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

December 19, 2024 | by

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.

Now CVS Health may be reviewing ‘options’–including a possible breakup–report

October 1, 2024 | by

Perhaps CVS needs to take a medication for Corporate Indigestion. It turns out that CVS did not entirely avoid the agita that is sickening Walgreens. Instead, it has other reasons. Reuters reported that according to their sources (unnamed), their management, board, and financial advisers are exploring ‘options’ that may lead to a partial breakup of the company. Prominently mentioned: a spinoff of their insurance businesses from their retail business. CVS acquired Aetna for this back in 2018 for a pricey $69 billion. Being debated: where the Caremark pharmacy benefit manager (PBM) unit will reside, under retail or insurance. PBM feeds into both retail and the insurance plans.

Glenview Capital Management is reported to be one of the financial institutions in talks with management on an improvement plan. Glenview owns 1% of CVS stock according to the Wall Street Journal, but that 1% accounts for over $700 million of its $2.5 billion war chest. That gives them cause for concern–and leverage.

CVS has confirmed none of this, going to the Boilerplate Folder to pull copy about “driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”

Industry observers aren’t expressing anything more than mild surprise about this, based on a concatenation of recent events and backwash from their 2022-2023 spending binge.

  • CVS cut its 2024 outlook again in August for the third quarter running…and has lost 25% in share value YTD.
  • The kneejerk of a $1 billion cost-cutting plan is being implemented; this week, about 2,900 corporate jobs will be cut. This is after a 5,000-employee layoff that was announced in October 2023, taking place into 2024.
  • Aetna’s Brian Kane was booted in August after less than one year on the job due to his numbers going the wrong way–and his job filled in and not replaced [TTA 8 August]. Who’s next?
  • The outlook for Medicare Advantage is glum into 2025 and later, with utilization costs soaring, new lower Federal reimbursement rates for diagnoses, and Federal clawbacks on overpayments from 2018 on. 2025 plan exits have multiplied with CVS’ affecting about 10% of their membership.
  • PBMs are under attack. The latest is a 20 September FTC administrative complaint (= suit) against the Big Three (CVS Caremark, Express Scripts/Cigna and Optum/UHG plus their respective group purchasing organizations for inflating insulin drug pricing. Insulin is the prime example of inflated drug costs in the FTC view. The latest action doubles down on FTC’s mid-year report. MedCityNews  Readers should note that drug costs have been consistently under attack in Washington not only with this administration, but the prior one, which makes the current election a continuation of the same negative atmosphere.
  • In May, CVS openly sought private equity partners to expand their Oak Street Health locations to a promised 300 by 2026. No partner nor expansion has been announced to date. OSH was bought for a stunning $10.6 billion only 17 months ago.at the very tail end of the ‘buy anything/FOMO’ boom.  This Editor noted that this summer, there were direct response TV commercials to rustle up members airing on various cable channels that target the mature demographic. OSH was regarded as the runt of the litter of primary care practice groups since the larger ones had already been bought by Walgreens and Amazon. Its drawbacks in addition to small size: its model was overly wedded to Medicare value-based (ACO REACH) and Medicare Advantage models, and it had never turned a profit nor was about to. Even at the time, CVS was heavily criticized as making “a deal that made no sense” and “CVS better have a plan they implement in 18 months or they’ll get slaughtered” by an industry figure. [TTA 2 Mar 2023,16 Mar 2023]  We’re at 18 months. Is OSH quietly on the block?
  • Signify Health was another expensive 2022 buy that sounded good on calls to support the “integration” objective ($8 billion, cash). It put CVS into burgeoning home health and practices–but cost not only the inflated purchase price but also part of the cost of unwinding Remedy Health’s failed Episodes of Care model. CVS also put $100 million into Carbon Health which had to unwind several lines of business including public health before their Series D [TTA 11 Jan 2023], and earlier this year had both their CEO and their president depart. Biotech Networks

Is it time to call healthcare the Sick Man of the American Economy? Or just these big pillars? Crain’s Chicago Business. FierceHealthcare, Healthcare Dive

Cigna’s $69 million acquisition of Express Scripts clears US Department of Justice hurdle

September 18, 2018 | by

As reported on 8 Sept, the DOJ announced on Monday that they have formally cleared the Cigna acquisition of pharmacy benefits manager Express Scripts. This puts together a major payer with a PBM manager, the latter area considered to be challenged for profitability as the PBM drug rebate model may be substantially less profitable in the future. Federal policy pressure is ramping up from Health & Human Services (HHS), with Secretary Alex Azar only last week promising disruptive change and more transparency in drug pricing.

CVS (PBM-Caremark) with Aetna is in the works and Anthem is creating its own PBM called IngenioRx. UnitedHealthcare has its own OptumRx for some years. 

Another point of pressure on the entire PBM category is the Amazon-Berkshire Hathaway-JP Morgan combine, sometime in the future when the hype and speculation on What Amazon Will Do turns into actual plans beyond their acquisition of tiny, specialized player PillPack for an exorbitant $1bn [TTA 4 July]. 

The DOJ investigation took six months, reviewed more than 2 million documents, and more than 100 industry people were interviewed.

Cigna and Express Scripts now must negotiate over 50 state departments of banking and insurance–over 50 because some states have two. Both companies already have shareholder approval, and the lack of overlap in their businesses limits the possibility of divestitures. Their advocacy website is here. But state DOBIs can be unpredictable, as Cigna found out with Anthem. (Their contentious breakup is still being contested in court–and Cigna could use the contractual breakup money to ease the Express Scripts debt estimated at $15 bn. Forbes.  Bloomberg, Healthcare Dive

Scary Monsters, Take 3: one week later, JPMorgan Chase takes heat, Amazon speculation, industry skepticism

February 7, 2018 | by

It’s the Week After the Amazon/Berkshire Hathaway/JPMorgan Chase announcement of their partnership in a non-profit joint venture to lower healthcare costs for their 1.1 million employees, and there’s a bit of a hangover. Other than a few articles, there’s been relative quiet on this front. This could be attributed to the financial markets’ roller coaster over the past few days, at least in part due to this as healthcare stocks were hardest hit. In the US, healthcare is estimated to be 18 percent of the economy based on Centers for Medicare and Medicaid Services (CMS) actuarial statistics for 2015…and growing. 

Jamie Dimon, CEO of JPMC, had some ‘splainin’ to do with some of the bank’s healthcare clients, according to a report in the Wall Street Journal (paywalled) summarized on MarketWatch. He assured them that the JV would be to serve only the employees of the three companies. JPMC bankers handling the healthcare sector also needed some reassuring as they are “paid handsomely to help clients with mergers and other deals and worry the move could cost them business.”

Speculation on Amazon’s doings in healthcare remains feverish. A more sober look is provided by the Harvard Business Review which extrapolates how healthcare fits into Amazon’s established strength in delivery systems. Amazon could deliver routine healthcare via retail locations (Whole Foods, Amazon Go), same day prescription delivery, passive data capture developed for Amazon Go sold as a service to healthcare providers (on the model of Web Services), and data analytics.

Headlines may have trumpeted that the three-way partnership would ‘disrupt healthcare’, but our Readers in the business have heard this song before. While agreeing with their intent, this Editor differed almost immediately with the initial media cheering [TTA 31 Jan]. The Twitterverse Healthcare FlashMob in short order took it down and apart. STAT racks up some select tweets: in the ACO model, savings come when providers avoid low-value care; the contradiction of profitable companies avoiding profit; that the removal of healthy employees from existing plans will increase inequity and the actuarial burden upon the less insurable; the huge regulatory hurdle; and the dim view of investment advisory firm Piper Jaffray that it will not be a ‘meaningful disruptor’. 

In this Editor’s view, there will be considerable internal politicking, more unease from JPMC customers, and a long time before we find out what these three will be doing.

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

December 6, 2017 | by
[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…)