Even after the crash in health care IPOs, there is still too much capital sloshing around and looking for a place to be wasted. Aledade raised an astounding $125 million to support its business of helping independent physician practices enter into "value-based" purchasing arrangements with payers. This firm has raised over $4oo billion in capital and is valued at billions of dollars, all for providing a commodity service in a declining market--the independent physician. Where has it all gone and how will investors ever see a return on it? The greater fool theory is the big hope in most cases. The fools were the public for a few years, but that is over now until the memory of these debacles fades, which it usually does pretty quickly.
One big problem is health care is getting all the different medical records and administrative systems in use to talk to each other and share data effectively. A company called Moxe has raised a fresh $30 million in financing to continue advancing a solution for that issue.
In a return to the early 20th century, over the last couple of decades employers have added onsite medical resources in an effort to lower costs and improve employee health and productivity. Companies providing these onsite medical clinics have raised a lot of capital and one, Hint Health has just raised an additional $45 million in new financing to expand its footprint.
Sidekick Health welcomes new investors, who pumped $55 million into "digital therapeutics", another over-hyped supposedly disruptive health care trend. This involves the typical phone apps, etc. that will instantly make you lose weight, get exercise, manage your blood pressure and blood sugar, etc. The investors who get stuck holding the bag will have a digit for you.
A company called Hello Heart raises a fresh $70 million in capital for yet another app that supposedly helps improve management of cardiac health. I despair about the sanity of venture capital and private equity investors, they just seem to keep making the same mistake of funding companies that don't really do anything clinically worthwhile, but then I remember THEY ARE PLAYING WITH OTHER PEOPLE'S MONEY and they are really good at the greater fool theory--they dump bad investments on some other chump before the problem becomes apparent--see Teladoc, e.g.
Having private investors own health care facilities isn't all bad. They may jack prices up mercilessly, but they don't appear to hurt outcomes for care and may even improve them, according to this study in JAMA. Mortality relatingt to hospitalizations for heart attacks was lower following an acquisition of a hospital by private equity, but there were no changes in spending or quality for other conditions studied.
You may recall how I mock some of the insane IPO valuations and acquisition activity in health care. Here is an example of why. TelaDoc, a large telehealth provider which went public at an absurd valuation, and then wasted huge amounts of money on acquisitions that made no sense, like Livongo, a supposed disruptive care management company, is taking a $6.8 billion impairment charge to write down the value of those acquisitions. The stock price, already socked over the last few months, sunk to an even more depressed, and for shareholders, depressing, level, but at least it is getting closer to its actual value as a company, which might be zero. Don't ever buy hype, especially in health care.
UnitedHealth Group, my former employer, is a health care behemoth. It has pushed aggressively in to the actual delivery of medical care in the last decade and is currently the largest employer of physicians in the country. It now is moving into home health care by purchasing LHC Group for $5 billion. Supposedly these deals will reduce total costs, but I don't believe it, I think they protect profits and profit margins and I doubt they result in better quality either.
TimeDoc Health obtains $48.5 million in new financing for its software product that supposedly simplifies administrative work for physicians and provides care coordination support. Only the 100th product in the market like this, but I am sure it has some truly distinguishing features.
In what has to be one of the strangest deals yet, large dialysis provider Fresenius is merging with two over-hyped and over-valued "digital health" companies oriented to kidney care--Interwell, which has a network of specialists and Cricket Health which supposedly does patient engagement. This apparently will make the conglomeration more attractive to payers and patients. This mess is valued at $2.3 billion.
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
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