Former Beaumont director wants CEO, top execs fired, merger delayed.

Mark Shaevsky, who served on the Beaumont board for 17 years until 2014, told Crain’s he has been frustrated the past several months that a majority of the Beaumont board appears to support the proposed merger with 28-hospital Advocate Aurora Health, a nonprofit health system with offices in Chicago and Milwaukee.

He also said he doesn’t believe the board has sufficiently addressed patient safety concerns expressed by doctors and nurses.

“I am very, very concerned the proposed acquisition, and I call it an acquisition, is very, very detrimental to the community,” Shaevsky said Thursday. “We have a significant community asset and if the merger is completed it will not really be controlled by the community.”

Shaevsky said Southfield-based Beaumont Health could continue to exist and thrive without being part of a larger system. “I don’t think bigger is better. I don’t see where the benefit would be to Beaumont,” he said.

In his Sept. 4 letter to Nessel — received by her office on Sept. 8 — Shaevsky detailed why he believes the proposed merger makes no sense.

“Beaumont’s annual revenues are nearly $5 billion,” wrote Shaevsky, an attorney who now heads Mark Shaevsky & Associates, LLC – Management Advisors in Farmington Hills. “If sold, the proceeds of $5 billion would go into a community foundation to support the health needs of the community. If the $5 billion would produce annual income of 5 percent, that would mean $250 million would be available for the betterment of our citizens every year indefinitely — and still have the $5 billion foundation. So, why would the citizens of Michigan transfer 100% ownership of a $5 billion community asset to another institution in return for promises of expenditures of slightly over $1 billion and a minority interest in a combined hospital system?”

Shaevsky told Crain’s he is not in favor of Beaumont selling to a for-profit company like Tenet Healthcare or HCA Healthcare, where the sale proceeds would go to create a community foundation. He said he used the example to illustrate how a nonprofit like Advocate Aurora would assume the assets and leave very limited reserved powers for local control.

“You have a valuable asset built up over the years. It is tax-exempt and belongs to the community,” Shaevsky said.

Fox has said that Advocate Aurora will make a $1.1 billion investment in Beaumont for capital, equipment and clinical program improvements over the next three years, if the merger is approved.

Shaevsky wrote the capital promise comes “without guarantees” and could be disregarded or delayed.

Advocate Aurora CEO Jim Skogsbergh has told Crain’s the system is committed to the funding, but that it could take more than three years to complete because of the COVID-19 pandemic and projected system losses of $500 million this year.

“The reality is Beaumont has the financial resources to pay for all the projects allegedly promised by Advocate,” Shaevsky wrote, adding that Beaumont has more than $2 billion in cash reserves and a top credit rating for tax-exempt bonds.

Contacted by Crain’s, Nessel’s office said she has received numerous letters about the Beaumont-Advocate proposed merger and that a preliminary review is underway. Nessel must approve the merger, a process that could take months.

Mark Geary, a Beaumont spokesman, said the system has not seen Shaevsky’s letter and could not comment at this time.

Shaevsky said Nessel’s office acknowledged his letter. He said he has no confidence in the board taking action and felt Nessel might intervene on behalf of the community.

Sutter Health’s bottom line, sinking its operating margin to almost -11%.

The not-for-profit lost $321 million on $2.9 billion in revenue in the quarter ended June 30. The Sacramento, Calif.-based system’s margin was already slim—just $36 million on $3.3 billion in revenue in the prior-year period, a 1% margin. 

The health system’s finances deteriorated under California’s mandatory suspension of elective procedures that began in March. Sutter’s admissions and patient days both fell almost 10% in the quarter. Emergency room visits fell almost 20%. Sutter’s outpatient revenue was down 14%. 

Sutter spokeswoman Amy Thoma Tan said in an email that it could take the health system years to recover from this “unprecedented crisis.” “While we have seen some patient volumes rebound, responding to COVID-19 continues to require extensive resource investments,” she said. 

All told, Sutter’s patient service revenue plummeted by 24% in the quarter year-over-year as the pandemic forced the system to suspend elective procedures. Premium revenue fell 5%. 

Sutter’s expenses were mostly flat in the quarter at just under $3.3 billion. Within that, salary and benefit costs jumped 6%, Some expenses declined, including supplies, which fell 16%, as fewer items were necessary for surgeries during the suspension. Purchased services fell 5% year-over-year.

Positive investment performance brought Sutter’s net income to $220 million in the quarter ended June 30, compared with $113 million in the prior-year period. 

It’s unclear how long the pandemic will continue to disrupt Sutter’s operations, Thoma Tan said. 

“What we do know is that the affordability challenges that existed before this pandemic—changes to our payor mix and increasing labor, technology and facilities costs—have been further heightened by recent events,” she said. 

The judge overseeing the antitrust lawsuit against Sutter hasn’t yet approved a preliminary settlement, which includes a $575 million payment and ceasing all-or-nothing contracting practices, anticompetitive bundling of services, and other mandates. The settlement will resolve allegations from a high-profile, class-action lawsuit in which plaintiffs accused Sutter of a range of anticompetitive practices that allegedly drove up the cost of healthcare in Northern California.

Mount Sinai, Yale, Johns Hopkins to track chronic kidney disease in COVID survivors

After obtaining promising initial results in a smaller trial launched earlier this year, a biotech startup has begun a new multi-center trial with Mount Sinai, and medical schools at Yale, the University of Michigan Medical School, Johns Hopkins, and Rutgers to predict long-term kidney disease risk in recovering COVID-19 patients.

RenalytixAI, a London-based diagnostics firm runs a blood-based assay for predicting the risk of progressive decline in patients’ kidney function. The firm’s researchers run a sample on a multiplex electrochemiluminescence assay to identify three biomarkers, then combine data derived from a patient’s electronic medical record to generate a risk score of the patient’s progressive kidney decline. 

As part of the new trial, the team will monitor recovered patients who developed acute kidney injury while in the hospital or may potentially suffer from chronic kidney disease in the future.

In the smaller study, the researchers collected both blood and urine samples from patients hospitalized with COVID-19. The team analyzed the incidence and severity of acute kidney injury, certain risk factors associated with the condition, the proportion of patients needing dialysis, patient mortality, and how often surviving patients recovered kidney function.

Coca’s team initially published a preprint regarding the results and expects to publish a finalized version of the study examining a total of 3,993 COVID-19patients in the Journals of American Society of Nephrology later this year.

“While 46% (1,835) of the population acquired AKI, 17% of those [patients] required dialysis, and the mortality [of the AKI population] was about 50%,” Steven Coca, RenalytixAI cofounder and associate nephrology professor at the Icahn School of Medicine at Mount Sinai, explained. “We found that about a third of patients with AKI that survived did not recover kidney function by the time of discharge.”

Despite patients in the trial having a median hospital stay length of about 10 days, Coca and his colleagues realized they needed to track patients’ recovery time and observe long-term kidney function post-discharge to better gauge their risk of CKD. 

Coca explained that in the new trial, his team will collect blood and urine samples of COVID-19 survivors with AKI before they are released from the hospital.

“Severity and duration of AKI in the setting of COVID appears to more severe than ‘standard AKI,'” Coca noted in an email. “Thus, we believe the risk for CKD after surviving COVID-AKI will be higher than routine AKI, and risk stratification will be needed to determine who will need to be seen by nephrologists and who needs more aggressive post-AKI care.”

RenalytixAI’s academic collaborators will collect blood and urine samples from their health systems and send them to Mount Sinai, where Coca’s team will analyze the samples. The group aims to process samples from as many as 4,000 patients over the course of the multi-year longitudinal study.

“Now that patients have recovered from COVID-19, you can see them in person and measure markers including their IGG antibodies as part of the longitudinal assessment.” Coca said. “Obviously, you’d overwhelm nephrologists since you can’t follow up with every COVID-19 patient, so we want to do a re-stratification of these samples.”

Coca and his colleagues will examine blood and urine biomarkers after three months to determine if they help predict which patients progress with CKD. The biomarkers Coca’s team will examine are broadly associated with either inflammation, AKI, or CKD progression

The group will then create a risk score based on the samples to establish a prediction for long-term outcome. Coca said that the team will watch for changes in biomarkers found by the assay in patients who return for longitudinal visits. 

The group will passively examine a patient’s kidney behavior over time by accessing their electronic medical records following the initial sample collection.

Coca argued that a patient’s one- to three-month follow up sample — even when adjusted for EGFR, kidney function, urine albumin, and other clinical variables — contains blood markers that add additional prognostic value “above and beyond” what the clinical variables can provide. He therefore anticipates spotting critical clinical findings from the MASKeD-COVID trial.

“Because we were in a surge phase in the past few months, we did not assay a large proportion of samples from patients … and thus the first collection will be in the post-discharge phase,” Coca explained. “Ironically, the post-discharge sample is the most valuable sample for predicting [CKD] progression.”

Noting that there have been “some rumblings” from pharmaceutical companies about COVID-19 drug development, Coca said that the last aim of the study will be to research how distinct phenotypes occur for COVID-related kidney disease. By collecting kidney biopsies from a patient subset with persistent evidence of kidney disease, the team will perform transcriptomic and proteomic analysis using single-cell sequencing to further understand the condition.

Matthias Kretzler, a nephrology, computational medicine, and bioinformatics professor who leads the team at University of Michigan will also research how COVID-19 can cause lasting damage to a surviving patient’s organs in addition to the kidneys, including the heart, lungs, and the endocrine system.

July 2020 COVID-19 Update – Providers face complex set of challenges

Dr. Marjorie Bessel
Chief clinical officer
Banner Health in Phoenix

On staffing: We are using an external staffing crisis agency to bring hundreds of nurses and respiratory therapists to us to assist in staffing to meet the needs of the surge we are experiencing … We are well over 1,400 (positive or suspected COVID-19) patients per day at Banner, and what we found is the COVID patients are very labor intensive … One COVID patient doesn’t equal the labor intensity of what one patient pre-COVID was like. It’s an additional burden that is also putting stress on our staff.

On supplies: We expect the supply chain to be disrupted for some period of time. We are only in the first wave and we have every expectation there will be a second wave, (which) is likely going to be no better and possibly worse than what we are currently experiencing. Our most difficult issue right now is isolation gowns. We are going through about a million isolation gowns a month at this time, so we are being creative in that space. (We are going back to the previous decades) when we used to have cloth gowns and you would launder them. We have piloted that in a couple of hospitals and it has been really well received by our employees.” 

On preparing for the surge: We had the luxury of time to put plans into place and those plans are having to be pulled off the shelves and implemented … (The downside to that) is the community, and society in general, feeling like it wasn’t going to come to us, that we could be complacent about CDC guidelines. There is some fatigue around it. I want my life to go back to pre-COVID also, but it just isn’t in the cards for us. We still have a long way to go.

On using triage only as a last resort: There is a lot of misunderstanding that we have people not getting ventilators who need them and that is not the case. We absolutely have plans in place to do triage if it were to get to a point like that … (but) we are committed to doing everything we can not to get to that. The healthcare systems are working collectively in the state so no one system would get to such a dire situation that would have to do something like triage. We are committed to sharing the load and if we have to do a triage situation all of us in the state would do it at the same time.

Physician practice consolidation causes CARES Act grant headaches

HHS sent out $50 billion in general provider grants based on 2018 and 2019 data, and the grants were attached to Tax Identification Numbers instead of the providers themselves. That left sticky situations for hospitals, private equity funds and physicians when money was sent starting in April. In some cases thousands of dollars were on the line. HHS clarified its guidance on May 19 and 20, but didn’t notify providers of the change ahead of a June 3 deadline to submit financial information.

Providers are affected differently based on the distinct fact patterns of their acquisitions.

Hospitals could lose out if they acquired a practice between partway through 2019 and January 2020. If the grants went to the practice’s inactive TIN, the provider has to send back the funds. 

A hospital or provider group can only apply for more grant funds for the practice they purchased if the acquisition changed the gross receipts in its most recent tax return by at least 20%. If not, they can’t recover the funds.

“Hospitals will have purchased practices as they moved to create more integrated health systems, which is a wrinkle in this,” Washington Council Ernst & Young principal Heather Meade said.

The 20% cutoff appears to be an arbitrary threshold, though observers pointed out that HHS likely had to choose a cutoff for practicality’s sake.

“There’s a bright line they had to draw, and I’m not being critical,” King & Spalding partner Mark Polston said. “They had to do it, but that bright line creates problems.”

Other issues arise when a practice left a larger group. A gastroenterology practice in Washington sued to recover provider relief grant funds after it exited a larger group at the end of 2019. The practice, Gastroenterology Associates Clinical Practice, estimated in its complaint that the larger group held onto between $350,000 and $400,000 in provider grants based on services the practice provided in 2019.

According to HHS’ new guidance, larger groups don’t have to return or transfer the funds a previously owned practices provided so long as the group can attest they will use the grants to offset coronavirus-related expenses or lost revenue.

Attorneys representing Gastroenterology Associates did not return an inquiry about how the new HHS guidance affects the dispute. The lawsuit was listed in a COVID-19 complaint tracker maintained by the law firm Hunton Andrews Kurth.

Private equity firms that acquired practices would likely be somewhat insulated from the issue, said Faegre Drinker Biddle & Reath partner Isaac Willett. Private equity firms often indirectly acquire non-clinical assets from a practice, but the practice maintains its existing billing TIN and payer contracts.

However, McDermott Will & Emery partner Joshua Spielman said some private equity acquisitions of multiple practices in a geographic area result in consolidations of TINs, which means providers could have to return some of the grant money.

“It seems that there are dollars Congress intended for the healthcare system, for care they provided to patients in the world, and that money is being lost as a result of the rules,” Spielman said.

As there was more than a month between when payments started to be distributed and when HHS issued guidance on the issue, some practices reached out to a provider hotline run by UnitedHealthcare in the meantime. 

But providers have said the hotline assistance has been inconsistent. Mara McDermott, vice president at McDermott+Consulting, said she was given instruction through the hotline that conflicted with the guidance HHS ultimately issued. She said there’s a chance that other providers may have gotten similar guidance and started spending money they should have sent back. 

“There is value in having certainty, but I think the process would be better if there were some sort of timeline where it’s not the day before you attest that you find out what the rules are,” McDermott said.

A HHS spokesperson said in a statement that the department has been responsive to questions and concerns from providers, particularly those related to accepting the funds given conditions and other potentially time-constrained issues.UnitedHealthcare said it has fielded nearly 100,000 calls from providers and sent over 1 million emails about the funds, with a provider satisfaction rate of 91%.

“We continue to work with HHS to address unique provider needs as they arise,” UnitedHealthcare said in a statement.While consultants, trade associations and lawyers who advise providers said they generally appreciate HHS updating its guidance to address specific circumstances, they said the delay poses potentially thorny compliance issues. 

Mollie Gelburd, associate director at the Medical Group Management Association, said she advises members to download a version of the terms and conditions and guidance from HHS when they attest to the conditions to insulate themselves from issues later.

“With the guidance constantly changing, it’s hard to gauge the risks of accepting funds,” Gelburd said.

HHS doesn’t proactively notify providers of changes to its guidance. Advisers to providers said they have to download PDFs of the guidance daily to compare with previous versions to find out about changes. Some changes are marked with the date they were released, while some changes aren’t dated.For example, HHS on Friday changed guidance on group practices that sold or terminated a provider. HHS removed language recommending that such groups return payments if they anticipate their lost revenue and coronavirus-related costs will be “materially less” than the grant amount without labeling the change, according to a version comparison document. A HHS spokesperson said the guidance is continually updated to address providers’ questions that were not explicitly addressed in the terms and conditions for the grants. The department has also extended the initial 30-day attestation deadline to 90 days to give providers more time as HHS works through guidance on more nuanced issues, the spokesperson said.”Generally, if providers are uncomfortable, even if they have attested to the funds already they may contact HHS and proceed to return the funds,” the spokesperson said.Smaller practices may have issues keeping track of those changes, said George Hruza, a doctor who serves on the American Academy of Dermatology’s COVID-19 task force. Hruza said dermatology has seen consolidation in recent years and could be affected by the TIN guidance changes.

“Trying to make heads or tails of this not easy stuff. You need an accounting expert, and sometimes they don’t even agree on what it means,” Hruza said.

But Polston, who formerly served as a HHS deputy associate general counsel for CMS, said the evolving guidance is a result of how quickly HHS sent out the funds. He said the task of operationalizing such a large funding distribution usually would take at least a year.

“There is a lot of grumbling about the process, the interface and the new information coming out constantly, but I do think if you pause a bit and think about the task that the agency had to do, they have done a pretty good job,” Polston said.

On the provider side, Polston said practices and groups need to cautiously consider whether keeping the funds is worth a potential audit or public exposure, though it’s unclear what the full extent of consequences could be.

$100 billion COVID-19 bailout

Hospital groups are asking Congress to forgive more than $100 billion in loans the Trump administration has handed out to help providers maintain cash flow during the COVID-19 pandemic.

Provider lobbyists successfully secured $175 billion in grant funds over the last two COVID-19 relief packages, but they are arguing that isn’t enough. As Congress gears up for another major legislative push, providers are asking lawmakers to forgive or relax terms on another $100 billion in Medicare accelerated and advance payments that the Trump administration has already sent out. 

CMS expanded Medicare advance and accelerated payment programs in March, and has since given out $100 billion in loans. But the agency abruptly pumped the brakes on the program, suspending payments to Medicare Part B suppliers and “reevaluating”funding requests in Medicare Part A. CMS said they chose to suspend the program because HHS had begun distributing the $175 billion in grant funds.

Providers are now turning to Congress to overrule the decision and enact changes to make the program even more favorable. Their primary request is that Congress make the advances forgivable. 

The National Rural Health Association said that some rural hospitals were already operating on negative margins before the pandemic, and may have trouble paying back loans. The group asked lawmakers to make the loans forgivable if they are used for patient care, staff salaries, utilities, or mortgage payments.

Rex Jones, CEO of Magnolia Regional Medical Center in Magnolia, Ark., said he decided to apply for an advance payment but is trying not to spend any of the money unless absolutely necessary. Magnolia reported losses in 2016, 2017 and 2018 according to data from CMS cost reports.

“Our concern was that when you are taking the money out from an advance on an organization with negative margin, there’s no way to pay it back,” Jones said.

The American Hospital Association and American Nurses Association also asked Congress to make the advances forgivable in a letter dated Friday. But making the loans forgivable would favor providers that have a more Medicare-heavy payer mix, and would disadvantage safety-net hospitals that are also operating on thin margins. 

If lawmakers don’t accede to turning loans into grants, providers want more favorable repayment terms. CMS can begin recouping the loans by garnishing Medicare payments after 120 days. The funds then transition into high-interest loans if they aren’t paid back in a year for hospitals, or 210 days for physicians and suppliers. 

The Greater New York Hospital Association argued that hospitals may not be back to regular capacity by July or August.

“Providers must begin to repay their Medicare advance while they continue to treat COVID-19 patients, or while they are in a precarious financial situation following a COVID-19 patient surge,” GNYHA wrote.

Specifically, the Federation of American Hospitals asked lawmakers to increase the amounts of the advances, extend repayment deadlines, decrease the rate at which CMS can garnish payments, and lower interest rates.

It isn’t just hospitals who want changes to the program, as physicians also received advances. The American Medical Association generally concurred with FAH’s recommendations, and also asked that HHS be allowed to make more than one advance payment.

“We fear physician practices may not resume normal operation in the immediate term and will need additional cash flows to remain afloat for patients after the pandemic is over,” physician groups wrote in an AMA-led letter.

A COVID-19 Vaccine Might Be Here Sooner Than You Think

The solution to ending the COViD-19 pandemic rests with a vaccine. Since this was a novel coronavirus,  efforts to introduce a vaccine have only recently begun.  Most respected officials say that a COVID-19 vaccine is 12-18 months away from being commercially available.  

Some of these experts point out that even 12-18 months for a vaccine would be an unprecedented accomplishment.  Typically vaccines take much longer to be brought to market. Many have literally taken decades. The development of the Mumps vaccine, thought to be amazingly quick, took four years.  The Ebola vaccine, again thought to have been rapidly developed, took five years.  But recent advances in technology have allowed for the quicker discovery of candidates using DNA and RNA sequences for vaccines. Although since this is new technology, the ultimate success of these efforts is still uncertain.  To date, no vaccine has ever been successfully brought to market using this new genetic sequencing technology. 

Vaccine development is a complex process. First a potential vaccine is tested in animals in what is called a pre-clinical phase. If the results show an immune response, the candidate enters human trials in up to three phases. In phase 1 testing is done in healthy volunteers primarily to demonstrate safety. Phase 2 trials are designed to test the efficacy of the vaccine in a relatively small population of patients. To eventually get to market, a vaccine must then be shown to be safe and effective in a phase 3 clinical trial that is more extensively tested for safety and efficacy. 

A number of steps have been taken to reduce the usual time to market for the COVID-19 vaccine. For example, the World Health Organization has published protocols to test multiple vaccine candidates in phase 2 and 3 clinical trials at the same time. Artificial intelligence can now be integrated into platforms (from companies like Saama Technologies) that can analyze clinical trial data to find answers sooner.  New technology lets researchers identify potentially effective genetic sequences for COVID-19  and allows for much faster development than in past years. For example Moderna (Cambridge Mass) used new technology to create a  mRNA sequence for SARS-COV2 that already entered human trials on March 16th. Moderna has said that it may enter phase two trials in the spring and potentially have a vaccine ready by the Fall of 2020. 

There are at least 70 separate efforts currently underway to develop a vaccine. Five vaccines are already entered the clinical testing phase, while the rest remain in preclinical phases of development.  Besides the Moderna vaccine which as mentioned is in phase 1 testing, some of these others are advancing at an unprecedented rate. 

CanSino Bio, a Chinese company, started phase one trials in March. Their vaccine is an adenovirus type 5 vector that expresses an S protein to stimulate an immune response.  Testing in phase 1 has begun in 108 healthy people to look for adverse events. Phase two trials are now expected to begin later this month on 500 people to test for antibody response to the vaccine, with half of the people placed in a placebo arm.  

Inovio pharmaceuticals (Plymouth Meeting PA)  has developed a synthetic DNA plasmid vaccine that encapsulates a piece of the genetic code of the COVID virus and also has entered a phase 1 clinical trial. 

Shenzen Geno Medical Institute in China has two potential vaccines that have entered phase 1 trials. They are both lentoviral derivatives. 

The Migal Galilee Research Institute in Israel has also announced plans to releases a vaccine that would enter clinical testing in the next few weeks.  Oxford University too has stated that they will likely have a vaccine ready by September 

Some big companies, with extensive vaccine development experience, have also announced plans to soon enter phase 1 clinical trials. Johnson and Johnson, through their Jansen division, plans to use their AdVAC and PER.C6 technologies to introduce a candidate of their own, and then if successful, move towards mass production of a vaccine. 

Many of these efforts are being undertaken by small companies   that have not successfully brought vaccines to the market before. This combined with the use of new untested   technologies being used, could provide   some false hope. However, it is more likely that the unprecedented number   of private and public efforts to bring a COVID-19 vaccine to market will yield   a positive outcome. My prediction is   that this will be sooner than most experts think. That will be good news for all of us.

UC San Diego Doctors Testing Drones To Help Reduce Patient Wait Time

There’s no question that a doctor’s visit can be inconvenient. It often requires patients to leave work for the day or find some extra time. But what if that patient has to come back the next day, because doctors couldn’t complete tests fast enough? Now doctors at UC San Diego Health are exploring an unconventional solution — drones — to a conventional problem.

Delays In A Diagnosis

At the UC San Diego Urgent Care in La Jolla, numerous patients can be found waiting for their names to be called. 

While some are able to get out of the building quickly and go home, other patients may have to return or potentially go to a hospital. That’s because typically urgent and primary care facilities don’t have labs to test samples, like blood. Sometimes it can take days for patients to get a full diagnosis, said James Killeen, an emergency care physician at UC San Diego School of Medicine. 

“Say there’s a patient, who has diabetes, high blood pressure … they get labs drawn, and then several hours later, or the next day, you find out they have worsening kidney function … Now you’ve sort of pushed their care back a day, two days, three days,” Killeen said. 

Hospitals have tube systems, Killeen said. So doctors can send samples swiftly through these pathways to a lab, where they can be processed within 20 minutes to two hours. And patients can be informed about their health issues much more quickly. 

But clinics typically have to send samples to a lab by car. 

“You assume that when you drop off the specimen to the car that it goes from point A to point B, but it actually goes to several other places. And that can take several hours, depending on car delays, traffic accidents,” Killeen said. 

Meanwhile, a patient’s health could get worse. And that’s a problem because the goal for medical systems is to prevent patients from having to make an urgent and costly trip to the hospital. So, Killeen said, he was looking for solutions. 

“By flying a drone, we can actually deliver these specimens in a timely fashion that’s actually cost-efficient,” Killeen said. 

A Nationwide Investigation Into Hospital Drones

UC San Diego Health announced this week that it’s launching a pilot program to test out drones, or unmanned aircraft, to see if they can deliver medical supplies and samples more quickly. But, doctors there already have a sense of how it will work.

That’s because UC San Diego is the second hospital system in the country to do this. The first is WakeMed in Raleigh, North Carolina. The hospital has had a few drones running going to a clinic across the street for a year, with promising results, according to Stuart Ginn, a medical director at WakeMed. 

“The average delivery time across that very short route was probably 40 minutes to an hour and we can do it now in 7 to 10 minutes,” Ginn said. 

Ginn, a former pilot, said federal regulations around drones are tough. But in 2017 the Federal Aviation Administration announced a pilot project so that 10 U.S. cities could test drones in fields ranging from policing to agriculture. San Diego and Raleigh got medical package delivery. 

While it’s too early to tell whether a few drones are really saving the hospital money and time, Ginn said a network of drones could have a significant impact. 

“We might be able to consolidate laboratory facilities back at our main lab, instead of having to stand up a small lab at an outpatient facility, which is costly and also takes up room that we could use to take care of patients,” Ginn said.

He admits creating that type of network could take time because drones are still a new technology. 

“It’s not like a new medical device, where if it gets Federal Drug Administration approval, the doctors will use it. This is out in people’s communities. And you can get clearance to fly, but where do you land? So it’s a much more nuanced technology,” Ginn said. 

A Leap of Faith

To make sure the drones are safe and being monitored, WakeMed teamed up with drone company Matternet and delivery service UPS. And so did UC San Diego. 

Mark Taylor, with UPS, said the drones are designed to safely carry medical supplies and samples without spoiling them. And the machinery also has safety precautions in place. 

“The aircraft itself is equipped with a parachute, it flies on a predetermined path. If it deviates at all the parachute goes off,” Taylor said. 

Federal regulators and manufacturers will be gathering data as these initial drone programs progress, he said.

“Can we fly further? Can we carry a heavier payload? … It will take some time for the industry to continue to evolve,” Taylor said. 

And Matthew Jenusaitis, chief innovation officer at UC San Diego Health, said even though there are these unanswered questions and risks, the hospital is embracing the drone project because it means innovation. 

“You need to take a leap of faith, you need to have a vision for how technologies could evolve. This is a university and academic setting, we’re always trying to ask what’s next,” Jenusaitis said. 

The hospital will evaluate the drone study when it’s over and decide from there whether to integrate the aircraft into the system, he said.

“As you can imagine hospitals have lawyers just like everyone else… but our goal is to provide the safest healthcare possible. That’s the goal of the pilot study,” said Jenusaitis.

“I think if this technology is successful, not just healthcare, but all over I think you’re going to see a lot more drones,” he said. 

UPS and Matternet officials say they hope to work with federal regulators to extend drones to more hospitals in the country.

Nation’s hospitals unprepared for COVID-19

UC Davis case just one example as one patient sends 124 nurses and health care workers
home on self quarantine

Despite University of California medical facilities being generally better prepared and equipped to treat challenging medical cases, the recent UC Davis Medical Center COVID-19 case highlights the vulnerability of the nation’s hospitals to this virus and the insufficiency of current Centers for Disease Control guidelines. 

The single COVID-19 patient admitted to the facility on Feb. 19 has now led to the self-quarantine at home of at least 36 RNs and 88 other health care workers.

These 124 nurses and health care workers, who are needed now more than ever, have instead been sidelined. Lack of preparedness will create an unsustainable national health care staffing crisis.  

Nurses view the handling of this COVID-19 case as a system failure and not a success. National Nurses United RNs are speaking out because they are dedicated to protecting the health and safety of their patients, health care workers, and the public.

Nurses employed by the University of California medical centers had met with UC officials four times and written repeatedly, starting from Jan. 28, to notify them about the urgency to prepare for coronavirus, make information requests, and offer to work with them. On Feb. 18, UC nurses wrote to Janet Napolitano, the UC system president, to demand increased protection for nurses and patients against the coronavirus. UC Davis nurses on Feb. 11, eight days before this patient was admitted, approached hospital management and asked them to institute infection control plans that already existed and had been in place during the 2014 ebolaoutbreak, but the hospital did not.

“We know that we can be successful in getting all our hospitals prepared to control the spread of this virus,” said Bonnie Castillo, RN, executive director of National Nurses United. “We are committed to working with hospitals and state and federal agencies to be ready. But nurses and health care workers need optimal staffing, equipment, and supplies to do so. This is not the time for hospital chains to cut corners or prioritize their profits. This is the time to go the extra mile and make sure health care workers, patients, and the public are protected at the highest standards.”

National Nurses United is conducting a survey of registered nurses across the country on hospital preparedness and will be releasing those results next week. 

Preliminary results from more than 1,000 nurses in California are worrisome:

  • Only 27 percent report that there is a plan in place to isolate a patient with a possible novel coronavirus infection. 47 percent report they don’t know if there is a plan.
  • Only 73 percent report that they have access to N95 respirators on their units; 47 percent report access to powered air purifying respirators (PAPRs) on their units.
  • Only 27 percent report that their employer has sufficient personal protective equipment (PPE) stock on hand to protect staff if there is a rapid surge in patients with possible coronavirus infections; 44 percent don’t know.

In addition to the survey, NNU has sent letters to the federal Centers for Disease Control, asking it to strengthen its guidelines on COVID-19, and to the California Department of Public Health, Cal-OSHA, and the World Health Organization outlining its concerns and recommendations.

National Nurses United is the largest and fastest-growing union and professional association of registered nurses in the United States, with more than 150,000 members nationwide.

Three Things to Pay Attention to at the 2020 J.P. Morgan Health-Care Conference

Presenters at the main show include Bristol-Myers Squibb (ticker: BMY), Gilead Sciences (GILD), Johnson & Johnson (JNJ), and Regeneron Pharmaceuticals (REGN). The gathering comes as the health-care sector has surged over the past three months, with the S&P 500 Health Care sector up 16.1% and the iShares Nasdaq Biotechnology ETF (IBB) up 23%. The broader S&P 500 is up 11.4% over the same period.

Yet significant worries remain. At the start of an election year, drug pricing remains a key issue in the political debate. While it has receded in recent months as foreign crises have heated up, it could easily return to the headlines. So could calls for Medicare for All, which shook the sector early last year.


Biotech companies often save their merger-and-acquisition announcements for the conference. As Evercore ISI analyst Josh Schimmer wrote in a note out Wednesday, January is a particularly busy month for biotech M&A. In 2017, Schimmer wrote, nearly half of the value of the year’s biotech deals was spent in January. One exception to the trend? January of 2016, the last presidential election year. “Entering 2020, will companies look to keep their heads down with modest guidance?” Schimmer wrote. “If so, we might see another choppy month, although the macro setup is quite different this time around with expectations around conservative price hikes already in sentiment.”


Also likely to be heavily attended will be Biogen’s (BIIB) presentation at 3:30 p.m. Pacific time Monday. The company, which announced a new $5 billion stock buyback in December, was the biotech story of the year in 2019, when its experimental Alzheimer’s drug failed in clinical trials, and yet the company said it still planned to submit it for regulatory approval. Investors will be listening for any news on the drug’s future, including clues on plans for when the company will submit it to the Food and Drug Administration.

The election

Executives will likely be fielding questions about how they are thinking about the coming presidential race. “The line we expect to hear most, is that managing through various political climates is a constant exercise/challenge and management teams are dealing with 2020 no differently,” Holz wrote. Drug pricing, health insurance proposals, and other issues will dominate the discussions, though the implications of the election will of course go far beyond those points. Watch for how executives discuss these issues, and how much they are worrying investors.