinic locations, 5+ urgent care centers, a multi-specialty ambulatory surgery center, and 400+ providers.

Pear Therapeutics files for bankruptcy

On April 7, digital therapeutics firm Pear Therapeutics filed for Chapter 11 bankruptcy. After I touched on Pear considering strategic alternatives last week, it turns out that the best path forward was to file for bankruptcy protection, lay off most of the staff, and identify buyers that might want to pay for specific assets or pipelines.

Pear went public via SPAC at a $1.6B valuation in December 2021, and just 16 months later, is selling off for scraps. Regardless, despite the challenges related to distribution difficulty, mindset shift involved with a cutting edge product, and reimbursement challenges, Pear as a whole pushed the envelope forward.

Chris Hogg shared a fantastic post-mortem on Twitter related to digital therapeutics as a whole in a thread linked here.

Froedtert and ThedaCare announce $5B merger

On April 11, Wisconsin-based health systems Froedtert and ThedaCare announced their intention to merge into what would create an 18-hospital, $4.5-billion in revenue health system.

From Kaufman Hall’s Q1 M&A review: “…a new type of post-pandemic activity is taking shape, as mid-sized regional health systems seek partners while they remain in a position of financial strength, with some looking to balance their desire to influence local healthcare delivery with utilizing the capabilities and resources of larger health systems.”

Microsoft and Epic announce partnership in AI, GPT-4

Microsoft and Epic announced a VERY notable collaboration hitting on all of the major healthcare buzzwords with one go! The two industry leaders will expand their longstanding partnership to develop and integrate generative AI into Epic environments on Microsoft’s Azure cloud platform. This…seems like a BFD. (Microsoft)

TPG, AmerisourceBergen acquire OneOncology for $2.1B

In mid April, TPG and AmerisourceBergen (ABC) announced the acquisition  of OneOncology from General Atlantic for $2.1B.

ABC purchased a 35% minority stake ($685M) in OneOncology while TPG holds the remaining 65% in a joint venture.

4 years from now, ABC will buy the remaining 65% of OneOncology at a 19x multiple. What a payday for TPG. And using 19x as a ballpark multiple for the transaction today, that roughly implies around ~$110M in EBITDA for OneOncology today.

On ABC’s front, the strategic acquisition gives the drug distributor a major asset in the oncology space after watching McKesson dominate the market with its own practice management company, the U.S. Oncology Network, over the past 13 or so years. Since acquiring the USON in 2010, McKesson has expanded the practice into 2,300 total clinicians.

As for General Atlantic, the growth equity investment firm exits its ~5-year investment in OneOncology. It made the initial $200M investment in 2018 and formed the oncology practice management company alongside Tennessee Oncology.

Since that initial investment, One Oncology has grown into a sizable footprint:

  • 15 practices
  • 300 sites of care
  • 560+ oncologists
  • 940+ total clinicians

In 2022, OneOncology tacked on another 86 physicians and holds an impressive retention rate with docs (an important metric in practice management).

HCA Partners with Augmedix on ambient, AI-enabled documentation

On April 20, Augmedix and HCA announced a partnership to pilot Augmedix’s ambient documentation solution at two HCA hospitals, specifically in the emergency room. Augmedix will work with HCA to develop the solution in the acute care setting, capture direct feedback from clinicians with the aim of driving better, more efficient outcomes.

More interesting to me, however, is HCA’s decision to invest into Augmedix alongside investment firm Redmile. By dropping a combined $12M, The largest for-profit operator signals that ambient documentation is a space to look at, and something with the potential to scale throughout HCA’s 180-hospital portfolio.

Miscellaneous Maddenings

  • So far Pinehurst has been incredible. We got here Sunday and played the Cradle and Thitle Dhu, played #4 Monday, am playing #2 today, and #9 tomorrow. Thanks to everyone who reached out – I haven’t gone through the Hospitalogy e-mail responses in a minute but I really appreciate the recommendations!

Hospitalogy Top Reads

Links to my analysis so far in 2023:

  • First Dollar and diving into flexible health benefits infrastructure (Link)
  • What HCA Healthcare is telling us about healthcare in 2023 (Link)
  • Physician-owned hospitals: good or bad? (Link)
  • Hospitals’ new normal and health tech’s opportunity (Link)
  • I read MedPAC’s 2023 report so you don’t have to (Link)
  • Vibes at ViVE – what I learned at one of health tech’s biggest conferences (Link)
  • The truth about hospital financial losses (Link)
  • Healthcare M&A state of play so far in 2023 (Link)
  • A.I has entered the chat – everything healthcare, generative AI, and use cases for clinical workflows (Link)
  • Inside the HCA and Augmedix partnership with Augmedix’s founder Ian Shakil (Link)
Blake Madden
Blake Madden
Join the thousands of healthcare professionals who read Hospitalogy

Subscribe to get expert analysis on healthcare M&A, strategy, finance, and markets.

This field is for validation purposes and should be left unchanged.

No spam. Unsubscribe any time.