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Category: The Business of Health Care

Ambergan = Amazon + Berkshire Hathaway + JPMorgan

Dear primary care doctor, Jeff Bezos is about to devour your lunch.

All of it. And then he’ll eat the table, the plates, the napkins and the utensils too, so you’ll never have lunch ever again. Oh yeah, and they’ll also finally disrupt and fix health care once and for all, because enough is enough already. Mr. Bezos, it seems, got together with two of his innovator buddies, Warren Buffet from Berkshire Hathaway and Jamie Dimon from J.P. Morgan, and they are fixing up to serve us some freshly yummy and healthy concoction.

Let’s call it Ambergan for now.

This is big. This is huge. It comes from outside the sclerotic “industry”.

And it’s all about technology. The founders are no doubt well versed in the latest disruption theories and Ambergan will be a classic Christensen stealth destroyer of existing markets. When the greatest investor that ever-lived combines forces with the greatest banker in recent memory and the premier markets slayer of all times, who happens to be the richest man on earth, all to bring good things to life (sorry GE), nothing but goodness will certainly ensue.

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To Err is Homicide in Britain – The Case of Dr. Hadiza Bawa-Garba  

By SAURABH JHA, MD

The good that doctors do is oft interred by a single error. The case of Dr. Hadiza Bawa-Garba, a trainee pediatrician in the NHS, convicted for homicide for the death of a child from sepsis, and hounded by the General Medical Council, is every junior doctor’s primal fear.

An atypical Friday

Though far from usual, Friday February 18th, 2011 was not a typically unusual day in a British hospital. Dr. Bawa-Garba had just returned from a thirteen-month maternity break. She was the on-call pediatric registrar – the second in command for the care of sick children at Leicester Royal Infirmary. As a “registrar” she was both a master and an apprentice – a juxtaposition of roles necessary for the survival of acute care in the NHS. Because there aren’t enough commanders, or consultants (attendings), in the NHS trainees must fill their shoes or else the NHS will collapse.

The captain of the ship and Dr. Bawa-Garba’s supervisor, Dr. O’ Riordan, was not in the hospital but teaching in a nearby city. As horrendous as “attending not being in the hospital” sounds this, too, is not atypical in the NHS. Dr. Bawa-Garba’s colleagues, i.e. other registrars, were also away, on educational leave. Normally, a registrar each is assigned to cover the wards, the emergency department and the Children’s Assessment Unit (CAU). On that day, Dr. Bawa-Garba covered all three. She was new to the hospital, but with no formal induction – i.e. no explanation where things are and how stuff gets done in the hospital – she was expected to get along with the call and find her way around the hospital.

As anyone who has been a junior doctor in NHS can attest – the normal, the optimal, is unusual, and what is usual in British hospitals is remitting and relapsing chronic understaffing. The abnormal eventually becomes normal. You work through the anarchy. The anarchy is both the old normal and the new normal.

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NEJM Blasts “Crusade,” Omits that Its Former Editor Launched It

A blistering attack by the national editor of the New England Journal of Medicine against the “less is more” movement in medicine omitted that the publication’s former editor-in-chief played a foundational role in popularizing the idea of widespread medical waste.

The commentary in late December by Dr. Lisa Rosenbaum, “The Less-Is-More Crusade – Are We Overmedicalizing or Oversimplifying?” has attracted intense attention.  Rosenbaum berates a “missionary zeal” to reduce putative overtreatment that she says is putting dangerous pressure on physicians to abstain from recommending some helpful treatments. She also asserts that the research by Dartmouth investigators and others who claim 30 percent waste in U.S. health care, in which she once fervently believed, is actually based on suspect methodology.

What Rosenbaum fails to mention is that the policy consensus she seeks to puncture – that the sheer magnitude of wasted dollars in U.S. health care offers “the promise of a solution without trade-offs” – originated in the speeches, articles and editorials of the late Dr. Arnold Relman, the New England Journal’s editor from 1977 to 1991.Continue reading…

Your Ticket to an Intimate Chat With Health Tech VCs

There’s so much news from media outlets and bloggers about the next Health Tech investment treads that its difficult to pin point where to focus or what will materialize.

Its much easier when you can actually hear the treads from the investors who are shaping the industry – well Health 2.0 got you covered! At next week’s WinterTech conference, we’re featuring the 4 CEOs and Their VCs panel session.

A spin-off of the popular 3 CEOs session from the Fall Conference, the 4 CEOs and Their VCs session is made up of four, back-to-back interviews between digital health CEOs and the VCs who believe in them. Hear exclusive insight into what’s happening in health tech investments with conversations between:
  • Venrock and Robin: Robin is a brand new digital assistant for doctors. Hear Venrock Partner Bryan Roberts and Robin CEO Punit Son discuss the opportunities Venrock sees in Robin.
  • 415 and Lemonaid: Patient experience has gotten easier with Lemonaid’s accessible online platform. Lemonaid CEO Paul Johnson sits with investment firm 415 to talk about their business strategy.
  • Thrive Capital and Honor: An online service that connects in-home caregivers, seniors and their families, Honor sits down with its investor Thrive Capital to discuss the purpose of their investment.
  • Grandrounds and Venrock: Owen Tripp of Grandrounds and Bob Kocher of Venrock discuss their working partnership, and give insight into what those closed-door meetings look like.
From Seed to Series C, don’t miss the opportunity to join the session that is representing each unique stage of the investment cycle. Tickets are selling fast so register today!

Will CVS-Aetna Merger Lead to “Separate But Unequal” Healthcare?

Last week, pharmacy giant CVS agreed to purchase Aetna this week for an astounding $69 billion dollar sum. The company allegedly plans to reduce health spending by developing an integrated system touted as “a new front door for health care in America.” This merger is actually an acquisition, entailing transfer of ownership. The central aim of an acquisition is to increase market share, expand the scope of services provided, and improve financial stability. CVS hit the jackpot on all three objectives. While Wall Street investors celebrate, many of us knowledgeable in the delivery of healthcare services are wondering who will bear the responsibility for the patients harmed by this experiment?

Aetna has compiled vast amounts of data from 22 million health plan members. CVS provides pharmacy benefits management to nearly 90 million consumers. Together, with 10,000 stores and 1,100-minute clinics already in the CVS network, this acquisition will create a ‘Walmart for Healthcare’. Applying bulk-purchase business strategies to the sale of merchandise is one thing, while providing healthcare services by ‘trial and error’ to human beings is another matter entirely. Bypassing physicians to deliver healthcare by protocol categorically jeopardizes patient safety.

Executives at Aetna-CVS plan to utilize pharmacists and nurses in the evaluation of acute illness and management of chronic disease. If an insurer, drugstore, and pharmacy benefit manager unite as one, it will usher in an era of medical “segregation,” with segregation defined as the isolation or separation of a race, class, or group by enforced or voluntary restriction, by barriers to social intercourse, by separate educational facilities, or by other discriminatory means.

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On the Morality of Insurance Premiums

As CVS-Aetna merger talks fill the air this Christmas season and experts weigh in on the impact this will have on the economy and consumers alike, I’m sitting at a little desk in a little office contemplating health insurance.

I run a little shop that’s about as far from CVS-Aetna as you can get in the health care space : a solo practice doctor with four full time employees and revenues a little south of $65 billion dollars.  I shouldn’t feel too alone.  Small businesses account for 99% of US firms and employ almost half of all private sector employees.  But knowing my problem is one shared by many provides only partial solace.

Prior to arrival of the ACA, I provided health insurance to everyone through the company.  At the time I had 3 full time employees and the insurance broker I worked with got me a quote for $1300 / month.  Now, I really didn’t want to be in the providing healthcare business, so when the ACA arrived with its individual market I was happy to facilitate buying health insurance from the exchanges.  So initially, I chose to pay for my employees plans on the individual market.  I was quickly told by my accountant that paying for my employees insurance in this manner was running afoul of a three letter entity of the federal government called the IRS.

Apparently the individual ACA market premiums were allergic to being deducted in this pre-tax manner.   Fine.  So I went ahead and paid each employee $6000 per year extra with the understanding that they would use that money to buy health insurance on the individual market.

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Secure your seat for live demos on precision medicine delivery at next week’s Tech Summit

Imagine if you will, a future in which a cancer diagnosis will be treated with a lifestyle change, like a chronic condition. Survivable. Manageable. Like Diabetes. Sure, to receive a cancer diagnosis today does not mean what it meant twenty years ago, but we are also unlikely to reach a point of ever acting casual about the term or the treatment plan.

In the meantime though, the increasing prevalence of personal data collection is driving new approaches in care plans that have a real shot at improving quality of life. The narrative of one’s life can be seen in the data – everything from where you live, what you eat, how you workout, even what you search for on the internet. The sources of such personal data come from places like clinical trials, biosensors, and wearables and is being stored in your Electronic Medical Record.

The sticking point though is the advancement of technological tools to view, aggregate, extract, and analyze relevant data to derive a meaningful plan of attack (er, treatment plan). One interoperable tool that plugs right into the EMR is Cota Healthcare. Pair this with omics data and genome sequencing technology, like 2bPrecise, and physicians are gaining insight into what makes you, you. And thus are better able to customize a bespoke cancer treatment plan, designed for you and only you.

Learn more about how omics data is driving new care plans, and see a live demo from Cota Healthcare andothers at the Technology for Precision Health Summit next week in San Francisco.

Amazon (Probably) Is About to Lose Out

Dear Jeff Bezos:

It looked like a great idea when you started to build a team of healthcare specialists back in the summer. Despite — or perhaps because of — endless attempts to control costs and improve quality, American healthcare remains (in the words of a recent THCB post) “a version of Afghanistan…replete with tribal conflicts, warlords, corruption, a bad communication system, [and] language problems.” Surely, there must be opportunities for Amazon.

Healthcare reporters were quick to pick up on rumors of your company entering the pharmacy business. If Amazon’s purchasing, distribution, delivery and marketing skills could be applied to the Whole Foods grocery business, imagine what might be achieved in the $500 billion pharmacy market. And imagine how this base could be used to transform the entire healthcare industry. No wonder drugstore chains and drug manufacturers saw their stocks swoon as the rumors spread.

Now it seems Amazon may have been aced out.

CVS Health, the largest retail pharmacy chain and a major pharmacy benefits manager, is in talks to buy Aetna, the third largest US health insurer, for more than $66 billion. While some analysts see this as primarily a defensive maneuver to thwart Amazon, it has the potential to dramatically change the healthcare playing field.

In the short run, both CVS and Aetna would be better protected against their current weaknesses. CVS’ PBM business is increasingly vulnerable as major insurers bring drug negotiations in-house, while its retail stores face growing competition from on-line pharmacies and – more recently – from federal approval of Walgreens’ acquisition of Rite-Aid. Aetna has its own weaknesses: it lost money on the Obamacare exchanges, and the continuing move of large groups to ASO contracts means less profitable underwritten business.

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What investors are saying about the state of digital health

Health 2.0 caught up with some of our favorite investors who have a strong pulse on what’s happening in digital health care both past and present. We talked about company evaluation, unmet needs in health care, and their biggest surprises yet.

Read the full interview featuring Lisa Suennen of GE Ventures, Bryan Roberts of Venrock, Rich Roth ofDignity Health, and Brent Stackhouse of Mount Sinai Ventures.

Here’s a preview…

“Pretty much all of my investments are in first time CEOs, which is not particularly what the venture capital playbook tells you to go do. But I find those people to be very hungry and largely underappreciated by the rest of the world. They’re also very willing to bash their head against a brick wall with me for a while, in order to try to succeed at something that is hard to do.”
 – Bryan Roberts, Venrock on what he looks for in an investment.

“There are so “many tech people who want to work their way into health care venture capital. When I started in health care venture in 1998 you couldn’t give it away. I wonder how long it will be before the cycle ends?”
– Lisa Suennen, GE Ventures on what surprises her about the industry right now.

Catch up with Lisa Suennen, Bryan Roberts, and others at Health 2.0’s WinterTech event on January 10, 2018 in San Francisco where you’ll hear more on investment trends, IPO, and the rise in consumer choices. Register today for WinterTech before the early price ends.

Why the Potential CVS Acquisition of Aetna is Brilliant, The Law of Unintended Consequences

Many people have been surprised by the announcement that CVS is interested in purchasing Aetna.  Why would a PBM want to own a health plan?  There has been speculation that the move by Amazon to get into the pharmacy space may be a reason.  But there is another more rationale reason and its based upon a flaw in the Affordable Care Act.

The flaw is known as the Medical Loss Ratio requirement and it reads like this from the CMS website

The Affordable Care Act requires insurance companies to spend at least 80% or 85% of premium dollars on medical care, with the rate review provisions imposing tighter limits on health insurance rate increases. If an issuer fails to meet the applicable MLR standard in any given year, as of 2012, the issuer is required to provide a rebate to its customers.

This requirement was put in place as a way to ensure that health plans did not make money by underutilizing medical care.  But it had the unintended consequence of insuring that costs never went down and here’s why.

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