June 2018 Healthcare Hot Takes: athenahealth for $7 billion–going once, going twice, sold?

Healthcare Hot Takes is Luma Health’s monthly rundown of healthcare innovations happening right now. Check out what the industry is thinking, reading, doing. This month’s main topic is the athenahealth potential buyout.

At the HLTH conference in Las Vegas this past month, the biggest news was that activist investor Elliott Management, led by notable businessman Paul Singer, submitted an unsolicited bid to buy out athenahealth for nearly $7 billion. The all-cash offer of $160 per share came at a 27% premium for the EHR company, which reported “weaker than expected” earnings in Q4 of last year. With this bid, Singer hopes to take athenahealth back into the private market.

“We have made this Proposal in part because we strongly believe that going private gives athenahealth the best chance to thrive as a disruptor in the healthcare technology market.” – Paul Singer, Elliott Management

Update: As of last week, Elliott Management sent over a third bid letter to athenahealth as it had yet to respond to the first two. Athenahealth has been in an ongoing dialog with its shareholders and will take its time to review the offer. You can read athenahealth’s formal statement here.

Update #2: As of 6/6/18, Jonathan Bush has effectively stepped down as CEO of athenahealth, paving the way for strategic alternatives including the sale of the company.

Luma’s Hot Take: As an official partner of athenahealth, Luma is interested in all news surrounding the company. This offer took us by surprise, specifically the magnitude of the bid. However, it did confirm how enormous the healthcare market is and how much influence EHR companies have in this space. We’re excited to see what happens!

A team of international researchers have developed an artificial intelligence system that can diagnose skin cancers at a better rate than experienced dermatologists. Known as a convolutional neural network (CNN), the system learns over time rather than having to be programmed like most software. This network was trained to identify skin cancer by being shown 100,000+ images of malignant melanomas and benign moles.

In the study, researchers gave the CNN 300 new images to see if it would be able to determine which skin was cancerous. Results of the study showed that the system was able to identify 95% of the malignant melanomas. To compare these results with those of trained medical professionals, the researchers recruited 58 dermatologists from various countries to assess 100 of the cases. The dermatologists were given clinical information along with the images of the cases, and were only able to correctly identify 88.9% of the melanomas. This marked the first time in history that a form of AI actually outperformed trained dermatologists in detecting melanomas.

Luma’s Hot Take: Oh no, the robots are coming, haha! But in all actuality, this is an amazing achievement for artificial intelligence in healthcare. Though there will always be a necessary human component to our medical treatment and healing, using technology for improved disease detection is something that we can get behind.

Healthcare mega-giant Kaiser Permanente is committing $200M to combat homelessness and grow affordable housing in the Bay Area and other locations where it operates. Kaiser has already invested in other citywide initiatives, but this funding pledge towards affordable housing is the largest in the history of the city of Oakland by a private entity.

The homeless problem is very real in the San Francisco Bay Area. With one of the most expensive housing markets and an exceedingly growing population, there has been a shortage of affordable housing in the region. This investment by Kaiser will go towards projects that maintain and increase affordable housing, while also focusing on programs that prevent the the uprooting of low and middle-income families.

Luma’s Hot Take: This announcement hits close to home, as Luma’s HQ is located in the San Francisco Bay Area. Total health is closely tied to demographic and social factors, and if we can’t improve our communities, then we can’t drive better health outcomes. That’s why we fully support Kaiser undertaking this massive project and hope that they can lift the burden on so many.

The U.S. Department of Veterans Affairs (aka the VA) has completed a federal ruling to allow for healthcare providers to provide patient care beyond state lines and outside the confines of the VA. This is a direct result of the Trump administration’s push for a nationwide telehealth program (See: Anywhere-to-Anywhere Initiative).

The initiative finally got Congress’ backing through bipartisan legislation (VETS Act of 2017) that passed in November of last year. However, federal ruling was still required for the VA to override state restrictions and allow providers to treat patients through telehealth outside of their region or agency. It wouldn’t be ideal for the VA to have to lobby each state regarding that state’s specific restrictions around telehealth services being offered to beneficiaries. Therefore, this rule “clarifies that VA healthcare providers may exercise their authority to provide healthcare through the use of telehealth, notwithstanding any State laws, rules, licensure, registration or certification requirements to the contrary.”

The hope is that telemedicine usage will help to improve patient access to care — especially for those veterans in rural areas — and alleviate the long wait times that have come to be associated with the VA. The ruling will go into effect on June 11.

Luma’s Hot Take: We are thrilled that telemedicine is gaining traction and we believe that healthcare practitioners should be able to provide care virtually to patients regardless of location. At Luma Health, we strive to drive better health outcomes through better patient access everyday!