George Boghos is CEO of Imagine Pediatrics, a company founded out of former CMS Innovation head Adam Boehler’s Rubicon Partners fund. Imagine is a wraparound tech-based service helping some of the sickest kids in America–think kids on feeding tubes, cancer, mental health conditions, autism and more. They provide telehealth and on the ground services (like EMTs) that supplement typical pediatrics offices. the goal is to improve the kids’ and parents’ experience and of course save money on emergency admissions, and hospital admissions. It’s a new idea but one that certainly is having a moment as we need to support families and improve care for kids. And hopefully do it for less money. George told me how it all works. Not simple!–Matthew Holt
VC returns: Well, it’s stock trading…
By MATTHEW HOLT
There’s been a lot of discussion lately about whether digital health is a legitimate place for venture capital. There have been lots of huge failures, very few notable successes (and certainly no “biggest companies in the world” yet), while some real giants (Walmart/Walgreens/Amazon) have come in and then got out of health care.
I don’t have to tell you again that most of the publicly traded digital health companies are trading at pennies on the dollar to their initial valuations. But I will. Look at that chart below.
Heck even Doximity– which prints money (45% net margins!)–is trading at well under its post IPO high. My quick overview is that there are not very many publicly traded companies at unicorn status. With really only Doximity, HIMS and Oscar being very successful. (We can have a separate argument as to whether Tempus and Waystar are “digital health”). And there are many, many that are well off the price they IPOed at. All that at a time when the regular stock market is hitting record highs.
Which makes it interesting to say the least that Define Ventures just came out with a report saying that in general digital health has done well as a venture investment and that it was likely to do even better, soon.
The report isn’t that long and is well worth a read but their basic argument compares digital health venture investments to those in fintech and consumer tech. Essentially it took digital health a lot longer to get to 10% of total venture investment than fintech or consumer tech, but it got there after 2020. Now more than 10% of all VC backed unicorns out there are health tech companies. Yes there was a retrenchment in 2022-3 but health tech investment fell less than other sectors in 2022-3 and is basically back in 2024.
The Define forecast forecast is interesting (it’s the chart below). Define posits that it took 4-5 years after the fintech and consumer tech sectors became 10% of VC dollars for them to start pumping out exits and IPOs. There are 30-50 each in those sectors now, but health tech was ahead of that with 18 exits already in the first 5 years after getting to 10% of VC dollars, and those exits were on average double the size of the fintech/consumer tech exits. (Although to be fair the health tech exits were when the market was higher after 2020)
In fact their analysis is that capital returned was about 10x investment. You might say, but hey Matthew didn’t you just show me a chart that most of those 18 companies were public market dogs? And you’d be right.
Continue reading…Ian Morrison
I got the very sad news today that Ian Morrison died peacefully at home yesterday. He had been sick and in hospice for some time but a few months back he told me that he was going for Jimmy Carter’s record. Ian was my first boss in American health care when I worked for him at Institute for the Future and he was as kind and lovely as he was funny and knowledgeable. I was very glad that when I started THCBGang during the pandemic that he was a regular member.
Ian spent decades working with everyone across health care in American and internationally, but as he used to say essentially was paid to insult people. That he did it so humorously and usefully was the reason he kept being invited back. Any Ian Morrison keynote at a big health care conference was both a chance to learn something and laugh hysterically.
He also never ignored the chance to help those trying to make health care fairer and more equitable, serving on the boards of Martin Luther King Jr hospital, the California Healthcare Foundation and many others. He remained a jovial Glaswegian socialist at heart.
Ian liked to say that he went from Scotland where death was imminent, to Canada where death was inevitable, to California where death was optional. Sadly that last crack wasn’t quite true.
My heart goes out to his wife Nora and their children and grandchildren. There’ll be a more formal obituary and a celebration of his life in the days and weeks to come–Matthew Holt
Jonathan Bush, Zus Health
It’s always fun to chat with Jonathan Bush. You kids today may not remember that he was the first CEO to take a cloud-based (Health 2.0!) company public back in 2007! Athenahealth didn’t end up challenging Epic because a cosmically evil hedge fund took it (and him) down as it was on its way to try to do that, but Jonathan has moved on and is now building a clinical data integration company called Zus Health. We talked Zus, digital health, whether there will ever be value-based care and more. 20 mins of digital health gold right here–Matthew Holt
Peter Yellowlees, AsyncHealth
Peter Yellowlees MD is CEO at AsyncHealth–this is a new company that is doing the intake interview for a psychiatrist or psychologist session. Peter demos how the AI agent asks questions, how a patient answers in real time. Then after submitting the answers, the AI creates both a full transcript in the back end, and then a summary which the clinician can use in advance of seeing the patient. You’ll see the real time transcript and patient summary. Very accurate and impressive. That saves a significant amount of time in the intake process and helps the patent get to the right type of treatment. It’s early days for Asynch Health, but you’ll quickly get the idea about how this use of AI might change one part of care–Matthew Holt
Aniq Rahman, Fabric Health
Aniq Rahman is the CEO of Fabric Health. In basically two years Fabric has changed its name (nee Florence) bought some health tech standouts in the fields of symptom checking and asynchronous care (Gyant, Zipnosis), a medical group (Team Health’s virtual care) and the telehealth part of Walmart (MeMD). In the 2010’s Aniq built an analytics company acquired by Oracle & turned to health care after seeing his father go through the system. What he is trying to build is a company that can help providers (and now others) go from soup to nuts in helping a consumer online. He explained how those pieces fit together to match the look and feel of the customers to support their staff but also to augment them with Fabric’s people where needed. Now, with the Walmart/MeMD acquisition they are adding employers (and payers and even life science companies). There’s a lot to be done here, and we had a great chat about where consumers are going to get their care, what else Fabric needs to do (Aniq is thinking provider directories next!), and what the secrets are about General Catalyst’s work at Summa Health (sadly not much inside info!!)–Matthew Holt
Ain’t no shame in the heart of the VC
By MATTHEW HOLT
It’s JPM week. That means a ton of startup bros wandering around San Francisco wondering who all the biotech guys and investment banker greyhairs are and why they’re still wearing suits.
Unlikely to be wearing suits are the digital health kids and the VCs they are trying to hunt down. The glory days are long gone. Athenahealth and Venrock are no longer having competing parties (or parties at all) and most of the starving startup kids looking for free booze and food are trying to scrounge invites to law firms who are still charging $1500 an hour for associate time before their clients notice that ChatGPT will do the same for $20 a month.
But venture in digital health continues on, even if much of it is subtexting cramdown M&A, such as last week’s General Catalyst deal funding Transcarent’s takeover of Accolade. But I’m not really here to talk about the digital health VC market per se.
What I do want to talk about is who is getting VC. This was prompted (to my slow Small Language Model) by a female friend who has been a CEO and was once a star at a fast growing digital health company. She told me that being female was now an active hindrance to raising money. Every time some tech bro on LinkedIn says how they raised $XXm in 12 minutes with no pitch deck, you’ll see lots of female CEOs explode in anger.
You don’t need me to repeat the numbers. Women & minorities find it hard to raise money. First time founders get a massive run around. Even when things were crazy in 2020-2022 the survey of startups I ran showed that it was very hard for early stage companies to raise money. Now it’s the apocalypse.
That’s not to say some female CEOs aren’t raising. Just last week Nema Health run by former Health 2.0 star intern (and now practicing Psychiatrist–which may be more relevant!) Sofia Noori raised $14m Series A to expand its amazing PTSD cure program. Maven’s Kate Ryder raised another $125m late last year to keep expanding their women’s health program, and must be viewing that elusive IPO sooner or later. And at a JPM party I ran into some of Joanna Strober’s team, reminding me that I thought Midi Health had perhaps raised too much money when it pulled down another $60m last year–but apparently it is going gangbusters. There’s also Equip for eating disorders with Kristina Saffran & Erin Parks at the helm (over $95m in so far) and doubtless a few more I’m forgetting. But in general they are the exceptions.
What’s not the exception is the tech bros raising for AI. Obviously the big players here are OpenAI, Anthropic et al pulling down billions to build their AI infrastructure. Anyone with a 401K is probably hoping that all works out given how much of the value of Nvidia, Tesla, Google, Meta, Microsoft & Apple seems to be based on a perhaps mythical AI abundant future. But there’s plenty in health care. Just this week Innovaccer ($275m), Qventus ($105m) & Truveta ($320m) all backed up the truck, all to combine data, AI and hope it will solve some of health care’s troubles.Those CEOs are men. But that’s not what I am complaining about.
You can also be a man and get away with a lot more. Hippocratic AI’s CEO Manjul Shah ran his last company HealthIQ into the ground. He screwed over suppliers, employees and customers to at least the tune of $17m in unpaid bills according to Katie Jennings at Forbes, then took another $170k personally out of the bankrupt company after he’d left. Was he a pariah to the investors who’s lost over $200m? Not in the least. The same investors A16Z and General Catalyst gave him another $50m right away to build an AI nurse chatbot company, and apparently health systems are lining up to buy it according to a podcast he was on with Julie Yoo of A16Z last week. This week Kleiner Perkins (and more) kicked in another $141m.
You might also have noticed that Ali Parsa who went through over $1 billion and crucified all his public market investors too when Babylon Health cratered is also back. His new company – an AI assistant launched with some famous doctors including Shafi Ahmed – is called Quadrivia AI. Funding isn’t clear but Sifted found some filings that indicate a Swedish VC is behind it.There’s also more than a little controversy about whether Babylon’s demise was just a series of bad business decisions or Parsa was lying about the tech. (I had Parsa on a couple of panels and always found him deferential and charming, but you can google Sergei Polevikov’s opinion!)
Look, unlike Lisa Bari at The Health Tech Talk Show, I love the idea of getting AI to answer patients’ questions, call them with information and generally use bots to add “abundance” to the health care workforce. I mean it’s just an extension of what Alex Drane and Eliza (and Silverlink & others) were doing 15 years ago. And there is huge possibility in using AI to actually diagnose and treat. I’m sure Parsa’s new AI bot also has the potential to improve physician care.
But should it be that easy for guys like Shah and Parsa to immediately get back in the game given the chaos they left in their wake? Shouldn’t VCs have some qualms about anointing as saviours the very people who just screwed over their previous customers, partners, employees and investors?
But I guess we have our answer already. Adrian Aoun took a big swing with Forward and closed it after losing $650m and leaving patients in the lurch with no notice and 200 people unemployed. He was back on a podcast days later saying his investors wanted to give him more to start again. And the biggest loser, chaos agent and conman of recent years, Adam Nuemann of WeWork infamy, was back very soon after with another $350m for yet another real estate startup.
Neumann’s benefactor in the latest round was A16Z’s Mark Andreesen. Andreesen also famously helped fund Trump’s election in 2024. That’s the biggest comeback of someone with no morals, ethics or competence ever.
So I guess at least some VCs have decided, there’s no shame.
(If you’re wondering about this piece’s title, I am riffing off this blues classic)
Take a deep breath: Trump may not mean that much change–for health care, that is
By MATTHEW HOLT
At some point I had to crawl out of my hole and put pen to paper on the election debacle that just took place, and what the ensuing lunacy might be like for the health care system. So this is my attempt to do just that.
It’s really hard to understand why Trump won this election or why Harris and the Democrats lost. There was a lot of weirdness going on. Remember that before the vote Harris was generally praised for running a steady campaign, the Democrats had tracked to the right on immigration (trying to pass what IMHO was a horrendous bill ), and Harris kept talking about having a Glock, being a prosecutor and campaigned with a Cheney. The swing states (which vote at a much higher proportion than everyone else) all (with the narrow exception of Pennsylvania) voted for Democratic senators. For President they only went 3% against where they were in 2020. Even weirder was that hundreds of thousands of Trump voters didn’t appear to vote down the ballot at all. Yet nationwide the swing was big enough for Trump to win the popular vote. (If you really want to dig in, Charles Gaba has put together a great spreadsheet)
The simplest explanation is that the teeny middle in American politics voted against the incumbent. And the “middle” is getting teenier. In 1964 Johnson got 61% of the vote. Nixon (1972) and Reagan (1984) won with nearly 60% of the vote. Obama’s big 2008 victory was with just 53% of the vote and he won by 7%.
Biden won in 2020 with just over 51% and Trump will end up winning while likely getting just less than 50% of the vote. This isn’t an overwhelming mandate. It’s a small minority of voters switching because they are pissed off with the status quo. This year the bug bear was inflation, which really wasn’t Biden’s fault even though he got the blame. It also appears that a decent slug of Arab-Americans and far left Democrats stayed home or voted for Jill Stein because of Gaza.
And let’s not forget the impact of the Electoral College which reduces turnout outside of swing states (not exclusively). Surely if we had a popular vote in which every vote counts, turnout would be higher, including in the big 2 states that are Dem strongholds (NY & CA).
However, even if you think it’s inconceivable that a majority would vote for Trump because of what happened in 2016 to 2021 (especially on January 6, 2021!), apparently that’s not enough of a disqualifier. He’s going to be President.
So what happens next? Particularly in health care.
My expectation (and hope) is that this is a snake eating its own tail. There are so many repugnant egos circling around Trump that it’s more than likely they’ll turn on each other, and little to nothing gets done. That doesn’t mean nothing will happen.
Continue reading…Andrea Ippolito, CEO, Simplifed
Andrea Ippolito has combined her personal experience as a mum struggling with breast feeding, and her professional career as an entrepreneur and engineer at Athenahealth building integrations with EMRs. She’s now the CEO of Simplifed which has built a network of lactation consultants, and much more, and has placed it in the workflow of that most important part of health care — pre and post partum. How did she do it and what’s it like? She told and showed Matthew Holt.
The big guys can’t do HLTH right
By MATTHEW HOLT
This is the week where the digital health landscape debunks to the HLTH Conference in Vegas to meet, do deals, listen to superannuated rappers and generally have a great time. Speaking as the guy who ran the digital health conference before HLTH emerged, I remain extremely jealous of how Jonathan Weiner, Rich Scarfo, Jody Tropeano and team have managed to pull 10,000 people together when Health 2.0 never got past 25% of that size! (And I won’t even mention the premium price they charge!).
I have written pretty extensively about how digital health has failed to develop an alternate to the incumbent hospital, specialty & procedure-based system. 90%+ of digital health companies are now desperately trying to get the incumbents to buy their stuff. It’s as if Jeff Bezos in 1998 was going cap in hand to Barnes & Noble asking them to put in his new online ordering system.
But there is something else that HLTH has not been shy in doing, and that is giving a place on the stage for big companies to explain what they intend to do to change the health system. Amazon, Walmart. Walgreens, CVS, Optum and many more have used that premium real estate to explain what they are going to do. And much like the digital health upstarts, the reality has been very different.
Almost all of those companies’ new strategies are in deep trouble.
Amazon was going to build a hybrid telehealth/home based delivery platform. It got up and running and had some sizable employer clients. It also had a strong relationship with Crossover Health which had great worksite clinics. Not hard at all to imagine that becoming a nationwide primary care platform that could take risk and really cut into the business of the incumbent non-profit systems. After all Dave Chase at Rosetta Stone has been preaching this forever. But at the first hint of trouble, Amazon cut & run and bought One Medical. It’s as if their play in grocery was to go mass market but then they decided that they could make more money from the high end Lululemon crowd that shops at Whole Foods. Oh yeah, that was their play in grocery too.
Walmart, Walgreens and CVS were all going to create mass-market primary care, and move to accepting risk primarily from Medicare Advantage. I interviewed Walmart’s then head honcho of health care, Cheryl Pegus, on stage at HLTH two years ago when she waxed lyrical about how Walmart was the answer to the lack of primary care all over the deep South and rural America. The joke was that by the time of that panel she had already quit and was moving to fresher pastures at JP Morgan! Around a year later Walmart declared that it couldn’t staff its clinics, was losing a fortune on each one, and it tossed the whole business.
Walgreens paid a fortune for VillageMD, then even more for Summit Medical (which included CityMD in NYC). At one point in late 2021, VillageMD CEO Tim Barry told me that their main issue was the execution risk of having to open more clinics per week then Starbucks did at the height of its expansion. Walgreens made a minority investment then kept doubling down on its bet. But three years later it has written off the whole amount ($8bn or so) and its stock price is in the toilet. It’s worth less now than doctor network Doximity!
Both of these companies and CVS have shown that it’s really hard just to get the basics right opening clinics in retail stores. That’s despite the fact that most Americans have no primary care doc and can’t get an appointment with a regular one, and that there’s a captive audience walking into their stores every day picking up their meds.
CVS has the added issue of trying to integrate a decent sized insurer into its operations just at the time when the Medicare Advantage gravy train looks like it is running out of steam. CVS’ CEO Karen Lynch took over Aetna recently and then this past week was dispatched to the cheap seats herself. (Don’t feel too bad for her, she’s getting $4m a year to “consult” with the board). Two things have hit Medicare Advantage. First the government is starting to look into risk adjustment upcoding. CVS, you may recall, bought Signify Health, a company specializing in sending nurses into seniors’ homes to perform said upcoding. Secondly, Medicare Advantage plans had surprisingly little information about and control over their members who were being cared for by their non-risk bearing delivery system (which is to say, most of it). They appeared to be totally surprised that post pandemic procedure numbers ratcheted up and were powerless to stop it. Well, Wall Street noticed.
Similar problems have hit Optum, the engine behind United HealthGroup’s profitable growth for the past decade or so. It’s not just the biggest health tech company in America, it’s also the biggest medical group owner—even if CEO and bumbling Englishman Andrew Witty doesn’t seem to know how many doctors it controls. They are being exposed in Stat on a weekly basis for basically semi-frequently causing their doctors to lie about their patients’ health status, just as the Wall Street Journal accuses their associated health plan of inventing diseases and procedures—all to bill the government more. You can argue back and forth but it does appear that the strategy of buying every medical group it can see and provider fracking appears to have hit a bumpy road.
So if the venture-funded digital health upstarts are no longer changing the world, and the big retailers and Optum aren’t setting the world alight, who is taking the upper hand? Well, I expect that intermingled with the ex-pop stars and amazingly beautiful actresses on stage this week (sorry, but I love Halle Berry!), we’ll see a rash of big incumbent non- & for-profit systems. Look at their numbers. Procedures are heading up. ERs are filling up. Operations are profitable or in some cases, very profitable, corporate jets are being bought, and “reserves” –AKA hedge funds–are growing well due to being stuffed full of Nvidia stock.
All of which leads me to believe that sadly HLTH isn’t about the future of health as much as it’s a retread of its past. Still, I’ll catch you at the parties if you’re there….
Matthew Holt is the founder and publisher of THCB
