Hello,
Welcome to this week's edition of Dispensed, our weekly healthcare newsletter here at Business Insider, where we're recovering from sugar rushes induced by a company-wide summer party last night.
If you're following along with what's happening on the hill, you might have noticed a refrain that echoes what Emma Court had the scoop on last week.
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This is your last reminder to submit nominations for our under 40 in healthcare list. The form for nominations is here. Submissions will close next Wednesday, June 19. As a reminder, we're looking for rising stars within the healthcare industry bringing interesting ideas to their roles - regardless of whether it's in the C-Suite or earlier in their careers.
To start off this week's newsletter, I wanted to be sure you caught Erin Brodwin's deep-dive into uBiome. It's a must-read for anyone following the fallout after the FBI raid in April. It's full of new details about what working at the company was like over the years, and where corners may have been cut.
uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here's the inside story.
- The Silicon Valley health startup uBiome is in hot water on the heels of an FBI raid in April.
- Founded in 2012, uBiome raised $105 million from investors on the promise of exploring the microbiome, a "forgotten organ."
- As uBiome advanced from a citizen
science project to a clinical-testing company, it overstated the medical value of its tests and prioritized growth over patient care, according to insiders, lawyers, and government officials. - "Some of my uBiome results remind me of astrology," one former employee said.
- uBiome may also have run afoul of federal and state regulations while running some of its tests, according to the experts, insiders, and documents.
Need a refresher on all of our uBiome coverage? You can find it here.
Relatedly, Erin teamed up with our colleagues on the strategy team again to bring you an important guide.
The VC's ultimate guide to sniffing out risky healthcare startups - and not getting tricked into backing them
And while we're on the topic of VCs, Emma took a look at Mary Meeker's massive Internet Trends report released this week. Parts of the healthcare slides reminded us a lot of the 2014 slides Meeker presented, which are a good reminder of how slow healthcare moves. Emma explains why that should be a warning for startups looking to disrupt the industry.
Two other tidbits from the world of startups to put on your radar:
- First, NYC-based behavioral health startup Quartet Health just raised another $60 million in a round led by the insurer Centene. The largest provider of Medicaid plans in the US is rolling out Quartet's software (connecting mental health providers to physical health providers) in Illinois and Louisiana.
- And we got our hands on the slide deck that on-demand health insurance startup Bind uses to explain its unconventional health plan model that has no deductibles or co-insurance. After spending a few weeks in the weeds with other health insurance startups, it was definitely an interesting presentation to go through.
Erin and finance reporter Jeremy Berke had the scoop on a new VC that's looking exclusively at psychedelics. They see it as an emerging field following all the growth in the cannabis industry.
Investors just launched the first VC dedicated exclusively to psychedelics, which they call the 'next wave' after the cannabis boom
- Psychedelic drugs like psilocybin and ecstasy are starting to attract attention from investors.
- In an exclusive interview with Business Insider, the world's first psychedelic-focused VC firm shared its plan for seeding promising startups in the space.
- Based in Canada, the firm, called Field Trip Ventures, aims to open clinics in the US and partner with existing research groups.
- Field Trip's founders hail from the marijuana investment world. They see psychedelics as "the next wave of the path that's been created by cannabis," they said.
Speaking of field trips, Emma in May sat in on a "biotech for dummies" course in which she - alongside biotech executives - got a refresher on biology. That included running an experiment to extract DNA from a strawberry.
We took the two-day, $1,300 'biotech for dummies' class where healthcare executives, HR managers, and investors catch up on science for the first time since high school
Our new healthcare fellow Clarrie Feinstein put out her first story this week - a look at why UnitedHealth Group or Carlyle Group are the likely acquirers of Magellan Health.
The biggest US health insurer and a top private-equity firm are likely buyers for $1.6 billion Magellan Health, according to Leerink
- Magellan Health is likely to be acquired by UnitedHealth Group or Carlyle Group for about $85 to $90 a share, according to Ana Gupte, an analyst at SVB Leerink.
- Magellan has a pharmacy-benefits business and a healthcare unit that offers insurance and other services, such as behavioral health.
Clarrie also has the details on a move made by California lawmakers to extend Medicaid coverage to undocumented residents between 19 and 25. That makes California the first state to do so.
A trip out to Long Island
Back in April (it's been a busy couple of months), I hopped on the Long Island Rail Road so I could see firsthand the ways in which hospitals are prepping for the future.
What I saw took me a bit by surprise. As Northwell Health CEO Michael Dowling explained to me, about 50% of the health system's revenue now comes from services that are provided outside of the hospital. That's a big shift from a decade ago, when 80% of the health system's revenue came from hospitals.
Here's a look at what Northwell's doing with its existing hospitals.
Dowling also made the case to me of why he thinks hospitals will be the one to disrupt the healthcare industry - rather than newcomers like Amazon or even CVS Health. You can read more about his reasoning here.
We also discussed how Dowling - even after a devastating first attempt - still wants to be in the insurance business one day. He explained why that is.
A flash from the past: A year ago, the Department of Justice came out with its criminal charges for Theranos founder Elizabeth Holmes and former president Sunny Balwani, making for a busy Friday evening. We're still waiting for that trial to get underway.
Be sure to send your thoughts/words of encouragement as we sift through under 40 nominees next week to healthcare@businessinsider.com. You can also find me directly at lramsey@businessinsider.com.
With that, I'll leave you all to your weekends. I'll be out next Friday, so there will be a guest writer of Dispensed. Stay tuned!
- Lydia