TTA’s week: WannaCry’s message, Anthem v. Cigna, d.Health Summit, Texas telemed

 

WannaCry brings short-term misery to NHS, but a larger warning. Now it’s Anthem vs. Cigna. Editor Donna reports from d.health Summit on aging–and how about that 105 year old allergist? Telemedicine giddyups in Texas at last!

And…time grows short to take R2G’s annual mHealth App Survey!

Successful Aging 2030: how far we haven’t come, how far we have to go (Over a coffee, Editor Donna’s full report from d.health Summit 2017)

(The WannaCry attack as it broke)
Dry the tears: WannaCry stymied, North Korea hackers suspect. Is this a poke for a worse attack? 
Updated 15 May: 20% of NHS organizations hit by WannaCry, spread halted, hackers hunted

(Anthem-Cigna’s legal tussle as it broke)
The End or Beginning? Anthem ends Cigna merger, won’t pay breakup fee, seeks damages (The Payer v. Payer Hate Fest)
Anthem-Cigna breaking: lawyers may talk, but Cigna gets to walk–and it continues in court (Delaware Court tells them to go into their corners)

Texas gets its telemedicine on: House passes full direct-to-consumer access (Another win for patients)
The weekend charmer: fitness tips from a 105 year-old practicing doctor (Sharp WWII veteran!)

The healthcare spinoff of ‘Law and Order’ continues with Anthem’s appeal to SCOTUS. Estonia rolls out the welcome for small business. The Dark Overlord casts a shadow over PHI, tenders are up in Nottingham and Scotland, and will health tech restart in the NHS? 

The stop-start of health tech in the NHS continues (UK) (Hurry up and wait)
Hackermania meets The Dark Overlord with 2.3 million 2017 health data breaches (Wrestlemania Cage Match!)
Thinking about a location for your health tech startup? Consider…’virtual’ Estonia! (A Baltic welcome to business–and you don’t have to leave home)
Tender Alerts: Nottingham NHS telestroke, Scotland remote health and care (Both are potentially large)
Better than ‘Dallas’? Anthem and Cigna in Delaware court (updated); Anthem’s SCOTUS appeal (Anthem and its attorneys grind on…and on…and on)

Our Weekend Update included: a PHD Challenge, RSM events, Fitbit’s ‘mess’ (but a good 1st Q), and better gait tracking as predictor of health.

d-Lab opens Challenge to transform use, governance of Personal Health Data (International competition from Spain)
Two London events worth considering (At RSM May 18, June 1)
Fitbit reaching out to NHS–but new smartwatch ‘a giant mess’ (But not according to Fitbit–updated for 1st Q earnings)
A stride ahead in gait analysis for detecting potential health issues (A better sensor approach from MIT)

Previous articles of continued interest:

Blue Cedar releases new security for health apps, built into the app (A way around a roadblock)
Is startup investor funding actually going to startups? Where are all of them, anyway? (R2G’s provocative views on Whither Startup Funding)
Breaking-The Theranos Story, ch. 41: settling, not fighting, with Partners Fund on fraud (Theranos heads to the Auger Inn)
Pulmonary telehealth gets hot: FDA clears MTI’s Bluetooth spirometer for home use (Lung health gets easier to measure at home)
Australian Telehealth Conference 2017 (Getting telehealth into primary care Down Under proves problematic)

Readers invited: 7th Annual mHealth App Developer Economics Survey (Research2Guidance wants to know from you)

Sustainable transportation models for patient access to care at lower cost (Cost-effective, non-emergency transportation)

Babylon Health ‘chatbot’ triage AI app raises £50 million in funding (UK) (But will AI put better health in your hands?)
Health 2.0 conferences acquired by HIMSS (updated) (The t-shirts just converged with the suits)

NantHealth/Soon-Shiong ch. 2: pay for play research at University of Utah? (The fog of dubiousness around the enterprise and donations thickens)

Have a job to fill? Seeking a position? Free listings available to match our Readers with the right opportunities. Email Editor Donna.


Read Telehealth and Telecare Aware: http://telecareaware.com/  @telecareaware

Follow our pages on LinkedIn and on Facebook

We thank our present and past advertisers and supporters: Tynetec, Eldercare, UK Telehealthcare, NYeC, PCHAlliance, ATA, The King’s Fund, HIMSS, MedStartr, HealthIMPACT, and Parks Associates.

Reach international leaders in health tech by advertising your company or event/conference in TTA–contact Donna for more information on how we help and who we reach. See our advert information here (to be updated). 


Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine and health tech, worldwide–thoughtfully and from the view of fellow professionals

Subscribe here to receive this Alert as an email on Wednesdays with occasional Weekend Updates. It’s free–and we don’t lend out or sell our list–no spam here!

Donna Cusano, Editor In Chief, donna.cusano@telecareaware.com, @deetelecare

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The End or Beginning? Anthem ends Cigna merger, won’t pay breakup fee, seeks damages (updated)

click to enlargeUpdated. Anthem on Friday 12 May beat Delaware Chancery Court’s Judge Travis Laster’s ticking clock [TTA 11 May], and finally, formally called off its merger with Cigna. Instead of sighs of relief and seeking oblivion in a few bottles of adult beverages, Anthem still won’t stop and let Cigna go. Anthem now refuses to pay the breakup fee per their agreement, claiming once again that Cigna sabotaged the merger, and wants blood from that rock. From the Anthem announcement:

In light of yesterday’s decision and Cigna’s refusal to support the merger, however, Anthem has delivered to Cigna a notice terminating the Merger Agreement. Cigna has failed to perform and comply in all material respects with its contractual obligations. As a result, Cigna is not entitled to a termination fee. On the contrary, Cigna’s repeated willful breaches of the Merger Agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna. (Editor’s highlight)

Now we have Anthem seeking damages from Cigna, which is a matched set with Cigna’s Funny Valentine of 14 February adding over $13 bn in damages to recoup the unrealized premium that shareholders did not earn as a result of the merger failure. Anticipating Anthem’s position even at that time, they flipped a wicked backhand in their statement:

Anthem contracted for and assumed full responsibility to lead the federal and state regulatory approval process, as well as the litigation strategy, under the merger agreement. Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the approval process.

Our Readers will also recall that in March, Cigna joined with Anthem in supporting Anthem’s appeal to the DC Court of Appeals, an unusual move in this light, but one that further reinforced their non-saboteur ‘we’re just innocent victims here’ position. Cigna has not yet publicly responded. The AMA cheered its apparent complete victory in the name of doctors and patients.

They hate each other and have from the start. The real victims here are the policyholders–patients–of both companies, with both companies distracted by a legal battle. How different they are from both Aetna and Humana, which (at least publicly) politely ended all efforts after the merger denial, paid out their breakup, and went back to business, which right now presents challenges with ACA hitting the long-predicted Actuarial Brick Wall. (Aetna exiting ACA individual exchange plans in 2018)

Judge Laster’s plans for a restful summer on Delaware’s beautiful beaches and bays are likely to have gone the way of the mouse in Robert Burns’ poem ‘To A Mouse’ (stanza 7). He is not alone in Indianapolis or Bloomfield, Connecticut:

But Mousie, thou art no thy-lane,
In proving foresight may be vain:
The best laid schemes o’ Mice an’ Men
Gang aft agley,
An’ lea’e us nought but grief an’ pain,
For promis’d joy!

See you in court! Fortune, Modern Healthcare, Healthcare DiveInterested in the previous details? See our coverage here, including our take on ‘whither the policyholders (patients) and corporate buyers’.

Anthem-Cigna breaking: lawyers may talk, but Cigna gets to walk–and it continues in court

click to enlargeBreaking, with a whimper. This evening (11 May), the Delaware Court of Chancery released its ruling denying a 60-day injunction requested by Anthem to prevent Cigna from ending their merger. The original merger agreement had an end date of April 30. Judge Travis Laster stayed the implementation of his ruling until Monday noon to give Anthem a chance to appeal to the Delaware Supreme Court. Reuters

Is this The End? In this Editor’s opinion, yes, the petition to the US Supreme Court for a writ of certiorari notwithstanding. I stand by my Monday observation that “the Chancery Court decision to extend for 60 days–into July– is critical to any SCOTUS hearing, as it is unlikely there would be any merit in a review of a dead deal even if there is a potentially novel issue. 

So Cigna can walk, pass ‘go’ and collect…? The open issue is now Cigna’s. There is a contractually mandated breakup fee of $1.85 bn. In February, their Funny Valentine also claimed over $13 bn in damages, on the grounds that Anthem had intent to harm Cigna’s business. Not so fast though–there will certainly be a fight over the damages. According to Bloomberg, “the judge said there was significant evidence Cigna may have violated the merger agreement by dragging its feet on antitrust concerns, which could entitle Anthem to “potentially massive damages.” The next phase of court actions will be around damages awarded to Cigna, if any; if so how much; and what is the final settlement. Dirty laundry and ‘Who Shot John?’ will fly in this same court, unless the settlement is quick and quiet, highly unlikely with these two noisy protagonists. If it remains substantial, Cigna could be shopping for acquisitions–or be a cash-rich acquisition target itself. More distractions for management.

Other mergers may be more palatable in a changing healthcare landscape…just not this one. Also Fortune. Interested in the previous details? See our coverage here, including our take on ‘whither the policyholders (patients) and corporate buyers’.

TTA’s week: Anthem’s Hail Mary, Dark Overlord strikes, Estonia loves startups, UK tenders, more

 

The healthcare spinoff of ‘Law and Order’ continues with Anthem’s appeal to SCOTUS. Estonia rolls out the welcome for small business. The Dark Overlord casts a shadow over PHI, tenders are up in Nottingham and Scotland, and will health tech restart in the NHS? 

And…don’t forget to take R2G’s annual mHealth App Survey!

The stop-start of health tech in the NHS continues (UK) (Hurry up and wait)
Hackermania meets The Dark Overlord with 2.3 million 2017 health data breaches (Wrestlemania Cage Match!)
Thinking about a location for your health tech startup? Consider…’virtual’ Estonia! (A Baltic welcome to business–and you don’t have to leave home)
Tender Alerts: Nottingham NHS telestroke, Scotland remote health and care (Both are potentially large)
Better than ‘Dallas’? Anthem and Cigna in Delaware court (updated); Anthem’s SCOTUS appeal (Anthem and its attorneys grind on…and on…and on)

Our Weekend Update included: a PHD Challenge, RSM events, Fitbit’s ‘mess’ (but a good 1st Q), and better gait tracking as predictor of health.

d-Lab opens Challenge to transform use, governance of Personal Health Data (International competition from Spain)
Two London events worth considering (At RSM May 18, June 1)
Fitbit reaching out to NHS–but new smartwatch ‘a giant mess’ (But not according to Fitbit–updated for 1st Q earnings)
A stride ahead in gait analysis for detecting potential health issues (A better sensor approach from MIT)

Security can be baked into apps, but funding isn’t baked into accelerators. Theranos’ good news that’s actually bad. But there’s real good news in pulmonary health, ATA awards, and Down Under. Anthem tries to Beat The Clock, but it looks like The Clock Beat It

Blue Cedar releases new security for health apps, built into the app (A way around a roadblock)
Is startup investor funding actually going to startups? Where are all of them, anyway? (R2G’s provocative views on Whither Startup Funding)
Breaking-The Theranos Story, ch. 41: settling, not fighting, with Partners Fund on fraud (Theranos heads to the Auger Inn)
Pulmonary telehealth gets hot: FDA clears MTI’s Bluetooth spirometer for home use (Lung health gets easier to measure at home)
ATA 2017: Telehealth 2.0 annual President’s Awards (New York-Presbyterian, Tyto Care, and more)
Anthem to Cigna: This merger is on, despite the appeals court decision, but the clock is ticking (Vanishing Point closing in fast)
Australian Telehealth Conference 2017 (Getting telehealth into primary care Down Under proves problematic)

Transportation as a social determinant of health–we focus on a company bending the cost curve. Three reports direct from the ATA/Telehealth 2.0 conference, Babylon raises £50 million for AI diagnostics, fraud allegations pile up for Theranos.

Sustainable transportation models for patient access to care at lower cost (Cost-effective, non-emergency transportation)

Babylon Health ‘chatbot’ triage AI app raises £50 million in funding (UK) (But will AI put better health in your hands?)
ATA2017 dispatch: Devices and doom (Overwhelming data with nowhere to go is a failed business model)
ATA2017 dispatch: Catalyzing telehealth innovation in hospital organizations (How Mercy is practicing ahead of the curve)
The Theranos Story, ch. 40: investor fraud revealed in equipment, fake demos, testing (Testing new lows in honest business practice)
ATA2017 dispatch: The future is about business models and the consumer (Interview with ATA chief Jon Linkous shows a change in direction)

Previous articles of continued interest:

The Theranos Story, ch. 39: good news, bad news, and the very ugly lawsuit news (The countdown at the bank begins)
Health 2.0 conferences acquired by HIMSS (updated) (The t-shirts just converged with the suits)

NantHealth/Soon-Shiong ch. 2: pay for play research at University of Utah? (The fog of dubiousness around the enterprise and donations thickens)
Readers invited: 7th Annual mHealth App Developer Economics Survey (Research2Guidance wants to know from you)

Have a job to fill? Seeking a position? Free listings available to match our Readers with the right opportunities. Email Editor Donna.


Read Telehealth and Telecare Aware: http://telecareaware.com/  @telecareaware

Follow our pages on LinkedIn and on Facebook

We thank our present and past advertisers and supporters: Tynetec, Eldercare, UK Telehealthcare, NYeC, PCHAlliance, ATA, The King’s Fund, HIMSS, MedStartr, HealthIMPACT, and Parks Associates.

Reach international leaders in health tech by advertising your company or event/conference in TTA–contact Donna for more information on how we help and who we reach. See our advert information here (to be updated). 


Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine and health tech, worldwide–thoughtfully and from the view of fellow professionals

Subscribe here to receive this Alert as an email on Wednesdays with occasional Weekend Updates. It’s free–and we don’t lend out or sell our list–no spam here!

Donna Cusano, Editor In Chief, donna.cusano@telecareaware.com, @deetelecare

Better than ‘Dallas’? Anthem and Cigna in Delaware court (updated); Anthem’s SCOTUS appeal

click to enlargeThe War of the Payers grinds on. It’s altogether appropriate that this is the 100th anniversary of the US entry into the Great War. It was marked by a costly strategy that stalemated in the trenches and fatally ground into dust over four years men, machines, national treasuries, and ultimately a world order. In this Editor’s view, we are witnessing it writ large in Anthem’s, and to a lesser extent Cigna’s, actions after their merger was put paid to, first by a DC Federal District, then a District Appeals court, in a suit brought by the Department of Justice (DOJ) and 11 states.

Update: In Delaware Chancery Court May 8, Anthem requested a 60-day preliminary injunction to prevent Cigna from ending their merger. This was in a hearing on the February restraining order that Anthem received to block Cigna’s exit, filed in that court, from the merger after the District Court decision. Vice Chancellor Travis Laster said (after five hours of argument) that he would rule as soon as possible. Reuters  New: Even Judge Laster admits it’s a ‘long shot’ that Aetna could find a path to success after two courts turned down the merger. Cigna’s legal spokesperson further amplified that, stating that it was ‘a near impossibility’ and that no “divestiture package would have solved” the merger’s problems. Bloomberg  See the back story below

Watch for fireworks whatever the decision. Antitrust lawyer David Balto rated its potential “more fun than watching an episode of [the television melodrama] Dallas“. CT Mirror

The Chancery Court action is far more important than Anthem’s ‘petition for writ of certiorari’ to the Supreme Court of the US (SCOTUS) for review of the lower court ruling, citing the following:

  1. The 2 to 1 split in the court decision
  2. That the 1960s court precedents relied on by the District Court must be updated to today’s understandings of economics and consumer benefit
  3. And asserting that the loss of the merger “would limit access to high quality affordable care for millions of Americans and deny them more than $2 billion in medical cost savings annually” from the improved bargaining power of the new entity

(What perhaps was not included was that the merger partner, Cigna, wants out, out, out of the merger, which does tend to put a negative cast on the whole affair, as it did for the DC District Court.)

This Editor believes that the Chancery Court decision to extend for 60 days–into July– is critical to any SCOTUS hearing, as it is unlikely there would be any merit in a review of a dead deal even if there is a potentially novel issue. In the Reuters report, Anthem’s attorney mentioned the SCOTUS petition with a decision date by early July (the end of the term). He confirmed their intent to appeal to the DOJ for a ‘negotiation’ once the Trump Administration had its nominated officials in place. In Bloomberg, Cigna’s attorney’s position is that SCOTUS wouldn’t even consider the petition until September, which would put it past the extension and a decision into the next term.

Petitions for writ of certiorari are the Hail Mary pass–the last-ditch move–of court actions. (more…)

Anthem to Cigna: This merger is on, despite the appeals court decision, but the clock is ticking

click to enlargeThe War of the Payers continues.

Update: The DC Court of Appeals released its decision Friday 28 April to deny the Anthem-Cigna merger, upholding the District Court’s decision. This was a 2 to 1 vote that was issued immediately prior to the 30 April merger expiration. It cited that the savings would not mitigate the anti-competitive effects in the national, large group, and local markets, mainly in Medicare Advantage. What has been under-reported is that 11 states plus DC originally joined with the DOJ to enjoin (stop) the merger. In the US system, any healthcare merger also has to be approved by the states, and this merger was a failure in this area. Remarkably, even the dissenting judge cited problems with hospitals and doctors due to the combined company’s negotiating power.

In any rational business deal, this would be the final nail in the coffin, especially with one of the merger partners already wanting to leave. Unless Anthem wants to appeal to the US Supreme Court, this merger has reached The End of the Line. Yet publicly Anthem is pursuing, at least for the time being. In a statement, Anthem expressed “We are committed to completing the transaction and are currently reviewing the opinion and will carefully evaluate our options.”  Court decision in full. Healthcare Dive. MedCityNews.

To recap other recent developments: In February, the two insurers were filing and counter-filing each other in Delaware Chancery Court–Cigna to end their merger, Anthem to continue. Last Wednesday (19 April), Anthem filed an injunction to prevent the deal from expiring as per the merger agreement on 30 April. This injunction may be heard by the Chancery Court on 8 May, according to Anthem documents, but the main court documents are still under seal. (Law 360, via Healthcare Dive 24 April)

In prior Federal court actions, the Federal District Court in DC, based on action by the US Department of Justice, first denied the merger on 8 February on antitrust and anti-competitive grounds [TTA 9 Feb]. Unlike the also denied Aetna-Humana merger, it was publicly known, to the point where it was cited in the District Court decision, that the companies had significant disagreements on the merger. After the denial, Anthem wasted no time in appealing for a reversal of the decision with the DC Court of Appeals. Cigna lost no time in initially wanting no part of any appeal of the ruling by Anthem–and filed in Delaware Chancery Court for $13 bn in damages in addition to the contractual breakup fee of $1.85 bn [TTA 14 Feb]. Two days later, Anthem filed in the same court for an injunction to delay the merger agreement’s legal termination [TTA 16 Feb]. In March, Cigna surprisingly filed a brief in support of Anthem’s appeal (Healthcare Dive). Anthem has also denied rumors of an appeal to the Justice Department to save the merger (Reuters), which is now moot if it ever existed.

As the clock winds down, there remain rivers of bad blood and accusations of bad faith between these two organizations which will continue to be fought in court. Was this merger ever really necessary? No, and it never was, and in our 16 February/21 February update (see analysis), this Editor opines on why Anthem’s to-date persistence in pursuing this has been extraordinarily harmful–to their customers and to both companies.

HIMSS17 dispatches: Mayo maps neonate telemedicine, Amwell-Samsung, Samsung-T-Mobile

Mayo maps out an enterprise telehealth (telemedicine) support structure. Here’s how the Mayo Clinic deployed neonatology remote telemedicine to their sites in Minnesota, Arizona, and Florida. There’s plenty of flow charts and summary points in this presentation deck around team building, staffing consistently and reporting that improves processes. Hat tip to our HIMSS correspondent on the scene, Bill Oravecz of Stone Health Innovations. Update: If you are using Chrome, you may have difficulty downloading session handouts from the HIMSS17 website Schedule pages. Try another browser. If you are interested, you may be able to obtain through contacting the two session presenters, Susan Kapraun and Jenna A. Beck, MHA, directly.

American Well and Samsung are partnering on integrating care delivery. Their joint release is low on details, but towards the end there’s an indication that American Well, its partners, and other providers and payers will be able to offer their services to Samsung customers. Other reports (Healthcare Dive) indicate the partnership is destined to enhance Amwell’s Exchange platform between payers and providers. Partners listed are Cleveland Clinic, New York-Presbyterian Medical Center and Anthem (undoubtedly resting after sparring with Cigna). Also Healthcare IT News.

Separately, Samsung also announced a partnership with T-Mobile for developing IoT in the senior care space. This would pair Samsung’s ARTIK Cloud with T-Mobile’s cellular network for Breezie, a social engagement for seniors interface built on a Samsung tablet which has apps and connects to various peripherals for post-acute care and daily living. It sounds interesting, but once again the release hampers the reporter by being as clear as mud in what it’s all about. See if you can decipher this: ARTIK Cloud permits “Amazon Alexa, Samsung SmartThings, iHealth Feel Wireless Blood Pressure Monitor and the Pulse Oximeter – to intelligently communicate with each other.” “Each Breezie interface has more than 40 preconfigured accessibility settings and sensor driven analytics to adjust for different levels of digital literacy, as well as physical and cognitive ability.” The Breezie website is far more revealing. Healthcare Dive also takes a whack at it towards the end of the above article.

Anthem to Cigna: That’s Sabotage! You’re staying, like it or not! (updated 21 Feb)

Breaking News in The War of the Payers. Late on Wednesday (15 Feb), Anthem received a temporary restraining order to block Cigna from terminating the merger. Judge Travis Laster’s decision in the Delaware Court of Chancery maintains the “legal status quo’ until an April 10 hearing, where he will hear arguments from both sides. Anthem is now able to proceed with a fast-tracked appeal in the DC Federal Court of Appeals to overturn the February 8 DC District Federal Court decision that denied the merger. The sole extension in the merger agreement is to April 30, which will be preceded by the Chancery Court hearing 20 days prior. Bloomberg, WSJ (via 4-traders.com)

Wednesday morning, Anthem had filed a temporary restraining order in Chancery Court to keep Cigna from ankling the merger, which would make an appeal moot. It was positioned in their February 15 release as “a temporary restraining order to enjoin Cigna from terminating, and taking any action contrary to the terms of, the Merger Agreement, specific performance compelling Cigna to comply with the Merger Agreement and damages.” Cigna wanted out immediately, as we noted on Feb 14, seeing no hope in challenging the District of Columbia Federal District Court ruling as Anthem does, and took the position that the extension was invalid. They also sought an additional $13 billion in damages for shareholders beyond the $1.85 billion breakup fee.

The language Anthem used in Wednesday’s release to justify the filing was harsh: “…Cigna does not have a right to terminate the Merger Agreement at all because it has failed to perform fully its obligations in a manner that has proximately caused or resulted in the failure of the merger to have been consummated.” Anthem then accused Cigna of actively working to sabotage the merger: “Cigna’s lawsuit and purported termination is the next step in Cigna’s campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the Merger Agreement in support of such effort.”Also Forbes

Bottom line: ‘Cigna, you’re a bad and faithless partner, but we are going to force a merger by any means possible anyway.’ Cigna blames Anthem for botching the merger approvals. Does prolonging any of this make sense?

Updated 21 Feb The differences started at the very beginning, with C-level disputes on who would lead a merged company and other areas of governance, so obvious (and public) they were cited by DC Federal District Judge Amy Berman Jackson’s Feb. 8 decision. David Balto, an antitrust lawyer in Washington, dubbed it ‘a shotgun marriage that went sour’ and not to discount Cigna’s case for damages due to business harm. After reading this article, you’ll wonder why they even started. Hartford Courant

Analysis Any merger between Anthem and Cigna has become, despite the language, a hostile takeover, worthy of Frank Lorenzo in this Editor’s airline days, or more recently, Carl Icahn. Having worked for Mr Lorenzo years ago, observing from my tiny chair way over on the sidelines, I learned that hostile takeovers and poorly thought-out mergers don’t work out well, in service delivery or economics, short or long term. They usually end badly, in bankruptcy court, with many tears shed and lives wrecked.

Memo to Anthem and Cigna–is this really necessary? Here we are dealing with insurance, and service to policyholders/members, affecting both their health and wealth. You both talk a good game about saving on medical costs, accelerating the progress of value-based care, delivering value to shareholders, and improving quality. But you hate each other and have from the start. Playing the game of Who Blinks First, and the distraction of a long and bitter legal battle, cannot be anything other than harmful to your members, employees, doctor and health system providers, your bottom lines, and your future.

This is not the airline business, beverages or detergent. It’s people’s lives here–have you both forgotten? Enough! Stop now! Get back to the business of healthcare!

Previously and related in TTA: Cigna to Anthem: we’re calling it off too, Aetna’s Bertolini to Humana: let’s call the whole thing off, Anthem-Cigna merger nixed

Cigna to Anthem: we’re calling it off too–and we want $13 bn in damages!

Breaking News  Not quite so tuneful or amicable is today’s other Funny Valentine, which is now in Divorce Court. Cigna officially wants out, out, out of its merger with Anthem in a big, big, big way. In addition to the contractual breakup fee of $1.85 bn, Cigna is suing for additional damages exceeding $13 bn.

The action versus Anthem in the Delaware Court of Chancery seeks to lawfully terminate the merger (already denied in the DC District Court, TTA 9 Feb) and to stop Anthem’s current move to extend the agreement to 30 April. The additional $13 bn in damages would recoup the unrealized premium that shareholders did not earn as a result of the merger failure.

Anthem stated last week following the District Court decision’s release that it would appeal. Healthcare Dive reported that filing took place yesterday in the District of Columbia Federal Court of Appeals.

The Cigna release is intriguing for its careful air-clearing and positioning. In their view, the merger “had the potential to expand choice, improve affordability and quality and further accelerate value-based care”. Then a wicked backhand to Anthem: “Anthem contracted for and assumed full responsibility to lead the federal and state regulatory approval process, as well as the litigation strategy, under the merger agreement. Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the approval process.’

Financially, Cigna stresses its positive outlook of 12 to 18 percent growth and ‘significant capital available for deployment’, as well as touting that their “approach of focusing on health care services over sick care financing has never been more critical.” There is also an updated statement about their share repurchasing authority: “Cigna is also announcing that its Board of Directors has expanded the company’s share repurchase authority to an aggregate amount of $3.7 billion. Management has determined that it is prudent to cap the amount of the repurchase to $250 million per quarter until there is more clarity with respect to the litigation with Anthem.”

No press response yet from Anthem. Stay tuned. Also CNBC

Earlier today: Aetna’s Bertolini to Humana: Let’s call the whole thing off

Updated: Aetna’s Bertolini to Humana: Let’s call the whole thing off.

Updated–Humana exits individual exchange policy markets

Breaking News On this Valentine’s Day, a Romance Gone Flat. This morning, both Aetna and Humana formally announced the end of their merger, ruling out any appeal of the Federal District Court decision against it last month [TTA 24 Jan]. While positioned as a mutual agreement, Aetna CEO Mark Bertolini took the key quote in the release: “While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction. We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations. Our mutual respect for our companies’ capabilities has grown throughout this process, and we remain committed to a shared goal of helping drive the shift to a consumer-centric health care system.”

Humana’s release limited the announcement to one line and briskly moved on to what really counts–the financials. They will receive a breakup payment of $1 bn (after taxes, $630 million) from Aetna, with their 2017 financial guidance call/release taking place after 4pm EST today. Molina Healthcare, which was to receive certain Aetna Medicare Advantage assets from Aetna post-merger to relieve an over-dominance in some markets, will also receive an undisclosed termination fee. Ka-ching! CNBC, Hartford Courant (Aetna’s hometown paper)

UPDATED 2/14-16 Humana’s financial release announced an updated strategy, share repurchases, a nicely increased dividend–and, buried in the release, their exit effective 2018 from the ‘individual commercial’ business, which are individual policies offered in 11 states through the ACA-created Federal Marketplaces, citing an ‘unbalanced risk pool’ and losses estimated at $45 million for FY17. (By 2018, it may be a moot point.) It is ironic that Aetna’s exit from exchange policies due to unprofitability (or not, as it turned out to be in a few cases) proved to be one of the many bricks that broke the merger, in Judge Bates’ view. The truth is that Aetna and Humana are hardly alone in fleeing the exchanges, and that they have turned out to be unprofitable, as predicted.

click to enlargeConsistent with their behavior over the 19 months of the proposed merger, both Aetna and Humana are publicly respectful, unlike….

These other two will never be one, something must be done? The demise of the Anthem-Cigna merger [TTA 9 Feb], now breaking up in Delaware Chancery Court, may mean a period of Payer Merger Quiet. Does this mean a refocusing on benefiting corporate and individual policyholders during the certain changes to come? Aetna may also proceed with a plan to move operations to Boston, which may affect hundreds of jobs, but has pledged to keep a presence in Hartford according to the Hartford Courant. Humana continues to be interested in investment opportunities and, from reports, another merger.

Goodness knows what the end will be! (Hat tip to Ira Gershwin for the title and the interpolated lyrics!)

Anthem-Cigna merger nixed, finally (US)

click to enlarge Breaking News. Not with a bang, but a whimper. Late Wednesday 8 Feb, the anticipated decision derailing the $54 million Anthem-Cigna merger was released by the Federal District Court, District of Columbia. Judge Amy Berman Jackson’s decision denying the merger was very much along the anti-competitive and anti-trust rationales contained in the 19 January advance report by the New York Post. There’s little that hasn’t already been explored in our prior reports, so we will leave the rehashing to sources like CNBC. The general consensus is that the four Big Payer Merger participants (Aetna and Humana merger denied [TTA 24 Jan]) will be moving on, perhaps to their advantage as most of the premises for merging, based on ACA’s effects, are expected to change, drastically.

Cigna must also be relieved after its reported ‘merger remorse’ after too many rumored disagreements with Anthem. According to Bloomberg, Cigna is sitting on $7 to $14 billion deployable capital, with the high end including extra debt. (Does this include the $1.85 bn breakup fee that Anthem owes to Cigna? Stay tuned on how Anthem tries to get out of this.) And the American Medical Association is beyond delighted (release).

Of course, there’s a lot of speculation about all that loose cash being deployed on new merger targets, which include the Usual Suspects of Humana, WellCare, Centene and Molina. Some free advice: all these companies should, for the next year, sit quietly and breathe deeply (as many employees who would be redundant in any merger are). They should also take care of business (TCB!), refocus on serving their policyholders, make their processes far less onerous on providers, and let it all shake out rather than rushing out to find out Who To Buy. (New Attorney General Jeff Sessions was sworn in this morning, and many changes are coming in both healthcare policy and the judiciary.) Also Neil Versel’s pointed take in MedCityNews.

Updates on Anthem-Cigna, Aetna-Humana mergers

click to enlargeFor our Readers following the Continuing Soap Opera which involves the payer mergers of Aetna-Humana and Anthem-Cigna, some updates:

  • Anthem-Cigna still undecided by despite our 19 January report that the merger would be denied by Judge Amy Berman Jackson of the Federal District Court for the District of Columbia. Reading the SEC 8-K filed in July 2015, the extension to 30 April is automatic if the merger is not consummated or is non-appealable by 31 January. Likely this is to Cigna’s chagrin, as multiple sources over the two years this has been going on have detailed the growing disagreements between the two companies. As we noted in January, Anthem is also running up against ‘the Blues rule’ where it does business as a Blue Cross Blue Shield plan. The arguments that this internal competition is beneficial are pretzel-like indeed.
  • A labor union investor, Westchester Putnam Counties Heavy & Highway Laborers Local 60 Benefits Funds, is suing Aetna for shareholder losses in the Federal District Court in the District of Connecticut (complaint here). The demand is for a jury trial and details what they believe to be false and misleading statements by management and not disclosing adverse facts.

Healthcare Dive is recommended for their two deeper dives: 1 Feb on Anthem-Cigna and the outcomes of both mergers, 30 Jan on the labor union lawsuit. The likelihood of either happening becomes more remote as time goes by, but there could be a surprise.

Breaking: Aetna-Humana merger blocked by Federal court

Breaking News from Washington Judge John B. Bates of the Federal District Court for the District of Columbia ruled today (23 Jan), as expected, against the merger of insurance giants Aetna and Humana. Grounds cited were the reduction in competition for Medicare Advantage plans, where both companies compete. “In this case, the government alleged that the merger of Aetna and Humana would be likely to substantially lessen competition in markets for individual Medicare Advantage plans and health insurance sold on the public exchanges.” The decision could be appealed in the US Appeals Court for the DC Circuit, or could be abandoned for different combinations, for example a rumored Cigna-Humana merger, or smaller companies in the Medicare/Medicaid market such as Centene, WellCare, and Molina Healthcare. Certainly there is money about: Humana would gain a $1 bn breakup fee from Aetna, and Cigna $1.85 bn.

No decision to date has been made in the Anthem-Cigna merger, but the general consensus of reports is that it will be denied by Federal Judge Jackson soon. [TTA 19 Jan]

Healthcare DiveBloomberg, Business InsiderBenzinga

Of course, with a new President determined to immediately roll back the more onerous regulatory parts of the ACA, in one of his first Executive Orders directing that Federal agencies ease the “regulatory burdens” of ObamaCare on both patients (the mandatory coverage) and providers, the denial of these two mega-mergers in the 2009-2016 environment may be seen as a capital ‘dodging the bullet’ in a reconfigured–and far less giving to Big Payers–environment. FoxNews

DC District Court judge to block Anthem-Cigna merger: report

Breaking News  Judge Amy Berman Jackson of the Federal District Court for the District of Columbia is expected to rule against the Anthem-Cigna merger on anti-trust grounds, sources have informed the New York Post. In anticipation of the appeal, Anthem has already filed an extension to the merger deadline from 31 January to 30 April, which Cigna is reportedly opposing in hopes of killing the merger.

The lawsuit was brought by the Department of Justice after Senate anti-trust subcommittee hearings and the displeasure of many state insurance regulators [TTA 21 July]. The hearing starting 21 November had two phases: the first on the merger’s effect on national employers, the second starting 12 Dec on local markets [TTA 21 Nov]. The huge stumbling block, according to the report, is Anthem’s unresolved conflict in a merger due to the ‘Blues Rule’, which requires that they have no more than one-third of its marketed products from other insurers in a state where they also market Blue Cross Blue Shield plans. Anthem is the licensee for Blue plans in 15 states, and according to court testimony by Anthem VP of corporate development Steven Schlegel, may have faced a $3 bn (£2.43 bn) penalty. This likely would have come from the Blue Cross Blue Shield Association, the licensor. Anthem’s hope reportedly was to transfer Cigna customers to its Blue plans to balance this out.

The NYP report also adds fuel to two years of rumors concerning governance and management succession conflicts between the two insurers. One revelation in the DOJ complaint was that in April 2016 “Anthem had established a separate, highly confidential team to work on integration planning without Cigna’s participation”. Earlier reports publicized that Cigna hoped that the DOJ lawsuit would have killed the merger; now Cigna wants no extension and to collect its $1.85 bn breakup fee. Sounds like a Fatal Case of Merger Remorse. Stay tuned. 

The separate Aetna-Humana hearing concluded on 30 December under a different DC District Judge, John D. Bates. Arguments here focused on overlaps in two areas: exchange policies (sold by Aetna in only four states, with overlap in 17 counties) and Medicare Advantage monopolies or near-monopolies. The judge’s ruling is still pending. Bloomberg, Hartford Courant, which lets hometown Aetna have its say.

Off to DC court we go: Anthem-Cigna, Aetna-Humana merger trials (US)

It seems like a year ago that the US Department of Justice sued to stop the merger of these healthcare payer giants on antitrust grounds, but it was only July! On the face of it, it would reduce the Big 5 Payers to the Big 3, with the $48 bn Anthem-Cigna matchup besting UnitedHealthcare for the #1 pole position with 45 million covered persons. DOJ also cited reduction of benefits, raising premiums, cutting payments to doctors and reducing the quality of service. 11 states, including New York, California and Connecticut, plus the District of Columbia, are backing the DOJ.

The Anthem – Cigna trial started today in US Federal Court in Washington DC. It is a two-phase hearing: the first on Anthem – Cigna’s merger’s effect on national employers, the second starting 12 Dec on local markets.

So much has happened since our July report, none of it good. ACA exchange plans have hiked benefits up well into the double digit increases by state due to lack of competition: CO-OP insurers couldn’t defy actuarial gravity for long and went out of business; commercial insurers lost too much money and bailed from multiple states (KFF). The effect on Medicare Advantage programs, which are judged on the county-state level, will be most significant with a combined Aetna-Humana having 40-50 percent market share in many counties. This triggers divestiture in current regulations.

These mergers rarely go to court after a DOJ action, so all eyes are on DC. An added fillip is that many expected the lawsuit to be the final kibosh on a Anthem-Cigna deal where reports of conflicts on future management and governance of a single entity were frequent. It wasn’t–and DOJ reportedly will be using documentation on the governance clash to demonstrate why it should not take place.

The $38 bn Aetna – Humana court date is 5 Dec, also in Washington, before a different judge.  All want a decision before year’s end so that (if positive) they can proceed with state regulatory approvals before deal expiration on 30 April 2017.

Bloomberg Big Law Business, USA Today  Also don’t assume this has much to do with a Donald J. Trump administration being ‘typical Republican=friendlier to Big Mergers’, because the president-elect has been hostile to other high profile ones, notably AT&T/TimeWarner, and this will be over before a new Attorney General is confirmed.

DOJ sues to derail Aetna-Humana, Anthem-Cigna mergers on anti-trust grounds (updated)

Breaking News. The anticipated shoe has dropped. With all the US news concentrating on the Republican convention, the US Department of Justice, late today, without much fanfare beyond the presser, lobbed lawsuits at Aetna and Anthem to stop their respective acquisitions of Humana and Cigna. US Attorney General Loretta Lynch was joined by Principal Deputy Associate Attorney General William Baer, who had been the DOJ’s point person for this anti-trust review.

According to CNN’s report, Mr Baer said “the two mergers would leave consumers at risk by reducing benefits and raising premiums. He also stressed that the most vulnerable would be hit the hardest and that competition would be reduced. “These are so-called solutions that we cannot accept,” Baer said. He added that the mergers are a “convenient shortcut to increase profit for these two companies,” and that the DOJ had “zero confidence” that they would benefit consumers.”

Reuters reported that Aetna and Humana expect “to vigorously defend the companies’ pending merger,” Anthem’s response was “more muted”, as industry observers expected, as it has been more problematic not only in size and with Medicare Advantage divestiture, but also with reports of disagreements on management and governance.

If these mergers were successful, the Big Five in US health insurance would be reduced to the Big Three, with the $48 bn Anthem-Cigna matchup besting UnitedHealthCare for the #1 pole position with 45 million covered persons.

Why is this important to those of us in telehealth, telemedicine and telecare? We are still seeking ‘who pays for it’ (remember our Five Big Questions/FBQs?) and when five becomes three, and things are unsettled….negotiations grind to a halt. (This Editor will reference the post-2008 years where health tech US deals and development came to a screeching stop as we waited to find out what was in that mystery ACA bill. Recovery/reset took years….)

Earlier reports via Bloomberg News and Reuters noted that both sets of insurance companies faced substantial opposition from the start. (more…)