By Jared Dashevsky
Travel nursing agency AMN Healthcare recorded $1.36B in Q4 revenue, a 116% increase from Q4 2020 revenue (link). Even more impressive: AMN’s net income jumped 363% in 2021. The increased demand for nurses during the omicron surge is likely to thank for the uptick in revenue and net income. AMN Healthcare isn’t alone, though. Triage Staffing, another travel nursing agency, also reported year-over-year revenue growth of 186% in 2021 (link). My questions after hearing these numbers:
- What’s going on with healthcare’s labor shortage leading to record-breaking revenues from travel nursing agencies?
- What does the future look like for employed nurses?
Pre-pandemic, there were already warnings about a nursing shortage (link). The shortage certainly became a reality during the pandemic because of severe burnout. In California alone, there’s an estimated shortage of 40,000 nurses (link). It’s no surprise travel nursing agencies grew 30% in 2020, and likely grew even more in 2021 given the revenue numbers we’re seeing.
Joining a travel nursing agency is quite attractive. These companies may pay 2x-4x the salary nurses are making as hospital employees and allow nurses to choose when they want to work (link).
Hospitals’ labor expenses continue to increase compared to pre-pandemic levels because of labor shortages (link). Hospitals are therefore forced to contract with (expensive) travel nursing agencies, or face the price of increased patient morbidity and mortality from insufficient nursing staff (link). To avoid the latter scenario, hospitals pay these travel nursing agencies to supply their floors with nurses. But, these nurses are, or may be, making double or quadruple the salary as hospital-employed nurses. All it takes is a little chitter-chatter between a traveling nurse and an employed nurse to convince an employed nurse to leave and make more money as a traveling nurse.
What Can Hospitals Do?
I propose three actions hospitals can take to address their shortage of nurses:
- Increase their nurses’ salaries to remain competitive with travel nursing agencies.
- Create their own, in-house travel nursing agency like the University Pittsburgh Medical Center did (link).
- Continue to pay high prices for traveling nurses.
Which action do you think hospitals should take?
HUDDLED WITH ATHELAS
Which segment in healthcare has grown 1,900% in the last two years? Remote patient monitoring (RPM).
Athelas is one of the largest RPM startups in the U.S. Athelas helps doctors take better care of their patients with its SIM-connected devices. The company’s devices regularly sync patient vitals to doctors’ EMR, allowing doctors to improve patient outcomes through preventative care.
If you’re not investing in RPM, you’re missing out:
- RPM improves patient show rates by 60%.
- RPM can reduce hospitalizations and ER visits by 25%, saving more than $20k/patient in medical costs.
- RPM earns an average practice of more than $75k per year in incremental revenue.
Athelas can help practices implement RPM end-to-end. The company provides devices to patients, handles 100% of billing and even provides a team of nurses to monitor patient vitals so doctors don’t have to—all at zero net cost to practices.
Explore Athelas RPM below.Schedule a Demo
The Digital Health Consolidation Saga Part II
Women’s health platform SimpleHealth acquired competitor contraceptive care company Emme (link). I think this acquisition is yet another example of the digital health consolidation movement we’re going to see throughout 2022.
SimpleHealth offers online consultations to prescribe birth control, which it ships to patients’ homes. Similarly, Emme is a birth control prescription delivery and telemedicine service. Emme originally focused on helping women keep track of their birth control pills through their smart case app. Through this acquisition, SimpleHealth will expand its contraception delivery and telehealth services to remain competitive against the many players in the women’s health sector.
I Told You So
Last week, I broke down specialty care company Thirty Madison’s merger with another specialty care company, Nurx (best known for its birth control delivery service). I noted, as others have, that we’re going to see a consolidation trend among digital health companies, many of which received massive funding in 2021, but continue to struggle financially. Why? Likely because the digital health space is supersaturated and, therefore, super competitive. There are many companies within the different digital health sectors but few companies dominate within them.
I think the consolidation movement may help build a few companies doing great things instead of many companies doing good things.
All I’m saying is to keep an eye out for continued M&A movement in the digital health space. Let me know if you see anything.
A Dooming Insurance Cliff
Millions of Medicaid beneficiaries are at risk of losing their health insurance once the pandemic public health emergency ends—which could be soon.
The Trump administration enacted The Families First Coronavirus Response Act (FFCRA) at the beginning of the pandemic. Part of the legislation gave states a 6.2% increase in the federal share of Medicaid spending (remember, Medicaid is jointly funded by federal and state governments) with an important condition: states must provide continuous insurance coverage for Medicaid enrollees, even if enrollees make too much income.
FFCRA’s Medicaid funding to provide this continuous coverage is contingent on the public health emergency status. The government has renewed the nation’s “public health emergency” status a couple of times and is set to renew it (or not) in April.
The public health emergency will inevitably end, meaning millions of Medicaid’s 76.7M enrollees will inevitably lose insurance.
- For example, 40% of Colorado’s 500K Medicaid enrollees aren’t currently qualified for coverage based on income but have coverage because of FFCRA.
The loss of insurance has serious economic consequences. Foremost, those without insurance are in poorer health and don’t have easy access to healthcare services. This means no regular source of care (preventative care) and late detection of conditions like cancer that will have a toll on health and economic productivity (link). Additionally, when those without insurance use healthcare services, the care is often uncompensated at first. Therefore, the government needs to spend around $33.6B per year to pay providers for their uncompensated care.
I don’t envision the government keeping the incentive for states to provide continuous Medicaid coverage even after the public health emergency ends. What I do envision, however, is the government possibly increasing the share of funding to states (currently, it’s 90%) that choose to expand Medicaid. Such incentives may soften the blow of Medicaid enrollees all of a sudden losing insurance, since many may still qualify based on the higher income criteria.
On the other hand, the government could make another special enrollment period for the Affordable Care Act Marketplace, whose premiums are at all-time lows (read: more affordable). This would give Medicaid enrollees with higher incomes the opportunity to purchase subsidized health insurance. I’m not sure how realistic these ideas are, but they’re worth a thought or two.
OUTSIDE THE HUDDLE
- For the third time, a person has reportedly been cured of HIV incidentally after a stem cell transplant to treat cancer. What’s new? This time they used umbilical cord blood.
- Dr. Robert Califf will be commissioner of the FDA for the second time in his life, after winning the closest-ever vote for confirmation.
- Ro, the health tech unicorn most well known for its erectile dysfunction line, has raised another $150 million at a valuation of $7 billion. Yup, still a unicorn.
- Molina expects enrollment through its Affordable Care Act marketplace to drop by 66%, or $1.2 billion, this year.
- Signify Health will buy Caravan Health for $250 million, as they work to “improve health outcomes while lowering costs”. If I had a dollar for every time I’ve heard that…
- 🤔 Did You Know? It only takes 1 gallon of water to produce 1lb of cricket protein by Chippin, but 2,000 gallons of water to produce 1lb of beef protein. Check out Chippin’ who’s keeping our dogs happy and the environment clean. Enjoy 25% off their dog food.*
- 🔌 Self-plug: I wrote an op-ed in MedPage today diving deeper into Mark Cuban’s new online pharmacy. Check it out here!
- ✈️ Cool Video: I came across this fascinating video on how FedEx and UPS are able to ship a package across the world in under 24 hours.
- 🦴 What I’m Doing: I’m currently on an orthopedic surgery rotation. Joint replacements have been my favorite surgeries to scrub into so far—a lot of power tools!
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1. The Future of Education
Paper, a leading provider of online academic support, announced a $270M Series D backed by Sapphire and Softbank Vision Fund 2.
The company’s service enables K-12 students nationwide to receive 24/7 tutoring services for various homework assignments, tests, and projects through an online live chat portal.
Specifically, Paper emphasizes the power that their service has to help solve inequity in academic circles by providing more support to students that are falling behind in the classroom.
Paper has been crushing it the past year:
- Up to 2M students served in US – up from 1M last year
- Currently in 30 states
- Partnered with some of the biggest school districts nationwide
Could Paper be the solution to the COVID-induced massive teacher burnout rates in the US?
Paper could do that and so much more.
Teachers have been absolutely crushed by the demands of COVID, and a recent poll showed that more than half of them are looking to quit.
Those numbers are wild, but 1,000% understandable.
Teachers need a savior, and Paper could be part of the solution.
Teachers no longer will have to worry about late night emails (something I excelled at) and will be able to be truly off the clock when school is over.
The company is at the perfect place at the perfect time.
I expect Paper to have a much different trajectory than high school and higher ed tutoring platforms Chegg, valued @ $4.5B, and CourseHero, raised a $380M Series C at a $3.6B valuation.
Chegg and CourseHero have been incredibly aggressive in the acquisition front trying to become the leader in online studying resources:
- Chegg acquired Busuu, Mathway, Thinkful, and Writelab
- CourseHero acquired Symolab, LitCharts, Cliffnotes, and Quilbot
Paper’s laser focus and positive social impact give the education platform a significant leg up.
Finally, a major possible tailwind for Paper to watch out for is a $98.4B education funding effort by Senate Democrats for FY22, representing a possible $24.9B increase on FY21.
Prediction: 5 years from now, Paper will be the most valuable education tutoring company — not Chegg or Coursehero.
2. A Packed Coop
Next Gen Foods, the company behind plant-based chicken product TiNDLE, announced a $100M Series A to fuel the company’s US launch.
This is the largest Series A to date for a plant-based meat company.
Crowded Market + High R&D Costs + Low Gross Margins = Tough To Make Money
This is the exact recipe of the Fake Chicken Wars and it makes me skeptical.
Let’s name just a few of the seemingly endless companies that have launched fake chicken products:
- Morning Star
- Impossible Burger
- Daring Foods—raised $40M Series A in 2021 from investors including Drake
And many, many more, including TiNDLE.
Also, it’s not like real chicken is going away, as Statista anticipates that poultry consumption will continue to increase in the US over the next decade.
I think we will see what happened in the alcoholic seltzer space play out in the Fake Chicken Wars. After a serious explosion in popularity of alcoholic seltzer, there was a rush of competition into the space.
Boston Beer Company, maker of Truly, saw their stock price drop 25% when Truly sales plummeted due to increased competition. The company had to throw away millions of cases of Truly due to over forecasting of demand.
Boston Tea Party? More like the Boston Seltzer party.
Prediction: The Fake Chicken Wars will lead to many more losers than winners.
3. Are Smart Cities Smart?
Flock Safety, a company that manufactures “smart” surveillance cameras for cities, announced a $150M Series E at a $3.5B valuation backed by Tiger Global.
The company currently deploys their community surveillance services in over 1500 cities nationwide leading to a 70% decrease in crime in those areas.
In 2021, Flock doubled their customers and tripled their revenue for the third year in a row.
Who is Flock’s biggest competitor?
The amount of lawsuits and negative PR Flock faces is off the charts as many Americans do not like the concept of surveillance.
States nationwide, Republican and Democratic, have displayed concerns with the Flock technology, critiquing camera installation without consent, the need for the cameras in the first place, or what Flock is doing with surveillance data once they have it.
The other theme here is the rise of IoT Smart Cities. Everything and anything in our cities will be smart in the near future and that means a lot more data collection in our lives.
The controversy is just getting started.
Side note: The company I am keeping a close eye on in the smart city space is NoTraffic (raised a $17.5M Series A in July), a traffic management platform that uses cameras and AI to change traffic lights and make our commutes faster.
Prediction: City council videos going viral are not going anywhere anytime soon
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CHART OF THE DAY
A Fantastic Year For FinTech
FinTech is the future and VCs are all over it
- In 2021, VCs invested over $39.2B into FinTech companies including Chime, Carta, and Varo
- This was almost 2x the prior record which was $20.4B set in 2020
Want to follow anything and everything FinTech? Make sure to sign up for my teammate Nicole Casperson’s WTFintech — an amazing newsletter covering anything and everything Fintech.
What They Do: Dietitian supervised platform that matches high risk people with personalized, health-focused meals as well as grocery shopping and meal prep guidance.
Amount Raised: $6M seed round
Lead Investors: S2G Ventures
Why It Matters:
The Boomer generation says they want to age at home, and a service like NourishedRx is poised to help them do so by providing tailored meals to specific health needs.
In a recent poll, 90% of Americans over the age of 50 want to age in place.
Currently, NourishedRx’s competition likely comes from other health-focused food delivery services like Purple Carrot, whose investors include Tom Brady.
What They Do: Platform that is focused on employee career development
Amount Raised: $4M seed round
Lead Investors: La Famiglia
Why It Matters:
The story here is the founders.
Zabby is founded by Joshua Cornelius and Mehmet Yilmaz, who started Freeletics together. Freelitics was one of the biggest European fitness apps, and it was acquired by Fitbit in 2018.
Freeletics raised $70M and had 53M users at the time of acquisition.
As for Zavvy, it’s clear that Cornelius and Yilmaz have their fingers on pulse of the times. One of the biggest challenges in business today is retaining strong talent and Zavvy looks to be a key player for companies everywhere.
Zavvy is one to watch.
What They Do: Aim to create dairy-free cheese (that’s actually good)
Amount Raised: $12M seed extension
Lead Investors: Route 66 Ventures
Why It Matters:
The cheese market is massive and growing: it was a $34.3B market in the US in 2019, and it is projected to be $45.5B market by 2027.
There is a great opportunity for a dairy-free cheese replacement to swoop in and dominate as the market is currently missing a strong option—just ask anyone with lactose intolerance!
The company also promises that their precision fermentation protein based process has serious positive consequences for the environment—cheese production is currently the third-leading carbon gas emitter in the food space.
The environmental benefits include (vs. classical dairy production):
- 10x less water
- 100x less land
- 5x less energy
- 25x less feedstock
Keep your eye out for these guys as they look to launch in late 2023.
What They Do: Management platform for convenience store delivery
Amount Raised: $5.5M seed funding
Lead Investors: Ripple Ventures, Outlander VC, Up Ventures
Why It Matters:
90% of the US population lives within one mile of convenience stores, yet convenience stores have failed to take advantage of delivery.
Lula is a management platform for convenience stores to manage all of their deliveries for apps like GrubHub, Uber Eats, Postmates, etc.
The company’s easy to use, 0% commission platform is on fire:
- 30% month over month store count growth
- Looking to grow head count from 35 to 100 by end of year
Lula’s biggest competitor is likely GoPuff, who totally bypasses convenience stores as they have their own warehouses.
GoPuff also has a ton of fuel behind them as the company just raised a $1B Series H at a $15B valuation.
What They Do: Platform that matches corporate teams and employees with various volunteering opportunities
Amount Raised: $12M seed round
Lead Investors: State of Mind Ventures
Why It Matters:
The modern employee expects opportunities to be able to create meaningful impact at work.
Two key stats:
- 71% of employees think it is integral to work for companies where volunteering is a core value
- 86% of corporate employers feel that employees expect to be presented with volunteering opportunities
Vee offers a single, localized platform to aid this volunteering process. Already securing clients that include some of the hottest tech companies. It’s only a matter of time until Vee is everywhere.
Vee is a massive winner for employees, employers, and the greater world.