Doctor on Demand, Grand Rounds merge to create multibillion-dollar digital health company

Dive Brief:

  • Virtual care company Doctor on Demand and clinical navigator Grand Rounds have announced plans to merge, creating a multibillion-dollar digital health firm.
  • The goal of combining the two venture-backed companies, which will continue to operate under their existing brands for the time being, is to integrate medical and behavioral healthcare with patient navigation and advocacy to try to better coordinate care in the fragmented U.S. medical system.
  • Financial terms of the deal, which is expected to close in the first half of this year, were not disclosed, but it is an all-stock deal with no capital from outside investors, company spokespeople told Healthcare Dive.

Dive Insight:

The digital health boom stemming from the coronavirus pandemic resulted in a flurry of high-profile deals last year, including the biggest U.S. digital health acquisition of all time: Teladoc Health’s $18.5 billion buy of chronic care management company Livongo. Such tie-ups in the virtual care space come as a slew of growing companies race to build out end-to-end offerings, making them more attractive to potential payer and employer clients and helping them snap up valuable market share.

Ten-year-old Grand Rounds peddles a clinical navigation platform and patient advocacy tools to businesses to help their workers navigate the complex and disjointed healthcare system, while nine-year-old Doctor on Demand is one of the major virtual care providers in the U.S.

Merging is meant to ameliorate the problem of uncoordinated care while accelerating telehealth utilization in previously niche areas like primary care, specialty care, behavioral health and chronic condition management, the two companies said in a Tuesday release.

Grand Rounds and Doctor on Demand first started discussing a potential deal in the early days of the coronavirus pandemic, as both companies saw surging demand for their offerings. COVID-19 completely overhauled how healthcare is delivered as consumers sought safe digital access to doctors, resulting in massive tailwinds for digital health companies and unprecedented investor interest in the sector.

Equity funding in digital health globally hit an all-time high of $26.5 billion in 2020, according to CB Insights, with mental and women’s health services seeing particularly fast growth in investor interest.

Both companies reported strong funding rounds in the middle of last year, catapulting Grand Rounds and Doctor on Demand to enterprise valuations of $1.34 billion and $821 million respectively, according to private equity marketplace SharesPost. Doctor on Demand says its current valuation is $875 million.

The combined entity will operate in an increasingly competitive space against such market giants as Teladoc, which currently sits at a market cap of $31.3 billion, and Amwell, which went public in September last year and has a market cap of $5.1 billion.

​Grand Rounds CEO Owen Tripp will serve as CEO of the combined business, while Doctor on Demand’s current CEO Hill Ferguson will continue to lead the Doctor on Demand business as the two companies integrate and will join the combined company’s board.

Back to “a deal for every doc”?

https://mailchi.mp/b0535f4b12b6/the-weekly-gist-march-12-2021?e=d1e747d2d8

Hospital Physician Partners and Lock Haven Hospital Announce New Emergency  Department Partnership

Many physician practices weathered 2020 better than they would have predicted last spring. We had anticipated many doctors would look to health systems or payers for support, but the Paycheck Protection Program (PPP) loans kept practices going until patient volume returned. But as they now see an end to the pandemic, many doctors are experiencing a new round of uncertainty about the future. Post-pandemic fatigue, coupled with a long-anticipated wave of retiring Baby Boomer partners, is leading many more independent practices to consider their options. And layered on top of this, private equity investors are injecting a ton of money into the physician market, extending offers that leave some doctors feeling, according to one doctor we spoke with, that “you’d have to be an idiot to say no to a deal this good”.
 
2021 is already shaping up to be a record year for physician practice deals. But some of our recent conversations made us wonder if we had time-traveled back to the early 2000s, when hospital-physician partnerships were dominated by bespoke financial arrangements aimed at securing call coverage and referrals. Some health system leaders are flustered by specialist practices wanting a quick response to an investor proposal. Hospitals worry the joint ventures or co-management agreements that seemed to work well for years may not be enough, and wonder if they should begin recruiting new doctors or courting competitors, “just in case” current partners might jump ship for a better deal. 

In contrast to other areas of strategy, where a ten-year vision can guide today’s decisions, it has always been hard for health systems to take the long view with physician partnerships.

When most “strategies” are really just responses to the fires of the day, health systems run the risk of relationships devolving to mere economic terms. Health systems may find themselves once again with a messy patchwork of doctors aligned by contractual relationships, rather than a tight network of physician partners who can work together to move care forward.

Genesis HealthCare plans to cut $236M in debt, delist stock from NYSE

Genesis Corporate Headquarters | Paul Risk Construction

Kennett Square, Pa.-based Genesis HealthCare will institute a three-pronged restructuring plan to improve its financial metrics and cut debt by $236 million, the company said March 3. 

Genesis HealthCare is a holding company with subsidiaries that provide services to more than 325 skilled nursing facilities and assisted or senior living communities in 24 states. 

As part of its financial improvement strategy, Genesis agreed to end master lease agreements at 51 assisted or senior living facilities leased from Welltower and transition them to new operators. Genesis expects to receive $86 million from the deal, which it will use to repay a portion of its debt obligations to Welltower. 

Genesis will also receive $170 million in debt reduction from Welltower after completing the transaction. 

The company also signed a definitive agreement for a capital infusion of $50 million from ReGen Healthcare, which ups its ownership interest in Genesis to 25 percent.  

The third part of the strategy is that it will voluntarily delist its Class A common stock from the New York Stock Exchange and deregister its common stock under the Securities Exchange Act of 1934.

“The severity of the pandemic dramatically impacted patient admissions, revenues and costs, compounding the pressures of our long-term, lease-related debt obligations,” said Genesis CEO Robert Fish. “These restructuring transactions improve the financial and operational stability of the company significantly and build on the encouraging signs we are seeing as COVID-19 case rates continue to materially decline and residents, patients and staff are vaccinated.”

Risking lives in pursuit of profits

https://mailchi.mp/05e4ff455445/the-weekly-gist-february-26-2021?e=d1e747d2d8

Benefit of Private Equity in Healthcare? Lessons from Nursing Homes

Finding a good long-term care facility for a loved one has always been a difficult process. A new National Bureau of Economic Research working paper suggests that families should also be paying attention to who owns the facility, finding a significant increase in mortality in nursing homes owned by private equity investors.

Examining Medicare data from over 18,000 nursing homes, 1,674 of which were owned by private equity (PE) firms, researchers found that PE ownership increased Medicare patient mortality by 10 percent—translating to a possible 20,150 additional lives lost. PE-owned facilities were also 11 percent more expensive.

Counterintuitively, lower-acuity patients had the greatest increase in mortality. Researchers found staffing decreased by 1.4 percent in PE-owned facilities, suggesting that shorter-staffed facilities may be forced to shift attention to sicker patients, leading to greater adverse effects on patients requiring less care.

Antipsychotic use, which carries a higher risk in the elderly, was also a whopping 50 percent higher.

Nursing homes are low-margin businesses, with profits of just 1-2 percent per year—and PE ownership did not improve financial performance.

Researchers found private equity profited from three strategies: “monitoring fees” paid to services also owned by the PE firm, lease payments after real estate sales, and tax benefits from increased interest payments, concluding that PE is shifting operating costs away from patient care in order to increase return on investment. Private equity investment in care delivery assets has skyrocketed over the past decade.

This study draws the most direct correlation between PE investment and an adverse impact on patient outcomes that we’ve seen so far, highlighting the need for increased regulatory scrutiny to ensure that patient safety isn’t sacrificed for investor returns.

Large health systems band together on monetize clinical data

https://mailchi.mp/41540f595c92/the-weekly-gist-february-12-2021?e=d1e747d2d8

Image result for monetizing clinical data
Fourteen of the nation’s largest health systems announced this week that they have joined together to form a new, for-profit data company aimed at aggregating and mining their clinical data. Called Truveta, the company will draw on the de-identified health records of millions of patients from thousands of care sites across 40 states, allowing researchers, physicians, biopharma companies, and others to draw insights aimed at “improving the lives of those they serve.” 

Health system participants include the multi-state Catholic systems CommonSpirit Health, Trinity Health, Providence, and Bon Secours Mercy, the for-profit system Tenet Healthcare, and a number of regional systems. The new company will be led by former Microsoft executive Terry Myerson, who has been working on the project since March of last year. As large technology companies like Amazon and Google continue to build out healthcare offerings, and national insurers like UnitedHealth Group and Aetna continue to grow their analytical capabilities based on physician, hospital, and pharmacy encounters, it’s surprising that hospital systems are only now mobilizing in a concerted way to monetize the clinical data they generate.

Like Civica, an earlier health system collaboration around pharmaceutical manufacturing, Truveta’s launch signals that large national and regional systems are waking up to the value of scale they’ve amassed over time, moving beyond pricing leverage to capture other benefits from the size of their clinical operations—and exploring non-merger partnerships to create value from collaboration. There will inevitably be questions about how patient data is used by Truveta and its eventual customers, but we believe the venture holds real promise for harnessing the power of massive clinical datasets to drive improvement in how care is delivered.

Notes for the 39th Annual J.P Morgan Healthcare Conference, 2021

https://www.sheppardhealthlaw.com/articles/healthcare-industry-news/

2021 JP Morgan Healthcare Conference | Zoetis

Sitting in the dark before 6 am in my Los Angeles house with my face lit up by yet another Zoom screen, wearing a stylish combination of sweatpants, dress shirt and last year’s JPM conference badge dangling around my neck for old times’ sake, I wonder at the fact that it’s J.P. Morgan Annual Healthcare Conference week again and we are where we are. Quite a year for all of us – the pandemic, the healthcare system’s response to the public health emergency, the ongoing fight for racial justice, the elections, the storming of the Capital – and the subject of healthcare winds its way through all of it – public health, our healthcare system’s stability, strengths and weaknesses, the highly noticeable healthcare inequities, the Affordable Care Act, Medicaid and vaccines, healthcare politics and what the new administration will bring as healthcare initiatives.

I will miss seeing you all in person this year at the J.P. Morgan Annual Healthcare Conference and our annual Sheppard Mullin reception – previously referred to as “standing room only” events and now as “possible superspreader events.” What a difference a year makes. I admit that I will miss the feeling of excitement in the rooms and hallways of the Westin St. Francis and all of the many hotel lobbies and meeting rooms surrounding it. Somehow the virtual conference this year lacks that je ne sais quoi of being stampeded by rushing New York-style street traffic while in an antiquated San Francisco hotel hallway and watching the words spoken on stage transform immediately into sharp stock price increases and drops. There also is the excitement of sitting in the room listening to paradigm shifting ideas (teaser – read the last paragraph of this post for something truly fascinating). Perhaps next year, depending on the vaccine…

So, let’s start there. Today was vaccine day at the JPM Conference, with BioNTech, Moderna, Novovax and Johnson & Johnson all presenting. Lots of progress reported by all of the companies working on vaccines, but the best news of the day was the comment from BioNTech that the UK and South Africa coronavirus variants likely are still covered by the BioNTech/Pfizer vaccine. BioNTech’s CEO, Prof. Uğur Şahin, M.D., promised more data and analysis to be published shortly on that.

We also saw continued excitement for mRNA vaccines, not only for COVID-19 but also for other diseases. There is a growing focus (following COVID-19 of course) on vaccines for cancer through use of neoantigen targets, and for a long list of infectious disease targets.  For cancer, though, there continues to be a growing debate over whether the best focus is on “personalized” vaccines or “off the shelf” vaccines – personalized vaccines can take longer to make and have much, much higher costs and infrastructure requirements. We expect, however, to see very exciting news on the use of mRNA and other novel technologies in the next year or two that, when approved and put into commercialization, could radically change the game, not only as to mortality, but also by eliminating or significantly reducing the cost of care with chronic conditions (which some cancers have become, thanks to technological advancement). We are fortunate to be in that gap now between “care” and “cure,” where we have been able with modern medical advances to convert many more disease states into manageable chronic care conditions. Together with today’s longer lifespans, that, however, carries a much higher price tag for our healthcare system. Now, with some of these recent announcements, we look forward to moving from “care” to “cure” and substantially dropping the cost of care to our healthcare system.

Continuing consolidation also was a steady drumbeat underlying the multiple presentations today on the healthcare services side of the conference – health plans, health systems, physician organizations, home health. The drive to scale continues, as we have seen from the accelerated pace of mergers and acquisitions in the second half of 2020, which continues unabated in January 2021. There was today’s announcement of the acquisition by Amerisource Bergen of Walgreens Boots Alliance’s Alliance Healthcare wholesale business (making Walgreens Boots Alliance the largest single shareholder of Amerisource Bergen at nearly 30% ownership), following the announcement last week of Centene’s acquisition of Magellan Health (coming fast on the heels of Molina Healthcare’s purchase of Magellan’s Complete Care line of business).

On the mental health side – a core focus area for Magellan Health – Centene’s Chief Executive Officer, Michael Neidorff, expressed the common theme that we have been seeing in the past year that mental health care should be integrated and coordinated with primary and specialty care. He also saw value in Magellan’s strong provider network, as access to mental health providers can be a challenge in some markets and populations. The behavioral/mental health sector likely will see increased attention and consolidation in the coming year, especially given its critical role during the COVID-19 crisis and also with the growing Medicaid and Medicare populations. There are not a lot of large assets left independent in the mental health sector (aside from inpatient providers, autism/developmental disorder treatment programs, and substance abuse residential and outpatient centers), so we may see more roll-up focus (such as we have seen recently with the autism/ABA therapy sector) and technology-focused solutions (text-based or virtual therapy).

There was strong agreement among the presenting health plans and capitated providers (Humana, Centene, Oak Street and multiple health systems) today that we will continue to see movement toward value-based care (VBC) and risk-based reimbursement systems, such as Medicare Advantage, Medicare direct contracting and other CMS Innovation Center (CMMI) programs and managed Medicaid. Humana’s Chief Executive Officer, Bruce Broussard, said that the size of the MA program has grown so much since 2010 that it now represents an important voting bloc and one of the few ways in which the federal government currently is addressing healthcare inequities – e.g., through Over-the-Counter (OTC) pharmacy benefits, benefits focused on social determinants of health (SDOH), and healthcare quality improvements driven by the STARS rating program. Broussard also didn’t think Medicare Advantage would be a negative target for the Biden administration and expected more foreseeable and ordinary-course regulatory adjustments, rather than wholesale legislative change for Medicare Advantage.

There also was agreement on the exciting possibility of direct contracting for Medicare lives at risk under the CMMI direct contracting initiative. Humana expressed possible interest in both this year’s DCE program models and in the GEO regional risk-based Medicare program model that will be rolling out in the next year. Humana sees this as both a learning experience and as a way to apply their chronic care management skills and proprietary groups and systems to a broader range of applicable populations and markets. There is, however, a need for greater clarity and transparency from CMMI on program details which can substantially affect success and profitability of these initiatives.

Humana, Centene and Oak Street all sang the praises of capitated medical groups for Medicare Advantage and, per Michael Neidorff, the possibility of utilizing traditional capitated provider models for Medicaid membership as well. The problem, as noted by the speakers, is that there is a scarcity of independent capitated medical groups and a lack of physician familiarity and training. We may see a more committed effort by health plans to move their network provider groups more effectively into VBC and risk, much like we have seen Optum do with their acquired fee for service groups. Privia Health also presented today and noted that, while the market focus and high valuations today are accorded to Medicare lives, attention needs to be paid to the “age in” pipeline, as commercial patients who enroll in original Medicare and Medicare Advantage still would like to keep their doctors who saw them under commercial insurance. Privia’s thesis in part is to align with patients early on and retain them and their physicians, so as to create a “farm system” for accelerated Medicare population growth. Privia’s Chief Executive Officer, Shawn Morris, also touted Privia’s rapid growth, in part attributable to partnering with health systems.

As written in our notes from prior JPM healthcare conferences, health systems are continuing to look outside to third parties to gain knowledge base, infrastructure and management skills for physician VBC and risk arrangements. Privia cited their recent opening of their Central Florida market in partnership with Health First and rapid growth in providers by more than 25% in their first year of operations.

That being said, the real market sizzle remains with Medicare Advantage and capitation, percent of premium arrangements and global risk. The problem for many buyers, though, is that there are very few assets of size in this line of business. The HealthCare Partners/DaVita Medical Group acquisition by Optum removed that from the market, creating a high level of strategic and private equity demand and a low level of supply for physician organizations with that expertise. That created a focus on groups growing rapidly in this risk paradigm and afforded them strong valuation, like with Oak Street Health this past year as it completed its August 2020 initial public offering. Oak Street takes on both professional and institutional (hospital) risk and receives a percent of premium from its contracting health plans. As Oak Street’s CEO Mike Pykosz noted, only about 3% of Medicare dollars are spent on primary care, while approximately two-thirds are spent on hospital services. If more intensive management occurs at the primary care level and, as a result, hospitalizations can be prevented or reduced, that’s an easy win that’s good for the patient and the entire healthcare system (other than a fee for service based hospital). Pykosz touted his model of building out new centers from scratch as allowing greater conformity, control and efficacy than buying existing groups and trying to conform them both physically and through practice approaches to the Oak Street model. He doesn’t rule out some acquisitions, but he noted as an example that Oak Street was able to swiftly role out COVID-19 protocols rapidly and effectively throughout his centers because they all have the same physical configuration, the same staffing ratio and the same staffing profiles. Think of it as a “franchise” model where each Subway store, for example, will have generally the same look, feel, size and staffing. He also noted that while telehealth was very helpful during the COVID-19 crisis in 2020 and will continue as long as the doctors and patients wish, Oak Street believes that an in-person care management model is much more effective and telehealth is better for quick follow-ups or when in-person visits can’t occur.

Oak Street also spoke to the topic of Medicare Advantage member acquisition, which has been one of the more difficult areas to master for many health plans and groups, resulting in many cases with mergers and acquisitions becoming a favored growth vehicle due to the difficulties of organic membership growth. Interestingly, both Oak Street and Humana reported improvements in membership acquisition during the COVID-19 crisis. Oak Street credited digital marketing and direct response television, among other factors. Humana found that online direct-to-consumer brokers became an effective pathway during the COVID-19 crisis and focused its energy on enhancing those relationships and improving hand-offs during the membership enrollment process. Humana also noted the importance of brand in Medicare Advantage membership marketing.

Staying with Medicare Advantage, there is an expectation of a decrease in Medicare risk adjustment revenue in 2021, in large part due to the lower healthcare utilization during the COVID crisis and the lesser number of in-person visits during which HCC-RAF Medicare risk adjustment coding typically occurs. That revenue drop however likely will not significantly decrease Medicare Advantage profitability though, given the concomitant drop in healthcare expenses due to lower utilization, and per conference reports, is supposed to return to normal trend in 2022 (unless we see utilization numbers fall back below 90% again). Other interesting economic notes from several presentations, when taken together, suggest that while many health systems have lost out on elective surgery revenue in 2020, their case mix index (CMI) in many cases has been much higher due to the COVID patient cases. We also saw a number of health systems with much lower cash days on hand numbers than other larger health systems (both in gross and after adjusting for federal one-time stimulus cash payments), as a direct result of COVID. This supports the thesis we are hearing that, with the second wave of COVID being higher than expected, in the absence of further federal government financial support to hospitals, we likely will see an acceleration of partnering and acquisition transactions in the hospital sector.

Zoetis, one of the largest animal health companies, gave an interesting presentation today on its products and service lines. In addition to some exciting developments re: monoclonal antibody treatments coming on line for dogs with pain from arthritis, Zoetis also discussed its growing laboratory and diagnostics line of business. The animal health market, sometime overshadowed by the human healthcare market, is seeing some interesting developments as new revenue opportunities and chronic care management paradigms (such as for renal care) are shifting in the animal health sector. This is definitely a sector worth watching.

We also saw continuing interest, even in the face of Congressional focus this past year, on growing pharmacy benefit management (PBM) companies, which are designed to help manage the pharmacy spend. Humana listed growth of its PBM and specialty pharmacy lines of business as a focus for 2021, along with at-home care. In its presentation today,  SSM Health, a health system in Wisconsin, Oklahoma, Illinois, and Missouri, spotlighted Navitus, its PBM, which services 7 million covered lives in 50 states.

One of the most different, interesting and unexpected presentations of the day came from Paul Markovich, Chief Executive Officer of Blue Shield of California. He put forth the thesis that we need to address the flat or negative productivity in healthcare today in order to both reduce total cost of care, improve outcomes and to help physicians, as well as to rescue the United States from the overbearing economic burden of the current healthcare spending. Likening the transformation in healthcare to that which occurred in the last two decades with financial services (remember before ATMs and banking apps, there were banker’s hours and travelers cheques – remember those?), he described exciting pilot projects that reimagine healthcare today. One project is a real-time claims adjudication and payment program that uses smart watches to record physician/patient interactions, natural language processing (NLP) to populate the electronic medical record, transform the information concurrently into a claim, adjudicate it and authorize payment. That would massively speed up cash flow to physician practices, reduce paperwork and many hours of physician EMR and billing time and reduce the billing and collection overhead and burden. It also could substantially reduce healthcare fraud.

Paul Markovich also spoke to the need for real-time quality information that can result in real-time feedback and incentivization to physicians and other providers, rather than the costly and slow HEDIS pursuits we see today. One health plan noted that it spends about $500 million a year going into physician offices looking at medical records for HEDIS pursuits, but the information is totally “in the rearview mirror” as it is too old when finally received and digested to allow for real-time treatment changes, improvement or planning. Markovich suggested four initiatives (including the above, pay for value and shared decision making through better, more open data access) that he thought could save $100 billion per year for the country. Markovich stressed that all of these four initiatives required a digital ecosystem and asked for help and partnership in creating one. He also noted that the State of California is close to creating a digital mandate and statewide health information exchange that could be the launching point for this exciting vision of data sharing and a digital ecosystem where the electronic health record is the beginning, but not the end of the healthcare data journey.

‘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.”

Haven, the Amazon-Berkshire-JPMorgan venture to disrupt health care, is disbanding after 3 years

https://www.cnbc.com/2021/01/04/haven-the-amazon-berkshire-jpmorgan-venture-to-disrupt-healthcare-is-disbanding-after-3-years.html

Haven, the Amazon-Berkshire-JPMorgan venture to disrupt health care, is disbanding  after 3 years

KEY POINTS

  • Haven began informing employees Monday that it will shut down by the end of next month, according to people with direct knowledge of the matter.
  • Many of the Boston-based firm’s 57 workers are expected to be placed at Amazon, Berkshire Hathaway or JPMorgan Chase as the firms each individually push forward in their efforts, the people said.
  • One key issue facing Haven was that each of the three founding companies executed their own projects separately with their own employees, obviating the need for the joint venture to begin with, according to the people, who declined to be identified speaking about the matter.

Haven, the joint venture formed by three of America’s most powerful companies to lower costs and improve outcomes in health care, is disbanding after three years, CNBC has learned exclusively.

The company began informing employees Monday that it will shut down by the end of next month, according to people with direct knowledge of the matter.

Many of the Boston-based firm’s 57 workers are expected to be placed at AmazonBerkshire Hathaway or JPMorgan Chase as the firms each individually push forward in their efforts, and the three companies are still expected to collaborate informally on health-care projects, the people said.

The announcement three years ago that the CEOs of Amazon, Berkshire Hathaway and JPMorgan Chase had teamed up to tackle one of the biggest problems facing corporate America – high and rising costs for employee health care  – sent shock waves throughout the world of medicine. Shares of health-care companies tumbled on fears about how the combined might of leaders in technology and finance could wring costs out of the system.

The move to shutter Haven may be a sign of how difficult it is to radically improve American health care, a complicated and entrenched system of doctors, insurers, drugmakers and middlemen that costs the country $3.5 trillion every year. Last year, Berkshire CEO Warren Buffett seemed to indicate as much, saying that were was no guarantee that Haven would succeed in improving health care.

Shares of UnitedHealth GroupHumana and CVS Health each climbed more than 2% after the Haven news broke.

One key issue facing Haven was that while the firm came up with ideas, each of the three founding companies executed their own projects separately with their own employees, obviating the need for the joint venture to begin with, according to the people, who declined to be identified speaking about the matter.

Coming just three years after the initial rush of fanfare about the possibilities for what Haven could accomplish, its closure is a disappointment to some. But insiders claim that it will allow the founding companies to implement ideas from the project on their own, tailoring them to the specific needs of their employees, who are mostly concentrated in different cities.

The move comes after Haven’s CEO, Dr. Atul Gawande, stepped down from day-to-day management of the nonprofit in May, a change that sparked a search for his successor.

Brooke Thurston, a spokeswoman for Haven, confirmed the company’s plans to close and gave this statement:

The Haven team made good progress exploring a wide range of healthcare solutions, as well as piloting new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable,” Thurston said in an email.

Moving forward, Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. will leverage these insights and continue to collaborate informally to design programs tailored to address the specific needs of our individual employee populations and locations,” she said.

An investment firm snapped up nursing homes during the pandemic

https://www.washingtonpost.com/local/portopiccolo-nursing-homes-maryland/2020/12/21/a1ffb2a6-292b-11eb-9b14-ad872157ebc9_story.html?fbclid=IwAR2O7OAWs8sCQMk6bk7jiwW2oTeguaqiBnjLxLf8rYOhD05oaAnGnqYf_Oc

Private Equity Fundraising Set Record in 2019: PitchBook | ThinkAdvisor

An investment firm has bought more than 20 nursing homes during the coronavirus pandemic, leading to disruptions at multiple facilities that weakened care for vulnerable residents amid the worst health crisis in generations, interviews and documents show.

From April through July, the New Jersey-based Portopiccolo Group — which buys troubled nursing homes and tries to make them profitable — paid hundreds of millions of dollars to acquire facilities in Maryland, Virginia and elsewhere.

The purchases drew scant scrutiny from regulators despite poor safety records at dozens of the company’s other nursing homes, including hefty fines for infection-control lapses and shortages of staff.

Many of Portopiccolo’s existing facilities were struggling to contain outbreaks of the coronavirus when its leaders went seeking new properties, state health records show. At a Virginia nursing home, staff hosted a hallway dance party for residents in April, weeks after federal guidelines had cautioned against such events. Conditions were so bad at one North Carolina facility that it was placed on a federal watch list even after the Centers for Disease Control and Prevention dispatched a strike team to help.

At its new nursing homes in Maryland, Portopiccolo’s operating companies made major changes to insurance and time-off benefits, failed to buy enough supplies and protective equipment and asked some employees to keep working after testing positive for coronavirus, said 14 current and former employees from four of the eight facilities.

Many veteran staffers quit as a result of the changes, said the employees, most of whom spoke on the condition of anonymity because they feared reprisals. Those who remained found themselves tending to dozens of residents at a time, the employees said.

“It was hair on fire,” said Katrina Pearthree, a former social worker at two facilities purchased by Portopiccolo over the last 15 months. She resigned from her job after losing health insurance coverage and disagreeing with new managers on patient care.

Portopiccolo spokesman John Collins denied that caregiving suffered and said that while benefits changed, they remained competitive within the industry. The firm, he said, wants to fill the gap left by nursing home owners exiting the industry because of the pandemic.

“Our company was founded by people who share a passion for caring for the sick, elderly and forgotten,” Collins said in a statement. “Any attempts to characterize our work or the work of our teams differently is flat out wrong.”

Elder-care advocates say Portopiccolo’s record of fines at other facilities, and the timing of its acquisitions, should have raised red flags for regulators, especially as the virus decimated the country’s nursing home population.

But the Centers for Medicare and Medicaid Services (CMS), the main federal agency regulating nursing homes, said the only way it tracks ownership changes is when facilities report the information for Medicare enrollment.

President-elect Joe Biden has said he wants to increase federal oversight through mandatory audits of nursing home cost reports and ownership data. Typically, such monitoring has fallen to state regulators, said Charlene Harrington, a professor emerita of sociology and nursing at the University of California at San Francisco. But even before the coronavirus crisis, she said, most states did a poor job.

In Maryland, the commission that oversees changes in nursing home ownership said the sale of a facility requires little more than “timely notification.” Virginia officials said they don’t closely monitor such sales, either.

“Your history indicates what you’re going to do in the future,” said Richard Mollot, executive director of a national advocacy group called the Long Term Care Community Coalition. “There needs to be more oversight of these purchases.”

‘From bad to worse’

Portopiccolo founders Simcha Hyman, 31, and Naftali Zanziper, 38, bought their first nursing home in 2016 after selling their medical supplies company to a private equity firm. They have since purchased more than 70 facilities in nine states, including 18 in Virginia. The nursing homes are run by operating companies set up and financed by the firm, including Peak Healthcare, Accordius Health and Pelican Health — a trend first reported by the business magazine Barron’s.

For years, Hyman and Zanziper described Portopiccolo as a private equity firm. But that description, along with the group’s promise to swiftly turn “distressed assets” profitable, was removed from the Portopiccolo website in early December after inquiries from The Washington Post about the firm’s nursing home acquisitions.

Collins said the label “private equity” — which typically describes groups that raise funding from private investors — is inaccurate. He declined to explain why the group described itself that way for months, including in news releases, and still does on its LinkedIn page.

Atul Gupta, a professor of health-care management at the Wharton School at the University of Pennsylvania, said it is possible Portopiccolo is trying to rebrand itself because of the increasingly negative stigma tied to private equity groups — which have been criticized for slashing costs at nursing homes, then selling them off to new owners. Studies, by Gupta and others, show that private equity ownership correlates with declines in staffing and quality of care.

Collins declined to say how many facilities Portopiccolo owns, how many it has sold or how much the firm has profited. Neither Peak Healthcare nor Accordius Health responded to multiple requests for comment.

An analysis of federal data shows that nearly 70 percent of facilities Portopiccolo owned before the pandemic have Medicare ratings of one or two stars out of five — based on patient-care metrics such as staffing ratios and infection control.

Two Portopiccolo facilities last month were placed in a federal monitoring program for having “a history of serious quality issues”; two others were listed as candidates because of severe deficiencies. Prior to the pandemic, the firm’s facilities in North Carolina were fined more than $480,000 for violating state and federal rules, federal data shows.

One facility placed in the monitoring program was the Citadel Salisbury, a one-star nursing home in Salisbury, N.C., where more than 150 staff and residents have contracted the virus, according to state data. Employees and residents alleged in a lawsuit filed in Rowan County Superior Court that Portopiccolo, which bought the facility from Genesis HealthCare on Feb. 1, left the nursing home woefully unprepared for the pandemic.

Employees testified in sworn affidavits that managers from Accordius, the operating group, prohibited staff from wearing masks in March, saying that doing so would scare residents. Nurses sometimes had to care for more than 50 residents at a time, employees alleged.

The lawsuit asks that the facility be required to improve conditions or be closed or put under new ownership. But lawyers for Portopiccolo asserted that staffing and equipment have been adequate. Hyman, Zanziper and Accordius executives sought to downplay their role at the Citadel, claiming in a motion to dismiss that daily operations were the responsibility of staff on site.

At the same time, Portopiccolo sued the families in federal court, arguing that they had signed agreements that preclude litigation against the nursing home.

Such arbitration clauses have become increasingly common at for-profit nursing homes, studies show, and have been criticized by consumer advocates as well as lawmakers as a way for facilities to avoid accountability. Biden said he wants to restore an Obama-era ban on the practice that was overturned by the Trump administration.

In June, North Carolina officials identified a slew of violations at the Citadel that they said placed residents in immediate jeopardy,” including a systemic failure to control infection and failing to inform the families of those who tested positive. Some found out their relatives had the virus from an emergency room physician. One man said he learned his aunt had died only when a funeral director called, asking what to do with her body.

Two hundred miles away in Virginia, staff shortages at Accordius Health in Harrisonburg were so dire before the pandemic that residents sometimes went days without showers, inspection records show.

“This place has gone from bad to worse,” one resident told an inspector. “They cut costs at our expense.”

After Accordius took over the facility in 2019, Ruth Simmers-Domzalski said, she noticed fewer staff members tending to her mother-in-law, Mary Domzalski, whose family twice found her lying on soiled bedsheets. On April 6, the facility held a hallway dance party where residents interacted without masks.

Domzalski, 88, attended. Three weeks later, she died of covid-19.

When asked about the event, Collins said the dance party did not conflict with federal guidelines at the time. CMS said on April 2 that all nursing home residents should cover their noses and mouths while interacting with staff; nearly a month before, it told facilities to cancel all group activities.

Tumultuous takeovers

Portopiccolo declined to say how many nursing homes it has bought during the pandemic, but The Post used CMS records to identify at least 22 facilities — eight in Maryland — that reported that Hyman and Zanziper had become owners since April.

Three of the Maryland facilities were bought from Genesis HealthCare, one of the largest skilled-nursing operators in the country. Amid plummeting occupancy rates and ballooning expenses, Genesis told stockholders this year that the firm would “improve its liquidity position” by selling off nearly two dozen of its roughly 400 nursing homes.

One was the Sligo Creek Center in Takoma Park, Md., where Pearthree, 59, worked part time as a social worker.

She had spent 18 years full time at another Genesis nursing home, the Fox Chase Rehabilitation Center in Silver Spring, leaving months after Portopiccolo bought it in 2019.

That sale was a “nightmare,” said Pearthree, recalling that new managers failed to secure local suppliers, leaving employees scrambling for medication and food. One afternoon, she said, staff members were unable to access digital patient records because Peak Healthcare had not put a new software system in place.

Less than a year after she left Fox Chase, Pearthree found herself facing another Portopiccolo takeover — this time amid a pandemic.

Again, the transition was chaotic. Peak did not actively recruit employees or offer them competitive packages prior to the takeover, leading to the departure of longtime staffers, including the administrator and director of nursing, said Pearthree and a senior Sligo Creek employee who spoke on the condition of anonymity because she feared reprisals. The former administrator and director of nursing did not respond to requests for comment.

Pearthree, a graduate student who worked 30 hours a week, was told she would have to increase her hours to keep her health insurance, she and Collins said.

Pearthree and the current employee also said Peak stopped providing hazard pay for contract employees and laid off a group of nonmedical staff Genesis had assembled to take temperatures and wipe down surfaces at the onset of the pandemic.

The facility has been cited twice by Maryand regulators since Peak took over, state inspection records show — in June for failing to test all residents and staff, and in August for failing to consistently inform family members of viral outbreaks.

Collins said staffing gaps were part of a nationwide shortage of nursing home workers and disputed the accounts from Pearthree and the current employee, saying supplies at both Sligo and Fox Chase were adequate and benefits were fair.

Eleven workers at three other Maryland nursing homes acquired by Portopiccolo during the pandemic said they lost paid time off and were offered more limited insurance packages. One worker who has asthma and high blood pressure said her bimonthly health insurance co-pay increased from $67 to $113 when Peak took over.

At Peak Healthcare Chestertown, on Maryland’s Eastern Shore, employees said the company offered a more limited benefits package than the facility’s previous owners, Autumn Lake, including less paid time off for new employees and no paid time off on major holidays.

The company scrimped on supplies, including cutlery, cleaning materials and clothing for residents, said employees at three facilities, who also spoke on the condition of anonymity out of fear of retribution.

Three employees at another facility said nurses have had to use hand soap to clean residents and rip up towels or bedsheets to dry them off.

“We risk our lives every day, and we don’t have proper supplies,” said one geriatric nursing assistant who brings her own gloves to work. “At what point do we put the patients first?”

Collins denied there were shortages, adding that at Chestertown, the budget for supplies had actually increased. He also denied that employees lost time off to which they were entitled, but said he could not address specific claims without knowing the names of the employees.

Reducing operating costs appears to be part of Portopiccolo’s business strategy, according to documents reviewed by The Post. In 2019, while acquiring three nursing homes in North Carolina, the group said it expected to save $360,000 by lowering expenses associated with employee benefits and insurance and $410,000 by cutting equipment and transportation costs. These measures, outlined in a mortgage loan contract, had allowed Portopiccolo to save more than $50 million across 37 facilities.

Collins said Portopiccolo has invested more than $6.7 million to purchase cleaning supplies and protective equipment since the start of this year. In comparison, Genesis, which operates about three times as many nursing homes, said that as of September, it had spent about $40 million more than normal on cleaning supplies and protective equipment.

Little government scrutiny

A recent study by the Long Term Care Community Coalition identified 15 states as having some good oversight practices for nursing home purchases, including requiring companies to disclose what other assets they own. Of the nine states in which Portopiccolo operates, none made the list.

“If your facilities in other states have very low staffing or a history of citations, you should not be allowed to purchase another one,” said Mollot, executive director of the coalition. “But states have a very hands-off approach to anything that happens outside their borders.”

Maryland Department of Health spokesman Charles Gischlar said the agency saw “no reason to change” the way it tracks shifts in nursing home ownership during the pandemic.

The Maryland Health Care Commission, another entity meant to oversee the sale of nursing homes, last year started asking prospective owners to affirm that they have not been convicted of a felony within the past 10 years or penalized more than $10 million because of their ownership of nursing homes.

But this requirement, which was designed “to keep out poor performers,” has not deterred a single transaction, said Paul Parker, a director at the commission.

For each facility that Hyman and Zanziper bought in Maryland, they declared to state regulators that they would not make substantive changes to services, staffing or bed ratios. State officials did not respond to questions asking how they ensured this would be true.

Gupta, the Wharton professor, said there should have been a moratorium on nursing home sales when the pandemic started because the changes that follow any acquisition can hamper a facility’s pandemic response.

But federal and state lawmakers never considered such a move.

“Nobody knew what was going on, nobody was in control,” Gupta said.

Joani Latimer, Virginia’s long-term-care ombudsman, said her office has been concerned by Portopiccolo’s pattern of buying facilities with low CMS ratings. Such facilities need more investment — not less — for conditions to turn around, she said.

“It’s not a process that you can just streamline to machine-like efficiency,” she said. “These are human needs with human challenges.”

Officials at the Virginia Department of Health, however, said they did not pay particular attention to Portopiccolo’s acquisition this year of Accordius Health at Courtland in Southampton County and Accordius Health at Waverly in Sussex County.

Such deals are “a business decision between the parties involved,” said Kimberly Beazley, director of the state Office of Licensure and Certification. “And we do not regulate business decisions made by facilities.”

Weeks with no hot water

Multiple employees at Portopiccolo-owned facilities, including one who worked in the kitchen at Chestertown, said their new managers had so much trouble filling staffing gaps this spring that employees were asked to work after learning they had the virus.

“It was a disaster,” said the Chestertown employee, who said she tested positive May 15 and declined when asked to come to work three days later. “People were still testing positive, and we were being asked to reapply for our jobs because this new company was coming in.”

Kent County Health Officer William Webb said local officials intervened that month after learning that a different employee at the facility who also had coronavirus was still working. “It was very concerning to me at the time, and we made sure to put a stop to it,” he said.

The facility’s water heater was broken from July to September, which meant there was no hot water for dishes or hand-washing. State inspectors fined the facility $730,000 for not fixing or reporting the problem, which they said posed “immediate jeopardy” to residents’ health. Collins said the firm is disputing the fine.

Webb said Peak’s decision not to promptly replace the water heater was “especially difficult” because the facility had seen scores of coronavirus cases and more than a dozen deaths in April and May. “If you’re in the business,” he said, “[you know] ample hot water is the core of any infection prevention program.”

When Peak took over managing the facility, roommates Patricia Sparkman, 82, and Brenda Middleton, 79, were isolated in their ground-floor room after testing positive for the virus.

Sparkman said in an interview that staff members left after the transition. Those who remained seemed less able to help, she said, including with basic tasks like bringing her water.

Middleton’s daughter, Tina Hurley, said the family moved Middleton a few months later to Peak Healthcare at Denton, about 30 miles away, so they could visit more frequently. But that facility had also been acquired by Portopiccolo on May 1.

Hurley said her mother is rarely checked on in Denton and has fallen several times while trying to get things for herself. At one point, she added, Middleton injured her leg but went without care from the facility’s doctor for days.

“I wouldn’t have brought her here if I knew how bad it would be,” Hurley said.

For Pearthree, the social worker at Sligo Creek, the breaking point came when she was asked to transfer back to Fox Chase in mid-May as director of social work. By then, Peak was operating both facilities.

She found residents she had known for years alone in their rooms, she said, confused and despondent in some cases. Relatives of those who died, she added, were given little information about how or when their loved ones had gotten sick.

When she raised concerns with managers, she said, she was brushed aside.

“The families felt betrayed by us,” Pearthree said. “And that was the part that overwhelmed me.” She sent a resignation letter in June.

Collins said Fox Chase administrators were unaware of her resignation and said Pearthree was terminated after she stopped coming to work. But the executive director of Fox Chase left Pearthree a voice mail on June 3 acknowledging her resignation and pleading with her to return.

“You do your job great and I like that,” the director said in the voice mail, which Pearthree shared with The Post.

Collins said that Portopiccolo leaders see their employees as “health care heroes.”

“We remain committed to putting care first,” he added.

Days before Thanksgiving, as all but one of the firm’s Maryland facilities reported new coronavirus outbreaks to the state, the firm closed on deals worth $37.7 million to acquire four more facilities in Florida.