Joshua Engle

Alot of bad actors and a few good actors. $2.5T HC capital raised & $1T invested by PE in last decade. $31B in 2013 vs. $217B in 2021. We know the story. Misaligned incentives - unrealistic multiples, short-term profit focus, aggressive cost-cutting, unrealistic scaling, misunderstood market dynamics, just to name a few. However, our industry needs money. But our industry is more infrastructure asset class than tech start-up (James Nicholls gave me that epiphany). Mic drop on the lyrical genius of Alex Fair of MedStartr Ventures as he literally gives the whole story poetic justice as he reads HIS POEM on this "On The Road at VIVE" episode of The Reverse Mullet Healthcare Podcast w/BP2 Health. This is the perfect episode for a Friday afternoon! He and Paulo J Machado donned the actual reverse mullets and joined us back in February at #VIVE2024 to talk about the need for REAL change in healthcare, startup focus and investor expectations. It was one to remember and one that is in desperate need of a full-length follow-up episode. Give us a like and a watch or a listen https://lnkd.in/e4w4mjkv https://lnkd.in/egmK3kMB

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Here's another fundraising roundup spotted in the healthcare wilds 👀 🍃 ✅ Sword Health raised $130M (new valuation: $3B). ✅ Better Health raised $14M to deploy expanded payer partnerships. ✅ Alzheon, Inc. | Preserving Future Memories raised $100M Series E to advance development & commercialization of its Alzheimer’s treatment. ✅ CinRx Pharma raised $73M to continue its ‘Hub and Spoke’ model of startup formation. ✅ Eko Health raised $41M to scale AI-driven heart and lung disease detection. ✅ Anterior (formerly Co:Helm) secured a $20M Series A to unlock admin efficiencies for healthcare payers. ✅ SamaCare raised a $17M Series B to scale specialty drug prior authorization platform. ✅ Plenful secured a $17M Series A to streamline pharmacy operations with AI-powered workflow automation. ✅ Grayce raised a $10.4M Series A led by Maveron amid a caregiving crisis. ✅ Stitch Employment Services Inc PEO raised $8.75M in seed to support independent medical practices. ✅ Posterity Health secured $6M to fund expansion and technology acceleration. ✅ Sware raised $6M to accelerate life sciences innovation by automating FDA-mandated software validation. ✅ Keragon raised $3M, as announced in @Conno Christou’s LinkedIn post. As always, if I missed you, let me know! Each week I'm spotlighting an innovative healthcare startup. I just ask for a bit more transparency. All submissions are confidential; submit yours here 👇 https://lnkd.in/gF4DrAvJ Looking for more fundraising roundups, alongside healthcare industry news and analysis? Subscribe to Hospitalogy, my 2x/week newsletter. Join 33K+ other investors, executives, and healthcare professionals: https://lnkd.in/g-nfRqW6

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We need to highlight more bootstrapped healthcare companies. I rarely see founders of these small businesses profiled at conferences or in the media. The chances of building a $100M+ revenue healthcare company are very slim. But that’s the expectation once you accept VC funding (especially Series A and beyond). Let me remind you, most healthcare companies do lower revenue than total capital raised. And you can build a wonderful life and help your community with much lower revenue / growth, if you take minimal or no funding. And believe it or not, most VC-backed founders are fascinated by founders and business models that didn’t require external capital. Do you agree? Or would you prefer media and “influencers” to focus on venture-backed and publicly traded companies? Sometimes I feel like I’m shouting out into the void. Because majority of content is focused on the unicorn chasers. Would love to hear from founders of bootstrapped companies in the comments?

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Some VC investors believe that brick and mortar - referring to a physical presence of some kind - should be avoided at all costs. Yet, the track record of clinic and hybrid care businesses in health care indicates otherwise. ==> One Medical (sold for $3.9 billion to Amazon), Oak Street (bought by CVS for $10.6 billion), Lifestance (IPO at $7.5 billion market cap), and PE-backed Premise Health (acquired by OMERS Private Equity for $1.1 billion) If a clinic is indicated as the optimal way to deliver care for that patient population, there are creative ways to build and operate them. Full article below with advice and strategies on how to build and operate hybrid clinics from my teammate Anarghya Vardhana from Maveron, Amir Dan Rubin from OneMedical Group, Steven Eidelman from Modern Animal and more!

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I’m worried about the state of venture capital and direct-to-consumer (DTC) healthcare startups. Hims & Hers is the poster child for DTC healthcare at $1.2B proj 2024 revenue and a $3.6B valuation. By most accounts, they have been an outlier success for DTC since bottoming out in May 2022. So why is this bad news for DTC healthcare? Because the market leader (Hims) trades at a 3x forward revenue multiple. And the category leader typically gets a higher valuation multiple than smaller startups. We see this phenomenon in private equity. They “roll up” smaller companies within the same category at a lower multiples just to create one larger platform that trades at higher multiples. Now back to DTC healthcare startups. If Hims commands a 3x revenue multiple, it’s not unrealistic that smaller, unprofitable startups may be valued 1-2x revenue at exit. At 2x revenue, a startup must generate $500M to produce a $1B exit in today’s market (depending on growth and profitability). Series A/B venture capitalists must see a pathway to $1B outcomes. And if the growth-stage investors with billions under management are less interested in DTC healthcare, the future funding rounds necessary for fueling growth are not guaranteed. Juxtapose this against 2017-2022 where DTC could raise Series B-E funding. Let’s take a DTC startup doing $25M after 3-4 years of operations and has already raised a Series A. By most accounts, it would be a phenomenal accomplishment. But today, investors will question the chances of that same company scaling from $25M to $500M revenue in the next 3-4 years with unknown future funding sources from Series B and beyond. You're stuck in VC-funding purgatory. Some of these companies will shut down. Some may sell for 1-3x revenue. And some may try to transition to profitable, cash-flowing businesses. All of which are certainly not the venture-backed goal the founders, investors, and employees often had in mind when first taking capital. I say this all with friends working at or starting DTC healthcare companies, I feel bad for them. I also feel bad for the patients who enjoy those products or services. To caveat (b/c I know people will object), there will be other DTC brands that exit for $1B+ (i.e., Ro). However, they were forged and scaled during a different time period where seemingly endless venture capital was available for DTC healthcare. Now we're in a different time with no end in sight. Thoughts?

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Should you sell your practice to a VC-Backed MSO Startup? tldr: - new VC-backed startups are forming MSOs to roll up independent practices - The pitch is physicians receive early liquidity from the roll up and are granted ESOP shares that can be used for retirement - Problem is the use of ESOPs with independent practices is not a new concept and has been used with large group practices since the 70's - ESOPs do not grant full ownership and in order for the shares to be valuable for retirement, the practice needs to run the same if not better post roll up - With VC-backed startups being primarily operated by non-physicians with zero clinical or medical practice experience, the likelihood of this happening is extremely low making the entire concept high risk However, there is a viable path for continued ownership + liquidity for independent practices. Check out the article to learn more. ⤵ https://lnkd.in/gmGvTYwP

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When a healthcare AI founder in our portfolio asked for advice, "everyone" (experts in his industry etc) told him to focus on the providers or payers first, not the patients (at least not directly). Yet the founder had conviction and passion that he wanted to go direct to patients. That's where his heart was. He admitted the experts' advice was probably right, but still... he wanted to try. A Design Sprint gave him the opportunity to take a shot. He didn't need to commit months of his life. He just needed to run an experiment. By focusing your effort and constraining the cost, Design Sprints give you an opportunity to follow your conviction and try things that are outside the consensus. More at jakeandjz.com

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Redesign Health has launched its largest fund to date, securing $175M to support over 20 new healthcare startups. Founded in 2018, the venture builder has previously incubated more than 60 companies, including Scriptology and Vivid Health. The new fund aims to address challenges such as healthy aging, interoperability, and expanding sites of care. This funding underscores investor confidence in tackling the $4T healthcare market's persistent challenges.

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With $8.2B invested into digital health so far, 2024 is shaping up to be a $10-12B annualized investment year. This would make funding comparable to 2023. I suspect with continued venture investment, boards will require exits. One thing I’m particularly interested in is terms of recent acquisitions and growth equity rounds. What type of downside protection (e.g., structure) is not disclosed to media that protects the investor? Will funds who have specifically raised capital to buy stakes in VC-backed companies at significant discounts? And what revenue/EBITDA multiples are looking like for M&A in 2024/2025? Every founder has to spin their story in a positive light when speaking to media. I know this because PR agencies reach out to me about their clients (p.s. I don’t consider myself a member of the media). The private health tech market feels like it could significantly rip or drop in the next 12-24 months. Therefore, my general advice to early-stage founders is to assume you will not raise capital beyond your seed round. If the investor market heats up in 2025, you will have the option to raise a series A at that time if you’ve built a strong business. If you’ve already raised series c or beyond, then one of your goals will be to time the exit (M&A or IPO) appropriately so that you garner an attractive multiple. There are few private health tech startups that have founder board control, can reinvest positive cash flows, and stay private forever. So by necessity of the structure, exits are desired. - - - - Image Credit: Rock Health

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A whirlwind of activity last week at the America's Physician Groups conference. Lots of solid insights shared by health system leaders. Some notable thoughts: +++ Artificial intelligence is intelligent in different ways: By now, we all know ai has a diverse set of use cases, incorporated in different applications and tools. But there are fundamental differences in how the intelligence itself is brought to life. Examples include: - Predictive AI, used to forecast future outcomes by leveraging historical data. Shout out to UCLA’s CKD/ESRD early intervention protocol (Joycee Berin) and Diagnostic Robotics’ intelligence care post-dicharge journeys (Kira Radinsky) - Protocolized AI, used to automating a user’s administrative load by using a set of detailed, pre-defined rule sets. Thanks to ARC for sharing their experience using Elaborate 's automated outpatient lab summaries (Manish Naik) - Generative AI, used to create new content. Great overview of ambient documentation at MGB as well as Cedars’ Sinai talking through its medical ontology model powering acute triage (Caroline Goldzweig) Across system leaders and experts, there was clear agreement that the first step to implementing intelligence intelligently is defining the ‘jobs to be done’. That way, internal and external stakeholders are clear on what they're solving for when they architect the solution.  +++ Scaling AI takes time and rigorous observation: Market leaders describe a phased pilot approach that allows clinicians to build confidence and system leaders to measure ROI before deploying systemwide. Loved hearing Rebecca Mishuris outline MGB’s novel approach of piloting two solutions against one another, to pressure test implementation, workflow, and value creation. +++ Proving ROI continues to be challenging: Lots of vendors using lots of different metrics to prove value, but the majority of leaders agreed that estimating the ROI of these new tools today is part science, part art. Demonstrating the ROI of the “soft” metrics around provider burnout and retention seemed to be a big opportunity, especially for investment in more efficient primary care and PCP wellbeing. After all, PCPs drive referrals to specialty-level care (and higher reimbursements) for health systems. Appreciated Anurang Revri's overview of how working team setup can also impact ROI estimates. +++ Value-based care = tools + humanity: VBC will require not only implementing tools to support clinical documentation, risk capture, upcoding, etc, but also humanizing interactions to engage patients. Countless examples, but one that made me smile was a depression focused chat bot responding in the following interaction: - Context: post-discharge check in Bot: Hi Freida, how are you feeling today after your surgery?  Patient: I’m having a tough time, am in a lot of pain.  Bot: Well, it can’t be that bad, I’m sure it will get better with a positive mindset!    🤣 🤣 🤣 Can't wait for next go-around!

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The birth of the MedSLP Collective was an unexpected journey that began during my time running a mobile FEES business in New York. Despite support from medical professionals, we faced a challenge: SLPs weren’t making many FEES referrals. This revealed a crucial insight - many SLPs weren’t fully aware of the benefits for their patients. Our field needed more education. To address this, I started a blog and newsletter for the SLPs I worked with. What began as a modest effort unexpectedly sparked a movement, as the content spread rapidly, revealing a deep hunger for specialized knowledge among SLPs. As the blog gained traction, I found myself at a crossroads. The demands of a growing online presence competed with the mobile FEES business. Inspired by podcasts I listened to during long drives, I decided to transform the blog into The Swallow Your Pride Podcast, which debuted at #11 on the iTunes Science and Medicine chart. The podcast’s success clarified my mission: provide accessible, high-quality education to SLPs everywhere. This led to a membership platform offering bite-sized education, designed to fit into the busy lives of practicing SLPs. When I floated this idea, the response was astounding - 300 people signed up overnight. This journey has been transformative. It’s a testament to the power of listening to our colleagues, adapting to their needs, and continuously innovating how we share knowledge. The Collective and our membership platform are the fruits of this journey. They represent not just my vision, but our profession’s collective desire to grow, learn, and provide the best possible care for our patients. As we continue to evolve and expand our educational offerings, I’m reminded daily of the passion and dedication that defines our field. To everyone who has been part of this journey - thank you. Your enthusiasm, curiosity, and commitment to excellence continue to inspire and shape the future of our profession. The Collective was born from a simple desire to educate, but it has grown into a movement that empowers SLPs to provide better care and achieve their full potential. #medslp #medslpcollective #slpeducation

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The biggest topics in healthcare last year? The two Gs. GPT and GLP-1s. We’re continuing to innovate our GLP-1 care track, which includes personalized care from care teams supported by AI tools, that can help maximize outcomes for someone on a GLP-1. And what’s to come? I expect this year we’ll see: ⭐ Measuring digital health programs will shift (check out Omada’s VOI report for more on this) ⭐ Consolidation in the market - not all digital health companies will survive ⭐ An uptick in PBM and health plan partners to help employers offer GLP-1s with sustainable coverage plans Anything I missed?

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What's been happening in mental health? ⏺ Vitalic Health raised a $4M seed round for its geriatric behavioural health care platform. ⏺ Kooth Digital Health landed a $1.45 million pilot contract to provide their Soluna platform to over 50,000 students across New Jersey. ⏺ Peer support startup Fello , led by former Uber Eats executive Alyssa Pollack, raised $10.4M for virtual, app-based peer support designed to combat the loneliness epidemic. ⏺ Oceans Healthcare acquired Haven Behavioral Healthcare , expanding to 5 new U.S. states and adding 7 new locations. ⏺ Mabel raised a €600K pre-seed round to help improve women's mental health through microdosing programs and mushroom-based supplements ⏺ Wysa published a paper on the impact of their early stage digital mental health interventions for Singaporeans. ⏺ Applications for the KHP Ventures Mental Health immersion programme close tomorrow (Jan 7th) (All links below) __ If you liked this and want insights on the mental health industry in your inbox every week, subscribe to The Hemingway Report newsletter and follow me Steve Duke 📩 #MentalHealth #BehavioralHealth

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It was a pleasure to host 5 amazing humans working hard to improve healthcare through investing in innovative startups. In this webinar we discuss 1. Due diligence in healthcare startups 2. What investors look for in founders 3. Opportunities in remote patient monitoring 4. Opportunities in AI scribes 5. Portfolio construction 6. Power law in healthcare investing Thank you to: Allan May Dr. Shaun Kuan Thanasi Tsiodras Regina Prasad, MS Greg Buchert, MD, MPH For taking the time to join me and sharing their wisdom! https://lnkd.in/d5z_XtEM #healthcare #venturecapital #angelinvesting

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🤔 How do (US) hospitals spend money 101? Salaries, Wages, Benefits: 45-55% Professional Services: 12-22% Supplies: 12-18% Depreciation/Amortization: 3-6% Other Expenses: 5-20% 8 key insights: n°1. Hospitals consume 31% of US healthcare spending: Despite being the largest spending category, many hospitals struggle with low operating margins, often below 2%. n°2. Labor costs dominate hospital expenses: Salaries, wages, and benefits account for 45-55% of a hospital’s expenditures, with front-line staff making up 75-82% of the workforce. n°3. Contract labor adds significant costs: Hospitals often resort to staffing agencies due to labor shortages, paying 2-3 times more for contract workers compared to employed staff. n°4. Supplies account for 12-18% of expenses: This includes medical equipment, drugs, and personal protective equipment. n°5. For-profit vs. non-profit hospitals: For-profit hospitals tend to manage costs more efficiently, keeping salaries and expenses lower, but often at the expense of services like Medicaid or charity care. n°6. Economies of scale in larger health systems: Larger systems benefit from negotiating better prices for supplies and services. n°7. Rural hospitals face unique challenges: Limited access to talent and capital means rural hospitals must rely more heavily on expensive outsourced labor and struggle to offer high-margin services. n°8. Staffing shortages remain a key issue: Despite financial recovery post-COVID for many hospitals, staffing shortages continue, driving hospitals to explore different revenue models and operational changes to sustain profitability.​ Great post by the Out-Of-Pocket team Nikhil Krishnan & Ben Chao #healthcare

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Q1 2024 was big for Digital Health, with $1.1B in VC funding. A large portion came from major deals like $126M for Transcarent and $108.8M for Rightway. Despite some challenges in digital therapeutics and telehealth, investments in general care ($213.4M) and health benefits navigation ($140.7M) are promising. Read what’s driving the shift from direct-to-consumer to enterprise telehealth models here: https://ow.ly/uNYs50SpXGh

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Hot off the pre-print server – an important publication authored by the Atropos Health team exploring the performance of LLMs in answering real-world clinical questions. LLMs excel at summarizing and contextualizing existing literature, but cannot generate de novo medical evidence today. The results of the study highlight performance gains attributable to injecting novel, relevant, and up-to-date medical evidence into LLM-powered clinical decision support systems. Brigham Hyde Nigam Shah Saurabh Gombar Read the study here: https://lnkd.in/ecuU25Pq

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