Deal and news roundup, 17-18 Feb: Sharecare goes SPAC for hefty $3.9 bn valuation; Humana Care Support pilots; AliveCor, AstraZeneca partner on renal, cardiac; Current Health RPM in clinical trials

Sharecare, a free/paid app platform that enables users to consolidate all their health and wellness data in one location and use proprietary health management tools, is going the SPAC route with Falcon Capital Acquisition Corp. It will trade on NASDAQ under SHCR. Initial enterprise value is expected to be $3.9 bn with approximately $400 million in growth capital. Closing is expected to be in Q2 of this year.

Founded in 2010 by celebrity doctor Mehmet Oz, MD (now on the board and not in active management) and WebMD founder Jeff Arnold, the current CEO, Sharecare will also have an undisclosed investment by strategic partners Anthem and Digital Alpha. Anthem is looking at the AI value plus consumer engagement and personalized care. Helping to fund both the public equity and cash position is a fully committed private investment in public equity (PIPE) of $425 million at $10.00 per share which is below market value. Falcon Capital will retain about 20 percent of the company. Mr. Arnold will join the board and be retained as CEO. After the closing, Sharecare and Falcon will donate about $4 million in stock to Sharecare’s charitable foundation.

Sharecare sells the platform to enterprises such as providers, employers, health plans, government organizations, and communities, as well as individuals on their free apps. Release, FierceHealthcare, Becker’s

Rival health plan Humana is also adding to its care management tools with a pilot of the Humana Care Support program. The platform creates an integrated, personalized experience for members, including a multi-disciplinary care team and SDOH integration. The pilot targets select groups of Medicare Advantage members in Kentucky, Pennsylvania, and West Virginia with multiple chronic conditions, complex congestive heart failure, and diabetes, with multi-disciplinary care teams. Humana Care Pilot is built on Salesforce’s Health Cloud platform for viewing the patient’s medical history and integrating clinician workflows. Its analytics are powered by Microsoft’s Azure and Power BI. The goal is lowering costs and improving outcomes for this high-cost group of patients. If successful, the program will roll out to other markets this year. Humana release, FierceHealthcare

AliveCor, the developer of the KardiaMobile mobile ECG/EKG, and AstraZeneca are partnering on research for new disease management solutions in cardiovascular, renal, and metabolism (CVRM) therapeutic areas. This will use AliveCor’s monitoring system for blood potassium. The Kardia-K AI platform uses ECG/EKG neural network analysis to measure a patient’s potassium levels without a patient blood draw. Hyperkalemia (elevated blood potassium) is linked to renal issues and kidney disease as well as cardiac issues. Kardia-K received Breakthrough Device Designation status from the FDA to screen for elevated levels of blood potassium in September 2018, and was validated in a study with Mayo Clinic published in 2019. Release, Mobihealthnews

Current Health, a monitoring and care management RPM system for enterprise-level health organizations, announced its “Community” initiative to build diverse longitudinal datasets for decentralized clinical trials. Their platform is FDA-cleared and used at scale in phase III and phase IV drug trials by major pharmaceutical organizations for remote endpoint collection and for virtual trial delivery. Monitoring is performed through wearables and sent to the electronic data capture (EDC) vendor for the clinical research organization (CRO). Current Health is using Community for its own COVID-19 study to predict hospitalizations and inform clinical treatment. The study is recruiting US participants diagnosed with the virus in the last 48 hours. Current has locations in Edinburgh, London, Boston, and San Francisco according to their website. Mobihealthnews

Crime Does Not Pay–especially when defrauding Medicare of nearly $1 billion

Ocean’s 11 (or 13) It Ain’t. Back in October, the Department of Justice (DOJ) and other Federal agencies had what was dubbed the  National Health Care Fraud and Opioid Takedown. Many of the takedownees were ‘telemedicine’ fraudsters. Of the over $6 bn of fraud identified, $4.5 bn was specified as relating to ‘telemedicine’ with more than 86 criminal defendants located in 19 judicial districts [TTA 2 Oct 20].

The sentences are now rolling in for this and earlier actions. Becker’s seems to be the only outlet tallying those who will be fined and having a stay in Club Fed. The three ‘telemedicine’ convictions noted by this Editor to date, totaling $958 million, are:

  • Genetic testing fraud: The owner of Scott Global, an Orlando telemarketing call center, was convicted of eight counts and a $2.8 million fraud. Telemarketers would call Medicare beneficiaries soliciting their information for expensive cancer screening genetic testing, or CGx, telling them that it would be covered by Medicare. Mr. Scott then paid bribes and kickbacks to ‘telemedicine’ companies to get physician’s orders authorizing the tests. Becker’s Healthcare 12 Jan   DOJ release
  • Pharmacy fraud: Larry Smith, a Florida resident owner of two pharmacies and a related company, defrauded pharmacy benefit managers of $931.4 million by submitting bills for fraudulent prescriptions purchased from a telemarketing company. The telemarketers improperly solicited patient information, then got approvals from ‘telemedicine’ prescribers, and finally sold the prescriptions to pharmacies like Mr. Smith’s for a kickback. Mr. Smith faces up to 10 years in prison.

In a 2018 related action, HealthRight, a ‘telemedicine’ company, and its CEO Scott Roix pleaded guilty to conspiracy to commit healthcare fraud for their roles in the scheme, agreed to pay $5 million in restitution. Sentencing is scheduled for 25 October. Mihir Taneja, Arun Kapoor, Maikel Bolos, and Sterling-Knight Pharmaceuticals also pleaded guilty in December 2020, according to the Justice Department. Becker’s Healthcare 26 Jan   DOJ release

  • The absence of telemedicine–prescribing medication without a patient consult–was what landed New Jersey physician Bernard Ogon, MD, to 33 months in prison, pay restitution of $24.3 million, and forfeit an additional $75,000. He signed preprinted prescriptions and then sent them to specific compounding pharmacies involved in the conspiracy. Becker’s Healthcare 28 Jan  DOJ release

Certainly more to come. This Editor has also checked for any further actions in Humana’s suit against telehealth/telemarketing company QuivvyTech as reported last August, and there are none. Our original report here.

Anthem-Cigna merger lawsuit finally wraps with ‘No damages for you! Or you!’

Not with a bang, but a whimper and a large bill. The long, drawn-out (May 2017!) lawsuit and countersuit in Delaware Chancery Court between payers Anthem and Cigna ended with the decision by Vice Chancellor J. Travis Laster to refuse to award damages to either party in the litigation.

Cigna, which was seeking nearly $15 bn from Anthem, seemed to receive the worst of his judgment. In his decision (PDF), VC Laster stated that Cigna was unable to prove that Anthem breached the Efforts Covenants and in fact, Cigna sought to derail the deal by pulling back on integration efforts, thus itself breaching the covenants. Thus, Cigna was not entitled to the $1.85 bn breakup fee or additional damages. Anthem proved that they sought to complete the merger and Cigna did not, thus seeking $20 bn in damages. In counterpoint, Cigna was able to prove that the deal would have been blocked regardless of their actions to demo the deal.

VC Laster’s conclusion, “In this corporate soap opera, the members of executive teams at Anthem and Cigna played themselves. Their battle for power spanned multiple acts….Each party must bear the losses it suffered as a result of their star-crossed venture.” The testimony revealed the deep divisions and battle lines between both companies during the merger preliminaries, until the Federal courts and DOJ put paid to it.

Yet the denouement of this Merger Made In Hell may not be fini. Anthem said in a statement to Fierce Healthcare that it feels “this decision is in the best interests of Anthem and our stakeholders.” But a Cigna spokesperson said they are not finished and considering a potential appeal. “We are pleased that the Court agreed with us that Cigna did not cause the merger to fail. We continue to strongly believe in the merits of our case, and we are evaluating our options with respect to appeal.” Certainly not the peaceful-in-public parting after the Federal denial of their merger by Aetna (acquired by CVS) and Humana (still in play).

The chief beneficiaries of this three-year drama? The law firms listed on page 1 of the opinion. Also Wall Street Journal (paywalled in part).

QuivvyTech: a ‘telehealth’ company, sued by Humana in telemarketing scheme (US)

It was inevitable–the first alleged fraud and lawsuit involving a ‘telehealth’ company. The interestingly named QuivvyTech, which has styled itself as a telehealth company with “virtual care in general medicine, mental health, and complex care”, has been sued by insurance giant Humana. The grounds are that QuivvyTech telemarketers cold-called Humana members, who are generally members of Medicare plans, asked them about common ailments, and claimed they were working with Humana. They then recorded information that was sent to QuivvyTech physicians who would prescribe the members pricey and unnecessary creams (content undisclosed) fulfilled by co-conspirator pharmacies with QuivvyTech. The physicians listed in the suit electronically signed prescriptions for the members without reviewing patient history or having a prior relationship with the patient.

Humana not only is alleging harm in the payer-member relationship, but also lost millions in fraudulent claim payments for visits and medications. 

The lawsuit by Humana seeks treble damages, plus interest and fees, from QuivvyTech. It was filed in the US Southern District of Florida as many of the scammed members lived in Florida. QuivvyTech is based in Boca Raton.

Defendants in the suit include Frank Michelin, associated with QuivvyTech; Reliable Medical Supplies and Reliable Document Solutions, a telemedicine company with about 200 physicians; and physicians Jeffrey Mahon, MD, Elie Hercule, MD, Samuel Teniola, MD, Louis Mojicar, MD, Ananda De Silva, MD, and Jeffrey Stern, MD.

One wonders where QuivvyTech obtained Humana members’ phone numbers and information. 

QuivvyTech is still recruiting for physicians on job boards such as ZipRecruiter and StaffPhysicians.com. Becker’s Hospital Review, Healthcare Finance, Fierce Healthcare

News roundup: Philips allies with Humana for pop health, Dexcom’s outage outrage, Halamka ankles Lahey for Mayo, Google and NHS Wales changes, Agfa’s health sale, Victrix/WhatsApp, more

Insurer Humana is identifying high-acuity and chronic CHF Medicare Advantage members and deploying two support programs utilizing Philips PERS and remote patient monitoring (RPM) systems. The first program identifies at-risk older people with chronic conditions and offering them Philips Lifeline with AutoAlert, Lifeline’s fall detection technology, and their CareSage predictive analytics. Philips Lifeline is already offered in select Humana Medicare Advantage plans. The second is a pilot with telehealth RPM to monitor a select group of CHF patients. This will use a Philips interactive tablet and connected measurement devices for care teams to actively monitor congestive heart failure patients. The rationale in the press release is centered on population health management, quality of care, and positively influencing patient outcomes, with “more efficient resource utilization” a/k/a lowering cost of care. Philips release.

Health tech is great, when it works–and Dexcom found out how serious it can get when it doesn’t. Dexcom, a continuous glucose monitoring system, experienced a server outage over the US Thanksgiving holiday weekend into Monday. It knocked out its updates in the Follow feature, frequently used by parents to monitor Type 1 diabetic children, and those with artificial pancreas devices that adjust insulin based on monitored BG levels. Dexcom was not only blasted by users on the server outage, which they attributed to ‘overload’, but also on its communications of the problem to users which depended on Facebook postings and not on real-time direct contacts or messaging. It was a ‘big surprise’ to their CEO, who also dismissed the possibility of a data breach, which seems a bit premature. Both Google and Microsoft provide cloud and tech services to Dexcom. CNBC 12/2, 12/3

Comings and goings: HIT pioneer, strategist, and general guru John Halamka is following the AI Star, leaving Boston’s Beth Israel Lahey Health to head up a machine learning/AI initiative at the Mayo Clinic in Minneapolis. Mayo this fall announced a 10-year high-level partnership with Google Cloud to store patient data and analysis. Modern Healthcare  According to the Healthcare IT News article, he’ll be returning on weekends to the Bay State to his 250-acre working farm….Also moving on to Google Health is Facebook’s Hema Budaraju, a product management director. Business Insider has annoyingly hid the news behind its paywall, leading to speculation in Mobihealthnews that she will be engaged in Google’s “social and environmental impact” efforts as she was at FB…And speaking of Google, founders Larry Page and Sergey Brin are stepping down at long last from active management. Google CEO Sundar Pichai will now be running Google and its corporate parent, Alphabet. See their letter on the GoogleBlog.DigitalHealth reports on changes at the NHS Wales Informatics Service. Helen Thomas is now interim director as NWIS director Andrew Griffiths is departing this month. NWIS is also transitioning to a new Special Health Authority….Agfa’s Healthcare Information Solutions and Integrated Care, plus their imaging division, are definitely going to Italy’s Dedalus Holdings S.p.A. for €975 million. It awaits approval from various authorities, their employee groups, and the usual closing conditions. Release, DigitalHealth.

UK healthcare analytics company Victrix Socsan has signed a licensing agreement last month with WhatsApp. Victrix will use Whats App for communications with beneficiaries as part of their furnishing proactive preventive care services and provide secure information. Release.

News and event roundup: Amazon PillPack, Humana joins CTA, NH’s telemedicine go, Fitbit Lives Healthy in Singapore, supporting Helsinki’s older adults, events

Now that we are past the unofficial end of summer, it’s time to spin that lasso and rope us some news.

Amazon’s PillPack loses a critical data partner. Electronic prescriptions clearinghouse Surescripts terminated their data contract with ReMy Health, which supplied PillPack with information on patients’ prescriptions. Surescripts found fraud in several areas of their relationship with ReMy Health including medication history, drug pricing, and insurance billing. Now PillPack has to obtain it the old-fashioned way–by asking the patient. This can lead to errors and inaccuracies in things like dosages and whether a drug is brand-name or generic. Now PillPack, in the lurch, is seeking a direct relationship with Surescripts. Seeking Alpha, CNBC

Health plan Humana is the first payer to join the Consumer Technology Association (CTA). Humana has been building up his data analytics and digital health capabilities with new ‘studios’ in Boston and hiring USAA’s CTO.  It’s piloting an app for Medicare Advantage patients to connect them with pharmacists and medication management via Aspen RxHealth plus working on a virtual digital primary model with telemedicine provider Doctor on Demand. Fierce Healthcare

New Hampshire is joining the telemedicine reimbursement bandwagon, with its legislature and Gov. Sununu approving primary care providers and pediatricians to bill Medicaid and private insurance for telemedicine visits starting in January 2020. This also ties into rural telehealth. AP, Mobihealthnews

Internationally….Fitbit is partnering with Singapore’s Health Promotion Board (HPB) for the Live Healthy SG behavioral change program, based on the Fitbit Premium program, starting in late October. Mobihealthnews A-P   In Finland, Digital Service Center Helsinki is creating digital tools and virtual care systems to enable older adults to safely and independently live at home, including socialization to prevent loneliness. It’s a significant challenge as over 22 percent of Finland’s population is over 65. Mobihealthnews Europe-UK

Events:

The 9th International Digital Public Health Conference series (#DPH2019), 20-23 November, Marseille, France. This conference is billed as the digital health partner of the 12th European Public Health Conference and brings together the areas of public health, computer and data science, medtech, and NGOs. Conference information here.

Aging 2.0 New York Global Innovation Showcase 4 December, NYC. One of a series of global Aging 2.o events, startups will present aging-focused innovations. Want to pitch? It’s still open–apply here. Register to attend here. Additional information on this and on CREATE’s Design for Older Adults Workshop on 21-22 October at Weill Cornell is here.

 

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

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

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

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

News roundup: Walgreens Boots-Microsoft, TytoCare, CVS-Aetna moves along, Care Innovations exits Louisville

Walgreens Boots finally does something. Their teaming with Microsoft to migrate their IT infrastructure to the Azure platform will eventually lead to “more personalized care experiences from preventative self-care to chronic disease management. WBA will leverage the cloud for wellness and lifestyle management programs.” It was important enough to both companies to have a photo op with twin CEOs: Walgreens Boots’ Stefano Pessina and Microsoft’s Satya Nadella. The ‘consumerization of healthcare’ and ‘transforming healthcare delivery’ phrases liberally sprinkled throughout the article and the press release are today’s prevalent clichés, as ‘synergy’ was the buzzword of say, 1999. Healthcare IT News, CNBC  In the long run, this IT overhaul may actually mean more to their customers than, say, the Amazon-JP Morgan-Berkshire Hathaway hydra.

A vote of confidence in diagnostic telehealth pioneered by young Israeli company TytoCare. They added $9 million to their Series C from investors including Sanford Health, Itochu and Shenzhen Capital Group (and its affiliates). This adds to last year’s round led by Ping An Global Voyager Fund for a total Series C of $33.5 million. TechCrunch. TytoCare also was named one of Wired’s Best of CES (CBS TV video, at 1:35) and earlier this month announced the integration of Health Navigator’s symptom checker into their system.

The judge says ‘No Delay For You’! In the CVS-Aetna hearing, Federal Judge Richard Leon refused to give the Department of Justice any more time to submit comments in the CVS Health and Aetna merger case. The deadline remains 15 February despite the government shutdown furloughing much of the antitrust division. Judge Leon is reviewing the decree under the Tunney Act requirement that the merger meet the public interest. Healthcare Finance

Care Innovations ankles Louisville. A modest and mainly paywalled item in Louisville Business First may point to something larger at Care Innovations. After two years of operation and a much-touted expansion to one of Louisville’s better addresses, the telehealth/RPM company has quietly vacated its 7,200 square foot space at Brown & Williamson Tower and pulled its operations from the city. Reporters from the publication were unable to obtain a statement from Care Innovations, which is now in Folsom, California, closer to majority owner Intel. At the time of their Louisville expansion in April 2017 (still on their website), Care Innovations received a $500,000 KBI tax incentive to create 24 high-paying jobs, which now are departed. It is ironic as Louisville is a health hub dominated by insurer Humana but has successfully campaigned for health tech. Last July [TTA 17 July], CI sold its Validation Institute and their VA win disappeared from their website. Of late, there has been no news from the one-time Intel-GE partnership.

News roundup: Walmart and Microsoft AI, are derm apps endangering public with 88% skin cancer diagnosis?

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2017/12/Lasso.jpg” thumb_width=”150″ /]Walmart and Microsoft partner to change the retail experience via AI. The five-year agreement will switch over applications to the cloud and will affect shipping and supply chain. It’s projected in Healthcare Dive that the impact will be in healthcare as well. Microsoft announced last month that it is forming a unit to advance AI and cloud-based healthcare tools. The landscape is under extreme pressure in retail and healthcare delivery, and Walmart needs to ready for future moves which will certainly happen. Walmart is rumored to be interested in acquiring Humana and is currently working with Emory Healthcare in Atlanta. Then there is CVS-Aetna, Cigna-Express Scripts, Google, and (looming above all) Amazon. (Though you can tuck all the years of Amazon’s profits into one year of Walmart’s.)

The ITV News headline grabs attention — but are dermatology apps really endangering the public when teledermatology can help diagnose 88 percent of people with skin cancer and 97 percent of those with benign lesions? A University of Birmingham-led research team did a metastudy of the literature and found three failings: “a lack of rigorous published trials to show they work and are safe, a lack of input during the app development from specialists to identify which lesions are suspicious and flaws in how the technology analyses photos” particularly for scaly or non-pigmented melanomas. But did access to these apps encourage early diagnosis which can lead to up to 100 percent five-year survival? Of course review is required as recommended by the study, but this last factor was not really examined at the British Association of Dermatologists’ annual meeting in Edinburgh. University of Birmingham release with study abstract

Department of Justice won’t challenge CVS-Aetna merger: report

DOJ, stay away from our doors! The $69 bn CVS Health and Aetna mega-merger looks like it will go sailing down that river, if Mr. Market is right. Shares in both companies enjoyed a nice bump on today’s report that the DOJ won’t challenge this merger. The local Hartford Courant is relieved that Aetna plans to stay in their longtime HQ city (since 1853), conveniently omitting their long-standing plan to set up a big shop in NYC. CNBC

What a difference from a year ago when two mega-mega-mergers, Aetna-Humana and Anthem-Cigna, were shot d0wn–nay, riddled with bullets–in the Senate and in two courts [TTA 9 Feb 17]. Cigna is still living with the hangover of their bad breakup with Anthem, with a fight over a nearly $1.9 bn breakup fee [TTA 17 May 17] continuing in the Delaware Chancery Court in 2019.  Cigna nixed any other insurers in a horizontal merger and sought out Express Scripts, a pharmacy benefits manager (PBM) which was reeling a bit after its largest client (coincidentally) Anthem departed. Anthem sued its PBM, Express Scripts, for $15 billion, alleging the PBM overcharged it by $3 billion annually The merger will cost them over $550 million in transaction cost and that is just the beginning. That $1.9 bn would sure come in handy. Modern Healthcare 

Is the Amazon Effect good or bad for consumers–and health tech?

Your busy Editor, who has been on business assignment this past month, has noticed the relative quiet around the subject of How Amazon is Rattling Healthcare. We’ve already noted here the retail and pharmacy/pharmacy benefit effects with CVS-Aetna, Albertsons-Rite Aid, and Cigna-Express Scripts. Aside from the bottom line, and Cigna finally closing a gap with other insurers with pharmacy benefit management services (PBM), is it good for the healthcare consumer as promised? 

Max Nisen’s article in Bloomberg Gadfly (sic) says ‘not so fast’. His argument is as follows:

  • Companies are largely following the lead of UnitedHealth and its Optum units, which integrate not only insurance and PBM but physician groups and analytics.
  • Deals will continue. There’s other insurers like Anthem, Humana, and the regional Blues; urgent clinics like CityMD, AtlantiCare, and MedExpress. Looming above all with clinics and retail pharmacies is Walgreens Boots and on the retail side, other supermarkets like Publix and Ahold Group.
  • Consolidation means fewer alternatives, competition, and thus less downward pricing pressure for both providers and consumers, as options decrease into what resembles a closed system. The merged companies will have debt to pay off, with pressure to pay off lenders and shareholders.

All this is regardless of what Amazon does with JP Morgan Chase and Berkshire Hathaway. Their admirable, seemingly altruistic reasons for this joint venture, in this view, has multiple unintended consequences and negative effects for ordinary folk–and doctors.

As for healthcare technology, when a Big Trend takes the air out of the room–EHRs, ACA, Watson/big data, even wearables, IoT and Big Data– more mundane everyday tech like remote patient monitoring and telecare, which depend on integrating into  healthcare/wellness/chronic care management systems and reimbursement (by those same insurers), tend to suffocate. 

Also of interest: Cigna may be too late to the PBM party (InvestorPlace)

CVS-Aetna: the canary says that DOJ likely to review merger–plus further analysis and developments

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2017/12/canary-in-the-coal-mine.jpgw595.jpeg” thumb_width=”150″ /]The canary is still tweeting. News reports indicate that the US Department of Justice (DOJ) will be in the lead reviewing the CVS acquisition of Aetna. This should be no surprise to our Readers. This Editor’s first analysis noted regulatory necessity and earlier this week, more explicitly predicted either the Federal Trade Commission (FTC) or the DOJ would be reviewing.

The New York Post’s Beltway sources (for ex-US readers, it’s the mass market News Corp. paper/site) are talking up DOJ:

President Trump’s Department of Justice appears to be the agency that will review CVS Health’s $69 billion merger with Aetna, sources tell The Post. While the decision is not yet final, the move would not be good news for the merging parties, sources said. “I think they would prefer it to be at the Federal Trade Commission,” one Washington, DC, source said.

The article explains that it’s a tossup as to bailiwicks–FTC reviews retail and drugstore mergers, DOJ insurance mergers. A sound but (by CVS) unwelcome reason for DOJ to review the merger is their familiarity with Aetna after DOJ opposing its failed merger with Humana in Federal court less than a year in the past. Their expertise would be wasted and politically, a cup that FTC would wish to pass inasmuch they are also short on commissioners.

As the Third Century Greek philosopher Sextus Empiricus stated, ‘The mills of the gods grind slowly, but they grind small’ (or ‘exceeding fine’ in more modern citations), which means that justice, at least in the Federal definition, will be served eventually.

  • The Trump Administration has let DOJ question the AT&T/Time Warner merger on antitrust reasons up, down, and sideways, to the point where it is nearly derailed. Much the same can be expected here.
  • The businesses create a new type of healthcare system. Expect HHS to have a say.
  • Congress is already demanding hearings, which given the short time to Christmas break will likely be January. 
  • What may help Aetna’s cause is that the merger with Humana was a friendly one; the decision, at least in the press, was accepted with grace. 

But as wags have said for at least two centuries, you can always tell the pioneers by the arrows in their back. When you’re redesigning the Conestoga Wagons, it has to be expected–which is why the experts gathering here in NYC over the past week have had not much to say about it to date.

Certainly it has been a downer for investment pickers, though both companies had significant profitability challenges facing them in the future. We refer here to several articles in Seeking Alpha where it’s predicted that the acquisition will boost CVS’ growth, but saddle it with huge debt: $45B in new debt, $21B in new equity, plus using $4B in available cash. Are they overpaying? Will it reduce internal cost and boost profitability? Will it do what they say they’ll do, which is to bend the cost curve down by start-to-finish engagement with customers? What pieces are missing? And time is a critical factor–how long this will take to realize is not projected. If you like stock and value charts and graphs, here’s the place. Seeking Alpha (by author): Ciura, Arnold, Ward

Other retailers will have their say. We’ve noted earlier that the vast supermarkets like Publix, Wegmans, Shop Rite or Ahold (Stop & Shop, Giant) are likely looking at opportunities with logical alliances or buy-ins to insurers like Oscar, Clover, Bright Health, or the smaller Blues. Target is already allied with CVS for their in-store drugstores. And then there is retail/online giant Walmart. The Wal-Martians need plenty of healthcare and Humana, based on local Louisville-area reports, is in play after not merging with Aetna.

Looming over all this is Amazon. A little-noticed report in Becker’s from July indicated that their 1492 unit has set about extracting data from legacy EHRs and to build a telehealth platform on Amazon hardware such as Echo. Already noted has been their buying of pharmacy licenses in various states. None of which can make any of the usual healthcare suspects happy.

Analysis of the CVS-Aetna merger: a new era, a canary in a mine–or both?

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2017/12/canary-in-the-coal-mine.jpgw595.jpeg” thumb_width=”150″ /]This Editor has been at two healthcare conferences in the last four business days (with tomorrow being a third). They should be abuzz about how the CVS-Aetna merger may transform healthcare delivery. To her surprise, there’s been a surprising lack of talk. There is a certain element of ‘old news’, as the initial reports date back five weeks but the sheer size of it ($240bn combined future value, $69bn purchase, an estimated $750 million in near-term synergies), being the largest health insurance deal in history, and the anticipated effects on the health delivery model normally would be a breaking news topic. To this Editor, it is a sign that no one truly knows what to make of it, and perhaps it’s too big–or threatening–to grasp for provider and payer executives especially.

For an overview of what we saw at the time as reasons why and possible competitor reaction, Readers should look back to our original article [TTA 28 Oct]. It’s being presented by both companies as a vertical merger of two complementary organizations, which already were moving towards this model, integrating their different services into “America’s front door to quality health care” (CVS CEO Larry Merlo)–a lower cost setting that saves premium dollars and brings integrated care to consumers’ doorsteps.

CVS brings to the table huge point of care assets: 9,700 pharmacy locations, 1,100 MinuteClinics, Omnicare’s senior pharmacy solutions, Coram’s infusion services, and the more than 4,000 CVS Health nursing professionals providing in-clinic and home-based care. Aetna has about 23.1 million medical members, 14.5 million dental members, and 15.2 million pharmacy benefit management (PBM) services members. Aetna also has a wealth of advanced data analytics capabilities through two subsidiaries, ActiveHealth Management and  Medicity’s health information exchange technology.

Seeking Alpha has an intriguing POV on this entry into a ‘new era’: that both CVS and Aetna consider this to be a long-term reshaping of their business model under the threat posed by Amazon, and are willing to do this despite little short-term financial benefit for either company. The problem as the writer sees it: execution. This is re-engineering care on a national scale, and its benefits are based upon combining intangibles, a murky area indeed especially in healthcare. Time is also a factor, as Amazon is getting pharmacy licenses in multiple states, and is rather an expert at combining intangibles.

Does it signal that the approach to a ‘new era’ in healthcare is accelerating? If this is a preview, 2018 will be extremely interesting. Our ‘canary in the coal mine’ may tweet–or fall over on its perch, asphyxiated.

Some additional points to consider: (more…)

CVS’ bid for Aetna–will it happen, and kick off a trend? (updated)

We have scant facts about the reported bid of US drugstore giant CVS to purchase insurance giant Aetna for a tidy sum of $200 per share, or $66 billion plus. This may have been in development for weeks or months, but wisely the sides are keeping mum. According to FOX Business, “an Aetna spokesperson declined to chime in on the reports, saying the company doesn’t “comment on rumors or speculation” and to Drug Store News, a CVS Health spokesperson did the same. Aetna’s current market cap is $53 billion, so it’s a great deal for shareholders if it does happen.

Both parties have sound reasons to consider a merger:

  • CVS, like all retailers, is suffering from the Amazon Effect at its retail stores
  • Retail mergers are done with the Walgreens Boots AllianceRite Aid merger going through considerable difficulties until approved last month
  • The US DOJ and Congress has signaled its disapproval of any major payer merger (see the dragged-out drama of Aetna-Humana)
  • It has reportedly had problems with its pharmacy benefit management (PBM) arm from insurers like Optum (United HealthCare), and only last week announced that it was forming a PBM with another giant, Anthem, called IngenioRx (which to Forbes is a reason why this merger won’t happen–this Editor calls it ‘hedging one’s bets’ or ‘leverage’)
  • Aetna was hard hit by the (un)Affordable Care Act (ACA), and in May announced its complete exit from individual care plans by next year. Losses were $700 million between 2014 and 2016, with over $200 million in 2017 estimated (and this is prior to the Trump Administration’s ending of subsidies).
  • It’s a neat redesign of the payer/provider system. This would create an end-to-end system: insurance coverage from Aetna, CVS’ Minute Clinics delivering care onsite, integrated PBM, retail delivery of care, pharmaceuticals, and medical supplies–plus relationships with many hospital providers (see list here)–this Editor is the first to note this CVS relationship with providers.

We will be in for more regulatory drama, of course–and plenty of competitor reaction. Can we look forward to others such as:

  • Walgreens Boots with Anthem or Cigna (currently at each others’ throats in Delaware court
  • Other specialized, Medicare Advantage/Medicare/Medicaid networks such as Humana or WellCare?
  • Will supermarkets, also big retail pharmacy providers, get into the act? Publix, Wegmans, Shop Rite or Ahold (Stop & Shop, Giant) buying regionals or specialty insurers like the above, a Blue or two, Oscar, Clover, Bright Health….or seeking alliances?
  • And then, there’s Amazon and Whole Foods….no pharmacy in-house at Whole Foods, but talk about a delivery system?

Also Chicago Tribune, MedCityNews.

UPDATED. In seeking an update for the Anthem-Cigna ‘Who Shot John’ court action about breakup fees (there isn’t yet), this Editor came across a must-read analysis in Health Affairs 

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Louisville’s Thrive Center showcases senior care technologies (KY)

Louisville, Kentucky is not the place our Readers would put at the top of their minds when thinking about assistive technologies for older adults, but the debut last week of The Thrive Center may change that. It’s a public-private partnership between the Commonwealth of Kentucky and Louisville Metro with private technology and senior living companies. It showcases technologies transforming senior care on a permanent, updating basis and demonstrated in use. 

The Center includes in their 7,500 square foot setting Samsung technologies integrated into a full-size kitchen, bathroom, living room and bedroom; AppliedVR virtual reality headsets; headphones from Eversound; brain fitness software from Posit Science; and music-as-medicine solutions from SingFit and wellness apps from EVŌ. The opening theme is assistance for memory care, which implies that the exhibits will be shifted to different themes in the future.

Companies which helped to establish Thrive include CDW Healthcare (IT), Samsung, Intel, Ergotron, Lenovo, HP/Aruba, Kindred Healthcare (post-acute care) and skilled nursing provider Signature HealthCare. Kindred and Signature are located in Louisville, which is a healthcare hub of the mid-South. It is also the headquarters of Humana and an operations center for Care Innovations–both notably absent from the partner list. CDW releaseSenior Housing News, Thrive Center website, Thrive Center release.

The End or Beginning? Anthem ends Cigna merger, won’t pay breakup fee, seeks damages (updated)

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2017/05/The-End-Pic-typewriter.jpg” thumb_width=”175″ /]Updated. Anthem on Friday 12 May beat Delaware Chancery Court’s Judge Travis Laster’s ticking clock [TTA 11 May], and finally, formally called off its merger with Cigna. Instead of sighs of relief and seeking oblivion in a few bottles of adult beverages, Anthem still won’t stop and let Cigna go. Anthem now refuses to pay the breakup fee per their agreement, claiming once again that Cigna sabotaged the merger, and wants blood from that rock. From the Anthem announcement:

In light of yesterday’s decision and Cigna’s refusal to support the merger, however, Anthem has delivered to Cigna a notice terminating the Merger Agreement. Cigna has failed to perform and comply in all material respects with its contractual obligations. As a result, Cigna is not entitled to a termination fee. On the contrary, Cigna’s repeated willful breaches of the Merger Agreement and its successful sabotage of the transaction has caused Anthem to suffer massive damages, claims which Anthem intends to vigorously pursue against Cigna. (Editor’s highlight)

Now we have Anthem seeking damages from Cigna, which is a matched set with Cigna’s Funny Valentine of 14 February adding over $13 bn in damages to recoup the unrealized premium that shareholders did not earn as a result of the merger failure. Anticipating Anthem’s position even at that time, they flipped a wicked backhand in their statement:

Anthem contracted for and assumed full responsibility to lead the federal and state regulatory approval process, as well as the litigation strategy, under the merger agreement. Cigna fulfilled all of its contractual obligations and fully cooperated with Anthem throughout the approval process.

Our Readers will also recall that in March, Cigna joined with Anthem in supporting Anthem’s appeal to the DC Court of Appeals, an unusual move in this light, but one that further reinforced their non-saboteur ‘we’re just innocent victims here’ position. Cigna has not yet publicly responded. The AMA cheered its apparent complete victory in the name of doctors and patients.

They hate each other and have from the start. The real victims here are the policyholders–patients–of both companies, with both companies distracted by a legal battle. How different they are from both Aetna and Humana, which (at least publicly) politely ended all efforts after the merger denial, paid out their breakup, and went back to business, which right now presents challenges with ACA hitting the long-predicted Actuarial Brick Wall. (Aetna exiting ACA individual exchange plans in 2018)

Judge Laster’s plans for a restful summer on Delaware’s beautiful beaches and bays are likely to have gone the way of the mouse in Robert Burns’ poem ‘To A Mouse’ (stanza 7). He is not alone in Indianapolis or Bloomfield, Connecticut:

But Mousie, thou art no thy-lane,
In proving foresight may be vain:
The best laid schemes o’ Mice an’ Men
Gang aft agley,
An’ lea’e us nought but grief an’ pain,
For promis’d joy!

See you in court! Fortune, Modern Healthcare, Healthcare DiveInterested in the previous details? See our coverage here, including our take on ‘whither the policyholders (patients) and corporate buyers’.