Good morning Hospitalogists,

We’re back with yet another edition of the Tuesday roundup. Time to put your love of healthcare to the test!

EXTREME MAKEOVER: PRIMARY CARE EDITION

Per Business Insider , one of the longstanding, value-based care primary care giants, ChenMed, announced a major organizational restructure this week:

“The family behind primary-care company ChenMed is stepping back from their leaderships. Steve Nelson, the former CEO of insurance giant UnitedHealthcare, will lead ChenMed as president. The Chen family will remain owners and board members of the company.”

But why now?

The family went so far as to say that the family’s decision to step away WASN’T because of financial concerns but rather “increasing pressure within the healthcare ecosystem and specific changes that have affected value-based care organizations like [ChenMed].” Let's...call a spade a spade

After leading JenCare for the past year, former DuPage Medical Group and UnitedHealthcare exec Steve Nelson will lead the company emerging from its family reunion.

Main takeaways:

• It’s hard to succeed as a standalone value-based care primary care player. Through integration, managed care can unlock 20-30% more financial value than can a VBC player on its own.
• From what I understand, the V28 risk adjustment model changes will create some problems for VBC players, so it’s possible ChenMed is setting itself up to get acquired by having the family one degree of separation away from business proceedings.
• The ChenMed family has done a heck of a job in running this organization and perpetuating an incredible brand and culture for its enterprise. They’ve also made a boatload of money in primary care. Someday I’d love to write a case study on the organization.

MARKET MOVERS

Partnerships and Strategy Updates:

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

Elevance Health’s Q2: Elevance staved off utilization concerns and elevated medical costs in Q2, following in UnitedHealth Group’s footsteps to raise its 2023 forecast. The managed care firm is also working on developing solutions for at-home acute care through Carelon’s myNEXUS post-acute care segment, noting reductions in cost, readmissions, and length of stay. Finally, Carelon’s behavioral health segment has outperformed lately given strong demand, and achieved 'multiple external business wins'.

All eyes are on Radiology Partners; PE rollup space heats up: After losing an alarming number of physicians at a Las Vegas based practice, Desert Radiology, a Radiology Partners affiliate since 2019 was forced to end a 57-year hospital relationship with University Medical Center of Southern Nevada amid reported physician turnover. (Link)

• To add to the PE rollup drama, emergency physicians are ramping up rhetoric against corporate management, officially stating that physicians should make both medical and business decisions concerning their practice. (Link)

AHA Fights Back: The American Hospital Association criticized recent attacks from Arnold Ventures on tax exemptions and 340B and also called out an incomplete study on pandemic funding. (Link 1, Link 2)

Medicaid Redeterminations Paused: CMS is pausing Medicaid redeterminations in several states. (Link)

Teladoc + Microsoft AI Partnership: Teladoc announced a notable partnership with Microsoft to integrate Nuance’s DAX Express solution into Teladoc’s Health Solo platform. (Link)

Cost Plus Drugs Updates:

• Mark Cuban's Drug Company is preparing to sell its medicine directly to hospitals. (Link)
• MCCPD also notched a major win with Kroger. The teamcubancard.com free Rx benefit card is now accepted at all Kroger Family of Pharmacy locations across the country – that's more than 2,000 stores in 35 states. (Link)

CVS → Optum: After a brief stint at CVS, Amar Desai is back at Optum leading the organization as its CEO. (Link)

Over 1 million physicians: The latest census reveals that there are more than 1 million physicians practicing medicine in the United States. (Link)

Partnership Announcements:

• Innovaccer and Post Acute Analytics are partnering to enhance value-based care delivery in post-acute settings. (Link)
• Evergreen Nephrology and Hypertension Nephrology Associates, P.C. have announced their partnership. (Link)
• Lark Health and Desert Oasis Healthcare have expanded their partnership. (Link)
• Acadia Healthcare announced the opening of its first behavioral hospital in partnership with Geisinger. It also formed a behavioral health joint venture with Nebraska Methodist Health System, with plans to build a 96-bed behavioral health center of excellence.
• DocGo and HealthCare Partners NY expanded their partnership Expand Partnership to Enhance Proactive At-Home Care for Patients (Link)
• Magellan Healthcare was selected by the state of Idaho to run Idaho’s behavioral health program. (Link)

Finance and M&A Updates:

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

TPG has struck a $1.4B deal to acquire Nextech, a provider of EHR and practice management software. (Link)

Healthcare M&A volume has increased in Q2:23, according to acquisition data from LevinPro HC. “Health care merger and acquisition activity increased nearly 10% in the second quarter of 2023, hitting 696 deals, according to new acquisition data from LevinPro HC. Activity in the second quarter was 8% higher than in the first quarter, when 646 transactions were announced. However, it is a drop of 7% compared with activity in the second quarter of 2022, when 748 deals were announced.” (Link)

A couple of orthopedic practice acquisitions:

• Virtua Health is now South Jersey’s largest orthopedic provider after its acquisition of Reconstructive Orthopedics. (Link)
• US Orthopaedic Partners is expanding its network with the addition of Orthopaedic Associates of New Orleans and Mid-State Orthopaedic & Sports Medicine Center. (Link)

Mertz Taggart provided a nice overview of home health & hospice M&A in its Q2 report. (Link)

Continue to keep an eye on movements by the FTC and DOJ, as they’re proposing new changes to the guidelines for reviewing anticompetitive mergers. (Link)

Digital Health and Innovation Updates:

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

The FTC and HHS have issued warnings to hospital systems and telehealth providers about privacy and security risks from online tracking technologies including Meta’s Pixel. Lots of things going on lately with data breaches and security. (Link)

Rezilient Health announced a partnership with Excel Health Plan to provide every member with access to Rezilient Health's hybrid suite of services, including personalized primary care, care coordination, health education and resources, and an enhanced network of providers. (Link)

Science IO and Chroma announced a partnership to make AI more accessible for all organizations: The power of Chroma's vector database, in combination with ScienceIO's domain-specific embeddings, can be harnessed to develop AI applications that accurately interpret and navigate the complexity of healthcare. Whether it's identifying patterns in patient health records, predicting outcomes, or streamlining administrative tasks, the integration of Chroma and ScienceIO will bring the power of AI to bear on critical tasks in healthcare. (Link)

HealthSnap and Prisma Health are expanding a program to provide more access to a remote patient monitoring and chronic care management platform. (Link)

New Cedars-Sinai health tech accelerator companies include (Link):

• 52North—at-home neutropenic sepsis blood tester
• Acorai—heart failure device
• Alva Health—RPM for early stroke detection
• CARI Health—RPM for medication adherence
• equalityMD—Community-based LGBTQ+ care
• Machine Medicine—Motor functioning assessments
• Paperplane Therapeutics—Digital therapeutics for children
• Predicta Med—Early detection and treatment of autoimmune disease
• RCE.ai—RPM for chest pain, detection of cardiac proteins in the blood
• TestDynamics—Medical imaging AI platform

Fundraising Announcements:

• VitalConnect, a hospital remote monitoring tech company, raised $30 million. (Link)
• K Health, yet another AI chatbot, raised $59M. (Link)
• Family First, a caregiver mental health platform, has secured $11 million in funding. (Link)
• Herself Health, which provides primary care to women 65 and over, raised $26 million. (Link)
• GenHealth AI raised $13M for AI-enabled predictive analytics in payors. (Link)
• Nvidia is jumping firmly into the AI-led drug discovery game, investing $50 million in biotech company Recursion. (Link)
  • Recursion uses AI-powered models to identify and design new therapies, and offers those models to other drug makers. Nvidia can then potentially license those AI models on BioNeMo, the company’s cloud service for generative AI in drug discovery that it rolled out earlier this year.

The Healthcare Hype Cycle: AI

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

This was a good brief overview from Beckers on recent moves from Google and Microsoft competing in the race to apply AI in healthcare. (Link)

Great write-up from Sparkline Capital on a more generalist perspective on investing in AI: Navigating the Hype (Link)

Northwell Health has integrated Aidoc's enterprise AI platform into 17 of its hospitals across New York State, aiming to enhance patient care. (Link)

Northwell, Feinstein Institutes to form new AI research center on health outcomes. (Link)

HOSPITALOGY TOP READS

• I enjoyed this read from MedCity news on the 'Costco Model' for the healthcare supply chain and how it could be a significant source of value. (Link)
• The 2024 MPFS Analysis by Mcdermott consulting provides insights into the proposed changes to the physician fee schedule. (Link)
• A recent Next Ventures  post discusses VBC Enablement and its role in paving the way for true value creation in healthcare. (Link)

MISCELLANEOUS MADDENINGS

Fun, random stories & updates from Blake. This section is totally, utterly skippable. In fact, you can ignore it altogether if you want.

A brief dissertation on the Open Championship this weekend:

• Remarkable, brilliant golf from my fellow lefty Brian Harman, although I have to say he made it boring as heck for the rest of us. Goes to show you that you can still win at the highest level with 165 mph ball speed and being red hot around the greens. Plus if you have a jackhammer for a putter how could you possibly miss those short putts??
• Rory is playing the best golf of anyone this year and yet...he just can't get it done come major time. He needs to look into his course management strategy and make a change at putter. You can't hit as many greens as he did and be as close to the hole as he was proximity-wise...and not capitalize on those opportunities. Plus, the TaylorMade Spider ain't it, fam. That being said, Rory will get at least another major.
• Justin Thomas is broken but he'll find it again. Love that guy.
• Incredible to see Jason Day playing well again.
• The internal out of bounds on 18 was wild. More courses should introduce volatility in scoring into certain holes to strike fear into the hearts of professional golfers. Links courses are great with the pothole bunkers as well - acting as a de facto one stroke penalty...without losing your ball!
• I miss major golf tournaments already, but best believe you'll be hearing my college football hot takes coming to a newsletter near you this fall!

Thanks for the read! Let me know what you thought by replying back to this email.

— Blake