We help physicians, scientists, entrepreneurs and managements change the world

ALDA & Associates International, Inc. Newsletter

 2021 SUMMER EDITION

Features & Articles in this issue

Breaking News

A reminder about our Newsletter. Since we specialize in Healthcare, the feature article will always deal with healthcare. Its content will benefit all constituents-providers, insurers and patients so even though you may not work in healthcare you will benefit in knowing what is emerging which may affect your patient experience. The second article may also feature healthcare but may also focus on an aspect of business that will be of interest to all of our readers. Additionally, earlier editions of the Newsletter are archived on the website. Readers can find them by scrolling down to the bottom of the newsletter.

In this issue we again look at whether we as a country have the ability to deliver quality healthcare and outcomes at a reasonable cost to the masses. This battle continues as well as the battle over COVID. Just when we thought we had that problem going down for the count, it got up off the canvas with tremendous tenacity and strength. 

ALDA continues to add client engagements in the industry and is now working with several drug development companies to assist in refining their strategy, capital raising, getting their drug candidates through clinical trials and thus adding to their product pipeline and navigating the Food and Drug Administration. We also are providing due diligence assistance to several healthcare institutions.

Book News

   Essentials of Corporate and Capital Formation
   by David H. Fater
   ISBN (13): 978-0-470-49656-5
   ISBN (10): 0-470-49656-8
   Cost: $39.95
   Paperback: 224 pages


 

 
Brief Description: A simple and effective guide to the mechanics of finance and corporate structure.

About ALDA:

ALDA & Associates International, Inc. is a business and financial consulting firm committed to assisting companies with:

We help physicians, scientists, entrepreneurs and managements change the world. Our experienced professionals are dedicated to helping clients unlock inherent value and create new value. The real-world experience of the ALDA team is leveraged for each client's unique circumstances, challenges, and people.

Among ALDA's hallmark services:

Our experienced professionals can show you all the right steps. For additional information on how we can help, please contact us by email at dfater@alda-associates.com or rcohen@alda-associates.com.

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Can we tame the health care beast? Can we assssemble an all-star team of companies and individuals that will finally achieve the Triple Aims?

Back in 2018, the announcement was made that Amazon. Berkshire Hathaway and JPMorgan Chase had teamed up to overhaul our broken healthcare system. These companies were considered three of the best run companies in America. Collectively, they had $534 billion in revenue; They controlled and/or spent approximately $4 billion in healthcare costs for their 1.2 million employees and their families.
 
They bravely came into this venture with humility having (a) Warren Buffett saying “American healthcare is a hungry tapeworm on the American economy and we don’t come to this problem with answers” and (b) Jeff Bezos saying ”The healthcare system is complex and we enter into this challenge open-eyed about the degree of very scared this company would take over the world.”
 
Their plan included the creation of an entity that was independent but not profit driven and therefore free from profit making incentives and constraints and technology solutions. This endeavor was viewed as an immense cause for celebration, especially for those people who had worked in the world of employer sponsored healthcare for decades trying but never really succeeding to come up with new or novel ways to control costs and improve outcomes that promoted wellness activities and chronic disease management programs.  These other approaches invested in navigation tools and second opinion services as well as embracing high deductibles in an effort to make beneficiaries better and more cost conscious users of care. By attracting the attention of three prominent and powerful CEO’s to be “leaders” in this brave new world, there was much cause for celebration. It also represented a shot across the bow at an industry (insurers, health providers, pharmacy benefit managers, or PBMs) that for too long had been allowed to profit by maintaining the miserable status quo.

This looked like the dream team had showed up with the actual capacity of shaking things up in the $3.8 trillion health care industry. The three CEO’s were considered visionaries in their industries—Berkshire and JPMorgan brought financial muscles and skills and Amazon had the proven playbook with their consumer-first efforts, big data and bold and patient investment for audacious disruption. In summary, they had deep pockets, ample resources and the purchasing power that came with their 1.2 million employees. They named the venture “Haven” and proceeded to start the business.
 
As if all this good stuff was not impressive, 5 months into the effort, they announced a fourth star would be joining the universe as its leader. This was Atul Gawande, a surgeon and influential New York writer whose clear analysis of the dysfunctional health care system had earned him the admiration of Barack Obama and Warren Buffett.

Let’s fast forward to 2020. Dr. Gawande resigned in May, ostensibly to focus on public policy around COVID-19. Fast forward again to February 2021 and digest the news that Haven is disbanding. Haven was formed with an aim to lower healthcare costs for the three companies’ workers; However, it was clear that assuming responsibility for the benefits management at the companies, which had distinct organizational cultures, was a daunting task. In this article, we will try to understand why and hope we can learn from the experience beyond Warren Buffett’s summation “The Tapeworm Won!”
 
 In looking at the demise of Haven a simple fact is that the entity that set out the fix healthcare in fact suffered from one of the industry’s worst traits – a lack of transparency. None of the companies have shared much information or data. Jamie Dimon offered 174 words in his annual letter to shareholders. “We learned a lot about how the healthcare system could be improved”.  Buffett’s insight (as stated earlier) was simply “The tapeworm won!”. Other insight may be difficult to come by because of ironclad non-disclosure agreements.

The lack of information coming from this experiment is disheartening especially when one considers that 160 million people get their insurance through their employer. While many would consider this good fortune to have the insurance, the reality is that it may not be that good after all with the average annual family premium amounting to $21,342 with deductibles. Haven was formed about how to make healthcare more affordable and accessible to employees.
 
The failure is not total but one would have hoped for more information on how to improve the system. Catalyst for payment reform which is an employer group that advocates for a higher value healthcare recently completed a comprehensive study on aggregated purchasing efforts like Haven’s. They found such groups are typically doomed for a few reasons such as the lack of competitive markets, resistance or “sabotage” by players that benefit from the status quo and employer’s unwillingness to compromise and act together.

Healthcare costs were also thought to be manageable by a concentration of workers under the same plan. While Haven covered 1.2 million lives, those lives were spread throughout the country defeating the ability to effectively negotiate prices. Additionally, each company had its own approach to health benefits with differing priorities and decision-making processes. Amazon, obviously, was more consumer focused. JP Morgan was more oriented around relationships and loyalty and Berkshire Hathaway did not have one style but many because of the dozens of portfolio companies it operated. This also drives home the point I have been making for years—-Healthcare is a national issue BUT it is delivered locally.
 
Haven could not break the black box that is healthcare in the United States. The venture game plan had been to aggregate and analyze the shared claims data and follow the insights to lower cost/higher quality care but Haven struggled to get its partners to share that data. Employers have little visibility into what they are actually buying as a result. In some respects it is like going to a restaurant and being presented with a non-itemized bill. A former New Jersey congressman observed that getting data from insurance companies and pharmacy benefit managers is like trying to get raw meat from a caged lion.

Two other approaches to try and provide high-quality, low-cost healthcare are being pursued elsewhere in the country. As I have described in earlier newsletters companies are contracting directly with the providers and bypassing the insurance companies. An example of this is General Motors who has contracted all of its healthcare with the Henry Ford Healthcare System. All 34,000 employees of General Motors get their healthcare from Henry Ford (HFHS). This should enable better prices better outcomes and better quality care but the jury is still out on this one.
 
A second approach has been for a large company to identify “Centers of Excellence” (COE) for specific illnesses. Walmart has identified COE’s for four different disease categories. The company covers the employees cost for going to those centers including travel costs with the objective by doing this they will benefit from a better-quality outcome at a lower cost.
 
Interestingly enough, Blackstone has an entity called Equity Healthcare that is similar to what Haven was to become and it is successfully working with Blackstone companies. When asked to share information about how Equity Healthcare has achieved success, the information was not forthcoming. There was no interest in providing that information to other companies for free because of the cost incurred to develop it and therefore a reluctance to share it. Interestingly enough, Marilyn Bartlett, who administers Montana’s state health plan reached out to Haven to offer the knowledge she had gained and never received a response from Haven.

So, has the effort to tame the healthcare beast ended. Hardly, BUT rather than pool knowledge the companies have plowed ahead on their own with mixed results.

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To explore ways in which we can provide assistance  with your  strategy or decipher the changing reimbursement rules being promulgated by CMS in this evolving health care environment, please contact David H. Fater at dfater@alda-associates.com or Richard M. Cohen at rcohen@alda-associates.com

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If The All-Stars Can't Win- Then Let's Focus on the Data (Despite the Fact That EMRs Can't Talk to One Another)


Alphabet Inc.’s Google and national hospital chain HCA Healthcare Inc. have struck a deal to develop healthcare algorithms using patient records, the latest foray by a tech giant into the $3 trillion healthcare sector. HCA, which operates across about 2,000 locations in 21 states, would consolidate and store its data with Google.
 
Google and HCA engineers will work to develop algorithms to help improve operating efficiency, monitor patients and guide doctors’ decisions from digital health records and internet-connected medical devices under the multiyear agreement.

Dr. Jonathan Perlin, chief medical officer of HCA, admits that patient data is generated in real time on a continuous basis. Google and HCA engineers will work together to develop algorithms to help improve operating efficiency, monitor patients and guide doctors’ decisions. This is what Google does best with their search engines and the related algorithms. He believes part of what they are building is a central nervous system to help interpret the various signals.

The deal expands Google’s reach in healthcare, where the recent shift to digital records has created an explosion of data and a new market for technology giants and startups. Data crunching offers the opportunity to develop new treatments and improve patient safety, but algorithm-development deals between hospitals and tech companies have also raised privacy alarms. Google has previously reached deals with other prominent U.S. hospital systems, including St. Louis- based Ascension, that granted access to personal patient information, drawing public scrutiny.
 
Google and Ascension sought to develop a search tool for patient information. The work, dubbed “Project Nightingale” and described in articles by The Wall Street Journal, prompted an outcry over privacy of patient records shared with Google, which included names, dates of birth and medication information. The companies said the effort complied with federal privacy laws. Google also reached an ambitious deal with the Mayo Clinic that combined storage of voluminous medical, genetic and financial data with algorithm-development efforts. The Google deal with Mayo allows Google access to identifying patient information, when needed. Other tech giants have struck similar deals with hospitals that grant access to identifying information in technology development, such as an effort by Microsoft Corp. and hospital system Providence to use patient records to develop cancer algorithms.

While not totally comforting, HCA said Google isn’t permitted to use patient- identifiable information under the agreement. Dr. Perlin said HCA patient records would be stripped of identifying information before being shared with Google data scientists and that the hospital system would control access to the data. Terms of the deal weren’t disclosed by the companies (Again-lack of transparency).
 
Google will access data when needed with consent from HCA, but the tech giant can develop analytic tools without patient records and allow HCA to test the models independently said. The goal is to push the boundaries of what the clinician can do in real time with data. Personal patient information is protected under the federal health-privacy law, known as the Health Insurance Portability and Accountability Act. The law allows hospitals and some other healthcare companies, such as health insurers, to share information with contractors, which must also abide by the law’s privacy protections.

Some consider the federal law outdated, saying the law’s protections haven’t kept pace with the technology sector’s growing demand for patient data, said Michelle Mello, a Stanford University professor of law and medicine who focuses on health-data privacy.
 
Data is viewed as a critical path to the puzzle but then there are some big names that have stumbled.  International Business Machines Corp. has explored a sale of its IBM Watson Health business, as the company’s healthcare artificial-intelligence unit has struggled.
 
Hospitals are uniquely positioned as brokers for data created by patients seeking care and interacting with doctors, laboratories, pharmacies and medical devices. They have increasingly sought to capitalize on that data in deals to aggregate patient records or develop products with pharmaceutical and technology companies.

 Fourteen hospital systems in February announced a newly formed company, Truveta Inc., to sell access to their anonymized records for patients across 40 states. Other hospitals have invested in health-record analytic companies, such as Health Catalyst Inc., which went public in 2019.
 
The multiyear HCA-Google agreement will seek to develop algorithms using data from 32 million annual patient visits that could help monitor patients and guide treatment, said Dr. Perlin. During the pandemic, HCA used its own technology to monitor critically ill Covid-19 patients and notify doctors of potentially better treatment options. The company found that survival rates increased by comparing the outcomes for patients before and after rolling out the algorithm.

Much more can probably be learned but it will have to include transparency and much more data-sharing.



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To explore ways in which we can provide assistance  with your  strategy,  please contact David H. Fater at dfater@alda-associates.com or Richard M. Cohen at rcohen@alda-associates.com

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Representative Engagements

Our experienced professionals are dedicated to helping clients unlock inherent value and create new value.

The ALDA Team includes, among others:

David H. Fater - Chief Executive Officer

Strategy, capital markets, restructuring, and mergers and acquisitions experience with public healthcare companies focused on physician management, rural healthcare, nursing homes, HMO's, diagnostic imaging and medical devices. Deeply involved in the implementation of the Affordable Care Act with Accountable Care Organizations, Independent Practice Associations and Management Services Organizations. 

Richard M. Cohen - Senior Operations and Business Development Executive

Healthcare operations and worldwide sourcing experience. Skilled in healthcare (physician management, clinical trials, medical and patient process flow, diagnostic imaging and life science) operations as well as in issues dealing with importing, exporting and manufacturing operations in South America, Far East and Europe. 

Thomas J. Bohannon - Senior Financial Executive

Accomplished, creative CPA, outstanding analytical and technical abilities. Has experience for over 40 years in public accounting and private industry including nursing homes, medical device companies,  hospitals, not-for-profits, retail, manufacturing, import/export and natural resources.

R. Brent Miller, Ph.D. Senior Research Executive
Focused on advancing Chemistry, Manufacture, and Controls (CMC) activities of small molecules from discovery through development. with more than 30 years of drug development experience. working with start-ups, mid-size, and large pharma companies. Throughout this experience, he has led a wide variety of operational departments, including Technical Strategic Alliances & Due Diligence, Project Management Office, Pharmaceutical Sciences (Formulation Development/Analytical Development), Bioanalytical Development, Quality Control and Stability.  .

A. Ronald Turner - Senior Healthcare Executive

Senior healthcare industry executive with strong entrepreneurial focus including CEO and COO positions with start-up hospital companies and a publicly-traded hospital company. Extensive and successful operations experience for more than 50 hospitals and 9 nursing homes, and senior reimbursement experience for a major publicly-traded hospital company and a national accounting firm. Experienced in mergers and acquisitions, led operational turnarounds and debt restructurings that created significant value.

Mark W. Caton – Senior Healthcare Executive

Senior hospital executive with over 30 years experience in operating not-for-profit and investor-owned rural/community hospitals as CEO or COO, and Regional COO with several national hospital companies.  Skilled in strategic planning and business development, operations management, revenue cycle management, medical staff development, and quality/resource management.

Daniel N. Weiss, M.D., F.A.C.C. - Chief Medical Officer

Medical devices and healthcare practice experience, engaged in a private medical electrophysiology practice where he performs numerous invasive cardiac procedures and has served as a consultant for several Fortune 500 Medical Device Companies including Philips, Boston Scientific/Guidant, St. Jude and Medtronic, as well as for several medical device and drug start-up companies. 

David Bott - Senior Information Technology Executive

Systems and network support solutions experience, proviedes analyis of strategic business needs and assessment of business models and their integration with technology.  

Santiago Guzman - International Executive

Experienced in new project development for companies in a variety of industries from start-up to Fortune 500. Client relations management, fluent in English and Spanish. Skilled facilitator for introductions with influential leaders in South America including those in the health care industry. 

With offices in:

For additional information, please contact:
David H. Fater, Chief Executive Officer
ALDA & Associates International, Inc.
15977 Brier Creek Drive, Suite 100
Delray Beach, FL 33446
(877) 845-4657
dfater@alda-associates.com

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