TTA’s April Showers 3: UHG damp financials, Change hack, House grilling; Cerebral hands over $7M; VA may restart Cerner EHR implementation; NeueHealth gets $30M from NEA; TandemStride debuts trauma survivor app, more!

 

 

Another packed week, with a few baffling events. Leading in bafflement is NeueHealth’s additional $30M from NEA, which now owns 60%. UHG battling on multiple fronts between the Change hacking and the House, Walgreens lays off more to cut costs, VillageMD sued on ad trackers, and Cerebral’s comeuppance costs $7.1M. VA may restart Oracle Cerner implementation, Epic and Particle Health feud. But restoring faith in health tech benefiting a neglected group is TandemStride. 

TandemStride launches platform to assist survivors of traumatic injury; a personal look (A real care gap)
News roundup: Congress hammers absent UHG on Change cyberattack–and more; 10% unhinged at Hinge Health; Steward Health nears insolvency; Two Chairs $72M Series C (UHG’s troubles cover the waterfront)
ISfTeH student contest and award 2024–deadline 26 April! (Move fast!)
Mid-week short takes: UnitedHealth’s $1.2B Q1 loss from Change attack, another Walgreens layoff, Dexcom-MD Revolution partner, Kontakt.io $47.5 raise, GeBBS Healthcare may sell for $1B (Walgreens still downsizing–what’s next)
News roundup: VillageMD sued on Meta Pixel trackers; Cerebral pays $7.1M FTC fine on data sharing, cancellation policy; VA may resume Oracle Cerner implementation during FY2025; Epic-Particle Health dispute on PHI sharing (Cerebral still in trouble)
The New Reality, Bizarro World version: NeueHealth gets $30M loan increase from NEA, now majority owner (Baffling)

This packed week was about righting listing ships. Teladoc’s CEO suddenly departs, Amwell at risk of a NYSE delisting–we look at What Happened and what needs to be done. VillageMD gets new COO to manage the shrinkage. And Change Healthcare data on sale from disgruntled ALPHV affiliate. Digital health funding continues to limp along. Clover looks at another delisting, Walmart Health applies the brakes. And we highlight innovations from Novosound, Biolinq, Eko, Universal Brain. 

Digital health’s Q1 according to Rock Health: the New Reality is a flat spin back to 2019 (Limping, but alive)
VillageMD names new president and COO as it shrinks to 620 locations (Ex Centene, Humana exec comes out of short retirement to clean up)
News roundup: Now Clover Health faces delisting; BlackCat/ALPHV affiliate with 4TB of data puts it up for sale; $58M for Biolinq’s ‘smallest blood glucose biosensor’ (Will UHG pay more ransom?)
Opinion: Further thoughts on Teladoc, Amwell, and the future of telehealth–what happens next? (A hard look at the follies, mistakes, and saving ships)
News roundup: Amwell faces NYSE delisting; Walmart Health slows Health Centers, except Texas; Novosound’s ultrasound patent; Eko’s Low EF AI; Universal Brain; Elizabeth Holmes in ‘Dropout’ + update
Teladoc CEO Jason Gorevic steps down immediately in shock announcement (Now what?)

A damp start to April leads with puzzling news. NeueHealth loses plans and big money in ’23–but gives a big bonus to its CEO. Cano Health reorganizing or selling by June. ATA kicks DOJ about expediting controlled substance telehealth regs. Apple keeps kicking around the ‘Davids’, but Davids won’t stop slinging either. And if you work with a PR or marketing agency, our Perspectives has some advice for you.

More New Reality: NeueHealth (Bright Health) CEO’s $1.9M bonus, 2023 financials–and does Cano Health have a future? (Two stories gone way sideways)
ATA requests expediting of revised proposed rule on controlled substance telehealth prescribing; announces Nexus 2024 meeting 5-7 May (DEA needs to get moving now, not later)
Davids (AliveCor, Masimo) v. Goliath (Apple): the patent infringement game *not* over; Masimo’s messy proxy fight with Politan (updated) (Seeing value in Masimo?)
Perspectives: Working with a PR Agency–How to Make the Most of the Partnership (Expert advice if you manage communications)

It was a pre-Easter week that started as quiet and got VERY LOUD at the end. Walgreens took the hard road, writing down VillageMD even before the closures were final and lowering forecasts. An important metastudy+ casts doubt on the efficacy of present digital health diabetes solutions but provides solid direction forward. And it’s definitely an early sunny spring for funding, but there’s continued bad weather forecast for UnitedHealth Group and Oracle Cerner’s VA implementation.

Facing Future 2: Walgreens writes down $5.8B for VillageMD in Q2, lowers 2024 earnings on ‘challenging’ retail outlook (Biting bullet early and hard)
Short takes: PocketHealth, Brightside fundings; VA OIG reports hit Oracle Cerner; Change cyberattack/legal updates; UHG-Amedisys reviewed in Oregon; Optum to buy Steward Health practices (UHG carries on as does company funding)
Can digital health RPM achieve meaningful change with type 2 diabetics? New metastudy expresses doubt. (Major digital health findings from PHTI)

This week’s Big Quake was DOJ’s antitrust suit against Apple for smartphone monopoly and control over apps. Another quake: 2023 data breaches were up 187%–when a medical record is worth $60, it’s logical. Early-stage funding and partnerships are back with a roar when AI’s in your portfolio. And Walgreens shrinks both VillageMD and distribution.

2023 US data breaches topped 171M records, up 187% versus 2022: Protenus Breach Barometer (And that was LAST year!)
Why is the US DOJ filing an antitrust lawsuit against Apple–on monopolizing the smartphone market? (One wonders)
Mid-week roundup: UK startup Anima gains $12M, Hippocratic AI $53M, Assort Health $3.5M; Abridge partners with NVIDIA; VillageMD sells 11 Rhode Island clinics; $60 for that medical record on the dark web (Funding’s back and AI’s got it)
Walgreens’ latest cuts affect 646 at Florida, Connecticut distribution centers (More in next week’s financial call)

A lighter week with the Change hacking starting to recede (pharmacy back up on Wed 13 March) and most industry types at HIMSS, we caught up with the first VA go-live in a year, Dexcom’s cleared OTC CGM, WebMD doubles down on health ed with Healthwise buy, Centene may sell abandoned HQ building. And Friday’s news is on a big cyberattack of an NHS Scotland region.

Weekend roundup: NHS Dumfries (Scotland) cyberattacked; delisted Veradigm’s strong financials; One Medical NY patients’ coverage clash; Suki voice AI integrates with Amwell; Legrand and Possum extended; Zephyr AI’s $111M Series A

News roundup: Cerner goes live at VA, DOD Lovell Center; WebMD expands education with Healthwise buy; Dexcom has FDA OK for OTC glucose sensor; Centene may have buyer for abandoned Charlotte HQ (Back to normal news!)
Updates on Change cyberattack: UHG’s timeline for system restorations, key updates around claims and payments in next weeks (updated) (Saving the analysis for later)

The Change Healthcare/Optum cyberattack entered a second week with no restoration of services in sight; how providers and pharmacies are coping without their primary means of processing patient claims and furnishing care–and the psychological toll; and the uncertain future of Walgreens, WBA, and the rapid downsizing of their provider arm, VillageMD. To add further insult to UHG, now DOJ is putting them under antitrust scrutiny.

Is BlackCat/ALPHV faking its own ‘death’? (updated) HHS and CMS come to Change affected providers’ assistance with ‘flexibilities’
Update: VillageMD lays off 49 in first two of six Village Medical closures in Illinois
Reality Bites Again: UHG being probed by DOJ on antitrust, One Medical layoffs “not related” to Amazon, the psychological effects of cyberattacks
Facing Future: Walgreens CEO moves company into strategic review–will he get WBA board alignment? (‘Go big’ now in reverse)
Week 2: Change Healthcare’s BlackCat hack may last “for the next couple of weeks”, UHG provides temp funding to providers, AHA slams it as a ‘band aid”–but did Optum already pay BlackCat a $22M ransom? (updated) (When will it end? Providers. staff, and patients are hurting)

Three major stories lead this packed week. Change Healthcare’s and Optum’s week-long struggle to get 100 or so BlackCat hacked systems up and running again for pharmacies and hospitals–no end in sight. Walgreens keeps closing Village MD locations–up to 85. But the funding freeze seems to be thawing, with M&A and lettered funding rounds suddenly poking through like daffodils–though the structure of one (Dario-Twill) is puzzling and another may be contested (R1 RCM). And Veradigm finally delists–while buying ScienceIO.

BlackCat is back, claims theft of 6TB of Change Healthcare data (Latest breaking news)

Breaking: VillageMD exiting Illinois clinics–in its home state–as closures top 80 locations (Something not good in the Village)
Short takes on a springlike ‘defrosting’: Redi Health’s $14M Series B, Dario Health buys Twill for ~$30M (About time for a Spring thaw)
Roundup: Walgreens’ new chief legal officer; Digital Health Collaborative launched; fundings/M&A defrosting for b.well, R1 RCM, Abridge, Reveleer; Veradigm likely delists, buys ScienceIO–mystery? (updated)
Change Healthcare cyberattack persists–is the BlackCat gang back and using LockBit malware? BlackCat taking credit. (update 28 Feb #2) (100 systems down, BlackCat’s back)


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Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine, and health tech, worldwide–thoughtfully and from the view of fellow professionals

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

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

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Mid-week short takes: UnitedHealth’s $1.2B Q1 loss from Change attack, another Walgreens layoff, Dexcom-MD Revolution partner, Kontakt.io $47.5 raise, GeBBS Healthcare may sell for $1B

UnitedHealth Group rang up Q1 revenue of $99.8 billion, with adjusted earnings from operations $8.5 billion, but had a net loss of $1.22 billion (WSJ). (Ed. note–Becker’s has $1.4 million) The loss was created not only from the cyberattack on Change Healthcare’s systems ($0.74/share) but also a $7 billion charge due to the sale of UHG’s Brazil operations.

  • Q1 revenue was up $7.9 billion versus same quarter 2023.
  • Their year 2024 forecast of the damage done by the ALPHV cyberattack on Change is $1.6 billion ($1.15 to $1.35 per share).
  • Optum’s Q1 revenues of $61 billion grew by $7 billion over prior year, led by Optum Health and Optum Rx due to continued strong expansion in the number of people served

Someone at HIStalk did some counting and noted that the Optum Solution Status dashboard for Change Healthcare shows 109 of 137 applications remain down, not much different than when we eyeballed it on 3 April. CNBC, UHG release, HIStalk, Becker’s, MSN/WSJ

Walgreens continues to cut staff–this go-around, it’s corporate support center employees both in Chicago and working remotely. No total was provided by the Walgreens spokesperson contacted by Crain’s Chicago Business. This adds to 900 corporate staff laid off in several waves earlier this year and last fall, VillageMD staff due to 140 closures, and 646 distribution center staff laid off last month. Walgreens stock is down 33% this year. 

In cheerier news, Dexcom is partnering with remote patient monitoring (RPM) provider MD Revolution to add its continuous glucose monitoring (CGM) system to MD Revolution’s RPM platform. MDR is a startup company marketing its RPM platform to large practices, health systems, and healthcare organizations. Current raises date back to 2015 totaling under $60 million mostly from venture round funding (Crunchbase). Release

Inpatient data analytics company Kontakt.io raised a Series C investment of $47.5 million, led by Growth Equity at Goldman Sachs Asset Management (Goldman Sachs). This adds to a modest $21.5 million from various investors from 2013 to 2022 (Crunchbase). Kontakt provides patient flow analytics to health systems to optimize patient, staff, and resource flows, improving safety, coordination, and service delivery. It uses a combination of RTLS property tracking, cloud, and AI to provide real-time location data and orchestrate staff, equipment, and clinical spaces around a patient’s care journey. The additional funds will be used for sales expansion and AI development. HIStalk, Release 

GeBBS Healthcare Solutions on the block, may fetch $1 billion. The LA-based business process outsourcing (BPO)/revenue cycle management (RCM) company, currently owned by ChrysCapital of New Delhi, is on the market for a reported $800 million to $1 billion. This would be a tidy payday for ChrysCapital which back in 2018 acquired an 80% stake in GeBBS for $140 million with a valuation then of $175 million. ChrysCapital is India’s largest home-grown PE investor. Economic Times-India Times, HIStalk

TTA’s April Showers 2: Teladoc, Amwell’s future, VillageMD’s new COO, Change data on sale, digital health funding limps along, pending delistings, innovations sprout, more!

 

 

This packed week is about righting listing ships. Teladoc’s CEO suddenly departs, Amwell at risk of a NYSE delisting–we look at What Happened and what needs to be done. VillageMD gets new COO to manage the shrinkage. And Change Healthcare data on sale from disgruntled ALPHV affiliate. Digital health funding continues to limp along. Clover looks at another delisting, Walmart Health applies the brakes. And we highlight innovations from Novosound, Biolinq, Eko, Universal Brain. 

Digital health’s Q1 according to Rock Health: the New Reality is a flat spin back to 2019 (Limping, but alive)
VillageMD names new president and COO as it shrinks to 620 locations (Ex Centene, Humana exec comes out of short retirement to clean up)
News roundup: Now Clover Health faces delisting; BlackCat/ALPHV affiliate with 4TB of data puts it up for sale; $58M for Biolinq’s ‘smallest blood glucose biosensor’ (Will UHG pay more ransom?)
Opinion: Further thoughts on Teladoc, Amwell, and the future of telehealth–what happens next? (A hard look at the follies, mistakes, and saving ships)
News roundup: Amwell faces NYSE delisting; Walmart Health slows Health Centers, except Texas; Novosound’s ultrasound patent; Eko’s Low EF AI; Universal Brain; Elizabeth Holmes in ‘Dropout’ + update
Teladoc CEO Jason Gorevic steps down immediately in shock announcement (Now what?)

A damp start to April leads with puzzling news. NeueHealth loses plans and big money in ’23–but gives a big bonus to its CEO. Cano Health reorganizing or selling by June. ATA kicks DOJ about expediting controlled substance telehealth regs. Apple keeps kicking around the ‘Davids’, but Davids won’t stop slinging either. And if you work with a PR or marketing agency, our Perspectives has some advice for you.

More New Reality: NeueHealth (Bright Health) CEO’s $1.9M bonus, 2023 financials–and does Cano Health have a future? (Two stories gone way sideways)
ATA requests expediting of revised proposed rule on controlled substance telehealth prescribing; announces Nexus 2024 meeting 5-7 May (DEA needs to get moving now, not later)
Davids (AliveCor, Masimo) v. Goliath (Apple): the patent infringement game *not* over; Masimo’s messy proxy fight with Politan (updated) (Seeing value in Masimo?)
Perspectives: Working with a PR Agency–How to Make the Most of the Partnership (Expert advice if you manage communications)

It was a pre-Easter week that started as quiet and got VERY LOUD at the end. Walgreens took the hard road, writing down VillageMD even before the closures were final and lowering forecasts. An important metastudy+ casts doubt on the efficacy of present digital health diabetes solutions but provides solid direction forward. And it’s definitely an early sunny spring for funding, but there’s continued bad weather forecast for UnitedHealth Group and Oracle Cerner’s VA implementation.

Facing Future 2: Walgreens writes down $5.8B for VillageMD in Q2, lowers 2024 earnings on ‘challenging’ retail outlook (Biting bullet early and hard)
Short takes: PocketHealth, Brightside fundings; VA OIG reports hit Oracle Cerner; Change cyberattack/legal updates; UHG-Amedisys reviewed in Oregon; Optum to buy Steward Health practices (UHG carries on as does company funding)
Can digital health RPM achieve meaningful change with type 2 diabetics? New metastudy expresses doubt. (Major digital health findings from PHTI)

This week’s Big Quake was DOJ’s antitrust suit against Apple for smartphone monopoly and control over apps. Another quake: 2023 data breaches were up 187%–when a medical record is worth $60, it’s logical. Early-stage funding and partnerships are back with a roar when AI’s in your portfolio. And Walgreens shrinks both VillageMD and distribution.

2023 US data breaches topped 171M records, up 187% versus 2022: Protenus Breach Barometer (And that was LAST year!)
Why is the US DOJ filing an antitrust lawsuit against Apple–on monopolizing the smartphone market? (One wonders)
Mid-week roundup: UK startup Anima gains $12M, Hippocratic AI $53M, Assort Health $3.5M; Abridge partners with NVIDIA; VillageMD sells 11 Rhode Island clinics; $60 for that medical record on the dark web (Funding’s back and AI’s got it)
Walgreens’ latest cuts affect 646 at Florida, Connecticut distribution centers (More in next week’s financial call)

A lighter week with the Change hacking starting to recede (pharmacy back up on Wed 13 March) and most industry types at HIMSS, we caught up with the first VA go-live in a year, Dexcom’s cleared OTC CGM, WebMD doubles down on health ed with Healthwise buy, Centene may sell abandoned HQ building. And Friday’s news is on a big cyberattack of an NHS Scotland region.

Weekend roundup: NHS Dumfries (Scotland) cyberattacked; delisted Veradigm’s strong financials; One Medical NY patients’ coverage clash; Suki voice AI integrates with Amwell; Legrand and Possum extended; Zephyr AI’s $111M Series A

News roundup: Cerner goes live at VA, DOD Lovell Center; WebMD expands education with Healthwise buy; Dexcom has FDA OK for OTC glucose sensor; Centene may have buyer for abandoned Charlotte HQ (Back to normal news!)
Updates on Change cyberattack: UHG’s timeline for system restorations, key updates around claims and payments in next weeks (updated) (Saving the analysis for later)

The Change Healthcare/Optum cyberattack entered a second week with no restoration of services in sight; how providers and pharmacies are coping without their primary means of processing patient claims and furnishing care–and the psychological toll; and the uncertain future of Walgreens, WBA, and the rapid downsizing of their provider arm, VillageMD. To add further insult to UHG, now DOJ is putting them under antitrust scrutiny.

Is BlackCat/ALPHV faking its own ‘death’? (updated) HHS and CMS come to Change affected providers’ assistance with ‘flexibilities’
Update: VillageMD lays off 49 in first two of six Village Medical closures in Illinois
Reality Bites Again: UHG being probed by DOJ on antitrust, One Medical layoffs “not related” to Amazon, the psychological effects of cyberattacks
Facing Future: Walgreens CEO moves company into strategic review–will he get WBA board alignment? (‘Go big’ now in reverse)
Week 2: Change Healthcare’s BlackCat hack may last “for the next couple of weeks”, UHG provides temp funding to providers, AHA slams it as a ‘band aid”–but did Optum already pay BlackCat a $22M ransom? (updated) (When will it end? Providers. staff, and patients are hurting)

Three major stories lead this packed week. Change Healthcare’s and Optum’s week-long struggle to get 100 or so BlackCat hacked systems up and running again for pharmacies and hospitals–no end in sight. Walgreens keeps closing Village MD locations–up to 85. But the funding freeze seems to be thawing, with M&A and lettered funding rounds suddenly poking through like daffodils–though the structure of one (Dario-Twill) is puzzling and another may be contested (R1 RCM). And Veradigm finally delists–while buying ScienceIO.

BlackCat is back, claims theft of 6TB of Change Healthcare data (Latest breaking news)

Breaking: VillageMD exiting Illinois clinics–in its home state–as closures top 80 locations (Something not good in the Village)
Short takes on a springlike ‘defrosting’: Redi Health’s $14M Series B, Dario Health buys Twill for ~$30M (About time for a Spring thaw)
Roundup: Walgreens’ new chief legal officer; Digital Health Collaborative launched; fundings/M&A defrosting for b.well, R1 RCM, Abridge, Reveleer; Veradigm likely delists, buys ScienceIO–mystery? (updated)
Change Healthcare cyberattack persists–is the BlackCat gang back and using LockBit malware? BlackCat taking credit. (update 28 Feb #2) (100 systems down, BlackCat’s back)


Have a job to fill? Seeking a position? See jobs listed with our new job search partner Jooble in the right sidebar!


Read Telehealth and Telecare Aware: https://telecareaware.com/  @telecareaware

Follow our pages on LinkedIn and on Facebook

We thank our advertisers and supporters: Legrand, UK Telehealthcare, ATA, The King’s Fund, DHACA, HIMSS, MedStartr, and Parks Associates.

Reach international leaders in health tech by advertising your company or event/conference in TTA–contact Donna for more information on how we help and who we reach. 


Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine, and health tech, worldwide–thoughtfully and from the view of fellow professionals

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

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

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Opinion: Further thoughts on Teladoc, Amwell, and the future of telehealth–what happens next?

The end of last week marked an Apocalypse Light in telehealth, but it was coming in this Editor’s opinion. And Pepper the Robot has nothing to do with it, other than representing telehealth’s state, and perhaps this Editor’s.

Two events–the forced exit of 15-year CEO Jason Gorevic from Teladoc and both Teladoc’s and Amwell’s continued market weakness and long roads to breakeven, if ever–have caused many in the field to think hard about our direction and where telehealth is going.

Both Teladoc and Amwell are the pioneers in provider-to-patient telehealth, going back over 20 years. While Amwell is no longer the #2 to Teladoc’s #1, both were in the forefront of how remote consults have transformed healthcare. The ability to remotely diagnose and provide care at distance is now a ‘given’ that has shifted the baseline for providers, patients, and payers. Nearly every entrant has or has acquired a remote in-person or app feature, whether care management, diagnostics, health education, or telemental health.

Because Teladoc’s struggles are writ large in the industry, we might benefit from a closer look at What Happened–and what in this Editor’s opinion might happen next.

What Happened?

The pandemic. Yes, it provided a major boost to any telehealth provider’s business whether corporate or provider-based. It mainstreamed telehealth. Smaller players like MDLive and Included Health snatched market share. But it also introduced ‘silly money’ that led companies to think that all they had to do was hold out the buckets, fill them with cash, and buy business. By late 2020, practices had reopened–and telehealth usage nosedived quickly, stabilizing to around 5% of medical claims, over 60% of which is mental health according to the FAIR Health end of 2023 telehealth tracker. 

The integration of telehealth into multiple platforms is now commonplace. This Editor observed in her work with her then-employer in early 2020 that the population health platform they had introduced already had integrated HIPAA-compliant telehealth platforms as a module–all that was needed to get the practices up and running on it–and coding correctly. Health systems now integrate telehealth into their patient portals. EHRs even for the small practice market now have integrated telehealth. As mentioned, specialized telehealth such as telemental health took off during the pandemic and, after a cleanout period, have largely stayed with us. Asynchronous telehealth has also become acceptable to consumers. (Interestingly, the leading asynchronous diagnoses are for hypertension and respiratory diseases that benefit companies like Amazon Clinic and triage-type systems.)

People use it when needed, but the enterprise payment model is subscriber-based. Teladoc has long claimed its subscriber base is 90 million people–but user data from HHS (ASPE 3/2023) indicates that only one of four use it. For an enterprise, paying for subscribers, this is a big fat line item ready to cut. Payers have also integrated telehealth into their coverage. Teladoc has, to its credit, created payer partnerships such as with Aetna, but so have others.

Bottom line: there’s no more ‘blue water’ market left for a big player like Teladoc with a model dependent on growth and on enterprise sales that are inherently price-driven. It’s a hard and painful change to realize that your technology is no longer the future, and that you have to slug it out in the mud with everyone else. 

A closer look at Teladoc. 

After 20 years, why wasn’t it profitable? A look back on our Teladoc coverage prior to the pandemic indicated growth was created by buying up smaller competitors, domestic and international, at premium prices. InTouch Health was a notable one, acquired January 2020 for $600 million. But Teladoc was way overdue on turning a profit before 2020, at which point it should have firmly moved into the black. And then reality hit by early 2022.

Where was the board in all this? This Editor does not pretend to know the minds of those far more experienced in the financial aspect of business than she. But after 15 years of CEO Jason Gorevic and the 2022 $6.6 billion write-down of Livongo which precipitated the long 90%+ loss in market value slide, why was he given walking papers only last Friday? Boards are supposed to be wise heads, looking out for the business and the shareholders. Did they get caught in the hype or hope that BetterHelp would save the company? Did something else happen? (Fun fact: Mr. Gorevic remains on the board.)

A track record of flawed judgment and recovery. In December 2018, their COO/CFO was dismissed after charges of insider trading and sexual misconduct. There have been two COOs since then, the first, David Sides, moving to CEO of NextGen Healthcare in 2021. In May 2019, Teladoc’s NCQA accreditation, first won in 2013, was placed under an unusual “corrective action” by NCQA which was termed by the CEO ‘much ado about nothing’. Au contraire, it was a black eye at the time and the industry never quite knew what happened. And then there was Livongo….

The Livongo deal killed Teladoc; saying the quiet part out loud. As this Editor stated at the time, the $18.5 billion purchase price of Livongo was dangerous for Teladoc (see ‘Gimlet Eyes’ from August 2020 here and here). It was a too-fast too-much too-soon deal that closed in three months at the summer peak of the pandemic and lockdowns looking like forever. The very notion that Livongo would open doors in hospitals and cross-selling to enterprises was suspect even at the time. The deal that Gorevic and 7WireVentures’ Glen Tullman and Livongo CEO Zane Burke concocted was ‘Grand Theft Auto’–for Livongo and their leadership, especially if they sold their Teladoc shares. It was never a merger of equals nor was it additive in value. Teladoc then made multiple, continuing transitioning and management errors, including not retaining Livongo executives, which have been well documented. And again–where was the board on this?

Where are the analysts? They seem to accept a storyline that ‘all is OK’ for 2024 now that Gorevic is gone. But standing pat on the Q1 and 2024 guidance as nearly all have done is suspect. Unlike Amwell, Teladoc has not forecast when it will achieve breakeven, much less profitability.

What’s Next? Given all the above, when will the aftershocks hit? Sooner or later?

If one looks to Walgreens as an example, where disaster hit quickly and hard last summer, a board member, Ginger Graham, took the acting CEO position. She took front and center on investor calls and executing reorganizations, which for an interim is unusual. Almost immediately, the cleanout began at the CIO and CFO levels and moved downward. Tim Wentworth joined as CEO in mid-October 2023 seven weeks after Roz Brewer was separated. VillageMD was identified quickly as a large part of the problem. He took the writedown even before locations were fully closed and made multiple moves to cut costs starting at the corporate level before moving into the field. This is not to make light of the human damage and the jury remains out on the wisdom of some of the moves. But Wentworth has moved quickly, decisively, and positioned it realistically in saying ‘this is not a 12-month turnaround’ and wisely caveating that board alignment around the strategic review was essential. Timid he is not.

Teladoc needs to move quickly, and intelligently–now, not later. While acting CEO Mala Murthy, backed by the board, makes decisive moves, Teladoc must find and appoint a Tim Wentworth-type at the helm for the turnaround. Quickly. It’s important not only for Teladoc but also for the telehealth industry.  But neither Mr. Market, judging on share price, nor this Editor, based on their track record, are hopeful.

TTA’s Finally Spring: DOJ sues Apple on monopoly, ’23 breached records up 187%, funding’s back and AI’s got it, Walgreens shrinkage, more!

 

 

A mixed week with the Change/Optum hack gradually resolving and receding. The Big Quake was DOJ’s antitrust suit against Apple for smartphone monopoly and control over apps. Another quake is that 2023 data breaches were up 187%–when a medical record is worth $60, it’s logical. Early stage funding and partnerships are back with a roar when AI’s in your portfolio. And Walgreens shrinks both VillageMD and distribution.

2023 US data breaches topped 171M records, up 187% versus 2022: Protenus Breach Barometer (And that was LAST year!)
Why is the US DOJ filing an antitrust lawsuit against Apple–on monopolizing the smartphone market? (One wonders)
Mid-week roundup: UK startup Anima gains $12M, Hippocratic AI $53M, Assort Health $3.5M; Abridge partners with NVIDIA; VillageMD sells 11 Rhode Island clinics; $60 for that medical record on the dark web (Funding’s back and AI’s got it)
Walgreens’ latest cuts affect 646 at Florida, Connecticut distribution centers (More in next week’s financial call)

A lighter week with the Change hacking starting to recede (pharmacy back up on Wed 13 March) and most industry types at HIMSS, we caught up with the first VA go-live in a year, Dexcom’s cleared OTC CGM, WebMD doubles down on health ed with Healthwise buy, Centene may sell abandoned HQ building. And Friday’s news is on a big cyberattack of an NHS Scotland region.

Weekend roundup: NHS Dumfries (Scotland) cyberattacked; delisted Veradigm’s strong financials; One Medical NY patients’ coverage clash; Suki voice AI integrates with Amwell; Legrand and Possum extended; Zephyr AI’s $111M Series A

News roundup: Cerner goes live at VA, DOD Lovell Center; WebMD expands education with Healthwise buy; Dexcom has FDA OK for OTC glucose sensor; Centene may have buyer for abandoned Charlotte HQ (Back to normal news!)
Updates on Change cyberattack: UHG’s timeline for system restorations, key updates around claims and payments in next weeks (updated) (Saving the analysis for later)

The Change Healthcare/Optum cyberattack entered a second week with no restoration of services in sight; how providers and pharmacies are coping without their primary means of processing patient claims and furnishing care–and the psychological toll; and the uncertain future of Walgreens, WBA, and the rapid downsizing of their provider arm, VillageMD. To add further insult to UHG, now DOJ is putting them under antitrust scrutiny.

Is BlackCat/ALPHV faking its own ‘death’? (updated) HHS and CMS come to Change affected providers’ assistance with ‘flexibilities’
Update: VillageMD lays off 49 in first two of six Village Medical closures in Illinois
Reality Bites Again: UHG being probed by DOJ on antitrust, One Medical layoffs “not related” to Amazon, the psychological effects of cyberattacks
Facing Future: Walgreens CEO moves company into strategic review–will he get WBA board alignment? (‘Go big’ now in reverse)
Week 2: Change Healthcare’s BlackCat hack may last “for the next couple of weeks”, UHG provides temp funding to providers, AHA slams it as a ‘band aid”–but did Optum already pay BlackCat a $22M ransom? (updated) (When will it end? Providers. staff, and patients are hurting)

Three major stories lead this packed week. Change Healthcare’s and Optum’s week-long struggle to get 100 or so BlackCat hacked systems up and running again for pharmacies and hospitals–no end in sight. Walgreens keeps closing Village MD locations–up to 85. But the funding freeze seems to be thawing, with M&A and lettered funding rounds suddenly poking through like daffodils–though the structure of one (Dario-Twill) is puzzling and another may be contested (R1 RCM). And Veradigm finally delists–while buying ScienceIO.

BlackCat is back, claims theft of 6TB of Change Healthcare data (Latest breaking news)

Breaking: VillageMD exiting Illinois clinics–in its home state–as closures top 80 locations (Something not good in the Village)
Short takes on a springlike ‘defrosting’: Redi Health’s $14M Series B, Dario Health buys Twill for ~$30M (About time for a Spring thaw)
Roundup: Walgreens’ new chief legal officer; Digital Health Collaborative launched; fundings/M&A defrosting for b.well, R1 RCM, Abridge, Reveleer; Veradigm likely delists, buys ScienceIO–mystery? (updated)
Change Healthcare cyberattack persists–is the BlackCat gang back and using LockBit malware? BlackCat taking credit. (update 28 Feb #2) (100 systems down, BlackCat’s back)

A few surprises at week’s end, with what appears to be a cyberattack taking down Change Healthcare’s systems and Walgreens’ VillageMD exiting Florida. There’s life in funding and stock buybacks but Oracle Cerner’s in the same-old with the VA. Teladoc on slow recovery road, telemental health coming back, LockBit busted, Musk’s Neuralink implant, and a few thoughts on AI. 

Weekend reading: AI cybersecurity tools no panacea, reality v. illusion in healthcare AI, RPM in transitioning to hospital-at-home, Korean study on older adult health tech usage (AI obsession?)
Breaking: Walgreens’ VillageMD shutting in Florida; Change Healthcare system websites cyberattacked (updated) (Two shockers)
Mid-week roundup: Cotiviti’s $10.5B stake to KKR; Cigna buys back $3.2B shares; VA Oracle Cerner faulty med records; LockBit ransomware websites cold-busted at every level, principals indicted; Trualta partners with PointClickCare
Teladoc closes 2023 with improved $220M loss, but weak forecast for 2024 leads to stock skid (Teladoc in recovery)
Telemental news roundup: Brightside Health expands Medicaid/Medicare partners; Blackbird Health gains $17M Series A; Nema Health’s PTSD partnership with Horizon BCBSNJ (A comeback badly needed)
Neuralink BCI human implant subject moving computer mouse by thought: Elon Musk (Controversy)

A week with a lot of Facing The Music, as the snow and chill continue as we’re ready for spring, already. Four payers scuttle mergers, Walgreens and Amazon are reorganizing big time, and the losses (Amwell especially) and layoffs continue. Apple wins a round in its patent fight with AliveCor. It’s the New Reality and let’s hope we get to a Newer, Better Reality soon. Maybe it’s time to focus on designing tech that is older adult (and not so older adult) friendly–and yes, there are some ‘green shoots’.

Weekend reading: why the tech experience for older adults needs a reboot (a boot in the….?), health tech takeaways from CES (Must reads)
Mid-week news roundup: Elevance-BCBSLA, SCAN-CareOregon mergers scuttled; Amwell’s $679M loss, layoffs; Invitae genetics files Ch. 11; innovations released from DeepScribe, Essence SmartCare (DE), fall detection at Atrium Health (SC)
Further confirmation of the New Reality for digital health–lower valuations, more exits, fewer startups, tech buyers not seeing ROI (The cleanout continues)
AliveCor v. Apple latest: Federal court tosses AliveCor suit on heart rate app data monopolization (This David v. Goliath round goes to Goliath)
Facing the Music of the New Reality: Amazon Pharmacy & One Medical restructure; Walgreens shakes up health exec suites again, cashes out $992M in Cencora; new takes on NeueHealth; Cue Health, Nomad Health layoffs


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Telehealth & Telecare Aware: covering the news on latest developments in telecare, telehealth, telemedicine, and health tech, worldwide–thoughtfully and from the view of fellow professionals

Thanks for asking for update emails. Please tell your colleagues about this news service and, if you have relevant information to share with the rest of the world, please let me know.

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

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Walgreens’ latest cuts affect 646 at Florida, Connecticut distribution centers

Walgreens closes two distribution centers to ‘streamline capacities to best support our stores’. Two large centers serving Walgreens retail stores, in Orlando, Florida and Dayville (Killingly), Connecticut, are closing permanently in May, with workers discharged on or before 17 May. Affected are 324 workers in Orlando and 322 workers in Dayville who according to Walgreens will receive severance, additional separation pay, on-site career fairs, and/or outplacement services. While workers in Orlando have a better employment situation locally with unemployment at 3%, Dayville, in northeastern Connecticut’s rural Windham County near the Rhode Island border, is up to 5%. WARN notices were filed in both states about 14 March. Crain’s Chicago Business, Becker’s 

Press accounts do not mention corresponding closures of Florida or New England Walgreens stores. The puzzle is that Florida, particularly central Florida, is a growing market with a permanent population as well as seasonal/tourism. Yet all 52 Village Medical co-located offices have closed in that state [TTA 22 Feb]. Reasons why range from too small co-locations unable to support full practices to lack of doctors and medical saturation.

Walgreens, after several quarters of losses, is cutting to the bone expenses, with layoffs, consolidations, and closures everywhere from their Illinois headquarters to VillageMD. Despite the $1 billion in cuts for 2024 announced last October, Mr. Market is not responding–Walgreens’ stock price continues its downward trend and has lost 15% sharply since January. The new CEO Tim Wentworth has already positioned Walgreens’ recovery as ‘not a 12-month turnaround story’. Walgreens, over the past three years, drilled a lot of holes. Some worked out well, such as Shields, but the $10 billion investment in VillageMD may be a dry hole.  In the strategic review he announced earlier this month, Boots may be on the block, not Shields, but there will be more and deeper cuts to come–if WBA’s closely held ownership agrees. Based on the distribution center closures, expect more closures of retail locations served by those centers to be announced. 

Facing Future: Walgreens CEO moves company into strategic review–will he get WBA board alignment?

Walgreens’ CEO Wentworth positions for turnaround. “This is not a 12-month turnaround story” said Mr. Wentworth at the TD Cowen healthcare investor conference. To this Editor, the public honesty and lack of cant (a/k/a “PR Speak”) was refreshing. His unobvious caveat though was aligning the board around what he and the new executive team–very few if any carryovers from the prior regime–see as the direction of the company and asset management.

The WBA board is led by executive chairman Stefano Pessina, who has a vested interest in a turnaround. He is the lead individual shareholder of WBA with apparently 10% of shares with other insiders (including the COO of WBA International, Ornella Barra, spouse of Mr. Pessina) having about 17%. Large institutional investors (Vanguard, State Street, etc.) have over 60% of the company. The share price has fallen about 40% in the past year (from early March 2023) and 55% from this time in 2022. (Derived from WBA and Yahoo Finance)

Example: This Editor has estimated from public information that Walgreens sank north of $10 billion into VillageMD, from initial and then controlling interest, then funding the buy of Summit Health/CityMD. This is a huge and recent investment that is going sideways in a span of less than three years. It does take some nerve to walk it back. TTA 22 Feb

Other key points Mr. Wentworth made, according to the most complete report in Crain’s Chicago Business, was that this was not a prelude to some massive unveiling of a New Walgreens, that it would be a ‘starting gun’ for the work to be done, and that investors would be updated through the process. The review will include:

  • Evaluating its 8,000+ location footprint based on current and projected population and type of usage
  • US Healthcare assets including the already shrinking VillageMD [TTA 29 Feb], home care benefit management services primarily for payers CareCentrix, and specialty pharmacy Shields Health Solutions.
  • Shields is apparently no longer up for sale per earlier reports but Boots now may be
  • Smaller assets around clinical trials and pharmacy fulfillment centers

The next earnings call is 28 March, when undoubtedly more will be revealed.

FierceHealthcare caught up to this as well.

Editor’s POV on ‘musts to avoid’: Walgreens’ chief medical officer, Dr. Sashi Moodley, was interviewed during ViVE24 by Mobihealthnews, It is only remarkable in how he sidestepped direct questions beyond the first two lengthy ones on a virtual care initiative, generating a fog of non-answers around VillageMD closures and corporate strategy that became peasoup thick by the last question. (Kudos to Jessica Haden for not going wobbly.) The dubious wisdom of placing a C-level in front of the press at a ‘hard and tough news’ time, one whose expertise is clinical in nature, most comfortable in speaking to that and not corporate strategy, plus evidently has a hard time editing/limiting responses, should be rethought. 

Breaking: VillageMD exiting Illinois clinics–in its home state–as closures top 80 locations

VillageMD to cut six locations in the Chicago area–five standalone, one attached to a Walgreens store. The clinics will close on 19 April.

The irony is that VillageMD is headquartered in Chicago.

In October, Walgreens announced that 60 Village Medical clinics would close. The Florida closings announced last week were in two phases, 14 and 38, a total of 52. With Illinois, the total would be 58. However, Crain’s Chicago Business stated late on Wednesday in its article that 12 Massachusetts locations closed in February. Last month, three locations in New Hampshire and all 12 Indiana clinics closed, bringing the total to 85.

This story will be updated as it develops.

Roundup: Walgreens’ new chief legal officer; Digital Health Collaborative launched; fundings/M&A defrosting for b.well, R1 RCM, Abridge, Reveleer; Veradigm likely delists, buys ScienceIO–mystery? (updated)

Walgreens’ CEO Wentworth’s final add to Executive Committee named. Lanesha Minnix was announced on Monday as the company’s new global chief legal officer and EVP, effective 15 April. She comes from being general counsel and corporate secretary for Ecolab, a Fortune 500 water, hygiene and infection prevention company. As chief legal officer, she will oversee Walgreens’ global legal, compliance, corporate governance and corporate security functions. Ms. Minnix succeeds Danielle Gray, who left in January to “pursue an external opportunity” (Reuters). Yahoo Finance from PR Newswire

A new organization to ‘advance digital health adoption’ launched last week. The Digital Health Collaborative, a coalition of 14 healthcare and consumer organizations, is committed to “evidence-based, cost-effective, equitable digital health solutions.” Their initial activities are expected to include a national purchaser survey, grantmaking, and convenings. The DHC is supported by the Peterson Health Technology Institute (PHTI) and led by Caroline Pearson, also the Executive Director at the NYC-based Peterson Center on Healthcare.

The 14 organizations backing the DHC are: AARP, AHIP, Alliance for Connected Care, American Medical Association (AMA), American Telemedicine Association (ATA), Consumer Technology Association (CTA), Digital Medicine Society (DiMe), Digital Therapeutics Alliance (DTA), HLTH Foundation, Innovation and Value Initiative (IVI), International Consortium for Health Outcomes Measurement (ICHOM), National Alliance of Healthcare Purchaser Coalitions, The National Committee for Quality Assurance (NCQA), and RockHealth.org.

The DHC with support from PHTI has established a Research and Impact Fund for aligned research and programs. The first grant was provided to DiMe for its Integrated Evidence Plans for Digital Health Products. While a fine list, this Editor notes no payers or hospitals (end user groups) or cybersecurity organizations to advocate for digital health security. DHC release

Some funding and M&A action…zounds!

b.well Connected Health’s Series C clocks in at $40 million. Leavitt Equity Partners led the raise which tops up b.well’s funding to $98.8 million. Their last funding round was a $32 million Series B in July 2021 with HLM Venture Partners as the lead. b.well markets its FHIR-enabled Connected Health platform to unify healthcare data, solutions, and services for end users at payers, providers, and employers. Joining the board are three new members: Andrew Clark, Managing Partner at Leavitt Equity Partners, Ryan Howells, Principal at Leavitt Partners and Executive Director of the CARIN Alliance, as an independent director, and Hon Pak, MD, Head of Digital Health at Samsung. Samsung is a key partner of b.well. A key joint project involves giving Galaxy smartphone users control over their longitudinal health records, as well as proactive, personalized health insights via Samsung Health, with easy access to care from providers including Walgreens, Northwell Health, Lee Health, ThedaCare, and others. Is the lettered round an indicator of Better Times ahead? Release, FierceHealthcare

R1 RCM may go private via investor group. An investor group led by New Mountain Capital is offering to take the revenue cycle management (RCM) company private to buy up shares they do not already own at $13.75 per share. New Mountain holds 32.43% of shares and is working with an investment group that includes another major shareholder TCP-ASC (TowerBrook Capital Partners that has a 29.64% stake, plus Ascension Health Alliance–Ascension accounts for nearly half of R1’s income), putting them at over 62% if TowerBrook goes all in. Mr. Market has weighed in and says that the offer price is already obsolete. It  represented a tidy premium to Friday’s close at $11.10, but the current trading on Nasdaq is well above the bid at $14.45. Current shareholders such as Coliseum Capital Management LLC, one of the five largest shareholders, have already stated to the board that the company is undervalued at the offer price. R1 traded in the $18 as recently as last summer, but hit a headwind at end of year with the loss of customer Pediatrix on implementation issues. But based on their 2023 performance despite this, the other investors are making a good case. R1 RCM is the largest publicly traded RCM company for hospitals and healthcare systems. They closed 2023 profitably with net income of $3.3 million, flipping a $63 million 2022 loss, on a revenue increase of nearly 25% to $2.3 billion.  Reuters, Healthcare Dive

Abridge, a clinical documentation and ‘clinical conversation’ company, is enjoying a lush Series C of $150 million led by Lightspeed Venture Partners and Redpoint Ventures leading five other investors. Abridge has a conversational AI technology using LLM and speech recognition to ease the burden of taking notes during the doctor’s appointment and states it is fluent in 14 languages across 55 medical specialties. Its last raise was a $30 million Series B just last October. A good reason why both is that it is fully integrated within Epic. According to HISTalk, Lightspeed advisor Paul Ricci is a former chairman and CEO of Nuance, one of Abridge’s biggest competitors, so one has to assume he knows what’s what inside this technology. Axios

Another NLP and AI powered healthcare data analytics company, Reveleer, is also topping its tanks with a $65 million raise. Hercules Capital led the venture round on a total funding of $208 million. Release

Veradigm nears a delisting on Nasdaq due to reporting–but plans acquisition of ScienceIO, in what has to be a first. The continuing delisting watch on Veradigm (the former Allscripts) is fading to black with the company anticipating its failure to file needed financial statements with Nasdaq. Its stock continues to decline (today at $7.32 as of noon ET).

Since March 2023, Veradigm has had trouble with required reports due to faulty financial software and has begged extension after extension. The required reports due by Tuesday 27 February are for 2023 quarterlies on form 10-Q and its annual 2022 report on form 10-K.

Veradigm is also facing a slew of shareholder lawsuits on the decline in its share price [TTA 3 Jan]. To counter this, Veradigm announced today (27 Feb) that the board of directors is adopting a limited duration stockholder rights plan that issues by means of a dividend one preferred share purchase right for each outstanding share of Company common stock to stockholders of record on the close of business on 8 March 2024. This becomes exercisable only if a person or group secures beneficial ownership of 10% or more of the outstanding shares in the next year. The rights plan is obviously designed to compensate shareholders in the event of a takeover not approved by the board (i.e. a hostile takeover) via accumulation of stock and make a sale to an unapproved buyer less attractive. Release, MarketWatch/WSJ

Apparently Veradigm is healthy and profitable, according to analysts reported in Healthcare Dive. The company estimated unaudited revenue between $608 million and $622 million for its fiscal year 2023. Net income from continuing operations is estimated between $49 million and $58 million, according to the filing. This, coupled with its business as a data company, further adds to the mystery around their reporting to Nasdaq.

Simultaneous to the delisting, Veradigm announced today that it is acquiring yet another company, ScienceIO, that is (surprise!) an AI company. Veradigm will leverage ScienceIQs proprietary large language models on Veradigm’s rich data set and more. Acquisition cost of $140 million in cash (subject to customary adjustments for cash, indebtedness, working capital and transaction expenses) has approximately $44 million deferred, substantially all of which is payable in installments on each of the first three anniversaries of the closing date. Release

This is not the first acquisition that Veradigm has made with the delisting hanging. In January, Veradigm announced the acquisition of Koha Health, which specializes in orthopedic/musculoskeletal (MSK) revenue cycle management (RCM).

Updated 28 Feb: Nasdaq is delisting Veradigm effective 29 February. It will continue to trade OTC under MDRX until whatever time they become compliant with their reports. Veradigm is not appealing at this time. Healthcare Innovation. Veradigm release

Breaking: Walgreens’ VillageMD shutting in Florida; Change Healthcare system websites cyberattacked (updated 23 Feb)

The New Reality Strikes Again. Walgreens is closing all VillageMD locations in Florida. In addition to the 14 already closed, an additional 38 will be shuttered on 15 March for a total of 52. These are all co-located and attached to Walgreens locations (left).

Florida was a major expansion market for co-located clinics and its third largest market following Texas and Arizona) according to a report by investment analyst Jefferies.  In October, Walgreens announced the closure of 60 Village Medical locations in ‘non-strategic locations’. In January, CEO Tim Wentworth confirmed that about half of those locations were already closed. Doing the math, the rest of those locations will be in Florida.  Updated–see 29 February

Evidently, Walgreens’ US Healthcare unit views Florida as non-supportable to warrant a drastic move like this in a growing population market. Business Insider, which appears to have an inside track on this from the Jefferies report, “theorized” that many of these Village Medical locations were actually inside pharmacies–too small to attract patients and to recruit primary care doctors. If this is true, for a company that prides itself on retail know-how, as in the old real estate saw ‘location-location-location’, it has made a major and costly misstep.

Walgreens has sunk close to $9 billion into VillageMD: $5.2 billion for the majority stake and another $3.5 billion to aid with the Summit Health/CityMD buy. This does not include the earlier minority investment in VillageMD, so the total is likely well north of $10 billion. It all looked very different in 2020 when it was ‘go big or go home’. One wonders if VillageMD / Village Medical or its parts are on the selling block along with Shields Health if Walgreens has decided on a major strategic change.  Healthcare Dive

And another Reality is Cyberattack. Revenue cycle management and leading patient payment processor Change Healthcare is the latest victim. It notified users that it was disconnecting systems hours after Wednesday morning Eastern Time when it noticed disruptions to some applications that grew into “enterprise-wide connectivity issues.” The disruption is continuing into today (Thursday 22 Feb). There are few public specifics other than the timing and confirmation of the attack as of now, but it appears to have reached down to the local pharmacy level, into providers of all sizes, and shut down nearly every Change Healthcare system. This Editor visited the main website, which appears altered (shrunken); attempts to go to connecting links go to blank screens. Optum is not disclosing further information and perhaps shouldn’t at this point. Change Healthcare is part of UnitedHealth Group’s Optum and processes 15 billion transactions a year filled with PHI and PII, which adds to the scariness factor. TechCrunch, Becker’s, HealthITSecurity   This is a developing story and will be updated

Update 22 Feb: HISTalk reports that athenahealth customers are also affected, as their electronic data interchange is supported by Change Healthcare technology.

UnitedHealth Group said in an SEC filing that a “suspected nation-state associated cybersecurity threat actor” gained access to Change Healthcare’s information technology systems. It “cannot estimate the duration or extent of the disruption at this time.” UnitedHealth has retained security experts and was working with law enforcement. As of Thursday evening, the disruption continues and affects pharmacies nationwide in an inability to process insurance claims for prescriptions. Healthcare services are also being disrupted, said an unnamed director at a regional hospital system in Pennsylvania. Reuters

Update 23 Feb: Further corroboration in Fox Business on the above and continuing effects on pharmacies. Tricare, which covers active and retired military, stated on its website in a news release that this is impacting all military pharmacies worldwide. “Military clinics and hospitals will provide outpatient prescriptions through a manual procedure” until the ongoing cyberattack against Change Healthcare “is resolved.”

In more unwelcome news that this cyberattack is ongoing, the American Hospital Association (AHA) is formally advising healthcare facilities to not only disconnect from Change/Optum, but also check their own IT for vulnerabilities. AHA notice.  Also WSJ (not paywalled)

Facing the Music of the New Reality: Amazon Pharmacy & One Medical restructure; Walgreens shakes up health exec suites again, cashes out $992M in Cencora; new takes on NeueHealth; Cue Health, Nomad Health layoffs

Amazon delivers a Dose of Reality in shrinking Pharmacy, One Medical. Using the “realigning some resources to help accelerate our efforts” meme, there are about 115 to 400 staff who will be ‘transitioned’ out of their present jobs, according to sources (Business Insider, Seeking Alpha). Areas affected were not disclosed. However, the Amazon division likely taking the hardest hit is One Medical, according to these sources.

  • Amazon has already announced that One Medical must reduce operating losses by $100 million this year. A large step they are taking is to close One Medical’s corporate offices in New York, Minneapolis, and St. Petersburg, Florida, reducing its San Francisco office space to one floor. They cited to industry publications that most employees are remote workers.
  • Unsurprisingly, Amazon is targeting major cost reductions. Fixed operating costs that are currently at 41% of total revenue will be reduced to 20% by 2028. Cost per patient visit will be reduced from $372 in 2023 to $322 in 2024, from $372 in 2023.
  • Legal, finance, and technology teams will report to Amazon’s healthcare business structure
  • Operating areas will increase from four to seven, reporting to a new head of operations
  • CFO Bjorn Thaler will move to a new position focused on growth initiatives, reporting to VP of Health Services Neil Lindsay

At the time of the acquisition, industry thinkers were wondering what Amazon would do with the money-losing One Medical clinics, for which they paid $3.9 billion but never turned a profit and lost $420 million in 2022, its last year of independent operations. Neither membership nor revenue has been reported since the 2023 closing. In 2022, One Medical had 700,000 patients, 8,000 company clients and 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. Amazon has been promoting One Medical online and on TV, most aggressively to its Prime members with promotional membership pricing. 

Amazon has aggressively cut tens of thousands of jobs and costs since 2023 in its Audible, Prime Video, Twitch and Buy with Prime units, and completely shut down Halo, its entry in fitness bands and sleep trackers. It has also been aggressively challenged on patient privacy and cross-using information by the FTC, most recently around Amazon Clinic.

Not mentioned in reporting was the FTC and DOJ scrutiny One Medical’s acquisition received between Amazon’s offer and the closing. The two agencies declined to move at that time [TTA 23 Feb 23], but FTC is continuing to build its case against Amazon–and One Medical may be a factor. For context on Amazon’s situation, Readers may want to review last December’s assessment of Amazon to date, Has Amazon lost its ‘edge’ in healthcare? Or finally seeing reality?   FierceHealthcare, Healthcare Finance, Healthcare Dive

Walgreens’ Reality includes C-suite reshuffles, scaring up cash. The new president of US Healthcare and EVP reporting to CEO Tim Wentworth is Mary Langowski. She is currently CEO of Solera Health. Her prior experience at CVS was as EVP and chief strategy and corporate development officer. Moving to an advisor position is the current president, John Driscoll. US Healthcare includes VillageMD, Summit Health/CityMD and CareCentrix. In addition, Manmohan Mahajan was appointed as permanent CFO, having held the position on an interim basis from July. Elizabeth Burger was named as EVP and chief HR officer from a similar position at industrial Flowserve, replacing Holly May who departed in November and is now with Petco. Crain’s Chicago Business, FierceHealthcare

Slipping under this was a further sale of Walgreens’ position in Cencora, the former AmerisourceBergen, a highly diversified pharmaceutical distributor. The sale of approximately $942 million of Cencora common stock was subject to the completion of the Rule 144 sale, and included a concurrent share repurchase by Cencora of approximately $50 million for a total to WBA of $992 million. WBA’s position is now 13% versus 15%; partnership and board representation remains in place. From the WBA release, “Proceeds to Walgreens Boots Alliance will be used primarily for debt paydown and general corporate purposes, as the company continues to build out a more capital-efficient health services strategy rooted in its retail pharmacy footprint.”

Is NeueHealth creating its own Reality? At the end of January, Bright Health Group faded to black and relit as NeueHealth, its value-based care medical practice division, and moved its HQ from poky, cold, failing Minneapolis to Doral, Florida. It sold or closed all its health plans in a heap of losses, most of which have bills coming due via CMS Repayment Agreements which come due on or before 14 March 2025. Most of the industry is shaking its head in wonder that NeueHealth has made it this far.

The discussion in MedCityNews is worth reading. It includes Ari Gottlieb of A2 Strategy who points out that the company is $1.4 billion in debt to the likes of investors Cigna Ventures, New Enterprise Associates, and CalSTRS. They owe $89 million to Texas to cover risk liabilities for its shuttered ACA plans. Over $100 million remains in escrow from the Molina sale to cover obligations from its Medicare Advantage plans. Mr. Gottlieb predicts that NeueHealth will be drained and go bankrupt before the Feds come calling in March 2025. Another analyst, Tyler Giesting, director of healthcare and life sciences at West Monroe, takes a sunnier view that NeueHealth is in a sector, value-based care, that payers are interested in and will buy into, as long as the practices perform. This Editor will reiterate her wonder at NeueHealth’s management maneuvers. They’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) to stay alive until, they hope, 2025 and better times. 

More Reality delivered in two layoffs in once-hot companies that thought pandemic les bon temps rouler would last forever:

  • San Diego-based Cue Health, a biotech company that produced Covid-19 tests, is laying off another 245 employees. This adds to the 884 workers in primarily San Diego laid off last year. Cue grew to over 1,500 employees when it got the first FDA approval for its 20-minute molecular test kits to supply the US government, the NBA, Google, and other large companies. Cue IPO’d in September 2021 at $200 million and $16/share, with a valuation of $3 billion. Its shares on Nasdaq are today at $0.25. The company also offers a test for mpox (monkeypox) and is seeking FDA approval for its RSV and Flu test kits. San Diego Union-Tribune
  • New York City-based Nomad Health, a healthcare staffing service that took advantage of the pandemic demand for travel nurses but had not fully transitioned into other temporary healthcare workers, released 17% of staff, from 691 to 572 employees. Nomad was reeling not only from lower demand but also correspondingly lower rates. It raised $200 million to date from investors such as Adams Street Partners and Icon Ventures. Forbes

And the final Reality is how healthcare companies, from providers to digital health, are phrasing what seems to be endless layoffs. Euphemisms such as rightsizing, org change, involuntary career events, corporate outplacing, and offboarding are all being used to sweeten for public consumption that a lot of people, hired so eagerly in 2020-22, are losing their jobs. From the Bloomberg article (paywalled), “They somehow seem to believe that if they use language that is more vague and less emotional, that people won’t get as upset,” said Robert Sutton, PhD, professor of management science and organizational behavior with Stanford University School of Engineering. Instead, euphemisms tend to have the opposite effect. Becker’s  This Editor has been both a survivor and a victim of same, being in marketing which is always vulnerable. Contract and consulting work, which anticipate a stronger market, are like the Sahara–few and dry water holes. Expect layoffs and a dead market for experienced talent to be a major factor in this year’s US elections, despite the reported low unemployment numbers (that no one believes anymore).

News roundup: Cano Health files Ch. 11 bankruptcy, delisted (updated), Walgreens lays off more, Allina Health outsources 2,000 RCM jobs to Optum

Cano Health’s telenovela moved to a Delaware court, where it filed for Chapter 11 bankruptcy. This prearranged voluntary Chapter 11 was filed on Sunday 4 February in the US Bankruptcy Court for the District of Delaware. Based on this Editor’s reading of their release, it’s a prepackaged reorganization of this beleaguered primary care provider. It also promises an exit by Q2 2024. It features several parts that have to be approved by the Court in short order:

  • A Restructuring Support Agreement (the “RSA”) with major lenders (the “Ad Hoc Lender Group”). They hold approximately 86% of Cano’s secured revolving and term loan debt and 92% of its senior unsecured notes. The RSA provides for the conversion of nearly $1 billion in secured debt to a combination of new debt and full equity ownership in the reorganized company. (See below as to what that means for Class A shareholders.)
  • Securing liquidity via a commitment for $150 million in new debtor-in-possession financing from certain of its existing secured lenders. 

In addition, Cano itemized several ‘first day’ motions to ensure continuity of operations–these also have to be approved by the Court: 

  • Paying associate wages, including for its doctors and nurses, without interruption
  • Continuing operations and honoring obligations to its affiliate physician groups
  • Ensuring patients at its clinics continue to receive quality value-based healthcare
  • Seeking authority to pay the existing pre-petition claims of certain vendors that are critical to the health and safety of Cano Health’s patients and critical to the operation of the Company’s medical centers.
  • Cano has authority to continue making ordinary course payments for all authorized goods and services provided on or after the filing date.

Earlier actions by their CEO laid groundwork for this reorganization through selling off operations and divesting staff. In September, they sold their Texas and Nevada operations to CenterWell Senior Primary Care, a unit of Humana, for $66.7 million, and exited California, New Mexico and Illinois late last year, with Puerto Rico winding up this quarter. Cano also cut 21% of staff (842 people) by November .

No comfort for their common Class A shareholders, though. Shareholders approved a 1 share for 100 reverse share split to buoy price last December, though the NYSE had notified Cano on 29 December of delisting based on their market capitalization not meeting their standards. Cano’s shares stopped trading as of last Friday at $2.30. What is usual, and signaled by the RSA conversion, is that common shareholders–probably including the infamous Cano 3 who owned about 35% of the shares–will receive bupkis, nada, zip, zero in the reorganization.

Update: The NYSE delisted Cano Health’s (CANO) stock late on Monday, citing the RSA conversion. Press release, Healthcare Dive.  The Class A shares are now listed OTC (the ‘pink sheets’) under CANOQ at $0.70. Shareholders are wholesale unloading with the day’s volume over 580,000 compared to the previous average of 340,000 shares.

Cano remains for sale during this process according to the release.

Here’s the 36-page filing, courtesy of Industry Dive. Healthcare Dive. FierceHealthcare dubbed this a ‘spectacular collapse’ (which it isn’t–that was Babylon Health) but includes some speculation from Ari Gottlieb, a principal at A2 Strategy Group whom this Editor has quoted before, that since Humana has a stake in and partnered with Cano, they should simply pick up what’s left. However, Humana may not be in a cash position to do so, given its recent losses in its Medicare Advantage business that also helped to sink Cano (partly paywalled). The local take in the Sun-Sentinel.

Less drastic but equally, more signs of the times:

Walgreens laid off 145 more staff, primarily in corporate. This follows on November’s 5% corporate layoff. No WARN notices have been filed and all are mum on what areas or states are affected. Nor is there any confirmation that this will be the end. Speculation is that more store closings are in the offing and once leaned down, Walgreens Boots Alliance will be sold off or parted out, with Shields Health Solutions perhaps the first on the block [TTA 25 Jan]. Healthcare Dive, Becker’s

Allina Health, a 10-hospital non-profit health system based in Minneapolis, Minnesota, is outsourcing 2,000 IT and revenue cycle management jobs to Optum. Happily, this is being done as a transition on 5 May from Allina to Optum with no layoffs or shift in workplace, as of this time. Rationale given is to trim needed expenses and ‘deliver on emerging spaces’, whatever that means.   Star-Tribune

*Updated for Cano Health delisting and additional information on Walgreens’ layoffs.

Short takes: Orion digital pain therapeutic to be commercialized by Newel Health; Verma to head Oracle Health; CVS to shut 25 LA-area MinuteClinics

Orion Health licenses its chronic pain therapeutic to Newel Health. Orion’s ODD-533 (Rohkea), classified by FDA and the EU MDR as software as a medical device (MDSW or SaMD) will be developed, manufactured, and commercialized by Newel. Newel, located in Salerno, Italy, designs and commercializes digital medicine and digital therapeutics (DTx) for the US and EU such as Soturi, a digital therapeutic app for Parkinson’s Disease [TTA 23 Feb 23], Orion, located in Espoo, Finland, develops primarily human and animal pharmaceutical products. Orion release

Oracle wastes no time in finding a new Oracle Health head, Seema Verma. Conveniently in-house, the former head of the Center for Medicare and Medicaid Services (CMS) from April 2017 to January 2021 joined Oracle in April last year as senior VP in charge of life sciences.  As executive VP, she will oversee both Oracle Health and life sciences as general manager. Verma’s appointment was announced internally in December, according to Bloomberg. In January, Oracle Health’s general manager, Travis Dalton, announced his departure effective 1 March to join MultiPlan as CEO and president. Verma’s government experience will come in handy, as she has the difficult situation of the stalled Millenium EHR at the VA as well as finalizing the Military Health System rollout, ensuring interoperability–as well as growing the faltering hospital EHR business. By combining the positions, Oracle also eliminates one large C-suite salary. Becker’s

And confirming signs of softness in the clinic business [TTA 24 Jan, JPM’s new reality], CVS announced the closure of 25 MinuteClinics in the Los Angeles area. Closing date is 25 February. They will retain 11 MinuteClinic locations in the Los Angeles area, including an on-demand virtual care practice. Clinics are losing out to virtual care and for more immediate needs, urgent care. This follows Walgreens’ closure of a planned 60 VillageMD adjacent practice locations and softness in their CityMD clinic group. List of 25 closures (LA Times), Becker’s

Midweek updates: Walgreens may sell Shields Health after 2 years; Ventric Health’s home cardiac RPM; Singapore military medical corps upgrades PACES 3 EMR

Walgreens reportedly looking to sell Shields Health Solutions, working with advisers on a valuation to raise cash. That valuation may bring $4 billion in a sale. Shields provides specialty pharmacy services and is part of its US Healthcare division. Criticism of the possible sale breaking in Bloomberg 23 January was hardly muted. TD Cowen analysts cited in Healthcare Dive called it “a strange move” to sell what could be Walgreens’ highest margin business with a knock-on effect of slowing a return to profitability. They even proposed that a sale of Boots in the UK might make more sense. A Bloomberg analyst called it “a pointed reversal of the prior CEO’s strategy to diversify” but also stated that “the strategic rationale for owning it remains strong”. It is perhaps the most salable of US Healthcare’s assets, with excellent growth of 27% in its last quarter. WBA bought a minority stake in Shields  in 2019, spent $970 million to take majority control in 2021, and bought out the last 30% for $1.37 billion in 2022.

The impression left by these articles and in FierceHealthcare was that WBA is a “troubled drug-store chain in turnaround mode” (Bloomberg). That isn’t a good look.

Heart failure is a major disease, with 6.5 million in the US diagnosed and joined by 550,000 every year. Ventric Health has a newly FDA-cleared non-invasive cardiac diagnostic system for remote patient monitoring (RPM) that can be used in the home as well as clinical settings. A trained clinician can use Ventric’s Vivio system to perform an evaluation in the home or a clinic that could only previously be done in the hospital. An EKG patch and arm cuff are placed on the patient, connected to a tablet with the Vivio app and its advanced algorithms via Bluetooth, and in under five minutes–two minutes for the data collection and about a minute for the analysis, can evaluate patient heart failure. The portability of the system eliminates a lot of care barriers to cardiovascular health by being more accessible to clinicians and patients in non-hospital settings, reduces time wasted on initial diagnosis, improves support of diagnosed patients, and promotes better outcomes. Healthcare IT News

The Singapore Armed Forces (SAF) Medical Corps upgraded its EMR for the first time in a decade. The SAF’s Patient Care Enhancement System 3 (PACES 3) runs both the Sunrise EMR system and the newly implemented Altera Opal by Altera Digital Health. This is Sunrise’s first upgrade in Asia-Pacific. Soldiers can now access information on their medical history, manage and book their medical appointments. Also upgraded: document management, clinical and financial applications, including enhanced workflows, improved system performance, enabled compliance with regulatory obligations, and improved overall usability. It also connects securely to Singapore’s National Electronic Health Record system and other local health IT infrastructures via internet. The EMR is the responsibility of the Ministry of Defence (MINDEF) of Singapore. Healthcare IT News

Wrapping up many changes at Walgreens, VillageMD, CVS Health, Oracle Health

Walgreens’ multitudinous c-c-c-changes from the suites to the streets. Financially, Walgreens’ US Healthcare segment in Q1 2024 (Oct-Dec 2023) grew sales to $1.9 billion versus prior year’s $989 million. This included VillageMD’s revenue from Summit Health and some growth at CareCentrix (home care) and Shields Health Solutions (specialty pharmacy). But losses continued, with an operating loss of $456 million and adjusted operating loss of $96 million, reduced from the prior year’s $152 million loss. This is also after their November layoff of several senior staff and 5% of corporate workers following a May layoff [TTA 10 Nov 2023]

  • On the earnings call, new CEO Tim Wentworth confirmed that VillageMD has closed 27 under-performing clinic locations. This is a little less halfway through the 60-location previously announced closure. This is a key part of the $1 billion in 2024 cuts announced at the end of last quarter by then-acting CEO Ginger Graham [TTA 18 Oct 2023]. Healthcare Dive
  • VillageMD’s weakness has been filling physician ‘patient panels’. A patient panel is one doctor’s patient count treated over typically 12 to 18 months. This can be as high in primary care as 2,500 patients, though no numbers were cited for VillageMD. According to Wentworth, VillageMD is now “on a diet”; fewer locations, more patient concentration at available clinics, patient panels and profitability goes up. Or so the math goes. Forbes
  • Walgreens also has trouble in the IT department. Key indicators: Neal Sample is their third CIO in a year, layoffs in staff among employees and contractors, departures of key managers, and the need for new technology including AI to support operations. Graham has cited the new pharmacy inventory system to more accurately forecast demand using AI as an example of the direction she sees IT taking. (Let’s hope it will quiet the rebellious pharmacists.) The former CIO, who departed in September, stocked up on AI and engineering talent at the expense of other needed roles. The Wall Street Journal’s deep dive from December.

Year’s end brought a stop to some of the musical chairs in the CVS Health C-suite. CFO and appointed president of Health Services Shawn Guertin turned his leave of absence due to family health reasons into a formal departure at the end of May. Interims Tom Cowhey moves from SVP corporate finance to CFO and Mike Pykosz, the CEO of Oak Street Health, becomes president of Health Care Delivery. Release, FierceHealthcare

Oracle Health also has the music up and the chairs out.

  • General Manager Travis Dalton is departing on 1 March to join MultiPlan as president and CEO. He succeeds Dale White, who moves to executive chairman replacing the retiring chairman Mark Tabak after 23 years with the company. MultiPlan is a payer cost management company that serves about 700 payers in payment and revenue integrity, network-based and analytics-based services. Dalton is the fifth of 10 senior executives from Cerner to depart after the late 2021 sale to Oracle.MultiPlan releaseHIStalk 1/5
  • Oracle Health’s chairman, Dr. David Feinberg, has also been making some transitional moves of his own, joining Aegis Ventures as a senior advisor while remaining at Oracle. His role is to help Aegis work with a consortium of health systems on developing and launching digital health products. Interestingly, there has been no disclosure of the percentage of time he will spend at Oracle versus Aegis. Dr. Feinberg also is a Humana board member. He joined Cerner from Google Health and within a few months, Cerner was sold.  Modern Healthcare

Breaking: Walgreens lays off 5% of corporate staff; chief medical officer, chief of staff for CEO to depart (updated)

The Walgreens shakeup and belt-tightening continues under new CEO Tim Wentworth–starting at the top. The first company memo that was leaked late Thursday 9 November to Bloomberg (paywalled) announced that Kevin Ban, MD, executive VP and chief medical officer, will depart tomorrow (10 Nov). He will be replaced by chief clinical officer Sashi Moodley, MD, not in the memo but according to Bloomberg‘s sources. Luke Sauter, chief of staff to the CEO, will also be leaving. No date was disclosed. In a separate memo, 5% or 267 of Walgreens’ corporate staff will be laid off across multiple departments at their Deerfield Illinois HQ, no notification or effective date disclosed. Bloomberg confirmed the departures with Walgreens, but no further details were provided. The cuts will not affect call centers, micro fulfillment centers, or stores.

Looking at LinkedIn, Dr. Ban joined Walgreens as CMO in January 2022 from Athenahealth. He replaced Patrick Carroll, MD, who left to take the CMO slot at Hims & Hers. Dr. Ban was promoted to global CMO of Walgreens Boots Alliance and added the EVP title in October 2022, a little over a year ago. Dr. Moodley joined in July 2021 from CareMore Health as WBA’s CCO for US Healthcare. Mr. Sauter, the chief of staff, is a long-time (15+ years) Walgreens executive in multiple positions, including VP of strategy and finance officer after multiple finance positions. He was named chief of staff to previous CEO Roz Brewer in July 2022.

It’s perhaps understandable in a cost-cutting situation that the functions of the CMO and CCO overlap to some degree, and the chief of staff to the CEO is an unusual position in today’s companies. It also demonstrates that Wentworth is willing to distribute at least some of the pain of trimming Walgreens staff and projects as part of the previously announced $1 billion cost reduction plan after a steep fiscal Q4 net loss of $180 million [TTA 18 Oct]. Crain’s Chicago Business is also paywalled but readable in part.

This is a developing story and will be updated with additional information when available.

Update: The 5% corporate layoff, which will affect the Deerfield office, is the second this year. There was a 10% reduction in Chicago and Deerfield in May. 393 were released in August at their manufacturing plant in Edwardsville, Illinois, in anticipation of its closing. Yahoo Finance/Chicago Tribune  On Reddit, commenters indicate that marketing and health & beauty departments were the hardest hit. There was also an employee town hall that wasn’t well received.

The Healthcare Dive article published today highlights the 45% drop in share price since January, particularly steep since August, and the struggle to attain profitability in their US Healthcare division, which includes Village MD. The October-announced $1 billion in cost reductions did not buoy stock as hoped, dropping further since then. Walgreens has not replaced the CFO who departed in July.

On Friday 10 November, Walgreens also sold a hefty share of Cencora common stock (the former Amerisource Bergen) in a combination of share repurchase at $250 million and variable prepaid forward transactions starting in Q4 2026 could potentially max out at $675 million. WBA continues to own about 15% of Cencora and remains on its board. Their release explains the financial pretzel, clearly designed to improve liquidity and cash management. 

Editor’s Note/Opinion 10/11: For an employer of this size, the layoffs represent an extreme downsizing that indicates several years of overhiring or wrong hiring in pursuit of corporate goals no longer in sight and strategic mistakes (like Theranos so long ago, but biting back with a $44 million settlement to Arizona patients). Some acquisitions may not be working out. Time will tell whether the majority buy-in of Village MD and financing its further acquisitions was smart or foolish, as already the office co-location scheme is being trimmed after little time in place [TTA 18 Oct]. As is true almost 100% of the time, hard times uncover the numerical and compensation bloat at the C-suite and senior level, and many strategic mistakes.

In short, leaving aside the Cencora stock sale to raise cash, drastic cuts like this usually leave an organization at many levels and the survivors staggering for some time. They have to be done with understanding, not blame, that most of those departing weren’t responsible for corporate strategic sins and, yes, mercy on those affected, beyond one line in a press release or a town hall. Circular firing squads don’t help recovery either.