Patrick Soon-Shiong's NantWorks enters hospital business with latest venture
- NantWorks, the parent organization for health technology and biotech companies founded by Dr. Patrick Soon-Shiong, announced on Wednesday it has acquired a majority stake in Verity Health System's management company Integrity Healthcare. Soon-Shiong will join Verity’s board of directors.
- Verity operates six California hospitals that have historically focused on care delivery services to low-income patients. NantWorks and Blue Mountain, the former majority owner of Integrity Healthcare, have committed to invest in Verity’s ongoing revitalization efforts and turn around the hospitals' financial struggles.
- Although Soon-Shiong is no stranger to the healthcare business, this latest move is the billionaire physician's first business venture in care delivery services, Los Angeles Times reported.
Soon-Shiong's first venture in the hospital business could give his healthcare business ventures the ability to test out their ideas in a care delivery setting. Soon-Shiong, a physician who made it big by founding biotech firms that would later be sold to pharma companies for billions of dollars, comes to the deal with controversy attached to his name after facing scrutiny over reportedly overblown medical claims about NantHealth's cancer moonshot initiatives as well as allegations of steering his charitable donations back to his business ventures. NantHealth denies both claims.
NantWorks houses an ecosystem of companies from NantHealth to NantBioScience and NantPharma, all committed to innovation in their respective spaces. Although the master plan for NantWorks' entry into care delivery services is still undefined, the deal could provide a testing ground of sorts for its technologies. Many providers pilot tools with third-party vendors on a trial basis to understand their potential for their system before purchasing a product at its full ticket price. In NantWorks' case, an aligned interest for both the provider and the healthcare company's top management could help smooth testing and operations as well as provide an end-goal vision for both parties.
Jim Pieri, portfolio manager at BlueMountain and a member of Verity’s board of directors, stated the partnership "marks an exciting opportunity for our health system to gain strategic access to next generation technologies and to accelerate the pursuit of more differentiated delivery strategies."
The system will likely welcome the investments. In 2015, the California hospitals were almost ready to throw in the towel. Then-California Attorney General Kamala Harris allowed Integrity Healthcare to purchase the system from Daughters of Charity Health System as long as it committed $260 million in capital to the revitalization of Verity Health System. Net patient revenue increased 7%, patient admissions grew 1.3% and inpatient surgeries rose 6.9% in the first 12 months since the investments were made.
Verity is looking to build on that momentum with the investment of diagnostic and imaging services and stem cell therapy, according to Jack Krouskup, chairman of the Verity Health System Board of Directors. The collaboration will expand the health system's oncology, cardiac, orthopedic, neurology, urology, transplant and pediatric services.
Such technology investments can be good promotion for hospitals looking to show patients that they are receiving care at the forefront of innovation. If Verity can gain market share and improve its financials while NantWorks is able to test tools that can be scaled and sold down the line to other providers, this could be a win-win deal for both parties.
- NantWorks NantWorks Acquires Majority Interest in Verity Health's Management Company Committing to Invest in Hospital System’s Continued Revitalization
- Los Angeles Times Patrick Soon-Shiong's NantWorks to take over St. Vincent and 5 other California hospitals
- Axios Soon-Shiong buys into California hospital system
- Los Angeles Times A management change is OK'd for Daughters of Charity hospitals, setting the stage for a sale
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