TTA Fall Follies Week 8: Amazon Pharmacy’s Big Week, Doro’s digital alarm, scoping data security needs, AI in Parkinson’s detection, Optum’s $, KOMPAI’s robots, more!

 

Amazon’s finally getting into the online pharmacy business–after a learning curve of two years with PillPack. News from all over including Doro’s digital social alarm, AI/biomarker early detection of Parkinson’s, GrandCare’s tech for the developmentally disabled, and a how-to guide to approaching your data security needs without tears (initially, at least).  

Short Takes 20 Nov: Doro Eliza social alarm in UK, R2G diabetes market study, KOMPAÏ Robotics update, Bluestream Health integrates LanguageLine translation, and Optum’s 18 (Optum spending big on health tech, KOMPAI’s story continues, Doro strikes again)
Weekend reading: HISTalk’s interview with Spirion’s CEO on healthcare data security (A Must Read on a logical approach to scoping your organization’s data security needs)
Early detection of Parkinson’s via AI (and a surprising medium); Ed Marx on the digital transformation (or not) of health systems and COVID treatment at home
News roundup: Amazon Pharmacy–retail, GoodRx threat, 81% of healthcare workers have remote IT issues, Epicor installs in Australia care homes, GrandCare for developmentally disabled adults

A crazy post-election week (EEK!) on this side of the Atlantic, and we haven’t moved to Brazil or Argentina. Yet. (Maybe Estonia?) COVID vaccine coming up–among 10–news from Vodafone and Doro in UK–Apixio acquired, and Karen Lynch will be CVS’ new CEO. And HIMSS says it will have an actual, real life, flesh and blood conference next August–but will it be worth the expense and attendance after all the restrictions?

News roundup: Pfizer’s COVID-19 vaccine on horizon, CVS’ new CEO, Vodafone UK 5G health survey, Centene acquires Apixio AI, Doro’s 24/7 Response
Shock news: a very muted HIMSS 2021 set for 9-13 August, Las Vegas (Will it happen? Is it worth it?)

A truly crazy Election Week on this side of the Atlantic, but your dauntless but distracted Editor rounded up some interesting COVID-19 early detection research (breathe, sleep, cough). Plus two UK Councils’ initiatives on remote monitoring and video calls to protect–and connect–isolated older people. (No legal comic relief from Theranos this week!)

Discovering ways to non-invasively early detect COVID-19 from heart rate, sleep, or a cough, even among the asymptomatic (Will they be rushed to market and be used before this is all over–or are they for the next Big Virus?)
Bexley, Wandsworth Councils onboarding remote monitoring, video calls with COVID-19 the spur (UK) (Protecting and connecting the most vulnerable their priority)

The Teladoc/Livongo merger closes fast, but Livongo veterans with spare $$$ form a SPAC. Will telehealth/telemedicine at 6% of office visits continue to be bubbly? More digging into the details of the Tunstall reorg. And we have a Perspective on how a communications provider connected in Pandemic Time.

Further information on Tunstall’s reorganization (A whole lot of shutdown and shuffling going on)
Breaking: Teladoc and Livongo close merger in $18.5 billion deal, staff/board changeovers (And a SPAC by Livongo vets in the works)
Perspectives: How Advanced Communications Technology Has Created A ‘New Normal’ In Healthcare (What Avaya has learned and done in connecting healthcare)
Telemedicine office visits versus in-person recede to 6%, concentrating in behavioral health. Will the gains hold? (The billion-dollar bubble bath question)

Kaiser extended its Medicare partnership with Best Buy’s Lively Mobile Plus. Review and approval of medical apps are revived in both the US and Germany. In the UK, Alcuris becomes a supplier to a DPS and Propel@YH brings in its 2020 cohort. For weekend reading, the ethics of contact tracing and ADL/safety trackers in senior care.

News roundup: Kaiser/Best Buy Lively partners; Teladoc’s mental telehealth, Livongo execs depart; approved apps make comeback in US, DE; United Airlines tests COVID CommonPass for international flying
Weekend reading: contact tracing in assisted living/LTC facilities via sensor-based ADL technology raises ethical issues (Older people value privacy too)
Alcuris appointed as supplier to Spark DPS (UK) (Innovation gains foothold in contracting)
Propel@YH digital health accelerator announces 2020 cohort of 10 companies (Bringing global digital health to Yorkshire & Humber)

Mostly a ‘redux’ of a week, with Doro acquiring another company, Teladoc suing Amwell, and Theranos’ judge telling them that nothing the defense threw at the wall stuck. Tunstall reminds us that the most vulnerable are at risk during the winter–you should too. And if you are seeking a sales manager position, see our UK highlights article–Buddi is hiring.

UK highlights: Doro acquires Connexus Careline, Tunstall warns on winter isolation and disconnected care, Buddi seeks Sales Account Manager  (Doro increases its second position, and happy to see more hiring!)
Teladoc sues Amwell on patent infringement–again (This time, much larger companies go head to head, creating bountiful Christmas bonuses for their lawyers)
The Theranos Story, ch. 67: the Holmes/Balwani indictments stay, Holmes’ defense strategy fails (Waiting for the Twinkie Defense II, or the money running out)

Leaves have started to turn and fall, but digital health just keeps rising with $9.4 bn in investment this year. Tunstall UK and Group Holdings report their financial status and preview their new ownership. And la scandale Theranos continues with a revelation of defense strategy.

Digital health investment smashes the ceiling: $9.4 bn invested through 3rd Q (It’s Bubble City!)
The Theranos Story, ch. 66: Walgreens and Safeway aren’t investors, they’re business partners! (Holmes’ defense strategy–erode her most serious charges)
Tunstall Healthcare (UK) and Group Holdings’ 2019 year end reports filed: highlights (The state of the company and a preview of new ownership) 

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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

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

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

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News roundup: Amazon Pharmacy–retail, GoodRx threat, 81% of healthcare workers have remote IT issues, Epicor installs in Australia care homes, GrandCare for developmentally disabled adults

Rounding up lots of dogies here!

Amazon, to no one’s surprise, has formally entered the US pharmacy business with Amazon Pharmacy which can fill prescriptions for most common medications. There is a whole process of course to sign up (at right), and a separate program for Amazon Prime customers with discounts on Amazon Pharmacy with two-day delivery, PillPack, and at 50,000 pharmacies in 45 states. The Prime program is administered by Inside Rx, a subsidiary of Evernorth/Cigna.

Mr. Market downgraded pharmacy retailers CVS and Walgreens Boots stocks, again unsurprisingly. It isn’t just brick ‘n’ mortars feeling the heat; heavily advertised drug price comparison platform (lumped into ‘digital health’) and recent IPO winner GoodRx took a 20 percent hit as Amazon Prime also discounts, comparable to GoodRx Gold. The GoodRx network is about 70,000 pharmacies, including the largest retailers. Fierce Healthcare. Big hat tip to Jailendra Singh at Credit Suisse Equity Research for these analyses on Amazon Pharmacy and GoodRx.

81 percent of healthcare workers experience issues with systems and technology used in external care, out visiting and caring for patients, according to a ‘State of Mobility in Healthcare’ multi-national study (email signup required) by business mobility development company SOTI. 64 percent of UK healthcare workers (63 percent overall) are ripping out what is left of their hair due to IT/technology glitches leading to system failures within a normal working week. Only a quarter of respondents said that their systems were able to cope with COVID-19. Based on the Healthcare IT News EMEA edition article, UK respondents apparently reported a higher level of IT problems affecting their work. The bright spot is that 68 percent of UK healthcare workers/55 percent overall agree that investment in new or better technology could help save lives. The study had respondents in the US, Canada, UK, Germany, Sweden, France, and Australia.

Speaking of software, Epicor, a US-based software company, is providing to two Australian care home groups their Community Care workflow and information platform: Finncare, which is associated with services to the Finnish and Scandinavian communities, and MannaCare in the Victoria area. Healthcare IT News Australia

One of the Ur-companies (2005!) in the senior health monitoring sector, GrandCare Systems, announced that they are working with LADD, a Cincinnati Ohio-based non-profit that supports adults with developmental disabilities. LADD’s project, the Heidt Smart Living Home, will incorporate GrandCare’s communication, cognitive assists, telehealth, and social engagement tools, as well as innovations in accessibility, lighting, and sensory control, for residents. Release Hat tip to CEO Laura Mitchell via LinkedIn.

News roundup: Pfizer’s COVID-19 vaccine on horizon, CVS’ new CEO, Vodafone UK 5G health survey, Centene acquires Apixio AI, Doro’s 24/7 Response

As infection rates continue to rise, Pfizer’s and German partner BioNTech SE’s COVID-19 vaccine was the top of the news this undecided post-US election week. It was found to be “more than 90 percent effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis” of the Phase 3 clinical study. They exceeded their evaluable case count (total was 94). Protection was achieved 28 days after the initiation of the 2-dose vaccination. Pfizer release. Chain and independent pharmacies have already signed on for distribution at no cost to patients, covering about 60 percent of pharmacies through the US, Puerto Rico, and the USVI. It’s expected that FDA approval will be by end of year with availability early next year. HHS release. Work on 10 other vaccines goes on. The NHS is lining up for distribution with Health Secretary Matt Hancock promising that they’ll be ready from December as coronavirus diagnoses and deaths climb up from summer levels. BBC News

CVS’ CEO Larry Merlo announces 1 Feb 2021 retirement, Aetna head Karen Lynch to take the helm. Ms. Lynch will also join the board of directors. Mr. Merlo will depart after the shareholder meeting and serve as a strategic adviser until 31 May, which is typical of CEO phased departures. He leaves CVS in excellent shape having conducted during his 10-year tenure the acquisition of Aetna in 2018 and the growth of CVS to almost 10,000 store locations, initiating 1,500 HealthHUBs, and over $199 bn in earnings through Q3 this year. Ms. Lynch joined Aetna in 2012 from Magellan Health Services, a specialty/behavioral managed health company, and Cigna. She hit a home run with vitalizing Aetna’s Medicare Advantage business to 2.5 million members from under 1 million in 2013 and became Aetna’s president in 2015. Mark Bertolini, Aetna’s CEO during the merger in 2018 (but not Federally approved till September 2019), lost his spot on the board in an apparent spat/downsizing last February.  FierceHealthcare, Healthcare Dive, Fortune

Vodafone UK’s new survey on 5G and Internet of Things (IoT) devices in UK health and social care has been issued. A key finding is the comfort level of some telehealth consults well past 50 percent, and over 60 percent in the 18-34 and 35-54 age groups. There is 60-70+ agreement with Government investment in digital technology to ‘future proof the UK healthcare sector’ and to pay for care homes’ high-quality broadband and mobile. More in Vodafone’s study here.

Healthcare payer Centene Corporation is acquiring healthcare analytics company Apixio. Apixio’s AI platform analyzes large amounts of unstructured patient data in physician notes and medical charts. It then creates algorithms to extract high-quality insights to support payers’ and providers’ administrative activities. Acquisition cost is not disclosed and close is expected by end of year. It will be an ‘operationally independent entity’ in an Enterprise group, but complement other in-house technologies such as Interpreta. A bit of catch up here as larger plans Anthem, UnitedHealth/Optum, and Humana all have either substantial in-house AI analytics or have contracted with outside vendors (e.g. Microsoft) for this capability. Release. (Disclosure: This Editor was formerly with Centene, via their WellCare Health Plans acquisition)

Doro Mobile UK and Ireland is introducing ‘Response by Doro’, a touch button service to summon help if needed. The alert button is on the back of the phone versus on the screen, which differs it from most mobile systems. The standard level connects to family and friends, with the Response Premium level connecting to a 24/7 service. For BT Mobile and EE mobile customers with a Doro mobile phone, their first month’s access to Response Premium is free. Release (PDF)

News roundup: Amwell’s socko IPO raises $742M, Walmart and the Clinic Wars, Taskforce on Telehealth Policy report released, Israel’s Essence releases fall detection sensor system

Telehealth bullishness shows no sign of diminishing. On Wednesday, Amwell‘s (the former American Well) IPO stunned markets by not only debuting at $18 per share (a price only large investors received) but also opening at $25.51 on the NYSE (AMWL) and floating more than 41 million shares for a raise of $742 million. If underwriters exercise all their options, the raise could exceed $850 million. Only last week, the SEC filing projected a sale of 35 million shares at $14 to $16 a share. Back in August, the raise was estimated to be only about $100 million. (One could consider this a prime example of ‘sandbagging’.) Friday closed at $23.02 in a week where Mr. Market had a lot of IPOs and hammered traditional tech stocks. As reported earlier, Amwell is backed by Google via a private placement and also Teva Pharmaceutical.

Smaller and lower profile than Teladoc, Amwell provides services for 55 health plans, 36,000 employers, and in 150 of the nation’s largest health systems, with an estimated 80 million covered lives. Like Teladoc, Amwell has yet to be profitable, with 2019 losses of $88 million and $52 million in 2018. FierceHealthcare, Marketwatch. Meanwhile, the Teladoc acquisition of Livongo has gone quiet, as is usual.

The Clinic Wars continue. Another front in the consumer health wars (and repurposing retail) is more, bigger, better clinics onsite. CVS drew first blood early this year with the expansion of MinuteClinics into fuller-service HealthHUBs, with a goal of 1,500 by end of 2021. Walgreens flanked them with 500 to 700 Village Medical full-service offices [TTA 9 July]. In this context, the expansion of Walmart Health locations looks limp, with their goal of 22 locations in Georgia, Florida, Arkansas, and Chicago metro by end of 2021. Another concern is with scale and modularizing the Walmart Health locations’ construction via constructor BLOX,  One wonders with recently reported layoffs of 1,000 at corporate and the replacement of industry innovation veteran Sean Slovenski with Lori Flees, whether there’s some radical rethinking of their clinic business investment as not mass but targeted to underserved areas that avoid CVS and Walgreens. FierceHealthcare, Walmart blog  CVS also announced the doubling of their drive-thru COVID-19 testing sites to 4,000 by mid-October. FierceHealthcare

More Weekend Reading. Here in the US, the Taskforce on Telehealth Policy, a joint effort between the National Committee for Quality Assurance (NCQA), the Alliance for Connected Careand the American Telemedicine Association, has issued a report that focuses on maintaining quality care, fitting telehealth into value-based care models, enforcing HIPAA for patient privacy, and ensuring widespread and equitable access to broadband and technology. The involvement of the NCQA is a major step forward in advancing policy in this area. Press release/summary, Report page, Powerpoint slides, and webinar recording  Hat tip to Gina Cella for the ATA.

New entrant in passive fall detection. Israel’s Essence SmartCare is launching MDsense, a multi-dimensional fall detection solution for the residential market. It is sensor-based, using wall mounted intelligent sensors rather than wearable devices that statistically are not worn about half of the time and have their own well-documented performance concerns. The release also mentions it can differentiate between multiple persons and pets, which this veteran of QuietCare would like to see. MDSense is part of Essence’s Care@Home system which uses AI and machine learning to continuously collect actionable data to respond to fall events and manage care better towards improved outcomes.

Reflections in a Gimlet Eye: further skeptical thoughts on the Teladoc acquisition of Livongo (updated)

Gimlet EyePerhaps it’s Reflections in a Gimlet Eye, but this Editor remains bemused and slightly dyspeptic about the acquisition of ‘health signals’ remote patient monitoring management platform Livongo by telehealth giant Teladoc.

Here’s the latest, courtesy of Credit Suisse equity research analyst Jailendra Singh on deal rationale and the potential synergies, based on his Q&A with Teladoc and Livongo management (link here):

  • Livongo: “The company was not for sale, and LVGO did not view the transaction with TDOC as a sale. Instead, management views the deal as a merger of the two leaders in virtual care.” 
  • It had nothing to do with pressure from CVS and UnitedHealth Group (UNH). 
  • There are major cross-selling opportunities, starting with an overlap of 25 percent of their clients. There are also opportunities with the InTouch Health client base in acute care, Aetna plus UNH on the health plan side, and employer administrative services only (ASO) plans. This is part of the calculation of synergies totaling $500 million in 2025 which they believe are conservative given the math.
  • They are also seeking to approach their client base before the closing through a reseller agreement, as Teladoc was able to do with InTouch.

Mr. Singh’s analysis is conservative and sober from a strictly financial viewpoint. His two-page analysis is, as usual, worth the read. 

But then we stumble across one particularly helium-charged claim. It’s projected that Teladoc and Livongo would have a combined company market cap of $38 bn, whereas the pre-pandemic value of the companies was $8 bn. (Steve Kraus, Partner at Bessemer Venture Partners, now on the board of Ginger, as quoted in Forbes). That is optimistic, considering that patient primary care virtual visits have flattened down to about 7.4 percent of visits as of June (Commonwealth Fund/Harvard/Phreesia study). It’s assuming a great deal that people will continue to shy away from in-person care going forward. Perhaps to a degree this will, as in-person fear is only starting to flatten, but not everything can be done virtually, even RPM. Telehealth and RPM also present challenges for practices in value-based care models, in workflows, and even with the liberalization of Medicare reimbursements, financially.

Livongo’s great asset, which was understandably compelling for Teladoc, is chronic condition management, RPM, and all that patient data, which can be broadened past their diabetes base (with a small one in behavioral health courtesy of their myStrength acquisition) into other chronic conditions which was Livongo’s strategy anyway. To be determined is how compelling this will be for Teladoc’s customer base and for new customers, particularly if the economic environment is constrained and health plans don’t get on board. 

So why is Mr. Market not mad about this ‘merger’? TDOC has taken a spill since its (adjusted) close on 4 August at $249, and is trading below $200 at $193. LVGO took a lesser hit, from $144 to $121. Another Bessemer Venture Partners investor, Morgan Cheatham, in the Forbes article linked above, was quoted that Livongo had clear market leadership in the employer and health plan market, then expressed surprise at why Livongo agreed to be acquired: “The company had a real shot at becoming a $100 billion business by running the ‘digital hospital’ playbook. In some ways, the acquisition feels premature.” Teladoc’s COO David Sides promised that the combined company will aid practices in the transition from hospital to home care, touting the consumer focus of both companies. (Have they consulted already burdened and strained providers how this can be made easier for them and fit into value-based care models as well as their financials?) But they may have to make more acquisitions to facilitate this. So $18.5 billion plus $1 bn for InTouch isn’t enough to get the job done?

Is it synergy, the wave of the future, or an overloaded Christmas Tree of features, not benefits?

Reminder: to date, neither company has been profitable.

So, what does this mean for other digital health companies? Initially, it’s quite positive that Teladoc could round up nearly $20bn in six months. John Halamka MD, a well-known digital health visionary now at Mayo Clinic, sees it as a bridge to the digital health ecosystem including other companies. A contrarian view was expressed by Mr. Cheatham.  Teladoc-Livongo is a challenge for other digital health companies in that they won’t, and cannot, be Teladocs and Livongos–in other words, an unrealistically high bar for them. “Why can’t Telavongo build this?”

Finally, a personal and slightly jaundiced view from this Editor. Let’s take a good hard look at the Human Factors that make companies go. This is an acquisition by Teladoc of smaller Livongo, despite the merger statements. Employees in both companies are wondering who will go, who will stay, who they will report to if they stay, and where they will be. They have about four to six months to mull what their future might look like at a tough economic time. This will — not may, will–have an effect on operations and attitudes, especially at Livongo.

There are some doubleplus ungood signs that make the assertion that this is a “merger” of companies questionable:

  • Jennifer Schneider, MD, president of Livongo, has stated that both companies are currently hiring and don’t plan layoffs as a result of the merger (Becker’s Health IT). Blanket statements like this are usually made at the start to assure employees. Anyone who has been through a merger knows there are overlapping areas such as HR, marketing, and financial. There are only so many chairs at the organizational table especially at the director and above level. The happy talk doesn’t change the reality that not everyone will be given the option to stay.
  • Statements on similar cultures notwithstanding, the fact is that both companies have different cultures and experiences because they have radically different histories and personalities running them. This Editor would suspect that Livongo employees, having come up in a young and smaller company, in an intense entrepreneurial environment, with employees who were among the first 50 or 100, have a great identification with Livongo and pride in their success.
  • Not one Livongo senior executive was named publicly as taking a new operational role in the merged entity. (Board seats don’t count. But then again, they will be walking away with a major payday, reputed to be in the hundreds of millions for the top executives. What they will do with their future is a major unknown.)
  • The HQ will be in Purchase. Most Livongo employees are in California.
  • The company will be named Teladoc and will not be renamed. That says a lot, even though industry wags are calling it Telavongo and other names.

One would hope that both companies make every effort to reorganize the company staffs in a way where layoffs are minimal, those who are packaged out are treated generously, but better, valued employees from both companies are retained and incentivized to stay–sooner rather than in 4th quarter–in a fair and unbiased evaluative process in how they support their businesses presently and going forward as part of the combined companies future. But this is not typically the case.

One would also hope that the clients and individuals who pay the bills were told, timed with the public announcement, that this was happening and what it means for them. Leaving them to read the announcement online is usually what happens. It’s not automatic, and I’ve seen this treated as an afterthought in both large companies and small, with line of business folks scrambling to put together customer messages, and delayed in getting them approved as after all they have to go through both corporate and investor communications. This is typically the case, as communications cease to be a priority at the market/LOB level when the SEC or DOJ are involved.

Reminder: the Human Factors will fly this aircraft–or auger it in. 

Agree? Disagree? Comments welcomed.  TTA’s earlier ‘skeptical take’ commentary here.

Shock news: the CVS-Aetna merger officially approved after 9 months

Go away on holiday, Judge Leon finally jumps into the hole. It took two months from the last hearings in mid-July, and nine months in total (delivered after last year’s Thanksgiving turkey) but Judge Richard Leon of the Federal District Court finally–and somewhat unexpectedly–ruled that the CVS-Aetna merger could be at last a Done Deal.

The Final Judgment goes into extensive detail about the Medicare Part D divestiture by Aetna to WellCare, complete with a Monitoring Trustee. On the very last page, Judge Leon admits that the merger is in the Public Interest.

The entire process, which is chronicled here, was unprecedented in the annals of Federally approved mergers. Usually a District Court Tunney Act review of a merger already through the wringer of the DOJ and the states is brief. Judges don’t make headlines, save when their rulings are the coup de grace (see: Aetna-Humana, Anthem-Cigna). Instead, Judge Leon called hearing after hearing, witness after witness from the AMA to PIRG, opining all the way, even turning away five supporting states petitioning (in vain) to be heard.

This high-profile precedent doesn’t bode well for future mergers, especially for healthcare. Fierce Healthcare, Columbus Dispatch

The CVS-Aetna merger hearing draws to a dreary, weary close

The train is moving so slowly on the tracks that even Pauline is getting some shut-eye. The minimal coverage given to last Wednesday’s hearings in the Court of Judge Richard Leon on the CVS-Aetna merger is understandable, as the hearing trod the well-worn path without a hint of when this will all Wind Up:

  • The Department of Justice argued that the concerns over the merger were settled via divestiture of its pharmacy benefit management (PBM) operation
  • The amici curiae witnesses (AIDS Healthcare Foundation (AHF), the American Medical Association (AMA), Consumer Action and U.S. PIRG) countered that it’s nowhere near enough, that the PBM competition represented by a new company would not be enough and higher drug prices would result.
  • Anything said by the DOJ attorneys or the ability to call more witness after the earlier hearing was derided by Judge Leon as “phantasmagorical,” “violating the first rule of holes”, and typified by the generally favorable to the judge Columbus Dispatch as “scolding”.

This Editor found no mention of the five states–California, Florida, Hawaii, Mississippi, and Washington–which were supposed to participate in the hearing to support the DOJ position [TTA 17 June]. One has to presume that they were not very vocal or permitted to be so.

Instead much was made of the judge’s interest in the AIDS Healthcare Foundation (AHF) remedies targeting relief for specialty and community pharmacies:

  • All rival pharmacies should have non-discriminatory access to CVS Caremark’s pharmacy networks at fair reimbursements that cover actual drug costs and dispensing costs.
  • Managed care plans should not be denied access to CVS Pharmacy networks, and that managed care plans’ access should be at a fair price.
  • All Aetna plan members must be allowed to opt out of any CVS/Caremark specialty or other mail order programs.

So the hearings wind down, with increased speculation that Judge Leon will simply disallow the merger sometime in the future, which will set up another round of court actions by the merged organizations on the merits and whether the Tunney Act can even be used in this way. And meanwhile, online pharmacies like PillPack scoop up the cream off CVS Caremark’s business. Healthcare Dive, Yahoo News.

Another round this Wednesday in the CVS-Aetna merger hearings

This time, five states are speaking up loudly. California, Florida, Hawaii, Mississippi, and Washington petitioned the DC Federal District Court’s Judge Richard L. Leon for a hearing on the CVS-Aetna merger, which will be held this Wednesday 17 July. The five states were original supporters of and advisory participants in the Department of Justice’s (DOJ) settlement with Aetna to sell its Medicare Part D business. As co-plaintiffs, the states’ regulators are defending their position that the sale would avoid harmful horizontal market concentration.

Both Judge Leon and the American Medical Association debated in June whether the divestiture of Part D was enough to ensure competition in Part D, since both maintained that WellCare Health Plans was too small to compete with CVS Caremark as a pharmacy benefits manager. Yet WellCare is being acquired by larger Centene, another government-sponsored health plan organization, in a transaction expected to close, pending Federal and state approvals, in 1st Quarter 2020. That merger weakens that argument.

While publications like Barron’s and the New York Post consider it a foregone conclusion that Judge Leon will, after he runs out of hearings, nix the merger [TTA 13 June], whether he actually can under the Tunney Act (1974) is debatable. The Tunney Act has been rarely invoked to stop a merger–especially a merger which is about half-done and a sale transaction which is an important part of the value of the acquiring company in its own acquisition.

The Hartford Business Journal makes the excellent point that every time the industry thinks Judge Leon’s hearings are wrapping up, they continue. This Editor will be surprised if there are any bombshells from this round. On to the next!

A measured look at the uncertainty around the CVS-Aetna merger

Within two to three weeks, we will know whether Judge Richard Leon of the Federal District Court will–or can–block the CVS-Aetna merger. Already a fait accompli, the merger itself would have to unwound if this is the decision–and uncertainty reigns on whether this actually can be done, as the companies have been merged for several months and have divested what DOJ requested (e.g. PDP to WellCare).

The CVS-Aetna vision is for HealthHubs–combined stores, data, MinuteClinics, kiosks, and the retail business, ultimately combined at a macro level with pharmacy benefit management, external data, and also Aetna’s insurance business. While the HealthHubs are in test, the reach of CVS on both the national and local/individual levels will be huge, if only starting with the data and analytics side. And the retail side is no slouch. Their growth on the retail pharmacy side has been over three times the industry.

In the prescription drug plan (Medicare PDP) market, that horse already left the barn. 70 percent of the PDP market is controlled by three companies: CVS Health, Express Scripts (Cigna), and Optum (UnitedHealth Group). The concerns expressed at the hearings about premiums rising and reduction of competition has already largely happened, with a market not truly private and highly restricted.

Uncertainty may very well be the theme of the rest of the year as it has been since last fall. The smart money is betting that Judge Leon will block the merger on anti-competitive grounds, leading to another round of court actions. Both companies are healthy and will fight it. If forced to part, the  Seeking Alpha analyst bets on CVS doing just fine long term, which leaves little in choices for Aetna with its way forward in merging with other insurers blocked.

CVS-Aetna merger will run off the tracks in Federal court: reports

Reports emerging this past Monday after the close of last week’s DC Federal District Court hearings in indicate that the CVS-Aetna merger may be nixed by Judge Richard Leon. This may result in the full unwinding of the already-closed merger, a derailing of the settlement which involved selling the Aetna Medicare Part D business to government-plan insurer WellCare, or something in between.

The original report was in Monday’s New York Post. A source working with CVS and Aetna stated “I think Leon rules against us. If he rejects the settlement, we would have to figure out the next steps.” That settlement is significant because it represents the only major overlap between the CVS and Aetna businesses. In other words, there’s nothing left to divest or concede.

Judge Leon, based on reports, was consistently irritated with the Department of Justice, questioning everything from the Part D divestiture to the effects of adding 21 million Aetna customers to CVS’s pharmacy benefits management (PBM) business not being revealed in DOJ documents to him. Conversely, the sale of the Part D business to WellCare was batted one way–as not enough to reduce CVS’ market control and not competitive–and then the other, as WellCare remains a CVS PBM customer for 2.2 million members in its health plans. What was also clear from his selection of expert witnesses that Judge Leon was more interested in the anti-competitive effects of the merger than any of the benefits.

It is obvious both from Judge Leon’s in-court actions (such as not permitting DOJ attorneys to cross-examine any witnesses), assorted remarks, and delay for now over six months, that this merger is coming to a pre-ordained conclusion, at least by this judge. This is already a first under the Tunney Act enacted in 1974. A negative decision will certainly be appealed by CVS-Aetna and DOJ, which will drag out any finalization even if successful–and the sale of the Part D business, important to WellCare as part of its own pending acquisition by Centene–to the end of the year and possibly beyond.

With this background and oral arguments delayed until 17 July, according to Judge Leon, the legal teams on all sides won’t have much of a summer.  Also Barrons, video on NBR.

The CVS-Aetna hearing is on the move–finally

The train that is the CVS-Aetna hearing, in the courtroom presided over by Judge Richard Leon of the US District Court for the District of Columbia, is at long last chugging down the tracks. And Pauline is still tied up. Tuesday 4 June was Day 1 of this hearing. Early reports are just being filed. The issue is whether Judge Leon will authorize the Department of Justice’s approval of the merger or dissolve a closed merger, based on his authority under the Tunney Act and his own repeated intent to search for harm that the merger might do to the public. 

Today’s hearing focused on Aetna’s divestiture of its Medicare Part D business as a prelude to the merger, and whether it was quite enough. Much of the discussion was on the relative strength of the buyer, WellCare (itself in the early stages of being acquired), and whether it could be truly competitive in the Part D market. The other factor is that CVS as a dominant pharmacy benefits manager (PBM) could undermine WellCare in several ways. PBMs operate opaquely and are highly concentrated, with CVS, Optum (UnitedHealthcare), and Cigna-Express Scripts accounting for 70 percent of the market. Modern Healthcare

Other issues for Days 2 and 3 will cover the effects on competition in health insurance, retail pharmacy and specialty pharmacy.

Healthcare Dive discusses how these hearings are already setting precedent on how Tunney Act hearings are conducted, their scope (Judge Leon has ruled against every attempt by CVS-Aetna to limit it), and the unprecedented live testimony.  There is the good possibility that Judge Leon will decide to dissolve the merger for competitive reasons, which DOJ likely would appeal. Add to this the cost of the delayed integration and the precedent set by the District Court on scrutiny of any healthcare merger, and this tedious hearing along with Judge Leon’s actions leading to it hold major consequences.

Drawn-out decision on the CVS-Aetna merger held up again in Federal court

“The Perils of Pauline” saga that is the CVS-Aetna merger continues. Judge Richard Leon of the US District Court for the District of Columbia twirled his mustache and announced that his court will hold a hearing in May on the merger. Practically nobody dislikes this particular $69 billion merger that’s already closed–not the companies, shareholders, Congress, the states, and not the Department of Justice, once Aetna sold off its Medicare Part D drug business to WellCare. But Judge Leon is an exception.

The Tunney Act requires the government to file proposed merger settlements as an approval of the consent decree with a Federal district court to assure they are in the public interest. Most are filed, reviewed by a judge, and approved with no hearings. Since October, Judge Leon has been examining the merger up, down, and sideways in, of course, the public interest and great attention by the press. Now a week (or more) of May hearings will commence with those who don’t like this merger, including the American Medical Association, the AIDS Healthcare Foundation, pharmacy and consumer groups.

Certainly this is long and drawn out, even for the DC district court. Even the high drama of the Aetna-Humana and Cigna-Anthem mergers took a little less time. Judge Leon continues to get coverage and the merger continues to be held up. Reuters, Fox News, Seeking Alpha

Short takes: Livongo buys myStrength, Apple Watch cozies with insurers, Lively hears telehealth and $16 million

Livongo gets behaviorally stronger with myStrength. Extending from their base in diabetes and chronic disease management into behavioral health, Livongo made a logical extension with early-stage behavioral health company myStrength. A large percentage of those with chronic conditions are also struggling with a behavioral health issue–Livongo cites 20 percent but in this Editor’s opinion, the estimate is low. Both Livongo and myStrength have been very successful in the payment game, with both companies achieving payment and reimbursement by employers, insurers, health systems, and state/Federal payers. The other factor is that employers and payers want single, integrated platforms for wellness and disease management. Livongo last year bought Retrofit for its weight management program. Competitor Omada Health recently acquired the behavioral health technology of defunct Lantern. MedCityNews, Fortune, Livongo release

Apple Watch wastes no time in partnering with insurers. Or vice versa! Confirming that Apple Watch’s growth strategy hinges heavily on health via its new features are fresh agreements with Aetna/CVS Health and a rumored reach into three Medicare Advantage plans. The Aetna partnership is with an app called Attain, which blends Apple Watch activity tracking data with users’ health history to create personalized programs. The program is limited to about 250,000 slots plus additional slots for employer plans, and will debut this spring. Late last year, United HealthCare announced Apple Watches would be added to existing wellness program called Motion and their Rally platform. Both Aetna and United have tiered payment programs for the watches, with United adding a HSA reward. For Medicare Advantage plans, Apple is rumored that they will subsidize the watch for use as a health tracker and coach. FierceMobileHealthcare 30 Jan (Aetna), 14 Nov 18 (UHC), and 29 Jan (Medicare Advantage).

Lively adds telehealth to hearing assistance. Lively’s mobile-connected, direct to consumer hearing aids are adding more telehealth features such as remote tuning, virtual video consults with an audiologist, and an online hearing assessment/uploading audiogram for assessment. The NYC-based company also announced closing on a $16 million seed/Series A fundraising round led by Declaration Capital with participation from Tiger Management. There are an estimated 35 million Americans with hearing loss in a $10bn annual market. Hearing aids are rapidly adding digital and DTC features–others in the field are Eargo and ReSound. Lively releaseAlleyWatch, Mobihealthnews. (Lively is not to be confused with Lively!, acquired by GreatCall two years ago)

News roundup: CVS-Aetna still on hold, blockchainers Change acquires PokitDoc, Teladoc’s COO resigns under insider cloud, Clapp joins Cricket

Federal Judge Richard Leon of the Washington, DC District Court is taking a consideration break on the integration of CVS and Aetna, after holding it up on 3 December. The Department of Justice (DOJ) originally recommended that the merger was legal under anti-trust law after Aetna divested its prescription drug plan to WellCare and both companies’ settlements with several states. Judge Leon, reviewing under the Tunney Act requirement that the merger meet the public interest, is waiting for the DOJ to respond to further steps that CVS has taken to keep the companies separate. According to Seeking Alpha, CVS will take “constructive measures on pricing and sensitive information” and that an outside monitor would be brought in to monitor the companies commitments. Hartford Courant

Health IT software company Change Healthcare acquired assets of San Mateo-based PokitDoc, a healthcare API and blockchain developer. PokitDoc has developed blockchain transaction networks for EHR and identity verification, automatic adjudication and smart contracts. Its APIs are used by Doctor on Demand, Zipnosis, PillPack, and available on Salesforce Health Cloud. Change’s own blockchain platform was developed in 2017. McKesson owns 70 percent of Change. PokitDoc had funding up to $55 million prior to purchase, the value of which was not disclosed. Mobihealthnews, Health Data Management

Teladoc cut loose its COO/CFO after insider trading and sexual misconduct allegations. Mark Hirschhorn resigned on 17 December from the telemedicine company after being instrumental in the company’s recent revenue and visit growth (albeit with a downward spiral on the share value). Mr. Hirschhorn was alleged to have not only have had a sexual relationship with a (much younger) subordinate while married, but also engaged in mutual insider trading…of Teladoc stock. The steamy details of the affair(s) and an equally seamy tale of a whistleblower’s fate are in the Southern Investigative Reporting Foundation’s ‘The Investigator’. For those more concerned about Teladoc’s financial future, a bullish analysis of their stock value and trends is over at Seeking Alpha. Adding to the fire: a class action lawsuit was also filed against Teladoc on behalf of the company’s shareholders, accusing the company of misleading or false statements. Also Mobihealthnews.

And it’s cheering to announce that a respected long-time telehealth executive has found a new perch. Geoff Clapp has joined Cricket Health, a provider of integrated technology around kidney health, as Chief Product Officer. Geoff is an authentic Grizzled Pioneer, having joined early telehealth RPM company HealthHero back in 1998, then their acquirer Bosch Healthcare. He was also founder of Better, which partnered with the Mayo Clinic on providing virtual care coordinators at popular prices for both consumers and health systems. Since then he has consulted for companies as diverse as Telcare (diabetes), Oration (sold to just-acquired PokitDoc), and in venture capital. Congratulations–and happy new year in the new job! Release

CVS-Aetna merger closes, but hardly ‘rubber stamped’ in Federal court

The deal is done, but expect unhappy holidays. As expected, the $69 million CVS-Aetna merger closed the week after Thanksgiving, on Wednesday 26 November, and are proceeding with their integration. Later that week, a Federal judge in the Washington, DC District Court complained at a hearing that both companies had treated him as a “rubber stamp” for the agreement. He was “less convinced” than the Department of Justice that the merger was legal under US anti-trust law. Yesterday (Tuesday 3 Dec), Judge Richard Leon ordered both companies and the DOJ to file briefs by 14 December “to show why their integration should not be halted while he considers whether or not to approve the consent decree reached in October,” according to Reuters.

This is despite various pounds of flesh:

  • The Department of Justice imposing the condition that Aetna sell its Medicare Part D drug plan business to far smaller WellCare Health Plans
  • New York State’s Department of Financial Services extracting concessions around their concerns: acquisition costs will not be passed onto consumers through increased premium rates or to affiliated insurers; maintaining current products for three years; privacy controls; cybersecurity compliance. Oh yes, a small $40 million commitment to support health insurance education and enrollment. (Healthcare Finance 26 Nov)
  •  But New York is a piker in its demands compared to California. The Department of Managed Health Care Director approved the merger based upon:
    • Minimal increases in premiums–and no increase due to acquisition costs
    • Investing $240 million in the state healthcare delivery system, including $166 million for state healthcare infrastructure and employment; $22.8 million to increase the number of healthcare providers in underrepresented areas like Fresno and Walnut Creek by funding scholarships and loan repayment programs; and $22.5 million to support joint ventures and accountable care organizations (ACOs) in value-based care (Healthcare Finance 15 Nov)

A CVS spokesman said in an email after the hearing: “CVS Health and Aetna are one company, and our focus is on transforming the consumer health experience.” (CNBC)  That transformation according to CVS president Larry Merlo involves expanding healthcare services beyond their present clinics to managing high-risk, chronic conditions, and transitions in care. Aetna’s expertise will be invaluable here as well as in an rumored expansion to urgent care (Seeking Alpha). All to out-maneuver Amazon, of course, which is promoting (on TV) PillPack and has applied for additional pharmacy licenses to ship drugs to customers in Washington, New Mexico and Indiana from their Phoenix facility (Healthcare Finance).

It appears that Judge Leon has his own serious reading of the 1974 Tunney Act, which requires a Federal court to ensure the agreement is in the public interest, despite the states and the DOJ.

Comings and goings: CVS-Aetna finalizing, Anthem sued over merger, top changes at IBM Watson Health

imageWhat better way to introduce this new feature than with a picture of a Raymond Loewy-designed 1947 Studebaker Starlight Coupe, where wags of the time joked that you couldn’t tell whether it was coming or going?

Is it the turkey or the stuffing? In any case, it will be the place you’ll be going for the Pepto. The CVS-Aetna merger, CVS says, will close by Thanksgiving. This is despite various objections floated by California’s insurance commissioner, New York’s financial services superintendent, and the advocacy group Consumers Union. CEO Larry Merlo is confident that all three can be dealt with rapidly, with thumbs up from 23 of the 28 states needed and is close to getting the remaining five including resolving California and NY. The Q3 earnings call was buoyant, with CVS exceeding their projected overall revenue with $47.3 billion. up 2.4% or $1.1 billion from the same quarter in 2017. The divestiture of Aetna’s Medicare Part D prescription drug plans to WellCare, helpful in speeding the approvals, will not take effect until 2020. Healthcare Dive speculates, as we did, that a merged CVS-Aetna will be expanding MinuteClinics to create urgent care facilities where it makes sense–it is not a big lift. And they will get into this far sooner than Amazon. which will split its ‘second headquarters’ among the warehouses and apartment buildings of Long Island City and the office towers of Crystal City VA.

Whatever happened to the Delaware Chancery Court battle between Anthem and Cigna? Surprisingly, no news from Wilmington, but that didn’t stop Anthem shareholder Henry Bittmann from suing both companies this week in Marion (Indiana) Superior Court. The basis of the suit is Anthem’s willfully going ahead with the attempted merger despite having member plans under the Blue Cross Blue Shield Association meant the merger was doomed to fail, and they intended all along for “Anthem to swallow, and then sideline, Cigna to eliminate a competitor, in violation of the antitrust laws.” On top of this, both companies hated each other. A match made in hell. Cigna has moved on with its money and bought Express Scripts.

IBM Watson Health division head Deborah DiSanzo departs, to no one’s surprise. Healthcare IT News received a confirmation from IBM that Ms. DiSanzo will be joining IBM Cognitive Solutions’ strategy team, though no capacity or title was stated. She was hired from Philips to lead the division through some high profile years, starting her tenure along with the splashy new Cambridge HQ in 2015, but setbacks mounted later as their massive data crunching and compilation was outflanked by machine learning, other AI methodologies, and blockchain. According to an article in STAT+ (subscription needed), they didn’t get the glitches in their patient record language processing software fixed in ‘Project Josephine’, and that was it for her. High profile partner departures in the past year such as MD Anderson Cancer Centers, troubles and lack of growth at acquired companies, topped by the damning IEEE Spectrum and Der Spiegel articles, made it not if, but when. No announcement yet of a successor.