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Happy Wednesday, Hospitalogists! I had a chance to chat with Wellvana's CEO Kyle Wailes about the Wellvana-CVS acquisition recently announced, so here's a nice little overview of that conversation. I would love to hear your thoughts on the enablement space after reading more about the deal. Also, as an aside, I've noticed my 'quick notables' summarizing tool has been hallucinating every now and then, and I don't always catch those links. I apologize for making some of you guys think news has happened that actually doesn't even exist, and won't be using a summarizing tool for that section for the foreseeable future to solve for my laziness!! I always want to be transparent with Hospitalogists, and my feet have been dragging on over-leveraging AI to create inferior work product with that section. Onward and upward - please accept my apology. Let's dive in. |
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Inside the Wellvana-CVS Deal |
Talking with Wellvana's CEO Kyle Wailes about their recent CVS MSSP Acquisition |
Wellvana, a fast-growing value-based care (VBC) enablement company with early backing from Martin Ventures back in 2019, acquired CVS' Medicare Shared Savings Program (MSSP) business in early March. Remember these assets were tied to CVS acquisitions of Caravan and Signify over the last few year. CVS will still retain ACO REACH presence within Oak Street Health while it gets board representation and a minority stake in Wellvana. The CVS MSSP business, which as mentioned, changed hands when CVS acquired Signify, and before that Signify acquired Caravan, was an attractive target for the team because of Wellvana's desire and strategy to manage a more diversified book of business across Medicare Advantage (MA), MSSP, and ACO REACH. Sadly, I didn't get the tea on multiples or valuation. Back to Wellvana and what this means for value-based care: I had a chance to chat with Wellvana's CEO Kyle Wailes for a bit about the deal. He shared some great info on the deal and Wellvana as a whole I'll memorialize for you guys here: - The move vaults Wellvana's total managed population to more than one million lives across 40+ states (up from roughly 100,000 in 22 states disclosed in their $84M Series B two years ago, then 24 states right before the CVS deal was announced in March 2025) and brings its medical spend under management to $12.5 billion through 500+ customers and 300+ team members.
- Since its launch, Wellvana has raised $140 million (as of their Series B in March 2023) and built three national ACO REACH contracts
- This deal cements Wellvana's position as one of, if not the largest, VBC enablers serving hospital-employed groups.
Combined, the newly expanded Wellvana manages 16 different ACOs and works with more than 500 hospital and primary care group clients nationwide. to date, Wellvana has saved over $1 billion in Medicare programs. I asked Kyle what differentiated Wellvana and he answered in a few different ways, which I'll highlight below: - Wellvana has a methodical approach to risk and population health grounded in robust actuarial models (Wellvana claims their actuary model is within 1% accuracy on underwriting their risk pools). Kyle noted that the deal only helps with risk underwriting - risk is a scale game, after all. The more scale you have, the more accurate your modeling becomes. The bigger the ACO, the more predictable the medical spend.
- A high-touch clinical model that extends the physician practice well beyond patient visits.
- This model includes documentation management, medication oversight, scheduling, transitional care, and consistent follow-ups to keep patients engaged in preventive care.
- For instance, Wellvana's care team acts as an extension of the practice for the 'in between' moments. The actuary, tech, and clinical teams work together to determine patient risk, and appropriate interventions for patients at the right time, identifying issues or points of emphasis within the ACO at large, and then streamlining clinical best practices day-to-day.
So where does Wellvana NewCo go from here? One of the most valuable outcomes of the acquisition is the enhanced ability to calibrate risk for new and existing providers. Wellvana's expanded footprint also translates to both deeper market density in select markets (local market density and scale is CRUCIAL for risk pool success) and a new wedge into attractive new markets/states, positioning the company to shift eligible providers into enhanced tracks and higher-risk (i.e., potentially more lucrative) programs - once they demonstrate readiness to take on these higher risk tracks. And that's another notable piece to highlight from Wellvana: their team knows it's called risk for a reason, and they don't want to charge blindly into the night for sake of growth and topline gross revenue. Scaling this way doesn't benefit anyone - not the patient, not the clinician partners, and definitely not the enablement firm or its investors. As a risk-bearing entity, you only want to take risk on the 'right' physicians and clinicians. When entering new contracts and opportunities, as Wellvana just did in a very big way, they'll take time to understand who's ready and who isn't for risk. I asked Kyle what exactly that meant, and he gave some great responses I'll summarize here: - It's not necessarily about panel size, although this factor does play a role.
- Being 'ready' for risk means…has this group or physician operated under risk contracts in the past? Can you accurately reflect and report risk to the payor? Every single clinical and hospital is different. In working with health systems and population health, it completely depends on the system, the owned assets, and whether they're engaging in system transformation or playing the old inpatient heads in beds game. For physician practices or even 1-2 physician clinics, flexibility in your model is key.
- The most successful ACOs are getting their patients in to see their PCP 5+ times a year. The extra touchpoints are critical. E.g., Is there a care plan in place for this patient? Are patients in compliance, are there transitional care follow-ups post-appointment and in between visits? All of these elements require disciplined and coordinated care teams.
- Change management is a tough part for physicians and patients. Every physician and clinical team is different, and there's not one lever you can pull to make it all work.
- Transitioning to risk, or determining readiness for risk isn't an overnight thing. It takes time, and it starts with trust and relationships. If you don't have that, then you can kiss sustainable success goodbye. First comes trust, then comes engagement, and these components create the recipe for good business results.
Looking ahead, Wellvana anticipates continued growth with an eye toward achieving greater balance across Medicare, commercial, and even eventually the Medicaid lines of business. For now Wellvana's strategy is to hit and maintain 50/50 membership balance among Medicare programs for sake of diversification, with upside on both ends. Wellvana's objectives as a company are simple, but profound: - Work with more payors;
- Continue their focus on health systems and primary care enablement;
- Drive more savings for their partners; and
- Generate better outcomes for patients
From a bigger picture perspective in value-based care, given the recent CMS/DOGE crackdown on alternative payment models, ending four programs, you may expect to see CMS further consolidate and streamline value-based care programs over time, even rumblings of merging ACO REACH with MSSP. This stroke of pen risk is real for risk-bearing organizations and startups in these arenas, and so for that reason, we will see further consolidation in the enablement space. From Kyle's perspective and to that point, he expects to see higher levels of risk tracks in Medicare over time - MSSP Enhanced and beyond. |
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Random personal anecdotes and musings from me |
Hospitalogy Bracket Challenge Update: Unfortunately, someone whose bracket name is 'Wreck em Tech' is in 1st place in the Hospitalogy Bracket Challenge, with a bracket in the 98.2 %tile. They did, of course, pick Tech to win the whole thing so we'll see if the 3 seed can come through for em! Finally, I wanted to give a big shout out to Hospitalogy sponsor and an AI-enabled value-based care player absolutely crushing it recently - Navina. Shout out to Navina, a long-time Hospitalogy sponsor, on their Series C! Navina secured $55M to scale its AI-driven clinical insights platform, particularly targeting expansion within value-based care. Navina holds partnerships with players like Privia and agilon and they'll use the newly restored coffers to expand their footprint and double down on their AI-enabled capabilities. By the way, and I'm not saying, but I'm also just saying…Hospitalogy sponsors stay winning. I mean I actually haven't tracked it but most of the folks who work with us seem to be doing pretty well. By the way, totally unrelated, but my brand partner's email is keith@workweek.com for sponsorship opportunities. No reason for mentioning that. |
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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