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What a week for Hospitalogy. On Thursday, I joined 49 other thoughtful, wonderful folks across the value-based care ecosystem. Together, we dove headfirst into the deep end and held some lively, energetic, passionate discussions (with maybe even a few F bombs thrown in) around where the future is headed, and how we can emerge from the muck of the past. The consensus from the day was…we're in the second inning of value-based care. And that things in an industry like healthcare move slowly…until they converge all at once. We had some amazing, candid and refreshing discussions around what's working and what isn't - and to preserve the sanctity of the space, I won't be sharing those discussions in the newsletter or anywhere else. What happened in the room in Austin, Texas, stays in that room. The event was an incredible learning experience for me, and feedback from folks who attended was awesome. Next time around, I'll be providing more space for networking and more breathing room throughout the day along with other useful tidbits of information. Thanks to everyone who participated - I had a blast meeting all of you and moving the needle forward in healthcare. I even got Paul Keckley - the godfather of healthcare content creation (who has been an incredible, huge supporter of mine) to throw up the hookem with me. Huge for the program. |
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THE WEEKLY EXECUTIVE SUMMARY |
Notable moves, policies, and strategies from around healthcare. |
Premier is going private in a $2.6B sale ($28.25 per share) to Patient Square Capital. Premier operates as a key player in the medical supply chain space, and its GPO is the 2nd largest in the country by staffed beds, behind Vizient. The sale comes at a time when medical supplies inflation is looming for hospitals and health systems nationwide. Premier Health as a whole had been conducting a strategic review which involved plans to sell two subsidiaries - Contigo Health and S2S Global - and now culminated in a take-private transaction. Premier divested S2S in October 2024 and reports results without Contigo, indicating its plans to divest by the end of 2025. I wonder if Patient Square Capital now finds another home for Contigo… - On a forward looking basis, Premier was expecting to generate ~$1B in revenue and ~$240M in adjusted EBITDA (down from $260M in FYE 2025), meaning multiples (on public-facing guidance) of 2.6x and 10.8x, respectively.
- Patient Square Capital's portfolio includes several marquee healthcare companies and the investment firm acquired another medical supplies related firm in Patterson Companies.
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More likely than not, we're going to see ACA subsidies extended in some short term type of way as this issue becomes a sticking point in the looming government shutdown, though subsidies will likely be modified in some way: - 'one modification Republicans have discussed is requiring ACA enrollees to have "skin in the game" by making them pay a minimum premium and barring zero-premium plans that are ACA-compliant but that critics contend fuel fraud.'
- 'Another potential change is limiting the tax credits so that enrollees who earn above a certain income level are not eligible. Any extension is also likely to be only for a couple of years, not permanent like Democrats would prefer.'
Aetna launched and is now expanding a payor-provider collaborative model called the Clinical Collaboration program. The managed care player is targeting implementation in 10 hospitals by the end of the year with goals to reduce length of stay by 5% and 30-day readmissions rates - a patient initiative both payors and hospitals can get behind. The program comes at a time when the AHA is blasting Aetna for its 'level of severity inpatient payment policy.' - On CVS related news, Omnicare, CVS' senior / long-term care pharmacy services segment, filed for chapter 11 bankruptcy after being on the hook for a $949M fine stemming from prescription drug fraud (Omnicare was found to be auto-refilling expired or un-refillable prescriptions). CVS acquired Omnicare for $10B in 2015. What else did CVS acquire for around $10B? (Sorry, can't help myself)
On the day of the Hospitalogy VBC retreat (they wouldn't let me break the news though, smh) Harbor Health announced a major expansion of its footprint, acquiring 32 Texas-based clinics from VillageMD. Harbor's model is fascinating as they're rebuilding and rethinking the payvidor model from scratch, and as we learned at the Hospitalogy VBC retreat, density is key when building out this kind of model. The 32 sites will serve to add density to Harbor's growing footprint in central Texas, with 10 clinics in Austin, 10 in San Antonio, 6 in El Paso, and 6 in Dallas. We also saw a little snippet on Harbor's scale, GTM, and value prop here: - We'll continue to work with Texas businesses to offer large employer health insurance plans for organizations with more than 50 employees. In addition, in November 2025, Harbor Health will be on healthcare.gov, the Individual Insurance Marketplace, offering fully insured individual and family health plans. Harbor Health plans cost 10% to 20% less than most other insurance plans, allowing consumers to retain more of their hard-earned money on the road to better health.
- "Our vision is to be the best 'pay-vider' in Texas, and this significant acquisition allows us to see that vision more clearly, essentially overnight," said Tony Miller, Harbor Health Co-Founder and CEO. "With a broader statewide presence, we are now positioned to serve up to 14 million Texans with care and coverage, up from 1.6 million currently. For us, that means more consumers and employers across the state can save money and receive high-quality care."
Virta Health seems to be inching closer to going public as it continues to announce its growth trajectory and provide strategic updates around its biz. In January, Virta Health hit 60% year over year topline growth on more than $100M in annualized revenue, working with 550 organizations and covering 12M lives. Now on September 22, Virta released an update to those figures, noting 80% year over year growth (in September? Year to date?) and $160M in annualized revenue to the same number of organizations and lives. Virta's model revolves around the idea of not just managing chronic disease, but reversing it altogether and providing value to employers and other customers by keeping individuals off GLP-1s - We also saw a flurry of hospital related M&A deals in the past week or so. It's like we go back to school and everyone is suddenly down for dealmaking - and consolidation - again (many in the northeast)! - Comanche County Memorial and Southwestern Medical Center are merging to create a new 2-hospital health system in Oklahoma called Memorial Health System of Southwest Oklahoma.
- UPMC is planning to acquire 3 hospitals and associated assets from Trinity Health, UPMC's first market entry into Ohio
- Hartford HealthCare will acquire 2 hospitals from Prospect Medical during bankruptcy proceedings for ~$86M, bringing the system up to 9 total hospitals. The purchase price is down from $435M (!!!!!) Yale New Haven initially offered for them, then subsequently sued to get out of after opening up the books. Yikes.
- UConn Health is in talks to acquire 3 hospitals for ~$400M, one from the aforementioned Prospect bankruptcy proceedings while the other two are community assets. Together, per the reports, the move may establish a new public health system in Connecticut.
- Westchester Medical and Bon Secours Mercy Health ended their joint venture and as a result of the unwind, WMCHealth, which has been managing the facilities, will assume control of 3 BSMH hospitals and associated nursing home facilities. The facilities will no longer operate as Catholic entities.
- Dartmouth Health will acquire Littleton Regional Healthcare, a small 25-bed critical access hospital. The press release is very careful with its language not to mention that this is most likely a member sub acquisition, rather leaning into 'affiliation' and 'preferred partner' language. Let's call a spade a spade fam.
Capital Rx is in talks to raise $400M led by Wellington Management and General Catalyst per Axios (paywall). McKesson is hosting its investor day today and I'll be keying in on its investor presentation and remarks on its vertical integration strategy given its market leading position with 3,300 affiliated providers in its US Oncology Network (and with oncology expected to continue to be the largest therapeutic category measured by drug spend…womp womp). Drug distributors have been some of the largest vehicles driving strategic acquisitions of physician groups - primarily in specialties with high drug spend or tie-in's to oncology. Here's the investor presentation deck for your perusal. You should also pay attention to what McKesson is saying regarding specialty drug spending and growth, and what areas it expects to see the most expansion - specialty drug spend is where the puck is in healthcare right now. There is a ton of good info on the state of the specialty market and entire healthcare ecosystem. |
RevSpring acquired Kyruus Health as a final footnote to today's news roundup. |
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SPONSORED BY ARBITAL HEALTH Put this new report at the top of your reading list! At the 2025 Arbital Health Summit, more than 100 leaders gathered to discuss what is and isn't working in value-based care. Candid, practical conversations pointed toward real changes needed in 2026. Arbital assembled the key ideas, examples, and lessons in their 2025 Summit Insight Report, capturing what was said and preserving it as a resource for anyone shaping risk contracts, building VBC infrastructure, or planning for 2026. P.S. we also covered this topic in my recent deep dive with Arbital.
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My favorite reads & resources from the week |
- This talent pipeline plan from Northwell's Michael Dowling was an interesting read into how health systems are thinking about trade school to develop clinical talent like nurses and medical assistants.
Almost 80% of the clinical workforce is leveraging AI, but only 39% are doing so effectively. I collaborated with Chegg Skills to explore solving that problem, and more, by leveraging upskilling programs that offer role-specific training for healthcare teams. Get my report here!* - From the WSJ - this overview of Novo Nordisk and its strategy emerging from copycats and maintaining a market-leading edge in the GLP-1 space is fascinating. For you podcast folks out there, Acquired did a great pod on Novo Nordisk and the history of semaglutide as well.
*This read is brought to you by one of my brand partners who help make this newsletter possible! |
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Random personal anecdotes and musings from me |
The Ryder Cup is this weekend and I can't wait for the thrilling team-based golf event. This type of energy and environment is what golf is all about, and I'd love to see the PGA Tour adopt similar events throughout the course of the year. Here's hoping for an American victory.
Man oh man, as I'm writing this I'm seeing the news come out about DJ Lagway and John Mateer, the quarterbacks for Texas' two next opponents (after the bye week). Last year it feels like we got a free pass for much of the season in facing many backups and I hope it doesn't happen again. I'm all for collecting W's but man, I'd rather watch some good games. |
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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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