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Happy Thursday Hospitalogists!

I join you today from Nashville where I'm participating in a few fun healthcare panels at the Nashville Entrepreneur Center. If you're around say hello!

Today's newsletter is a summary of all of my February content, which should be a pretty good proxy for everything happening in healthcare across strategy, finance, and partnerships. If I missed something big feel free to give me a shout!

My January Recap can be found at the link here.

These formats are meant to be more skimmable since I know you're all incredibly busy and otherwise don't have time to read through my admittedly dense content 🙂 (I'm working on it, I promise)

Welcome to Hospitalogy, a newsletter breaking down healthcare strategy, finance, and M&A twice weekly. Join 27,000+ executives and investors from leading healthcare organizations by subscribing here!

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FEBRUARY HEADLINES & STORIES

1) Improved Health System outlook in 2024:

On strong utilization expectations alleviating contract labor and travel nursing conditions, shortening length of stay signaling more capacity in the post acute market, and a rebound in investment returns bolstering balance sheets, large integrated health systems are bouncing back in 2024. Several large nonprofit health systems have seen significant improvements in operating margin (and this dynamic is supported by Kaufman Hall's latest hospital flash report)

My HCA analysis: Apart from some troubles at Mission, HCA's business is chugging along as usual (strong volumes, high acuity, good markets) despite some expense headwinds from professional service fees.

My Tenet breakdown: As Tenet makes divestitures in the acute care space, its USPI portfolio is outperforming. In a pre-announced earnings release, Tenet noted that strong surgical growth in USPI resulted in higher than expected profitability – above the high end of its adjusted EBITDA guidance for '23.

On the other hand, CHS released Q4 earnings and attributed falling profitability in the quarter to bad payor mix, higher salaries & wages, higher professional fees & insurance costs, while attributing positive tailwinds to those affecting Tenet and HCA as well, namely strong IP/OP volumes, higher acuity, increases in other (DSH) revenues), and falling travel nursing expenses. It also disclosed a DOJ investigation.

Health system bifurcation: The CHS call aligns well with the bifurcation we're seeing among hospitals and health systems. Like I mentioned, larger integrated health systems with appropriate market density are outperforming. These are the price 'makers' in markets - whereas price 'takers' are falling behind, and the state of rural hospitals continues to be dire. Kaufman Hall noted this dynamic as an 'inverted bell curve' which is really quite alarming and should only fuel consolidation and service line closures for the have-nots.

Ken Kaufman's post on these dynamics are must-read for any provider organization leader.

2) Change Healthcare Breach exposes healthcare IT infrastructure vulnerability as DOJ reviews UnitedHealth Group for Antitrust:

The Change Healthcare breach rocked, and as of this writing, is still rocking the healthcare world. Optum's subsidiary has been offline for SEVERAL days after discovering a foreign party had gained access to parts of the system, so Change decided to shut it down for damage control. More specifically, there was a vulnerability in a service called ConnectWise leading to the security exploitation.

The ramifications of the breach are significant – the AHA even went so far as to encourage provider organizations to disconnect from Change's services (well, they said Optum really, maybe that was on purpose). Side note – can you think of another industry where if a shutdown of this magnitude occurred, the company's stock price would be entirely unaffected? (That should tell you everything you need to know about UnitedHealth Group's moat and defensibility).

I asked a pharmacist at Walgreens (couldn't help myself, smh) about the Change Healthcare stuff. He said that the first day was the worst but that most pharmacies have figured out workarounds at the day 7 or 8 point. But this isn't the case for everyone - some providers seem to be in full-on crisis mode. And the breach could last weeks!!

Moving on to implications for UnitedHealth Group at large, folks in the healthcare space were very quick to point out Change Healthcare 'changed' hands very recently to UnitedHealth Group's Optum – a fact that works against the managed care behemoth, and a point in the favor of the FTC when it comes to anti-megamerger narrative given the DOJ challenged the Change Healthcare acquisition at the time.

In fact, the DOJ has been investigating UnitedHealth Group for antitrust concerns since late last year per a recent WSJ article exclusive. The Change news really adds fuel to this fire - in an election year - but in reality UnitedHealth Group is pretty insulated from antitrust review. There's no precedent for proven harm related to vertical mergers in healthcare and it's a tough hill to climb. The lobby is strong and I'd be very surprised to see anything material come out of this. That being said, the Optum-Amedisys deal is still pending, so there's that.

The most recent update seems to indicate the hackers are not a nation state as UnitedHealth initially suggested but rather a well-known hacker group who claims to have access to patient data records. It's an alarming development. As patient data grows more longitudinal and complete in picture, these data breaches present a significant challenge for healthcare organizations. This is why we can't have nice things.

3) Cigna sells MA segment to HCSC:

Announced on January 31. 600k members, $3.7B purchase price. $12B in revenue. Jared Strock had a nice breakdown of the valuation implications and the segments included on LinkedIn here. Cigna also secured a 4-year deal for its pharmacy benefit manager Express Scripts to continue providing services for the plan, and Evernorth as a whole will have opportunities to sell other services like clinical care coordination into the newly secured HCSC asset. Overall, the deal is expected to close in early 2025.

4) Steward Health Care in Disarray:

Things have gone poorly for Steward Health Care in 2024 after years of turmoil and buying up terrible assets fueled by debt. The Boston Globe found out a pretty egregious state of affairs for its Massachusetts hospitals – e.g., physicians buying their own surgical equipment, nurseries closed at birthing centers, and other conditions these clinicians have been dealing with.

This Boston Globe essay (paywall) was so well done and worth the read.
Massachusetts Wakes Up to a Hospital Nightmare
Steward Health Care employees, patients grapple with turmoil (paywall – Boston Globe)

5) Cano goes under:

Cano Health has left its physician equity holders out to dry. Earlier on Monday, Cano Health officially filed for bankruptcy after hemorrhaging cash for sometime from failing to appropriately manage risk or right-size the sinking ship. Cano's stock will be delisted, wiping out common shareholders, and likely doing the same to its physician 'partners,' many of whose practice buyouts (and retirements) were funded via a combination of cash and equity.

Cano Health's downfall offers a warning for Medicare Advantage (Stat paywall)

6) SCAN-CareOregon cancelled:

After announcing a new name (HealthRight Group) and an 800,000 member, $6.8B, 5-state merger in late 2022, Nonprofit health plan SCAN Group called off its planned combination with CareOregon this week. The call-off follows some public rhetoric opposing the deal

7) BCBSLA-Elevance cancelled or being modified:

Blue Cross Blue Shield of Louisiana initially announced its intended sale to Elevance back in January 2023. Of course, once the public caught wind of the deal, the two parties faced significant backlash and ultimately called off the sale 9 months later. THEN, in December, the two sides tried to resurrect the deal only to, once again, call it off – again – in mid February. BCBS LA can't get buy in from the state, but they're still trying to implement some sort of reorganization or merger.

Between these cancelled plans, last year's called off health system deals, Optum's bubbling public commentary troubles with acquiring the Corvallis Clinic, and icy glares at the federal level from the FTC, states are turning on mega-mergers. At this level, we're entering the Russian winter of healthcare M&A.

8) R1 RCM's take-private offer signals renewed private buyout interest:

New Mountain Capital, one of the largest shareholders of revenue cycle management firm R1 RCM, offered to take R1 private for $13.75 a share in an all-cash offer announced later in the afternoon on February 26. It's around a 24% premium from its closing price the day prior. R1 is considered one of the 'gold standard' large operators when it comes to revenue cycle management services, and clearly the private markets think the firm is undervalued – a dynamic that seems to happen fairly often in healthcare considering the quarterly pressures public companies face.

Another interesting dynamic to consider – Ascension (one of the largest nonprofit health systems) owns a significant stake in R1 RCM and New Mountain would like for them and TowerBrook Capital Partners, another institutional shareholder, to get on board. It also seems as if the takeover proposal was met with frostiness considering R1 shares were trading near $20 as recently as summer 2023.

9) VillageMD exits Florida and Illinois as things at Walgreens deteriorate:

In an unexpected move (and seemingly broken by Brett Jansen on LinkedIn and HTN, wild), VillageMD is fully exiting Florida, one of its largest markets with 52 locations. More recently, ModernHealthcare broke VillageMD's plans to also exit Illinois. From folks I've talked to around the space, the situation within Walgreens HQ is dire - not many internally know what's going on or what's next. What's unfolding here is nothing short of disastrous for Walgreen's healthcare narrative for investors.

Walgreens is cash strapped, given the initiatives to cut costs at VillageMD but also sell Shields for a purported $4B price tag. Adding to this misery is the fact that advanced primary care senior clinics take time and capital to reach maturity and ultimately, profitability. The economics are not in their favor. Once Walgreens right sizes the VillageMD portfolio, we'll see if things improve for the struggling pharmacy player. I've been hearing for a couple years now that Walgreens cobbled together a few healthcare delivery assets and called it a strategy. They have a lot to prove and I have to wonder how patient care is being affected given the closures en masse.

10) Insurers respond to dismal MA Rate notice:

As Medicare Advantage profitability declines from recent highs amid a multi-year phase-in of risk adjustment and elevated utilization trends, insurers are crying foul about the advance rate notice.

You have to think CMS plays ball a bit given this commentary with the finalized rate releasing in April, but we'll see:

"Bearing in mind the continued expectation for the multiyear phase-in of the risk adjustment model change that was finalized in 2023, we view the preliminary rates as insufficient with respect to general medical cost trend expectations." – Centene's Sarah London
"For us, the rate change as it sits today is approximately minus 1.3% before risk coding trend." – Centene's Andrew Asher
"Last week, we received the proposed 2025 rate notice. The funding level was broadly consistent with our expectation, which we do not believe is sufficient to cover current medical cost trends." – CVS' Karen Lynch
"And as I said earlier, we are anticipating that the rate notice in '25 will look similar in terms of impact to '24 as an initial assumption. If you remember, we cut about, on average, something close to $13 on average PMPM in that environment." – Humana's Susan Diamond, prior to rate notice release (Humana later disclosed the notice was a 1.6% margin headwind)
"I think the way we've looked at the shift in the rate notice is a 3-year set of adjustments, and that's why we've been very thoughtful about how we plan, not just, frankly, benefit design, but how we continue to accelerate our management of OpEx through the organization, how we've continued to focus on eliminating unnecessary care and waste within the system through our various medical management capabilities." – UnitedHealth Group's Andrew Witty, prior to rate notice release

11) $5B Children's Hospital expansion signals strong Dallas market:

Two long-established, premier healthcare players in the Dallas area – UT Southwestern and Children's Health (who have been collaborating for 60+ years) – are building a new Children's hospital plaza in the Dallas medical district expected to total $5B in capital spend. The new 33-acre multi-tower build will replace the existing Children's Medical Center Dallas to meet surging demand for high acuity pediatric care, research, and training, and will hold quite literally every pediatric healthcare service you can imagine.

MARKET MOVERS - FEBRUARY STORIES TO KEEP A PULSE ON

Strategy Updates:

Key considerations for decision makers. Notable moves, policies, and strategies.

First Healthcare IPO disappoints: BrightSpring Health Services debuted on the public markets to an unfortunately muted response, which disappointed me. We need more upbeat energy around healthcare IPOs. I'm hoping the up and coming firms inject some positivity – and working business models – into the public markets.

Scathing LifeStance Short Report: Famous short-selling shop Hindenburg Research put out an infamous short report on hybrid behavioral health player LifeStance Health this week, noting a number of perceived issues at the firm, including issues around retention rate, compensation numbers, CFO turnover, ease of prescription access for controlled substances, and more. (Link)

Overall, we think LifeStance is a classic example of what happens when private equity meets a 'hot' healthcare sector: Massive debt fueling a grinding, metric-focused corporate culture resulting in worse quality of care for patients, a worse environment for clinicians and long-term losses for the average investor.

Which reminds me of the short report Citron Research put together on agilon. Guess they were vindicated after all, huh? Meanwhile Lifestance just released its Q4 earnings and popped 30% on a solid outlook.

Everside and Marathon Health Merger: Everside Health and Marathon Health are merging to form a comprehensive healthcare service provider, operating under the Marathon Health brand, aiming to serve 2.5 million patients across the U.S. (Link)

Amazon's Healthcare Layoffs: Amazon has announced layoffs impacting hundreds of employees at One Medical and Amazon Pharmacy. More of a restructuring announcement post-acquisition. (Link)

The Washington Post unveiled (paywall) a federal investigation involving a fraud scheme centered around ordering an obscene amount of catheters – potentially costing Medicare $2B. Over the span of two years, seven medical equipment companies ramped up billing for catheters from a measly order of 14 all the way up to 406,000. Patients' insurers were billed for catheters that were never ordered or received, with no evidence found that patients had requested these catheters, suggesting a significant breach in the healthcare system.

MA Projected: MA enrollment projections from the CBO and presented by KFF are projected to top out at 60% of Medicare enrollees. (Link)

Adding to Medicare Advantage data, The Commonwealth Fund had a nice primer on everything Medicare Advantage, if you're looking to get caught up quick. (Link)

Kentucky's CON Program: Kentucky is currently studying the state of its Certificate of Need program and potential changes may be on the horizon in the state given other states have reformed CONs. (Link)

Health Systems Exiting Health Plans: Some health systems including Baystate Health and ProMedica are choosing to divest their health plans amid changing market dynamics. (Link)

Radiology Partners Growth: Radiology Partners provided an update on its 2023, adding 650 physicians and 62 client sites within a year. (Link)

U.S. Oral Surgery Management: The management company announced its 2023 results including partnerships with eight new practices across seven states. (Link)

A couple of nice data analysis pieces from KFF this month:

State Medicaid Program Trends: KFF explores shifting trends within state Medicaid programs, revealing underlying data insights. (Link)
Medicare Advantage Enrollment: KFF discusses ten reasons behind the growing enrollment in Medicare Advantage plans. (Link)

Surprise Billing Disputes: CMS data indicates a significant rise in disputes related to surprise billing. (Link)

Hospital at Home Approvals: Nine more health systems have been approved to implement 'hospital at home' programs in recent months per Beckers. (Link)

AdventHealth
Virginia Mason Franciscan Health
Sanford Health
CareWell Health
M Health Fairview
Inspira Health
BayCare Health System
North Texas Medical Center
Boston Medical Center

Optum Contract Terminations: Optum lost 3 notable contracts, two of which occurring in behavioral health (Maryland and Idaho) while SSM Health cancelled its MSA with Optum on revenue cycle and other outsourcing functions. (Link)

Advocate Aurora's Pricing Lawsuit: Advocate Aurora is facing a lawsuit over allegations of its healthcare pricing and negotiation strategy. (Link)

Mississippi Medicaid Expansion: Mississippi's Lieutenant Governor announces an impending Medicaid expansion bill which is close to being passed by Mississippi legislature. (Link)

'Essential Health System' Designation: Proposed legislation seeks to classify and fund safety-net hospitals as 'essential health systems.' (Link)

Partnership, Products, and Pilot Announcements:

Collaborations and launches to keep a pulse on.

Allina Health is offloading 2,000 admin employees to Optum in an outsourcing deal we've seen a few times over the past couple of years. Interestingly, though SSM Health ended its contract with Optum after outsourcing 2,100 employees to them. I guess that's one way to conduct layoffs at a nonprofit health system huh?

Acadia Healthcare enters into a joint venture partnership with Ascension

Seton to expand behavioral health services in Austin, Texas. (Link)

Noom partners with Liviniti on Noom's newest offering: Noom GLP-1 Companion. (Link)

TruLite Health announces collaboration with Mayo Clinic to address clinical bias and improve health equity. (Link)

Mark Cuban Cost Plus Drug Company and Sidecar Health team up to tackle rising healthcare costs. (Link)

Instacart and DispatchHealth partner to tackle food insecurity. (Link)

US Acute Care Solutions expands partnership with Inova Health System to include comprehensive emergency medicine services at Inova Fairfax Medical Campus. (Link)

Calibrate sets a new benchmark in obesity treatment, demonstrating a remarkable 18% sustained weight loss for members at 24 months, outperforming GLP-1 medication trials. (Link)

Everly Health and the National Kidney Foundation partnership aims to save lives through early detection of chronic kidney disease. (Link)

Florida Blue partners with Sanitas to run a value-based primary care center in Jacksonville. (Link)

WellSky partners with Google Cloud to accelerate data-driven innovation and integrate cutting-edge AI technology into solutions. (Link)

Trinity Health and Anthem have established an interesting value-based partnership utilizing the Epic platform. (Link)

Saint Agnes Medical Center and Anthem Blue Cross also entered into a similar deal – a new multi-year contract emphasizing enhanced value-based health care and improved data connectivity. (Link)

Cigna plans to launch a weight loss management program through its health services organization, Evernorth. (Link)

The Mayo Clinic Diet introduces a medical weight loss Rx program, offering a specialized approach to weight management. (Link)

Midi Health collaborates with Ambience Healthcare to enhance women's health specialty services with the use of generative AI. (Link)

Navina integrates its AI-powered diagnosis insights directly into the Epic EHR system, enhancing clinical decision-making. (Link)

Hims & Hers partners with Hartford HealthCare to provide access to in-person care services. (Link)

CVS Health collaborates with Wexner Medical Center to work on an Accountable Care Organization (ACO) initiative. (Link)

Maven Clinic employees now have access to WellTheory's autoimmune disease care platform, marking WellTheory's first enterprise partnership. (Link)

myPlace Health, focusing on PACE (Program of All-Inclusive Care for the Elderly), has opened its first care center in Los Angeles. (Link)

Frame establishes a partnership with Privia, aiming to enhance healthcare delivery and patient engagement. (Link)

Papa introduces new impact programs designed to add value for health plans, focusing on improving member engagement and outcomes. (Link)

Florida Blue collaborates with Sanitas to establish a value-based primary care center in Jacksonville, aiming to improve healthcare access and quality. (Link)

Monogram Health on LinkedIn announced a partnership with Aetna (don't forget CVS was a new strategic backer in Monogram's January 2023 $375M funding round) and also announces a collaboration with Millennium Physician Group in Florida back in Jan. to manage thousands of Florida patients dealing with chronic kidney disease. (Link)

Bon Secours Mercy Health and Compassus announce a partnership to provide home care and hospice services, aiming to enhance patient support and care continuity. (Link)

Florida Blue collaborates with Sanitas to establish a value-based primary care center in Jacksonville. (Link)

RadNet and JVS SoCal create ImagingWorks, an innovative partnership to launch career training programs for medical imaging. (Link)

AT&T's 125,000 employees gain access to fertility and family-building benefits through Maven Clinic. (Link)

Cityblock extends its services to New York Medicaid members through a partnership with Fidelis Care, focusing on comprehensive healthcare for underserved communities. (Link)

Biofourmis and WellSpan Health collaborate to deliver high-quality, hospital-level acute and post-discharge care to patients at home, leveraging advanced technology. (Link)

PACE-focused myPlace Health opens its first care center in Los Angeles, enhancing services for the elderly. (Link)

Frame partners with Privia Women's Health, focusing on improving healthcare delivery and patient engagement. PWH patients will have access to Frame's services to support their pre-pregnancy, fertility and infertility needs. (Link)

Nema Health, a virtual clinic for PTSD, partners with Horizon BCBSNJ to expand access to mental health services. (Link)

Cigna and HelloFresh team up to offer a meal kit benefit in employer plans, aiming to support healthy eating habits. (Link)

Key Physicians selects Infina Connect's Intelligent Care Coordinator to improve healthcare referral management across the Triangle area. (Link)

care.ai and Virtua Health collaborate to expand the hybrid care providers' virtual care offerings, integrating advanced AI solutions. (Link)

Orlando Health and Acadia Healthcare hold a groundbreaking ceremony for a new behavioral health hospital to serve the greater Orlando area. (Link)

UCI Health and Lifepoint Rehabilitation break ground on a new inpatient rehabilitation hospital in Orange County, CA. (Link)

Waltz Health ventures into Medicare Advantage by forming a partnership with SCAN Health Plan, focusing on pharmacy benefits and patient access to medications. (Link)

Highmark Health and Epic collaborate to enhance payer-provider collaboration with insights powered by Google Cloud. (Link)

GE HealthCare partners with Biofourmis to broaden its virtual care and at-home solutions, focusing on patient-centered healthcare delivery. (Link)

Talkspace and Wheel enter into a strategic partnership to offer a comprehensive virtual care platform that integrates physical and mental health services. (Link)

Humana announces a strategic partnership with Veda to enhance the accuracy of provider directories. (Link)

Quantum Health collaborates with Vanderbilt Health Affiliated Network, expanding its healthcare navigation services to Tennessee employers. (Link)

Uptiv Health and Lyn Health have partnered to integrate infusion therapy with chronic care management. (Link)

NextGen Healthcare teams up with SCHIO to assist California providers in navigating the state's new data exchange regulations. (Link)

Brightside Health expands access to Medicaid and Medicare for greater telemental health coverage. (Link)

Finance and M&A Updates:

Healthcare financial summaries and interesting merger activity

Optum Oregon is acquiring large multispecialty group The Corvallis Clinic. With more than 100 providers across the clinic, and more than 500 additional support staff, according to the same public notice, Optum Oregon would employ the current physicians and other providers currently employed at their 11 clinic locations in Albany, Corvallis, Lebanon, Lincoln City, Newport, and Philomath areas. Read Optum's petition to the Oregon State Health Authority here.

Atlantic Health System and Saint Peter's Healthcare System plan to merge:

"Under the terms of the LOI, Atlantic Health System would make significant investments in Saint Peter's and the service area, helping Saint Peter's to continue to evolve as a high-quality, resourceful, and comprehensive healthcare system serving communities throughout central New Jersey. The two systems would work collaboratively to create significant synergies between the two organizations including transitioning Saint Peter's onto Atlantic Health System's electronic medical record system.

Cardinal Health is acquiring Specialty Networks for $1.2B – "Specialty Networks is an integrated platform focused on independent physician practices across urology, gastroenterology and rheumatology as well as life sciences organizations. It lists 11,500 specialty providers across 1,200 independent practices" (Link)

The RadNet-Dignity Health joint venture acquires 7 imaging centers from a Cigna company, expanding its imaging services footprint. (Link)

Novo Holdings agrees to purchase drug manufacturer Catalent for $16.5 billion, potentially expanding production of the weight-loss drug Wegovy. (Link)

Premier, Inc. announced the completion of its strategic review process. (Link)

98point6 Technologies announces the acquisition of Bright.md to fast-track the launch of its asynchronous care module. (Link)

Johnson & Johnson faces accusations of mismanaging its employees' drug benefits. (Link)

UCSF Health has expanded its network by integrating two of San Francisco's longest-serving hospitals. It acquired the two hospitals from CommonSpirit's Dignity Health, likely (my speculation) as part of a broader initiative for the NFP to tighten up its portfolio. (Link)

HCA Healthcare subsidiary Surgery Ventures acquired two surgery centers in Texas, broadening its surgical services footprint. (Link)

Following a $3 billion merger, Virgin Pulse and HealthComp have rebranded as Personify Health, combining care navigation and health plan administration services. (Link)

Akumin completed its take-private transaction on February 6, becoming a private company wholly owned by Stonepeak. (Link)

Kaiser's preliminary financial results indicate a trend we'll see play out for much of 2024: razor thin operating margins, but massive turnarounds in net margins led by growth in investment returns – non-cash marked-to-market investments. (Link)

Fairview Health Services and the University of Minnesota signed a Letter of Intent for UofM to purchase four key academic health facilities that make up the M Health Fairview University of Minnesota Medical Center — the East and West Bank campuses, M Health Fairview Masonic Children's Hospital and the M Health Fairview Clinics and Surgery Center.

The news comes after Fairview's collapsed merger plans with Sanford and Fairview noting that continued support of the teaching hospitals was financially unsustainable. (Link)

Figures provided by Fairview show the company has invested $1 billion into U of M hospitals since 1997, and it has steadily lost money since the M Health Fairview agreement between Fairview, the U of M and M Physicians was formed in 2018. Earlier this month, Fairview announced it was eliminating roughly 250 positions by the end of the year through a combination of layoffs and attrition.

CommonSpirit bounced back majorly in calendar year Q4 noting significantly improved operating & EBITDA margins. (Link)

Providence settled its lawsuit over improper patient billing and charity care. (Link)

Mass General Brigham also flipped to positive operating margins. Despite a stronger than expected medical loss ratio, 3.2% inpatient discharge growth, 9% procedure growth, and 10% imaging growth boosted its margins for calendar year Q4. (Link)

A New Jersey healthcare system Cooper University Health Care has received a historic 'A+' credit rating, reflecting its financial stability and performance. (Link)

Cotiviti announces an $11B recapitalization agreement with KKR and its long-standing owner Veritas, aiming to strengthen its financial structure and expand its services. (Link)

Nava Health MD, Inc. and 99 Acquisition Group, Inc. have entered into a merger agreement, leading to Nava Health becoming a publicly traded entity. (Link)

PatientFi, a leading payments platform, secures a significant growth equity investment from Questa Capital, which is expected to support its expansion and enhance its offerings. (Link)

Amwell reported a $679M loss for the year but anticipates accelerated growth in 2025, bolstered by a significant defense contract. (Link)

Surgery Partners reported its Q4 yesterday to a muted market reaction. The firm is projecting greater than $3B in revenue and $495M in adjusted EBITDA (~16.5%) in 2024.

…same-facility revenues increased 11.3% in the full-year 2023 versus 2022

…same-facility revenues increased 8.1% in the fourth quarter 2023 versus 2022

Other notable earnings highlights:

ATI Physical Therapy lost less money
Teladoc earnings disappointed yet again and we've seen a marked fall from grace for the once high-flying covid name
Hims and Hers had a huge Q4 and 2024 outlook. Full year highlights:
- 48% subscriber growth to ~1.53M
- 18% increase in average order value
- $872M in revenue (65% growth)
- 82% gross margins (4% improvement)
- Adjusted EBITDA of $49.5M (~$60M improvement)

Innovation Spotlight

Cool initiatives and reasons for optimism

The NEJM published a study on ambient clinical documentation using the recently announced partnership between the Permanente Medical Group and Nabla, noting what appears to be some pretty strong adoption numbers by TPMG's physicians. In total, 3,442 physicians have used Nabla to help with documentation, and 968 of those have used it during 100+ encounters.

TL;DR – ambient documentation is great, letting physicians have more meaningful patient interactions and spending less time on admin work. Patients were also generally fine with MDs using Nabla's tool

It's also crazy accurate!! a review of 35 AI-generated transcripts resulted in an average score of 48 of 50 in 10 key domains

The study also listed next steps for AI ambient players: "Ongoing enhancements of the technology are needed and are focused on direct EHR integration, improved capabilities for incorporating medical interpretation, and enhanced workflow personalization options for individual users…ongoing attention must be paid to ensure that the technology supports clinicians while also optimizing ambient AI scribe output for accuracy, relevance, and alignment in the physician–patient relationship."

Interesting applications of Apple's new mixed reality headset Vision Pro are surfacing – like in diagnostic imaging; pretty dang cool. I'm incredibly excited to see potential new use cases for mixed reality from the surprisingly well-polished product. I mean, radiologists are pretty used to staring at screens in dark rooms so maybe this means they can actually get some sunlight!

The first Neuralink implant called Telepathy was implanted into a willing recipient. Wild times we live in, fam. (Link)

Fierce Healthcare released its Fierce 15 list of innovative and notable startups, including Ophelia Health, Abridge, Yuvo Health, Oshi Health, and Thyme Care. (Link)

An Oshi Health case study conducted by the AMA's Future of Health series was an interesting look at a forward thinking company in the GI space. (Link)

Abridge posted a cool video on Twitter of its work with Emory Healthcare and how it has helped shape 3,000+ clinicians' day to day. (Link)

Hippocratic AI launches a Nurse Advisory Council to ensure the safety of Large Language Models (LLMs) in healthcare. (Link)

Fundraising Spotlight:

Recent notable funding rounds. AI-generated. Non-exhaustive.

Accompany Health raised $56M to work on a hybrid offering aimed at complex, low-income populations. Personally I think it's pretty awesome to see efforts like these supported with a huge swath of capital, and I hope dollars continue to go where they're most sorely needed. (Link)
Cohere Health, working on prior auth and products for utilization management purposes, raised $50M. (Link) (More Context)
Isaac Health nabbed $5.7M in a seed round to scale its virtual brain health and dementia care services, aiming to make comprehensive brain health services more accessible and effective. (Link)
Avante raised $10M to do vague things but planning to tackle big problems in healthcare. (Link)
Care Continuity secured $10M to turbocharge patient navigation, focusing on improving patient outcomes and healthcare efficiencies through enhanced navigation solutions. (Link)
Vektor Medical, a pioneer in non-invasive, AI-based arrhythmia analysis technology, raised $16M (Link)
Elephas garnered $55M to advance its live tumor imaging technology, aiming to transform cancer treatment with real-time insights. (Link)
Ambience raised $70M, bringing its total funding to a whopping $100M as the land grab in AI ambient documentation continues. Nabla raised $24M in early January while Abridge raised $30M in late 2023 – all in very recent memory. Meanwhile, there are plenty of low-quality dupes on the market. As you can probably tell, I'd expect to see significant consolidation in this space. (Link)
Headlight launched with $18 Million in funding, bringing on board Amazon Pharmacy executives to simplify the mental health journey for patients. (Link)
Elidah secured Series A funding to further its innovations in women's health, specifically addressing urinary incontinence. (Link)
DeepLook Medical raised $1.7M for its AI-driven technology aimed at enhancing cancer detection in dense breast tissue. (Link)
Firefly Bio unveiled $94M to develop new ADC (Antibody-Drug Conjugates) cancer medications, showcasing a novel approach in the field. (Link)
Unlearn secured $50M to further develop its digital twin technology, which aims to accelerate clinical trials and personalized medicine. (Link)
Dina raised $7 Million to expand its digital care-at-home platform and network, aiming to enhance home healthcare services. (Link)
Ezra raised $21 million to make Full Body MRIs more accessible, democratizing advanced diagnostic imaging for better health outcomes. (Link)
Medical Microinstruments secures $110M for surgical robotics advancements. (Link)
Reveleer scores $65M to scale its AI-enabled data and analytics platform. (Link)
Fabric announces $60M Series A led by General Catalyst. (Link) (GC Breakdown of investment)
b.well Connected Health raises $40M to scale its platform unifying patient data. (Link)
Bioptimus launches with $35M to create an AI foundation model for biology. (Link)
Oula banks $28M to build out maternity care clinics, backed by Chelsea Clinton. (Link)
9amHealth raises $9.5M Series A extension led by The Cigna Group Ventures to expand to employers nationwide. (Link)
Siftwell Analytics secures $5.8M in funding round for digital health analytics. (Link)
UnityAI secures $4 Million in seed funding to revolutionize hospital flow. (Link)
Maia Oncology picks up $4.25M to build out a virtual primary care clinic for cancer patients. (Link)
Menopause Startup raises $3.3M in funding led by UPMC. (Link)
RapidClaims launches with $3.1M using AI to automate healthcare claims. (Link)

SPONSORED BY ADONIS

My Major Trends and Challenges Briefing hosted by Adonis is almost here!

As a reminder, it's on March 6th at 2:00 PM EST.

I'll be breaking down the future of managing costs, boosting patient satisfaction, achieving sustainable growth, and how RCM and AI are seriously changing the healthcare industry in 2024.

A lot of what I'll share is based on our recent study involving over 100 leading experts in Finance, Operations, and Revenue.

Get ready to learn and take notes – there's still time left to register!

HOSPITALOGY TOP READS FROM FEBRUARY

My favorite healthcare essays from the week

Oscar's Pirate Ship: How the insurtech is reinventing itself in 2024
Analyzing Oak Street Health's growth - from startup to CVS asset.
The WSJ's profile of 23andMe's rapid descent from a $6B company to almost nothing – At the center of 23andMe's DNA-testing business are two fundamental challenges. Customers only need to take the test once, and few test-takers get life-altering health results. Really fascinating read for those with a WSJ subscription. I respect Anne Wojcicki for sticking to her guns though.
Matthew Holt – The Money's in the Wrong Place. How to Fund Primary Care
VMG Health's Ambulatory Surgery Centers Year in Review is a must-read for anyone in the space.
Weaver's Health Care Valuation 2023 Year in Review
Chartis' latest report on the dire state of rural hospitals. Can you call it a crisis if it's been happening for 15 years?
The Xealth 2024 Trends Report is a good look into the future of digital health and what's top of mind for health systems in 2024. (Link)
Modern Healthcare's 40 Under 40: Meet the influential young leaders in healthcare as recognized by Modern Healthcare. (Link)
VMG Health (my old firm, and some of my old colleagues!) wrote a really nice breakdown of the oncology space from an investment standpoint including recent private equity and corporate-backed activity. (Link)
Primary Care: the mother of all APIs
The wild and magical world of claims
A good write-up from the Commonwealth Fund on FQHCs and how they can transition to value-based care.

JOBS IN HEALTHCARE

Here are some jobs that I'm curating for the healthcare industry. You can see the full list of jobs I've curated here. If you're looking to hire, use the promo code HOSPITALOGY to get your first job listing free on my curated job board.