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As consumers embrace wellness apps to help them do everything from reducing stress to improving their sleep, some health insurers are throwing their weight behind the trend, offering members free access to certain apps designed to improve health and well-being. “People are looking for an easy way to get better,” says Anne Hoverson, vice president of digital transformation at Florida Blue, which looks to “curate the right thing at the right time” for its members.

The first health and wellness apps were introduced more than a decade ago and, even today, “most don’t do much,” says Bryce Williams, vice president of MindBody Medicine for Blue Shield of California. “They’re just kind of a transitory experience for most people.”

But some apps can play a vital role in member care, he adds. “We felt the field had matured far enough that it was a really great opportunity that could help our members.”

The California insurer has a special website called Wellvolution that offers tools to help members do such things as manage their diabetes, lose weight and deal with mental health issues. The abundance of wellness apps can create what behavioral economists call overchoice: People freeze up when facing too many options. Blue Shield of California makes sure that all apps on the Wellvolution website have been clinically validated and deemed effective in real-world settings, according to Williams. The company launched Wellvolution in 2008 and started “experimenting” with apps in 2010, Williams says. Now, members who go to the site can discuss health concerns and the insurer will suggest apps and other tools to help them meet their goals. Health plan members do not pay extra for the programs. They may be connected to apps such as Ginger, which provides online mental health care; WW (previously Weight Watchers) to lose weight; Clickotine to quit smoking; and Virta Health to manage diabetes. In an email to 

e®, Blue Shield of California said that all of the payment models in Wellvolution are pay for performance. In the case of Ginger, the health plan says it pays on milestone basis, and the milestones include engagement, sustained engagement and clinical outcomes based on common mental health scoring tools.

Florida Blue launched a new section of its website last year where members can relay their health concerns and be linked to appropriate care. Plan members have no-cost access to meQuilibrium, an app designed to reduce stress and build resiliency using cognitive behavioral therapy at a time when many Americans are struggling because of the mental toll of the COVID-19 pandemic. A Florida Blue member with diabetes might have access to Livongo for Diabetes, which monitors blood glucose readings through a connected device. Members may receive automated “nudges” to help them stay on track or can chat with a care coach or diabetes educator. The Livongo for Diabetes website say it is a $75-per-month benefit paid for by an employer or health plan.

As demographics shifted and younger people, who are more inclined to use apps, started to sign up for healthcare coverage, Florida Blue began to increase its app offerings, Hoverson says. Meanwhile, app development, including wellness apps, boomed. The wellness apps also cater to the high value people place on convenience. There is no appointment, no travel time, no waiting room. An app “is always there for you, always in the palm of your hand,” Williams says. The pandemic has also been a factor, propelling a major shift to virtual care and familiarity with getting healthcare delivered digitally. The pandemic, says Hoverson, “brought down a lot of barriers.”

That growing demand for virtual care has also fueled a wave of investment in the overall digital health sector, which includes apps. Noom, the weight loss program and app that uses cognitive behavioral techniques, raked in the largest investment in the digital health area in 2021, bringing in $540 million, according to Rock Health, a venture fund that focuses on digital health.

Overall, venture funding for digital health start-ups soared to $29.1 billion last year, a new record, according to Rock Health, and about double the investment funding in 2020. The 2021 money went to 729 deals, with the average deal reaching almost $40 million. Digital health start-ups in the fitness and wellness sector drew $4.3 billion in funding last year, according to Rock.

One issue with health and wellness apps is covering their cost. Some are available to consumers for free, many charge a monthly subscription fee and others are available only to health plan members.

The digital health company Big Health has tackled the issue by working with a pharmacy benefit manager (PBM). Big Health promotes its apps, which use cognitive behavioral techniques, as nondrug alternatives for insomnia and anxiety. The company says its apps — Sleepio for insomnia and Daylight for anxiety — have undergone clinical study, including 13 randomized clinical trials.

The company works with CVS Caremark, the PBM arm of the pharmacy giant. “By pioneering the ability to bill through the PBM, employers and health plans can easily add Big Health to their formulary and pay for their use via a drug claim, which is the same way they pay for medications,” Big Health co-founder and CEO Peter Hames said in an email. A person can access a Big Health app only if their employer has signed them up.

Big Health and a few other companies are trying to break away from the pack with claims that their apps have passed clinical trial muster. But in a recent opinion piece in 

, David Simon, Ph.D., a research fellow at the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School, and his colleagues from Harvard discussed the dearth of regulation of many wellness products, including direct-to-consumer apps that people use to help assess their health. The FDA tends to focus on the risk a product might pose to consumers, they noted. The agency draws a line between devices that diagnose diseases and conditions or purport to cure, treat or prevent disease and those intended for general use and wellness. “Even though some general wellness products may be ‘devices,’ the FDA will not regulate these products if they only promote a healthy lifestyle or help reduce the risk of certain chronic diseases based on accepted interventions,” the authors wrote.

Simon said in an interview that one of his concerns is whether consumers who use wellness apps are “aware they are not meant to diagnose diseases.” There are also questions about reliability of the information generated by wellness apps and what physicians can or should do with that information.

As for regulation, “the FDA can’t be out there policing tens of thousands of apps that exist” with the agency’s limited resources, said Simon.

By offering apps, health plans hope to increase connection and engagement with members.

For Florida Blue members, apps can serve to manage chronic conditions more effectively, Hoverson says. “The better they do, the healthier they are,” which can reduce emergency room visits and hospital admissions while lowering costs for the insurer.

Williams of Blue Shield of California agrees. He says offering the apps “improves the lives of those we serve. By improving health, all the rest (on the business side) is going to take care of itself.”

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Florida Blue and Blue Shield of California are among the insurers curating and offering free access to wellness apps for their members.

Keeping Members by Making Them ’Appy: Health Plans and Wellness Apps

Fabric Health is, you might say, working to do its part to wash away health disparities by offering residents in Philadelphia, access to healthcare services at laundromats. The idea behind Fabric Health is to “meet busy families where they are,” says co-founder Courtney Bragg, MBA.

Along with washing and drying their clothes, customers at five Philadelphia laundromats have been able to sign up for health insurance, get a mammogram, undergo a skin cancer screening or get a blood test for liver cancer or hepatitis B. Braggs says laundromats are “de facto community centers,” as many customers show up weekly to wash their clothes.

Fabric Health is one of a number of efforts that move healthcare communication and some service delivery to unusual settings. Other groups have found ways of using barbershops and churches.

Bragg and co-founder Allister Chang were introduced by friends over a year ago. They had both spent a lot of time at laundromats, and together, they dreamed up the idea for Fabric Health, a for-profit social impact startup. They then spent time talking to healthcare leaders to “understand their pain points,” Bragg says.

Bragg has experience in education and healthcare, and Chang is a member of the Washington, D.C., State Board of Education and has worked with various nonprofits, including four years as executive director of Libraries Without Borders. Over the years, the pair had gotten to know Brian Holland, co-owner of The Laundry Café, and they launched Fabric Health out of The Laundry Café’s five locations in North and West Philadelphia. The founders received grants and investments to start their venture.

Before launching, they visited laundromats and talked to people as they helped them wash and fold their clothes. “You can’t just parachute in and parachute out and expect people are going to trust you and talk to you,” Bragg says.

If healthcare inequity is the problem, then Philadelphia is a good place to test solutions. The city is the poorest large city in the United States. One in 4 of Philadelphia’s households lives below the federal poverty line.

The Fabric Health founders learned through their discussions with healthcare experts that more than 100,000 Philadelphians did not have health insurance. One of their first moves was handing out flyers to laundromat customers, asking whether they knew anyone who was uninsured. Bragg and Chang also directly talked to people — and got an earful amid the din of the washers and dryers. So, they connected with Pennie, the state’s health insurance marketplace, to provide information and help laundromat customers sign up for health insurance coverage. 

Consumers are “inundated with information” about insurance, Bragg says, but they don’t know how to sort through it. Bragg and Chang recognized an opportunity to introduce Pennie to the uninsured and answer people’s questions. They even got Pennie’s Executive Director Zachary Sherman to attend an in-person question-and-answer session at the laundromat.

Sherman says he welcomed the chance to connect with those who may not be aware of their insurance coverage options. “Disproportionately, they tend to be in communities of color. They tend to be lower income,” he says. Many of the uninsured qualify for Medicaid or for coverage through Pennie at low or no cost, Sherman explains. Taking advantage of the time people have on their hands at a laundromat is a “really cool (and) interesting idea,” Sherman says.

Bragg and Chang also connected with Jefferson Health, a large health system that competes with Penn Medicine in the Philadelphia market. Jefferson Health has an RV that is equipped to do mobile cancer screenings, including 3D mammograms. With the RV, Jefferson Health has offered free mammograms and other cancer screenings at Fabric Health locations.

Amy Leader, Dr.Ph., M.P.H., an associate professor of public health at Thomas Jefferson University who leads the mobile cancer screening efforts, calls the RV “one of our crown jewels,” allowing the health system to do screenings at at libraries, churches and community centers. — and laudromats.

Fabric Health has started to expand. With a $500,000 grant from the Richard King Mellon Foundation, it is going to open up business in Pittsburgh.

In 2019, The University of Texas at Austin School of Nursing, with support from the city of Austin, began providing mental health and wellness care at two Black churches in a program called African American Mental Health and Wellness Program (AMEN). Part of the goal is to combat the stigma surrounding mental health issues in the Black community. Initially, the program provided training for pastors who “sometimes felt ill-equipped to handle” church members with mental health issues, and they received information on when and where to refer people for further care, explains Jacklyn Hecht, managing director of the project.

When COVID-19 hit, the program became remote. As many people were left feeling isolated at home, the nursing school worked with the pastors to develop an outreach program. Healthcare workers also called congregants to see how they were faring. “With (COVID-19), no one has been immune from having some kind of mental health stress,” Hecht says.

“Members just wanted to talk,” says Angela Bigham, a community health worker the University of Texas, who is involved with AMEN at her church, Rehoboth Baptist, in Austin. If people were troubled, the pastor would be notified so he could reach out to them.

The university also set up mobile COVID-19 vaccination clinics at the churches, and church members were encouraged by their pastors to get vaccinated. “If they see someone they know and trust, they follow,” Bigham says.

Over time, AMEN has added discussion sessions and classes on topics such as grief, loss, racism, mindfulness and nutrition. Bigham’s church has a community garden where they offer tours to teach visitors about the food they grow and its nutritional value. AMEN aims to “build infrastructure within the church and sustain the program,” Hecht says.

Stephen B. Thomas, director of the Center for Health Equity at the University of Maryland School of Public Health in College Park, founded Health Advocates In-Reach and Research (HAIR). The program focuses on training Black barbers and hairstylists so they can offer customers health education and connect them with medical services. Why barbers? “They have the trust the medical community has lost,” says Thomas.

The HAIR program is now up and running in three Maryland counties. One program, supported by a grant from the state of Maryland, involves barbers and hairstylists who provide COVID-19 education and host vaccination events. Thomas received a call from the White House this past year, requesting the HAIR program be part of an initiative to recruit Black barbershops and salons to be part of a national vaccination campaign. The barbers and stylists involved with HAIR also promote and support screenings for colorectal cancer and other conditions. Televisions in the shops feature health programming.

“The message is important, (and) so is the messenger. Trust matters,” Thomas says.

Susan Ladika is an independent journalist in Tampa, Florida, who covers healthcare and business.

Fabric Health is bringing healthcare services to laundromats in Philadelphia and Pittsburgh. Other organizations are using barbershops and churches to deliver healthcare services and messages.

Delivering Healthcare in Unlikely Places

A new online pharmacy founded by Mark Cuban, billionaire investor and Dallas Mavericks owner, hopes to be a slam dunk when it comes to drawing in consumers who are seeking an alternative to paying high prices for essential drugs. The Mark Cuban Cost Plus Drug Company launched in January and offers what it claims are the lowest prices available on 100 generic drugs.

With this online pharmacy, “consumers can get access to routine drugs at lower costs, forcing other organizations in the industry to meet or beat it,” says Amel Hammad, managing director and leader of the healthcare industry practice of Riveron Consulting.

A major part of Cuban’s pharmacy pitch is that it will be transparent about pricing. The new pharmacy says it sets prices based on the cost to manufacture the drug, plus a 15% markup for each drug it dispenses, and a $3 charge for labor. The consumer pays for shipping. In the press release announcing the venture, Cuban’s online pharmacy held up Gleevec (imatinib), a cancer drug, as an example, stating that Gleevec retails for $9,657 per month, but the generic version can be purchased through the new online pharmacy for just $47.

Cuban’s online pharmacy is also promising good deals on less expensive drugs. The company’s website is pricing a 30-day supply of lisinopril, a blood pressure medication, at $3.60. The company says, by contrast, a 30-day supply sells for $24 at retail pharmacies. However, that is a bit misleading, because GoodRx lists prices that are less than half that at several retail pharmacies with a price of
$4 for a 30-day supply.

Cuban’s new company doesn’t accept insurance payment, so anyone buying drugs from the online pharmacy will be paying out of pocket. But “often, the same drug is cheaper than it is with an insurance copay,” says Lovisa Gustafsson, MBA, vice president at the Commonwealth Fund, a foundation that focuses on healthcare research.

Cuban is starting his pharmacy when there is widespread discontent with the drug costs. President Joseph R. Biden mentioned high drug prices in his State of the Union address in February. According to the federal government actuaries, expenditures on prescription drugs topped $348 billion in 2020, which is up 3% from the previous year. A study released this past year by RAND Corporation found that prescription drug prices in the United States were, on average,
2.56 times higher than in the 32 other countries in the study. For brand-name drugs, U.S. prices averaged 3.44 times higher. However, generic drug prices in the U.S. were slightly lower. Generic drugs account for almost 85% of drugs that are sold in the U.S. but just 12% of spending, RAND found.

Poll results released in September by Gallup showed that
18 million Americans couldn’t afford at least one of their medications in the previous three months. The problem of affordability was especially serious for those earning less than $24,000 per year. However, the pricing of drugs in the U.S. is complicated by a web of rebates and discounts that separate the stated price from the one actually paid. By some accounts, trends in net prices paid by insurers and other payers have been flat and have even dipped in recent years.

Cuban’s online pharmacy may be particularly attractive for those who pay out of pocket for their prescriptions, which is a group that would include people without insurance or those who have signed up for a high deductible plan, says Stacie Dusetzina, Ph.D., associate professor of health policy at Vanderbilt University. However, “the challenge is that they are somewhat limited in scope,” Dusetzina says, noting that Cuban’s pharmacy is offering only a limited selection of generic drugs. In addition, Hammad says the new online pharmacy may help address access because of the mail-order delivery, although mail-order delivery is hardly unique to Cuban’s new pharmacy.

The inspiration for Cuban’s pharmacy came from an email Alex Oshmyansky, M.D., Ph.D., sent to Cuban, who is perhaps best known for being one of the investors on the television show, “Shark Tank.” Oshmyansky, a radiologist who earned his medical degree from Duke University and trained at Harvard University and Johns Hopkins, was seeking investment in his company, Osh’s Affordable Pharmaceuticals, according to 

 Oshmyansky had set up the company to purchase generic drugs directly from manufacturers and sell them to pharmacies, thereby cutting out the pharmacy benefit managers (PBMs).

In an interview with NPR, Cuban said he asked Oshmyansky, who now serves as CEO of Cuban’s online pharmacy, “Can we cut out the inefficiencies?” Cuban’s company has created its own PBM to work with the manufacturers, and later this year, the company is set to open a manufacturing facility in Dallas.

On NPR, Cuban likened PBMs to “bouncers at a club,” saying they are “controlling access to all the big insurers. And if you want this insurance company to sell your drug, you’ve got to pay the cover charge,” which comes in the form of rebates paid by drugmakers. When the 

 reported on Cuban’s new enterprise in October 2021, months before the official announcement, the newspaper 
charaterized the venture as a PBM.

Cuban’s operation has “found a way to address pain points around prescription drugs by going directly to the manufacturers to avoid the markup created by the healthcare industry while cutting out the middlemen of third-party insurance and pharmacies,” Hammad says.

Ventures such as Cuban’s are a “pushback against middlemen,” Gustafsson says. “(It will be) interesting to see how successful they are,” Gustafsson says, especially as they scale up their offerings over time.

Because the new pharmacy doesn’t take insurance and only offers a subset of generic drugs, Dusetzina says she’s unsure of how disruptive this would be to a PBM.

Cuban’s venture is “one in a broader trend of new entrants to the pharmaceutical supply chain,” Gustafsson says. Amazon also has an online pharmacy, she notes. Prices are posted on the website and payments from most major insurers are accepted. In addition, Amazon Prime members get extra savings. Prime members save up to 80% on generic medications and 40% on brand names when paying without insurance, according to the website.

Gustafsson also mentions Civica Rx, a nonprofit drug manufacturer that produces generics for hospitals and health systems. In early March, Civica announced that it plans to manufacture and distribute low-cost insulin. Consumers can also use GoodRx, which tracks drug prices and offers discounts and coupons. “GoodRx has done a lot to be a household name,” Dusetzina says.

Also in the wings is EQRx, a company founded two years ago that aims to produce drugs that are very similar to existing medications and can be brought to market quicker and less expensively than drugs developed by other drugmakers.

Gustafsson says the new entrants in the drug supply chain could eventually have an impact on PBMs if the companies wind up negotiating on behalf of fewer people.

“Innovators in healthcare understand the pain points consumers are encountering,” Hammad says. “They recognize many people are willing to take the private-pay approach, and not utilize insurance or any third-party payer, to avoid the administrative burden.”

Susan Ladika is an independent journalist in Tampa, Florida, who covers business and healthcare.

Cuban, an investor on “Shark Tank” and owner of the NBA’s Dallas Mavericks, has launched a namesake online pharmacy that says it will have transparent pricing and will bypass pharmacy benefit managers.

Mark Cuban Says he Has the Prescription for High, Opaque Drug Pricing

Tired of grappling with the rising costs and poor quality of healthcare, a coalition of major healthcare purchasers is taking things into its own hands, establishing a company that is designing healthcare products to meet its members’ needs. “There’s an incredibly high frustration level among buyers of healthcare,” says Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health (PBGH) in San Francisco. 

The nonprofit PBGH represents almost 40 large private employers and public entities that together spend $100 billion each year on healthcare services for more than 15 million Americans and their families. PBGH members include Microsoft, Walmart and American Airlines.

The decision to create the company, Emsana Health, was made about two years ago, with the initial focus on “really understanding the needs on a deep level,” Mitchell says. The company officially launched in the fall, and its first venture is setting up a pharmacy benefit manager (PBM), EmsanaRx, which went started operating on Jan. 1.

EmsanaRx CEO Greg Baker says the PBM is different from its competitors because it was designed to answer to its group members. One of its objectives is to provide members with sound, actionable data, such as what drugs actually cost, as well as information on discounts and administrative fees, Baker says. Companies that use EmsanaRx will pay a fixed price per prescription and a fixed fee to EmsanaRx.

“We do hear the traditional PBMs talk about doing the right thing for their clients, being that a counterweight to the manufacturer, being that intermediary that America needs,” says Baker. “I guess I just fundamentally disagree with that.” Baker says PBMs may be passing on rebates to their clients, but they also charge a variety of fees: “Now I have got a formulary placement fee and a clinical management fee and price protection fees, and those fees do not benefit the employer. Those fees all go back to the PBM.”

Baker says the traditional PBMs often use long, complex contracts that are difficult for clients to understand. EmsanaRx will use simple-language, eight-page contracts, he says, and data will be shared in a way that clients can understand. The account managers will be clinical pharmacists.

EmsanaRx is operating as a for-profit company with shares owned owned primarily by PBGH and its members. There are also some outside investors. Baker, who wouldn’t disclose their identities, describes them as well-funded individuals looking to bring innovation to healthcare. He says there isn’t pressure on the nascent PBM to generate major profits and describes a three-year plan that involves serving the first clients this year, some PBGH members in 2023, and ramping up to becoming a full-fledged PBM in 2024. 

“We’ll try to nudge this PBM industry into a better place. But it is really, ‘let’s start slow, let’s be deliberate, let’s do it right’ because I don’t have investors breathing down my neck saying, ‘We need profit today.’” 

is an independent journalist in Tampa, Florida, who writes about healthcare and business.

EmsanaRx, a pharmacy benefit manager launched by the Purchaser Business Group on Health, started operations in January.

Large Employers Launch PBM

The hot new healthcare investment vehicle may soon be yesterday’s news, as company underperformance and an increased focus by regulators have decreased interest in special purpose acquisition companies (SPACs).

SPACs grabbed attention as a way for start-ups in healthcare and other industries to go public as an alternative to an initial public offering (IPO). A SPAC or “blank check company” doesn’t make any products or sell anything. Instead, it is formed by investors in order to raise money through an IPO so it can then go out and acquire another company.

The trend took off in healthcare in 2020, marked by deals such as telehealth company Hims & Hers Health’s announced merger with Oaktree Acquisition Corp., and Medicare insurance start-up Clover Health’s announced merger with Social Capital Hedosophia Holdings Corp.

By the first quarter of 2021 there were 40 healthcare and life science IPOs tied to SPACs, raising almost $11 billion, according to S&P Global Market Intelligence data. “It came as a whirlwind,” with impressive activity between December 2020 and April 2021, says Sari Kaganoff, general manager of consulting at Rock Health.

But in the second quarter of 2021 there were just eight SPAC deals in the healthcare and life sciences sector, according to S&P Global Market Intelligence. Now, “many in the life science sector are pursuing IPOs over SPACs because the gloss seems to be wearing off SPACs due to SEC (Security and Exchange Commission) scrutiny, the shareholder dilution that comes with SPACs and the fact companies that have gone public via SPACs have generally underperformed from a stock price perspective,” observes Steve Sapletal, healthcare and life sciences deal advisory and strategy industry leader at KPMG.

SPACs took off in healthcare because they provide quickest exit strategy for smaller and start-up companies and are not as tightly regulated as IPOs, Sapletal says. For SPACs, “healthcare has presented opportunities to invest in assets with clear earnings visibility as well as new growth verticals such as digitally enabled healthcare service provisions or healthcare data analytics,” he notes.

Although SPACs have been around for decades, they have taken off as an investment vehicle in recent years. 

 reported that just 59 SPACs were created in 2019, with about
$13 billion invested across all industries. The following year, 247 were created, with $80 billion invested. The first quarter of 2021 saw 295 SPACs created, with $96 billion invested. In 2020, SPACs represented more than half of the new publicly listed companies in the United States, according to the 

“It’s just another form of access to capital markets,” says Peter Micca, a partner in life sciences and healthcare at Deloitte. But a SPAC merger usually takes less time to complete than an IPO, and the mergers have a fixed value “so there’s no road show to determine the value of the company,” comments Micca.

When a SPAC is created, it typically has 18 to 24 months to acquire a company. If that doesn’t happen, the SPAC must disband and return money to its investors, according to Sapletal. Kaganoff says that they are “very incentivized not to fail in finding a target.”

Digital health has had a strong appeal to SPACs. In healthcare, “demand for technology is at an all-time high,” Micca says, and the COVID-19 pandemic only accelerated the awareness of digital health options, such as telehealth. Changes in reimbursement, licensing and regulation made it easier for providers to offer telehealth to patients at a time when many have shied away from in-person healthcare, Micca says.

In the first quarter of 2021 there were two completed SPAC mergers involving digital health companies, while nine others were announced, according to a report by Rock Health. The announced mergers included the online therapy company Talkspace and the well-known personal genomics and biotech company 23andMe. The first quarter of 2021 also saw two completed IPOs, Rock Health reported. Digital health companies that were targeted by SPACs during 2020 and the first quarter of 2021 were on average five years younger than those that did an IPO, according to Rock. SPAC targets raised an average of $43 million less in total funding than those that were involved in an IPO.

SPACs were going strong until April, when they began attracting more attention from regulators, Kaganoff says. Since the SEC began to issue more regulatory guidance, interest has slowed considerably. “It’s a little bit less wild West than it used to be,” says Kaganoff.

Although they are perhaps less of a hot ticket now, many SPACs were launched before the cooldown. At the end of the third quarter, 458 SPACs were looking for a company to acquire, and almost 70% had less than 18 months to do so, according to a KPMG report. Technology, media and telecom companies were the top targets, with more than one-third of SPACs seeking a company to merge with in those fields. But healthcare and life sciences ranked second, with
59 of those SPACs, or 13%, hunting for companies in that sector, according to KPMG.

From 2018 until the end of the third quarter, 50 mergers in the healthcare and life sciences sector had been completed, KPMG found. The estimated merger value in the sector was, on average, more than $1.5 billion.

But a number of the deals have failed to live up to expectations. Talkspace agreed to go public in January 2021 in a SPAC merger with Hudson Executive Investment Corp. The deal was valued at $1.4 billion. It debuted on the Nasdaq in June, with shares listed at $8.90. As of early January, the stock price was $1.82 per share.

Following its third quarter financial results in November, shares plummeted 35% as the company’s chief financial officer called the company’s net income and net revenue “disappointing.” Talkspace’s co-founders also have left the company. Hims & Hers completed its SPAC merger in January 2021, with stock prices at $17.08 a share. In early January 2022 it was trading at $5.74 a share. And Clover Health stock has sunk over the past year. In January 2021 it was trading at almost $15 a share. A year later it was trading at slightly more than $3 a share.

More recently, the prescription digital therapeutics company Pear Therapeutics began trading on the Nasdaq in December after a merger with SPAC Thimble Point Acquisition Corp. It opened at $9.30 per share and as of early January was trading at less than $6 a share.

While SPACs will continue to seek out new targets in the new year, deal activity is expected to continue to cool. Going forward, Micca expects “a modulation in all forms of access to the public market in 2022.”

Sapletal expects a substantial drop in the number of SPAC IPOs in 2022 compared with 2021. However, almost 60 SPACs are looking for healthcare and life sciences targets, “and given their finite life, they will be more desperate to make a deal.”

Kaganoff says she doesn’t expect a lot of new SPACs will be created. Even if a company might be a candidate to merge with a SPAC, some prefer doing an IPO or want to be acquired by a larger company, Kaganoff says. There are also limitations, she says, because “there aren’t that many companies that are of the size and scale to go public.” 

Special purpose acquisition companies took off as investment vehicles in healthcare. Increased regulatory oversight and some flagging stock prices may cool off the trend.

SPACs in Healthcare: The Hot Ticket has Cooled off

In this on-demand society in which people want what they want, when they want it, experts are predicting consumers will continue to turn to retail clinics for their healthcare needs in the coming year.

With millions of Americans having received their COVID-19 vaccinations at retail clinics, “people are getting more familiar” with such clinics and “realize this has a real place in the care continuum,” says Neal Batra, a principal in the life sciences and healthcare practice at Deloitte Consulting. “The industry is convinced you’ll be able to (receive) some portion of your primary care not from a classic doctor’s office,” he adds.

The clinics at drugstores such as CVS, Walgreens and Walmart are a draw because of their convenience and easy access, says Joyce Yu-Chia Lee, a health sciences clinical professor at the University of California, Irvine. The goal is to “seamlessly integrate into their (consumers’) busy lives,” says Willie Hoag, co-founder of Tether Advisors, a commercial real estate advisory firm.

But not everything is so rosy for retail healthcare clinic operators. They are fighting off lawsuits accusing them of responsibility for the opioid epidemic. In late November, a federal court jury in Cleveland found that CVS Health, Walmart and Walgreens had contributed to the cause of opioid overdoses and deaths in two Ohio counties. There are also the headwinds of healthcare delivery’s migration to telehealth and in-person shopping to online. CVS announced in November it was shuttering 900 drugstores around the country over the course of three years, or roughly 1 in 10 of its 10,000 locations. “Organizations are still looking for that magic formula for what works for retail primary care,” notes Batra.

And CVS is still trying to shift from being a retailer of healthcare products and drugs to a provider of healthcare with its HealthHUB locations that offer a variety of healthcare services, such as mental health therapy, screening for chronic conditions and health classes.

During an investor’s day presentation on Dec. 9, Karen Lynch, the company’s CEO, said CVS is “transitioning what we call stores to health destinations.” In the future, Lynch said, the company’s physical locations will fall into one of three categories: primary care clinics with a “high level of clinical services,” HealthHUBs “with products and services that support everyday health and wellness” and traditional pharmacy locations. Lynch did not say how many locations would be in each category. She also painted a picture of CVS moving more fully into primary care, shifting away from what episodic care to what she called “longitudinal care.” 

CVS, which acquired Aetna for $69 billion in 2018, is marketing health plans that encourage consumers to use CVS by offering care at its MinuteClinics with no copays.

Meanwhile, Walmart seems to be experiencing healthcare hesitancy. The giant retailer opened just 20 of the 125 clinics it had planned to open by the end of 2021, Insider reported. Walmart executives didn’t even mention retail clinics in their November earnings call. In the August call, Doug McMillon, the company’s president and CEO, said, “The work we did to build some clinics has been helpful, and I think we’ll have more clinics in the future. But the clinics aren’t the thing on its own.” He also referred to the role of telehealth, and healthcare at home and on mobile devices and the importance of directing consumers “to the place to get the right care at the right time.”

On the other hand, Walgreens seems to be forging ahead with its partnership with VillageMD. The retailer announced in October it was investing $5.2 billion in VillageMD to increase the delivery of value-based primary care. With that investment, Walgreens upped its stake in VillageMD from 30% to 63%, and VillageMD plans to hold an initial public offering next year.

With the Walgreens investment, VillageMD plans to open at least 600 Village Medical clinics at Walgreens in more than 30 markets by 2025 and 1,000 clinics by 2027. More than half are slated to be developed in medically underserved communities. Because it is expensive to build clinics, retailers have an advantage by already having brick-and-mortar locations in place, says Hoag.

So far, only a relatively small group of people use retail health clinics. A Morning Consult poll of 2,200 adults conducted last year found that just 8% of respondents indicated they went to a retail clinic for medical services often and 27% said they used the clinics “sometimes.” But more than 70% of the respondents said they trusted retail health clinics and 10% said they would go to the clinics “often” after the pandemic, whereas 45% said they would go there “sometimes.” Additionally, the majority of respondents said they valued the quality of care, cost of service and convenience of such clinics.

But respondents were split when asked whether the quality of services was the same quality as they would receive at a traditional doctor’s office. About one-third said it was the same, more than one-quarter said it was worse and about 30% said they didn’t know.

The pandemic has driven growth in retail clinic usage, observes Gurpreet Singh, U.S. health services leader for PwC, a consulting firm. A pre-pandemic 2019 survey by PwC’s Health Research Institute found that 30% of U.S. adults had visited a retail clinic. A September 2020 survey found that the share of respondents who visited a retail clinic had climbed to 40%, and about three-quarters said they would use a retail clinic again.

The clinics tend to provide care “especially for people who do not have a primary care physician,” such as younger people, notes Lee, the University of California, Irvine, professor. “Retail is more geared to people with less complicated conditions,” she adds.

One aspect of retail healthcare that has perhaps not received as much attention as others is the pricing. Batra notes that prices are transparent, so people know what they are going to be charged, in stark contrast to the often-opaque pricing in traditional healthcare. But he also points out some drawbacks of retail healthcare. The services are often limited. If someone needs, say, three services, they may find that only two are provided by the retail clinic. For that and other reasons, retail health is not going to replace primary care physicians, says Batra.

Hoag believes that the future of the retail clinics lies in providing preventive care — which is consistent with the vision that Lynch mapped out. With their numerous locations, retail clinics can play an important role in increasing health equity, says Singh: “Being part of the community can and should result in more activism in the community and better representation of the demographics.”

Susan Ladika is an independent journalist in Tampa, Florida.

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