Breaking: suspect in UnitedHealthcare CEO’s murder arrested in Pennsylvania, to be arraigned tonight (updated)

December 10, 2024 | by

The suspect in the assassination-style murder of UnitedHealthcare CEO Brian Thompson was arrested this morning (Monday 9 Dec). Luigi Mangione, aged 26, was located today at a McDonald’s restaurant in Altoona, PA after an employee recognized him from wanted posters and media coverage. Altoona is a small city about 95 miles east of Pittsburgh.

One of the four fake IDs in his possession was used to check into an Upper West Side hostel. This was a fake NJ Motor Vehicle Commission driver’s license (Real ID!) with a false name and address in Maplewood NJ, a suburb of Newark near NYC. Police also found in his possession a ‘ghost gun’ with a suppressor that is consistent in appearance to the one used in the shooting. Updated: The gun was assembled from parts, possibly from a kit or separately purchased as replacement parts, with a 3D printed receiver. A receiver is the business components of a firearm–the firing pin, bolt, and breech block.

Mangione was due to be arraigned this evening at the courthouse in Altoona on gun charges. He will likely be extradited to Manhattan.

According to his LinkedIn profile (which is still up), Mangione was a University of Pennsylvania graduate with a six-year combined undergraduate and master’s degree in engineering, specializing in computer and information science. He is listed as currently employed at TrueCar, a car researching and dealer service, as a data engineer, but the Daily Mail reports that he left that position in February 2023 and suffered a spinal injury sometime last year. He was from Towson, Maryland and his LinkedIn profile had him living in Honolulu. The family owns and develops resort and golf club property in the Baltimore suburbs, operates the Lorien Health Services nursing homes, is in the travel business, and owns WCBM-AM, a 50,000 watt talk radio format station.

Luigi Mangione’s manifesto (not fully published) and social media postings reflect a distinct anger towards corporate America, according to the NYPD, and medicine and insurance companies as ‘parasites’, possibly personal because of the treatment of a sick relative. He also admired the writings of the murderous Unabomber, who terrorized individuals and academia for 20 years. The shell casings of ammunition found at the New York Hilton crime scene engraved with ‘delay’, ‘deny’ and ‘depose’ were the first indication that the shooter committed this murder in the name of a cause best known to him. New York Post updates, Pittsburgh Post-Gazette  This story is, of course, developing.

Brian Thompson’s private funeral was today (Monday) in Minnesota.

Updated Tuesday: Mangione and his local attorney Tom Dickey are contesting extradition to New York. This was determined during his court hearing at the Blair County Courthouse in Hollidaysburg, PA, near Altoona. Mangione, the suspect in the murder of Brian Thompson, raged on the way into the hearing this morning but remained quiet once in court. The Manhattan district attorney will request extradition via a ‘Governor’s Warrant’ from NY Governor Kathy Hochul, which will be sent to PA Governor Josh Shapiro. This processing could take up to 45 days. In the meantime, Mangione will be held on the gun charge and the false IDs at a state prison in Huntington. Over $8,000 in cash was also found in his backpack when arrested, which he maintains was planted by police. The three-page handwritten ‘manifesto’ positions himself as a hero and scores the corruption and greed of “United” that “they continue to abuse our country for immense profit because the American public has allwed (sic) them to get away with it.”

The extent of Mangione’s back injury was severe. According to the landlord of the co-living space Mangione inhabited for six months in 2023, “his lower vertebrae were almost like a half-inch off, and I think it pinched a nerve.” A former high school classmate said he lost touch with his family and ‘went missing’ after back surgery did not go well earlier this year.

The McDonald’s employee who called Altoona police to check this particular guest eating hash browns has been threatened on social media. 

Masimo update: SEC announces investigation of RTW Investments and role in proxy war voting

December 6, 2024 | by

The Securities and Exchange Commission comes knocking on RTW Investments’ door…and they have no sense of humor. Though the proxy war is over now for two months and Politan Capital Management is firmly in control, with losing founder Joe Kiani departing in a classic ‘you’re fired/I quit’ scenario that’s dissolved in a flurry of lawsuits from New York to California [TTA 15 Nov], the next shoe dropping can land Kiani and his ally Roderick Wong of RTW into some extremely hot soup, to strain two metaphors.

The SEC is now investigating the “empty voting” scheme apparently used by Kiani’s side in the proxy war. Masimo had already sued Kiani and RTW in the US District Court for the Southern District of New York charging that they used empty voting to manipulate the shareholder vote in favor of Kiani. Masimo is claiming that this action rigged 19% of the vote under Kiani’s and allies’ control. As noted in our November article, empty voting is done through put options or by selling the shares after the record date but before the shareholder meeting. It’s a way for an investor to build up share control and sway the outcome of a shareholder vote at little cost.

Strata-gee yesterday (5 Dec) reported that Bloomberg News (paywalled), during last week’s pre-Thanksgiving ‘news black hole’, broke that the SEC is probing RTW, a $6.5 billion hedge fund. Its head Roderick Wong is cooperating with the probe. He characterized it to his investors as a ‘fact-finding investigation’ and accurately characterized it as “the existence of a probe doesn’t mean laws were broken” in a message on Monday 25 November. A SEC probe is not necessarily safe as milk–see the last part of this article.

However, as Strata-gee reports, empty voting is not necessarily illegal. It is Masimo’s stating that it has evidence that Kiani and RTW conspired to form an insider group–and insider groups always ring bells for the SEC especially during a proxy fight. And where there’s the SEC, there is the Department of Justice. Witness the interest in insider trading in the form of stock sales by executives at UnitedHealth Group while a DOJ probe was happening but not public–and the resurgence of interest in UHG’s legal difficulties as part of the shocking recent events–which have caused industry executives to scrub their profiles from corporate websites. Healthcare Dive.

Why this matters to us in healthcare tech. Masimo makes consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry where they have a brace of patents. Their global revenue in 2023 was over $2 billion. Medical Design and Outsourcing  Last year at this time, Masimo was the David wrestling Goliath Apple to the mats with  ITC (International Trade Commission) bans on the new Apple Watch 9 and Ultra 2 last Christmas season, forcing Apple to pull them from sale and disable the feature violating the Masimo patents. Masimo continues to challenge Apple patents in court with mixed results, most recently reported in mid-October. Since the new Masimo is actively selling or spinning off its audio brands, what remains is their healthcare technology business.

A cautionary tale. This Editor, as a subscriber to Strata-gee (an audio business specialist website) after finding Editor Ted Green’s talented writing there in following the Masimo Mess, wanted to share from today’s subscriber email his description of a SEC probe at a former employer. Basically, the SEC doesn’t launch investigations unless they have good reason to do so, and they turn your company’s life upside down doing it. Mr. Wong will be holding court for a group of guests for awhile. Editor Ted has a reminiscence of when it happened at the well-known audio brand Onkyo, which was treated as a suspect in the legendary Crazy Eddie (“his prices are insaaaaane!”) retail electronics chain fraud.

Have I ever told you the story about the day, many years ago, when about 20 agents of the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) came storming through the main entrance of Onkyo USA, marched into the President’s office (who was in a meeting that was hastily dismissed) and delivered a Search Warrant? (This is not a joke!) I learned a few things that day about the men and women of the SEC: 1) Most of them were armed with weapons that could deliver deadly force; 2) They were as serious as a heart attack; and 3) They would take office space in our facility and stay for weeks, as they forensically examined everything about our business. It turned out that this was part of an investigation into Crazy Eddie, a New York dealer that they suspected had engaged in illegal activities. As one of their top suppliers, Onkyo was considered a potential co-conspirator until we proved we weren’t…which, thankfully, we did – and they came to see us as one of the victims of Eddie Antar’s scheme and NOT a partner.

No apologies rendered, I’d guess. Or payback for the sandwiches and coffee.

Weekend short takes: Merative’s $25M funding, Risant closes on Cone Health, Aya buys Cross Country staffing for $615M, Supreme Group acquires Amendola PR

December 6, 2024 | by

Merative data analytics raises $25 million from Morgan Health. The latter, a JPMorgan Chase business unit focused on employer-sponsored insurance, is investing in Merative to expand its capabilities for employers to manage data with integrated tools and have a more comprehensive, integrated view of health care quality and cost to make improvements. Merative’s products include the employer-focused platform Truven, their employer/payer analytics Health Insights, and their MarketScan databases of real world claims data plus insights for evidence studies. Merative’s markets include employers, health plans, healthcare providers, governments, life sciences, and benefits advisors. Their majority owner is Francisco Partners. Release, MedCity News

Risant Health closed on the purchase of Cone Health of Greensboro, North Carolina. It was originally announced in July. Cone has four acute care hospitals, a behavioral health facility, an insurance plan, and an ACO with 200,000 patients. It is located within the Piedmont Triad metro area and its surrounding counties. It is Risant’s second system after the founding system of Geisinger in Pennsylvania. There was no transaction cost but Risant will provide a minimum of $1 billion in capital to the system in the next five years.  Cone Health closed its 2023 fiscal year on 30 September with $2.8 billion in total operating revenue. Risant is Kaiser Permanente’s nonprofit/community-based hospital system initiative. FierceHealthcare, Cone Health Release

Healthcare staffing is worth some large cash, with Aya Healthcare buying Cross Country Healthcare for $615 million. Their offer for Cross Country shares, traded on Nasdaq, is for $18.61 per share, a 67% premium over the closing price on 3 December. The Aya deal will take it private with an expected closing in the first half of 2025. Aya’s expertise is in travel nursing, allied health, and staffing for professionals in per diem, permanent, interim leadership, locum tenens, and non-clinical roles. Cross Country will remain as a separate brand in healthcare staffing and include providing clinical services in non-clinical settings, such as schools and homes. Release, Benzinga, Mobihealthnews

And in one last acquisition, independent PR agency Amendola Communications is being acquired by Supreme Group. Purchase price was not disclosed but current head Jodi Amendola will continue as president of the agency as a standalone operation under Supreme Group. Amendola is the fifth acquisition by Trinity Hunt Partners-backed Supreme since June 2023. Ms. Amendola was one of our Perspectives contributors in April. We wish them the best! Release

BT Group hacked by Black Basta, China’s Salt Typhoon breached 8 telecoms in dozens of countries, government records

December 6, 2024 | by

Telecoms, as linkages to digital health tools and remote patient monitoring, are vital–and lately the target of hackers.

BT Group’s BT Conferencing business division shut down some of its servers following a Black Basta RaaS ransomware breach. After an initial denial to Bleeping Computer, other reports confirmed that the breach was successful in snatching 500GB of data, including financial and organizational data, “users data and personal docs,” NDA documents, confidential information, and more (see screenshot of Black Basta’s leak site, left). BT confirmed that only some servers for the Conferencing business were taken offline and that live conferencing services were unaffected. According to Bleeping Computer, “The cybercrime group also published folder listings and multiple screenshots of documents requested by the company during the hiring process as proof of their claims. The ransomware gang also added a countdown to their dark web leak site, saying the allegedly stolen data would be leaked next week.” BT Group is continuing to monitor and is coordinating with international law enforcement entities. The Russian-based Black Basta since 2022 has been quite successful at its ransomware-as-a service business; its affiliates have breached over 500 organizations and collected $100 million in ransom payments from over 90 victims, according to CISA and the FBI.

Chinese state-sponsored hackers are no slouches in the telecom hacking business either. Their operation dubbed Salt Typhoon has breached at least eight telecom operations and their operations in dozens of countries. Anne Neuberger, deputy national security adviser to the currently expiring administration, seemed not to be overly alarmed that this activity has been going on for a year or two, stating that “at this time, we don’t believe any classified communications have been compromised. ” Companies confirmed by CISA and the FBI are T-Mobile, Verizon, AT&T, and Lumen Technologies. T-Mobile’s breach came via a connected wireline provider’s network, but their chief security officer stated that T-Mobile has no more attacker activity within its network.

Access to telecom allowed the Chinese hackers to intercept and steal internet traffic from internet service providers. Neuberger also confirmed that some government traffic had been compromised–that of government officials, the US government’s wiretapping platform, and there was theft of law enforcement request data and customer call records. Salt Typhoon has also used nom de plumes FamousSparrow, Earth Estries, Ghost Emperor, and UNC2286 to breach Southeast Asia government entities and telecom companies since at least 2019. FBI advice–encryption. Bleeping Computer

News roundup: VA’s 2025 EHR budget + vendor breach, Neuralink robot arm study, linking mood prediction to sleep, CoachCare buys Revolution Health RPM/CCM, Seen Health’s $22M launch, Spectrum.Life in Deloitte Ireland’s Fast 50

December 5, 2024 | by

It’s $869 million for the EHR budget. The total budget for the Department of Veterans Affairs for FY2025, which started back on 1 October but is still unapproved by Congress, is $369 billion.

  • The overall EHR budget of $869 million includes current operations of VistA, Oracle Health, and exchange with the DOD/MHS system
  • Drilling down, the budget section for Oracle Cerner for the EHRM (EHR Modernization) has $375 million earmarked for the federal EHR contract. This addresses clinicians’ issues and supports healthcare deployment strategies that optimize resources throughout procedures.

VA decided in FY2023 that there would be no further deployments of Oracle Health’s EHR until the current multiple issues present at the existing six facilities using the Oracle Cerner EHR as well as the James Lovell joint MHS/VA implementation completed earlier this year were at least on a pathway to resolution. However, VA Secretary Denis McDonough said in April during early House Veterans’ Affairs Committee hearings on FY 2025 and 2026 budgets that there was the possibility that implementation may resume before the end of FY2025 using carryover funding, not FY2025 allocated funding. Whether Secretary McDonough will be remaining under the Trump Administration is, of course, subject to change.

In June, VA extended its contract with Oracle Health for another 11 months, not having much of a choice. In July, VA was sued by Laurette Santos, a VA clinical social worker in the White City, Oregon facility, over worker accessibility standards and lack of Federally mandated assistive technology in the Oracle EHR.

Additional funds are on request for IT–$6.2 billion for IT systems–and $10 million for AI research and development. ExecutiveGov

VA’s breach problem. It’s located with a vendor for medical transcription, DBP, Inc. According to the Veterans Health Administration release, the attack on DBP’s server encrypted files that were then potentially copied by the hacker. DBP shut down the server and disconnected it from the internet, preventing additional attacks. The vendor purchased new hardware and implemented new security controls. 2,302 veterans were affected with some or all the following information exposed: full name, medical record information, or Social Security number. It was also geographically wide: Maine, Boston, Connecticut, Baltimore Amarillo TX, and Minneapolis MN.

Neuralink moves forward with feasibility study with a robotic arm. Four months after Elon Musk proposed the N1 implant be capable of moving an Optimus (Tesla Bot) robotic arm or leg, Neuralink has an approved feasibility study, code named CONVOY, to investigate whether the N1 implant can move an Optimus robotic arm. Start date is not disclosed. This follows on the announcement of the clinical trial with Health Canada for the “Canadian Precise Robotically Implanted Brain-Computer Interface” (CAN-PRIME) for N1 brain implant and its R1 robot, which is used to place the 64-thread implant into the brain, and approval last month for Blindsight, an implant for sight restoration. [TTA 27 Nov]. Mobihealthnews

Quantifying the link between sleep and predicting moods. This relatively lean bit of research from South Korea uses machine learning (ML) to predict mood episodes in mood disorder patients using only sleep and circadian rhythm data from wearable devices including smartphones used by 168 patients generating 267 days of data. The researchers derived 36 sleep and circadian rhythm features to enable accurate next-day predictions for depressive, manic, and hypomanic episodes. A key finding that daily circadian phase shifts were the most significant predictors: delays were linked to depressive episodes, advances to manic episodes. The study has implications for symptom evaluation and for treatment effectiveness. Mobihealthnews, NPJ Digital Medicine

Acquisitions and funding:

CoachCare acquires Revolution Health Solutions in the busy RPM/CCM space. Both companies offer chronic care management (CCM) services enhanced by remote patient monitoring (RPM) and outsourced teams. CoachCare’s acquisition cost and staff transitions were not disclosed. CoachCare, based in NYC, has raised about $49 million over five rounds in an unusual way–four under $1 million, then in July a private equity round of $48 million from Topmark Partners and Integrity Growth Partners. They claim 150,000 patients and hundreds of healthcare organizations along with five other acquisitions. Revolution Health Solutions, based in Dallas, had no funding rounds listed on Crunchbase. They were founded and led by Jenn Gillette Tompkins who positions it as a partnership (her LinkedIn post).  Release

Seen Health comes out of stealth with $22 million. The Series A has five investors: Virtue, 8VC, Basis Set Ventures, Prime Time Partners, and Astrana Health. Seen is leveraging off the PACE model (Program of All-Inclusive Care for the Elderly) that helps chronically ill and infirm older adults remain in their homes and out of a nursing home by constructing a care team containing a social worker, nurse, dietician, primary care provider, and others. PACE models that started in San Francisco’s Asian and Pacific Islander communities in the 1970s have also been supplemented with digital health telemonitoring, such as QuietCare in 2006-9 (Editor’s note). Despite their advantages, PACE programs only cover 5% of older adults. Twin brothers Xing and Yang Su decided to build on PACE, creating culturally apt physical centers and equipping them with technology such as an EHR and geofencing that prevents wandering. Their programs will also include care at home coordinated with local agencies to provide low or no-cost care. The financing will be used to build out their first center in Los Angeles County’s San Gabriel Valley that focuses on the Asian and Pacific Islander (API) communities along with the needed technology and to build out their team. MedCityNews

Some nice recognition for Ireland’s Spectrum.Life. It ranked #41st in Deloitte Ireland’s 2024 Technology Fast 50 Awards, which recognize the fastest growing Irish tech companies. Spectrum.Life’s digital platform supports digital health, mental health, and wellbeing for employers and employees in the workplace, insurers, and educators. Their services are used by 9.8 million insurance members, 3,000 corporate clients, 60+ universities and 650,000 university students. WireNews

Breaking: UnitedHealthcare CEO Brian Thompson murdered in NYC

December 4, 2024 | by

No other words other than shocking, awful, and terrible. Brian Thompson, CEO of UnitedHealthcare, was murdered by gunshot around 6.45am this morning 4 December, outside the New York Hilton on Sixth Avenue (Avenue of the Americas) between 53rd and 54th Streets.

We know very little at this point. Reports indicate that a masked man approached outside the hotel and shot Mr. Thompson several times including in the chest near the 54th Street side entrance, then fled down Sixth Avenue towards Central Park nearby on a bicycle. Mr. Thompson was taken to Mount Sinai Hospital as critical and pronounced dead. The shooting is being depicted as ‘targeted’ and as an ‘assassination’. The suspect was described as a white male wearing a cream-colored jacket, black mask, black gloves, black and white sneakers, and a grey backpack. (Other than the cream jacket in winter, totally unremarkable) Witness reports indicate that the suspect was waiting outside the hotel and was not a guest. (The Hilton is a standard place to meet people near Rockefeller Center and the business district.)

Mr. Thompson was in NYC scheduled to speak at UHG’s Investor Day conference today at the Hilton, the site of many meetings and conferences. UnitedHealth Group CEO Andrew Witty halted the meeting around 8am.

A personal note. For this Editor working two blocks away years ago at what was then the Burlington Building, in account management for the Campbell-Ewald ad agency on Eastern Airlines, the Hilton was an ‘all hours’ safe haven during long crazy hours, to meet a friend, grab a drink, or just to get out of the office. Nearby tonight is the Rockefeller Center Christmas Tree lighting. Thousands will be there. He will not be.

We at TTA extend our sympathies to Brian Thompson’s family, friends, co-workers, and everyone he touched. We hope the NYPD swiftly locates and arrests the suspect, bringing him to justice. This is developing.

Daily Mail, New York Post

Wojcicki: I’m transforming 23andMe to be ‘viable’ and thriving–but had ‘no idea why her board resigned’

December 4, 2024 | by

Transform it till it survives. That seems to be the meme of 23andMe’s CEO/founder Anne Wojcicki in a “CBS Mornings” ‘exclusive’ with co-host Gayle King. Dropping on 27 November (Wednesday morning before Thanksgiving), the 10-minute segment was primarily a pre-recorded eight-minute interview done in a ‘living room’ setting earlier with an introduction and closing commentary with two others. For a non-business interviewer, King directed it better than expected, though the context was soft, with an intro and early questioning that focused on the company’s problems and a Fortune article (more below), then moving towards the end to Wojcicki’s family and personal challenges this year. 

Wojcicki believes that the company is ‘viable’ and ‘transforming’ under her. King redirected Wojcicki from her initial corporate boilerplate-speak twice within the first few minutes back to the troubles of the company, including “How does a company survive when it’s lost 98% of its value though?” The answer was rather pat: “We absolutely are in a situation where we’re figuring out cash burn and we’re looking at all the ways that we’re gonna drive revenue growth.” which is about as much as a CEO and controlling shareholder would want to say about a public company potentially facing shareholder lawsuits.

King touched on the instances of last year’s massive data breach [TTA 19 Jan, 2 Feb], the layoff in November of 40% of its remaining workforce [TTA 14 Nov], and the entire resignation of the board [TTA 17 Sept]. This last elicited the surprising revelation that Wojcicki had “no idea why her board resigned” nor “great insights into what the strategic differences were” or that “there was not an overt disagreement.” King did not drill down into that brace of amazing statements about a hand-picked board of a public company during a financial crisis, trying to decide on a course of action whether to sell or go private. She also did not address the role that the data breach and 23andMe’s widely derided treatment of their customers had in precipitating the company’s decline.

Regarding content in the generally negative Fortune article from October, Wojcicki rebutted the former employees’ view that all decisions ran through her and that she was “outwardly charming, but stubborn and controlling behind the scenes.” saying that ‘”I love getting feedback” and that she encouraged everyone to voice their opinions and share suggestions, which is not quite the same as a collaborative management style or delegation. To her, her vision was centered on using genetic data for consumer empowerment, research, and discovery. Unfortunately, the company moved away from the consumer part which remained largely one-off testing, despite the late adoption of a subscription model and refocusing on consumer products such as GLP-1 drugs. The corporate focus became drug discovery and development (closed) and the GSK data (ended).

To Wojcicki, the closures and layoffs are justified in what she envisions as the ultimate transformation of the company, her new mantra. King closed by asking her about her one and five-year predictions for the company. At one year, Wojcicki without blinking and with a small smile said that 23andMe would be “thriving”. Five years? With a large, confident, and convincing smile, with clasped hands, Wojcicki said it would be “transforming healthcare”. This Editor has heard that song before.

VillageMD’s co-founder/CEO resigns as Walgreens continues the brush-off after billions in losses

December 3, 2024 | by

Walgreens’ disposition of VillageMD clarifies with CEO/co-founder/board chair Tim Barry’s sudden and unceremonious departure. The news dropped on Wednesday 27 November, directly into the media black hole of the Thanksgiving holiday.

A tell-tale sign is that Walgreens’ board has appointed only an interim, VillageMD’s chief operating officer Jim Murray. It is not clear from company statements made to media if Mr. Murray will replace Mr. Barry on the board.

Mr. Murray was appointed only last April, having nearly all his experience on the insurance side. He retired from Centene in late March, having come aboard after being COO at Magellan Health when Centene acquired it (now mostly sold off) and with 28 years previously at Humana. [TTA 10 Apr and release] This may suit Mr. Murray, given his age at about 70 (from Centene regulatory filings). 

In a statement to the Chicago Tribune, a Walgreens spokesperson said that “We look forward to continuing to partner with Jim Murray as he assumes day-to-day leadership responsibilities.” (Editor Donna–as if a COO does not already have day-to-day leadership responsibilities?) Murray has been “integral in helping lead the company’s turnaround as VillageMD makes meaningful progress and positions itself for profitable growth.” Neither the Walgreens representative nor VillageMD spokesperson Molly Lynch answered media questions about why Mr. Barry left or the circumstances behind the sudden departure without even a fig leaf (or pumpkin pie) of a cover story or the usual ‘thanks for your service’–which leads to more questions and doubts about What Really Happened.

The larger picture of sinking Walgreens financials. They closed FY 2024 with an operating loss of over $14 billion, more than doubling FY 2023’s loss of $6.9 billion versus FY 2022’s profit of $1.4 billion during the pandemic. $12.7 billion of a total $13.4 billion impairment was due to VillageMD’s loss in value due to clinic closures, slow patient panel growth, and downward trends in Medicare reimbursement. The remainder of about $332 million was attributed to loss of value in the CareCentrix home care unit (Form 10-K 10 October 2024, document page 123; impairments page 97; also TTA 28 Mar)

The Big Idea of combining primary care with retail locations in the Roz Brewer/WBA’s Stefano Pessina vision (hallucination?) was a major misstep into a Big Hole.

  • Bad timing was one factor. VillageMD added to a mound of miseries in retail and pharmacy sales caving, competition from direct vendors such as Amazon and Mark Cuban Cost Plus, plus  traditional brick-and-mortar CVS and Walmart. There were also expensive settlements around opioid prescribing. VillageMD also tapped Walgreens for $3.5 billion to acquire Summit Medical and CityMD–and defaulted on a $2.25 billion loan in August.
  • Joining primary care clinics with retail footprints wasn’t based on testing consumer behavior and acceptance–or practice reality. The plan was to have 1,000 joint locations modeled on the picture above left by 2027. As a model, it depended on obtaining both sufficient providers and building loyal patient panels, a slow pull if there ever was one. Physically adding clinic locations to Walgreens’ stores proved to be both expensive and difficult. 
  • These factors and others sank Roz Brewer’s CEO-dom, the share price, and the vision of Mr. Barry’s and VillageMD’s founders and physicians. The last dated back to 2013 and built into a network of hundreds of freestanding primary care clinics in value-based care. Many of the 140+ closures starting early this year were not only of expansions, but also of long-standing VillageMD offices, including in its core market of Chicago metro. Earlier this year, Cigna wrote off most of its $2.5 billion investment, throwing its Q1 into the red [TTA 2 May].

Many of the practices participated successfully in CMS’ advanced ACO shared savings models starting in 2016 such as Next Generation, Direct Contracting, and the current ACO REACH. The practices integrated telehealth as part of their value-based care models to achieve quality metrics. In CY 2023, VillageMD-operated ACO entities in the REACH model achieved $140 million in gross savings for Medicare, with $36 million shared back with the government and the remainder reinvested in the care model. (CMS reports are released 10-12 months after the prior year’s end.) 12 November release

Walgreens went big–and was sent home with the metaphorical tail between the hind legs. Perhaps engraved on VillageMD’s headstone will be what Walgreens CEO Tim Wentworth said of VillageMD during the Q4 earnings call in October, “… We’ve declared it’s not a crucial part of our future.” Mr. Wentworth and the board declared months ago that they wished to sell all or part of the business, at least below their majority holding at 63% [TTA 8 Aug, 2 July]  Who even wants to or is able to buy, with Walmart Health defunct and Oak Street Health and One Medical retrenching for their respective owners? Will VillageMD be part of anyone’s future? Healthcare Finance News, Healthcare Dive

Short takes: Teladoc intros hospital bed fall risk detector, Veradigm’s AI scribe, Lucid’s pill-sized esophageal cancer diagnostic, Cortica’s $80M raise for autism treatment, LG NOVA startup winners

November 27, 2024 | by

Turkey bites before Thanksgiving:

Teladoc debuts Virtual Sitter, a hospital bed system for fall detection risk. It uses AI to assess the risk of a patient falling from a hospital bed. The risk is determined by the patient moving within or outside set spatial boundaries (Bounding Box). It can also determine limb movements, whether the patient is sitting up or lying down, and can screen out other people in the room. The AI is coupled with human observation by a nonclinical trained staff monitor who can speak with the affected patient. Virtual Sitter integrates with Teladoc’s TV Pro devices and enables the live monitor to view up to 25% more patients. Falls out of beds are a major cause of hospital injury with over 1 million patients affected and 30% experiencing lasting injuries. TV Pro and Virtual Sitter are in Teladoc’s integrated care unit that has done fairly well in recent quarters. FierceHealthcare, Teladoc release in Yahoo Finance

Veradigm introduces a virtual scribe. The Veradigm Ambient Scribe is designed to ease the burden of EHR documentation. It uses  generative AI from AvodahMed to automatically capture and transcribe real-time patient-provider interactions into structured medical notes. It integrates into the Veradigm EHR. Veradigm release. Meanwhile, the long-drawn-out Veradigm sale has not advanced but betting is that it will be wrapped by year’s end [TTA 13 Nov].

Lucid Diagnostics introduces a diagnostic for detecting esophageal cancer cells without endoscopy. Esophageal cancer is deadly (50% mortality in Stage 1), difficult to detect but is common in those suffering from gastroesophageal reflux disease (GERD). Endoscopy for these high-risk patients is highly invasive, requires IV anesthetic, and its complexity is a barrier to detection of pre-cancerous cells, where it is most curable via ablation. The noninvasive EsoGuard biomarker test uses a detection device about the size of an easily swallowed vitamin pill and is attached to a thin catheter. The catheter collects cells in about a minute which are then analyzed for genetic markers associated with esophageal precancer and cancer. It was FDA-cleared in 2019 and is the only test of its type, but awaits coverage by Medicare and commercial insurers. MedCityNews 

Cortica raises $80 million for its childhood autism diagnosis and treatment offering. The raise was a venture round from Morgan Health, a unit of JP Morgan, Nexus NeuroTech, and Autism Impact Fund.  It provides applied behavior analysis, diagnostic testing, speech-language therapy, occupational therapy, counseling and other services through its 24 centers in eight states and also via virtual counseling in schools and homes. Its purpose is to integrate the often fragmented care autistic and neurodivergent children receive.  The current funding will be used to expand the number of center locations, for value-based contracts with insurers, and to integrate guarantees focused on faster evaluation, diagnosis and treatment, as well as clinical outcomes. Since 2018 it has raised $255 million. MedCity News, FierceHealthcare

And winding it up….

Korean electronics company LG throws its cap into the startup competition business. LG’s NOVA is not salmon or Brazilian music but the North America Innovation Center of LG Electronics. Ten startups presented at LG’s InnoFest in San Francisco, focusing on  life sciences, open innovation, health tech, AI, smart life, and cleantech. The three winners were chosen as the most promising in driving impactful change. 

  • First Place ($15,000): mDETECT Inc. – Developer of highly-sensitive cancer blood tests using DNA sequencing, offering a universal approach to monitoring therapy response and detecting cancer progression. 
  • Second Place ($10,000): Glidance – Independent mobility for people who are blind or have low vision with Glide, the first AI-powered intelligent guide, which enhances confidence, safety, and autonomy. 
  • Innovation for Impact ($10,000): Oncoustics – Transforming low-cost point-of-care ultrasound devices into powerful diagnostic tools for early detection and monitoring of liver diseases using AI. 

The winners’ next step is collaborating in LG NOVA’s Mission for the Future Program which includes marketing, partnerships, and additional resources.  LG release

News roundup: Oak Street’s Pykosz departs CVS, Musk’s Neuralink gains Canadian clinical trial, VA healthcare improvement bill omits EHR oversight measures, 23andMe’s Mirador precision medicine partnership

November 27, 2024 | by

Another CVS departure. As Glenview Capital taps its feet waiting for CVS financials to improve, Mike Pykosz, appointed less than a year ago to head up their Health Care Delivery unit, is departing. His replacement is Dr. Sreekanth Chaguturu. Unsurprisingly, Dr. Chaguturu will be working two jobs–president of Health Care Delivery as well as EVP and chief medical officer of CVS Health, saving an executive salary. This may be the capper of a two-month 52-card pickup that started with rumors of a breakup that would split off Aetna, replacement of CEO Karen Lynch, a new head of Aetna, and four new board seats given to Glenview. [TTA 19 Nov]

No date was given for Mr. Pykosz’s departure, but the wording in the release made it appear that it was effective immediately. His LinkedIn post from last Tuesday indicated that he was moving on by end of November, this week. According to new CEO David Joyner, Pykosz had informed management earlier in the year that he was planning to depart and had worked to ensure a smooth transition. Mike Pykosz had previously been CEO and co-founder of Oak Street Health, acquired by CVS for $10 billion in May 2023. In the following months, OSH integrated with elements of Signify Health, in-store Minute Clinics, and grew from 170 units to 250 locations. Whether any of them are profitable is not disclosed and likely not probable, though CVS made much of OSH’s and Signify’s 36% increase in quarterly revenue versus prior year. There is also no disclosure of Mr. Pykosz’s future plans though his LinkedIn post mentions that he was “excited to be able to dedicate time to investing in, advising, and supporting innovative healthcare companies, helping them meet their strategic goals and build better healthcare solutions as well as spend more time with family and friends.” including coaching grade 3 basketball. Bet on hearing from Mr. Pykosz after what is likely a prolonged non-compete agreement and a good rest. Healthcare Dive

Elon Musk’s brain-computer implant, Neuralink, to enter a clinical trial with Health Canada. This is the first outside-US trial for Neuralink. It comprises the N1 brain implant and R1 robot, which is used to place the 64-thread implant into the brain. The study will be performed by the University Health Network (UHN) hospital at its Toronto Western Hospital. The “Canadian Precise Robotically Implanted Brain-Computer Interface” (CAN-PRIME) subjects will be Canadian-resident patients with tetraparesis or tetraplegia resulting from cervical spinal cord injury or the neurological disease ALS who also have a life expectancy of at least 12 months. Earlier this year, an American implant patient moved a mouse by thought [TTA 21 Feb] and is now playing video games and online chess. Neuralink received approval last month for Blindsight, an implant for sight restoration. Mobihealthnews

VA service improvement bill manages to omit Oracle EHR oversight measures. The bipartisan omnibus bill titled ‘The Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act” (H.R. 8371) passed the House last week. It introduced many benefits to VA healthcare workers and to veterans, but managed to pass the House without the ‘guardrails’ that the House Veterans Affairs committee deemed necessary to continue the Oracle EHR rollout, replacing the obsolete VistA system. The committee spokesman, Mark Takano, D-Calif., attributed the omission of requirements included under the EHR Program RESET Act to “a lack of political viability in both the House and Senate”. The chair of the Technology subcommittee, Matt Rosendale (R-Montana), went considerably further and voted against the entire bill. Both blamed Oracle: Takano attributed it to “the army of lobbyists that Oracle unleashed to kill it” and Rosendale stated that “Oracle Cerner bought and bullied their way into getting this bill passed without their company being scrutinized.” The bill now goes to the Senate in the minimal time before the ending of the 118th Congress next month.   

The requirements in the omitted RESET Act included most of what has been discussed in both Senate and House to remedy Oracle Cerner Millenium’s stopped-dead implementation in the VA.

  • Increased Congressional oversight of EHR deployments, ensuring that each implementation of the new EHR “met or exceeded”  pre-deployment efficiencies before moving to the next one
  • Requiring VA to provide lawmakers with quarterly reports with additional data “on user adoption and employee satisfaction” with the Oracle Cerner system
  • Requiring VA to supply data on “employee retention and turnover at medical facilities where such electronic health record system is in use.”

Nextgov.com

Rep. Rosendale issued a press release blasting H.R. 8371. “…this bill ignored years of bipartisan work focused on requiring Oracle Cerner to fix its EHR System, that has resulted in veteran deaths, before it could be expanded to new VA Medical Centers and the company can continue to collect on its multibillion-dollar contract.” Omnibus bills like this are always shotgunned together as well. “The House Veterans’ Affairs Committee ignored regular order with this legislation which, by uniparty design, prohibited scrutiny and debate on the final product. That decision spearheaded a bad process for passing this bill which resulted in an unacceptable final product for our veterans. When a uniparty agreement comes together overnight, like it did with the Dole Act, it means a small group of individuals negotiated it and the American people – and in this case our nation’s heroes – get the short straw.”  

(Editor’s note: Senator Elizabeth Dole, who is still with us at 88, was a single-term Senator from North Carolina 2002-2006, but Cabinet member in two prior administrations as well as the widow of Senator Bob Dole from Kansas.)

Signs of life at 23andMe? The troubled genetic data company, which earlier this month shuttered what remained of its drug therapeutics unit and laid off 40% of its remaining employees, announced this week a research partnership with Mirador Therapeutics, a precision medicine company focused on immunology and inflammation. Mirador is using a targeted set of aggregated, de-identified genetic and phenotypic data from the 23andMe research database to combine with its Mirador 360 development “engine”. Most of the release is boilerplate with the requisite quote from the Mirador CEO, mixed with copy hyping previous 23andMe collaborations and their patient privacy policy which carefully omits the fact that you, personally, can withdraw from the research program, but your genetic data and limited identifiers cannot [TTA 8 Nov]. No financials or agreement duration are disclosed. 23andMe release, Endpoints News (paywalled)

Help fund the NeuroNinja comic–a superhero with Parkinson’s! (Update–it funded!)

November 26, 2024 | by

Turning Parkinson’s into an adventure story. Steven Greene, an old friend of your Editor Donna and owner of a marketing agency, was diagnosed in 2009 with Parkinson’s. He has had all sorts of treatments and therapies during 15 years with it, including brain stimulation surgery. Steve’s experiences led him to develop a comic series, NeuroNinja, targeted to the Parkinson’s community. Our hero Steven, during surgery, experiences a freak accident involving an MRI machine and a quantum computer (left/above). Their convergence causes his brain to fuse with a cutting-edge technology, transforming him into NeuroNinja! He remains unsteady, unpredictable, and has Parkinson’s tremors. But NeuroNinja is, in Steve’s words, “a hero who reflects their daily reality, someone who embodies resilience, strength, and hope in the face of adversity. NeuroNinja is more than just a comic; it’s a symbol of perseverance, a reminder that even with a chronic illness, we can be heroes in our own lives. He uses his symptoms and unique abilities to fight evil, navigate challenges, and help others. His ultimate power? The strength to fight through his own struggles, because sometimes the greatest battles are the ones we face within ourselves.”

The series, completed through key panels and the first issue, is being funded through a Kickstarter that so far has raised just above $6,100, exceeding its $6,000 goal. It has three days left to go, so please look at Steve’s video and the entire proposal–and donate!

Update–NeuroNinja is funded! The Kickstarter exceeded its $6,000 goal at $6,350 backed by 54 people. Kickstarter has a feature called ‘late pledge’–click on the ‘back this project’ button. There are rewards available at the $65 and $200 levels and pledges of other amounts are welcomed too for the next 50-odd days.

Breaking: Federal agents seize Steward Health’s CEO, international head’s mobile phones in widening US fraud investigations

November 26, 2024 | by

This fowl is coming home to roost, and it’s not going to be much of a Thanksgiving at Steward’s former CEO Ralph de la Torre and international CEO Armin Ernst’s tables as a result. Last week, reports emerged that Federal agents served search warrants and seized mobile phones belonging to both Steward executives, though neither has been formally charged with crimes in the US. Since July, rumors have prevailed that the US Attorney’s office based in Boston had opened an investigation, citing fraud and violations of the Foreign Corrupt Practices Act about its business dealings in Malta between 2018 and 2023–and perhaps more [TTA 25 July]. These rumors were confirmed when a former US Senator, John Boehner, a Steward board director, testified on 14 November to a Federal grand jury in Boston. Boehner had access to financial information that could have revealed potential fraud and corruption within the operations of Steward Health, which collapsed into bankruptcy in May. Prosecutors were reportedly zeroing in on financial transactions that could have personally benefited de la Torre and their top executives. The former senator was best known of late for his lobbying and advocacy of marijuana legalization, which makes his board appointment even more interesting. Other former Steward executives have also been questioned by Federal investigators, according to the Boston Globe‘s (paywalled) reports.  Becker’s and Becker’s, both 25 November. Also Times of Malta 26 Nov

In the US, federal search warrants are not issued lightly. Credible evidence must be presented by a federal law enforcement officer or a US attorney to a magistrate judge with authority in any district where the crimes may have occurred. There must be probable cause to search for and seize a person or property. That includes electronic storage media such as servers, computers, and phones.

The Boston Federal investigation is separate from the outgoing Congress’ Health, Education, Labor and Pensions (HELP) Committee’s subpoena and criminal/civil contempt charges referred in September to the Department of Justice [TTA 1 Oct and prior], complete with de la Torre’s immediate countersuit, nor the Malta Government’s ongoing actions against Steward (as Vitals Global) in the privatization of three hospitals in that island nation. Times of Malta 26 Nov  Steward’s business in Malta included a loony, gaudy spy operation against their critics there and elsewhere. That reported cost was $7 million, diverting much-needed funds while Steward defaulted on its bills and payrolls.  [TTA 2 July]  The Malta investigations have also been stymied by the non-appearance of both de la Torre and Ernst, on the grounds of facing US charges and an ill wife, respectively. Former Malta prime minister Joseph Muscat, under investigation, previously had his phone seized but refused to give the password, which may take a year to crack. Times of Malta 21 Nov

An extensive critique of Steward’s board of directors by the Globe’s reporters from October is available here courtesy of the Weinberg Center for Corporate Governance. It is a worthwhile dive into how Steward’s “unusual” business practices were facilitated by its tight-knit and inexpert board, drawing parallels with Theranos. Board members also enjoyed de la Torre’s considerable largesse, unlike Theranos.

Investigations by the Boston Globe’s reporters also reported that additional Steward funds were diverted to de la Torre’s personal pursuits, such as a private jet for friends, a donation to his children’s school, and a Madrid apartment. The last is interesting to this Editor as Spanish courts do not extradite easily for crimes not committed or charged in Spain, requiring review and approval of all requests by the National Court. de la Torre also has reported residences in Costa Rica where extradition via a bilateral treaty is easier. 

This Editor’s extra-legal advice to de la Torre remains that he should go on his $40 million oceangoing yacht for a trip into international waters and not even try to brazen this through. (And if anyone believes that the corporate phone hasn’t been tossed overboard or any phones seized hadn’t been thoroughly cleansed, I have a bridge over the Hudson River to sell you!)

Government updates: GAO scores HHS on cybersecurity issues; patient issues largely omitted from EHR notes in VA study

November 20, 2024 | by

The Government Accountability Office (GAO) latest report remains critical of HHS’ leadership on cybersecurity issues. Using the immense Change Healthcare data breach as a glaring example, GAO’s latest report released 13 November outlines HHS’s continued ‘challenges’ in ensuring that, among Federal agencies, it takes the lead in strengthening cybersecurity in the healthcare sector. For instance, HHS coordinates with the Cybersecurity and Infrastructure Security Agency (CISA), which is the national coordinating agency for critical infrastructure security and resilience. Where HHS comes up short (again) against GAO prior reports and recommendations is:

  • Weakness in tracking how healthcare organizations are effectively mitigating ransomware 
  • Not yet assessing how healthcare organizations are adopting the ransomware-specific practices outlined in the NIST (National Institute of Standards and Technology) cybersecurity framework centered on identifying, detect, protect, respond, and recover.
  • Inability to document the effectiveness of support HHS provides to healthcare organizations, such as guidance documents, training, job aids, and threat briefings to help the sector manage ransomware risks.   
  • Not conducting a comprehensive sector-wide cybersecurity risk assessment addressing IoT (Internet of Things) and OT (operational technology) devices and systems common in healthcare.
  • Using their Administration for Strategic Preparedness and Response (ASPR) to fully and consistently monitor its working groups supporting the healthcare sector on progress against goals, responsibilities, and on their collaboration.
  • The Centers for Medicare and Medicaid Services (CMS) has had requirements since 2020 with parameters that conflicted with those established by other federal agencies that share data with states, such as the Social Security Administration.
  • CMS has policies to assess states’ cybersecurity but does not coordinate with other federal agencies on the assessments.

GAO’s latest report recommended that:

  • HHS, in coordination with CISA and sector entities, determines the sector’s adoption of leading cybersecurity practices that help reduce ransomware risk.
  • HHS, in coordination with CISA and sector entities, develops evaluation procedures to measure the effectiveness of its support in helping to reduce ransomware risk.
  • HHS includes IoT and OT devices as part of the risk assessments of the sector’s cyber environment.
  • ASPR takes action to fully and consistently demonstrate leading collaboration practices .
  • CMS 1) solicits input from relevant federal agencies on revisions to its security policy to ensure consistency across cybersecurity requirements for state agencies. 2) revises its assessment policies to maximize coordination with other federal agencies.

Highlights and full report 

EHR notes also come up short when it comes to issues brought up by patients–and include information outside the clinician-patient transcript. This observational study from the Regenstrief Institute by two Indiana University medical researchers at the VA found multiple discrepancies in EHR notes that are supposed to recap the actual conversation between patient and clinician during a primary care appointment versus the actual transcript. It took place at four primary care clinics at a midwestern Veterans Affairs (VA) Medical Center and one associated VA community-based outpatient clinic, all using the current VistA EHR. Video and audio recordings were used to create transcripts that were compared with the EHR notes.

The discrepancies were bi-directional. According to the study, “fewer than half of issues that patients initiated in discussion were included in notes, and nearly half of notes referred to information or observations that could not be verified.” There was also a difference in recording by who brought it up. For instance, psychosocial issues were common in patient-clinician discussions. “The researchers found that when the clinician initiated discussion about these issues, 92 percent of notes in the EHR included them, but when the patient initiated discussion, only 45 percent did.”

There were also gaps in quality that were questioned in the study:

  • 8% of notes lacked an assessment and plan. Were some assessments truly incomplete, and some important plans actually skipped?
  • 18% of notes were missing follow-up plans. Were some follow-up plans never arranged?
  • 26% lacked reports of diagnostic test results. Were such results simply absent or unimportant, or were important findings unavailable, difficult to access, or overlooked?

“We recognize that certain variations in EHR documentation stem from authors’ preferences or styles about how to organize or structure notes. At the same time, notes should not lack critical elements.” Reasons for omissions could include “lack of recognition of the significance of a problem by clinicians, forgetfulness while writing notes, insufficient time to complete records accurately and thoroughly; belief that the issue had already been addressed; or prioritization of other concerns.”

Both Drs. Michael Weiner and Richard Frankel are researchers in various aspects of health information technology to improve patient outcomes and doctor-patient communication. They are affiliated with the US Department of Veterans Affairs Health Services Research and Development Center for Health Information and Communication, as well as professors of medicine at Indiana University’s medical school. Regenstrief Institute article 12 Nov, BMC Primary Care published study 18 July 2024

News roundup: CVS Health cedes 4 new board seats to Glenview, Oscar’s strong Q3, telehealth controlled substance prescribing in 3rd extension, new Revere Medical to buy CareMax assets (updated), Oura picks up $75M Dexcom financing and partnership

November 19, 2024 | by

This pre-Thanksgiving week stuffs the turkey, not with giblets and savory fillings, but with Big Developments on the Big Stories of the past few weeks.

CVS feeds the crocodile, gives Glenview Capital four new seats on the board. CVS’ startling move with the hedge fund Glenview Capital Management that adds Leslie Norwalk, Glenview CEO Larry Robbins, Guy Sansone, and Doug Shulman, expands their board of directors to an unwieldy 16. According to the CVS release, Norwalk, from Epstein Becker Green, will join the Health Services Committee. Sansone, CEO of H2 Health, will join the Audit Committee.  Shulman, chairman/CEO of OneMain Holdings, will join the Management Planning and Development Committee. It’s unknown whether Robbins will need to join a committee given his prime position.

Despite CVS’ lack of confirmation after their reported breakup/spinoff discussions that kicked off October [TTA 1 Oct], it’s apparent to anyone with clean glasses that Glenview is driving multiple changes at the company including the ouster of CEO Karen Lynch even after she took direct control of Aetna. She was replaced by a CVS ‘lifer’, David Joyner, head of CVS Caremark. Glenview owns 1% of CVS stock as of last report in October, according to the Wall Street Journal, but that 1% accounts for over $700 million of its $2.5 billion war chest. That gives them cause for concern–and leverage.

The board appears to be looking towards maximizing performance now, not later. The new executive chair of CVS Health, Roger Farah, from the release: “In our discussions with the leadership at Glenview, we agreed that we can deliver greater value from our integrated businesses to all of our stakeholders, including our customers, consumers, colleagues, and shareholders.” New faces tasked with quick turnarounds include group president Prem Shah and at the head of shaky Aetna, Steve Nelson from ChenMed [TTA 8 Nov]. That means achieving profitability and cash flow at a very tough time for nearly all insurers. CNBC, Becker’s

How Centene did it after a similar move by Politan Capital Management. Since early 2022, Centene has been selling off in pieces what turned out to be an abundance of ancillary, only partly digested businesses, such as Ribera Health, Magellan, Apixio, and most recently their MSO/ACO organizer Collaborative Health Systems [TTA 13 Nov, 5 May 2023, 30 July 2022], along with a deep portfolio of real estate such as a projected Charlotte HQ, all bought by the late CEO Michael Neidorff. These ‘fat pads’ were easy cuts along with several thousand people. CVS Health, however, may not have the padding that Centene had to generate ready cash from willing buyers as it has the reputation of being fairly lean. Their big missteps may have been in 2022 (FOMO Time) pursuing a management-led Big Objective of entering brick-and-mortar and buying never-profitable Oak Street Health primary care for $10 billion, buying home health’s Signify Health for $8 billion, and investing $100 million in Carbon Health, all at inflated post-pandemic prices with the latter two having significant issues within their lines of business. 

The proposal of splitting up the company sounds drastic to achieve profitability. It may be a ‘worst case scenario’ thrown out to keep the crocodile sated. Much depends on how both Glenview Capital and Mr. Market behave next year with the opportunities presented, while facing a new administration and HHS and CMS heads without ties to or fondness for payers. 

Meanwhile, Oscar Health, helmed by Aetna’s former and ousted head Mark Bertolini, posted a strong Q3 closing September 30. Versus prior year, their revenue went up 68% to $2.4 billion, medical loss ratio remained fairly stable at 84.6%, up 80 basis points (bps=.01%), and expenses improved by 3.6%, but importantly they narrowed their net loss to $54.6 million, or $(0.22)  of earnings per share, a $10.8 million improvement. Revenue for the year was adjusted upward to the $9.2 billion to $9.3 billion range, $200 million above the prior range of $9.0 billion to $9.1 billion. It’s quite a turnaround from the dancing-with-disaster Oscar of only 18 months ago. Look hard, there’s a schadenfreude-ish smile on the middle guy’s face….  Oscar release

DEA extended telehealth prescribing of controlled substances for a third round. The kicking the can down the road was easily predicted last month. The “Third Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications” exited the registry of the White House Office of Management and Budget (OMB) 14 November. On the 15th, the rule was posted to the Federal Register and officially published today (19 Nov). It gives the Drug Enforcement Administration (DEA) a clean extension of the pandemic time flexibilities on Schedule II-V remote prescribing. The industry will wait and see if the incoming Trump 47 administration will bring this up to Congress to repeal, as by a whisker the extension fell outside the 60-day vacate window. But it’s not a hot button issue and is very likely to continue into 2025. FierceHealthcare, ATA release

CareMax goes into Chapter 11, agrees to sell to the new Revere Medical. The senior healthcare provider based in Miami filed Chapter 11 on 17 November but already has entered an agreement to sell assets to Revere Medical, formerly Stewardship Health, sold out of Steward Health’s bankruptcy to Brady Health Buyer, an entity of Rural Healthcare Group-Kinderhook Industries [TTA 8 Nov]. The sale that had to be planned for some time is part of a restructuring plan approved by the company’s secured lenders, commonly called a pre-packaged bankruptcy. Revere is acquiring CareMax’s management services organization (MSO) and ACO assets, including the Medicare shared savings program (MSSP) part of its MSO business that supports about 80,000 Medicare beneficiaries. CareMax will wind down and exit their Medicare Advantage and ACO REACH businesses which will take some time, likely 2026. The operating clinic business assets will go to a third-party buyer. Further restructuring is part of a restructuring support agreement (the “RSA”) with lenders holding 100 percent of the Company’s secured debt obligations, according to the 17 November release. Becker’s  Update: CareMax was related to Steward Health as the exclusive value-based managed service organization (MSO) for Steward Health Care’s Medicare network. Steward’s failure was the final crack that broke CareMax’s back, as it had been losing money for several years, according to Paul Rundell, CareMax’s chief restructuring officer. Not helpful was their leasing many of their properties from real estate investment trust Medical Properties Trust, same as Steward.  HealthcareDive   And where in the world is Dr. de la Torre, Steward’s CEO?

Finland’s Oura health tracker ring now discloses where the money’s coming from. Oura picked up $75 million from Dexcom in a Series D funding round, their first since a $100 million Series C in May 2021 and an undisclosed venture round the following year. Their total financing is $223 million and the valuation at $5 billion. Dexcom and Oura are also in partnership to integrate Dexcom glucose data with vital signs, sleep, stress, heart health, and activity data from Oura Ring. The two-way integration will flow data between Dexcom and Oura products, including Dexcom glucose biosensors, Dexcom apps, Oura Ring and the Oura App. Oura release, FierceHealthcare Oura purchased Sparta Science earlier this month and metabolic tracker Veri in September. Veri, however, works with the Abbott FreeStyle Libre to guide users to the right foods, habits, and timing versus common health metrics such as sleep for their bodies. 

Bad News Roundup updates: UHG/Optum defends Amedisys buy fast via a website, digging deeper into Forward’s fast demise, former Masimo CEO Kiani booted–and sued (updated)

November 15, 2024 | by

The other shoe drops, as UnitedHealth Group/Optum take their defense public a day later. This unorthodox approach to defending an acquisition against a Department of Justice lawsuit [TTA 13 Nov] is visible on a specially set up Optum page. ImprovingHomeCare.com predictably highlights the benefits of an Amedisys merger along with the divestitures to VitalCaring Group. The gauntlet thrown is unadorned: “The Amedisys combination with Optum would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care. We will vigorously defend against the Department of Justice’s overreaching interpretation of the antitrust laws.”

  • Setup is around present and future demand–and that providers have to be capable of investing and scaling to meet it. “70% of adults 65 or older will likely need some form of long-term care during their lives.” and 3 million Americans received home health services in 2020 (Editor’s note–in a pandemic year when visits were certainly curtailed).
  • Home health is highly fragmented both nationally and locally, thus the acquisition isn’t anti-competitive. “In metropolitan areas with approximately 500,000 residents, there are an average of 26 agencies serving the metro area. The combination of Optum and Amedisys would be a fraction of both home health and hospice–and there would be strong competition in both metro and rural areas.
  • The divestiture to VitalCaring would further preserve competition, and that VitalCaring is a quality competitor. The DOJ release made much of VitalCaring’s inadequacies, such as their lower quality scores, financial difficulties, and leadership. VitalCaring, headquartered in Austin, Texas, currently operates in six states with 58 locations with plans to expand. Their CEO April Anthony is cited as building multiple home health companies ‘from scratch’ such as Encompass Care.
  • Additional proof points stress streamlining of care across Optum’s areas of expertise, integrating technology, and improving value-based care coordination.

FierceHealthcare

Forward’s shut down continues to reverberate in a classic tale of overreach and misdirection. Their bet on kiosks, plus a ‘forward-tech’ approach to a concierge-on-the-cheap, no- insurance-accepted model of primary care over eight years, apparently led to what pilots call a death spiral–it begins wide and imperceptible until it tightens and accelerates fatally in a final dive. Business Insider, true to its name, spoke with 11 anonymous and now former employees who attributed the failure to putting all their chips on 3,200 CarePods installed in one year. Their CEO, Adrian Aoun, was obsessed with technology to the point where he wanted to replace his offices and doctors with CarePods and started to strip the clinics of services, despite only two CarePods installed. 

Most advanced, yet unacceptable*. Patients didn’t try out or use the CarePods, finding them less than inviting. Logistical challenges delayed placements in large markets like New York and Chicago. Then technical problems mounted: automated blood draws failed, lab tests were withdrawn. The coup de grace–patients kept getting trapped in the CarePods. They were insanely expensive–the first two CarePods cost over $1 million each. Then the huge units were unattractive to landlords who didn’t want to fight local building codes nor saw a profit in them. By the end of the summer, there were only two CarePods in place at a mall in Sacramento and in Chandler, Arizona, both gathering dust. (*Shout out to Raymond Loewy, Never Leave Well Enough Alone)

In the increasingly empty Forward clinic offices, the futuristic tech and breadth of services touted in social media adverts weren’t quite as advertised. The whole-body scanner glitched requiring manual checks. Their lab tests became limited to those that could be done in-house, eliminating genetic testing via 23andMe along with services such as simple dermatology removals.

Christina Farr in Second Opinion has a set of takeaways worth noting, with this Editor’s comments (in parentheses):

  • Subscription-based, out-of-pocket healthcare is possible–but hard. (WAY hard when basics are up 25%+! And insurance is almost a given, even if taken in part.)
  • Brick-and-mortar clinics make only limited sense–and space must be used economically, not easy to do in health tech. (Retail and in-person are perhaps anathema in the concepts of those in health tech.)
  • We’re not focusing on those who really need care (But they’re not sexy, wealthy, or relatable to the creators of said tech. Many of them are also on Medicare and Medicaid–truly not sexy.)
  • Primary care is a tough starting point for subscription care (Except the very highest, most exclusive end as she notes!) Specialties may be more amenable to this model. (But volume?) And different age groups want different relationships within this type of care.
  • Timing is everything. Perhaps if Forward had started its clinics today it would have had a far better chance of success? (Then look at bullets 1-4 and see how truly daunting a tech-first clinic setup can be for the tech mindset untempered by research and UX-minded marketing.)

Forward is yet another sad and expensive example of 1) a founder hyperfocusing on whiz-bang technology, 2) losing touch with the customers using it, 3) not improving delivery based on customer needs, and 4) forgetting where he ostensibly started–the mission of improving healthcare. This Editor is sure that his 30-odd investors, especially Vinod Khosla, will have something to say to him about running through $100 million in one year–and over $300 million over eight years.

Masimo’s now-former CEO booted from his company and sued–to boot! (updated) The new management formally terminated founder Joe Kiani on 24 October, as noted in an October SEC filing. In a classic ‘you’re fired..no, I quit!’ situation, after he lost the proxy fight for control of the company, he resigned on 19 September. Kiani immediately filed a lawsuit against Masimo in California state court to obtain a $400 million payout per his employment contract. It is reported to be a declaratory relief suit that hinges on a ‘resignation for good reason’. This is usually specified in the contract. An example is that the executive ceases to be part of senior management, along with others.

The new board of directors has now turned the tables. Masimo is now suing Kiani and RTW Investments in the US District Court for the Southern District of New York. The complaint alleges collusion to violate Federal securities laws by secretly manipulating the shareholder vote through an ’empty voting’ scheme. Empty voting is done through put options or by selling the shares after the record date but before the shareholder meeting. It’s a way for an investor to build up share control and sway the outcome of a shareholder vote at little cost. The suit proposes that Kiani and RTW did precisely that, rigging the vote by acquiring control of over 19% of shares. Evidently, the BOD has proof. The lawsuit and more details are in Strata-gee.

(Editor’s opinion: this is a bare-knucks attempt to claw back Kiani’s contract payout by the new controlling company, Politan Capital Management. And both lawsuits could be true. Pass the popcorn.)

Insult upon injury for Joe Kiani is that shareholders now have some hope that management can save the company by concentrating on healthcare tech. Shares are up. Masimo’s Q3 results reported on 5 November were strong though net income declined. Sound United, the main anchor dragging down the company, is now termed ‘a discontinued operation’. Exhaustive detail on their results is in Strata-gee here.

Bad News roundup: DOJ drops the hammer on UHG-Amedisys, 23andMe lays off 40% and closes therapeutics, Lyra Health lays off 2% in restructuring, Forward primary care + kiosks shuts down abruptly

November 14, 2024 | by

Shoe drop! The long-anticipated Department of Justice (DOJ) lawsuit against UnitedHealth Group and Optum to prevent the acquisition of  home health and hospice operator Amedisys was filed yesterday (12 November) in the District of Maryland. UHG’s offer to acquire Amedisys was made in June 2023 for $3.3 billion in an all-cash deal, but approval was held up in DOJ review ever since. Even with location divestitures proposed in July to VitalCaring Group to reduce anti-trust concerns with Optum’s home health operations (acquired with LHC Group), UHG remained a DOJ target. The civil lawsuit was filed by DOJ together with the Attorneys General of Maryland, Illinois, New Jersey, and New York. No timeline is provided in the release.

The rationale cited is of course anti-trust and elimination of competition between Amedisys and UHG’s Optum. “We are challenging this merger because home health and hospice patients and their families experiencing some of the most difficult moments of their lives deserve affordable, high quality care options,” said Attorney General Merrick B. Garland. The fact that the US Attorney General was quoted first in their release indicates the importance of the case to the DOJ. It’s also a race to the finish as come 20 January 2025, there will be a new president appointing a new AG immediately.

The DOJ states that both companies are “fierce competitors” and that the divestiture is insufficient. “The proposed divestiture does not alleviate harm in over 100 home health, hospice, and labor markets, which generate at least a billion dollars in revenue annually, serve at least 200,000 patients, and employ at least 4,000 nurses.”  Their case is well-built in this Editor’s view. From the release:

 UnitedHealth’s market share after the transaction would make the merger presumptively illegal in:

    • Hundreds of local home health care markets, with an annual volume of commerce exceeding $1.6 billion annually, in 23 states and the District of Columbia;
    • Dozens of local hospice markets, with an annual volume of commerce exceeding $300 million annually, in 8 states; and
    • Hundreds of local markets for home health and hospice nurse labor, employing at least 8,000 nurses, in 24 states.

The lawsuit also seeks civil penalties against Amedisys for falsely certifying compliance with its obligations under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) by failing to produce millions of documents or disclosing the deletion of other documents. For each day that Amedisys was in violation of the HSR, DOJ is seeking a fine of up to $51,744 daily. Amedisys was originally set to be acquired by OptionCare, which does not directly compete in home health, but UHG won a bidding war.

As this Editor said at the time of the Change Healthcare acquisition win against DOJ in Federal court (and we know how that turned out long term), “DOJ has a long memory, a Paul Bunyan-sized ax to grind, and doesn’t like losing.” FierceHealthcare

23andMe continues their long jump down to…who knows where? CEO Anne Wojcicki is minusing out 200+ employees or 40% of its remaining workforce, and fully shuttering its therapeutics development unit. The latter is running two clinical trials which will be wound down ‘as quickly as practical.’ These cuts will save $35 million annually but incur $12 million in one-time severance and termination-related costs. The much-touted therapeutics discovery unit was shut in late summer [TTA 14 August].

What’s left? Not much–the Lemonaid remote prescribing unit, with an entree into GLP-1 prescribing, some published studies, a new AI chatbot called “DaNA”, and a longevity service dubbed Total Health. During their Q2 FY2025 earnings call and release, revenue sank to $44 million versus prior year’s $50 million (-12%)–slightly from Q1’s $40 million–operating expenses reduced 17% to $84 million versus prior year’s $101 million, but the company remained firmly in the red with a GAAP loss of $59 million, 21% less than last year’s $75 million and reduced versus Q1’s $69 million loss. The board, as previously noted, now consists of three financial non-healthcare people, replacing the seven who resigned. Meanwhile, customers wonder about the security and use of their genetic and personal information [TTA 8 Nov]. Release, AP, Healthcare Dive

Another telemental health unicorn, Lyra Health, laid off 2% of staff in a restructuring. 77 people on non-clinical operational teams were released. Some may receive severance for 12 weeks with health benefits, according to one of the anonymous released. Noted in the FierceHealthcare article are reported changes at Lyra, including larger provider caseloads demanded and deletion of seven core values that put clients and clinicians first. Lyra’s last raise was a $235 million Series F in January 2022 for a total of over $910 million (Crunchbase). That high valuation of $5.6 billion has been tough to maintain in the current funding environment–and to not take a down round that affects valuation. 

Health kiosk/primary care practice Forward goes backward, shuts immediately. Nearly on the first anniversary of a $100 million Series E raise from Khosla Ventures and four other investors to deploy self-serve kiosks (left) in major cities [TTA 17 Nov 23], tech-driven primary care practice Forward announced its sudden closure today, effective immediately. What remains on their website is a goodbye-and-good-luck note to patients canceling appointments and zeroing out its app. Patients can email clinicians for care support until 19 December. There is no information available on accessing records nor transferring to new providers, leaving patients in the lurch. 200 employees will lose their jobs immediately as well.

Forward had primary care practices in 14 markets such as New York, San Francisco, and others. Last year it claimed 100+ primary clinicians at 19 locations, with patients paying $150/monthly (no insurance accepted) for un­lim­it­ed vis­its to For­ward’s pri­ma­ry clin­ics. (Refunds, anyone?) The CarePods self-serve kiosks were designed to be self-contained units placed in malls, offices, and gyms. Inside, subscribing patients could access AI-powered health apps for disease detection, biometric body scans, blood testing in disease areas, including diabetes, hypertension, weight management, and mental health (depression and anxiety). They were scheduled last year to be deployed in the San Francisco Bay Area, New York, Chicago, and Philadelphia. Nice idea, but like the earlier HealthSpot Station of 2012-2016, they are equally defunct.

In its eight-year life, Forward had raised $325 million (Crunchbase), which also reported last year’s Series E as only $75 million. At the time of their Series D, Forward was valued at over $1 billion and had a roster of flashy investors such as music’s The Weeknd, Salesforce’s founder Marc Benioff, actor Matthew McConaughey, Eric Schmidt, and Softbank. What’s stunning? Reports indicated that it only gen­er­at­ed un­der $100 mil­lion in to­tal rev­enue since its founding. There has to be more to this, like lawsuits….    FierceHealthcare, Endpoints News