Mid-week roundup: Cotiviti’s $10.5B stake to KKR; Cigna buys back $3.2B shares; VA Oracle Cerner faulty med records; LockBit ransomware websites cold-busted at every level, principals indicted; Trualta partners with PointClickCare

February 22, 2024 | by

Investor KKR announced their buy of a $10.5 billion stake in healthcare analytics Cotiviti. The stake comes from Veritas Capital, creating an equal share of ownership. The recapitalization will be used for commercial expansion, new product development, and technology-related opportunities. It is expected to close subject to regulatory approvals in Q2 this year. According to Axios and Bloomberg, it is financed by a $5 billion leveraged loan sale launched last week, with a $4.4 billion floating rate term loan led by JPM and a $600 million fixed rate term loan led by Goldman Sachs. This is Veritas’ second attempt to exit. While money is leaking back into private equity deals, the new trend is to finance them with more cash than debt. Cotiviti release

Cigna, having sold off its Medicare Advantage plans for $3.7 million to HCSC, is repurchasing $3.2 billion in stock (7.6 million shares) through agreements with Deutsche Bank and Bank of America. Cigna’s plan remains to repurchase $5 billion of common stock over H1 2024 after ending merger talks with Humana. FierceHealthcare, Cigna release

VA warned about faulty medication records in the Oracle Cerner Millenium EHR. The culprit is in the Health Data Repository, according to a government watchdog. David Case, deputy inspector general for the VA, reported at a House Veterans Affairs Committee Technology Modernization Subcommittee meeting last week, that while VA had no reports of harmful drug interactions, Case had at least one instance of a veteran not given a critical medication for adrenal insufficiency, leading to a near-disastrous outcome. The VA has also not informed the 250,000 veterans with prescription records in the Oracle Cerner system that the records may have errors.. In the VA facilities that have Oracle Cerner, providers, pharmacists, and frontline staff must perform complex manual medication safety checks to replace automated checks.

The Oracle Cerner rollout has been put on hold till summer this year–maybe [TTA 1 Nov 23]. At this hearing, Mike Sicilia of Oracle did show up and attributed the problems in the HDR to multiple systems being involved from VistA and other EHRs, into Oracle Cerner. However, after 10 separate fixes, the most recent software update had a similar data issue during final testing and was quickly pulled. Military.com

A victory versus ransomware. Updated. The LockBit ransomware group has been cold-busted “at every level” by the UK, US, and international law enforcement. According to the Department of Justice release and other sources, the UK’s National Crime Agency’s (NCA) Cyber Division led Operation Cronos, working in cooperation with the Justice Department, Federal Bureau of Investigation (FBI), and other law enforcement agencies worldwide. They seized numerous public-facing websites and domains used by LockBit to connect to the organization’s infrastructure along with servers used by LockBit administrators. Russian nationals Artur Sungatov and Ivan Kondratyev, also known as Bassterlord, were indicted in the US District Court of New Jersey in Newark, charged with deploying LockBit against numerous victims throughout the United States. Sungatov was also indicted in the Northern District of California. According to Europol, “Two LockBit actors have been arrested in Poland and Ukraine at the request of the French judicial authorities. The French and US judicial authorities have also issued three international arrest warrants and five indictments.” LockBit’s ‘heart’ is of course in Russia, where nearly all cybercrime is located–they are free to operate there as long as they don’t target anything in RU. Cybernews

Trualta partners with PointClickCare for family caregiver education and support. PointClickCare is a leading EHR for long-term and post-acute care (LTPAC) providers. Trualta provides educational resources to support family caregivers when a patient is discharged through logging in to the resource site, with the ability to access articles, videos, and modules that cover a variety of care topics including preparing for discharge, transitioning from hospital to home, and life after discharge.  Trualta’s information will be offered through PointClickCare’s Marketplace. A recent study by Trualta of caregivers using their materials found that 30 days of Trualta use can decrease annual unexpected hospital visits among care recipients by 20%. Trualta release

Teladoc closes 2023 with improved $220M loss, but weak forecast for 2024 leads to stock skid

February 22, 2024 | by

A falling tide sinks most boats. If you were riding the telehealth pandemic tide, as Amwell [TTA 15 Feb] and Teladoc did, these last two years were the worst kind of shock. Teladoc’s 2022 was an annus horribilis–the Livongo acquisition went $6.6 billion worth of sideways [TTA 3 Feb 23], wiping out their 2022 with writedowns culminating in a $13.7 billion annual loss. Their 2023 was a lot better, beating analysts’ estimates, but forecast growth is slowing to a crawl.

  • Q4 revenue was up 4% to $661 million, powered by a 15% gain in international revenue of $96 million and a 2% increase in US revenue to $565 million. Hopes for the heavily promoted mental health business BetterHelp fell flat too at a flat $277 million. Their integrated care segment providing telehealth services to health plans, employers, and health systems brought in $384 million, up 8%. Net loss was $29 million versus $3.8 billion in 2022.
  • 2023 notched an 8% increase from $2.4 billion to $2.6 billion, with integrated care accounting for $1.5 billion, up 7%, with BetterHelp revenue reaching $1.1 billion. But losses continued at $220.4 million–versus $13.7 billion in 2022.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization) increased in Q4 22% to $114 million, with 2023 up 33% to $328 million. BetterHelp’s Q4 increased 11% to $58 million, 19% to $136 million for the year.

This cheerful picture was negated by Teladoc’s downbeat forecast for 2024. Q1 is projected between $630 and $645 million, lower than the analyst take of $673 million. 2024 full year is forecast between $2.635 billion and $2.735 billion, with the analyst take at $2.77 billion. The analysts forecast a 6.8% increase versus Teladoc’s forecast of 5.2%, but the difference was enough to drop their share price by 25%. According to CEO Jason Gorevic, the forecast will be for growth at best in low single digits, which is not what Wall Street wanted to hear. This could be sandbagging–or reality. Telehealth visits dropped 45% in 2022 from 2020 (Trilliant Health), with more recent CMS Medicare data on visits falling 73% in Q2 2023 from Q2 2020. Other factors: telehealth modules in EMRs and population health platforms, many more competitors like Included Health (Grand Rounds/Doctor on Demand) and MDLive.

Teladoc post-Livongo writedown has assiduously focused on cutting costs, higher margins, and getting on that ‘path to profitability’, cutting jobs in data science and engineering, third-party (supplier?) costs, and more. Yet on the Q4/2023/2024 earnings call, the CEO talked up making technology deals for differentiating technologies such as machine learning and (of course) AI, as well as ‘tuck in’ M&A deals. After the Livongo embarrassment, perhaps Mr. Gorevic could give it a rest until notching a few more solid quarters. Quartz, FierceHealthcare, Healthcare Dive, Teladoc release

Telemental news roundup: Brightside Health expands Medicaid/Medicare partners; Blackbird Health gains $17M Series A; Nema Health’s PTSD partnership with Horizon BCBSNJ

February 21, 2024 | by

Mental health, whether pure ‘telemental’ or an integrated in-person/virtual model, remains one of the healthier (so to speak) sectors of digital health.

Brightside Health announced today a series of new and expanded health plan partnerships as well as expanded state coverage for Medicare and Medicaid plans.

  • CareOregon with a new contract to serve Medicaid beneficiaries.
  • Blue Shield of California with a new contract to serve Medicare Advantage enrollees.

These add to Brightside’s partnerships announced last October:

  • Blue Cross and Blue Shield of Texas–expanded contract to include Medicare Advantage coverage.
  • Centene’s expansion of coverage state-by-state, including Nebraska Total Care Medicaid and Wellcare Medicare Advantage.
  • Optum for UnitedHealthcare Medicare Advantage members
  • Lucet for Florida Blue members

Under traditional Medicare, coverage now includes Texas, California, Delaware, Arizona, New York, Washington, Florida, North Carolina, Michigan, and Illinois.

Beneficiaries and members can access Brightside’s virtual psychiatric therapy including medication, plus cognitive and behavioral therapy with independent skill practice, and Crisis Care, Brightside’s program for those with elevated suicide risk. With the new partnerships, Brightside is now estimating that they cover approximately 100 million lives–one in three US covered lives–and is seeking to further expand these partnerships as well as to traditional (original) Medicare Part B beneficiaries. Brightside Health was founded well before the gold rush in telemental health–2017–and has raised over $81 million over five rounds up to a Series B in March 2022, mainly led by Acme Capital (Crunchbase). Brightside release, Yahoo! Finance, Psychiatric Times

Blackbird Health raised $17 million in a Series A funding. This was led by Define Ventures with participation from Frist Cressey Ventures and GreyMatter, for a total raise of $23 million to date. Blackbird addresses the other side of the spectrum from Medicare–pediatric mental health in an integrated in-person and telemental health model–and serves patients aged 2-26. Blackbird’s care model considers in an ‘understand-first’ approach how children’s brains develop over time and the impact that growth has on mental health. Another unique aspect is that they developed a series of ‘Blackbird Biotypes’ based on 50 million data points drawn over a decade that identify patterns of behavior in clusters of individuals with similar symptoms-linked brain features. These assist in assessment, accurately identifying the underlying root cause of symptoms, and proposing integrated and personalized treatment plans. Blackbird claims this approach results in substantially lower use of medications and ED utilization. Last year, Evolent Health co-founder and COO Tom Peterson joined the company after his own family’s experience with Blackbird’s therapeutic model to help it scale from its three clinics and 40 providers in the Mid-Atlantic region. Blackbird release, Forbes

Startup Nema Health, a virtual clinic targeting a single condition–post-traumatic stress disorder (PTSD)–is now in-network in Horizon Blue Cross Blue Shield of NJ (Horizon BCBSNJ) commercial plans. Nema’s model is virtual care for PTSD from evaluation and virtual therapy sessions, starting with intensive sessions 3-5 times per week for 2-4 weeks, through support from a designated peer mentor plus messaging and interactive exercises. Based in NYC, Nema is in-network with UnitedHealthcare/Optum, Oxford, Oscar, and Connecticare in the states of New York, New Jersey, and Connecticut. Horizon is New Jersey’s largest insurer. Nema claims that 76% of their patients no longer meet PTSD criteria after completing Nema therapy. Nema is at seed stage funding of $4.1 million from .406 Ventures and Optum Ventures, raised last November. FierceHealthcare, Nema release

Why this matters:

Since 2020, telemental health got a black eye (and then some) from ADHD and opioid medication-assisted treatment (MAT) providers such as Cerebral, Done Health, Truepill, and others. Thriving during the pandemic, many of them are now facing various Federal charges. Others, like Calm, are basically meditation and sleep apps. The real need, and provider shortage, remains.

The need for psychiatric care and support for Medicare and Medicaid covered populations is high, but clinical supply is low.

  • According to the Center for Medicare and Medicaid Services (CMS) in announcing the state-based Innovation in Behavioral Health (IBH) eight-year, eight-state integrated care model last month, among the 65 million Americans currently enrolled in Medicare, 25% have at least one mental illness, with 40% of Medicaid members experiencing mental illness or substance use disorders (SUDs).
  • Yet provider shortages have worsened over time–as of 2020, The Commonwealth Fund estimated that an additional 7,400 providers (not necessarily psychiatric MDs) were needed to meet demand. Studies cited in Psychiatric Times (2022) estimate that the current shortage of psychiatrists, running at 6%, is expected to be between 14,280 and 31,109 psychiatrists by 2024. Distribution is concentrated in urban areas and their suburbs as well. It doesn’t help that physicians entering psychiatry in 2003-13 decreased by 0.2% and their average age is 55. Even in well-covered geographic areas, retiring doctors with no replacements have created coverage shortages.
  • For child psychiatry, the American Academy of Child and Adolescent Psychiatry (AACAP) reports that there are just 14 psychiatric specialists for every 100,000 children in America. 

Neuralink BCI human implant subject moving computer mouse by thought: Elon Musk

February 21, 2024 | by

The first patient implanted with the Neuralink brain-computer interface (BCI) reportedly is well and has moved a computer mouse cursor by thought. Mr. Musk said this Monday during an X Spaces event, according to Reuters. The thought control is limited to moving the cursor around the screen. Quoted in the Independent (UK), Musk said, “We’re trying to get as many button presses as possible from thinking. So that’s what we’re currently working on is: can you get left mouse, right mouse, mouse down, mouse up… We want to have more than just two buttons.” This is rapid progress, given that the implant was reported on 1 February.

Ars Technica discusses a salient point, which is ethics around reporting a medical study via, in this case, social media, and by the company founder. It is not the way that research is conventionally conducted especially at an early stage. Ars quotes two bioethics professors who wrote a brief essay on this published by the Hastings Center. The PRIME study took only quadriplegic volunteers and the study received a go-ahead from the FDA for this early feasibility study. The money quote: “When the person paying for a human experiment with a huge financial stake in the outcome is the sole source of information, basic ethical standards have not been met.” (However, in the view of the Editor, this entire ethical standard was fractured beyond repair by the Covid fiasco.) The writers also target the researchers, doctors, and other medical professionals taking part in the research. But taking this further, what happens if, as in many studies of high-risk devices, things go wrong? If this Editor were advising Mr. Musk, I would tell him to let his company and scientists do the talking–and stay mum until more solid results are achieved, or not. The two bioethicists also make the point that it could raise the hopes of those with serious paralysis, but that is true of all medical research. Another interesting discussion on Neuralink’s potential is on Yahoo!Finance. Previously in TTA 1 Feb. 

Weekend reading: why the tech experience for older adults needs a reboot (a boot in the….?), health tech takeaways from CES

February 16, 2024 | by

Your Editor wants to wrap the week on a positive note. There can be too much ‘facing the music’ and not all the tunes apply to us personally, nor if they’re playing, can we turn them off. But Laurie Orlov in her always-thoughtful Aging and Health Technology Watch (formerly ‘Aging In Place Technology Watch’) draws our professional attention to the nagging question of design and the user experience for older adults, even the ones who used computers with black screens in the 1980s, Palm Pilots, Crackberries, and feature phones. While older adults have adopted smartphones, tablets, and smartwatches, they’ve felt left behind as they grow ever more complicated. User interfaces (UI) and icons aren’t standardized between iOS, Android, and watches. Signons for consumers and professionals across platforms are inconsistent. And things have gotten so complicated at least on phones that transferring from old to new or pulling files off is a real hassle for just about everyone except digital natives. So you see older people using expensive smartphones for making calls, sending texts or email, and maybe GPS. Of course, your Editor suspects that designers design for themselves and the native group, and don’t think about older users.

The Tech User Experience for Older Adults Needs A Reboot

AND…Laurie’s health tech takeaways from CES, the 2024 Market Overview, and Five Trends That Matter are all linked on the January 2024 summary page.

Mid-week news roundup: Elevance-BCBSLA, SCAN-CareOregon mergers scuttled; Amwell’s $679M loss, layoffs; Invitae genetics files Ch. 11; innovations released from DeepScribe, Essence SmartCare (DE), fall detection at Atrium Health (SC)

February 15, 2024 | by

The unforgiving environment for mergers continues. Two payer mergers that seemed fairly reasonable have stalled or been scuttled due to regulatory and policyholder concerns. 

  • Elevance Health (the former Anthem) a multi-state Blue/non-Blue payer, was willing to buy a struggling Blue, BCBS Louisiana (BCBSLA), for $2.5 billion. BCBSLA has again ‘paused’ the process and offer that started last year, with a second withdrawal (the first in September 2023) of its amended filing in December with the Louisiana department of insurance. They also canceled a policyholder meeting and vote scheduled for next week. The reasons why in the BCBSLA statement hint at significant and well-timed opposition to their transition from a Blue non-profit to a for-profit insurer. They reaffirm that they need a partner, but “now is not the right time to make this bold step.” This sounds very final and The End.  FierceHealthcare, Healthcare Dive  
  • Across the country in Oregon, two smaller payers, SCAN Group and CareOregon, called off a long-planned merger (December 2022). HealthRight Group would have brought together two non-profits with SCAN in Medicare Advantage in five states and CareOregon heavily covering Medicaid members. It faced opposition from Oregon regulatory bodies scheduled to rule on it in the next few weeks, with the state’s Medicaid Advisory Committee nixing it based on SCAN’s California-based ownership. FierceHealthcare, Healthcare Dive

Amwell not having a good start to its year either. The other large integrated telehealth pioneer provider announced earlier this week a 2023 loss of $679 million, up from $272 million in 2022, and a 10% cut in staff as of the end of the year. What’s eyewatering is that $436 million of the losses were impairment charges caused by a sustained decline in its share price during the first three quarters. The staff cuts will create $15 million in compensation-related savings, which after the amount of the impairment charges seem like pocket change. Revenue declined 6% versus 2022. Some of this is related to Amwell’s transition from its original system to the new Converge platform.

But as typically in the bad news/good news paradigm, there is a ‘path to profitability’ charted by 2025 boosted by a major contract with the US Defense Health Agency in partnership with Leidos. This is part of the Digital First initiative for the Military Health System (MHS) and will replace the MHS Video Connect system with Amwell Converge, a contract that is worth up to $180 million [TTA 2 Nov 23]. In 2024, Amwell will concentrate on expanding its tech partnerships with current customers and winning new clients, according to management on the earnings call. Amwell’s shares are a cheap buy at just over $1.30, but this Editor’s experience is that Federal contracts especially with DOD or related are unpredictable in cash flow. Just ask Oracle. FierceHealthcare, Healthcare Dive

Invitae, a genetics testing data company, filed Chapter 11. It’s another sign that this former darling sector of health tech/biotech has fallen on hard times (see 23andMe, TTA 2 Feb). This week’s filing in the US District Court for the District of New Jersey, an unusual venue for this San Francisco-based company, requests the court to permit the use of cash on hand to fund continued operations as it seeks to sell. The company listed assets of $500 million to $1 billion, but liabilities of $1 billion to $10 billion. Invitae went public back in 2015 as a provider-patient driven genetics company previously spun off from Genomic Health. Their shares reached a high of over $56 in the crazy days of December 2020. Shares on OTC are now $0.019. Mobihealthnews, Reuters, Invitae release

Enough with the bad news–let’s look at some innovations.

DeepScribe, a generative AI platform for medical documentation, yesterday announced their new Trust and Safety Suite with three new features:

  1. Clinical Moments: This allows users to trace AI-generated medical notes back to their origins in the clinical conversation
  2. Note Insights: an audit dashboard that provides administrators with a snapshot of DeepScribe’s performance across an organization
  3. Expert Human Audits: DeepScribe’s expert human audits team will review notes and grade the outputs against DeepScribe’s clinical accuracy framework for users and administrators, and then provide customized suggestions to improve output accuracy.

Release, also HIT Consultant

Essence SmartCare was selected as the sole technology provider for Germany’s INES project. INES (intelligent emergency detection system) is an older adult support initiative led by Techniker Krankenkasse (TK), one of the largest health insurance funds in Germany, with the participation of nine other partners, and sponsored by the Innovation Fund. The INES project objective is to determine how intelligent alert and emergency systems can improve the care of seniors living independently. The test in three regions in Germany is with 2,000 seniors 75+ living alone. It started in June 2023 and will be in place for 21 months. It will use the MDsense radar-based home monitoring and alert system plus Voice Extender that calls emergency services and permits 2-way calls from any room in the home. Israel-based Essence technologies cover emergency response for the care of older adults at home, on the go, and vital signs monitoring at home and in hospital. This Editor last covered Essence back in September 2020 and am glad to see them still around. However, will the system continue to be used in support of these seniors after the 21 months are up?  Release

Hospital fall detection with the aim of fall prevention is being implemented at South Carolina’s Atrium Health. This was spearheaded by nursing staff to replace an inadequate system for fall detection and prevention. The new system, the Hester Davis Falls Program, permits additional analysis of patient dynamics of falls, identifies trends, and implements targeted interventions to improve outcomes. More in Healthcare IT News

Further confirmation of the New Reality for digital health–lower valuations, more exits, fewer startups, tech buyers not seeing ROI

February 15, 2024 | by

In the wrap ups of 2023 last December and a month later in January, this Editor summarized it as not a year of slow, steady growth as predicted by the experts in January 2023, but one of utter turmoil starting in March, peaking mid-summer when M&A cratered and the Feds cracked down on antitrust and privacy. By year’s end, picking through the debris, we saw it as a ‘clearing’ year of the “also-rans and never-should-have-beens” that were funded willy-nilly in 2020-2022. 

The good, bad, and ugly are ‘facing the music in 2024′. Our latest in POVs on the New Reality surrounding digital health/health technology. 

More exits of various types, reduced valuations, need to fundraise again among digital health startups. Katie Adams of MedCityNews, which of the mainstream online health news websites has the tartest takes on the business, interviewed two investors in digital health. Their POVs:

Cheryl Cheng, CEO of Vive Collective (Menlo Park, California)

  • Raised large rounds in 2021? These companies now face ‘valuation overhangs’ that aren’t ‘bridged by organic growth’ and a far tighter investment environment with reduced valuations and exits. (That exit may be a sale–or a shutdown–Ed.)
  • Investor priority? Profitability, not growth.
  • What counts in today’s environment in raising capital? Be within 24 months of being EBITDA positive. (EBITDA=earnings before interest, taxes, depreciation and amortization). Steady growth in last two years also counts as a positive. Raising money will be less difficult–not easy. (No more rivers of free-flowing money to fill one’s buckets–Ed.)
  • Have a point solution? Many providers have point-solution fatigue and are pushing toward platforms. That alone will force some startups to sell.

Ian Wijaya, managing director at investment bank Lazard

  • What are the big questions of startup boards that include investors? How many months of cash runway are left? If markets are improving, is now the time to explore a sale jointly with a financing?
  • What drives the pricing? The “specific quality of the company and the value it can achieve across its strategic alternatives.”
  • What should startups do? Thoroughly explore their strategic alternatives and separate what is actionable from what is fantasy.
  • The best deal? When companies are bought, not sold–when the buyer initiates the process, not when the company puts up the ‘For Sale’ sign. That requires a little sleight of hand in engaging with potential buyers well in advance and creating a competitive environment, which requires time.

Not a good environment for startups, either. If Redesign Health is a bellwether of startup creation–their business is building healthcare companies which are then spun off–their layoff of 77 staff from their New York-based 200 to 250 (estimated) is not a good sign. The cuts are from the areas that support new venture creation. Redesign started in 2018. According to FierceHealthcare, Redesign has started up 65 healthcare companies (over 50 stated on the website), including 40 in the past two years, but only 35 are current on their website. They are backed by a ‘who’s who’ of investors who have $165 million with, in September 2022, a $1.7 billion valuation, but they’re not going anywhere. But it’s a sign that Redesign is backing off from actively forming new startups, and likely working to ensure the survival of those in the portfolio like the challenged Calibrate.  BNN Breaking

The tech buyer market has a problem that could interfere with all the above: ROI. It turns out that while payers and providers are integrating digital health into their systems, 71% in the Ernst & Young (EY) survey said that their hospital expenses weren’t decreased by said implementation. But then there’s efficiencies.

  • 93% of respondents said emerging technology is an asset for providers and that the technology has positively affected operational efficiency (but efficiency isn’t translating into savings?)
  • 90% said their departments have more time to take care of the needs of providers thanks to pushing administrative tasks to a digital system
  • But while 86% acknowledged the potential for reducing costs via digital health, 70% said they have yet to see a return on investment. 

Mobihealthnews

And in this year, providers are where it’s at if you’re investing–especially for-profit hospitals. This is the first time in years, according to TD Cowen analyst Gary Taylor at a Nashville Health Care Council event. Providers are finally experiencing meaningful lower labor costs. However, non-profits have come out of the past few years in uncertain to poor shape and for-profits will pick up their market share, facilities, and technology. Conversely, payers are adjusting to increased Medicare Advantage costs that have turned profits into losses (e.g. Humana, Cigna’s exit, the Cano Health and Bright Health failures). Medical utilization is rising and CMS is cutting back on benchmark payments to payers. Becker’s

All reasons why 2024 will be a most interesting year. To be continued. 

AliveCor v. Apple latest: Federal court tosses AliveCor suit on heart rate app data monopolization

February 14, 2024 | by

Apple wins one, but the other and more important AliveCor antitrust/IP cases go on. Judge Jeffrey White of the US District Court for the Northern District of California dismissed one of the many lawsuits between AliveCor and Apple. This one goes back a few years when AliveCor provided a cardiac app to the Apple Watch. The claim is that Apple’s 2018 changes in algorithms reading heart rates in the watchOS5, upgrading from the “Heart Rate Path Optimizer” algorithm (HRPO) to the “Heart Rate Neural Network” algorithm (HRNN), hurt a third-party app provider like AliveCor with their SmartRhythm app designed for the HRPO. The AliveCor argument in the 2021 lawsuit was that Apple should have made the earlier algorithms available, and that Apple violated California’s Unfair Competition Law. Apple’s argument was that the HRNN was more accurate, this was a genuine improvement that provided better data, and that third parties had no right to interfere in Apple’s design and business decisions. Since it was a summary decision, we do not know the details of Judge White’s reasoning. 

AliveCor’s full statement, provided by AliveCor, is:

AliveCor is deeply disappointed and strongly disagrees with the court’s decision to dismiss our anti-competition case and we plan to appeal. We will continue to vigorously protect our intellectual property to benefit our consumers and promote innovation. The dismissal decision does not impact AliveCor’s ongoing business; we will continue to design and provide the best portable ECG products and services to our customers.

Separately, the ITC’s findings that Apple has infringed AliveCor’s patents still stand. Both the ITC and U.S. Patent Trial and Appeal Board (PTAB) appeals will be reviewed at the United States Court of Appeals for the Federal Circuit in the coming months. In other recent developments, the PTAB recently ruled in AliveCor’s favor by instituting Inter Partes Review (IPR) of Apple’s patents and a stay of Apple’s countersuit.

We welcome any comments provided by Apple. Both AliveCor’s and Masimo’s suits go on in various courts.

Reuters, 9to5 Mac   Most recent AliveCor v. Apple coverage: spoilation split decision, ITC final determination

Facing the Music of the New Reality: Amazon Pharmacy & One Medical restructure; Walgreens shakes up health exec suites again, cashes out $992M in Cencora; new takes on NeueHealth; Cue Health, Nomad Health layoffs

February 14, 2024 | by

Amazon delivers a Dose of Reality in shrinking Pharmacy, One Medical. Using the “realigning some resources to help accelerate our efforts” meme, there are about 115 to 400 staff who will be ‘transitioned’ out of their present jobs, according to sources (Business Insider, Seeking Alpha). Areas affected were not disclosed. However, the Amazon division likely taking the hardest hit is One Medical, according to these sources.

  • Amazon has already announced that One Medical must reduce operating losses by $100 million this year. A large step they are taking is to close One Medical’s corporate offices in New York, Minneapolis, and St. Petersburg, Florida, reducing its San Francisco office space to one floor. They cited to industry publications that most employees are remote workers.
  • Unsurprisingly, Amazon is targeting major cost reductions. Fixed operating costs that are currently at 41% of total revenue will be reduced to 20% by 2028. Cost per patient visit will be reduced from $372 in 2023 to $322 in 2024, from $372 in 2023.
  • Legal, finance, and technology teams will report to Amazon’s healthcare business structure
  • Operating areas will increase from four to seven, reporting to a new head of operations
  • CFO Bjorn Thaler will move to a new position focused on growth initiatives, reporting to VP of Health Services Neil Lindsay

At the time of the acquisition, industry thinkers were wondering what Amazon would do with the money-losing One Medical clinics, for which they paid $3.9 billion but never turned a profit and lost $420 million in 2022, its last year of independent operations. Neither membership nor revenue has been reported since the 2023 closing. In 2022, One Medical had 700,000 patients, 8,000 company clients and 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. Amazon has been promoting One Medical online and on TV, most aggressively to its Prime members with promotional membership pricing. 

Amazon has aggressively cut tens of thousands of jobs and costs since 2023 in its Audible, Prime Video, Twitch and Buy with Prime units, and completely shut down Halo, its entry in fitness bands and sleep trackers. It has also been aggressively challenged on patient privacy and cross-using information by the FTC, most recently around Amazon Clinic.

Not mentioned in reporting was the FTC and DOJ scrutiny One Medical’s acquisition received between Amazon’s offer and the closing. The two agencies declined to move at that time [TTA 23 Feb 23], but FTC is continuing to build its case against Amazon–and One Medical may be a factor. For context on Amazon’s situation, Readers may want to review last December’s assessment of Amazon to date, Has Amazon lost its ‘edge’ in healthcare? Or finally seeing reality?   FierceHealthcare, Healthcare Finance, Healthcare Dive

Walgreens’ Reality includes C-suite reshuffles, scaring up cash. The new president of US Healthcare and EVP reporting to CEO Tim Wentworth is Mary Langowski. She is currently CEO of Solera Health. Her prior experience at CVS was as EVP and chief strategy and corporate development officer. Moving to an advisor position is the current president, John Driscoll. US Healthcare includes VillageMD, Summit Health/CityMD and CareCentrix. In addition, Manmohan Mahajan was appointed as permanent CFO, having held the position on an interim basis from July. Elizabeth Burger was named as EVP and chief HR officer from a similar position at industrial Flowserve, replacing Holly May who departed in November and is now with Petco. Crain’s Chicago Business, FierceHealthcare

Slipping under this was a further sale of Walgreens’ position in Cencora, the former AmerisourceBergen, a highly diversified pharmaceutical distributor. The sale of approximately $942 million of Cencora common stock was subject to the completion of the Rule 144 sale, and included a concurrent share repurchase by Cencora of approximately $50 million for a total to WBA of $992 million. WBA’s position is now 13% versus 15%; partnership and board representation remains in place. From the WBA release, “Proceeds to Walgreens Boots Alliance will be used primarily for debt paydown and general corporate purposes, as the company continues to build out a more capital-efficient health services strategy rooted in its retail pharmacy footprint.”

Is NeueHealth creating its own Reality? At the end of January, Bright Health Group faded to black and relit as NeueHealth, its value-based care medical practice division, and moved its HQ from poky, cold, failing Minneapolis to Doral, Florida. It sold or closed all its health plans in a heap of losses, most of which have bills coming due via CMS Repayment Agreements which come due on or before 14 March 2025. Most of the industry is shaking its head in wonder that NeueHealth has made it this far.

The discussion in MedCityNews is worth reading. It includes Ari Gottlieb of A2 Strategy who points out that the company is $1.4 billion in debt to the likes of investors Cigna Ventures, New Enterprise Associates, and CalSTRS. They owe $89 million to Texas to cover risk liabilities for its shuttered ACA plans. Over $100 million remains in escrow from the Molina sale to cover obligations from its Medicare Advantage plans. Mr. Gottlieb predicts that NeueHealth will be drained and go bankrupt before the Feds come calling in March 2025. Another analyst, Tyler Giesting, director of healthcare and life sciences at West Monroe, takes a sunnier view that NeueHealth is in a sector, value-based care, that payers are interested in and will buy into, as long as the practices perform. This Editor will reiterate her wonder at NeueHealth’s management maneuvers. They’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) to stay alive until, they hope, 2025 and better times. 

More Reality delivered in two layoffs in once-hot companies that thought pandemic les bon temps rouler would last forever:

  • San Diego-based Cue Health, a biotech company that produced Covid-19 tests, is laying off another 245 employees. This adds to the 884 workers in primarily San Diego laid off last year. Cue grew to over 1,500 employees when it got the first FDA approval for its 20-minute molecular test kits to supply the US government, the NBA, Google, and other large companies. Cue IPO’d in September 2021 at $200 million and $16/share, with a valuation of $3 billion. Its shares on Nasdaq are today at $0.25. The company also offers a test for mpox (monkeypox) and is seeking FDA approval for its RSV and Flu test kits. San Diego Union-Tribune
  • New York City-based Nomad Health, a healthcare staffing service that took advantage of the pandemic demand for travel nurses but had not fully transitioned into other temporary healthcare workers, released 17% of staff, from 691 to 572 employees. Nomad was reeling not only from lower demand but also correspondingly lower rates. It raised $200 million to date from investors such as Adams Street Partners and Icon Ventures. Forbes

And the final Reality is how healthcare companies, from providers to digital health, are phrasing what seems to be endless layoffs. Euphemisms such as rightsizing, org change, involuntary career events, corporate outplacing, and offboarding are all being used to sweeten for public consumption that a lot of people, hired so eagerly in 2020-22, are losing their jobs. From the Bloomberg article (paywalled), “They somehow seem to believe that if they use language that is more vague and less emotional, that people won’t get as upset,” said Robert Sutton, PhD, professor of management science and organizational behavior with Stanford University School of Engineering. Instead, euphemisms tend to have the opposite effect. Becker’s  This Editor has been both a survivor and a victim of same, being in marketing which is always vulnerable. Contract and consulting work, which anticipate a stronger market, are like the Sahara–few and dry water holes. Expect layoffs and a dead market for experienced talent to be a major factor in this year’s US elections, despite the reported low unemployment numbers (that no one believes anymore).

2023 was buying time, 2024 is face the music time: Rock Health

February 8, 2024 | by

Rock Health’s year-end wrapup, which usually makes a splash, didn’t this year. It was released this year in conjunction with the JP Morgan Healthcare Conference in the week after New Year’s, which almost guaranteed it would fly below the radar.

Another analogy: if you were doing aerobatics, 2023 for digital health was maintaining a flat spin from altitude if you could (left/above), 2024 would be getting out of the flat spin and into level flight before you and the ground had a meeting, so to speak.

Rock Health’s summary of 2023 was minus their typical frothiness:

  • It was back to 2019 across the board, as if 2020-21 never happened.
    • Full year 2023 raised $10.7 billion across 492 US deals. It was the lowest amount of capital invested since 2019, which finished with $8.1 billion across 413 deals. By comparison, 2022’s total was $15.3 billion across 577 deals.
    • Q4 2023 was the lowest funding quarter since Q3 2019, with an anemic raise of $1.9 billion across 122 deals.
  • M&A was left for dead, unexpectedly so from their earlier projections. (Note to Rock Health–it could be the negative attitude toward deals emanating from Washington)
  • A and B stage companies had trouble raising money in the usual lettered way. 81% of currently active venture-backed startups that raised a round in 2021 didn’t raise a labeled one in 2023. Some resorted to ‘extensions’ that further diluted existing ownership or unlabeled rounds that left more questions about when the next raise was going to be. Unlabeled rounds hit an all-time record of 44% of total raises, double that of 2022. (This Editor notes that there were no analyses of C and D rounds, because there were so few.)
  • “Silent rounds” of financing happened but were hard to gauge–and because they were inside, didn’t measure the attractiveness or competitiveness of the company in the real market. It was pure, simple survival of the company and the investment.
  • Startup shutdowns, in their view, were no higher than usual–less than 5% of venture-backed US digital health companies (i.e., have raised >$2M).

In this Editor’s view, the percentage does not capture the prominence of the startup shutdowns: Babylon Health, Quil Health, Pear Therapeutics, OliveAI, Smile Direct, Cureatr, SimpleHealth, The Pill Club, Hurdle. It also doesn’t count Amazon shutting down Halo, Cano Health’s parting out before this week’s bankruptcy, as well as Bright Health’s (now NeueHealth) divestitures and shutdowns through 2023 leading to their becoming a very different company in 2024. 

For 2024, Rock Health is seeing:

  • The return of labeled raises (A, B, C etc.) In their view, many companies will not be able to manage this without moving into ‘hot’ areas like obesity care (cue the Ozempic), value-based care enablement, or AI. Those that can’t will either have ‘down’ rounds or close (see this week’s closing of Astarte Medical in the NICU segment because they wouldn’t integrate AI).
  • M&A will increase, with acquirers buying low among the now cash-strapped companies. This Editor would add that both DOJ and FTC will have their say about this, having published new Merger Guidelines in December.
  • Publicly traded companies will ‘recalibrate’, which is a polite way of saying a lot of companies will face delisting. As of 31 December 31, 2023, at least 17% of public digital health companies trading on the NASDAQ or NYSE were noncompliant with listing standards. This Editor notes that 23andMe is the latest cracked SPAC in jeopardy. Some will rally, the strongest may IPO. BrightSpring Health IPO’d on 26 January, Waystar’s is pending. 

Their sobering conclusion. Too many companies were created in the last few years of the boom. “2024 will be a year of recalibration and consolidation. Some startups will rally, finding that high capital efficiency and exceptional offerings pay off to secure them their next major fundraise. Others will need to make the tough call to wind down operations or accept lower-than-hoped-for M&A offers, particularly in saturated segments.”

At last, Rock Health and TTA have met on similar ground. This Editor’s take back in December. From ‘Signs of the next phase in 2024’:

“…the board is being cleared of the also-rans and never-should-have-beens. They are like dead plants and brush that need to be cleaned out so that new growth can happen. We are cycling through some of them already as we move to a New Reality and winding this up.”

Additional TTA views on 2024: The New Reality permeating JPM, and Peering through the cloudy crystal ball into 2024

Another icy bucket: who is liable when a healthcare AI system fails?

February 7, 2024 | by

When AI contributes to patient injury, who will be held responsible? That is the question that an article in the New England Journal of Medicine (NEJM, 18 Jan, subscription required). It examines over 800 cases, pulling out the most relevant information on the 51 cases with software creating physical injury.  If you are in a healthcare provider or vendor legal department and strategic sourcing, this article deserves your greatest scrutiny.

AI and even software represent a relatively new area of tort law (an act or omission that leads to injury or harm). Responsibility is not clear because there is a lack of clear direction in existing case law, plus cases involving AI are few to date. The study reviews aspects of AI that may elevate or minimize risk. Ultimately, it comes down to minimizing risk in the adoption of AI tools as it was in clinical decision support systems and EHRs–because not adopting them may eventually be construed as malpractice. 

Cases involving medical software and AI have generally clustered around three situations. From the study:

  1. Harms to patients caused by defects in software that is used to manage care or resources. Typically, plaintiffs bring product-liability claims against the developer.
  2. Physicians having consulted software in making care decisions (e.g., to screen patients for certain conditions or generate medication regimens). In cases of harm, those physicians’ decisions are evaluated against what other specialists would have done–standard of care.
  3. Apparent malfunctions of software embedded within devices, such as implantables, surgical robots, or monitoring tools. Plaintiffs may assert malpractice claims against physicians and hospitals, alleging negligent use, installation, or maintenance of these devices, including human error in reprogramming. Plaintiffs may also sue developers, alleging defects in manufacturing, design, and warnings.

Moving ahead, the study’s recommendations on weighing liability risk against the benefits of adoption of AI in direct patient care with a “human in the loop” (not fully autonomous software) are, from the study:

  • Resist the temptation to lump all applications of AI together. Some tools are riskier than others.
  • The hallmarks of risk are: low opportunity to catch the error, high potential for patient harm, and unrealistic assumptions about clinician behavior
  • In tools that can create high risk, expect to allocate substantial time and resources to safety monitoring and gather considerable information from model developers and implementation teams. Lower risk tools should be monitored in a more general, lower-touch way. 
  • Organizations can bargain, in a buyer’s market, for terms that minimize purchasers’ liability risk. Licensing agreements should, for instance, require developers to provide information necessary for effective risk assessment and monitoring, including developers’ assumptions regarding the data that models will ingest, processes for validating models, and recommendations for auditing model performance.
  • Purchasers should also insist on favorable terms governing liability, insurance, and risk management in AI licensing contracts–in other words, indemnification. If developed in-house, ensure that you have adequate insurance to cover claims.
  • Apply lessons learned from older forms of decision support. Courts examine whether the recommendation was evidence-based and whether the physician should have heeded it for the patient in question.
  • Document, document, document
  • Legal defenses for AI require different expertise and expert witnesses than typical malpractice cases.
  • It also may be prudent to inform patients when AI models are used in diagnostic or treatment decisions–informed consent

POLITICO commentary 

First healthcare IPO: BrightSpring debuted at less than projected, but holding value

February 7, 2024 | by

First out of the gate, but a slower break than expected. Home health, pharmacy, and eldercare services provider BrightSpring Health IPO’d on 26 January (the day after we wrote about it, grrr). BTSG has the distinction of being the first healthcare IPO in a year and the first in 2024 to go public. As noted on 25 January, the offering was initially pegged at $15 to $18 per share on the Nasdaq Capital Markets, then later cut back to $13 which would have meant a raise of $633 million. Instead, it opened at $12 for a lower raise and fell fairly quickly to $11, near which it has stayed since then. From the looks of it, investors don’t trust healthcare companies, even in home health, pharmacy, and eldercare services and not technology, after the spectacular bust of over 90% of the companies that IPOd and SPACd from 2020 into 2022. Perhaps we should be content that at least it has not plunged as others did!  FastCompany

Mid-week short takes: Ireland’s HealthBeacon bought by Hamilton Beach (!), Ambience AI raises $70M, VA to develop VR mental health app with Mynd Immersive

February 7, 2024 | by

Dublin’s HealthBeacon PLC has been sold to Hamilton Beach Health. HealthBeacon is an app platform/device/injection care management system that integrates with patient support programs to remind them to inject their medications on schedule. Since its formation in 2021, Hamilton Beach Health has marketed the HealthBeacon Smart Sharps Bin in the US. HealthBeacon was founded in 2013, currently has 50 employees and operates in the UK, Europe, North America, and Australia. Acquisition cost was not disclosed, but HealthBeacon’s current investors over 10%, according to their investor page, are Cantor Fitzgerald Ireland Client Nominees Limited, Oyster Capital Investments Limited, James Joyce (CEO), and Canaccord Genuity Wealth Management.

Kieran Daly, a co-founder of HealthBeacon, will run day-to-day operations reporting to Rob George, VP of Hamilton Beach Brands, now Global General Manager. This Editor had surprisingly never heard that Hamilton Beach, associated more with kitchen appliances, had a Health division among the mixers, electric kettles, and garment steamers. Release

Ambience Healthcare raised a healthy $70 million Series B. It was led by Kleiner Perkins and OpenAI Startup Fund. Ambience Healthcare is (naturally) in the hot healthcare AI sector with four applications (soon to be five) described as an ‘operating system’ for the end-to-end patient journey through nearly all specialties and integration with six major EHRs. Current deployments are with UCSF, Memorial Hermann Health System, John Muir Health, The Oncology Institute, GI Alliance, Midi Health, and Eventus WholeHealth. Results claimed are reduction in documentation time by an average of 78%, improvement in coding integrity, and at least a 5X return on investment. Release

VA to develop VR extended reality (XR) mental health app with Mynd Immersive. Mynd’s market has generally been in senior and post-acute care as a digital therapeutic using the HTC Vive VR glasses and programming ranging from speech, cognition, and behavioral therapies to recreation and pleasant distraction. Mynd is used by the VA in 100 long-term care facilities across the country. The new VA/Mynd partnership is targeted to Vietnam veterans to provide them with virtual journeys created specifically for Vietnam veterans via a project titled “Virtual Vietnam: A Path to Peace.” As this generation is now reaching their senior years, old conditions such as PTSD and new ones such as isolation occur, reviving or exacerbating Vietnam War memories. The Virtual Vietnam project is a three-year cooperative research and development agreement. Healthcare IT News, VA/Mynd release  TTA 9 Nov 23 on Mynd’s recent study on effectiveness with Stanford University’s Virtual Human Interaction Lab. 

Two Must Reads: Is AI the next hype bubble replacing crypto–and capable of great harm?

February 7, 2024 | by

crystal-ballTwo articles that consider the current state of AI to read and ponder. On one hand, far less than what it’s hyped to business–especially healthcare–and on the other, more malevolent with great potential for harm.

The first article by Gintaras Radauskas in Cybernews confirmed this Editor’s misgivings on exactly what is artificial intelligence (AI) and the unrealistic expectations around it. It seems that a lot of the thinking around AI is doubletalk–gibberish, as he put it, leading off with analyzing a recent interview of Sam Altman of Microsoft-backed OpenAI and its chatbot ChatGPT. 

“To me, AI looks like a solution to a problem that’s not a problem – or, actually, a non-solution to the very real problems that are not going away.”

  • He draws parallels to cryptocurrency, which was widely hyped in the past few years as a secure alternative currency that was off the dollar and global bank grid. Even large banks, financial institutions, and big VCs like Sequoia Capital were sucked in. And real people did lose real money–famous football quarterback Tom Brady to African and Indian students.

This Editor knew the high and nonsensical point of the bubble was when she was in her local Shoprite perhaps two years ago and after checkout, next to the NJ Lottery machine and containers of sidewalk deicer, there was a machine that would convert my very real US greenbacks to crypto. The end of the bubble was the FTX bankruptcy in November 2022, then the arrest followed by last year’s trial and conviction of FTX’s Sam Bankman-Fried. Gaining little notice was that FTX was itself hacked and drained in a SIM-card swapping scheme in late 2022 before its collapse that emptied the accounts of 50 people. Those three perpetrators were indicted earlier this month. CNBC

  • When crypto imploded, ChatGPT took its place in the TechWorld Hype Universe. Bank of America terms it a ‘defining moment–like the internet in the ’90s’. For those of us who were around then, there were bulletin boards (!), multiple platforms (AOL), something called search engines (AltaVista, Dogpile), and lots of websites that surfaced and then went under the waves. A lot of money changed hands and a lot of parties were thrown before the dot.com bust. Unlike the internet boom, AI is already dominated by the tech giants like Microsoft (OpenAI) and Google (Bard, now Gemini) so it’s actually less of a risk for the large companies eager to use it.

But then why are these large companies not on board yet? “Only 3.8% of businesses reported using AI to produce goods and services, according to November’s Business Trends and Outlook Survey. It’s safe to say we’re very, very far away from mass adoption and use of AI.”

Perhaps it’s this. AI has already been parodied as a highly sophisticated long-form autocomplete tool. Your Editor has experimented with generative AI via Microsoft’s Bing. Example: an article on a non-healthcare topic, antique auto restoration. It was largely but not entirely accurate. But it was written at about a fifth-grade level in a style that was flat and uninteresting–the dumbing-down of the value of copy to inform and persuade continues. (Companies look at writers and marketers as an expense to be eliminated, not managed. As a marketer from the start of my career, and who worked for or with some of the best-known US agencies renowned for creativity, I would not recommend that career path to anyone today.) 

  • And finally, the ultimate use of AI is to get rid of people. That is what automation does. And while it can increase accuracy, speed, and take away drudgery in tasks like healthcare billing and coding, healthcare is about people–and while it can make it appear more responsive, when the humans are gone, will only the chatbots be left, with coding that endlessly replicates itself, like the automated phone menus that leave you in the ether with your questions unanswered–except it’s your diagnosis or information that your doctor’s trying to obtain? And what happens to the professionals trained to do these tasks and who already use automation tools to do their work? What happens when AI picks up and propagates a wrong treatment or surgical technique? This is not quite the analogy of the blacksmith and horseshoes or film versus video. We are ill equipped to deal with the societal effects of training people for jobs that no longer exist and concentration of technology into a very few companies.

And if we leave these tasks to AI without human intervention and supervision, what will happen?

The second article, linked to in the first, could be titled after the 1960s movie ‘Experiment in Terror’. Imagine asking AI about you. It tells you you’ve died and gives links to your obituary. Alexander Hanff, a founder of IT companies, computer scientist, and privacy technologist did. And ChatGPT repeatedly told him he was dead, complete with fake links to his obit in the Guardian and very convincing text. Now imagine you’re applying for a job, a loan, a mortgage, or a passport. The AI tool tells the employer, the bank, and the Feds that you’re dead. Hanff was already warned by a professional colleague who conducted the same exercise and received a bio back with false information. This deep fakery, origin unknown and undiscoverable, is huge potential for harm. Conclusion:

“Based on all the evidence we have seen over the past four months with regards to ChatGPT and how it can be manipulated or even how it will lie without manipulation, it is very clear ChatGPT is, or can be manipulated into being, malevolent. As such it should be destroyed.” ®

Hanff has company with Steve Wozniak of Apple on this [TTA 5 May 2023]. Read this one all the way through. And be scared. The Register

News roundup: Cano Health files Ch. 11 bankruptcy, delisted (updated), Walgreens lays off more, Allina Health outsources 2,000 RCM jobs to Optum

February 6, 2024 | by

Cano Health’s telenovela moved to a Delaware court, where it filed for Chapter 11 bankruptcy. This prearranged voluntary Chapter 11 was filed on Sunday 4 February in the US Bankruptcy Court for the District of Delaware. Based on this Editor’s reading of their release, it’s a prepackaged reorganization of this beleaguered primary care provider. It also promises an exit by Q2 2024. It features several parts that have to be approved by the Court in short order:

  • A Restructuring Support Agreement (the “RSA”) with major lenders (the “Ad Hoc Lender Group”). They hold approximately 86% of Cano’s secured revolving and term loan debt and 92% of its senior unsecured notes. The RSA provides for the conversion of nearly $1 billion in secured debt to a combination of new debt and full equity ownership in the reorganized company. (See below as to what that means for Class A shareholders.)
  • Securing liquidity via a commitment for $150 million in new debtor-in-possession financing from certain of its existing secured lenders. 

In addition, Cano itemized several ‘first day’ motions to ensure continuity of operations–these also have to be approved by the Court: 

  • Paying associate wages, including for its doctors and nurses, without interruption
  • Continuing operations and honoring obligations to its affiliate physician groups
  • Ensuring patients at its clinics continue to receive quality value-based healthcare
  • Seeking authority to pay the existing pre-petition claims of certain vendors that are critical to the health and safety of Cano Health’s patients and critical to the operation of the Company’s medical centers.
  • Cano has authority to continue making ordinary course payments for all authorized goods and services provided on or after the filing date.

Earlier actions by their CEO laid groundwork for this reorganization through selling off operations and divesting staff. In September, they sold their Texas and Nevada operations to CenterWell Senior Primary Care, a unit of Humana, for $66.7 million, and exited California, New Mexico and Illinois late last year, with Puerto Rico winding up this quarter. Cano also cut 21% of staff (842 people) by November .

No comfort for their common Class A shareholders, though. Shareholders approved a 1 share for 100 reverse share split to buoy price last December, though the NYSE had notified Cano on 29 December of delisting based on their market capitalization not meeting their standards. Cano’s shares stopped trading as of last Friday at $2.30. What is usual, and signaled by the RSA conversion, is that common shareholders–probably including the infamous Cano 3 who owned about 35% of the shares–will receive bupkis, nada, zip, zero in the reorganization.

Update: The NYSE delisted Cano Health’s (CANO) stock late on Monday, citing the RSA conversion. Press release, Healthcare Dive.  The Class A shares are now listed OTC (the ‘pink sheets’) under CANOQ at $0.70. Shareholders are wholesale unloading with the day’s volume over 580,000 compared to the previous average of 340,000 shares.

Cano remains for sale during this process according to the release.

Here’s the 36-page filing, courtesy of Industry Dive. Healthcare Dive. FierceHealthcare dubbed this a ‘spectacular collapse’ (which it isn’t–that was Babylon Health) but includes some speculation from Ari Gottlieb, a principal at A2 Strategy Group whom this Editor has quoted before, that since Humana has a stake in and partnered with Cano, they should simply pick up what’s left. However, Humana may not be in a cash position to do so, given its recent losses in its Medicare Advantage business that also helped to sink Cano (partly paywalled). The local take in the Sun-Sentinel.

Less drastic but equally, more signs of the times:

Walgreens laid off 145 more staff, primarily in corporate. This follows on November’s 5% corporate layoff. No WARN notices have been filed and all are mum on what areas or states are affected. Nor is there any confirmation that this will be the end. Speculation is that more store closings are in the offing and once leaned down, Walgreens Boots Alliance will be sold off or parted out, with Shields Health Solutions perhaps the first on the block [TTA 25 Jan]. Healthcare Dive, Becker’s

Allina Health, a 10-hospital non-profit health system based in Minneapolis, Minnesota, is outsourcing 2,000 IT and revenue cycle management jobs to Optum. Happily, this is being done as a transition on 5 May from Allina to Optum with no layoffs or shift in workplace, as of this time. Rationale given is to trim needed expenses and ‘deliver on emerging spaces’, whatever that means.   Star-Tribune

*Updated for Cano Health delisting and additional information on Walgreens’ layoffs.

Sell NHS medical records to fund AI, biotech? Not quite what’s in the Blair-Hague report. (updated)

February 2, 2024 | by

A ‘sale’ not quite what the press reports. The former political rivals of the 1990s and early 2000s, Sir Tony Blair and Lord William Hague, joined forces again last week to release their third report.  “A New National Purpose: Leading the Biotech Revolution”, the third joint report available on Lord Hague’s website, would be to capitalize on what they described as “the fastest and most far-reaching [technological] revolution in the history of human civilisation” to make Britain a world leader in developing “gene therapies, of discovering new antibiotics and of building molecular factories.”

The three major points of the report are:

  1. Formation of a new laboratory, the Laboratory of Biodesign, to focus on the invention of new biotechnology, biomolecules, and therapeutics that are at too early a stage for commercial investors.
  2. Establishment of an NHS Data Trust (NHSDT, pages 33-36),designed for public benefit, with a controlling stake owned by NHS England and additional investments from companies. 
  3. For scaling up biotech, an expansion of the work of the British Business Bank, improved rules for Venture Capital Trusts and consideration of scale-up grants where companies will list in Britain. The recommendations go further into reforms in venture capital funds and capital markets.

#2 is the point making the headlines in the Independent and Sky News. The reports do not explain that the sale of the NHS medical records would be done through the NHSDT.  It would negotiate data-sharing agreements with external organizations and be capable of joining profit-sharing arrangements, while guarding that data would not be sold to third parties and be strictly anonymized. The plain language of the recommendation: “Provide research entities with access to the anonymised data in return for financial profit, which would benefit the NHS. This could happen via a range of mechanisms, varying from direct financial payment to negotiating cost-price access for the NHS to any medicines developed based on the data provided.” (page 35) Profits would be reinvested into the NHS. The analogy is to the for-profit parts of the BBC.

The report goes on to stress producing high-scale companies that stay in the UK, versus the current situation of exporting technology to the US. It also proposes a Biosecurity Task Force “to keep Britain and the rest of the world safe from biotech accidents and bad actors.”

It also addresses how the UK should address a future pandemic as a national security issue (pages 55-58) and restructure the UK Health Security Agency.

In AI, the report recommends the formation of the MediMind laboratory network that would work towards relieving pressure on the NHS through creating personalized AI doctors. This would be done in partnership with industry and the NHS. Last June’s report concentrated on AI.

(Update 2 Feb, Editor’s note: It dismays me again that professional reporters writing for reputable news websites misinterpreted the report as advocating the straight-up sale of NHS medical data. All one had to do was what this poor Yank marketer/writer did–search within the report, past the executive summary, into that section. But ‘selling NHS data’ is more ‘clickbaity’. 

Unfortunately, this Editor believes that these reports will be read, filed, and the same mistakes will be made, putting the UK further behind the proverbial 8-Ball…standard operating procedure.

Open forum below for our UK (and elsewhere) Readers.)