‘Shkreli Awards’ Shame Healthcare Profiteers

Lown Institute berates greedy pricing, ethical lapses, wallet biopsies, and avoidable shortages.

Greedy corporations, uncaring hospitals, individual miscreants, and a task force led by Jared Kushner were dinged Tuesday in the Lown Institute‘s annual Shkreli awards, a list of the top 10 worst offenders for 2020.

Named after Martin Shkreli, the entrepreneur who unapologetically raised the price of an anti-parasitic drug by a factor of 56 in 2015 (now serving a federal prison term for unrelated crimes), the list of shame calls out what Vikas Saini, the institute’s CEO, called “pandemic profiteers.” (Lown bills itself as “a nonpartisan think tank advocating bold ideas for a just and caring system for health.”)

Topping the list was the federal government itself and Jared Kushner, President’s Trump’s son-in-law, who led a personal protective equipment (PPE) procurement task force. The effort, called Project Airbridge, was to “airlift PPE from overseas and bring it to the U.S. quickly,” which it did.

“But rather than distribute the PPE to the states, FEMA gave these supplies to six private medical supply companies to sell to the highest bidder, creating a bidding war among the states,” Saini said. Though these supplies were supposed to go to designated pandemic hotspots, “no officials from the 10 hardest hit counties” said they received PPE from Project Airbridge. In fact, federal agencies outbid states or seized supplies that states had purchased, “making it much harder and more expensive” for states to get supplies, he said.

Number two on the institute’s list: vaccine maker Moderna, which received nearly $1 billion in federal funds to develop its mRNA COVID-19 preventive. It set a price of between $32 and $37 per dose, more than the U.S. agreed to pay for other COVID vaccines. “Although the U.S. has placed an order for $1.5 billion worth of doses at a discount, a price of $15 per dose, given the upfront investment by the U.S. government, we are essentially paying for the vaccine twice,” said Lown Institute Senior Vice President Shannon Brownlee.

Webcast panelist Don Berwick, MD, former acting administrator for the Centers for Medicare & Medicaid Services, noted that a lot of work went into producing the vaccine at an impressive pace, “and if there’s not an immune breakout, we’re going to be very grateful that this happened.” But, he added, “I mean, how much money is enough? Maybe there needs to be some real sense of discipline and public spirit here that goes way beyond what any of these companies are doing.”

In third place: four California hospital systems that refused to take COVID-19 patients or delayed transfers from hospitals that were out of beds. Wall Street Journal investigation found that these refusals or delays were based on the patients’ ability to pay; many were on Medicaid or were uninsured.

“In the midst of such a pandemic, to continue that sort of behavior is mind boggling,” said Saini. “This is more than the proverbial wallet biopsy.”

The remaining seven offenders:

4. Poor nursing homes decisions, especially one by Soldiers’ Home for Veterans in western Massachusetts, that worsened an already terrible situation. At Soldiers’ Home, management decided to combine the COVID-19 unit with a dementia unit because they were low on staff, said Brownlee. That allowed the virus to spread rapidly, killing 76 residents and staff as of November. Roughly one-third of all COVID-19 deaths in the U.S. have been in long-term care facilities.

5. Pharmaceutical giants AstraZeneca, GlaxoSmithKline, Pfizer, and Johnson & Johnson, which refused to share intellectual property on COVID-19, instead deciding to “compete for their profits instead,” Saini said. The envisioned technology access pool would have made participants’ discoveries openly available “to more easily develop and distribute coronavirus treatments, vaccines, and diagnostics.”

Saini added that he was was most struck by such an attitude of “historical blindness or tone deafness” at a time when the pandemic is roiling every single country.

Berwick asked rhetorically, “What would it be like if we were a world in which a company like Pfizer or Moderna, or the next company that develops a really great breakthrough, says on behalf of the well-being of the human race, we will make this intellectual property available to anyone who wants it?”

6. Elizabeth Nabel, MD, CEO of Brigham and Women’s Hospital in Boston, because she defended high drug prices as a necessity for innovation in an op-ed, without disclosing that she sat on Moderna’s board. In that capacity, she received $487,500 in stock options and other payments in 2019. The value of those options quadrupled on the news of Moderna’s successful vaccine. She sold $8.5 million worth of stock last year, after its value nearly quadrupled. She resigned from Moderna’s board in July and, it was announced Tuesday, is leaving her CEO position to join a biotech company founded by her husband.

7. Hospitals that punished clinicians for “scaring the public,” suspending or firing them, because they “insisted on wearing N95 masks and other protective equipment in the hospital,” said Saini. Hospitals also fired or threatened to fire clinicians for speaking out on COVID-19 safety issues, such as the lack of PPE and long test turnaround times.

Webcast panelist Mona Hanna-Attisha, MD, the Flint, Michigan, pediatrician who exposed the city’s water contamination, said that healthcare workers “have really been abandoned in this administration” and that the federal Occupational Safety and Health Administration “has pretty much fallen asleep at the wheel.” She added that workers in many industries such as meatpacking and poultry processing “have suffered tremendously from not having the protections or regulations in place to protect [them].”

8. Connecticut internist Steven Murphy, MD, who ran COVID-19 testing sites for several towns, but conducted allegedly unnecessary add-ons such as screening for 20 other respiratory pathogens. He also charged insurers $480 to provide results over the phone, leading to total bills of up to $2,000 per person.

“As far as I know, having an MD is not a license to steal, and this guy seemed to think that it was,” said Brownlee.

9. Those “pandemic profiteers” who hawked fake and potentially harmful COVID-19 cures. Among them: televangelist Jim Bakker sold “Silver Solution,” containing colloidal silver, and the “MyPillow Guy,” Mike Lindell, for his boostering for oleandrin.

Colloidal silver has no known health benefits and can cause seizures and organ damage. Oleandrin is a biological extract from the oleander plant and known for its toxicity and ingesting it can be deadly,” said Saini.

Others named by the Lown Institute include Jennings Ryan Staley, MD — now under indictment — who ran the “Skinny Beach Med Spa” in San Diego which sold so-called COVID treatment packs containing hydroxychloroquine, antibiotics, Xanax, and Viagra, all for $4,000.

Berwick commented that such schemes indicate a crisis of confidence in science, adding that without facts and science to guide care, “patients get hurt, costs rise without any benefit, and confusion reigns, and COVID has made that worse right now.”

Brownlee mentioned the “huge play” that hydroxychloroquine received and the FDA’s recent record as examples of why confidence in science has eroded.

10. Two private equity-owned companies that provide physician staffing for hospitalsTeam Health and Envision, that cut doctors’ pay during the first COVID-19 wave while simultaneously spending millions on political ads to protect surprise billing practices. And the same companies also received millions in COVID relief funds under the CARES Act.

Berwick said surprise billing by itself should receive a deputy Shkreli award, “as out-of-pocket costs to patients have risen dramatically and even worse during the COVID pandemic… and Congress has failed to act. It’s time to fix this one.”

Mednax sells off its radiology division

https://mailchi.mp/365734463200/the-weekly-gist-september-11-2020?e=d1e747d2d8

M&A Analysis: Mednax to Sell its Radiology and Teleradiology Business -

National physician staffing firm Mednax announced the sale of its radiology practice—which includes teleradiology company Virtual Radiologic, known as vRad—to venture-backed Radiology Partners for $885M.

Publicly-traded Mednax has been hit hard by both contracting disputes with UnitedHealthcare, as well as pandemic-related volume declines. Both its anesthesiology and radiology businesses suffered big losses with the halt of elective procedures in the spring, and saw volumes decline between 50-70 percent compared to the prior year.

The company began divesting in May with the sale of its anesthesiology division to investor-backed North American Partners in Anesthesia. Mednax leaders say these decisions to sell were made independent of the pandemic, and that they have been planning to return to the company’s roots of focusing exclusively on obstetrics and pediatric subspecialty care, including changing its name back to Pediatrix.

Acquiring firm Radiology Partners is the largest radiology practice in the country, working with 1,300 hospitals and healthcare facilities. With this acquisition, it will have 2,400 radiologists practicing in all 50 states and the District of Columbia.

Hospital-based physician staffing firms have been especially hard hit by COVID-induced volume declines. This has created a softening in valuations and opened the door for investment firms to accelerate practice purchases.

We expect the pace of deals to quicken as independent practices experience continued financial strain—with large national groups leading the way, taking advantage of lower practice prices to build large-scale specialty enterprises.

 

 

 

 

Envision Healthcare considering bankruptcy filing

https://mailchi.mp/0d4b1a52108c/the-weekly-gist-april-24-2020?e=d1e747d2d8

KKR-backed Envision Healthcare hires restructuring advisers ...

 

National physician staffing firm Envision Healthcare is considering filing for bankruptcy, according a report from Bloomberg. Sources say the company, backed by private equity (PE) firm KKR, which acquired Envision for $9.9B in June 2018, has hired restructuring advisors and is working with an investment bank. The abrupt halt to elective surgeries and reduction in emergency room volumes due to COVID-19 has caused Envision’s business to shrink by 65 to 75 percent in just two weeks at its 168 open ambulatory surgery centers (ASCs), compared to the same time period last year.

The Nashville-based company, which employs over 25,000 physicians and advanced practitioners, has already been reducing pay for providers and executives, in addition to implementing temporary furloughs. Envision is also struggling with a debt load of more than $7B, resulting from its 2018 leveraged buyout, and has been unable to convince its bondholders to approve a debt swap.

It remains to be seen whether Envision will be a bellwether for how other PE-backed physician groups will weather the ongoing COVID crisis. While Envision’s composition of mainly hospital- and ASC-based providers, coupled with its huge debt load, leave it on especially shaky financial footing, many PE-backed physician groups will struggle this year to achieve anything close to the 20 percent annual rate of return often promised to investors.

If high-profile PE-backed groups like Envision end up declaring bankruptcy, it will likely impact the calculus of the many independent practices which may have previously looked to PE firms for acquisitionand temper the enthusiasm of investors, who might see physician staffing and practice roll-ups as less attractive as volumes continue to fluctuate.

 

 

 

Envision hires restructuring advisers, considers bankruptcy filing

https://www.beckershospitalreview.com/finance/envision-hires-restructuring-advisers-considers-bankruptcy-filing.html?utm_medium=email

Envision Healthcare Said to Be Considering Bankruptcy, 2 Years ...

Envision Healthcare, a Nashville, Tenn.-based physician staffing company owned by private equity firm KKR, is struggling to manage its $7 billion debt load and recently hired lawyers and an investment bank to advise on its restructuring options, sources told Bloomberg.

The company is looking at restructuring options, including a potential Chapter 11 bankruptcy filing, as it faces financial pressure from the COVID-19 pandemic, according to Bloomberg. Envision has seen a significant decline in patient volume across its practices and specialties during the pandemic.  

No decision has been made on a course of action for Envision, and the company is still seeking to ease its debt burden by swapping $1.2 billion of unsecured notes for a new term loan. Creditors have until the end of the month to decide whether to participate in the deal.

The company is exploring its restructuring options after taking several steps to improve its financial position, including holding back pay for physicians, reducing salaries of senior leadership and furloughing nonclinical staff. The company said clinical pay will be reduced in services with low patient volumes, and performance-based bonuses and clinician profit-sharing will be delayed until the fall. Additionally, Envision temporarily suspended retirement contributions, merit increases and promotions for all employees.

About a week after Envision implemented many of the changes, U.S. Sen. Elizabeth Warren of Massachusetts and U.S. Rep. Katie Porter of California sent a letter to Envision and other healthcare staffing companies backed by private equity regarding pay and benefits.

The letter, which Ms. Porter posted on Twitter, said Envision is cutting its physicians’ pay and benefits, “all while our doctors face new financial strains of their own” amid the COVID-19 pandemic.

In response, Envision cited challenges healthcare organizations are facing.

“The nation’s healthcare system has experienced a drastic drop in patient volume since the beginning of the COVID-19 crisis,” wrote Envision, which has more than 40,000 team members, 27,000 of whom are physicians and clinicians. “Even as COVID-19 fills emergency departments in hot spots around the country, Envision’s overall emergency volume is actually down 45 percent.”

Hospital and physician groups are trying to secure funds from the Coronavirus Aid, Relief and Economic Security Act and get additional aid. Though the private equity industry is lobbying Washington to gain access to the funds, it remains unclear whether private equity-backed companies like Envision will receive the emergency government funds.