Babylon Health’s rollercoaster ride continues. Today’s news was that their last of three NHS Trust contracts, with Royal Wolverhampton NHS Trust (RWT), was ended by Babylon two years into a ten-year contract. This follows the end of two other contracts that drew a fair amount of controversy (see our index here)–the 2020 one-year Royal Berkshire NHS Foundation Trust with an accident and emergency triage app that was discontinued by Babylon, and with University Hospitals Birmingham NHS Foundation Trust (UHB) for a virtual A&E app that was ended in July.
In the UK, Babylon will continue its GP At Hand service that took over a GP office in Fulham, London in 2016. It now currently covers about 155,000 patients. It will also maintain the AI-based chatbot used for triaging patients. GP At Hand is not profitable. GP practices work on a flat fee per patient that averages £155 ($183) per patient per year.
Babylon and RWT contracted in 2021 for a digital-first primary care service that would cover 55,000 patients, with a patient portal that would enable them to view their health records and view appointments. The app would also monitor conditions and like the AI chatbot, help to diagnose illness and actions. Babylon is ending the ten-year contract after two, which would make it 2023.
From the bubbly Digital Enthusiasm of former Health Minister Matt Hancock (left) in 2018 to the storm around @DrMurphy11, a GP who raised performance issues with the Babylon chatbot that escalated to BBC Two’s Newsnight in February 2020, founder and CEO Ali Parsa is now in an unenviable position in two countries. He 1) has semi-exited the UK market, 2) ruthlessly cut costs to the bone because the stock is down 90%, and 3) shifted to the far larger but unforgiving market of the US. The bright spot here is that US patients covered have already topped 6 years of effort in the UK. Parsa has now moved to the US.
Parsa noted in a recent results call [Seeking Alpha-Ed.] with analysts. “Those two or three small NHS contracts that you refer to—and those are not our significant primary-care contracts— those are marginal contracts for us, more in that category of contracts where we could not see a significant contribution to our profit margin,” he said. “And they also had a rather small contribution to our revenue. And therefore we saw them as a distraction and terminated those contracts.”
This Editor has previously noted Babylon’s layoffs/redundancies of at least 100 staff to save $100 million by Q3, which we are now in. Expansion in the US has to take place with static staff to make goal. And as to the US being unforgiving: VCs are snapping their capacious purses shut, Mr. Market’s gone into rehab, and inflation is shrinking healthcare budgets from providers to payers to self-insured companies. The Big Kahunas with Big Bucks–CVS Health, Allscripts, UnitedHealth Group, Amazon, Walgreens, Walmart–and out-of-left-field players like Option Care Health bidding on Signify Health, are snapping up, as we’ve earlier put it, “healthy health tech companies at the right (discounted) price that fill in their tech gaps”. And making life difficult for single players like Babylon Health. Wired. And a snappy hat tip to HISTalk.