TTA’s Unofficial Summer kickoff: breaking up UnitedHealth to save it, post-GLP-1 weight gain, soft robots, NZ telehealth controversy, Midi Health widening women’s health, AssistIQ, Ambience, more!

30 May 2025

Brrrr….it’s unofficially summer as we leave May behind. Our big article this week is your Editor’s think-piece on breaking up UnitedHealth Group in order to save it–and healthcare. We also look at post-GLP-1 weight gain–and what it means for providers, in-person and telehealth, ‘soft’ robotics out of Scotland, NZ’s telehealth war with GPs, and what’s doing at companies like Midi Health, AssistIQ, Ambience, Auxira, and Yosi Health. And plenty of weekend reading and viewing!

Weekend reading/viewing (for me too): Rural telehealth blackouts and value-based care’s ‘utopia’ (Set aside the time)

Short takes: Midi Health’s longevity care for women covered by (some) insurance, NZ government 24/7 telehealth scored by GPs, Auxira tele-cardiology follow-up launches (Two disappointments that look like advances)

News roundup: GLP-1 weight regain real, soft robots walk off 3D printer, Ambience’s AI coding beats doctors by 27%, Get a Second Opinion debuts, $11.5M for AssistIQ (Reality bites GLP-1s and a soft robot wee bairn)

Job Posting: Yosi Health seeks Demand Generation Manager and Manager, Data Analytics & Reporting

Should free-falling UnitedHealth Group be broken up? Or break itself up to survive, before it becomes another GE? (updated) (Not a rant, more a ‘get going’ to avoid disaster!)

From last week: The major news the week before US Memorial Day was the Hinge Health IPO, the first for digital health in two years–but the downside was that it was at a lower valuation. Denouements abounded with most 23andMe genetic assets bought by Regeneron, without a drink of Lemonaid. WeightWatchers’ time may have passed, new heads for Calibrate and Oak Street, and two more ‘arranged marriages’, Smarter Technologies and Fuze Health. An update on the VA EHRM in the budget. Masimo’s recovering, as is Ted of Strata-gee

News roundup 22 May: an inflight ‘save’ and AliveCor’s KardiaMobile, rolling out the VA/Oracle EHR in ‘waves’, Fuze Health formed from LetsGetChecked/Truepill, hacking and ransomware 92% of PHI data breaches (A renaming of a 2024 ‘arranged marriage’–can it be saved?)

News roundup: Hinge Health public @$32/share, lower valuation. Is WeightWatchers game over? Calibrate replaces CEO, new prez for Oak Street, NMC gets ‘Smarter’ rolling up 3 portfolio companies, another splash of investor ‘cold water’ (The first health tech IPO in 2 years and ‘smushing’ when they can’t)

Update: Masimo’s website status and an analysis of the Sound United sale (Getting up and running post-attack, but what happened?)

23andMe sold to Regeneron for $256M in court-supervised bankruptcy, sans Lemonaid. And is it worth it? (We come up with a number, it’s likely)

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Telehealth & Telecare Aware – covering news on latest developments in telecare, telehealth and eHealth, worldwide.

Should free-falling UnitedHealth Group be broken up? Or break itself up to survive, before it becomes another GE? (updated)

Breaking up is hard to do. But should be done if UHG wants to survive and thrive.

Our proposition: UnitedHealth Group has become a victim of its own giantism, conflicts, and focus on financials–and its failure will drag down healthcare.

How big? By far, it is the largest US health insurance company based on 2023 enrollments with a 15% market share, 29 million members, and $371.6 billion in revenue. It leads by far Elevance Health (formerly Anthem, 12%), CVS Health/Aetna (12%), Cigna (11%) and Health Care Service Corporation (7%). A more realistic picture of its size is that it is now is the US’ fourth-largest firm by revenues, just behind Walmart, Amazon, and Apple. (Visual Capitalist 17 Dec 2024, based on American Medical Association data). Their growth has been led by acquisition into Optum, their health services division. It houses their owned physician practices as the largest owner of practices in the US with 90,000 physicians, their ACO relationships, data analytics, Change Healthcare, the largest billing and claims management company, home care/hospice, the third largest PBM Optum Rx, a venture investment arm, and much more. Optum is the massive symbol of the integration envisioned by former and current CEO Stephen (Steve) Hemsley. Other health plan companies have health services units, for instance PBMs–CVS has Caremark and Cigna Express Scripts, both larger than OptumRx, and analytics–but not to the vertical and horizontal integration depth and extent of UHG’s continuing search for revenue and profit.

The road this vision took under Mr. Hemsley and later Sir Andrew Witty took diversions along the way that have escalated into a cadence of legal troubles, a near-perfect storm of corporate misery, that have damaged them among customers, shareholders, and regulators. A list of the recent highlights (bold type links are new information; standard type links refer to earlier TTA articles):

  • The contentious two-year-long purchase for an eye-blinking $7.8 billion or $13 billion of Change Healthcare that finally closed in 2022. While opposed by the Department of Justice (DOJ), the District Court disagreed and said it wasn’t anti-competitive or prevented competitive entry. 
  • Change Healthcare was a House That Jack Built that collapsed spectacularly in February 2024 with the ALPH-V/BlackCat ransomware attack. It was evident that Optum didn’t conduct basic due diligence on Change Healthcare’s multiple systems, built up over multiple acquisitions, nor set to work fixing them after the closing, leaving the largest claims/payment system vulnerable. UHG’s response managed to anger patients, providers, and HHS. It took Optum most of 2024 to fix it at a loss of at least $2.3 billion
  • DOJ has been investigating certain relationships between the company’s UnitedHealthcare insurance unit and its Optum services unit, specifically around Optum’s ownership of physician groups. This started in March 2024.
  • The $3.3 billion acquisition of Amedisys home health has taken over two years (since June 2023) and has taken multiple rounds of divestitures–and still DOJ is grinding its Paul Bunyan-sized ax against it, filing their suit in Maryland along with four state attorneys general in November 2024.
  • DOJ’s insider trading investigations may have started as early as October 2023. The $300 million Hollywood (Florida) Firefighters Pension Fund filed a class action lawsuit in mid-December 2024 alleging that the sales were made while the Department of Justice (DOJ) was considering an anti-trust action against UHG that would revisit the so-called ‘firewall’ between it and Change Healthcare. Named in the lawsuit were Brian Thompson, head of UnitedHealthcare, Andrew Witty, and Steve Hemsley. (Sir Andrew resigned from UHG’s board effective 20 May, Becker’s and SEC Form 8-K)
  • DOJ is reportedly investigating UHG for criminal Medicare Advantage fraud, according to the WSJ earlier this month, reported in HealthcareFinance.
  • The latest accusation: kickbacks to nursing homes to reduce patient transfers to hospitals and thus costs, based on an investigative report from the UK Guardian reported in FierceHealthcare last week.

The Brian Thompson assassination earlier in December uncapped a boiling volcano of resentment against the health care system that crossed political lines, then focused on UHG itself and its claims treatment. Next it revealed something that UHG undoubtedly didn’t want known–that UHG’s AI-powered claims review system had a 33% rate of claims denial on marketplace plans across 20 states, the second highest in the US (first was BCBS Alabama, a single-state plan) (KFF). This eruption unleashed a tsunami of heartrending social media stories of denied care and approved then denied care by UnitedHealthcare, including one for a patient delivered to a surgeon post-operation.

  • Instead of examining their methods, UH doubled down on featuring ever-so-trendy AI. Revealed recently to the WSJ, half of their 1,000 + AI-powered apps use generative AI and the remainder a more “traditional” form, without explanation of “traditional” according to chief digital and technology officer Sandeep Dadlani, Their software, not necessarily AI-powered but usually rules-based or using algorithms, ‘auto adjudicate’ 90% of UHG claims. And this wasn’t new. UHG was sued in Federal Court as far back as 2023 in using an AI-powered application to evaluate and deny claims.

This is above and beyond the business conditions that have affected every insurer: high utilization costs resulting from accelerated care activity, more (and more expensive) benefit offerings, and higher costs associated with Medicare Advantage beneficiaries, along with a minor reduction in MA benchmark rates.

One healthcare observer’s–and marketer’s–opinion, drawn from her experience not only in healthcare but also outside it.

UHG has pursued profit and growth to justify an immense share price and return to its shareholders. It has become unmoored from its business customers, instead trapped in an ever-widening gyre of increasing its revenue, profit, share price, and dividend every quarter, every year, to satisfy investors. It remains profitable, yet its share price has collapsed from over $600 on 3 December 2024–the day before the Thompson murder–to $378 on 12 May, the day prior to Witty’s resignation, to today’s close of $295. This is despite massive share purchases by Mr. Hemsley and other UHG executives, presumably to demonstrate confidence. Last week, three major investment banks downgraded their recommendations on UHG.

It’s time to sell off businesses and refocus on either being an insurer or being a healthcare services company. Not both. 

  • If UHG chooses to be an insurer, refocus on a service mission, not the shareholders. Respect their members (and commercial businesses) who pay the premiums. Focus on member health, first preventative, then managing chronic care. Stop treating patients and providers as always trying to game the system or grift them. People depend on insurance at the time of need, when they are sick, and treatment is complicated. Make it easier for both members and their providers.
    • Bring back humans evaluating prior authorizations and claim approvals–and get better tools with a final review by humans. Treat providers in and out of network better.
    • Get back to being the insurer of choice for individuals and groups. Contract for the services you need, not own them and try to manage them too. UHG would not be the first insurer who has faced this–both Molina and Centene have divested all or many of their service businesses.
  • If UHG chooses to be Optum, it needs to focus on their services and how well they integrate. Divorcing Optum from UnitedHealthcare resolves a lot of conflicts around interest but there are still others.
    • Owning and controlling practices creates multiple conflicts and a closed system. The feedback from doctors in Optum-owned practices that this Editor has seen is that they are micro-managed down to the penny, escalating administrative costs and taking focus from patient care. Optum practice locations that this Editor has seen have a ‘bad look’–underused, often repurposed locations.
    • Abandon the Amedisys acquisition and rethink (or spin off) the entire home care business for the same reason as owning practices.
    • Refocus their ACOs from ‘captives’ to management services provisioning that more naturally integrates with Optum services–or get out of the business.
    • Expand analytics into providing the best and most convenient tools for hospital and practice management, which likely will require some acquisitions.
    • Optum Rx is facing its own challenges from new competitors and eroding market share–and simplification can help management focus on it. If Change Healthcare is kept, rework and reform how they process and pay claims across healthcare; harden it against the cyberattack/ransomware that cost the economy and healthcare billions. Optum Ventures and its role should also be examined for conflicts with the main business.

UHG is a company now demonstrating the end stage of integration: too many complex parts, too much administration needed to keep the juggernaut going, too many inherent conflicts, no central theme, too little focus, culminating in failure to customers and shareholders. It has become toxic in reputation to its own members, providers, and to businesses who sign commercial contracts. It’s become a falling knife, a rolling failure such as GE before its breakup or (returning to my airline days) Texas Air Corporation, once the world’s largest airline holding company. Unlike GE or TAC, UHG’s business size and outsized vertical integration choking off alternatives have created multiple situations, such as Change Healthcare’s failure, which can damage the entire healthcare system. It’s time that their new CEO and their C-levels sit down and have a long think about what their future, and the future of their role in being a healthcare leader, should be. Think…smaller.

Update 28 May: The American Hospital Association (AHA) has also provided comments to the Trump Administration, DOJ, and FTC, as part of the administration’s 10:1 deregulation initiative*, addressing payer vertical integration and its effects on providers. Payer control, concentrated among four payers that control half the market (UnitedHealth, Elevance, Aetna, Cigna) , far outstrip those of health systems, and have led to higher premiums and constraints on care. The AHA is demanding review of regulations within the Affordable Care Act (ACA) that permit insurers to circumvent medical loss ratio (MLR) requirements through high-priced practice acquisitions yet enjoy exclusions in the Stark Law (physician self-referral) that health systems cannot. Their comments also included simplification of prior authorization processes and other utilization management practices, and swiped at the increased Premarket Notification process for M&A, something that the new administration is already reviewing. FierceHealthcare published 27 May.

*For every new regulation passed, canning 10 rules, regulations or guidance documents

TTA’s Blooming Spring 5: Hinge Health’s IPO, 23andMe bought by Regeneron, sans Lemonaid, WeightWatchers’ future, debuts of Smarter Technologies and Fuze Health, VA EHR update, more!

 

23 May 2025

The major news this week was the Hinge Health IPO, the first for digital health in two years–but the downside was that it was at a lower valuation. Denouements abounded with most 23andMe genetic assets bought by Regeneron, without a drink of Lemonaid. WeightWatchers’ time may have passed, new heads for Calibrate and Oak Street, and two more ‘arranged marriages’, Smarter Technologies and Fuze Health. An update on the VA EHRM in the budget. Masimo’s recovering, as is Ted of Strata-gee

Remember our soldiers, sailors, airmen, and Marines who have passed on this Memorial Day. Our Monday newsletter will be on Tuesday.

News roundup 22 May: an inflight ‘save’ and AliveCor’s KardiaMobile, rolling out the VA/Oracle EHR in ‘waves’, Fuze Health formed from LetsGetChecked/Truepill, hacking and ransomware 92% of PHI data breaches (A renaming of a 2024 ‘arranged marriage’–can it be saved?)

News roundup: Hinge Health public @$32/share, lower valuation. Is WeightWatchers game over? Calibrate replaces CEO, new prez for Oak Street, NMC gets ‘Smarter’ rolling up 3 portfolio companies, another splash of investor ‘cold water’ (The first health tech IPO in 2 years and ‘smushing’ when they can’t)

Update: Masimo’s website status and an analysis of the Sound United sale (Getting up and running post-attack, but what happened?)

23andMe sold to Regeneron for $256M in court-supervised bankruptcy, sans Lemonaid. And is it worth it? (We come up with a number, it’s likely)

From last week: UnitedHealth Group changed out CEOs suddenly. The new one is a surprising ‘blast from the profitable past’ but that didn’t stop Mr. Market from taking the stock down down down. Another blast involves Elizabeth Holmes’ partner Billy Evans fronting a diagnostic testing- in-a-box startup.”Surprise, surprise!” No surprise that Holmes lost her appeal of an appeal–nor Omada Health filing for an IPO. Unfortunately, our investigator on all things Masimo met his own surprise walking on a sunny day–fortunately, Ted’s on the mend. More about BCIs with Apple integration, a chronic pain management startup, Parkinson’s data, two good raises, and what payers pay to keep their execs safe.

Short takes: Synchron BCI integrates with Apple devices, Shields Health partners with Duke on specialty pharmacy, raises for Cohere Health, Olio (More BCI action with Apple getting into it)

Theranos’ revenge? Holmes’ partner Billy Evans founds a startup for diagnostic testing, denies it is ‘Theranos 2.0’; Holmes loses Federal rehearing appeal. (Is Holmes advising long distance? Letters from a Texas Jail?)

News roundup: Omada Health files for IPO, UPMC-Redesign partner on chronic pain management, OK and PA AGs warn 23andMe users to delete data, Verily to build Parkinson’s dataset, what payers paid for exec security (Omada follows Hinge. But the last is surprising–between a lot and a little)

This just in: UnitedHealth Group CEO Andrew Witty steps down immediately, replaced by former CEO Stephen Hemsley (updated 15 May) (UHG may change out CEOs, but continues to be hammered by Mr. Market)

Best wishes to Strata-gee’s Ted Green on a fast recovery! (Ted, our ace Masimo investigator, was put rather suddenly in a bad place…use your eyes when you drive!)

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Support not only a publication but also a well-informed international community.

Contact Editor Donna for more information.

Help Spread the News

Please tell your colleagues about this free news service and, if you have relevant information to share with the rest of the world, please let me know!

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

Telehealth & Telecare Aware – covering news on latest developments in telecare, telehealth and eHealth, worldwide.


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News roundup 22 May: an inflight ‘save’ and AliveCor’s KardiaMobile, rolling out the VA/Oracle EHR in ‘waves’, Fuze Health formed from LetsGetChecked/Truepill, hacking and ransomware 92% of PHI data breaches

Leading our news with a short, heartwarming story.

A passenger on a 29 April KLM flight from Uganda to Amsterdam experienced, three hours in, heart attack symptoms and extreme pain. The Dutch passenger’s luck was that a group of passengers were medical volunteers with Cura from the World, a Oklahoma-based group returning from a medical mission to Uganda. Dr. TJ Trad, the founder/CEO and an invasive cardiologist, created an aid station for the passenger where his legs could be raised and his vitals monitored with the assistance of a nurse. The lucky part was that the team had most of its equipment aboard, including a 12-lead ECG to confirm his cardiac status, plus five medications used for emergency treatment. He was stabilized, but the interesting part was that Dr. Trad used his personal AliveCor KardiaMobile to monitor the patient for arrhythmia, the later and high emergency stage. Dr. Trad was carrying it because a year earlier, he had experienced his own heart attack that canceled out his last medical mission trip and used it to monitor himself. With the patient under monitoring and medications, the KLM flight did not have to divert to Tunisia and it landed at Amsterdam Schiphol three hours later. At the hospital, the Dutch patient was examined over 12 hours and eventually discharged, as he was not diagnosed with a heart attack, stroke or pulmonary embolism, according to the passenger’s wife speaking with CNN. Dr. Trad was able to catch his connecting flight home. From an aviation perspective, it underscores the need for medical training and an emergency kit for monitoring this type of incident. Hat tip to Dave Albert, MD, founder and chief medical officer of AliveCor.

VA now dubbing the rollout of the Oracle Cerner EHR as a ‘wave’ strategy. Dr. Neil Evans, the acting executive program director of VA’s Electronic Health Record Modernization Integration (EHRM) Office elaborated on the ‘wave’ in an interview with GovCIO Media & Research. Each rollout will be clustered in sites that routinely work together and where patients flow for care from one location to another. For instance, the planned 2026 rollout previously announced in December 2024 will be in four Michigan locations: VA Battle Creek Medical Center, VA Detroit Healthcare System, VA Ann Arbor Healthcare System, and VA Saginaw Healthcare System. The nine additional sites in 2026, except for Alaska standing alone, are similarly clustered [TTA 4 April]. The new news? FTA:

  • The White House’s proposed discretionary budget for FY 2026 calls for an increase of nearly $2.2 billion in funding for the EHR program as a “top priority effort.”
  • The proposed budget also plans to streamline much of the agency’s over 1000 IT systems, which it claims are “decades old” and “duplicative.”
  • It pauses procurement of new systems and directs the U.S. Department of Government Efficiency Service (DOGE) to conduct a full review of the agency’s IT systems alongside the VA.
  • Other government agencies are going through the same process: National Oceanic and Atmospheric Administration (NOAA), Defense Department (MHS), and the Coast Guard also are modernizing their EHRs. VA is learning from them as well as the private sector, according to Dr. Evans.

The ‘wave’ needs to work. Veterans Affairs Secretary Doug Collins outlined VA plans at two House appropriations hearings last week on the 2026 and 2027 VA budgets. The total for the EHRM is $3.5 billion in FY 2026 (Federal budgets start in October; the total budget has been dubbed the ‘Big Beautiful Budget’) and is needed for additional rollouts in FY 2027. But given the failures at the six existing implementations and the continuing fixes and patches, in a process that seems like it started in 1900 (actually 2018), one can understand the consternation of Veterans Affairs committee member Rep. Greg Murphy (R-NC): “I’m still dumbfounded at the billions and billions and billions of dollars that have been poured into an EHR that should have never been done in the first place. It’s not a system that should be used for the largest healthcare system in the country.” Healthcare Dive

Fuze Health launches–phase 2 of a merged LetsGetChecked and Truepill ‘arranged marriage’. The merger of the two last October with digital/mail order pharmacy Truepill operating as a subsidiary of at-home diagnostics via testing kits LetsGetChecked was a $525 million deal that we classified as a ‘smush’ when it was announced last August. Both were heavily invested in by Optum and torching  through cash. While $525 million was the purchase value in the headline, only $25 million was in cash and the rest of the financing didn’t add up to the total. The Phase 2 of this entity, Fuze Health, now has a third partner, prescription deliverer Alto, and a new name, Fuze Health. No acquisition amount is mentioned for Alto, which has a total funding of $62.4 million through a June 2021 Series B plus equity crowdfunding (March 2024!) and no financing from Optum (Crunchbase). The only Fuze management mentioned in the release are Alicia Boler Davis, Alto’s CEO, and Paul Greenall, Fuze chief development officer. Their website links back to the four individual companies.

In 2022, LetsGetChecked acquired Veritas Genetics, now prominently featured as part of Fuze. Also in 2022, Truepill fell under DEA scrutiny with a ‘show cause’ action after being a fulfillment pharmacy for Cerebral and Done Health in their Schedule II controlled substance violations. This was settled in November 2023 with multiple requirements including continuing heightened compliance (DEA release). Fuze Health promotes itself as “a technology-powered home health screening, genomics and pharmacy services provider committed to transforming patient experiences and enabling its healthcare partners – including care providers, health plans, employers and life sciences companies – to excel in an outcomes-focused system.” No mention of investors or backing, as is typical in these announcements.  Now go forth and make money. Hat tip to HIStalk 5/23/25 

Hacking and ransomware now constitute 92% of healthcare data breaches. Once upon a time, when this Editor reported on what were then unusual data breaches, the more common causes were insider theft, unauthorized access/disclosure, and improper disposal or loss. They have nearly vanished as the ‘business of breaches’ has settled down and internal security has approved. A cross-sectional study published as a research letter in JAMA Network surveyed breaches from 2009 to 2024 using HHS’s Office of Civil Rights (HHS-OCR) reporting. Of 566 incidents in 2024, 457 were “IT incidents” and 61 were tagged as ransomware, totaling 92%. Despite the massive Change Healthcare breach, ransomware breaches fell to 11%.  Considering patient records, there were 170 million breached in 2024 and hacking/IT incidents accounted for 91% of the total. Of 732 million records affected from 2010 to 2024, hacking or IT incidents and ransomware (considered as a subset) accounted for 88% (643 million) and 39% (285 million) of incidents. Since 2020, ransomware has affected more than half of all patients annually, reaching 69% in 2024–again, the effect of Change Healthcare. Also Healthcare Dive

2024 earnings roundup, after a dramatic year: UnitedHealth Group and Masimo

UnitedHealth Group’s annus horribilus closed out with a decent, but not up to earlier projections, financial report.

Having opened in February with the massive (and massively expensive) ransomware/hack of Change Healthcare, UHG didn’t have a lot of bright spots. Elevated utilization rates increased expenses; changes in Medicare Advantage reimbursements and the STAR ratings metholodogy changes reduced bonus payments.

Then, in the early, dim morning of their 4 December investor day in NYC, UnitedHealthcare’s CEO Brian Thompson was murdered while entering the New York Hilton Hotel. The manhunt and the controversy set off by the perpetrator’s so-called ‘manifesto’ exploded into a hurricane of severe public criticism on how plans process claims and treat members, a traditional and social media/online storm that only diminished around Christmas and the rise of other news. In literal fear for their lives, health plan executives took the lowest profiles they could manage. 

UHG’s earnings, while positive overall, reflected this uncertainty with lower Q4 revenue causing them to miss Street estimates. Share price fell over 6% today (Thursday). 

  • UHG’s Q4 revenues were $100.8 billion versus $94.4 billion in the prior year, up 6.8%. Profit of $5.5 billion was flat versus prior year. UHG’s 2024 revenues were $400.3 billion, 7.7% higher than 2023’s $371.6 billion. 
  • Health plan unit UnitedHealthcare’s 2024 revenues were $292 billion, up 6%, with operating earnings of $15.2 billion. US commercial members grew by 2.1 million.
  • Their 2024 medical cost ratio — the percentage of premiums spent on medical care — rose to 85.5%, far higher than 2023’s 83.2%, exceeding analysts’ projections of 84.96% and far above the targeted 80%.
  • Optum’s revenue, affected by the Change Healthcare hack and ransomware payments, still rose to $253 billion, up $26.3 billion or 12% versus prior year. The Optum Insight unit, which includes Change, had revenues of $18.8 billion, declining 1% because of the $867 million loss due to business disruption.

UHG release, FierceHealthcare, CNBC 

UHG also announced:

  • The Optum Rx unit will now pass through 100% of rebates negotiated with drugmakers to their clients–insurers, states and unions. This is up from 98% since 2% have preferred other rebate models. FierceHealthcare
  • UHG and Amedisys filed last week in the US District Court of Maryland to have the November Department of Justice suit dismissed. They cited that the DOJ did not adequately prove that the $3.3 billion acquisition would be anti-competitive. For one, the DOJ did not adequately define or provide detail on the geographic markets that would become be non-competitive. FierceHealthcare  They extended their deal deadline to the end of 2025 last month.
  • Change Healthcare stated yesterday that it has ‘substantially’ completed notifying affected consumers of their breach. Interestingly, if you use a search engine to try to find the breach notice, you’ll have a great deal of trouble–because the source code contains a hidden “noindex” code on the notice. ‘Noindex’ code tells search engines to ignore the web page–and has been there, apparently, since 20 November 2024. UHG has also not publicly disclosed a more exact number of those affected beyond the long-ago estimate of 100 million. TechCrunch   The state of Nebraska has sued UHG, Optum, and Change over the breach [TTA 19 Dec 2024

Masimo, ending a dramatic year of its own, now firmly in the control of Politan Capital Management despite flying lawsuits with former CEO Joe Kiani and an SEC investigation announced last month, issued its preliminary 2024 closing financials and their 2025 guidance. What’s hot–their consumer and professional medical devices, including smartwatches, that measure vital signs including pulse oximetry. What’s not–their audio business under Sound United, which is on the block.

  • 2024 healthcare revenue was up smartly by 9% to $1.395 billion. 
  • 2025 healthcare revenue is projected to increase 8-11% in the range of $1.5 billion to $1.53 billion. Non-GAAP operating profit is projected for 2025 at $398 million to $406 million.
  • Non-healthcare revenue (a/k/a Sound United) was $699 million. That declined 10% decline on a reported basis. 
  • Non-GAAP EPS for 2024 was $4.10. 

For 2025, Masimo is ending reporting for the Sound United business nor providing 2025 guidance since they are selling it. The only guidance they are giving is on the healthcare business. If one does the math–selling off Sound United will take out $700 million from their revenue. One more thing…updated results will be postponed until their investor call, delayed until Tuesday, 25 February. Mass Device, Masimo release

A year’s end newsletter to our Readers: a few wishes for Under the Tree, a few Quirky Predictions for 2025

It’s hard for your Editor to believe, but this is actually the 15th year since Steve Hards was most kind and invited me to contribute a few articles to what was then simply Telecare Aware.

A lot has happened since then, professionally and personally. I’m grateful for the opportunity that TTA has given me to Cover the Healthcare Waterfront, relying on multiple sources from super-local to Mainstream News to the Usual Sources. 

Most of all, this forum (and it is one!) stays true to the course that now Editor Emeritus Steve set some years ago:

Telecare Aware’s editors concentrate on what we perceive to be significant events and technological and other developments in telecare and telehealth. We make no apology for being independent and opinionated or for trying to be interesting rather than comprehensive.

In that, though I’ve occasionally gone far afield (and down some rabbit holes) into exclusively US issues such as how healthcare gets paid, its politics, and the financial landscape (from bubble to devastation to recovery), I believe they hold true in the UK and in other countries. 

So one wish I have from Santa for 2025 is for More Comments. I’m very interested in knowing what you think about topics that are covered and your take on them. Using hits as a guide, it is hard to predict. Sometimes it is breaking news, a major data breach, or Walgreens’ continuing soap opera. Perhaps you want more audio commentary or article audio files, which I’ve experimented with via Soundcloud. So…What do you think?

A second wish: for other writers to join me here as lead/topic providers or better, contributors, for news outside the US. Specifically, I believe Readers want to know what is going on in the UK and Europe, but ‘standard sources’ are either not focused on health tech, paywalled, or overly specific ‘inside baseball’. Steve and I have long recommended Roy Lilley’s newsletter and UK Telehealthcare.

So…if you know of reporting on UK or EU issues, please direct me there. Better yet, contribute an article! Or two! We are small and cannot pay, but if the facts are there and the writing is sound, you’ll be published and can republish elsewhere. (This is exclusive of Perspectives, which are non-promotional thought pieces contributed by companies’ marketing areas. And we thank them!)

A third wish: speaking of marketing, I am a marketing and communications consultant by trade. Yet I am very shy about putting my shingle out there and asking Readers for leads to companies that might need marketing help, short-term or long term. My LinkedIn profile has most of my CV and key information on what I’ve done and where I’ve worked, but for a full overview about my capabilities across branding, program, planning, and products, email me here

Now for the Quirky Predictions–I’ll keep it short and open to debate:

2025 will continue international rebuilding of companies in healthcare and health tech. But the tear-downs will continue to clear the table. Overall, there’s optimism in the air with a new administration. It doesn’t feel like a rerun of 2023 where everyone thought it was going to be Romping Unicorns post-pandemic and the Big Guns were snapping up Big Buys like Signify Health and Oak Street Health for Big Bucks. We know now how that worked out for Walgreens, CVS, Walmart, and even Amazon (which I predict will be rethinking–and retrenching). We are starting from a low level and hopefully leveling up from there.

That doesn’t mean that there won’t be more Shotgun Mergers by VCs that avoid the new merger guidelines and a few Chapter 7s and 11s (UK=administration) along the way. There will be more layoffs. Funding rounds for both healthcare and digital health will be moderate. Down rounds that reduce valuation will still be with us. Investors will push for more control–witness what is happening at Walgreens and CVS, and what happened at Centene.  There will be more big changes at Walgreens, CVS, Elevance, Centene, Cigna, and many others considered mainstays of healthcare–and don’t rule out Amazon and Walmart. But by the end of year, barring a Bird Flu Pandemic, space aliens landing from the Plague of Drones in US and international skies, or an Unraveling of Sanity, overall we will be doing a lot better.

Robert F. Kennedy Jr. will be turning up the heat on Health. He will be confirmed as head of Health and Human Services and will, within a year, refocus it along its name. Health rather than Sick Care. A lot of substances ranging from vaccines to PFAS to various dyes and additives in food will be questioned at FDA, restricted, and brought to the national consciousness. As a personality, he is extremely intelligent and dynamic–knows how to absorb the most complex information and move on it. He knows that Make America Healthy Again is his Main Chance and also to be true to his legendary father’s legacy. It will make a lot of drug and chemical companies rather…nervous. (I am less sanguine about Dr. Mehmet Oz as head of CMS and his ability to clean up that puzzle palace, but hopeful.)

Speaking of heat, I wouldn’t want to be a C-level at any of the major health plans that are in multiple lines of integrated business.  The assassination of Brian Thompson and earlier the massive Change Healthcare hack ripped the cast and bandages off the entire system. The sheer hostility to payers was startling enough for UHG CEO Andrew Witty to write a massively defensive op-ed in the NY Times–and the hostility has hardly dimmed with the jailing of Luigi Mangione who has turned into a folk hero to some. (Yeesh! I cannot think of anything less moral.) The incoming administration and Congress are restive and major changes will be coming from there. Already there is a bipartisan Congressional bill (the PBM Bill) requiring the divestiture of pharmacy benefit management (PBM) companies from insurers within three years. While it will not be passed by the 118th Congress, it will be reintroduced by the 119th after 3 January if you look at who is backing it. This is the kind of movement to simplify how healthcare is delivered and paid for that crosses ideologies and finds a wide spectrum of support from Bernie Sanders to RFK, Jr. and presumably the re-elected President. 

Once the PBM string is pulled, what then comes into focus is insurer ownership and control of providers. UHG/Optum owns or is affiliated (meaning ACO or partial ownership) with 10% of US practices. DOJ is already after UHG for the Change Healthcare acquisition on security grounds. The more aggressive posture around anti-trust will not change in this administration and only slightly moderate with a new FTC chair. (Lina Khan’s term has expired though she may try to hang on, but her bête noire Amazon is still in trouble with their One Medical Bad Bet.)  The few payer organizations that only offer health plans, like Molina, Oscar, and Clover, will start to look very smart indeed. Perhaps smaller and less controlling is actually…better. And more profitable.

Running in parallel: the lack of trust in Big Pharma and the cost of drugs from them. They’re next.

We will need to get much more realistic about AI, what it is capable of, and its social effects. It is spreading into everything like kudzu (try entering into most browsers) but what we will be finding out is that a lot of what is ‘AI’ sold to companies as labor-saving is half-baked. It doesn’t work well. Some of it falls into the ‘uncanny valley’ of unease as too humanoid. If a company or service relies on it for decision making, it may not make those decisions better than humans. Reportedly UnitedHealthcare uses AI for a claims decision model, something that is cited as flawed. Bad decisions incite human anger, and lack of human contact is like being in a perpetual voice jail.

There is also growing evidence that in writing and researching, over-dependence on AI prompts and drafts destroys the ability to remember and creatively connect both on the fly and under consideration, in the ability to move an argument logically to a conclusion utilizing persuasive writing and speech skills. This especially affects the young. I’m hearing reports on this from the hiring front, where young grads cannot write without AI assistance and are stunted in their verbal skills. AI in writing gets to be a crutch (I use a tool for grammar–and about 10% of the time it’s off.). And have we forgotten that AI is dependent on content….GIGO from the early computing days still applies. We don’t want to be the Eloi, do we? (Look up your H.G. Wells)

And one last prediction. The mass market weight loss fad hyping GLP-1 drugs (Wegovy, Ozempic, Mounjaro, Zepbound) will implode. These drugs are now readily available, less expensive (but certainly not cheap), and cheerily advertised on social media, radio, and TV by drug manufacturers and telehealth prescribers. These are promoted for weight loss alone, not for weight loss to better manage Type II diabetes or true obesity. What will pop the bubble? Side effects of slow digestion like stomach paralysis. Diarrhea, nausea, intestinal distress, even pancreatitis and suicidal ideation. Little known is that 80-90% of clinical trial participants experienced at least one adverse event. If you survive these, a weight gain rebound often happens once off the injections.

The telehealth prescribers like Ro and Hims make it so easy–and do they go through blood and other testing, and histories, to ensure that the patient is a suitable candidate?  Metabolic modifications ain’t beanbag.

A side business popping up: nutritional  supplements and ‘special drinks’ to prevent malnutrition (because of the low food intake) and muscle loss. (Another sign that GLP-1 is hitting a peak.)

Perhaps waiting in the wings are the class action lawyers, ready to jump on any massive side effects or, God forbid, deaths.

No ‘craze’–and this is one–is unalloyed bliss. If you have a diversified telehealth company like Teladoc and you get into this business, it may not make a difference (?)–but sole providers like Calibrate (among many) will feel the pain. And destruction. (Does anyone remember the much-touted Alli/Orlistat that reduced the fat absorbed by the digestive tract and those side effects?)

May you and your loved ones have a Merry Christmas, Happy Hanukkah, and a Happy New Year…however you and yours celebrate! We will be on a two-week break and return, along with many of you, on 6 January.

News roundup: Precision’s $102M raise, more on BCI; Withings clears BPM Pro 2; Nebraska 1st state to sue Change/UHG, related insider trading update; VA Oracle go-lives may resume; ATA intros CODE; ClearDATA HITRUST certified

One more funding. A competitor of Elon Musk’s Neuralink, Precision Neuroscience. closed their Series C at $102 million. This round was led by General Equity Holdings, with participation from firms including B Capital; Duquesne Family Office, the investment firm of Stanley F. Druckenmiller; and Steadview Capital, bringing their total funding to $155 million. The total brings them according to their release as one of the best-funded brain-computer interface (BCI) company after Neuralink, whose funding is unknown. The funding will be used to advance its clinical research and expedite development of its cutting-edge brain implant. 

Precision is the developer of the Layer 7 Cortical Interface to treat motor paralysis. At the time of their last funding in January 2023, this Editor noted that their difference was to treat neurological illnesses and events such as stroke, traumatic brain injury, and dementia. Their focus remains largely there: severe spinal cord injury, stroke, ALS. So far, the investigational device has been tested its device in 27 patients through research partnerships and was designated by FDA as a Breakthrough Device.

More on BCI in this must-read article by Timmy Broderick for STAT. The upcoming issues around BCI now center around the engagement of CMS (Centers for Medicare and Medicaid Studies) for coding, coverage, and payment for devices after the investigational stage; privacy issues about neural data; and continued support after implantation. This last one is acute as these companies are young. There has already been the example of Second Sight’s bankruptcy, leaving subjects stranded with useless retinal devices in their eyes. BCI to this Editor will develop through 2025–and be a major focus of investment by 2026-2027.

Withings gains FDA clearance, intros BPM Pro 2. A professional-level product for hypertension and chronic heart failure (CHF) targeted to care teams to connect with their patients, the FDA clearance covers blood pressure and pulse rate measurement in adults with arm circumferences of 9 to 17 inches (22 cm to 42 cm) or 16 to 20 inches (40 to 52 cm). What is really interesting about the connected (Wi-Fi, cellular, BT) device is that care teams can program the device through the Patient Insights feature for the patient to interact with the device in real time. Through a small screen, it asks questions that help to track the patient’s condition, reinforce medication adherence, and assess their satisfaction. It also has a Retake Measure feature to retake a reading if results exceed predetermined thresholds and increases accuracy. Withings plans to upgrade the device to take a 1-lead ECG to detect atrial fibrillation; this is a separate clearance and expected to become available in 2025. The device is not yet CE Marked. Withings was named a CES 2025 Innovation Awards Honoree in the Digital Health category. (Photo, Withings website) Release, Mobihealthnews, MedCityNews

UHG’s Mound of Misery multiplies with Nebraska’s Change Healthcare lawsuit, plus separate but related insider trading. 

  • Nebraska became the first state to sue UnitedHealth Group, Optum, and Change Healthcare over those affected by the late February ALPHV/BlackCat hack of Change’s systems. In Nebraska alone, it affected 575,000 individuals. (It is actually hard to find someone who was not affected by the hacking of the leading exchange for major claims clearing and payments.) Nebraska’s attorney general Mike Hilgers is suing because of the company’s carelessness in handling data and, even worse, in its slow notification of those affected. Our Readers will recall that Change/UHG initially tried to push off notification on healthcare providers. When HHS threw the ball back to Change [TTA 5 June], notices didn’t go out until August-September. The charges in state law center on consumer law: financial data protection and consumer protection statutes, deceptive trade practices, and Federal standards on privacy (HIPAA, and HIT protection. The lawsuit was filed by the AG in the District Court of Lancaster County, Nebraska. Nebraska Examiner
  • The Change acquisition and later problems were possibly the catalyst for stock sales by senior/C-level UHG executives, including UnitedHealthcare CEO Brian Thompson. The $300 million Hollywood (Florida) Firefighters Pension Fund initiated a class action lawsuit alleging that the sales were made while the Department of Justice (DOJ) was considering an anti-trust action against UHG that would revisit the so-called ‘firewall’ between it and Change.  The complaint specifically mentions that UHG executives were aware of it as early as October 2023. The Wall Street Journal revealed the investigation on 27 February 2024–the same time as the Change breach was revealed, cracking the stock almost immediately. Executives including Thompson ($15 million), UHG CEO Andrew Witty, and board chairman Stephen Hemsley ($102 million) were named. The class action covers the period for stock purchased between 14 March 2022 and 27 February 2024. UHG has until 1 March 2025 to answer the complaint. Healthcare Finance News  (This is likely to affect the settlement of the Thompson estate–Ed.)

VA confirms that additional Oracle EHR implementations may go live in 2025, after 18 months of dead stop. The Oracle Cerner EHR is reportedly ‘running better’ at the current six sites where it is operating: five VA only (including 20 community clinics and about 100 support sites), and the sixth at Lovell jointly with the Military Health System (MHS). The restart of EHR Modernization (EHRM) was confirmed earlier during budget hearings by Kurt DelBene, assistant secretary for information and technology and chief information officer. Crash and lag downtimes are reduced by half and incident tickets by 60% since the last updates in August.  Timing remains indefinite for 2025 (FY ends 30 September 2025) but current VA Secretary Denis McDonough confirmed that primarily VA staff will continue to work on it under the Trump Administration. “The overwhelming majority of VA professionals who work on EHRM will be working on EHRM on January 21st, just as they were on January 19th,” McDonough said at an 11 December press conference. Federal News Network

Short takes:

  • The American Telemedicine Association (ATA) launched its new ATA Center of Digital Excellence (CODE) last week. CODE is constructed as an alliance with leading health systems for the development and implementation of digital health best practices that prioritize patient-centered care, equitable access, and improved clinical and operational outcomes. Tools span enhancement of workflows and patient engagement to improve healthcare accessibility. ATA release
  • ClearDATA’s CyberHealth platform and cloud managed services have earned Certified status by HITRUST for information security. ClearDATA provides healthcare specific managed cloud security, compliance and operations solutions. HITRUST, the Health Information Trust Alliance, is a non-profit that sets standards for data organizations through the HITRUST CSF framework. Release

News roundup 16 Oct: Walgreens shuts 1,200 stores–500 in ’25, CVS exiting core infusion biz, Masimo v. Apple update, DEA recommends 3rd telehealth extension, Change hack costing UHG $705M, Owlet back in NYSE compliance

A roundup of chickens coming home to roost? But some chickens are just happy to come home.

Walgreens’ Mound of Misery just grew a little higher. The headlines today were all about Walgreens’ closing 1,200 stores over the next three years. Their current store location roster is about 9,000, according to their website. 500 of these will be closed during their upcoming FY2025.  Their release stated this would be “immediately accretive to adjusted EPS and free cash flow”. (Were they making any money at all?) This helped to give their share price a nice bump from $9 to above $10 at market close today. Last year, Walgreens’ shares were priced above $22.

Q4 (closing 31 August) closed with a 6% boost in retail sales. However, losses were $3.0 billion versus a net loss of $180 million in the prior year’s Q4. The reasons cited in their release were a higher operating loss, a $2.3 billion non-cash charge for valuation allowance on deferred tax assets primarily related to opioid liabilities recognized in prior periods, and a non-cash impairment charge related to equity investment in China. The operating loss related to a non-cash goodwill impairment charge for CareCentrix. 

The full year was not cheery. Sales were $147.7 billion, an increase of 6.2% from a year ago (in constant currency, 5.7%). But losses in their FY2024 were $14.1 billion, a stunning increase of 104.5% compared to prior year.

VillageMD is being monetized along with other assets. “CEO Tim Wentworth said in the earnings call that the company is focused on “monetizing non-core assets to generate cash,” naming VillageMD as an example, to focus on its core retail pharmacy business.” HIStalk 16 Oct Can Walgreens shrink itself to profitability? Fierce Healthcare

Over at CVS, they’re doing their own shrinking. CVS is closing its core infusion services business, with plans to either close or sell 29 related regional pharmacies. Infusion services were bought from Coram LLC in 2013 for $2.1 billion. This Reuters exclusive was based on an 8 October memo and confirmed by a CVS press representative. Patients relying on antibiotics, drugs supporting muscular health, and intravenous nutrition services will be transferred to other providers. CVS will continue to provide certain services: specialty medications and enteral nutrition, or tube feeding, at pharmacies in Minnesota, Pennsylvania and San Diego, with nationwide nursing services. Hat tip to HIStalk 16 Oct.

Masimo wins one big patent challenge, loses one (or four), to Apple. 

The Win: Apple had sued Masimo in the US District Court of Delaware for patent infringement of Apple’s utility patent 10,942,491 B2 (“the ‘491 patent”). Masimo was charged as violating Apple’s patent on 19 features. Masimo appealed to the Patent Trial and Appeal Board (PTAB) of the US Patent and Trademark Office (USPTO) for an inter partes review (IPR) of the patent on the grounds of ‘unpatentability’, a very high proof. Masimo succeeded in this, rendering Apple’s ‘491 patent useless. Apple can appeal but the likelihood of success against the PTAB ruling that required three administrative patent judges to review, at this level of proof, is low. In this Editor’s view, this may spur other developers to come up with innovations now that these 19 features have been deemed unpatentable.

The Loss (I think): In review in the Delaware District Court are four complicated lawsuits between the two combatants, with Apple’s premise that Masimo has infringed upon other patents. Masimo alleged “inequitable conduct” by Apple in their patent filings with the PTO, essentially alleging fraudulent filings on multiple patents. Apple has been granted a summary judgment on Masimo’s claims, throwing them out.

Interestingly, Masimo–never shy to announce wins versus their foe Apple under the prior leadership of Joe Kiani–has remained strangely mum. (Perhaps everyone is waiting for the takeover dust to settle?) Will the ‘new’ Masimo be so combative against Apple? A far more detailed analysis for the patent mavens is in Strata-gee. A very large hat tip and bow to their editor, Ted Green, who writes about marketing primarily in the audio/visual business but has been 100% on top of The Masimo Saga–thank you!

To no one’s surprise, DEA kicks the telehealth waiver can down the road–for the third time. The Drug Enforcement Administration (DEA) sent to the White House’s Office of Management and Budget (OMB) a proposed rule to extend telehealth prescribing of Schedule II and higher controlled substances without changes. These waivers which removed the in-person examination requirement under the Ryan-Haight Act were instituted during the Covid pandemic and extended twice [TTA 11 Oct 2311 May 23] with a final expiration of 31 December 2024. In September, reports indicated that DEA not only wanted to restore prior restrictions but also wished to introduce additional ones. However, their timing (September!) given Federal standards of publishing draft rules and lengthy comment periods before a final rule was impossible to be achieved by year’s end. [TTA 13 Sept]

Whether OMB will approve the extension (to a date that cannot be confirmed since the text is unavailable, but reportedly one year) is not certain, as it may be disputed by the Department of Health and Human Services (HHS). Since the waiver is due to expire at the end of the year, this may help to assure the multitude of mental health and other telehealth companies dependent on legal remote diagnosis and prescribing controlled substances that their businesses can continue. FierceHealthcare

UHG didn’t have a happy quarter either due to Change. The total hit to UnitedHealth Group of the Change Healthcare hack is now estimated at $705 million, or 75 cents a share. Their 2025 guidance on profit is a lackluster $30 per share–below Wall Street estimates of $31.18. Government plans’ cuts in payments for Medicare Advantage plus and low state payment rates for Medicaid are affecting UHG as well as nearly every other payer. UHG’s share price on the news reacted negatively, falling 9% and dragging down other payers as well. UHG must rue the day they bought Change Healthcare, as it has been largely bad news ever since. CNBC

And winding up on a happy note–Owlet is back in good graces with the NYSE. Last year, they faced a NYSE notification that they were out of compliance with the $50 million minimum valuation of the company over a consecutive 30-day trading day period. They are now in compliance and their Class A shares can trade without the ‘BC’ black mark and no longer be listed as such on the NYSE website. The NYSE will be following its standard procedure of a 12-month follow-up on compliance. Release, Mobihealthnews

The baby sock and baby monitoring company has had a rough couple of years between a cracked SPAC (2021), FDA notifying them at the end of 2021 that they considered the Smart Sock a medical device, forcing the company to pull it from distribution [TTA 4 Dec 21], mounting losses, layoffs, and rebuilding with an FDA-cleared BabySat and enhanced Dream Sock [TTA 21 June 23]. Usually, this concatenation of events means the company either shuts or sells, but Owlet has done neither and bootstrapped itself. Revenue in their Q2 ending 30 June was up 58% year over year with a narrower operating loss of $2.2 million, compared with $6.7 million in prior year. It recently expanded their European distribution of the Dream Sock after CE Mark certification in May to a total of 11 countries [TTA 18 Sep]. 

Short takes: both Clover and Oscar in the black; Aetna prez booted after 11 months; Ava-VSee bedside robot; updates on Change, OneBlood ransomware, Masimo proxy fight

Clover Health’s milestone–a first-ever profitable operating quarter. Not only that, but it was an impressive turnaround from the prior year. With results in their Q2 operating net income of $7.2 million, versus a $28.9 million loss in 2023, these results were far more favorable directionally than the adjusted EBITDA which was $36.2 million versus $9.9 million for the prior year. Insurance revenue was also up 11% to $349.9 million, attributed to member retention and an improved medical cost ratio (MCR) of 71.3%, down from 77.9% in the prior year. Additional revenue from other operations, such as the recently introduced Assistant AI, is minimal. The 2024 forecast stays ‘in the clover’ with raised forecast revenue of $1.35 to $1.375 billion and adjusted EBITDA of $50 million to $65 million. Also helpful is their lifted Star rating from 3 to 3.5 for 2025. FierceHealthcare, Clover earnings release

Rival Oscar Health also stayed Back in Black for the second quarter running–CEO Bertolini wouldn’t have it any other way (or else–see below right). Q2 net income rose to $56.2 million which was a a $71.7 million improvement versus prior year. Adjusted EBITDA also nicely improved to $104.1 million, a $68.6 million improvement. Revenue increased to $2.2 billion, a 46% increase over the prior year. Their MCR went down .9 points. The overall forecast for the year wasn’t provided. Membership was up over 600,000 in their main business of individual and small group insurance, with Bertolini pointing out that this was powered by plan growth in 80% of the states where they operate. Oscar exited Medicare Advantage at the end of 2023, and is shifting to marketing ICHRA, or individual coverage health reimbursement arrangements that permit small businesses to offer employees individual health plans subsidized by employer contributions. After this year, the 58,000 members left in the unprofitable Cigna co-branded small group program will exit [TTA 10 May]. Oscar release, FierceHealthcare

Back in Mr. Bertolini’s old stand, Aetna, results weren’t so cheerful–and their president walked the plank after less than one year. The reorganization announcement was made on the earnings call yesterday, effective immediately. CVS Health CEO Karen Lynch will oversee the daily operations of the health benefits segment along with Aetna’s CFO. CVS VP/chief strategy officer Katerina Guerraz will move over to become Aetna’s chief operating officer.

What initiated it: while health benefits’ revenue stayed in the black, going the wrong way were operating income decreasing 39.1%, the medical benefits ratio (MBR) soaring to 90% from 86% in prior year and the medical loss ratio (MLR) going up to 89.6% from 86.2%. These were attributed to increased utilization, the decline in Medicare Advantage Star ratings, Medicaid acuity, and a revised risk adjustment in the individual exchange business. Something in this immediately doomed now former president Brian Kane, who joined only last September. His last post was at Humana as chief financial officer and leader of their primary care business. CVS Health release, FierceHealthcare, Healthcare Finance

Marrying robots with telemedicine, VSee is partnering with Ava Robotics to create an autonomous robot for telepresence use in hospital intensive care units. This would enable remote emergency physicians to be present at the point of patient care, interact with patients, consult with onsite staff and make treatment decisions. The projected market is smaller regional hospitals and ICUs.  VSee already markets telemedicine carts and portable diagnostic and home care kits. Availability is not disclosed. VSee release, Mobihealthnews

VSee also announced a partnership with Wichita, Kansas community health provider Stand Together for its Aimee telehealth services. Telehealth at their centers will be available to participants for a monthly charge of $4.99 or a single virtual urgent care appointment for $9.99. VSee release

Ransomware strikes again. Non-profit blood donation organization OneBlood was hit on 29 July by a despicable ransomware attack that disabled much of its blood collection services for over 250 hospitals in the southeastern US. They continued to operate at reduced capacity and called for donors of O positive blood, O negative blood and platelet donations. The perpetrator, ransom demands, and breached information were not disclosed. On Monday 5 August, systems were partially restored in time for Tropical Storm Debby’s assault on many southeastern states. From a OneBlood spokesperson: “Our critical software systems have cleared reverification and are operating in a reduced capacity. As we begin to transition back to an automated production environment, manual labeling of blood products will continue. Additionally, we are beginning to return to using our electronic registration process for donors.” DataBreaches.net, FierceHealthcare, HealthcareITNews

Hard-hit Change Healthcare is still playing games with reporting to HHS’ Office of Civil Rights (OCR). Parent UnitedHealth Group reported the ransomware shutdown and data breach to OCR, a full five months after its occurrence. The number reported is the OCR minimum of 500, when it is well known that it affected millions of patients. UHG started direct patient notification on 31 July after weeks of delay, but stated to OCR that they are still determining the number of individuals affected. Provider notifications started in late June [TTA 21 June]. This followed after a hostile dispute earlier that month where UHG tried to push patient notifications onto providers, which HHS decided was 100% UHG’s responsibility. [TTA 5 June]. OCR FAQ update, HealthcareITNews

Masimo and activist shareholder Politan Capital continue to slug it out down to the 19 September shareholders meeting. Back in mid-July, Masimo postponed the meeting, originally scheduled for 25 July. At that time, Masimo filed a complaint in the US District Court for the Central District of California against the two Politan representatives on their board of directors plus Politan’s two nominees that proxy materials contained false statements and violations of the Exchange Act. The suit added that board member Quentin Koffey, also Politan’s chief investment officer, was secretly conspiring with a plaintiffs’ bar law firm currently in litigation with Masimo.

The latest revelation per Strata-gee 7 August: Politan’s countersuit in the Delaware Court of Chancery states that the charges filed by Masimo in the District Court are based on ‘unnamed sources received from a third-party opposition research firm…’ and Masimo’s outside counsel does not know the identity nor ever spoke to the sources. This was filed against CEO Joe Kiani, independent director Craig Reynolds, and director Bob Chapek as a breach of Delaware law.

To date, Masimo has not confirmed their sources to the Delaware court. 

As previously reported [TTA 17 July], the proxy fight was triggered by the value of the company, reduced substantially after Masimo’s snakebit 2022 acquisition of Sound United’s consumer audio brands, Politan’s move to control the company, and kick out the CEO Joe Kiani.  The fight on the Masimo board of directors for two open seats pits the Masimo slate of CEO Joe Kiani and outside candidate Christopher Chavez, against Politan’s Darlene Solomon and William Jellison. Politan already holds two seats and with a win of two additional seats will control the company. Masimo plans to sell the consumer audio and healthcare (baby monitoring) businesses to another unnamed investor, retaining their professional healthcare and pulse oximetry products.

Stay tuned to the next episode of this soap opera.

Class action legal action by pharmacists, providers ramps up against Change Healthcare/UnitedHealth Group

More litigants in a legal pile-on in Minnesota. The National Community Pharmacists Association (NCPA), with 19,000 pharmacy members, and around 40 providers have filed suit against UnitedHealth Group, Optum, and Change Healthcare in the US District Court for the District of Minnesota. The 140-page document charges that UHG/Optum/Change had substandard network security in their clearinghouse operations, leading to the Blackcat/ALPHV breach, and that the plaintiffs might have chosen another clearinghouse and revenue cycle management platform had they known this. The pharmacists and providers all suffered monetary damages from the outage that are still unresolved.

From the press statement, NCPA CEO B. Douglas Hoey: “NCPA was against UnitedHealth’s acquisition of Change from the start. This breach proves that bigger is not better and that consolidation often leads to inefficiencies. Companies are so big they cannot protect every entry point and cannot respond quickly due to internal bureaucracy. The fact issues remain unresolved is a testament to this point. This breach has cost our members a significant amount of money and time and it is still not resolved months later.” He also pointed to the pharmacies’ losses remaining unpaid, financial losses, and taking losses for vulnerable patients with high-cost prescriptions.

According to Healthcare Dive, the multiple lawsuits against UHG must be centrally filed in Minnesota, as ordered by a Federal judicial panel, since UHG is headquartered there. Nothing will move quickly, as class action suits typically take two or more years to be heard and then appealed.

Change started its HHS-OCR mandated process of notifications around 20 June with hospitals, insurers, and other customers. Individuals and practices were not scheduled to be notified until late July but no date has been announced. The Change website also contains a very carefully worded ‘HIPAA Substitute Notice’ that reads like a consumer data breach notification. TTA 21 June

News roundup: UHG’s cyberattack hit now $2.3B, Senate bill on cyberattacks intro’d, VA’s AI tech sprint awards, AliveCor’s new CPT codes

UHG reported earnings, profit reduced by $1 billion due to Change Healthcare cyberattack costs. On Tuesday 16 July UnitedHealth Group reported Q2 (ending 30 June) earnings of $98.9 billion, up $6 billion or 7% versus Q2 last year. Profit though didn’t move the same way, instead taking a hit at $7.9 billion, down from last year’s $8.1 billion. Despite strong performances in the UnitedHealthcare and Optum units, the drag from the Change Healthcare cyberattack is now estimated at an additional $1 billion from last quarter’s guesstimate, now at $2.3 billion. Also affecting the profit bottom line is inflating healthcare costs that are reflected in rising medical loss ratios (MLRs). Change is also obliged to do the patient notification which will start by the end of this month [TTA 21 June], having already started notifications of hospitals, providers, insurers, and other customers. Release, Healthcare Dive

But hey, now the Senate has a bill to coordinate agencies with the purpose of reducing those darn cyberattacks. The Healthcare Cybersecurity Act, sponsored by Senators Jacky Rosen (D-Nev.), Todd Young (R-Ind.), and Angus King (I-Me.), would direct the Cybersecurity and Infrastructure Security Agency (CISA) and the Department of Health and Human Services (HHS) to collaborate on improving cybersecurity. One important change would be creating an HHS liaison within CISA to coordinate incident response specifically for healthcare entities. An earlier version introduced by Sen. Rosen in 2022, S. 3904 (117th Congress), never made it into committee.  Sen. Jacky Rosen release, Healthcare Finance   But aren’t there other agencies involved in cyberattacks and ransomware like the FBI and the Department of Justice? And international agencies like the NCA and Europol since so many come from the darker parts of Europe and Asia? (The devil’s in the details…)

The Department of Veterans Affairs (VA) is taking a modest dip into the AI ocean. The award late last week of pilots for an AI-assisted healthcare dictation tool went to Abridge AI and Nuance Communications. The non-competitive, fixed-price contracts are as a result of the two companies winning the first track of the VA’s AI Tech Sprint which launched last October. The tools are designed to generate transcriptions from ambient recordings of patient encounters within specialty care, mental health care, and primary care settings, as well as integrating into the Oracle Cerner EHR. The notice does not specify start or end date. There is also a second sprint around developing an AI system to process documents generated in patient-provider encounters and other complex medical documents for continuity of care and sharing information with VA providers. FedScoop

AliveCor received CPT codes applicable to the company’s Kardia 12L ECG System. The Category III Current Procedural Terminology (CPT) codes are assigned by the American Medical Association (AMA).  The 12-lead system a few weeks ago gained FDA clearance for the combination of the Kardia 12L ECG System (left), a single cable with five electrodes that acquires 8 high-quality diagnostic bandwidth leads, with their KAI 12L AI-assisted diagnostic technology for clinician use only. The three new codes will be effective 1 January 2025 and will be published in the 2025 CPT Code book. Release

Week-end short takes: Change Healthcare/UHG breach notification starting (updated); fundings for Pomelo Care, Marigold Health, Humata Health

Change Healthcare finally starting notifications, but not yet to consumers. A press statement today from Change/UnitedHealth Group confirmed that the long process of notifications has started with hospitals, insurers, and other customers. Individuals and practices will not be notified until late July. Change confirmed that the Blackcat/ALPHV cyberattack exposed names, addresses, health insurance information, and personal information like Social Security numbers, but at the individual level investigation isn’t finalized. At this point, they have reviewed over 90% of impacted files and have not seen signs that doctors’ charts or full medical histories were taken. Technically, UHG has made the 21 June deadline stated in the Hassan/Blackburn Senate letter [TTA 19 June] but not within the 60-day HHS-OCR window, which opens them up to an HHS fine. After paying a cyberransom of $22 million in bitcoin and uncounted (to us) millions in rebuilding systems, HHS’ fine may look like the lesser cost of doing business. The Change website also contains a very carefully worded ‘HIPAA Substitute Notice’ that reads like a consumer data breach notification. AP via Yahoo! News UK   One wonders if there’s a fair amount of ‘buyer’s regret’ going on at UHG in fighting so hard to buy Change. Due diligence would have helped over that year-plus.

Update: The Centers for Medicare & Medicaid Services (CMS) announced earlier this week that the provider financial assistance program will be ending 12 July as billing activities have largely resumed. It has advanced over $2.55 billion in payments to Medicare Part A providers and $717.2 million to Part B providers. FierceHealthcare

Fundings this week:

Virtual maternity support platform Pomelo Care scored $46 million in Series B funding. Lead investors are Andreessen Horowitz (a16z) and First Round Capital with participation from Stripes, BoxGroup, Operator Partners, and SV Angel. Pomelo’s markets for virtual fertility, pregnancy and newborn care from preconception through a baby’s first year services are employers, health plans and providers. The company claims 3 million covered lives across 46 states through their commercial and Medicaid health plan partners. Release, Mobihealthnews

Telemental health provider Marigold Health now has an $11 million Series A. Marigold is structured as an anonymous social network where people with mental health and substance use conditions provide peer-based support. Lead investors for the Series A are Rock Health and Innospark Ventures. Additional participants are the Commonwealth Care Alliance (CCA), Wavemaker360, Stand Together Ventures Lab, Epsilon Health Investors, Koa Labs, VNS Health Plan and KdT Ventures. Their substance use disorder (SUD) programs are currently available to 25,000 members in Delaware, Rhode Island, and Massachusetts. The new funding will be used for expansion to at least four additional states by the end of 2025. Release (Marketwatch), Mobihealthnews

Humata Health, which has developed AI-based technology to automate prior authorizations for payers and providers, closed an unlettered $25 million funding round. Lead investors are Blue Venture Fund (representing the majority of BCBS plans) and LRVHealth (representing nearly 30 health systems and payers), with participation from Optum Ventures, .406 Ventures, Highmark Ventures, and VentureforGood. The funding will be used to broaden its generative AI technologies, expand their provider base, and begin to partner with payers and delegated entities. Humata bought the base prior authorization technology from Olive AI out of its bankruptcy [TTA 31 Oct 2023]. Its founding chairman and CEO is Jeremy Friese, MD, who had been Olive AI’s president for their payer business after selling Verata Health, also in the prior authorization automation area, to Olive.  Release, FierceHealthcare

News roundup: VA extends Oracle Cerner for 11 months; Amwell founders swap jobs; Alphabet’s Verily pivots to Lightpath with GLP-1, retiring Onduo; UnitedHealth hasn’t notified on Change breach

To no one’s surprise, the Department of Veterans Affairs (VA) extended its contract with Oracle Cerner for another 11 months. This is per the new contract relationship that started last year, resetting from the original five-year contract that started in 2018 to five one-year terms, with mandatory annual reviews and renewals [TTA 18 May 2023]. Technically, the contract expired in May but VA extended it for one month as discussions continued over the next one-year term. This second option period expiring May 2025, according to the VA release, is focused on the following for the EHR modernization (EHRM):

  • Supporting the existing six facilities with the Oracle Cerner EHR
  • Achieving the goals of the reset and driving towards future deployments
  • Increased accountability across a variety of key areas, including minimizing outages and incidents, resolving clinician requests, improving interoperability with other health care systems, and increasing interoperability with other applications to ensure an integrated health care experience
  • Supporting value-added services, such as system improvements and optimizations
  • Achieving better predictability in hosting, deployment, and sustainment
  • Fiscal responsibility 

The plan is to resume site deployments in FY 2025, likely in year 2025, after reset goals are met. Seema Verma, Oracle Health’s new executive vice president and general manager, said that “VA’s intent to resume deployments in the next fiscal year is a significant milestone that reflects the hard work our collective teams have done to improve the system today, as well as confidence in our shared ability to continually evolve the EHR over time to meet the needs of both practitioners and patients.” NextGov/FCW, FierceHealthcare, Healthcare Dive, Oracle release

Is there much choice for the VA in the matter? Not really. VistA can be updated but remains non-interoperable with the Military Health System’s (MHS) Cerner-Leidos EHR. But can Oracle Cerner be fixed up and debugged to work for VA’s vastly different needs and smoothly deployed within the contract duration? That jury is still out in the view of the VA and Congress.

The Brothers Schoenberg swap positions at Amwell. Roy Schoenberg, MD, MPH, will transition immediately from his role as president and co-CEO to move to executive vice chairman of Amwell’s board of directors. Ido Schoenberg, MD, will become the sole CEO. The brothers co-founded the company in 2006. Ido’s quote closing the release is interesting in demonstrating the shift from investment without profits to getting on the path to profitability:  “This transition represents a natural evolution for our company as we shift from a period of intense R&D investment to an operational focus aimed at achieving greater efficiencies, optimizing cash flow and delivering profitable growth while maintaining our dedication to enabling our clients’ aspirations.” Roy is credited with developing Converge which is their next-generation integrated platform. If Teladoc is finding it difficult to transition from the stand-alone, transactional, urgent care service they and Amwell pioneered, into an evolved market that has incorporated virtual capabilities into multiple types of care models, whither Amwell’s future? More thoughts in TTA 2 May, 9 April

Alphabet (Google)’s once-visionary Verily now jumps on the GLP-1 bandwagon with Lightpath. Verily’s latest pivot to the highly trendy weight loss area is termed as a metabolic solution as part of a “personalized chronic care solution for health plans and members”.  Lightpath will start as Lightpath Metabolic, a four-part program that includes Metabolic Intensive (diabetes management), Weight Loss Intensive, Metabolic Improvement, and Metabolic Achievement. The Verily platform integrates data from health records, connected devices, and other care points to deliver “personalized pathways, suggestions, and nudges to health plan members” virtually along with health coaches and an advanced licensed clinical team. The current virtual chronic care management platform, Onduo, will be retired by 2025.

Once upon a time (2021, sigh), Verily was Google’s skunk works for advanced health tech with Google Health being the marketing and merchandising arm for clinical and consumer products. Google Health was broken up in August 2021 and Verily faded into the Alphabet background with the occasional joint venture and clinical pilots, with Onduo being their most marketable product. Google seems to have little direction for Verily other than to keep it alive. And given the competition plus a greater understanding of the long term effects of the GLP-1 drugs in the weight loss area, the GLP bandwagon is up for a shaky ride in the next year. Release, FierceHealthcare

And very strangely, UnitedHealth Group hasn’t notified Health and Human Services’ Office of Civil Rights (HHS-OCR) about the ransomware data breach at Change Healthcare, nor the individuals affected. The notification to OCR is required under HIPAA to be within 60 days of the date of the incident. UHG is over the deadline by two months, calculating from 21 February. CEO Andrew Witty wilted before double-barreled Senate and House hearings in May and UHG lost a fight to put the notifications for the breach onto providers [TTA 5 June]. Senators Margaret Wood Hassan (D-NH) and Marsha Blackburn (R-TN) sent a joint letter on 7 June to Andrew Witty, CEO of UnitedHealth Group, urging him to send a breach notification letter that notifies OCR, state regulators, Congress, the media, and health care providers that it intends to complete all breach notifications on behalf of all HIPAA-covered entities, individuals and businesses affected, by 21 June. That’s Friday. UHG continues to maintain that they still do not know the extent of the breach. The Medical Group Management Association (MGMA) also sent a letter to Mr. Witty on 12 JuneDon’t hold your breath for UHG sending millions of letters. Becker’s, HealthExec

News roundup: Change responsible for data breach notices; 37% of healthcare orgs have no cybersec contingency plan; health execs scared by Ascension breach; CVS continues betting on health services; Plenful’s $17M Series A

HHS agrees with providers that the data breach notification is on Change Healthcare, not them. Health and Human Services’ Office for Civil Rights (OCR) moved quickly to formally change the FAQs that kicked off the 100+ provider letter [TTA 23 May]. Now “Covered entities affected by the Change Healthcare breach may delegate to Change Healthcare the tasks of providing the required HIPAA breach notifications on their behalf.” “Covered entities” in this case refers to the providers. Only one entity–Change or the provider–“needs to complete breach notifications to affected individuals, HHS, and where applicable the media.” Providers must contact Change Healthcare for the delegation. 

Chad Golder, general counsel and secretary at the American Hospital Association (AHA) said in their statement, “As we explained then, not only is there legal authority for UnitedHealth Group to make these notifications, but requiring hospitals to make their own notifications would confuse patients and impose unnecessary costs on providers, particularly when they have already suffered so greatly from this attack.” HHS notice, Healthcare Dive

Meanwhile, UHG still does not know the extent of the breach which started in late February. Knowing the extent of the breach is needed to start notifications. It has not formally notified HHS of the breach long past the 60-day mandated window (see #3 in the HHS FAQs). This may create an ‘unreasonable delay’ (see #6). Not all Change systems are back up either–see the Optum Solutions page that has plenty of red Xs.

Only 63% of healthcare organizations have a cybersecurity response plan in place, leaving 37% without a plan. This is based on a survey of 296 IT/data security/management executive respondents working at healthcare organizations in the US performed by Software Advice, an advisory and consulting firm. Other findings:

  • Nearly 1 in 3 have had a data breach in the last three years
  • 42% of practices have experienced a ransomware attack, and of those, 48% say the attack impacted customer data
  • 34% failed to recover data after the ransomware attack
  • 55% of medical practices allow access to more data than employees need to do their job which makes them more vulnerable to attacks
  • While 41% of data breaches are attributable to malicious hacking, another 39% are due to malware, 37% are due to social engineering and phishing scams, 36% are due to software vulnerabilities, and 30% are due to employee error.

It would have been helpful if Software Advice in its report had broken down the type of practices surveyed. Healthcare Dive

Meanwhile, healthcare executives were ‘scared’ by the Ascension Health breach, as they should have been. Katie Adams’ piece in MedCityNews explores reactions from five different C-suite hospital executives about the recent attack on Ascension. The IT and data officers are from MD Anderson, Yale New Haven Health, CommonSpirit Health, Allegheny Health Network, and UPMC. The overall take was that threats are more common than ever, bad actors are abundant and getting better (using tools that can make amateurs into pretty good “bad actors” via “LLM products and have them help you build ransomware code.”), managing weaknesses in third-party vendors that live in the cloud is a Herculean task, phishing, and the need for ‘government’ to be involved. 

This Editor notes that the rush for providers into generative AI, given this environment, is perhaps premature. Yet here they go; researchers from Mount Sinai’s Icahn School of Medicine used structured data, such as vital signs, and unstructured data, such as nurse triage notes, to develop models predicting hospital admissions using ChatGPT-4. It supposedly can learn from fewer examples than other machine-learning models currently used and use data from traditional models. Becker’s

Ascension is slowly coming back, now projecting that all their locations will have their EHRs restored by the week of 14 June. Currently, only Florida, Alabama and Austin are up and running. Ascension Rx retail, home delivery and specialty pharmacy sites are now open as well. They will have some ‘splainin’ to do to HHS OCR. Ascension update site

CVS is confident in the future of its retail health despite their struggles with Minute Clinics and Oak Street.  Despite the struggle of retail health clinics at other providers such as Walgreens/VillageMD and the shutdown of Walmart Health, Sree Chaguturu, MD, CVS Health’s executive vice president and chief medical officer, expressed complete confidence at a recent industry conclave, thINc360 – The Healthcare Innovation Congress. This is despite the closures of dozens of Minute Clinics in Southern California and New England [TTA 31 May] out of their 1,100 total plus that CVS seeking an investment partner for Oak Street [TTA 29 May]. Dr. Chaguturu returned time and again to the 10,000-odd CVS Pharmacy locations and their leverage within communities, leaning very hard on the 5 million people coming in daily and the ‘opportunity for their pharmacists to engage’. As a CVS customer at a small location, those busy pharmacists aren’t engaging with me unless I have a script to fill or need an OTC decongestant that’s on the state signoff list due to an ingredient. In fact, CVS locations have rather few people nowadays, including behind checkout counters. Then again, it was a meeting speech. FierceHealthcare

Concluding on a brighter note, Plenful’s Series A came in at a tidy $17 million. Plenful developed and markets an AI-assisted workflow-automation platform for pharmacy and healthcare operations, claiming that it automates over 95% of the work for disparate administrative workflows. Features include 340B audit, document processing, contracted rates optimization and inventory planning, and pharmacy cycle revenue and reporting. Founded in 2021, the company has already lined up some impressive clients. Lead investor TQ Ventures was joined by Mitchell Rales (cofounder and chairman of Danaher), Susa Ventures, Waterline Ventures, and Bessemer Partners, the lead for last September’s $9 million seed funding for a total of $26 million. Crunchbase, Mobihealthnews

News roundup: 100+ medical orgs pile on Change/UHG; Teladoc hit with second class-action suit; Congress demands Oracle EHR improvement–or else; Transcarent intros WayFinding; Centivo buys Eden Health

The fallout from the Change cyberhack hangs like smog over UHG. On Monday, the American Medical Association (AMA), along with about 100 other signatories from nationwide medical associations including CHIME and AHIMA, sent a strongly worded letter to Health and Human Services Secretary Xavier Becerra. It requested a clear delineation of responsibilities for breach reporting requirements created by the 21 February Change Healthcare ALPHV/Blackcat ransomware attack. Reporting is required by HHS’ Office of Civil Rights (OCR) under HIPAA.

Specifically, the AMA letter requested 1) more public clarity around reporting responsibilities to patients for the data breach and 2) that all reporting and notification responsibilities will be handled by Change Healthcare, not the providers. “OCR should publicly state that its breach investigation and immediate efforts at remediation will be focused on Change Healthcare, and not the providers affected by Change Healthcare’s breach”. To date, this doesn’t seem to be OCR’s position.

  • The AMA and signatory organizations maintain that it “is the responsibility of the covered entity which experienced the breach—UHG—to fulfill its obligations in regard to reporting the breach to OCR, notifying each affected individual, as well as any further HIPAA breach reporting requirements that may be applicable, such as notifying state Attorneys General and media outlets.”
  • OCR, on the other hand, has gone on the record in April as stating in their FAQs that “while the covered entity is ultimately responsible for ensuring individuals are notified, the covered entity may delegate the responsibility of providing individual notices to the business associate. Covered entities and business associates should consider which entity is in the best position to provide notice to the individual, which may vary, depending on the circumstances, such as the functions the business associate performs on behalf of the covered entity and which entity has the relationship with the individual.” (Providers can be considered business associates)

In other words, the providers want the full responsibility of contacting patients, state attorneys general, media, and others (e.g. class action lawyers) to be Change Healthcare’s. They do not want to be forced to contact their patients and, in all fairness, at this point do not know which patients were affected because they are not privy to Change Healthcare’s information. UHG has not yet produced a breach report to OCR. AMA letter to Becerra, Healthcare Finance News

When the stock falls, blame the marketing spend! The latest class-action lawsuit filed against Teladoc blames the company for spending money in digital and other media advertising promoting BetterHelp, their telementalhealth unit. The suit cites Teladoc’s public statements such as a “long runway” for BetterHelp’s membership growth and that spending would be inefficient due to the saturated category. Yet spending increased in 2023. The lawsuit charges that this directly deteriorated the company’s revenue, leading to a substantial fall in its stock price. Charged are Teladoc, and at the time CEO Jason Gorevic and CFO Mala Murthy. Stary v. Teladoc Health, Inc. et al., was filed on May 17 in the US District Court for the Southern District of New York. No response yet from Teladoc. Docket on Justia, Mobihealthnews

The House and Senate Veterans’ Affairs Committees jointly introduce legislation on VA’s EHR modernization. The Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act would require the Department of Veterans Affairs to exercise even greater oversight of the Oracle Cerner implementation in these areas:

  • The quarterly reports to Congress would include additional quality metrics on user adoption, employee satisfaction, and employee retention/turnover where the Oracle Cerner EHR is introduced. This adds to existing required reporting on spending and performance.
  • Regarding additional rollouts, the VA secretary must certify that the sites are ready. He also must furnish corroborating data to Congress “demonstrating that all facilities currently using the Oracle Cerner EHR system have recovered to normal operational levels.”
  • If there is no improvement (presumably to this standard) at Oracle Cerner locations within two years of the bill’s enactment, the program will be terminated.
  • VA must also report on the status of VistA with details about “the operation and maintenance costs and development and enhancement costs” of the software and “a list of modules, applications or systems” within VistA that VA plans to retire or continue to use. 

HIStalk 17 May, NextGov/FCW

‘Not for sale’ Transcarent introduces an AI-assisted platform, WayFinding. The platform designed for end users of Transcarent’s enterprise health navigator combines generative AI with instant access to care providers to integrate benefits navigation, clinical guidance, and care delivery on a single platform. The personalized guidance enables the member to find a provider, find out costs, and guides to the best clinical action to take next. It then connects them to medical professionals or provides direct access into digital point solutions. It integrates information on details of the employer plan, ancillary benefits, the member’s medical history, and connection to clinical specialists. There is no information in the overly padded release on when the new platform will be available or how it will be offered to existing and new customers. This follows on Transcarent’s $124 million Series D funding two weeks ago.  FierceHealthcare, Mobihealthnews, TTA 8 May

Centivo acquires Eden Health virtual care. The purchase price was not disclosed. Centivo, headquartered in Buffalo NY, is  a health plan for self-funded employers. Eden, also providing services to employers, is a concierge provider that offers through a mobile app primary care, mental health, and care navigation services, plus workplace pop-up clinics. Eden also has technology that connects providers’ EMRs to their app. Eden’s services will be fully integrated into Centivo, which will enable it to expand to 50 states and increase from its current 120 employer base to 160. The combined organizations cover about 2 million eligible patients in companies ranging from Fortune 100 size to small businesses. Eden’s CEO will serve as a senior advisor to Centivo, but there is no other indication of employee transition.  Release, FierceHealthcare

News roundup: UHG CEO’s Bad Day at Capitol Hill; Kaiser’s 13.4M data breach; Walgreens’ stock beatup; Cigna writes off VillageMD; Oracle Cerner shrinks 50%; Owlet BabySat gets Wheel; fundings for Midi, Trovo, Alaffia, Klineo

It was a Bad Day at Boot (Capitol) Hill for UnitedHealth Group’s CEO Andrew Witty. On May Day, he was the Man In The Arena facing two Congressional grillings–the first from the Senate Finance Committee in the morning, and the second in the afternoon from the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations. The precipitating event was the Optum/Change Healthcare data breach and system hacking by ALPHV/BlackCat, a disruption which is as of today not fully resolved.  Millions of patients may have had data stolen and exposed–a number that has yet to be determined, but an outcome for which UHG, while paying the ransomwaristes, has prepared. Already, the VA has notified 15 million veterans and families of that possibility.

This Editor will be linking below to multiple articles and Mr. Witty’s prepared testimony. Interested Readers can also refer to YouTube for extensive links to video testimony. Highlights:

  • Both houses criticized the slow response and amount of financial assistance given to providers after the shutdown of Change’s systems prevented (and still is preventing) timely claims processing and payment. While ‘near normal’ volumes of medical claims and 86% restoration of payment processing sounds good, that leaves a lot of wiggle room on over two months of totally disrupted processing and payment. The billion or so cited sounds impressive but much of this is in loans. Most practices and groups simply do not have the financial cushion or billing skillset to bridge this disruption, to pay back loans, or to bookkeep this.
  • Also criticized at this late date was UHG being unable to determine how many individuals had PHI exposed in the breach.
  • As to cause, the description of UHG finding that surprise, surprise, Change’s systems were way out of date, stored on physical servers versus the cloud, and used Citrix remote access without multi-factor authentication (MFA) was utterly savaged. According to Mr. Witty, ALPHV after days of knocking around got in on the one server that did not have MFA authentication.

The blunt fact is that UHG had close to two years (January 2021-Oct 2022) before the buy closed. Due diligence consisting of a full audit had to have been done on Change’s IT systems. They processed what UHG wanted to buy. In this Editor’s estimation, Job #1! for UHG should have been ensuring that Change’s systems were hardened, then upgrading to what Mr. Witty called UnitedHealth’s standards. This Editor will go further. A minimum requirement for the sale should have been security hardening. There was time before the closing.

Senator Thom Tillis, R-North Carolina, had the best riposte. He brought a copy of “Hacking for Dummies” to the hearing, highlighting MFA. I doubt he was much moved by UHG now bringing in cybersecurity company Mandiant to both investigate and harden their systems, nor by UHG having to pay ransom, without knowing whose data was compromised.

  • Beyond the breach, UHG was called ‘monopolistic’ by both Republican and Democrat Members. There were calls to break up UHG as not ‘too big to fail’. UHG has grown by acquisition and consolidation of services. As this Editor has speculated, this is likely coming to an end with the new, much more stringent Merger Guidelines. This sentiment paints a large, unmissable target on UHG’s back for aiming FTC’s and DOJ’s missiles. (DOJ also has a huge score to settle with UHG dating back to the failure to block the Change sale.)

By the end of the day, Mr. Witty looked quite the worse for wear–tie and collar askew, slightly sweaty, versus the perfect poses of the various Members. Becker’s, FierceHealthcare, Axios, HealthcareDive    Mr. Witty’s Senate testimony statement, House testimony statement

Speaking of data breaches, Kaiser Permanente reported a big one to Health and Human Services (HHS). This relates to ad tracker information shared with third-party advertisers such as Google, Microsoft, and X. Kaiser used it in secured areas of their website and mobile apps. Information disclosed could be name and IP. Kaiser reported it on 12 April but only disclosed on 25 April that 13.4 million records may have been affected. The ad trackers have since been removed. TechCrunch, FierceHealthcare 

Walgreens stock not recovering. April was WBA’s worst month in five years and May is no better, with the stock muddling around $17.50. The month slid around 18%. Their 52-week high was $33. As of now, CEO Tim Wentworth’s actions such as closing locations and writing down VillageMD haven’t convinced Mr. Market of WBA’s worth, but in fairness it’s early in his tenure. In the Insult to Injury Department, it was revealed that the IRS is seeking to claw back $2.7 billion in unpaid 2014-2017 taxes. Crain’s Chicago Business

Cigna is also writing down its interest in VillageMD. Almost forgotten is that in late 2022, Cigna invested $2.5 billion into VillageMD. They have now written down $1.8 billion of that ‘low teens’ ownership. The planned tie was connecting Village Medical into Evernorth, Cigna’s medical services area. It was also supposed to provide Cigna with an annual return on investment, but one assumes it did not. The writeoff threw Cigna’s Q1 into the red with a net loss of almost $300 million versus a prior year profit of $1.3 billion, despite a strong quarter that grew revenue 23% versus prior year to $57.3 billion. Healthcare Dive

Oracle Health has been successful–in shrinking Cerner by close to half. Records of employment at Cerner’s Kansas City-based operation have declined from 11,900 people in 2022 (Kansas City Area Development Council) to a current 6,400 (internal documents). Cerner itself reported 12,778 local full-time-equivalent employees in 2022. Oracle had multiple layoffs of Cerner affecting Kansas City workers and has consolidated multiple office buildings and campuses. Becker’s

In more cheerful news:

Baby monitor Owlet announced a strategic partnership with Wheel for Owlet’s BabySat. BabySat is Owlet’s FDA-cleared prescription vital signs monitor for infants 1-18 months. Wheel clinicians can now prescribe BabySat which enables parents to order BabySat from Owlet and other suppliers. With Wheel, BabySat also integrates with durable medical equipment (DME) suppliers who accept and can bill for the product through many insurance providers for partial or full reimbursement. Wheel is a virtual care platform and physician/nurse-practitioner online network available direct to consumer and to enterprises. Owlet release

And rounding up funding:

MidiHealth closed a $60M Series B funding. This was led by Emerson Collective with participation from Memorial Hermann, SemperVirens, Felicis, Icon Ventures, Black Angel Group, Gingerbread Capital, Able Partners, G9, and Operator Collective for a total of $99 million in funding. Midi provides virtual support for women going through peri- and full menopause. The fresh funding will help them expand national insurance coverage, hire and upskill an additional 150 clinicians by end of year, diversify service lines, and scale to care for 1 million+ women per year by 2029. Release

Trovo Health launched with $15 million in seed funding, led by Oak HC/FT. The NYC-based AI-powered provider task assistance platform will use the funding to build its technology platform, clinical operations, and leadership team. Mobihealthnews 

In the same roundup, NYC-based Alaffia Health scored a $10 million Series A round. This was led by FirstMark Capital with participation from Aperture Venture Capital. Alaffia creates generative AI solutions for payment integrity in health insurance claims operations, with the aim of eliminating insurance fraud, waste, and abuse for health plans, third-party administrators, self-insured employers, stop-loss carriers, and government agencies. Their total raise to date is $17.6 million. Paris-based Klineo also raised €2 million for its oncology clinical trials search platforms, assisted by AI, for the use of doctors and patients. BPIFrance and business angels participated in the round.