Today on Health in 2 Point 00, Jess and I power through a whopping six questions. In this episode, Jess asks me about the merger between Cambia Health Solutions and Blue Cross NC, Alex Azar getting grilled by Rep. Joe Kennedy on Medicaid work requirements, Omada Health adding connected blood pressure and glucose monitors, 23andMe’s new Type 2 Diabetes predisposition test, and raises by Akili Interactive and MAP Health Management. —Matthew Holt
By LYGEIA RICCIARDI
Last week’s announcement by Aetna and Apple of their Attain “experience” designed to enable Aetna members to achieve better health using the Apple watch was the latest in a series of partnerships vying to shake up healthcare from an unconventional angle. Others include Amazon-Berkshire Hathaway-JP Morgan’s collaboration to reshape health insurance, and Uber and Lyft’s numerous partnerships with Sutter, CareMore Health, and other healthcare systems to address transportation challenges for patients.
The Heat is On
Big changes in healthcare—including the shift to value-based care, the growing influence of consumerism, and a recognition that health outcomes depend on a wide array of everyday life factors ranging from foods to moods—are forcing the old guard in healthcare to recalibrate. Healthcare provider organizations alone engaged in a record-breaking 115 mergers and acquisitions in 2017, and continued apace until now, with deals already announced in 2019 between Dignity Health and Catholic Health Initiatives (CHI), among others.
The most interesting partnerships, from my perspective, pair traditional healthcare players with non-traditional ones: it’s a recognition that something fundamental has to change, a point which hasn’t been lost on the 84% of the Fortune 50 companies that are already in healthcare, up from 76% in 2013. Everyone from tech giants to car manufacturers seems to gambling to some extent on healthcare. And why not, when the potential jackpot just keeps growing?
By NIRAN AL-AGBA, MD
A few weeks ago, I saw a young patient who was suffering from an ear infection. It was his fourth visit in eight weeks, as the infection had proven resistant to an escalating series of antibiotics prescribed so far. It was time to bring out a heavier hitter. I prescribed Ciprofloxacin, an antibiotic rarely used in pediatrics, yet effective for some drug-resistant pediatric infections.
The patient was on the state Medicaid insurance and required a so-called prior authorization, or PA, for Ciprofloxacin. Consisting of additional paperwork that physicians are required to fill out before pharmacists can fill prescriptions for certain drugs, PAs boil down to yet another cost-cutting measure implemented by insurers to stand between patients and certain costly drugs.
The PA process usually takes from 48-72 hours, and it’s not infrequent for requests to be denied, even when the physician has demonstrated an undeniable medical need for the drug in question.
The recent news that U.S. retail giant CVS Health will purchase insurance giant Aetna, in part to gain millions of new customers for its prescription drug and primary care businesses, is another ominous sign for patients. Patients should worry about all the continued consolidation in the health care industry, whether it is Walgreens buying Rite-Aid to increase their pharmacy clout; Anthem’s ill-fated attempt to purchase Cigna to become an insurance monopoly; or hospital systems like Partners Healthcare in Boston trying to buy the hospitals and physician networks in and around its service area to control patient flow and increase market share. Consolidation often limits competition, and when that happens in market-based systems especially the result, says good research, is often that the cost of health care goes up. This does not benefit patients, who increasingly are paying more out of pocket for their insurance and for the services they receive from doctors, hospitals, labs, and drug companies.
The Affordable Care Act did little to encourage greater competition in the health care marketplace. That was probably by design, since those creating the legislation held an implicit assumption that the bigger players in each of the different industry areas like insurance, pharmacy, and hospital care could deliver given the size of the insurance expansion the ACA would promote. As we see from the existing premium inflation on the exchanges across the country and with prescription drugs, and the continued long delays in people’s ability to access care, this assumption was not accurate. To the contrary, the ACA’s focus on new and unproven structures like accountable care organizations; new payment models that reward scale and resource investment in things like information technology; and rewarding those organizations that have the most comprehensive performance measurement infrastructures has encouraged the kind of profit-oriented consolidation in the industry that does less to improve the overall system. Also, given the increased squeeze by payers like Medicare on payments to hospitals, for example, mergers and acquisitions are a natural yet dysfunctional corporate response to higher levels of uncertainty in the external health care environment.
Who will be the first to take integrated health care delivery national?
A few years ago, the best bet might have been an established provider with a nationally compelling brand and a growing affiliate federation such as Cleveland Clinic or Mayo. Instead, Optum – just a decade ago three separate services largely focused on serving United’s health benefits business – has entered care delivery and — by a constant stream of acquisitions big and small — built up beachheads in a majority of markets and is – via ongoing big acquisitions, tuck-ins and greenfield expansions – laying the foundations of a national integrated ambulatory system.
Particularly in light of the latest rumors about the role of clinics in driving the value of a potential AET-CVS combination, it is timely to take a look at what Optum has put together, size its geographic reach and discuss some strategic implications.
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.
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.
It was an invitation too intriguing to refuse: fly to LA to participate in a “top-secret mission” related to digital health. Instructions? Bring workout clothes. Don’t disclose your location. “We can’t say much. Just enough for you to quickly pack your bags, fly to California and participate in an exclusive Apple Watch from Aetna event – all expenses paid.” Generally, I’d file this type of message in the junk mail folder, but knowing that Apple takes secrecy seriously, I did some background sleuthing and decided it looked legit.
The mystery unfolded last week as I stepped into a black car at LAX with a secretive driver who joked that I and his other two passengers (who had received similar invites) would have to cover our faces as we drove through town. (Yikes!) When we arrived at a hip “concept” hotel I felt more at ease, and relaxed into enjoying the so-called mission with a glass of wine and some discussion of trends in the digital health industry. Over the course of a couple of days I was fortunate to join a group of new (and some old) friends to exchange ideas, take a challenging hike to the peak of Runyon Canyon Park, interact with Apple and Aetna execs, try out some new technologies, and get a glimpse of what both Aetna and Apple are envisioning for the future of digital health. I was assigned to one of several teams named after famous movies (in keeping with the Tinseltown theme) a personalized agenda, and some critical tools for the modern adventurer, including a bandana, water bottles, a phone charger, and, naturally, a selfie stick.
For about a year Aetna has used the Apple watch as part of an integrated wellness program available to its 50 thousand employees and those of several partner organizations it insures, such as Hartford HealthCare, which was represented among the participants in the mystery mission. Both companies are poised to expand the program.Continue reading…
Did Aetna just pull a nasty, Trump-like move and up the ante on the Obamacare debate in advance of the election and exchange open enrollment for 2017?
The allegation is that the company withdrew from 11 state insurance exchange marketplaces for 2017 after the Justice Department failed to heed Aetna’s warning that it would do so if Justice didn’t approve its $37 billion purchase of Humana. The Justice Department announced last month that it was challenging that deal and Anthem’s proposed merger with Cigna, saying both deals threaten to sharply reduce competition in the health insurance marketplace.
A July 2016 letter from Aetna to Justice, unearthed by Huffington Post, contains the threat. But in announcing its exchange pullback this past week, Aetna made no mention of the letter and insisted its action was prompted by existing and expected future financial losses in the exchanges.
This was a comment I submitted submitted to this proposed set of regulations on health plans participating in the ACA. (Use ctrl-F to search “provider directory” within the page). HHS is proposing forcing insurers to make their provider directories more accurate and machine readable, and it would be great for consumers if that was made the case–especially if APIs (which means basically giving access for other computers to read them) were mandated–here’s why:
Subject–Immediately updated provider directories machine readable via APIs should be mandated for health insurers.
Finding accurate information about providers is one of the hardest things for consumers to do while interacting with the health care system. While regulation cannot fix all of these issues, these proposed regulations in section 156.230 can greatly help, But they should be strengthened by requiring (under subsection 2) that health insurers immediately add new information about providers in their networks to a publicly available machine readable database accessible via a freely available API.
Currently companies trying to aid consumers in provider search and selection tell us that the information pertaining to which providers are in a particular network is the least accurate of all data they can receive. For consumers the biggest question for plan selection is trying to find out which provider is in their plan, and at the least this requires searching multiple websites. Worse, particular insurer’s plans can even have the same name but can have different networks (in one instance in our personal experience Aetna in New York state had two different plans with effectively the same name but different networks). This is essentially impenetrable for consumers and that is assuming that the information on the websites is accurate or timely–which it is often not.