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The big guys can’t do HLTH right

By MATTHEW HOLT

This is the week where the digital health landscape debunks to the HLTH Conference in Vegas to meet, do deals, listen to superannuated rappers and generally have a great time. Speaking as the guy who ran the digital health conference before HLTH emerged, I remain extremely jealous of how Jonathan Weiner, Rich Scarfo, Jody Tropeano and team have managed to pull 10,000 people together when Health 2.0 never got past 25% of that size! (And I won’t even mention the premium price they charge!).

I have written pretty extensively about how digital health has failed to develop an alternate to the incumbent hospital, specialty & procedure-based system. 90%+ of digital health companies are now desperately trying to get the incumbents to buy their stuff. It’s as if Jeff Bezos in 1998 was going cap in hand to Barnes & Noble asking them to put in his new online ordering system.

But there is something else that HLTH has not been shy in doing, and that is giving a place on the stage for big companies to explain what they intend to do to change the health system. Amazon, Walmart. Walgreens, CVS, Optum and many more have used that premium real estate to explain what they are going to do. And much like the digital health upstarts, the reality has been very different.

Almost all of those companies’ new strategies are in deep trouble.

Amazon was going to build a hybrid telehealth/home based delivery platform. It got up and running and had some sizable employer clients. It also had a strong relationship with Crossover Health which had great worksite clinics. Not hard at all to imagine that becoming a nationwide primary care platform that could take risk and really cut into the business of the incumbent non-profit systems. After all Dave Chase at Rosetta Stone has been preaching this forever. But at the first hint of trouble, Amazon cut & run and bought One Medical. It’s as if their play in grocery was to go mass market but then they decided that they could make more money from the high end Lululemon crowd that shops at Whole Foods. Oh yeah, that was their play in grocery too.

Walmart, Walgreens and CVS were all going to create mass-market primary care, and move to accepting risk primarily from Medicare Advantage. I interviewed Walmart’s then head honcho of health care, Cheryl Pegus, on stage at HLTH two years ago when she waxed lyrical about how Walmart was the answer to the lack of primary care all over the deep South and rural America. The joke was that by the time of that panel she had already quit and was moving to fresher pastures at JP Morgan! Around a year later Walmart declared that it couldn’t staff its clinics, was losing a fortune on each one, and it tossed the whole business.

Walgreens paid a fortune for VillageMD, then even more for Summit Medical (which included CityMD in NYC). At one point in late 2021, VillageMD CEO Tim Barry told me that their main issue was the execution risk of having to open more clinics per week then Starbucks did at the height of its expansion. Walgreens made a minority investment then kept doubling down on its bet. But three years later it has written off the whole amount ($8bn or so) and its stock price is in the toilet. It’s worth less now than doctor network Doximity!

Both of these companies and CVS have shown that it’s really hard just to get the basics right opening clinics in retail stores. That’s despite the fact that most Americans have no primary care doc and can’t get an appointment with a regular one, and that there’s a captive audience walking into their stores every day picking up their meds.

CVS has the added issue of trying to integrate a decent sized insurer into its operations just at the time when the Medicare Advantage gravy train looks like it is running out of steam. CVS’ CEO Karen Lynch took over Aetna recently and then this past week was dispatched to the cheap seats herself. (Don’t feel too bad for her, she’s getting $4m a year to “consult” with the board). Two things have hit Medicare Advantage. First the government is starting to look into risk adjustment upcoding. CVS, you may recall, bought Signify Health, a company specializing in sending nurses into seniors’ homes to perform said upcoding. Secondly, Medicare Advantage plans had surprisingly little information about and control over their members who were being cared for by their non-risk bearing delivery system (which is to say, most of it). They appeared to be totally surprised that post pandemic procedure numbers ratcheted up and were powerless to stop it. Well, Wall Street noticed.

Similar problems have hit Optum, the engine behind United HealthGroup’s profitable growth for the past decade or so. It’s not just the biggest health tech company in America, it’s also the biggest medical group owner—even if CEO and bumbling Englishman Andrew Witty doesn’t seem to know how many doctors it controls. They are being exposed in Stat on a weekly basis for basically semi-frequently causing their doctors to lie about their patients’ health status, just as the Wall Street Journal accuses their associated health plan of inventing diseases and procedures—all to bill the government more. You can argue back and forth but it does appear that the strategy of buying every medical group it can see and provider fracking appears to have hit a bumpy road.

So if the venture-funded digital health upstarts are no longer changing the world, and the big retailers and Optum aren’t setting the world alight, who is taking the upper hand? Well, I expect that intermingled with the ex-pop stars and amazingly beautiful actresses on stage this week (sorry, but I love Halle Berry!), we’ll see a rash of big incumbent non- & for-profit systems. Look at their numbers. Procedures are heading up. ERs are filling up. Operations are profitable or in some cases, very profitable, corporate jets are being bought, and “reserves” –AKA hedge funds–are growing well due to being stuffed full of Nvidia stock.

All of which leads me to believe that sadly HLTH isn’t about the future of health as much as it’s a retread of its past. Still, I’ll catch you at the parties if you’re there….

Matthew Holt is the founder and publisher of THCB

Pete Hudson, Alta Partners & Transcarent Investor (Part 2)

Pete Hudson is one of the OGs of digital health. As an emergency room doc he was fed up with his friends bothering him with their medical problems and he created a tool called iTriage, which helped patients figure out what condition they had, and where to go to deal with it. This was fifteen years ago and we’re now starting to see the evolution of that. Pete is now a venture capitalist and an investor in Transcarent–the sponsor of a new video series on THCB. This is part 2 of our conversation (part 1 is here) and we dive much more into AI and what Transcarent’s Wayfinding tool and other AI like it could do to change health care and the patient experience–Matthew Holt

Chris Darland, Peerbridge Health

Chris Darland is CEO of Peerbridge Health, which is the maker of a “3 lead to 12 lead” EKG patch that can give a better view of overall cardiac health than what’s on the market now–which tend to specialize in AFIB. Chris thinks that the Peerbridge Cor product will lead to a new world where for a much lower price we can have much better data on many more people who are at potential risk for heart disease and much more. I talked with him to discover what’s coming and what the impact might be on the overall health care system. Will we have fewer bypasses and stents? Maybe…Matthew Holt

Pete Hudson, Alta Partners & Transcarent Investor (Part 1)

Pete Hudson is one of the OGs of digital health. As an emergency room doc he was fed up with his friends bothering him with their medical problems and he created a tool called iTriage, which helped patients figure out what condition they had, and where to go to deal with it. This was fifteen years ago and we’re now starting to see the evolution of that. Pete is now a venture capitalist and an investor in Transcarent–the sponsor of a new video series on THCB. We had a long conversation about the evolution of digital health, what went right, what opportunities got missed, and what to expect next. This is part one of our conversation, and allows two guys who were there close to the start of this world to survey what’s happened since–Matthew Holt

Can Someone Actually Be Responsible?

By MATTHEW HOLT

I was having a fight on Twitter this week and it hit me. America 2024 is Japan 1989. 

The topic of the fight was right-wing VC Peter Thiel. In 2001 he put a ton of Paypal stock allegedly worth less than $2,000 into a Roth IRA. The Roth IRA was designed so that working stiffs could put post tax cash into an IRA, grow it slowly and take out money tax-free. (For traditional IRAs you put in pre-tax money and get taxed when you take it out). You may have read the story in ProPublica. Magically Thiel earned less that year than the max allowable income limit (around $100K) to contribute to a Roth IRA, and magically that stock was within weeks worth much more and then, later, hundreds of millions more. Since then Thiel has invested those Paypal returns in Facebook, Palantir and much more, and that Roth IRA has billions of dollars in it that can never be taxed.

My twitter adversary was saying that Thiel obeyed the law. I doubt it, but that’s not really the point. When the Roth was introduced it wasn’t meant to be a loophole that Silicon Valley types could use to hide billions from tax. But neither my twitter “friend” nor Peter Thiel want to take responsibility or pay their fair share.

Japan in 1989 was wealthy and successful and heading off a speculative cliff which it’s since taken 3 decades to dig out of. There were numerous academics pointing this out, but the most interesting analysis was The Enigma of Japanese Power written by a Dutch journalist named Karel van Wolferen. Here’s a summary from wikipedia with my emphasis added

Van Wolferen creates an image of a state where a complicated political-corporate relationship retards progress, and where the citizens forgo the social rights enjoyed in other developed countries out of a collective fear of foreign domination….Japanese power is described as being held by a loose group of unaccountable elites who operate behind the scenes. Because this power is loosely held, those who wield it escape responsibility for the consequences when things go wrong as there is no one who can be held accountable.

In Thiel’s case a collective network of tax accountants, junk philosophers, and purchased politicians like JD Vance ensure that no one has to be accountable. Ultimately Thiel doesn’t feel responsible for paying what he owes. Of course the exposure of Trump’s tax cheating shows that he doesn’t either. And many people find this OK.

Meanwhile I got into it a little with Jeff Goldsmith on last week’s THCB Gang about why hospitals are still paid per transaction when it would be much better for them to be paid some kind of global budget for the services they provide and for doctors to be paid a salary to exercise their best judgment rather than be tempted into providing care just because they get paid for it. Both COVID and the recent Change Healthcare outage put health care providers in a terrible situation financially because they depend on being paid fee-for-service via claims for individual transactions. Did the leadership of America’s hospitals and doctors come out asking for a change to the system? No, they just got a government hand out and begged for a return to standard operating procedure. No one can rationally look at how we pay for health care in America and say “give us more of the same” but there’s no leadership to change it at all.

Talking about lack of leadership, Amber Thurman died in Piedmont Henry Hospital because no-one on the medical team was prepared to give her the D&C that she desperately needed. They were scared of going to jail under Georgia’s draconian anti-abortion law. There are many, many guilty parties here.

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THCB Gang Episode 140, Thursday October 3

OK we are really back.! Following last weeks special with the Women Healthcare Leaders for Progress, the “regular” THCBGang is coming back for the Fall, mostly but not always at the 1pm PT 4pm ET timeslot on Thursdays.

Joining Matthew Holt (@boltyboy) on #THCBGang on Thursday October 3 at 1pm PST 4pm EST are futurist Jeff Goldsmith: delivery & platform expert Vince Kuraitis (@VinceKuraitis); author & ponderer of odd juxtapositions Kim Bellard (@kimbbellard);

You can see the video below & if you’d rather listen than watch, the audio is preserved as a weekly podcast available on our iTunes & Spotify channels

The Silicon Curtain Descends on SB 1047

By MIKE MAGEE

Whether you’re talking health, environment, technology or politics, the common denominator these days appears to be information.  And the injection of AI, not surprisingly, has managed to reinforce our worst fears about information overload and misinformation. As the “godfather of AI”, Geoffrey Hinton, confessed as he left Google after a decade of leading their AI effort, “It is hard to see how you can prevent the bad actors from using AI for bad things.”

Hinton is a 75-year-old British expatriate who has been around the world. In 1972 he began to work with neural networks that are today the foundation of AI. Back then he was a graduate student at the University of Edinburgh. Mathematics and computer science were his life. but they co-existed alongside a well evolved social conscience, which caused him to abandon a 1980’s post at Carnegie Mellon rather that accept Pentagon funding with a possible endpoint that included “robotic soldiers.” 

Four years later in 2013, he was comfortably resettled at the University of Toronto where he managed to create a computer neural network able to teach itself image identification by analyzing data over and over again. That caught Google’s eye and made Hinton $44 million dollars richer overnight. It also won Hinton the Turing Award, the “Nobel Prize of Computing” in 2018. But on May 1 2023, he unceremoniously quit over a range of safety concerns.

He didn’t go quietly. At the time, Hinton took the lead in signing on to a public statement by scientists that read, “We believe that the most powerful AI models may soon pose severe risks, such as expanded access to biological weapons and cyberattacks on critical infrastructure.” This was part of an effort to encourage Governor Newsom of California to sign SB 1047 which the California Legislature passed to codify regulations that the industry had already pledged to pursue voluntarily. They failed, but more on that in a moment.

At the time of his resignation from Google, Hinton didn’t mix words. In an interview with the BBC, he described the generative AI as “quite scary…This is just a kind of worst-case scenario, kind of a nightmare scenario.”

Hinton has a knack for explaining complex mathematical and computer concepts in simple terms.

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Red Alert about Red Buttons

By KIM BELLARD

In a week where, say, the iconic brand Tupperware declared bankruptcy and University of Michigan researchers unveiled a squid-inspired screen that doesn’t use electronics, the most startling stories have been about, of all things, pagers and walkie-talkies.

Now, most of us don’t think much about either pagers or walkie-talkies these days, and when we do, we definitely don’t think about them exploding. But that’s what happened in Lebanon this week, in ones carried by members of Hezbollah. Scores of people were killed and thousands injured, many of them innocent bystanders. The suspicion, not officially confirmed, is that Israel engineered the explosions.

I don’t want to get into a discussion about the Middle East quagmire, and I condemn the killing of innocent civilians on either side, but what I can’t get my mind around is the tradecraft of the whole thing. This was not a casual weekend cyberattack by some guys sitting in their basements; this was a years-in-the-making, deeply embedded, carefully planned move.

A former Israeli intelligence official told WaPo that, first, intelligence agencies had to determine “what Hezbollah needs, what are its gaps, which shell companies it works with, where they are, who are the contacts,” then “you need to create an infrastructure of companies, in which one sells to another who sells to another.”  It’s not clear, for example, if Israel someone planted the devices during the manufacturing process or during the shipping, or, indeed, if its shell companies actually were the manufacturer or shipping company. 

Either way, this is some James Bond kind of shit.

The Washington Post reports that this is what Israeli officials call a “red-button” capability, “meaning a potentially devastating penetration of an adversary that can remain dormant for months if not years before being activated.” One has to wonder what other red buttons are out there.

Many have attributed the attacks to Israel’s Unit 8200, which is roughly equivalent to the NSA.  An article in Reuters described the unit as “famous for a work culture that emphasizes out-of-the-box thinking to tackle issues previously not encountered or imagined.”  Making pagers explode upon command certainly falls in that category.

If you’re thinking, well, I don’t carry either a pager or a walkie-talkie, and, in any event, I’m not a member of Hezbollah, don’t be so quick to think you are off the hook. If you use a device that is connected to the internet – be it a phone, a TV, a car, even a toaster – you might want to be wondering if it comes with a red button. And who might be in control of that button.

Just today, for example, the Biden Administration proposed a ban on Chinese software used in cars.

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THCB Gang Special! Women Healthcare Leaders for Progress talk about health care & the election

THCB Gang is back! (I know you’ve all missed it) and we started with a bang. I met with five powerhouse women leaders in health care who’ve just issued a public statement signed by another 500+ women leaders in support of the Harris/Walz campaign.

On the Gang are Missy Krasner, digital health veteran most recently at Amazon and Redesign Health but wayback on the founder team at ONC; Molly Coye, who ran Medicaid in NJ and CA and has had every role in health innovation know to womankind; Miriam Paramore, investor board member and operator at many, many health tech companies; (Lori Evans Bernstein, founder of Caraway, Health Reveal & many more but also at ONC back in the day, who actually couldn’t make the call); Laurie McGraw, EVP at Transcarent, formerly at AMA, Allscripts, etc; and Audrey Mann Cronin, communication advisor to CEOs and Founder, Say it Media.

Despite my obvious political leanings, this wasn’t be a push over. Do we need this group? What does Harris want to do about health care? What can she do? I am on record as saying “not much”. This was great discussion, and I was (virtually) ducking alot! — Matthew Holt

Streamlining Public Benefits Access is a Must to Address Poverty

By ALISTER MARTIN and TARA MENON

If a friend were to ask you which state, Massachusetts or Texas, has a more streamlined federal benefits enrollment program, what would your guess be?

Having screened over 17,000 families and helped them obtain more than $1.8M in federal and state aid through our work in both Massachusetts and Texas, our experiences doing federal benefit enrollment have led us to a surprising conclusion: Texas is leading the way. While Massachusetts has room for improvement, this issue extends beyond a single state—many other states face similar challenges with complex and fragmented benefits systems.

At Link Health, where our work spans the bustling neighborhoods of Boston and Houston, this revelation has been both a surprise and a call to action. In many underserved communities, through partnerships with Federally Qualified Health Centers, our organization seeks to assist eligible people in the navigation and enrollment in benefit programs that address crucial needs like access to affordable internet, food access, healthcare support, and housing resources.

One of the main obstacles we’ve encountered is that people are often unaware of the benefits they qualify for or find the process overwhelming. In states like Massachusetts, separate applications are required for each benefit program, making it harder for families to get the help they need. Programs such as LIHEAP, which offers heating subsidies, Lifeline, which provides internet access for telehealth, and SNAP, which helps with food assistance, all come with different paperwork and requirements. This fragmentation creates unnecessary barriers.

This is not unique to Massachusetts. Across the U.S., many states have similarly disjointed systems, leaving millions of dollars in federal aid unclaimed. It’s estimated that around $140 billion in federal aid goes unclaimed each year due to these inefficiencies.

In contrast, we have found that Texas’s “Your Texas Benefits” platform is efficient and user-friendly. This centralized, comprehensive application process covers a wide range of state benefit programs, including SNAP, TANF, Medicaid, and CHIP, as well as other services like WIC, family violence support, adult education, and substance abuse prevention programs. This unified system allows users to apply for multiple programs through a single portal, streamlining the process considerably. Plus, this common application system allows groups like ours to efficiently connect patients with the help they need without the usual bureaucratic entanglements — it benefits us both.

Although Massachusetts made some progress with its limited common application for MassHealth and SNAP in 2021, it still doesn’t offer a fully unified system for all its programs. This means that many residents must continue navigating multiple applications and processes. During the recent Medicaid “unwinding,” people across the U.S. lost coverage because they couldn’t manage the renewal process. It’s estimated that between 8 million and 24 million people are at risk of losing Medicaid benefits nationwide(Center For Children and Families), not because they no longer qualify, but because of these application challenges.

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