Thanks for all of your commentary on my piece last week on physician dynamics! Hospitalogy readers are the absolute best and I cherish this position to move the conversation forward in healthcare.

Today’s send is a fun one.

Healthcare marketers, this one is for you!

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Freshpaint’s Ray Mina and I are sitting down to have a conversation surrounding what’s affecting healthcare marketing today:

  • How we got here with problems including the Pixel fiasco;
  • What marketers need to know TODAY about the regulatory landscape; and
  • How to apply best practices for your organizations moving forward.

Huge thanks to Freshpaint for sponsoring this virtual session.

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A PBM Disruption, or a Blip on the Radar?

In likely the biggest news headline of the week, Blue Shield of CA and its 4.8 million member footprint announced its intention to ditch CVS and is replacing that 3-letter void with a consortium of vendors – Amazon Pharmacy for at-home drug delivery, Mark Cuban Cost Plus Drugs for benefit design and medication access, Prime Therapeutics, and Abarca to fill other existing drug benefit functions.

Notably, CVS is still retaining the specialty drug book of business, which contains half of the spend. CVS also issued an 8-K on the matter, notably unconcerned about the loss of business especially given the specialty moat.

Long-term, I can’t wait to see how this move by Blue Shield of CA plays out. Industry analysts, jaded to any sort of change in the healthcare status quo, claim that it’ll have minimal to no long-term impact given how entrenched PBMs are. CVS agrees, though the healthcare behemoth has plenty to worry about. Blue Shield of CA claims that the move could save up to $500M, transparently, to its members through the piecemeal offering.

So I ask you, my extremely educated readers: Is this an overreaction, or the beginning of the end for the pharmacy benefit management industry? Let’s say the stunt is successful in driving savings. Do we think that large employers and other regional payors are going to twiddle their thumbs with existing arrangements? Sure, PBMs are still involved via Express Scripts, but the experimentation isn’t going away any time soon. It’s a blip on the radar…but a blip that could grow – and fester – into something real and undesirable for the entrenched incumbents of today.

Partnerships and Strategy Updates:

Anything affecting decision making in healthcare – notable moves and strategies for healthcare operators to keep on your radar.

  1. OHSU & Legacy Merge: Oregon Health & Science University announced its intent to merge with the financially challenged Legacy Health, signifying the latest in a line of attempted health system mergers within a local market, although the two do not have existing overlapping geography. In reality, the two players are likely getting their lunches eaten by larger players in the local market. As far as the attempted merger is concerned, OHSU will be ‘acquirer’ stepping into Legacy Health’s shoes through a member substitution and promising $1 billion in local community investment for the combined entity. The systems together generated around $6.5B in revenue, though each lost money in 2023.
    1. The combined system — with more than 32,000 employees and 100-plus locations, including 10 hospitals, and more than 3 million patient visits a year — will be the largest employer in the Portland metro area, and will focus on amplifying the region’s leadership in patient- and community-focused health care, education, research and innovation. (Press Release) (Link)
  2. Allina Doctors’ Union: Doctors at Allina officially filed for unionization which is a major step in the direction that many believe physicians should take to retain ownership of the practice of medicine. A trend to watch. (Link)
  3. Hospital Landlord Crisis: America’s most significant hospital landlord Medical Properties Trust, battered by credible reports of sketchy financial activity and poor capital management, is facing some major heat after some recent non-disclosures of material events came to light stemming from struggling partner hospital operators (Steward and Prospect Medical Holdings) and a suspended bailout from the California Department of Managed Health Care. (Link)
    1. The WSJ report was so compelling that Medical Properties Trust itself felt the need to release a statement in defense: (Link)
    2. …Aaaaand MPT followed up with a plan for ‘long term value creation’ for the firm today. Sinking ship. Why do people invest in this stuff? (Not investment advice) (Link)
  4. Abridge & Epic Team-Up: Abridge became the first “Pal” of Epic, introducing its generative AI to assist a broader range of patients and providers. Along with Keycare, Abridge is choosing to ease integration for enterprise players on Epic, which should – in my mind – drastically reduce sales cycles. Seems like a big move and win for the Abridge team, so I’ll be closely following the Generative AI Wars™. Also… “Pal” of Epic? Pal? Are we back in Kindergarten? (Kidding) (Link)
  5. Akumin’s Financial Struggle: Facing various issues, radiology provider Akumin established a special committee to assess its challenged capital structure. (Link)
  6. ACO REACH Adjustment: The CMS made adjustments to the ACO REACH to ensure its stabilization and aiming to expand participation in the program. (Link)
  7. Hospital VC Shift: Here’s an interesting article from Stat (paywalled) which dives into a decreased appetite for hospital investment in venture capital (Link)
  8. Amazon Pharmacy Initiative: Amazon Pharmacy introduced a new strategy to facilitate access to cost-effective insulin through auto-applying coupons. (Link)
  9. HCSC’s MA Expansion: Health Care Services Corporation (HCSC) has planned for a third consecutive year of Medicare Advantage expansion for 2024. (Link)
  10. Insurtechs’ Impact: Insurtech companies, Bright and Friday, could potentially impose a $1B risk adjustment payment burden on other insurers, leaving them out to dry. (Link)
  11. Public Health Threats: A recent poll positioned opioids and obesity as the leading public health threats. (Link)
  12. U.S. Impact on Denmark: America’s rising demand for weight-loss drugs is having fascinating ripple effects on Denmark’s economy. (Link)
  13. Integrated Behavioral Health: A recent Commonwealth fund article discussed the significance of making care primary and integrating behavioral health care. (Link)

Partnership Announcements:

  • Kroger and Select Health introduced a co-branded Medicare Advantage plan. The co-branded plan will be offered in Colorado, Idaho, Nevada, and Utah. Remember that SelectHealth is Intermountain’s MA subsidiary with over a million members. Meanwhile I’m just waiting for someone to partner with HEB down in Texas! Kroger has previously partnered with Elevance and Priority Health and there are several other co-branded plans out there in the wild. (Link)
  • Verily and OneOncology announced an interesting partnership to collaborate on cancer research to enable more efficient clinical trials. Verily will integrate its clinical trials management software into OneOncology’s platform. (Link)
  • Methodist Health System announced a partnership with Surgery Partners to develop and acquire ASCs in the North Texas market. Shout out DFW! (Link)
  • United Digestive partnered with Oscar Health’s Georgia health plan to go in-network with plan members. “The organization currently has more than 62 clinics, 22 ASCs, and 300 providers practicing in Georgia, Florida, North Carolina, and South Carolina.” (Link)
  • DocGo and EmblemHealth initiated a partnership to deliver in-home care for patients. (Link)
  • Evergreen Nephrology and Nephrology Associates of Central Florida teamed up to introduce an improved standard of kidney care. (Link)
  • MedArrive and Heartbeat Health collaborated to provide Medicaid members with in-home virtual cardiology services. (Link)
  • HOPCo Network Solutions entered a partnership with a Florida value-based care network. (Link)
  • Health Alliance Plan and CareSource achieved regulatory approval for a Medicaid joint venture in Michigan. (Link)
  • Azalea Health and Particle Health entered into a strategic alliance. (Link)
  • PicnicHealth partnered with AstraZeneca to progress cancer datasets. (Link)
  • Oxford Health Founder, Steve Wiggins, unveiled a novel health insurance model utilizing nirvanaHealth’s Aria platform on Microsoft Azure. (Link)
  • SSM Health and Siemens Healthineers partnered to promote health equity and bolster workforce development. (Link)
  • DMOS Orthopaedic Centers partnered with Hatch (Link)

Finance and M&A Updates:

Anything related to the financial side of healthcare and M&A.

LifePoint Health opened a new behavioral health facility alongside its JV partner Baystate Health, including 150 private and semi-private rooms. (Link)

Spectrum Equity acquired a majority stake in healthcare benefits software company VBA for $156M. (Link)

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CareJourney released an insightful multi-part series on integration of bundled payments within accountable care models, specifically focusing on Orthopedic Surgeons considering cost and quality in Part 2. (Link)

A study found there was no clear link between hospital market control and post-surgery patient results. (Link)

  • “…the analysis reviewed 30-day postoperative mortality and readmission measures for more than 2.2 million Medicare beneficiaries whose claims were recorded between 2015 and 2018…[the analysis] showed that market competition “was not consistently associated with improved outcomes after high-risk surgery…Because there was no clear association between hospital competition and improved outcomes, policymakers may not rely on hospital competition as a rationale for trying to improve care, especially as it pertains to surgical care.”

Levin Associates published a piece on trends in Private Equity, including notable recent activity from private equity players in healthcare – acquisitions, exits, and future prospects. (Link)

Mayo Clinic saw a bounce-back in its financial and operating performance, similar to other large health systems, noting a $1B increase by 2023’s mid-year due to an over-performance in its main operations.

  • …medical service revenue rose 9.9% year over year and represented 84.5% of the system’s total revenues. Management also highlighted substantial year-over-year gains in year-to-date (six month) clinical volumes—a 6.5% increase in outpatient visits, 8.4% increase in surgical cases and 2.4% increase in admissions—while total patient days declined by 1.1%.” (Link)

Babylon filed for chapter 7 – full liquidation, the worst kind – bankruptcy within the US. (Link)

U.S. Oral Surgery Management secured a $150M credit deal to fund expansion for its dental operations. 8 months ago, it raised $125M, so USOSM must be making some significant purchases while performing well – “The company said it expects to add $100 million in acquired revenue this year on top of a similar amount last year.” (Link)

Digital Health and Innovation Updates:

Notable fundraising announcements, health tech product launches, breakthrough innovation, and reasons for optimism.

AWS introduced an interactive training program focused on healthcare cloud solutions. “Individual and enterprise developers can practice everything from automating prior auth forms to deriving AI/ML-driven insights from healthcare data.” (Link)

Firstmark discussed the evolution and significance of software-first care in the future of healthcare technology. (Link)

A Nature Medicine article dove into the potential and challenges of digital health for senior populations. It was a really interesting dive into the AgeTech market specifically and really drove the point home for me that although there’s a lot of potential for innovation in the space, adoption of digital technology by seniors and education is a major roadblock. (Link)

Spring Health released a mental health educational platform tailored for employers. (Link)

Picnic Health announced an entry into the Oncology real world data market. (Link)

Cityblock undertook a restructuring of its operations, resulting in a 12% workforce reduction, as it strategizes for growth and profitability. (Link)

Fundraising Announcements:

  • Genesis Therapeutics, an AI-enabled drug discovery platform, raised $200M. (Link)
  • As mentioned, CareBridge secured $140M to further its expansion into additional states. (Link)
  • Viome, a diagnostics company, obtained $86.5M in funding and introduced its gut test at 200 CVS locations. (Link)
  • RapidAI, a company focused on workflow solutions in vascular and cardiac diseases, secured a $75M Series C investment led by Vista Credit Partners back in late July. (Link)
  • Thyme Care, a cancer care enablement and coordination platform, raised $60M (Link)
  • Mendaera, a platform specializing in healthcare robotics, raised $24M. (Link)
  • Lindus Health, a U.K.-based clinical trials startup backed by Peter Thiel, raised $18M. (Link)
  • Visana, a women’s health company, secured a $10M seed round. (Link)


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The Healthcare Hype Cycle:

This is the spot where I cover the buzzy, hot topics in healthcare. Currently the flavor of the month is AI in Healthcare.

Google has extended its AI mammography collaboration with iCAD. (Link)

The New York Academy of Sciences examines the innovative wave and potential of AI in healthcare. (Link)

Lotte Healthcare is working on an AI-driven service for diagnosing Alzheimer’s disease. (Link)

Miscellaneous Maddenings

Fun, random personal anecdotes & updates from Blake

  • I played golf at a local muni Pecan Hollow with my buddy Travis this weekend and we were matched up with another interesting twosome – an older fella – around 70 – and his buddy. Well if you can remember in Dallas, we’re dealing with one of the worst heat waves in recent memory and it was 109 on Sunday. This old man can barely stand by hole 12 and to his credit, he taps out and tells us that hole 13 will be his last. He walks up to the 13th tee box and mutters “I’m feeling so dizzy and lightheaded.” So we’re sitting in the cart thinking we’re about to call 911 to get this guy to the hospital when he winds up and absolutely gob smacks a drive 260 down the fairway. He goes on to birdie the hole and then tells me that maybe he should play feeling like this all the time. I’m not one to get in the way of rituals or traditions, but I had to push back on that one! Anyway, I shot a 79 with some ups and downs. It’s been hard to play in Dallas with the heat.

Hospitalogy Top Reads

My favorite healthcare essays from the week

  • Xpostfactoid pondered if the FTC’s suggested prohibition of noncompete clauses might reduce the corporatization of healthcare. (Link)
  • The AHA provided insights on strategic investment in healthcare innovation. (Link)
  • The New York Times discussed the origins of new weight loss drugs but expressed uncertainty about their mechanism of action. (Link)
  • The Wall Street Journal delved into the rapidly expanding industry surrounding mental health and American anxiety. (Link)
Blake Madden
Blake Madden
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