TTA’s Season of Drear 4: Amazon-One Medical, UHG-LHC close; Teladoc’s record loss; AliveCor wins ITC against Apple; VA awards 10 in anti-suicide program; Club Fed nears for Balwani, Holmes; PBC 4U?; more!

February 25, 2023 | by

Weekly Alert

A Magic 8 Ball of a week. Amazon-One Medical cheered–but is FTC eyeing them for a wider antitrust suit? Teladoc’s financials continue cloudy. David wins one against Goliath with AliveCor’s ITC review win. Theranos’ Balwani and mom x 2 Holmes appeal as coming appointments with Club Fed near. UHG widens its home care footprint with LHC Group. And is a PBC model a good one for your company?

Should your healthcare organization become a public benefit corporation (PBC)? (A business model that may fit your purpose)
News roundup: UHG closes $5.4B LHC deal, Teladoc’s record $13.7B ’22 loss, Olive AI divesting UM, Cigna exec can’t join CVS, VA anti-suicide program awards, Equiva-Infiniti ACP initiative, Newel Health’s Parkinson’s device
Breaking: Amazon closes One Medical $3.9B buy, despite loose ends–and is the Antitrust Bear being poked? (A contrarian and very gimlety view)
Theranos’ Balwani seeks to remain free during appeal, argues he owes nothing in restitution (updated for Holmes appeal) (Club Fed nears for both)
Breaking: AliveCor wins presidential review on ITC Final Determination on Apple patent infringement (David v. Goliath go on to the PTAB)

Revelations and reorganizations this week. Babylon’s Parsa admits the SPAC was cracked after all. GoodRx’s whacking on ad trackers only the FTC’s first strike. Skepticism reigns about CVS’ buy of Oak Street Health–and Amazon’s One Medical. Avaya has a Chapter 11 reorg and a few more companies lay off to get by. But keeping the blue side up–companies are still getting funding, a lovely Valentine tribute to Dame Esther Rantzen–and we’ve secured a tidy discount to ATA for our Readers.

ATA 2023 Annual Conference 4-6 March–a special deal for our Readers (ATA, San Antonio, for $250 less!)
Short takes: Avaya’s Ch. 11; Aetna sells India telehealth; fundings for IncludeHealth, Senniors, Thatch, Previa, MDI; layoffs at Collective Health, Vicarious, Olive AI (Our best to Avaya and those seeking work)
A Valentine’s Day tribute to Dame Esther Rantzen (Silver Line UK’s mover & shaker)
Is CVS’ Oak Street Health deal genius? Or a waste of time and $10B? (The skeptics are out for this one)
Mid-week news roundup: Parsa admits Babylon SPAC was ‘big mistake’, FTC’s strategy on GoodRx action, Oracle signs Accenture for VA training, Constellation delays ’22 reports, Emirates Health launches Care.ai and Digital Twin

This was the week the bills came due. DTC telehealth companies now under Federal scrutiny for monetizing patient data via ad trackers. Amazon’s One Medical buy further blocked–are health practices the right move facing a $2.7B loss? Football players pay the butcher’s bill with high rates of CTE. NHS Digital’s bill is that their magic tech fails nurses in the field. And Oak Street Health, facing the red ink bill, took the $10B deal from CVS. 

Digital technology falling (even) short(er) in NHS nursing: QNI report (UK) (When you are failing the nurses in the field, you have a problem, London)
Ad tracker action heats up: Congress questions DTC telehealth companies on sensitive patient health data sent to advertisers (No such thing as free money, and the bill is coming due)
Chronic traumatic encephalopathy (CTE) found in over 90% of deceased NFL player brains: BU study (We return to a past, heavily covered topic in time for Super Bowl)
CVS opens the checkbook, does the Oak Street Health deal for a generous $10.6B (Latest in CVS-Walgreens-UHG war–and DOJ waits in wings)
Amazon gets all tangled up on their $3.9B One Medical buy as FTC widens antitrust scrutiny (Will Amazon stay with it, given their losses?)

Can VA’s Oracle Cerner Millenium Be Saved in the looming Congressional Showdown? Can Congress save telehealth expansion? Can healthcare be saved from relentless cyber attacks? And can Matt Hancock be saved from his run of Bad Luck? Much more this week, plus a Must Read on Teladoc’s mishandled Livongo buy.

Week-end roundup: more House actions on telehealth benefits, VA EHR; Oracle exec moves to FDA digital health; Angle Health raises $58M; layoffs at Akili, Innovaccer, Athenahealth, Mindstrong
News roundup: GoodRx pays $1.5M to FTC on Meta Pixel use, ATA concerns on Covid PHE end, defending Livongo sale to Teladoc, Philips lays off 18K, Amazon health layoffs–and big ’22 loss, Ireland HSE digital head quits, Matt Hancock assaulted on Tube 
Killnet racks up 22 more healthcare cybervictims and data thefts; whitepaper on best defense practices (Cyberattacks are inevitable)
Pull the plug on Oracle Cerner in the VA! Two House Representatives urge return to VistA, send bill to Veterans’ Affairs committee (Back to the drawing board?)

A potpourri of news this week from Google’s antitrust lawsuit (and 6% layoff) to Dollar General’s clinic pilot with DocGo mobile vans. Ransomware attacks by AlphV/BlackCat fizzled and the DOJ knocked out Hive. Significant research on micro samples of blood and post-traumatic biomarkers published. Oracle has more VA/MHS problems, engineering head departs. Some funding and grants. And did Elizabeth Holmes really attempt to flee the country?

Rounding out week: Oracle Health engineering head departs; Hive ransomware KO’d by DOJ; Google sued by DOJ on antitrust, lays off another 12,000; Pearl and Precision Neuro raise, Enabled Healthcare ADAPT grant
Mid-week news roundup: CVS Health Virtual Primary Care launches, VA’s two-day Oracle Cerner EHR slowdown, and microsampling blood + wearables for multiple tests (Not quite a return for the Theranos concept)
Healthcare cyberattack latest: NextGen EHR ransomwared by AlphV/BlackCat, back to normal – 93% of healthcare orgs had 1-5 ransomware incidents (Expect more of this–it’s a movable war)
Using wearables to monitor biomarkers related to neuropsychiatric symptoms post-traumatic event (Significant research)
Theranos Holmes trial updates: did she book a one-way flight to Mexico last year, or were the prosecutors reckless and wrong? (You decide)
CVS, Walgreens, Walmart….Dollar General health clinics? (A low-risk toe in the clinic water)

It must be Mid-Winter Blues, but the news was fairly light this week–even from the JPMorgan health conference, a soggy SFO affair indeed. (At least the streets were cleaned.) Babylon feels ‘misunderstood’, Teladoc lays off 6%. CVS keeps funding and KillNet keeps threatening IT Havoc. Good news from UKTelehealthcare with TECS help for the digital switchover. Plus ISfTeH’s annual meeting now set for Winnipeg and news from ATA.

Industry org news: ISfTeH International Conference call for presentations, new leaders for ATA Policy Council (Good news!)
UKTelehealthcare launches TECS consultancy in partnership with TECS Advisory (Expert help on the digital switch)
Interesting pickups from JPM on CVS, Talkspace, Veradigm backs Holmusk, ‘misunderstood’ Babylon Health; six takeaways (News from a damp, dreary, insane JPM)
Teladoc laying off 6%, reducing real estate, in move to “balanced growth” and profitability (Nice move if they can do it)
‘KillNet’ Russian hacktivist group targeting US, UK health info in Ukraine revenge: HHS HC3 report (Healthcare becomes a side battle)

A mulligan stew of a week. CVS moving in on primary care with (possibly) Oak Street, funding Carbon Health in-store clinics while the latter downsizes. Walgreens’ VillageMD closed on Summit Health and Teladoc paints a brighter revenue picture with BetterHelp. Rock Health quantified a deflated 2022 year in funding, but M&A/VC investment still proceeds in its ‘boring’ way. Verily, Alphabet’s wandering ‘bet’, finally gets a needed trim. And Theranos is still in the news from appeals to post-prison requirements.

Weekend short takes: Theranos’ Holmes post-prison mental health + more on Shultz and Balwani; global M&A, funding roundup
Rock Health puts a kind-of-positive spin on digital health’s ‘annus horribilis’ 2022–a boring 2023
Mid-week roundup: Teladoc gets BetterHelp to boost Q4 ’22 revenue; fundings for Array, Paytient, Telesair, three others; layoffs hit at Alphabet’s Verily, Cue Health
CVS works their plan in Oak Street Health buy talks, Carbon Health $100M investment + clinic pilot; VillageMD-Summit finalizes (updated)
Theranos trial updates: Holmes’ freedom on appeal bid opposed; Balwani files appeal to conviction

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News roundup: UHG closes $5.4B LHC deal, Teladoc’s record $13.7B ’22 loss, Olive AI divesting UM, Cigna exec can’t join CVS, VA anti-suicide program awards, Equiva-Infiniti ACP initiative, Newel Health’s Parkinson’s device

February 23, 2023 | by

UnitedHealth Group added more home care to its Optum unit with the close of the LHC Group deal on 22 February. Final cost was $5.4 billion or $170 per share of the now-delisted Nasdaq company. The acquisition was announced in March and survived two reviews: a request from the Federal Trade Commission (FTC) for additional information which held up the close past the original December date and a shareholder suit on ‘material nondisclosure’ in the SEC filing. FTC requested information on worker pay and ‘vertical harm’ on market competition, but did not proceed with further action prior to the closing. LHC Group serves 960 locations in 37 states, with 30,000 employees and revenue of $2.2 billion last year. The original announcement indicated that the Louisiana-based management team will be coming over to Optum Health and co-founders Keith and Ginger Myers will personally invest $10 million in UHG following the acquisition close. Interestingly, as of today (Thursday noon ET), neither company has announced the closing on their websites. Home Health News, FierceHealthcare  For those into value-based care, as previously noted, Optum is acquiring via LHC Imperium Health, a good-sized ACO, population health, and management services company. It’s another fit as Optum is a major physician group owner, many of whom are also in ACOs, and made LHC even more attractive. According to their website, Imperium now manages 16 ACOs and is in partnership with a large ACO group. 

Unsurprisingly, Teladoc notched a record loss for 2022– $13.7 billion on revenue of $2.4 billion. This included the Q1 2022 $6.6 billion write-off of the Livongo acquisition. On the investor call, company executives scaled down 2023 revenue forecasts to $2.55-$2.68 billion, which is about 9% growth. Teladoc remains at about 80 million members. The company’s ‘balanced growth’ plan to move toward profitability has already resulted in January’s announcement of 6% of staff being laid off and a reduced geographic footprint, presumably including real estate and leases. Healthcare Dive, HISTalk 2/24/23 which also cross-references the MedCityNews Livongo ‘lemon’ interview

Olive AI continues to shrink and juggle, with today’s announcement of their putting their utilization management service line up for sale. Earlier, they announced divesting their population health and 340B service lines to a sister company. The UM line buyer would take on the accounts and the 100-person staff. Olive AI is an automator of routine health system administration tasks such as these. Their pivot will be in automating revenue cycle management for health systems. Last week, Olive announced the release of 215 employees, about 35% of its remaining staff, in addition to its July layoff of 450 employees, then about 33% of staff. If this Editor’s calculations are correct, Olive is down to about 900 or less. Becker’s  Original report in Axios is paywalled, but indicates problems with the software’s efficacy, multiple executive departures, and a previous asset sale.

Yes, Virginia–non-competes ARE enforceable. So Amy Bricker, Cigna’s former head of pharmacy benefits unit Express Scripts, found out when she tried to join CVS as a senior executive as chief product officer for its consumer area, not Caremark which is a direct competitor. She had signed a two-year non-compete/non-disclosure barring her from any employment with any direct competitor. Cigna apparently imposes non-competes on only their most senior executives, a total of 16. This is a temporary restraining order from the US District Court for the Eastern District of Missouri to bar her from joining the company, duration unknown. Cigna had to post a $250,000 bond for possible future damages. FTC (again) is attempting to ban non-compete use both in future and retroactively. Restraining order, Healthcare Finance News, Healthcare Dive

Some blue side up news: 

  • Mission Daybreak Grand Challenge awarded by the VA. 10 companies were awarded $20 million to pursue digital health approaches to prevent veteran suicide as part of a 10-year VA initiative. The first-place winners were Stop Soldier Suicide and Televeda, awarded $3 million each. Healthcare IT News has additional details on all the finalists.
  • Digital health is leveraging an existing $14.2 billion FCC initiative called the Affordable Connectivity Program (ACP). Two companies, Equiva Health, a digital patient engagement and health relationship management solution provider, is partnering with internet provider Infiniti Mobile to create Equiva ACP Connect. The product configures tablets and mobile devices for care management and patient education distributed by hospitals, nursing homes, insurers, and other healthcare organizations. Release
  • Newel Health has received a grant from the Michael J. Fox Foundation to further development for Soturi, a digital therapeutic solution for Parkinson’s disease management. Soturi utilizes data collected from a wearable sensor, using an algorithm-based decision-making method, for personalized treatment. The project will be presented at the SINdem conference in Bressanone, Italy on 24th February. Release (PharmaPhorum)

Optum Labs creates and funds digital health research hub at Cornell Tech NYC

December 6, 2022 | by

Optum Labs, the research and development arm of Optum/UnitedHealth Care, is allying with Cornell University to create a collaborative health research hub at the university’s NYC-Roosevelt Island campus, Cornell Tech. The initiative, funded by Optum Labs, is targeted to develop precision behavioral health and advance equity. According to the release, it will drive innovative research in precision behavioral health, extended reality for aging in place, and equitable human and algorithmic decision-making. A large part of this is incorporating new types of health data from wearables and IoT devices, Also this joint venture will seek to create new types of remote intervention and care delivery using augmented reality and virtual reality actuation technologies with computational techniques. (Whew!)

The digital health hub will be led by Deborah Estrin, an Associate Dean and a Robert V. Tishman ’37 Professor at Cornell University, and Tanzeem Choudhury, Ph.D., Senior Vice President at Optum Labs, and a Roger and Joelle Burnell Professor in Integrated Health and Technology at Cornell University. The funding amount is not disclosed. To this Editor, this seems like an effort to restore the New York area as a digital health hub and regain momentum lost since 2020. Cornell release, 

Optum has been reaching out on multiple fronts. The RVO Health joint venture brought over media and Healthgrades doctor ratings [TTA 14 July], UHG inking a 10-year deal with Walmart Health starting with Florida locations, and of course the Change Healthcare wrap into OptumInsight [TTA 20 Sept, 4 Oct] though still being contested by DOJ post-closing. All a part of Keeping Up With the CVS Health/Aetnas, Walgreens/VillageMDs, Amazons, and fellow payers like Cigna and Elevance. HealthcareFinanceNews

News roundup: Babylon Health Q3 revenue up 3.9x; surprise–DOJ to appeal UHG-Change buy approval; Walmart loses senior health exec Pegus to JPM

November 22, 2022 | by

Earlier this month, Babylon Health announced its Q3 financials. Both revenue and value-based care membership grew. Losses also grew but the margins narrowed considerably. Highlights of their release:

Comparing Q3 2022 to Q3 2021

  • Revenue increased by $288.9 million versus $74.5 million, an increase of $214.4 million or 3.9x. This was largely driven by a 285% increase in Medicare membership.
  • Losses were there but margins improved due to aggressive cost reductions. Q3 loss was $89.9 million, or a 31.1% loss for the Period Margin (percent of revenue). Last year’s loss was $66 million, or 88.6% Period Margin. This represented an improvement of 57 points. When looking at EBITDA, Adjusted EBITDA totaled $(54.3) million, an (18.8)% Adjusted EBITDA Margin. This compared to last year’s $(47.5) million Adjusted EBITDA, or (63.7)% Adjusted EBITDA Margin, an improvement of 45 points.
  • Value-based care membership grew 2.7x to approximately 271,000
  • They acquired Medicare Advantage members in New Mexico, and commercial members via a digital-first product for Centene’s Ambetter plans in six states
  • In the UK, their Bupa partnership was extended for three years. Bupa has 2.3 million health insurance customers.

For year 2022, Babylon is updating its revenue guidance from $1.0 billion or greater to $1.05 billion to $1.1 billion.

Babylon is selling Meritage Medical Network, an independent physician association (IPA) based in Northern and Central California with 1,800 providers in six counties serving 90,000 patients, advised by  a major investment bank. They will also comply with SEC reporting requirements for a domestic issuer versus previously as a foreign private issue. Babylon will report its Q4 and 2022 yearend results under U.S. GAAP. They are also proceeding with a 25-to-1 reverse stock split to boost share price and prevent a NYSE delisting [TTA 13 Oct]. Mobihealthnews

The Department of Justice (DOJ) wiped egg off its face Friday, appealing the District Court of the District of Columbia approval in late September of UnitedHealth Group’s acquisition of Change Healthcare. The two companies closed on the buy in early October. DOJ was joined in the appeal by New York and Minnesota. The surprising appeal, after six weeks and the closing, is unusual but not unprecedented. At the time, the DOJ statement was written so that industry observers expected an appeal.

While the merger is closed, an appealed decision, if favorable to the DOJ, would force a separation of the businesses. Of course, UHG believes that “the appeal is without merit.” Stay tuned to see if this goes anywhere. Becker’s, Healthcare Dive

Walmart loses another healthcare exec. Cheryl Pegus, MD, will be departing Walmart as EVP of health and wellness and joining Morgan Health as a managing director. At Morgan, she will be focusing on population-based health initiatives and bringing clinical expertise to mental health, diabetes, and other chronic diseases. She is also joining Atria, a physician-owned organization of heart specialists.

During two years at Walmart, Dr. Pegus helmed development of a low-cost private brand analog insulin, expanded Walmart’s retail health center network across major markets, and the company’s pandemic response. Morgan Health was set up in 2021 to improve the quality, affordability, and equity of employer-sponsored healthcare. It has opened advanced primary care centers in Ohio. JPM a few weeks ago opened a Life Sciences Private Capital group [TTA 2 Nov]. Becker’s, Healthcare Dive

Walmart, despite their size, has had a certain wobbliness in their strategy. Aggressively starting out of the gate in 2018 with high-profile exec Sean Slovenski leading and plans to open up 1,000 clinics, he departed in 2020 and that put the brakes on the clinic strategy for awhile. In 2021, they bought privately held telehealth provider MeMD. Earlier this year, they announced the opening of more health ‘superstores’ in Florida, having established 20 in Arkansas, Illinois, and Georgia starting in 2019. Meanwhile, Walgreens is going big with VillageMD and its acquisition of Summit Health, and CVS Health is snapping up Signify Health to expand into value-based care and home health.

Catchup News Roundup: UHG-Change buy final; Theranos’ Holmes sentencing delayed, ‘limited hearing’ agreed to

October 4, 2022 | by

Note: your Editor is on the mend after returning from vacation with a nasty bug that’s laid her low for the better part of a week.

UnitedHealth Group’s Optum unit completed its acquisition of Change Healthcare, after the 10-day agreed waiting period post-decision. As planned, Change will be folded into the OptumInsight unit. The all-cash deal was either $7.8 billion or $13 billion, depending on what source you go with [TTA 20 Sept].

The Department of Justice has a generous quantity of Grade A, Extra Large Egg on its metaphorical face. The District Court decision found that the DOJ did not conclusively prove its allegations of antitrust and loss of competition in services. Statements from UHG’s competitors such as Cigna, Aetna, and Elevance (Anthem) that the acquisition would not lead them to ‘stifle innovation’ also weakened the DOJ’s case. The major conflict, ClaimsXtend, was already in progress of divestiture to TPG.

Challenging acquisitions post-closing is difficult but has happened. Readers may recall the 2019 nine-month long District Court Tunney Act review drama over the final approval of the CVS buy of Aetna, dragging on long after the buy was final and reorganization was underway. If the Tunney Act applies, and this goes to a certain Judge Richard Leon, watch out!  Optum’s release did not disclose reorganization plans or management changes. Healthcare Dive, FierceHealthcare 

Elizabeth Holmes’ sentencing delayed to allow a ‘limited hearing’ on The Mysterious Visit of Adam Rosendorff.  The ‘crafty strategy’ [TTA 16 Sept] scored a win today (3 October). Judge Edward Davila accepted the defense’s request for a limited hearing on whether there was any prosecutorial misconduct in Dr. Rosendorff’s testimony and delayed Holmes’ sentencing originally scheduled for 17 October.

In August, according to Holmes’ partner Billy Evans, in a scene lifted out of TV’s Perry Mason, Dr. Rosendorff arrived at Holmes’ home doorstep disheveled and apologetic, allegedly telling Evans that the prosecution “made things sound worse than they were.” Yet Dr. Rosendorff swore a declaration to the prosecution after the Mysterious Visit that he testified “completely, accurately and truthfully” and stood by his testimony, while expressing “compassion” for her and her family. Rosendorff’s testimony was more about the Theranos labs and how they defrauded patients based on specious PR and inflated claims, not the investor fraud of which she was convicted. 

The limited hearing has been scheduled for 17 October (the original sentencing date). Judge Davila has already stated that the hearing will not last the full day. He also offered to both the prosecution and defense options for new sentencing dates: mid-November, early December, or mid-January. How this will affect Sunny Balwani’s upcoming sentencing on 12 counts is not known. Mercury News 

Breaking: Judge permits UnitedHealth acquisition of Change Healthcare, denies DOJ motion (updated)

September 20, 2022 | by

US District Court judge dismisses Department of Justice motions to prevent UHG acquisition. The decision on Monday by Judge Carl Nichols of the District of Columbia district court denies DOJ’s action to stop the deal. It also orders the planned divestment of Change’s ClaimsXten claims payment and editing software to an affiliate of TPG Capital for $2.2 billion in cash.

The DOJ and entities such as the American Hospital Association had objected to UHG’s folding Change into OptumInsight as anti-competitive. As both Optum and Change offered competing claims processing software that covers 38 of the top 40 health insurers, UHG would then solely have access to nearly all competitive payers’ information. There were other competitive issues that were dismissed in the judge’s brief opinion. (For insight, see our earlier coverage starting here.) The full opinion, originally expected in October after the bench hearing in August, is under seal due to proprietary, sensitive information and will not be released. (US v UnitedHealth Group, 22-cv-481)

DOJ’s top antitrust official, Jonathan Kanter, said they are “reviewing the opinion closely to evaluate next steps”.  DOJ’s short statement surely sounds like the DOJ will appeal. UHG and Change are moving forward “as quickly as possible”. Stay tuned.  Reuters, Healthcare Dive

Update: As reported in HISTalk from Bloomberg the all-cash deal is $7.8 billion, not the earlier reported $13 billion.

News briefs, catchup edition: UnitedHealth/Change decision October?, CVS wins $8B Signify Health auction, Walgreens majority buy of CareCentrix, FTC requests more info on Amazon-One Medical

September 15, 2022 | by

Your Editor is semi-returned from Almost Two Weeks in Another Town, with a few more days to close out September (and summer into autumn) coming up. A lot of big news broke despite the usually slow Labor Day holiday week.

UnitedHealthcare Group/Change Healthcare Federal lawsuit to be decided in October–reports. The bench trial in the US District Court in Washington DC pitted the Department of Justice and state plaintiffs against UHG’s massive $13 billion acquisition of claims and EDI/data processing giant Change. It concluded 16 August with closing arguments presented 8 September. Dealreporter via Seeking Alpha reported that UHG and Change effectively countered DOJ’s antitrust objections to the acquisition. Change Healthcare had previously sold their claims editing business to TPG Capital to ease antitrust concerns.  Whether that will be enough in the current environment with greater sensitivities around healthcare consolidation remains to be seen. If approved, Change will be folded into OptumInsight. For a deeper dive into the issues, see TTA’s earlier reporting 3 August and 23 March.

CVS Health beat out other contenders with an $8 billion cash bid for Signify Health. It was a busy Labor Day for CVS as Signify’s board met and decided that day on CVS’ cash offer of $30.50 per share in their unusual auction. Amazon, UnitedHealth Group, and little-known Option Care Health were the other bidders. Signify is a strategic boost for CVS in becoming a major player in primary care, provider enablement, and home health as we’ve summarized here from CVS’ Q2 earnings call. Signify’s capabilities in in-home health delivery and provider services were cheaper to buy than to develop. Based on the weight given to it in the CVS release, Signify’s Caravan Health and their Medicare ACOs furnishing value-based care management services to 170 providers was a significant factor in the top price paid.

New Mountain Capital and their investors own 60% of Signify and will be exiting. Signify had in July announced their own exit from the costly and problematic Episodes of Care/BPCI business acquired with Remedy Partners back in 2019. This led to most of the over 480 staff layoffs announced last month. The sale is, as usual, pending regulatory approvals and isn’t expected to close until first half 2023. Kyle Armbrester, Signify’s CEO Kyle Armbrester will continue to lead the company as part of CVS Health. Healthcare Finance, FierceHealthcare

Rival Walgreens Boots Alliance completed their acquisition of a majority share of home care coordination platform CareCentrix. Walgreens’ final payment was $330 million for 55% of the company at an $800 million valuation. As noted previously, Walgreens ‘go big or go home’ strategy in primary care kicked off in 2020 with growing investments in VillageMD, culminating in last year’s $5.2 billion for 63% of the company. The plan is to co-locate Village Medical offices with 600 Walgreens locations by 2025 [TTA 14 Oct 2021]. CVS’ recent actions can be seen as a reaction to Walgreens’ aggressive moves. Healthcare Finance

Amazon now under FTC scrutiny for One Medical acquisition. If shutting down the much-publicized Amazon Care wasn’t quite enough last month, the Federal Trade Commission (FTC) will be reviewing Amazon’s $3.9 billion buy of One Medical. This was announced in a 1Life Healthcare (parent of One Medical) 8-K filing with the Securities and Exchange Commission (SEC). Both 1Life and Amazon received requests for additional information on 2 September, above and beyond the usual required Hart-Scott-Rodino Act (HSR) reports that will be reviewed by the FTC and DOJ. Effectively it extends the HSR waiting period by 30 days after One Medical and Amazon have substantially complied with the additional information ‘second request’.

The FTC isn’t winning popularity contests with Amazon’s legal department, as the agency is reviewing their acquisition of iRobot, maker of robot vacuum cleaners. Mobihealthnews

Babylon Health exits last NHS hospital contract as a ‘distraction’, looks to US market for growth

August 24, 2022 | by

Babylon Health’s rollercoaster ride continues. Today’s news was that their last of three NHS Trust contracts, with Royal Wolverhampton NHS Trust (RWT), was ended by Babylon two years into a ten-year contract. This follows the end of two other contracts that drew a fair amount of controversy (see our index here)–the 2020 one-year Royal Berkshire NHS Foundation Trust with an accident and emergency triage app that was discontinued by Babylon, and with University Hospitals Birmingham NHS Foundation Trust (UHB) for a virtual A&E app that was ended in July.

In the UK, Babylon will continue its GP At Hand service that took over a GP office in Fulham, London in 2016. It now currently covers about 155,000 patients. It will also maintain the AI-based chatbot used for triaging patients. GP At Hand is not profitable. GP practices work on a flat fee per patient that averages £155 ($183) per patient per year.

Babylon and RWT contracted in 2021 for a digital-first primary care service that would cover 55,000 patients, with a patient portal that would enable them to view their health records and view appointments. The app would also monitor conditions and like the AI chatbot, help to diagnose illness and actions. Babylon is ending the ten-year contract after two, which would make it 2023.

From the bubbly Digital Enthusiasm of former Health Minister Matt Hancock (left) in 2018 to the storm around @DrMurphy11, a GP who raised performance issues with the Babylon chatbot that escalated to BBC Two’s Newsnight in February 2020, founder and CEO Ali Parsa is now in an unenviable position in two countries. He 1) has semi-exited the UK market, 2) ruthlessly cut costs to the bone because the stock is down 90%, and 3) shifted to the far larger but unforgiving market of the US. The bright spot here is that US patients covered have already topped 6 years of effort in the UK. Parsa has now moved to the US.

Parsa noted in a recent results call [Seeking Alpha-Ed.] with analysts. “Those two or three small NHS contracts that you refer to—and those are not our significant primary-care contracts— those are marginal contracts for us, more in that category of contracts where we could not see a significant contribution to our profit margin,” he said. “And they also had a rather small contribution to our revenue. And therefore we saw them as a distraction and terminated those contracts.”

This Editor has previously noted Babylon’s layoffs/redundancies of at least 100 staff to save $100 million by Q3, which we are now in. Expansion in the US has to take place with static staff to make goal. And as to the US being unforgiving: VCs are snapping their capacious purses shut, Mr. Market’s gone into rehab, and inflation is shrinking healthcare budgets from providers to payers to self-insured companies. The Big Kahunas with Big Bucks–CVS Health, Allscripts, UnitedHealth Group, Amazon, Walgreens, Walmart–and out-of-left-field players like Option Care Health bidding on Signify Health, are snapping up, as we’ve earlier put it, “healthy health tech companies at the right (discounted) price that fill in their tech gaps”. And making life difficult for single players like Babylon Health. Wired. And a snappy hat tip to HISTalk.

Signify Health bidding war ensues, waged by Amazon, UnitedHealth Group, CVS, Option Care Health

August 24, 2022 | by

What a difference less than two weeks makes. We noted on 11 August that in-home health and value-based provider services company Signify Health was up for sale in an unusual auction, with CVS Health the first disclosed bidder. Yesterday, three more companies jumped into the mix, UnitedHealth Group (the 9,000 elephant of US health), Amazon (with One Medical still pending), and little-known Option Care Health, a public (Nasdaq: OPCH) home infusion care company.

Reports in the Wall Street Journal (paywalled) indicate Signify’s value in the auction may top $8 billion. Bids are due around Labor Day. The board will be meeting next Monday to discuss the bids to date. Signify’s current value is about $5 billion.

The share price closed today just above $27, a major rise from last week’s close of $21 (Yahoo Finance).

The UHG bid is above $30, with Amazon close by, according to Bloomberg News sources. The CVS bid is not known. A buy by Amazon would put the company in Instant Major Healthcare Player territory. This Editor believes that with UHG and CVS, antitrust may factor in, especially considering Signify’s recent ownership of the ACO MSO Caravan Health.  

Option Care may not be well known, but it has impressive backing from Goldman Sachs and has been profitable. Their interest is Signify’s home health network and access to providers through Caravan. Another backer, Walgreens Boots Alliance, just sold 11 million shares on the secondary market, reducing its holdings from 20.5 percent to approximately 14.4 percent.

There’s no bar, of course, to the board ending the auction at any time and awarding the company. Healthcare Finance, FierceHealthcare

Mid-week roundup: UnitedHealth-Change trial kicks off; Amazon’s One Medical buy questioned; Cionic’s neural sleeve designed by Yves Behar; Medable-Withings partner; Orion Health’s new CEO; IBM Watson Health’s Simon Hawken passes

August 3, 2022 | by

The Department of Justice lawsuit to block the $13 billion acquisition of Change Healthcare by UnitedHealth Group started on Monday. It is a bench trial in US District Court in the District of Columbia that will last 12 days, concluding on 16 August with a verdict date to be determined. The DOJ and the plaintiffs, including Minnesota and New York State, are presenting their case over seven days. UHG and Change will have five days. It’s expected that UHG CEO Andrew Witty and former chief David Wichmann will be testifying. The American Hospital Association (AHA) was a key player in pushing for a DOJ action (their article here). TTA recapped the main competitive issues in play on 23 March, along with this Editor’s opinion that the merger will be blocked given this current administration’s anti-trust stand. ‘It will be one for the books–the ones marked ‘Nice Try, But No Dice’. FierceHealthcare, HealthcareFinanceNews

Will Amazon’s acquisition of One Medical be reviewed by the Federal Trade Commission (FTC)? That is what Senator Josh Hawley (R-Missouri) is requesting. He cites that Amazon will have “access to enormous tranches of patient data. While HIPAA and other privacy laws exist to thwart the worst potential abuses, loopholes exist in every legal framework.” He also cites, somewhat broadly, that information of this type could be used to suggest over-the-counter blood pressure medications to a One Medical patient shopping at a Whole Foods Market. (What is meant here is that there are many supplements that claim to benefit blood pressure available OTC, such as Garlique; however, there are many OTC meds that can increase blood pressure such as decongestants.) This Editor agrees with Senator Hawley that the acquisition should be carefully reviewed by FTC and, to go further, HHS as it involves patient data.) Hawley Senate.gov page 

The Cionic Neural Sleeve, designed to aid people with mobility issues, is getting a design upgrade via Yves Behar and his fuseproject. The Neural Sleeve [TTA 30 June] aids the legs through sensors in the sleeve that monitor movement for muscle firing and limb position, then analyzes them through an app to optimize functional electronic stimulation (FES) delivered through the sleeve. The Behar team, according to the release, has delivered a neural sleeve “designed for everyday wear, and importantly, is easy to put on and take off – a critical design element for those with inhibited mobility. The lightweight, breathable fabric feels like an athletic legging, and is available in multiple colors and sizes. Paired with the intuitive CIONIC app, the sleeve enables the user to be in control of their own mobility journey.” Cionic is taking pre-orders for delivery in early 2023. Also The Robot Report.

Medable partners with Withings for clinical trials. Medable, a clinical trials platform, is partnering with Withings Health Solutions to connect Withings devices for monitoring at home. Withings devices will provide medical-grade measurements, including temperature, heart rate, blood pressure, sleep patterns, and weight to connect the data into Medable’s decentralized clinical trial platform. Direct monitoring also assists in attracting and retaining subjects in clinical trials, plus improving accuracy, by eliminating subject manual reporting and checkins. Financial terms and duration were not disclosed. Release, FDA News, FierceBiotech

Short international take: Orion Health, an Auckland, New Zealand-based health IT company headed by Ian McCrae for the past 30 years, announced he is stepping down for health reasons. Replacing him in late August as CEO will be Brad Porter, coming from Fisher & Paykel, a NZ-based medical device company. Mr. Porter is Mr. McCrae’s son in law.  Orion recently won what could be the largest health information exchange system in the world for Saudi Arabia, covering 32 million people. Healthcare IT News 

And a sad passing: Our UK and European Readers likely know Simon Hawken from his long career with IBM, including Watson Health (now Merative) and Merge Healthcare, and earlier with BEA Systems. HISTalk reported that he passed away on 25 July. This Editor has not been able to find other notices, so is asking for Reader help and comments.

Amazon moves to acquire One Medical provider network for $3.9B (updated)

July 27, 2022 | by | 1 Comment

Amazon joining the in-person provider network space for real. Amazon Health Services last week moved beyond experimenting with in-person care via provider agreements (Crossover Health, TTA 17 May) to being in the provider business with an agreement to acquire One Medical. Earlier this month, news leaked that One Medical as 1Life Healthcare was up for sale to the right buyer, having spurned CVS, and after watching their stock on Nasdaq plummet 75%.

  • The cash deal for $3.9 billion including assumption of debt is certainly a good one, representing $18 per share, a premium to their $14 share IPO in January 2020. (The stock closed last Wednesday before the announcement at just above $10 per share then plumped to ~$17 where it remains.)
  • The announcement is oddly not on One Medical’s website but is on Amazon’s here.
  • The buy is subject to shareholder and the usual regulatory approvals. The IPO was managed by JP Morgan Securities and Morgan Stanley. It is primarily backed by Alphabet (Google).
  • One Medical’s CEO Amir Dan Rubin will stay on, but there is no other executive transition mention.
  • Also not mentioned: the Iora Health operation that serves primarily Medicare patients in full-risk value-based care models such as Medicare Advantage (MA) and Medicare shared savings, quite opposite to One Medical’s membership-based concierge model. However, Iora’s website is largely cut over to One Medical’s identity and their coverage is limited to seven states.

There is a huge amount of opinion on the buy, but for this Editor it is clear that Amazon with One Medical is buying itself into in-person and virtual primary care for the employer market, where it had limited success with its present largely virtual offering, and entree with commercial plans and MA. One Medical has over 700,000 patients, 8,000 company clients and has 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. It has never turned a profit. Looking at their website, they welcome primarily commercial plans and MA (but not Medicare supplement plans).

Amazon, with both a virtual plus provider network, now has a huge advantage over Teladoc and Amwell, both of which have previously brushed off Amazon as a threat to their business. There is the potential to run two models: the current Amazon Care pay-as-you-go model and the One Medical corporate/concierge model. This puts Amazon squarely in UHC’s Optum Health territory, which owns or has agreements with over 5% of US primary care practices, is fully in value-based care models such as Medicare shared savings through its ACOs, and is aggressively virtual plus integrating services such as data analytics, pharmacy, and financial. Becker’s

What doesn’t quite fit is Iora Health and the higher cost/higher care needs Medicare market that is less profitable and requires advanced risk management, a skill set that Amazon doesn’t have. This Editor will make a small prediction that Iora will be sold or spun off after the sale.

This Editor continues to believe that the real game for Amazon is monetizing patient data. That has gained traction since we opined that was the real Amazon Game in June and October last year, To restate it: Amazon Care’s structure, offerings, cheap pricing, feeds our opinion that Amazon’s real aim is to accumulate and own national healthcare data on the service’s users. Then they will monetize it by selling it to pharmaceutical companies, payers, developers, and other commercial third parties in and ex-US. Patients may want to think twice. This opinion is now shared by those with bigger voices, such as the American Economic Liberties Project. In their statement, they urged that the government block the buy due to Amazon’s cavalier attitudes towards customer data and far too much internal access, unsecured, to customer information (Revealnews.org from Wired). Adding PHI to this is like putting gasoline on a raging fire, and One Medical customers are apparently concerned. For what it’s worth, Senator Bernie Sanders has already tweeted against it.   MarketWatch

Whether this current administration and the DOJ will actually care about PHI and patient privacy is anyone’s guess, but TTA has noted that Amazon months ago beefed up its DC lobbying presence last year. According to Opensecrets.org, they spent $19.3 million last year. In fairness, Amazon is a leading Federal service provider, via Amazon Web Services. (Did you know that AWS stores the CIA’s information?)  One Medical is also relatively small–not a Village MD/Village Medical, now majority owned by Walgreens Boots. This is why this Editor believes that HHS, DOJ, and FTC will give it a pass, unlike UHG’s acquisition of Change Healthcare, especially if Amazon agrees to divest itself of the Iora Health business.

Treat yourself to the speculation, including that it will be added as an Amazon Prime benefit to the 44% of Americans who actually spend for an Amazon Prime membership. It may very well change part of the delivery model for primary care, and force other traditional providers to provide more integrated care, which is as old as Kaiser and Geisinger. It may demolish telehealth providers like Teladoc and Amwell. But as we’ve also noted, Amazon, like founder Jeff Bezos, deflects and veils its intents very well. FierceHealthcare 7/25, FierceHealthcare 7/21, Motley Fool, Healthcare Dive

Midweek heat wave roundup: GE Healthcare’s new name, hospital-to-home health trending big, over 2 million patient records hacked

July 20, 2022 | by

GE’s breakup into three public companies, announced last November [TTA 12 Nov 21], has been formalized with brand names. No surprise, the healthcare business has but a teeny tiny change to GE HealthCare (logo left) and after the spinoff will be trading sometime in early 2023 under GEHC on Nasdaq because “GE HealthCare will benefit from the exchange’s profile and track record as a market for innovative, technology-led public companies, particularly in the healthcare sector. The heritage ‘meatball’ (as we called it in marketing internally, but formally the Monogram) will be retained but the color will change from poison green to “compassion purple” to reflect more humanity and warmth and achieve greater distinction”. The hardest hit part of GE, the energy businesses, will be spun off as GE Vernova and key color an ‘evergreen’. What is left will be GE Aerospace, retaining its name and change its color to an ‘upper atmosphere’ blue that is almost black. Outer space, anyone? GE release, interview on YouTube

Au courant is hospital-to-home (H2H) and home health, digitally enabled mais bien sûr.

  • Mass General Brigham (MGB) is reportedly expanding its current 25-bed program to 200 in the next 2.5 years. Since 2016, MGB has treated nearly 1,800 H2H patients. By end of 2023, they plan 90 hospital-at-home beds managed across Massachusetts General Hospital, Brigham and Women’s Hospital, Newton-Wellesley Hospital, and Salem Hospital. Their new head for home-based care will be Heather O’Sullivan, who comes from EVP and chief clinical innovation officer spots at Kindred at Home, acquired by Humana in 2021. FierceHealthcare
  • Out in rural Wisconsin, Marshfield Clinic is rolling out a H2H program with DispatchHealth, to coordinate medical care for injuries and illnesses including viral infections, COPD exacerbations, congestive heart failure, and more. The goal is to reduce non-emergency ED visits. DispatchHealth can also perform services such as onsite diagnostics, mobile imaging, and CLIA-certified labs for kidney function, electrolytes, and urinalysis. In March 2021, they closed a $200 million Series D bringing their funding to unicorn level. HealthcareITNews
  • UHG’s Optum has moved closer on its $5.5 billion acquisition of LHC Group home health and hospice [TTA 31 Mar] with shareholder approval on 21 June. Once closed later this year, LHC will be integrated into Optum Health. LHC operates in 37 states and the District of Columbia, employing about 30,000 individuals. Home Health Care News, Becker’s

And what would a week with a heat wave that melts runways at RAF Brize Norton and Luton be without a couple of big data breaches to heat up things? Stolen: an iPad chock full of 75,000 Kaiser Permanente patients’ PHI from Kaiser’s Los Angeles Medical Center’s COVID-19 testing center. While the information on the iPad included first and last names, dates of birth, medical record numbers, and dates and location of service (but not SSN or financial information), Kaiser was able to remotely erase the data. At this point, there is no evidence of theft or misuse. NBC Los Angeles, Becker’s   An even larger breach of 2 million records came via a February hack attack on health provider debt collector Professional Finance Company (PFC). Hackers got into PFC’s computers and accessed patient names, addresses, SSN, health insurance, and medical treatment data. Among the 650 client companies affected were Banner Health and Nevada physician network Renown Health. Healthcare Dive

Thursday news roundup: RVO Health JV combines Optum-RV Health consumer health assets; Holmes sentencing for Theranos fraud delayed

July 14, 2022 | by

Red Ventures, Optum combine consumer savings, digital health coaching, education assets into RVO Health. Quietly announced via Moody’s Investor Services (PDF) and appearing on LinkedIn, this offloads media holding company Red Ventures’ RV Health, consisting of Healthline health news/education media (Healthline, Medical News Today, Psych Central, Greatist, and Bezzy), plus the Healthgrades doctor rating, FindCare doctor locator and PlateJoy meal planner services. Optum contributes their Perks prescription savings card, Store shopping service, and coaching platforms Real Appeal, Wellness Coaching, and QuitForLife. For Red Ventures, this moves 20% of their company earnings into the JV, leaving media such as Bankrate.com and CNET. For Optum, this expands their coaching and consumer savings capabilities into an established digital audience–Red Ventures claims 100 million monthly users of its health media and other services. For Red Ventures, it opens up new solutions available through Optum’s parent, UnitedHealth Group.

According to Moody’s analysts, this is part of Red Ventures’ de-leveraging: “Under the terms of the JV arrangement, in exchange for the contributed assets, RV received cash proceeds, which were used to pay down the term loan. UHG will consolidate the financials of RVO Health in its future financial statements.” Based on LinkedIn, it will be located in Charlotte, North Carolina. Unannounced is who will be managing RVO Health.  FierceHealthcare, Becker’s 

Ironically, Healthline Media’ main competitor, WebMD, bought the former data analytics part of Healthgrades, Mercury Healthcare, on 29 June (release).

Elizabeth Holmes gets a three-week extension on her freedom. Her sentencing, originally scheduled for 26 September at the US District Court, Northern District of California, in San Jose has been moved to 17 October. No reason was given by the court for the extension. Judge Edward Davila will be presiding over the sentencing on four of the original 11 Theranos wire fraud charges [TTA 4 Jan]. Each one of these charges carries a penalty of up to 20 years, but generally in financial fraud, sentences are carried out concurrently. Judge Davila, known as a tough sentencer according to the Mercury News (mercifully not paywalled) may be considering factors such as that Holmes was, after all the founder and CEO but that Theranos did not start as a scam, proceeding to fraud when the technology was oversold and financially started to go under; and that she is a mother of a child not yet out of diapers. (This Editor will add the smoke around Sunny Balwani’s emotional abuse.) She will also be in a Federal facility for women likely located not far from San Jose. It is expected that she will appeal the verdicts and the sentences.

There is also the Balwani Factor. Sunny Balwani was convicted on 12 wire fraud charges and as Theranos’ president, was depicted as the ‘enforcer’. That book, when thrown after Holmes’ sentencing, will not be a paperback. Although he will want to stock up on reading for his expected long stay in Club Fed. Also CBS News.

Thursday roundup: UHG/Optum, Change extend merger deadline to 31 Dec, buys Kelsey-Seybold; $2B Tivity Health sale; General Dynamics enters derm AI diagnostics; MobileHelp PERS sold to Advocate Aurora

April 7, 2022 | by

UnitedHealth Group’s Optum unit and Change Healthcare, to no one’s surprise, have cast the die and extended their merger deadline to 31 December. Originally, the acquisition was to be completed at end of 2021 and later pushed to 5 April.

In a joint release, they touted their shared vision for a “simpler, more intelligent and adaptive health system for patients, payers and providers”. Backing this up is a break fee of $650 million from Optum to Change Healthcare in the event the court scuppers the deal.

On 25 February, the US Department of Justice filed a lawsuit in US District Court in Washington, DC to stop the acquisition on anti-competitive grounds [TTA 25 Feb]. UHG/Optum and Change, despite divestitures, could not evade DOJ’s reasoning that Optum was buying its only major competitor in areas such as hospital claims data, claims processing, claims editing, and EDI clearinghouse, which facilitates the transfer of electronic transactions between payers and physicians, health care professionals, or facilities. Less than a month later, Optum and Change responded, contesting the charges in that same District Court, and contending that it would be ‘economic suicide’ for Optum to be anti-competitive, since Optum’s business model is dependent on payers other than UnitedHealth. Fighting rather than switching off the deal, it’ll be heard on 1 August [TTA 23 March]. FierceHealthPayer, 

As noted last week, Optum is writing big checks for LHC Group home care/management services and Refresh Mental Health. This week’s jumbo buy is the Kelsey-Seybold Clinic of Houston. This is a multi-faceted operation with multiple multi-specialty care centers, a cancer center, a women’s health center, two ambulatory surgery center locations, and a 30-location specialized sleep center. It also has a highly regarded ACO and KelseyCare Advantage, a 5 Star Medicare Advantage plan, in addition to partnering with insurers on commercial value-based health plans. If it closes, Optum will be more than likely well over its goal of owning or controlling over 5% of US providers. Terms were not disclosed, but TPG’s private equity arm made a minority investment in Kelsey-Seybold two years ago. At the time, the valuation was rumored to be $1.3 billion.

Tivity Health is being acquired by funds managed by Stone Point Capital for $2 billion. The $32.50 per share is a 20% premium to the 90-day price average, which reflects its 40% financial share growth in the past year. Having sold its original name of Healthways and a sizable chunk of its original business to the digital health conglomerate Sharecare, it rebranded in 2017 as Tivity and concentrated on fitness businesses: senior-targeted SilverSneakers, gym chain Prime Fitness, and alternative/complementary medicine WholeHealth Living. Closing is anticipated to be Q3. CEO Richard Ashworth will remain with the company, and headquarters stay in Franklin, TN. Release, Becker’s

A palate cleanser: a division of defense/aerospace giant General Dynamics, General Dynamics Information Technology (GDIT) has developed an AI diagnostic for remote dermatologic use for the active service/veteran market. It classifies images of skin lesions, determines if they are indicative of skin disease, and will recommend follow-up care. According to the GDIT release, “the GDIT skin lesion classifier tool won third place in the VA National AI Tech Sprint 2020-2021, a competition organized by the Department of Veterans Affairs (VA) National Artificial Intelligence Institute (NAII) to match private sector talent with veterans, VA clinicians and other experts to brainstorm AI-based solutions that can improve veteran health and well-being.” Also Healthcare IT News

MobileHelp, one of the earliest mobile PERS, and sister company Clear Arch Health, a remote patient monitoring provider, have been purchased by Advocate Aurora Enterprises. Terms were not disclosed, but management will remain in place in Boca Raton. MobileHelp was private, so estimates of valuation are difficult, but their private equity backing included ABRY Partners and Topmark Partners (Crunchbase). Their PERS market claimed 300,000 households. Clear Arch had a separate clinical base with provider care management of chronic condition patients connected to EHRs. For AAE, a division of Advocate Aurora Health systems in Illinois and Wisconsin, MobileHelp’s acquisition will complement their recently acquired home health provider Senior Helpers and Xhealth clinical digital solution ordering. The traditional PERS and call center business continues to be of interest, but blending into other businesses. Release, Healthcare IT News

DOJ lawsuit to block UnitedHealth-Change Healthcare’s acquisition now set for 1 August trial

March 23, 2022 | by

UnitedHealth Group isn’t giving up. Last Thursday (17 March) UHG filed with the US District Court in Washington, DC, responding to the US Department of Justice’s (DOJ) suit to stop their acquisition of Change Healthcare and folding into its Optum unit. Essentially, their argument in their public statement is that the acquisition would have multiple consumer benefits and big savings as the ‘healthcare system of the future’, including:

  • We can increase efficiency and reduce friction in health care, producing a better experience and lower costs
  • Helping health care providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes
  • Improve the quality of health care delivery, automate claims transactions, and accelerate payment between provider and payer
  • Patients get a simplified consumer experience, lower costs, and get better point-of-care delivery due to improved adherence to best clinical evidence

In their view, it would be ‘economic suicide’ for Optum to be anti-competitive. UHG states that Optum’s business model is dependent upon their external customers, and if their competitively sensitive information is misused, they would stop using Optum’s services and turn to competitors.

The DOJ does not agree, of course. As to competition, they contend that Change is the only significant competitor to Optum in claims processing. The merger would be anti-competitive in other ways as well:

  • Change is “United’s only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year — and give United a monopoly share in the market.” It would also give UHG the ability to raise competitors’ costs for that technology.
  • Hospital data accounts for about half of all insurance claims. UHG with Change would have effective control of that ‘highway’.
  • Change is also a major EDI clearinghouse, which facilitates the transfer of electronic transactions between payers and physicians, health care professionals, or facilities. UHG would have control of the EDI clearinghouse market.
[More–TTA 25 Feb] 

It moves to the District Court and Judge Carl J. Nichols on 1 August. The trial will be 12 days–seven for DOJ, five for UHG/Change. With the delay, analyst Jailendra Singh of Credit Suisse expects Change to press UHG to sweeten the deal, such as a termination fee, versus an increase in purchase price. It’ll be an interesting summer for a bevy of lawyers! Forbes, Credit Suisse note

This Editor holds to her previous opinion that this merger is ‘one for the books–the ones marked ‘Nice Try, But No Dice’.  No matter what, Change will have to change.

The shoe dropped: DOJ sues to block UnitedHealth Group-Change Healthcare merger. What’s next?

February 25, 2022 | by

To nearly no one’s surprise, the US Department of Justice did what was reported back on 17 Jan: block UnitedHealth Group’s (UHG) bid to acquire Change Healthcare on anticompetitive grounds. Earlier today, the DOJ issued their statement in a release on the joint civil lawsuit with the attorneys general of New York and Minnesota. (This Editor finds the New York AG participation interesting, as Change is HQ’d in Nashville, Tennessee with UnitedHealth in Minnesota. The usual grounds are state interest and commerce.)

The reasons cited will also not come as any surprise to our Readers, as these objections were raised from the start in that the acquisition would give UHG an unfair advantage against their payer competition and squelch innovation. These are from the DOJ release and the complaint filed today (24 February) in the US District Court for the District of Columbia.

  • UHG is the US’ largest insurer and also a major controller of health data. Change is a major competitor to UHG/OptumInsight in health care claims technology systems, which was the basis of the American Hospital Association’s (AHA) objections.
  • The acquisition would eliminate a major competitor to UHG in claims processing. Moreover, Change is “United’s only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year — and give United a monopoly share in the market.” It would also give UHG the ability to raise competitors’ costs for that technology.
  • Hospital data accounts for about half of all insurance claims. UHG with Change would have effective control of that ‘highway’.
  • Change is also a major EDI clearinghouse, which facilitates the transfer of electronic transactions between payers and physicians, health care professionals, or facilities. UHG would have control of the EDI clearinghouse market.
  • UHG would be able to view competitors’ claims data and other competitively sensitive information through Change. “United would be able to use its rivals’ information to gain an unfair advantage and harm competition in health insurance markets.”

The plaintiffs–DOJ, New York, and Minnesota–conclude with a request of the court to 1) enjoin (stop) the acquisition and 2) award restitution by UHG and Change for costs incurred in bringing this action.

Consider this acquisition one for the books–the one embossed ‘Nice Try, But No Dice’. 

So what’s next? Here’s your Editor’s speculation.

Change is one of the ‘shaggiest’ independent companies in healthcare, in so many businesses (many acquired) that it’s hard to understand exactly what they stand for. It has extensive businesses not only in the areas above that will nix the UHG buy, but also in imaging, data analytics, clinical decision making, revenue cycle management, provider network optimization and related solutions, pharmacy benefits, patient experience in billing and call centers, funding healthcare….and that’s just the surface of a giant list. From the outside, it’s hard to see how all these parts coalesce.

In the industry, Change was long rumored to be for sale. Recently, it’s become unprofitable. It closed its FY 2021 (ending 31 Mar 2021) with a $13.1 million loss and through Q3 FY 2022 with a $24.5 million loss.

At the end of this, Change may be better advised to sell off some of its businesses, retrench, and refocus on its most cohesive and profitable areas.