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BFD Expert Voices - Health Tech Deals

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Neil Lindsay stresses that Amazon's promise of convenience is the cornerstone of its health care strategy. Lindsay, SVP of Health Services, met with Aaron this week on the sidelines of HLTH as part of our  "1 big meal" interview series.

Why he matters: After One Medical founder and former CEO Amir Dan Rubin's departure, Lindsay has a broader and more complex mandate. 

This interview has been lightly edited for length and clarity. 

What's the status of the One Medical integration? 

"I think it's going really well. Culturally, we're very alike. I think we have very similar leadership principles."

[In a separate interview with Erin, One Medical chief medical officer Andrew Diamond said a visit several years ago from Haven — the once high-profile (now shuttered) health care collaboration of Amazon, Berkshire Hathaway and JPMorgan Chase — prompted an early recognition that Amazon and One Medical were "kindred spirits."

Asked further about the visit, Diamond said, "I was like, 'Is this really happening?'" While the meeting didn't lead to any immediate conversations about a deal, "It kind of prepared us for an acquisition."]

Could Amazon pursue M&A to supplement its One Medical buy?

“We're interested in things where we can elevate the experience, but this isn't a big M&A project," Lindsay says.

What's the post-mortem assessment on Amazon Care? 

"Pre-pandemic — virtual care had become a big idea, but then obviously, the pandemic changed a lot of things. It changed how much virtual care was occurring, and also selling to enterprises. Their needs are changing too over time."

"You need to have ways to pay for this in an environment that is complex and expensive sometimes, and people have different levels of insurance. We need to innovate on new, unique things like RxPass or having Prime Rx.

It's a long-term mission. It will never be done. Take me up in 20 years, and I'll ... give you a percentage of how far I think we're there. And it'll probably be a small number."

🥾 1 fun thing: Lindsay says he and his partner go for a six- to eight-mile hike every Sunday.

1 big meeting: Amazon's Neil Lindsay on One Medical and more

Photo illustration of Neil Lindsay on a picnic table patterned background.

Photo illustration: Axios Visuals. Photo: Courtesy of Amazon.

General Catalyst is boldly taking venture capital where most VC investors won't go — the hospital, Claire and Erin write.

Why it's the BFD: The move would be the first attempt at a venture-capital-run health system, where hospital executives and tech leaders could design tools together.

It challenges a status quo wherein startups attempt to squeeze their shiny new tech into traditional health system workflows.

Details: The new company — Health Assurance Transformation Corporation (HATCo) — will acquire and operate a health system "for the long term," General Catalyst announced at the HLTH conference in Las Vegas.

Per General Catalyst, HATCo will work with the firm's 20 health system partners (spread across 43 states and four countries) and build "an interoperability model" that leverages technology in General Catalyst's existing portfolio.

HATCo is a permanent capital vehicle where General Catalyst will house wholly-owned or majority-owned health care businesses.

What they're saying: The news rippled through HLTH, and many told Erin and Claire they're cautiously optimistic.

"If the idea is, 'Hey, what we wanna do is take world-class health care IT and incorporate it into hospital systems because we know they suck at that — that's kind of a cool idea,'" says Todd Walrath, CEO of health care staffing software company ShiftMed.

"Normally I would tell venture to stay away [from health systems], but when comes to [General Catalyst] — I think they can pull it off," says Andrew Parker, CEO of elder care company Papa.

"My initial reaction is excitement," says Conrad Gudmundson, VP of strategy at AI clinical decision support company Lucem Health. "I will be very curious to see how aggressive [GC] are with their adoption of new technologies.

"Good luck, right?" quips Siva Namasivayam, CEO of Cohere Health, which the automates prior authorization process. "I'd love to look at a model. Are they doing everything for everyone?"

One health system executive, who described the arduous process typically required to attempt to embed tech tools into their workflows, told Axios on background they wish they had access to a setup like the one General Catalyst outlined in its announcement.

Yes, but: It's unclear to what degree the firm's involvement in hospital operations will be disclosed to patients. Many tools — including most risk prediction algorithms — do not require patient knowledge or consent.

The big picture: The deal would represent a flip of the traditional hospital system approach to digital health, which has seen systems launch their own VC arms or invest directly in health tech startups.

"Health care organizations are by definition conservative," Gudmundson says. "I'll be curious to see if — and at what pace — [General Catalyst] starts to challenge that status quo."

💭 Erin's thought bubble: Combined with General Catalyst's announcement last week that it would merge portfolio health care automation companies Commure and Athelas, the news smacks of the once-lofty ambitions of General Catalyst-backed Olive AI, formerly the highest-profile startup in the sector.

That company promised to reduce health systems' administrative spending at a rate of roughly 5x the cost of installing its software, but Olive has since shed talent and sold several business lines.

The bottom line: VC moves fast and breaks things, which is the opposite of what traditional health systems are set up to do.

It's an odd marriage but if the capital is patient and General Catalyst can deploy its portfolio tech in a smart way, it could be a successful union.

2. The BFD: General Catalyst's big idea

Illustration of a cursor arrow clicking the close button on a dialogue box top bar which is attached to the top of a hospital road sign

Google is in no rush to apply artificial intelligence to health care, Claire writes.

Driving the news: "We're not in a hurry," Google SVP of technology and society James Manyika told Erin at HLTH in Las Vegas on Monday. "The only race we feel we're in is the race to do this right."

The big picture: Indeed, the "move fast and break things" mantra that so pervaded tech years ago appears to have been supplanted by a more delicate message, several builders and investors told Axios on the sidelines of HLTH.

"We're being slow and deliberative," Sunita Mishra, chief medical officer of Amazon Health Services, told Erin during a meeting at the conference.

"We're growing slow to grow fast," said Fortuna Health CEO Nikita Singareddy, meaning the company is spending a lot of its time assessing patient needs and use patterns.

Meanwhile, Google's AI-powered efforts span medical imaging, dermatology, genetic testing, and drug discovery.

Context: Data privacy concerns have plagued companies across health tech as regulators including the FTC have begun a more aggressive crackdown on breaches of health information.

Catch up fast: The handling of public data by large tech companies has long vexed consumers, and Google is no exception.

Google and its subsidiary DeepMind last year faced a class-action lawsuit alleging they unlawfully used the confidential medical records of 1.6 million National Health Service patients without their knowledge or consent. (That lawsuit was subsequently dismissed on the grounds that it did not meet the bar for bringing a representative action.)

In 2019, the Wall Street Journal reported that doctors and patients weren't notified of a program Google ran with hospital system Ascension Health that allegedly provided 150 Google employees with access to patient data.

A lawsuit against Google and the University of Chicago Medical Center accused the institutions of processing identifiable medical records.

What's next: As large language models in health care mature, Google foresees a future wherein the potential for breaches of patient data is narrowed.

Zoom in: "There are a lot of applications that don't make this presumption that you need first somebody's personal, private data," Manyika says, citing CT scans as one example.

The typically hourslong process to highlight cancerous tumors can be done in a manner of minutes using AI that assesses images.

"You don't need the patient's personal data to do that," he says. "You're looking at images or using techniques to simply enable the physicians and care providers to be able to do that work of contouring."

Reality check: Patient data privacy remains a concern — and Manyika says there will be new questions emerging.

For example, he noted: "Could it be possible that they might inadvertently portray patterns that reflect an individual's data not in the data set?"

With its advertising efforts, the tech giant is also trying to "make sure we don't even provide ads targeted to people based on their health conditions," to mitigate the comingling of user data.

3. Google SVP: "We're not in a hurry" on AI in health

Axios Pro Deals Erin Brodwin in conversation with Google SVP of technology and society James Manyika

Axios Pro Deals Erin Brodwin in conversation with Google SVP of technology and society James Manyika. Photo: Claire Rychlewski, Axios 

Flourish Labs, a San Francisco-based telehealth and training peer support platform for mental health, raised $6.6 million in seed funding, CEO Obi Felten tells Aaron exclusively.

Why it matters: Cultural stigma surrounding mental health and a behavioral health provider shortage are leaving many patients untreated — while young adult suicide rates continue to rise.

Details: The lead investor in the round was Gradient Ventures and was co-led by Collaborative Fund, along with WGU, Learn Capital and One Mind.

How it works: Flourish Labs hires and trains young adults with experience of mental health challenges to become certified peer support specialists for young adults seeking mental health support.

The company's 80-hour training program takes about three months to complete. Flourish runs background checks on its peer specialists, who are overseen by a licensed clinician.

Flourish Lab's HIPAA-compliant telehealth platform, Peers.net, allows patients seeking support to search for and schedule 1:1 sessions with trained professional peer supporters.

Peer support is commonly used for addiction treatment, Felten says, though Flourish aims to eventually reach patients experiencing depression, anxiety, eating disorders, grief and trauma.

"Our aim with Peers.net is to professionalize 1:1 peer support as a broader mental health care option," she says.

What's next: Flourish is expanding to teenagers this week. The company only served young adults aged 18-30 previously.

Additionally, the company will look to expand to more provider groups, as well as penetrate schools and employers.

What they're saying: "Peer support training and service provision traditionally has been traditionally done by small organizations and nonprofits, in person in urban centers, without technology," she says.

"Peers.net solves an access issue," she says. "Therapists are overbooked and more casual alternatives like anonymous chats or group sessions don't offer the level of care needed for many individuals."

"We want to signal to the market, that we are working with the system and market and not outside it," she continues. "Peer support is an alternative they should try and now we need to convince the payers to pay for it."

Flashback: Felten spent most of her career in consumer technology, notching 15 years at Google and then Google X, where she helped launch Google Chrome and the Android system.

Her husband was diagnosed with bipolar disorder when they were both 29.

"He went undiagnosed for eight years and I saw and helped him through all of the up and down cycles that come with it," she says.

Through that process, she realized how important of a role peer support can play.

Of note: Marigold Health, which offers peer support for substance abuse, received $6 million in seed funding last year.

4.  Flourish Labs seeds $6.6M for peer support

Illustration of many different hands reaching for and holding up a therapy couch. 

Here's what you missed while we were dark yesterday: 

Hybrid musculoskeletal care provider Commons Clinic clinched $19.5 million in Series A capital, CEO Nick Aubin told Erin exclusively.

Why it matters: As it stitches together what Aubin describes as a One Medical for specialty care, Commons hopes its services help patients with musculoskeletal (MSK) problems to avoid expensive hospital visits.

MDisrupt, a startup that connects health tech founders with clinical experts, secured $3 million in seed funding, CEO Ruby Gadelrab told Erin exclusively.

Why it matters: More and more health tech founders come from outside the sector, and as a result, many lack the clinical expertise necessary for building successful businesses.

Main Street Health, a value-based health care organization exclusively serving rural populations, announced a $315 million-plus financing round, including investment from Oak HC/FT and five national Medicare Advantage plans.

Why it matters: Main Street is targeting an underserved population, and value-based care is primed to be a major tool in closing gaps in care for rural patients. 

Of note: The financing comprises $190 million of equity and $125 million of debt, says Main Street Health spokesperson and Russell Street Ventures director Kara Pitts. 

5. ICYMI: A trio of fundraises 

Want more health tech deals? Check out the Axios Pro Deals Tracker beta.

• Lottie, a British elder care home marketplace, raised £16.35 million in Series A funding. Accel led, and was joined by General Catalyst. https://axios.link/3LVzTbj

• LANGaware, a U.S.- and Greece-based developer of cognitive, AI-powered diagnostics, raised $2m in seed funding led by Eleven Ventures with participation from Metavallon VC. https://axios.link/3tmFKA6

• SafeRide Health, a San Antonio, Texas-based provider of non-emergency medical transportation (NEMT) technology and services, raised an unspecified amount of Series C funding led by Sands Capital and joined by Healthworx and SCAN Group. https://www.saferidehealth.com/ 

• Amalgam Rx, a Wilmington, Del.-based provider of clinical workflow software, raised an unspecified amount of Series B funding from CVS Health Ventures. https://amalgamrx.com/

•  Bonaccord Capital Partners acquired a passive minority stake in Revelstoke Capital Partners, a Denver-based health care PE firm with $5.6b in AUM. www.revelstokecp.com  

6. Deals o' the day

It's HLTH week and that means lots of news — so let's get to it.

⏰ 3 days and counting: Axios BFD is this Thursday in NYC! Register here to watch the livestream, beginning at 10am ET.

✈️ Erin today is completing this year's conference circuit — which began this September in Huntington Beach and included stops in Los Angeles, SF, and Vegas — with a flight to NYC for the Axios BFD.

❤️‍🔥 Thanks for reading, and extra thanks to newsletter editor George Moriarty and copy editor Mickey Meece. Please ask your colleagues, friends, and family to sign up.

October 10, 2023

1 big meeting: Amazon's Neil Lindsay on One Medical and more