Investors have not yet learned their lesson, as Pearl Health gathers a new round of $75 million in capital for its business of supporting physicians who want to participate in value-based care arrangements.
More money pouring into young health care companies as Dispatch Health gains $330 million in new capital to deliver high acuity health care in a patient's home, rather than a hospital or an ER, which will supposedly save money. It won't. Nothing ever does in health care.
A lot of money is invested in health care startups and growth companies, since health care is 20% of the economy, but the returns aren't always good. Here is another company raising large amounts of capital to keep a marginal business going. Hazel Health provides services to students in elementary through high schools and raised another $51.5 million to support growth.
It may be investors that need the redesign. They just keep pouring money into this digital health crap despite all the losses. Redesign Health claims that it makes money by helping other digital health companies get going. If the whole sector collapses, and it should, it won't matter, but for now the company has just raised another $65 million in funding.
In truth, this seems like more money down a rathole. Google's parent and other investors are putting a billion dollars into Google's health arm, Verily. Apparently want to compete with Amazon or something.
It is like investors have learned nothing from the past two years. Even supposedly smart investors like Morgan Health, which is making a $20 million contribution to LetsGetChecked, which supposedly helps manage patient care in the home. It is a contribution, not an investment, because Morgan Health is highly unlikely to see any return.
The "stupid" model for health care venture capital investing is alive and well. Everside health, which operates primary care clinics and has grown by acquiring other failing health care businesses, some persuades investors to dump another $164 million into the company.
Apparently not even a cute name can save you if you have a stupid business. I constantly bemoan the mis-application of capital and health care is Exhibit A. Olive, another company whose function you would struggle to explain, raised a crapload of money and now has to lay off 450 employees due to lack of a real value to customers. Why did you ever hire that many staff?
Three large employers thought they would change health care by creating a company called Haven. It went nowhere, after a lot of money down the tubes. One was JP Morgan, which then created a division called Morgan Health. Morgan Health has been investing in firms it thinks can control health care costs. The latest is $30 million for Centivo, which helps employers run self-funded plans. I hate to break it to JP Morgan but their health investments look as much like bad ideas as Haven was.
Over the last two decades the pharmacy benefit manager industry got very large, very consolidated and engaged in abusive and deceptive pricing practices. Ultimate payers generally don't trust the current mix of PBMs so we are seeing a new wave of entrants promising a different, more transparent business model. Capital Rx is building new claims and other software to support PBMs and has added a fresh $106 million in financing.
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.
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].