Patient Engagement

Healthcare deals I’d like to see in 2016: IBM buys athenahealth, Verizon buys a hospital and Kaiser Permanente buys a wine app

Go big or go home, healthcare. 2016 is the year to make big things happen.

By Chris Seper on December 29, 2015

This article is part of an end-of-the-year series in which MedCity News staff members share their healthcare M&A wish list for 2016.

How are we going to get the big things done in healthcare?

The industry is great at the incremental, but seems to only rarely set itself up for a blockbuster. We’re in an era where big moves could transform medicine: from better analytics to genetics to consumer-driven healthcare to home health and digital medicine.

There are plenty of reasons big deals don’t get done. But sometimes it’s simply because of fear of a big decision, the partnership is too risky or it’s not in the industry’s DNA to get it done.

So my deals try to take out those issues and take away barriers that stand in the way of great change or leaps forward. It would be a shame if we all washed ashore at the end of 2016 and wondered why bigger things didn’t get done.

IBM Watson buys athenahealth and Validic

Watson is the Hungry Mungry of healthcare. Even though the company made big splashes in 2016, their deals (datawise) were all just snacks for old Watson. IBM’s quest to enhance the healthcare experience through data remains more show than go. So, I just see it sitting there in the cold dark air just gnashin’ its teeth and waiting for another meal.

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Validic and athenahealth provide a real meal: resources for a constant stream of data always delivered in a way Watson can consume it. Validic can do what IBM will continue to need: translate any data in any format in any way. Meanwhile, athenahealth is a cloud-based EMR that will onboard valuable data that is perfect for Watson’s data-driven tummy.

The deal would also allow athenahealth to operate at a low margin – because IBM will care most about customer acquisition to get more data. That’s probably the best future for athenahealth, anyway. CEO Jonathan Bush continues to sell the idea athenahealth will grow its profit margins while at the same time up its penetration into large hospitals. But people are not buying that. Honestly, I wonder if he believes it either.

23AndMe buys PatientsLikeMe

This is a gas-on-the-fire acquisition for 23AndMe, which this year made peace with the FDA, quickly advanced its genetic testing products and then spun off a new therapeutics division.

PatientsLikeMe fits all these strategic moves perfectly. 23AndMe could combine the power of its genomics database (already used by many in pharma) with an active community of consumers whose anecdotal data is also valuable for 23AndMe’s customers.

What’s more, it makes 23AndMe’s genetic tests even better and would further satisfy the FDA. Integrating PatientsLikeMe would further guide 23AndMe genetic-testing customers to a community of informed consumers who can share empowering, contextual information.

Verizon buys Tenet Health System

I’ve come to believe that it will be impossible for any carrier to comprehensively engage a health system. The carriers offer sprawling, all-encompassing strategies that few healthcare CIOs want to take on. As a result, everything moves incrementally and the carriers change strategies and it all starts over again.

So Verizon should just buy a health system and get it done. I picked Tenet for no other reason than it is a big, for-profit hospital that is used to answering to public investors in the way Verizon is. With a hospital system as part of the greater company, Verizon can bypass the debate over whether to use all its solutions, install them and make it work.

Once it gets cutting-edge digital solutions to work at Tenet, other health systems would follow suit (no matter the carrier).

If Verizon is crazy enough to buy AOL and Yahoo, how far afield is a major health system?

Kaiser Permanente buys Delectable

Healthcare lacks the ability to organically create the consumer simplicity other sectors can.

How many of you use Delectable? It’s a beautiful little app that calls up a whole bunch of information – pricing, consumer feedback and beyond – on the wine you’re drinking when you upload a photo of the label.

Kaiser should buy it and do the same thing with medicine. Consumers take photos of medications and get data on pricing, access consumer feedback, can rate their own experience and so on.

Instead of having healthcare folks ruin the project, just tell the newly acquired Delectable team: “Do that, but for medicines.” And then get out of the way.

Boston Heart Diagnostics/Eurofins Scientific buys Theranos

This is the worst possible future for our friends in Silicon Valley as it means Theranos’ unicorn valuation has met the glue factory. However, if things continues to crumble for Elizabeth Holmes and the Nanotainers That Aren’t, this prediction is perhaps the best of the silver linings.

Maybe Theranos can pull it out and was simply overhyped before its time? But, if not, there would be worse places for Theranos’ technologies to wind up post fire sale than Boston Heart Diagnostics (which is a subsidiary of Eurofins, which would buy and integrate the companies).

Boston Heart is a company with proven products in the market, an aggressive vision for the future of consumer-driven healthcare, and a fearless, entrepreneurial CEO who could serve as a true healthcare counselor for Holmes, leverage Holmes’ innovation and point of view, and know exactly what to do with what’s left of the technology.