Megan Callahan Will Head up Lyft’s Health Care Efforts

After a months-long search, Lyft has hired a leader for its growing health care business, which helps patients get rides to non-emergency medical appointments. The company is set to announce it’s hired Megan Callahan, formerly the chief strategy officer for Change Healthcare, a company that merged with McKesson in 2017, as its health lead.

The hire comes as Lyft is looking to ramp up revenues ahead of a possible IPO 2019. The company’s chief business officer David Baga told CNBC by phone that health represents a “sizable chunk” of Lyft Business, which is set to achieve a annualized revenue run rate of $1 billion by the end of the year. Lyft told CNBC that the number of health care rides tripled from the third quarter of 2017 to the same period a year later.

Lyft’s primary competitor, Uber, also views health as a growth opportunity. Both companies have built out dedicated teams in health, and have formulated a strategy to work with stakeholders in the industry to help patients who need help to get to the doctor’s office on time.

Non-emergency medical transportation is attractive for both ride-sharing companies because insurers, including some Medicaid and Medicare plans, will often cover the cost of the ride for patients. There’s a huge incentive for health plans to make transportation easier, as studies have found that a lack of transportation is a key reason why patients avoid the doctor’s office.

Lyft’s focus is to forge partnerships in health care with traditional players, including health systems, medical transportation brokers and health IT companies. For instance, in March it signed an exclusive deal with medical record technology provider Allscripts to make it easier for doctors to book Lyft rides for their patients.

To that end, Baga, the chief business officer, told CNBC it needed to hire an operator from the industry to maintain and build on these relationships.

“We wanted someone for the job who lives and breathes health care,” he explained. “But we also wanted someone who could understand the key challenges, and be willing to break from the status quo.”

Callahan told CNBC she joined Lyft because of the opportunity to improve access to health care services, particularly for low-income or elderly users.

She also said that Lyft’s deep knowledge about health stood out relative to other technology players.

“I was gobsmacked by the level of understanding on HIPAA and PHI,” she said, referring to the complex web of federal privacy rules and regulations that govern how health data is stored and shared. “They (Lyft) had clearly taken the time to understand the industry.”

Lyft is also moving into other areas, including working with pharmaceutical companies to people get to clinical trial sites and arranging rides for physical therapists to treat patients in their homes.

Experts say that’s the tip of the iceberg for Lyft and other new transportation entrants.

“There’s home care, there’s delivery of goods and supplies — it becomes a market in the tens of billions of dollars if you’re looking at logistics opportunities in health care,” said John Brownstein, co-founder of a company in the space called Circulation Health that partners with Lyft. Circulation was recently acquired by one of the largest brokers in the space, Logisticare.

Callahan didn’t rule out any of these sorts of opportunities, but said her near-term goal was to look for more ways to increase rides and reduce missed appointments.

Athenahealth sold to Veritas Capital for $5.7 billion

Athenahealth has agreed to be acquired by a Veritas Capital and Evergreen Coast Capital affiliate for $5.7 billion, the companies announced Monday morning.

Athenahealth will continue to be its own brand, but Veritas and Evergreen will merge it with Virence Health, the analytics and software firm formerly known as the Value-Based Care Solutions Group, which GE Healthcare acquired earlier in 2018.

Virence Chairman and CEO Bob Segert will lead the newly combined company.

“Combining with Virence will create new opportunities for collaboration and growth,” Athenahealth Executive Chairman Jeff Immelt said in a statement.

Athenahealth has been facing takeover attempts since at least 2017, when Elliott Management first tried to buy the company. Elliott Management supports the Veritas-Evergreen acquisition. The transaction “represents an outstanding, value-maximizing outcome for Athenahealth shareholders,” Elliott partner Jesse Cohn said in a statement.

Athenahealth will hold an earnings call later Monday. In a third-quarter earnings report released Friday, the company reported it booked less business compared to the same period of 2017. Revenue for the quarter was $329.5 million, according to the company’s new accounting standards, and $331.4 million according to the old standards, up 9% over the year-before quarter.

Athenahealth’s stock was up nearly 10%, to $131.97 a share at the end of trading Monday.

2018 Mid-Year Elections

Democrats secured the House majority Tuesday night for the first time in nearly a decade with a projected majority of as many as 35 seats. The victory promises a new era of checks on the Trump administration’s healthcare regulatory agenda as well as a possible odd-couple alliance with the White House against Big Pharma.

The GOP held the Senate as expected, gaining on its slim margin with at least two pickups in Indiana and North Dakota. This tightly calibrated Congress likely won’t push any major healthcare legislation. And Obamacare will remain in place—albeit tweaked at the state level and through administration policies so the law increasingly looks like a mix of competing Democratic and GOP visions.

Analysts don’t expect any big-picture legislation as the sprint to the 2020 presidential election begins. In the especially polarized politics of healthcare, each party bends with their voters, said Robert Blendon, a Harvard University professor of health policy and political analysis. While healthcare polls as a top issue with the majority of voters, priorities shift fast depending on which party is surveyed.

“If I were (saying this) in the mid-1990s, I would say the issues top of mind for all voters would determine what the new House would actually do,” Blendon said.  Pundits called this midterm cycle a base election: healthcare in the 116th Congress will depend on finding the give in the gridlock over a divisive topic.

Drug pricing

Democrats have framed drug pricing as a rare policy area where they can work with the president—the common enemy there is Big Pharma.

Still, following an election that swept them to power as a referendum on Trump, some Beltway insiders doubt Democrats will bend much. Pharma’s panic level will depend on how well this relationship can work, and that’s not only up to Democrats: it’s up to the White House and Trump’s top lieutenants as well.

In her victory speech Tuesday night, House Minority Leader Nancy Pelosi (D-Calif.)—expected to stay on as speaker of the House given the party’s success—said Democrats would pass legislation for direct Medicare negotiation with drug companies. This was a core part of Trump’s own campaign platform. But HHS Secretary Alex Azar has pushed back on such a policy.

Key lawmakers poised to step into influential committee positions have criticized the Trump administration’s drug pricing strategy for not going far enough. These include Cummings on oversight; Rep. Lloyd Doggett of Texas who may get the House Ways and Means health subcommittee gavel; and Vermont’s Rep. Peter Welch, who sits on the House Democratic Steering and Policy Committee and the House Energy and Commerce Committee. As a counterpoint, however, Pharma ally Rep. Anna Eshoo, a Democrat who represents a biotech-dominated district in California, is next in line for the Energy and Commerce health subcommittee gavel.

Criticisms notwithstanding, Azar stunned industry and experts last month with a proposal to tie U.S. drug prices to their lower-cost counterparts abroad. Some industry analysts viewed that as leverage to get Big Pharma to the negotiating table despite that being the boldest move of any administration yet, even as House Democrats said it needed to be bolder.

“Instead of nibbling around the edges, (Trump) should demand in his State of the Union speech that Congress send to his desk within 30 days a broad price negotiation bill that applies to all drugs in the Medicare program,” Welch said in a release after Trump unveiled the policy proposal.

Healthcare costs

Smaller measures targeted at cost could pass bipartisan muster.

This year the Senate Health, Education, Labor and Pensions Committee has focused its hearings on cutting healthcare costs. A bipartisan group of senators has pushed variations of a bill to curb outsize balance bills from hospitals.

As health insurance co-pays and deductibles rise and provider networks narrow, price woes will stay top of mind even as the ACA becomes more entrenched in insurers’ business models. Nearly 75% of individual market plans restrict their provider networks, according to the consulting group Avalere—a steep rise from 2014. Nearly 90% of people in exchange plans hold the IRS definition of a high-deductible plan of more than $1,300.

So as 2020 approaches, voters’ focus may stray from the Obamacare coverage arguments while remaining keenly focused on their wallets—as Pelosi and Senate Republicans seem to be aware.

One longtime House Democrat said she for one wants to see more compromise on the many healthcare issues “that really aren’t partisan.”

“Everybody’s up again in two years and that includes a number of key Republicans in the Senate,” said Rep. Jan Schakowsky (D-Ill.). “In terms of bipartisanship I look rather fondly back to the Bush administration when we actually got things passed and done. And in part that’s because the definition of the job included the word compromise—it wasn’t a dirty word back then.”

It remains to be seen what levels of compromise a base election can yield.