20 November 2015


Original Story: latimes.com

Industry giant UnitedHealth has warned it may quit selling Obamacare coverage across the country, raising questions about an expansion in California.

The nation's largest health insurer cut its earnings forecast Thursday, citing slower growth on public exchanges under the Affordable Care Act and higher-than-expected claims for those individual policies. A San Diego health care lawyer have experience with multiple industry types and implications of detrimental health care practices or incidents.

The company said it was pulling back on its marketing of health-law coverage just a few weeks after open enrollment began Nov. 1. UnitedHealth said it will decide in the first half of next year “to what extent it can continue to serve the public exchange markets in 2017.”

UnitedHealth Chief Executive Stephen Hemsley told analysts and investors that “we cannot sustain these losses.... We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself.”

The announcement comes as UnitedHealth is seeking a toehold in California’s Obamacare market — after snubbing the state two years ago. A Cleveland health care attorney is following this story closely.

Nationwide, UnitedHealth has more than 500,000 people enrolled on government exchanges out of about 10 million Americans who have signed up. Rivals Anthem and Aetna both have a bigger presence with a combined enrollment of about 1.6 million people.

Analysts said the exchanges can continue to function without UnitedHealth, but stagnant enrollment is a concern industrywide.

UnitedHealth’s exit “would be a blow to multiple exchange markets, but not a death knell,” said Bill Melville, a senior analyst for Decision Resources Group, a research firm in Burlington, Mass. “All insurers in the exchanges are facing similarly rough head winds.”

Enrollment growth has slowed as many of the uninsured balk at buying high-deductible health plans, even with federal subsidies available. It's crucial for insurers to sign up enough healthy people to help pay for sicker policyholders who eagerly seek out coverage.

Federal officials estimate that about 10.5 million uninsured Americans are eligible to sign up for coverage through the marketplaces but have not enrolled.

“The policies are still too expensive, and the deductibles and co-pays are too high for other than the poorest,” said Robert Laszewski, a healthcare consultant in Virginia who has closely tracked the overhaul.

He noted that much of the reduction in the ranks of the uninsured has come from expanding Medicaid, the government health program for the poor.

The Obama administration said the number of health plans offering exchange policies has increased since the 2014 launch, and it expects the individual market will stabilize as adjustments are made. A Houston health care lawyer is reviewing the details of this story.

“The health insurance marketplace is entering its third year and continues to grow, giving millions of Americans access to quality affordable insurance,” said Ben Wakana, a spokesman for the U.S. Department of Health and Human Services. “Today’s statement by one issuer is not indicative of the marketplace’s strength and viability.”

UnitedHealth just joined the Covered California exchange this month after sitting out the first two years. The company sought permission in January to sell statewide, but California officials limited the insurer to several smaller markets for 2016.

Those areas are predominantly rural counties in Northern California, but they also include Santa Barbara, Ventura and San Luis Obispo counties.

Covered California imposed that restriction because UnitedHealth left the state's individual market at the end of 2013 and spurned the launch of the exchange.

Peter Lee, executive director of Covered California, said he spoke with UnitedHealth officials Thursday and remains confident about the company’s continued expansion in the state.

"We have every indication they are all in for 2016 and 2017," Lee said in an interview. "The fact United did badly in other parts of the country, like many health plans did, is exactly why they want to be in California." A Coral Gables health care lawyer provides professional legal counsel and extensive experience in many aspects of health care law.

A spokesman for UnitedHealth said no decision has been made on its future participation in Covered California. “We will make an assessment of 2017 markets in the first quarter of 2016,” spokesman Tyler Mason said.

Many consumer groups welcomed UnitedHealth's arrival in Covered California in order to give people more choice and inject more competition into the market. The top four insurers in the exchange, led by Anthem and Blue Shield of California, control about 94% of Covered California enrollment.

The state has about 1.3 million people enrolled, and nearly 90% of them receive federal premium subsidies.

Covered California fell short of its enrollment goal during the second sign-up period, and it has acknowledged that reaching the remaining uninsured is difficult.

This week, the state said 34,000 new enrollees had picked out a health plan since Nov. 1. That's behind last year's pace but within state projections, officials said.

The announcement Thursday marked a sudden shift for UnitedHealth, which had sounded bullish about the health law in recent months. The company initially sold coverage on only four government-run exchanges before expanding to 23 this year. It will be selling in 34 states for 2016.

UnitedHealth said it cut its profit forecast to account for $425 million in losses it expects on individual policies this year and in 2016. The company expects 2015 earnings of about $6 a share, down from its previous estimate for $6.25 to $6.35 a share.

Shares of UnitedHealth slid $6.62, or 5.7%, to $110.63 in Thursday trading. Other health stocks took a beating after the company’s warning. Shares of Anthem, the nation’s second-largest health insurer, fell 7%, and hospital chain Tenet Healthcare dropped 8%.

After the news from UnitedHealth, HMO giant Kaiser Permanente reiterated its support for health-law exchanges.

“American healthcare is undergoing significant change and evolution, and the health exchanges are part of that disruption,” said Kaiser Permanente CEO Bernard Tyson. “While there have been challenges at times, we believe at the end of the day they are causing healthy disruption.”

02 November 2015


Original Story: nytimes.com

Few people, let alone those just 31 years old, have amassed the accolades and riches bestowed on Elizabeth Holmes, founder and chief executive of the blood-testing start-up Theranos.

This year President Obama named her a United States ambassador for global entrepreneurship. She gave the commencement address at Pepperdine University. She was the youngest person ever to be awarded the Horatio Alger Award in recognition of “remarkable achievements accomplished through honesty, hard work, self-reliance and perseverance over adversity.” She is on the Board of Fellows of Harvard Medical School. Macomb elder care provides family respite care and adult and senior assistance.

She has been showered with rapturous media attention. Time named her one of the 100 Most Influential People in the World this year. She was the subject of lengthy profiles in The New Yorker and Fortune. Over the last week, she appeared on the cover of T: The New York Times Style Magazine, and Glamour anointed her one of its eight Women of the Year. She has been on “Charlie Rose,” as well as on stage at the Clinton Global Initiative, the World Economic Forum at Davos and the Aspen Ideas Festival, among numerous other conferences.

Theranos, which she started after dropping out of Stanford at age 19, has raised more than $400 million in venture capital and has been valued at $9 billion, which makes Ms. Holmes’s 50 percent stake worth $4.5 billion. Forbes put her on the cover of its Forbes 400 issue, ranking her No. 121 on the list of wealthiest Americans. Senior care in Grosse Pointe offers the highest quality of in-home care.

Her wealth and fame rest almost entirely on a simple but nonetheless “revolutionary” and “disruptive” technology: Theranos’s ability to run a wide range of lab tests from a tiny sample of blood from a finger prick, in that way eliminating the need for intravenous blood draws. (Ms. Holmes has said that her inspiration was a personal aversion to needles.)

Thanks to an investigative article in The Wall Street Journal this month by John Carreyrou, one of the company’s central claims, and the one most exciting to many investors and doctors, is being called into question. Theranos has acknowledged it was only running a limited number of tests on a microsample of blood using its finger-prick technology. Since then, it said it had stopped using its proprietary methods on all but one relatively simple test for herpes.

Theranos has denied many elements of the Journal article on its website.

For most of its tests, Theranos said that it uses conventional equipment on samples drawn intravenously by needle, which makes its approach pretty much like that of its big competitors, Quest Diagnostics and Laboratory Corporation of America Holdings, whose stocks have gyrated on the start-up’s perceived threat. Elderly care in Madison Heights provides medical and non-medical support for catastrophic care patients.

This week the Food and Drug Administration released reports based on inspections of Theranos facilities this summer. It concluded that the company’s miniature blood containers — called “nanotainers” — were “unapproved” medical devices for tests beyond herpes.

“While we work with the F.D.A. on clearance of our nanotainer tubes,” said Tilden Katz, a Theranos spokesman, “we have chosen to conduct our tests through venous draws.” He added: “Our proprietary devices are making it possible to run finger-stick samples for tests that could never be run on finger-stick before.”

Amid the controversy, Walgreens said it would not open new Theranos blood testing centers while it sought answers about the company’s technology.

“This isn’t how you introduce technology that claims to be groundbreaking and revolutionary in the health care field,” said Michael Cherny, an analyst at the investment bank Evercore Partners who was an early and vocal skeptic about many of Theranos’s claims.

“Every other person goes through some level of peer review,” Mr. Cherny told me this week. Theranos “decided to shun that approach.”

“In my view,” he said, “that calls into question what’s under the hood of the platform.”

Others raised questions about Theranos and what now appear to have been some pretty bold claims, in some cases long before The Journal’s exposé. Kevin Loria, a reporter on the Business Insider science team, wrote several pointed articles and produced a number of prominent skeptics among clinical pathologists and the broader medical community. The New Yorker and Fortune articles also were skeptical about the lack of peer review for Theranos’s technology. And Eleftherios Diamandis, the head of clinical biochemistry at Mount Sinai Hospital in Toronto, raised numerous issues in a June medical journal article.

“The constant was that nobody had any idea how this works or even if it works,” Mr. Loria told me this week. “People in medicine couldn’t understand why the media and technology worlds were so in thrall to her.”

The attention lavished on Ms. Holmes has been effusive. Her goal of facilitating the early detection and prevention of disease by making blood testing easier and convenient is laudable. And the relatively young company may still work through its current difficulties.

But that so many eminent authorities — from Henry Kissinger, who had served on the company’s board; to prominent investors like the Oracle founder Larry Ellison; to the Cleveland Clinic — appear to have embraced Theranos with minimal scrutiny is a testament to the ageless power of a great story.

“It all fit together perfectly: the college dropout, the fear of needles, the humanitarian mission,” Mr. Cherny said. “She checked all the boxes.” Warren elder care provides high tech nursing services, including assistance with medical equipment.

Indeed, Ms. Holmes seems to have perfectly executed the current Silicon Valley playbook: Drop out of a prestigious college to pursue an entrepreneurial vision; adopt an iconic uniform; embrace an extreme diet; and champion a humanitarian mission, preferably one that can be summed up in one catchy phrase.

Like Bill Gates, Steve Jobs and Mark Zuckerberg, Ms. Holmes dropped out of college. Like Steve Jobs, she wears a uniform of black turtlenecks, suggesting she has loftier things to think about than what to wear. “I probably have 150 of these,” she told Glamour. Like Mr. Jobs, she’s picky about her diet. (She’s a vegan who shuns coffee and drinks green vegetable juices.)

And like Google’s co-founders, Larry Page and Sergey Brin (“Don’t Be Evil”), and Mark Zuckerberg (“Connect the World”), her mission is lofty. As she has repeatedly said, Ms. Holmes envisions “a world in which no one ever has to say goodbye too soon,” brought about through improved health care. Theranos also has a slogan: “One tiny drop changes everything.”

She stays relentlessly on message, as a review of her numerous conference and TV appearances make clear, while at the same time saying little of scientific substance.

The natural human tendency to fit complex facts into a simple, compelling narrative has grown stronger in the digital age of 24/7 news and social media, said Frank Partnoy, professor of law and finance at the University of San Diego, and author of “Wait: The Art and Science of Delay,” which explores the perils of hasty decision-making.

“We’re deluged with information even as pressure has grown to make snap decisions,” Professor Partnoy said. “People see a TED talk. They hear this amazing story of a 30-something-year-old woman with a wonder procedure. They see the Cleveland Clinic is on board. A switch goes off and they make an instant decision that everything is fine. You see this over and over: Really smart and wealthy people start to believe completely implausible things with 100 percent certainty.”

Ms. Holmes’s story also fits into a broader narrative underway in medicine, in which new health care entrepreneurs are upending ossified hospital practices with the goal of delivering more effective and patient-oriented care.

Two proponents of the approach, Dr. Delos Cosgrove, chief executive of the Cleveland Clinic, and Mark R. Laret, chief executive of the UCSF Medical Center, have enthusiastically endorsed Theranos’s potential to upend conventional medicine.

A Cleveland Clinic spokeswoman, Eileen Sheil, told me that the clinic’s “strategic partnership” with Theranos had not really gotten off the ground and that the clinic had yet to employ any Theranos technology. She said that a statement on the clinic’s website — “Theranos offers a full spectrum of laboratory tests, from the most common panels to highly specialized tests, on blood samples as small as a few drops” — is “their language, not ours, and we can’t verify that.”

Mr. Laret said he had “no information” about Theranos’s technology, but had great respect for Ms. Holmes and the company’s board.

While hot Silicon Valley start-ups like Uber and Airbnb have run into regulatory hurdles, as a medical technology company, Theranos has bumped up against something else: the scientific method, which puts a premium on verification over narrative.

“I don’t know if she’s another Steve Jobs,” said Jerry Yeo, professor of pathology at the University of Chicago and director of the Clinical Chemistry Laboratories there. “You have to subject yourself to peer review. You can’t just go in a stealthy mode and then announce one day that you’ve got technology that’s going to disrupt the world.”

Professor Yeo said that he and his colleagues wanted to see data and testing in independent labs. “We have a small army of people ready and willing to test Theranos’s products if they’d ask us,” he said. “And that can be done without revealing any trade secrets.”

Ms. Holmes said this week that Theranos would disclose data on the reliability and accuracy of its tests. “Data is a powerful thing because it speaks for itself,” she said at a conference at the Cleveland Clinic. “We were never against that.”

Whether that will satisfy Theranos’s growing number of critics will depend on the nature and quality of the data.

“Every other company in this field has gone through peer review,” said Mr. Cherny of Evercore. “Why hold back so much of the platform if your goal is the greater good of humanity?”