Early news roundup: Envision exits Ch. 11, splits; Walgreens’ new CIO; Philips’ $60M from Gates Foundation; more on Walmart-Orlando Health partnership; Cigna may sell MA business

November 8, 2023 | by

Staffing firm Envision Healthcare exits Chapter 11 bankruptcy, splits off AmSurg clinics. One of the Big Bankruptcies earlier this year has been reorganized, cutting $8 billion in debt by 70% and spinning off its AmSurg surgical clinics to new ownership. The hospital and physician staffing company was hurt as early as 2020 with shortages of available staff, then the pandemic which cut patient volumes, and conflicts with payers around out-of-network billing charges. The last put the company in conflict with the ‘no surprises’ patient protection billing law that took effect this year. One particular legal spat with UnitedHealthcare tied up both companies for years, but was won by Envision after an independent arbitration panel this past spring awarded Envision $91 million, finding that UHC breached its in-network contract. KKR, which had taken Envision private in 2018, lost $3.5 billion in equity, one of their largest corporate investment losses. Henry Howe, the company’s chief financial officer, takes over as interim CEO on 1 December as current CEO Jim Rechtin leaves to join Humana. Healthcare Dive  Background: TTA 12 May, 16 May   

Walgreens fills its chief information officer vacancy with the interim CIO. Neal Sample was appointed last Wednesday (1 Nov) as CIO and EVP, reporting to new CEO Tim Wentworth and joining the executive and IT governance committees. Sample was appointed last month as an IT advisor after CIO Hsiao Wang left suddenly on 2 October. Both Wentworth and Sample worked with each other at Express Scripts, with Sample holding both COO and CIO positions there, then departing for the CIO position at Northwestern Mutual. Walgreens release, Retail Dive

Philips receives an additional $44 million from the Gates Foundation for further Lumify Ultrasound System development. The total of $60 million in grants starting in 2021 was for the development of AI-enabled applications to improve obstetric care in low- and middle-income countries. The Lumify handheld ultrasound system assists frontline health workers, such as midwives, in interpreting obstetric images and identifying possible complications during pregnancy in hours versus weeks of training. The system’s Kenya trial was successful. The additional funding will be used to expand global adoption in underserved rural communities. Philips release  This follows Gates Foundation grants to GE Healthcare ($44 million) and Butterfly Network ($5 million) for easily deployed ultrasound and imaging systems to support low-income countries’ rural maternal health and respiratory scanning. Mobihealthnews

More on Orlando Health’s partnership with Walmart. Briefly noted here last week in Walmart’s release and reporting on Walmart Health’s new partnership with Centene’s Ambetter plan in Florida was the Orlando Health hospital partnership. This will coordinate care for patients admitted to the health system’s hospitals or who need specialty care. It is a first for Walmart as it has not previously partnered with local health systems on specialty and hospital care as an extension of its clinics. Eight of its 48 clinics are in the Orlando area. Becker’s Health IT 1 Nov, 6 Nov

Cigna is exploring a sale of its Medicare Advantage (MA) business. According to the exclusive report by Reuters (may be paywalled), Cigna is in early stages, at this point consulting with an investment bank. Cigna is not much of a player in the difficult state-by-state, county-by-county MA business, with 599,000 members as of 30 September, which is about 3% of their 19 million total insurance members. But it has been problematic, with Cigna recently paying CMS $172 million to settle allegations that it violated the False Claims Act by submitting incorrect data to obtain higher payments. By comparison, UnitedHealthcare and Humana have nearly half (47% or 14.5 million) of the national 30.8 million MA members (KFF). Becker’s

Monday roundup: Envision files Ch. 11, who’s to blame for Meta Pixel abuse?, CVS Health to shut clinical trials unit, Amino Health scoops $80M, DocGo flat but optimistic, Owlet way down in revenue

May 16, 2023 | by

What was envisioned last week came to pass for Envision Healthcare on Sunday. The hospital and physician staffing company filed for Chapter 11 reorganization five years after it was taken private by investment company KKR. At the time of that massive buyout, the value of the company was pegged at $10 billion. Things started to go south for Envision after 2020 with the pandemic drying up patient volumes for two years, with the added factors of regulations kicking in on ‘no surprise’ billing, inflation, staffing shortages, and major fights with health plans around out-of-network inflated charges plus a huge claims dispute with UnitedHealthcare [TTA 12 May]. Ironically, Envision won the main dispute with UHG; that $91 million won in arbitration in an insider’s view would have staved off the bankruptcy this year.

KKR will apparently lose its $3.5 billion equity in the company as $8 billion in debt restructuring takes place. What’s before the court is that the Envision staffing operation will be separated from the AmSurg surgical clinics. Senior lenders will have their debt rearranged into equity into one or the other company. Junior lenders, bondholders, and KKR will receive zero, or as we say locally, bupkis. It’s envisioned (sic) that the restructuring will take about three to four months.  Financial Times, Envision release

The hospitals, that’s who! If you believe Meta, it’s the hospitals that abused those poor Pixels, making them do things against their wishes to tattle all sorts of PHI and PII to Big Bad Meta which sends patients all those Nasty Intrusive Ads. Meta is being sued by parties from the ACLU to patients in class action lawsuits on how the Pixel was used on hospital patient portals and scheduling websites. Meta’s argument is that the health systems’ developers could but did not control how the ad trackers were used and that “Meta did not implement or configure” the Pixels used on the health systems’ websites. In fact, Meta claims that they have filtering tools that screen out sensitive data and that would alert the developer. “It’s ultimately the developer, not Meta, that controls the code on its own website and chooses what information to send,” according to the May 5 filing in that busy US District Court of Northern California.

This could influence outcomes in the multitude of lawsuits being filed against health systems like Kaiser Permanente, UCSF Health, and LCMC Health in New Orleans plus Willis-Knighton Health in northwest Louisiana (Healthcare Dive). If the District Court finds that Meta, and possibly other ad trackers such as those from Google, Twitter, or Bing were not inherently liable for personal health data violations that monetized PHI, then the health systems are 100% on the hook for the data breaches (or ‘wiretapping’ in a creative use of terminology). It also makes the potential paydays possibly less lucrative–in the eyes of this Editor, as Meta and Google have far deeper pockets than any ol’ health system. SC Media, Paubox   The Meta Pixel backstory here

CVS Health to shut its clinical trials unit by December 2024. CVS, like Walgreens and Walmart, jumped into the clinical trials business during the Covid-19 pandemic, seeing a need in the market with pharmaceutical companies and a ready-made, 100 million deep diverse base of patients among their pharmacy users. CVS cited to Healthcare Dive that the shutdown was to better concentrate on core business. Current active trials on the website include narcolepsy, rheumatoid arthritis, and kidney health. No disclosure as to profitability but CVS has a lot to digest with new buys Signify Health and Oak Street Health.

Amino Health’s $80 million funding is a bright spot in this sideways spring. With a digital guidance model that works with employers and health plans to help 1.6 million members navigate their care, their new funding will be used for technology scaling. Equity and debt financing were led by Transformation Capital, which will be joining the Amino board, and Oxford Finance LLC. Amino is being boosted by the Federal Transparency in Coverage (TIC) Rule which makes pricing disclosure a key part of plan navigation. Amino originally started with a direct-to-consumer model but shifted to enterprise, including brokers and third-party administrators. Amino’s total raise is now $125 million (Crunchbase). Mobihealthnews, Amino release

DocGo’s two services, mobile health and medical transport, essentially swapped revenue this quarter in a better-than-average picture. Their mobile health services area in Q1 fell 19% to $72.9 million from $90.1 million in Q1 2022, while transportation services grew 44% to $40.1 million from $27.8 million in Q1 2022. This added to total revenue of $113 million with a net loss of $3.9 million. Their 2023 revenue guidance remains at $500-$510 million with adjusted EBITDA guidance of $45-$50 million. 

What’s promising here is that it’s a SPAC that didn’t crack like practically every other. DocGo pointed out in their release that they have a backlog of $205 million in total contract value over approximately three years and they have doubled their RFPs. Their patient target for 2023 is 50,000. Share price today on Nasdaq ticked up to $8.77. Considering their high last year of $11.08, they are not doing badly in this time at all. Mobihealthnews .We last saw DocGo providing mobile clinics in a Tennessee pilot with Dollar General [TTA 24 Jan] which now is tied in with the state of Tennessee, plus a pilot in NY and NJ with Redirect Health. They provide services in 26 states and the UK.  

This Editor is trying to be as cheerful as the baby at left about baby sock/monitor Owlet, which has had a rough ride in the past two years. Their revenue dropped to $10.7 million in Q1 2023 versus $12 million in Q4 2022 and $21.5 million in Q1 2022. Owlet ended 2021 with a nastygram from the FDA that pulled their original Smart Sock off the market [TTA 4 Dec 2021] but rebounded early in 2022 with the Dream Sock and Dream Duo [TTA 16 Feb 2022] that avoided the claims that sent them into 510(k) Marketing Neverland.  Still, they were delisted by the NYSE in December 2022. On the positive side, Owlet wound up 2022 with $69.2 million in revenue and a good-sized private placement of $30 million in February [TTA 18 Mar]. It has submitted to FDA for two products, including the steep de novo climb on an enhancement to the Dream Sock. Now a much smaller company than it was last year, they have reduced operational expenses to $15.1 million from $24.1 million in Q4 2022 to get to breakeven by end of this year and to be relisted on the NYSE in the future. Having followed them since the early ‘telehealth for the bassinet set’ days of 2012-2013, this Editor wishes them bonne chance. Owlet release, Mobihealthnews

Week-end roundup: Cano Health’s $60M loss and divesting, Oscar Health exits CA, UCSF Meta Pixel lawsuit narrows, Syneos goes private for $7.1B, Envision nears Ch. 11, Australia’s A$429M EHR modernization funded

May 12, 2023 | by

Cano Health’s Q1 was not a cheerful one, what with a board fight, the Cano 3 resigning and nailing a long list of grievances to the door, and a new chairman of the board, Sol Trujillo, who specializes in turnarounds. The results bore out the Cano 3’s concerns, with a $60.6 million net loss versus 2022’s barely-there $100,000. Revenue increased 23% to $866.9 million but per member per month (PMPM) revenue fell 13%, driven by a higher proportion of non-Medicare members but partially offset by membership growth: 388,667 including 207,420 Medicare capitated members, an increase of 44% and 29% year-over-year. Adjusted EBITDA was only $5 million, compared to $29.2 million in Q1 2022. What’s being divested to improve cash flow are the proverbial ‘non-core assets’ which are outside of Medicare Advantage–a complaint of the Cano 3 who noted things like family self-dealing and a murky relationship with a Miami claims recovery outfit. Cano also raised 2023 forecasts for membership and total revenue, but no mention of growth in medical centers. Cano earnings release, Healthcare Dive, Digital Health Business

In other slimming-down news, Oscar Health will exit its exchange plans within Covered California at the end of the year. While they have 35,000 members, their medical loss ratios (MLR) are over 100% versus the desired 80%. (MLR, a key metric in exchange plans, is defined as the proportion of total paid medical service claims and all quality improvement activities together, then dividing that number by the total premium revenue minus all allowable deductions. New CEO Mark Bertolini says they will return when Oscar reshapes their product offerings and strategy. This Editor hears a heavy boot drop. Healthcare Dive

Lawsuits of health systems on Meta Pixel being used to send private patient information to Facebook and other third-party advertisers are now rolling through the courts. The class action against University of California San Francisco (UCSF) Health just got a little narrower. Judge William Horrick of the US District Court for the Northern District of California granted defendant UCSF Health’s motion to dismiss several plaintiff claims. As a public entity, UCSF argued that the “unjust enrichment” claims were invalid. ‘Jane Doe’s’ lawyers representing the class of patients have a deadline of 30 May to amend the breach-of-contract claim. Health systems caught up in the ad pixel mess should follow this closely, though Becker’s seems to be the only news coverage. Our coverage of Meta Pixel

And in other healthcare news from two ends of the spectrum:

  • Biopharma contract research organization (CRO) Syneos Health will be going private in a $7.1 billion deal.  Elliott Investment Management, Patient Square Capital, and Veritas Capital are leading the cash buyout for $43.00 per share, a tidy 24% premium to the 13 February closing price, which is a somewhat unusual delay but apparently due to heavy media speculation around it. Syneos was formed in the merger of two large CROs, InVentiv Health and INC Research, and as a public company has been on the share price roller coaster, though the category is considered to be highly attractive for investment to improve the odds of biopharma success.  The deal is expected to close in the second half of the year. Syneos release, Healthcare Dive
  • Healthcare staffing company Envision Healthcare envisions filing a Chapter 11 bankruptcy soon, according to a Wall Street Journal report. They are carrying about $7 billion in outstanding debt, ongoing and costly legal spats with UnitedHealthcare, and has had difficulty finding physicians and nurses that are contracted to augment hospital staff. Conflicts with payers center around out-of-network billing charges which are far above the customary and the ‘no surprises’ patient protection billing law that took effect this year. Investor KKR owns the company and reportedly has already written it down. Their EBITDA cracked from $1 billion in 2020 to about $250 million in 2022. FierceHealthcare, Healthcare Dive

And Down Under, the modernization of Australia’s health system EHR, estimated to cost A$429 million over two years, is now funded in the 2023-4 budget. The My Health Record (MHR) modernization will improve data sharing across service settings, sharing of pathology and diagnostic imaging information, and increase usage of MHR by allied health professionals. The budget also includes substantial fresh funding to the Australian Digital Health Agency (ADHA)–over A$325 million over four years and an ongoing A$80 million–and A$5.7 billion to Australia’s national Medicare program including strengthening primary care and urgent care. IT News (Australia)