With little pomp, California launched two apps at the start of the year offering free behavioral health services to youths to help them cope with everything from living with anxiety to body acceptance.
Through their phones, young people and some caregivers can meet BrightLife Kids and Soluna coaches, some who specialize in peer support or substance use disorders, for roughly 30-minute virtual counseling sessions that are best suited to those with more mild needs, typically those without a clinical diagnosis. The apps also feature self-directed activities, such as white noise sessions, guided breathing, and videos of ocean waves to help users relax.
"We believe they're going to have not just great impact, but wide impact across California, especially in places where maybe it's not so easy to find an in-person behavioral health visit or the kind of coaching and supports that parents and young people need," said Gov. Gavin Newsom's health secretary, Mark Ghaly, during the Jan. 16 announcement.
The apps represent one of the Democratic governor's major forays into health technology and come with four-year contracts valued at $498 million. California is believed to be the first state to offer a mental health app with free coaching to all young residents, according to the Department of Health Care Services, which operates the program.
However, the rollout has been slow. So slow that one of the companies has missed a deadline to make its app available on Android phones. Only about 15,000 of the state's 12.6 million children and young adults have signed up for the apps, and school counselors say they've never heard of them.
Advocates for youth question the wisdom of investing taxpayer dollars in two private companies. Social workers are concerned the companies' coaches won't properly identify youths who need referrals for clinical care. And the spending is drawing lawmaker scrutiny amid a state deficit pegged at as much as $73 billion.
An App for That
Newsom's administration says the apps fill a need for young Californians and their families to access professional telehealth for free, in multiple languages, and outside of standard 9-to-5 hours. It's part of Newsom's sweeping $4.7 billion master plan for kids' mental health, which was introduced in 2022 to increase access to mental health and substance use support services. In addition to launching virtual tools such as the teletherapy apps, the initiative is working to expand workforce capacity, especially in underserved areas.
"The reality is that we are rarely 6 feet away from our devices," said Sohil Sud, director of Newsom's Children and Youth Behavioral Health Initiative. "The question is how we can leverage technology as a resource for all California youth and families, not in place of, but in addition to, other behavioral health services that are being developed and expanded."
The virtual platforms come amid rising depression and suicide rates among youth and a shortage of mental health providers. Nearly half of California youths from the ages of 12 to 17 report having recently struggled with mental health issues, with nearly a third experiencing serious psychological distress, according to a 2021 study by the UCLA Center for Health Policy Research. These rates are even higher for multiracial youths and those from low-income families.
But those supporting youth mental health at the local level question whether the apps will move the needle on climbing depression and suicide rates.
"It's fair to applaud the state of California for aggressively seeking new tools," said Alex Briscoe of California Children's Trust, a statewide initiative that, along with more than 100 local partners, works to improve the social and emotional health of children. "We just don't see it as fundamental. And we don't believe the youth mental health crisis will be solved by technology projects built by a professional class who don't share the lived experience of marginalized communities."
The apps, BrightLife Kids and Soluna, are operated by two companies: Brightline, a 5-year-old venture capital-backed startup; and Kooth, a London-based publicly traded company that has experience in the U.K. and has also signed on some schools in Kentucky and Pennsylvania and a health plan in Illinois. In the first five months of Kooth's Pennsylvania pilot, 6% of students who had access to the app signed up.
Brightline and Kooth represent a growing number of health tech firms seeking to profit in this space. They beat out dozens of other bidders including international consulting companies and other youth telehealth platforms that had already snapped up contracts in California.
Although the service is intended to be free with no insurance requirement, Brightline's app, BrightLife Kids, is folded into and only accessible through the company's main app, which asks for insurance information and directs users to paid licensed counseling options alongside the free coaching. After KFF Health News questioned why the free coaching was advertised below paid options, Brightline reordered the page so that, even if a child has high-acuity needs, free coaching shows up first.
The apps take an expansive view of behavioral health, making the tools available to all California youth under age 26 as well as caregivers of babies, toddlers, and children 12 and under. When KFF Health News asked to speak with an app user, Brightline connected a reporter with a mother whose 3-year-old daughter was learning to sleep on her own.
'It's Like Crickets'
Despite being months into the launch and having millions in marketing funds, the companies don't have a definitive rollout timeline. Brightline said it hopes to have deployed teams across the state to present the tools in person by midyear. Kooth said developing a strategy to hit every school would be "the main focus for this calendar year."
"It's a big state — 58 counties," Bob McCullough of Kooth said. "It'll take us a while to get to all of them."
Brightline's contract states that the company was required to launch downloadable apps for iOS and Android phones by January, but so far BrightLife Kids is available only on Apple phones. Brightline said it's aiming to launch the Android version over the summer.
"Nobody's really done anything like this at this magnitude, I think, in the U.S. before," said Naomi Allen, a co-founder and the CEO of Brightline. "We're very much in the early innings. We're already learning a lot."
The contracts, obtained by KFF Health News through a records request, show the companies operating the two apps could earn as much as $498 million through the contract term, which ends in June 2027, months after Newsom is set to leave office. And the state is spending hundreds of millions more on Newsom's virtual behavioral health strategy. The state said it aims to make the apps available long-term, depending on usage.
The state said 15,000 people signed up in the first three months. When KFF Health News asked how many of those users actively engaged with the app, it declined to say, noting that data would be released this summer.
KFF Health News reached out to nearly a dozen California mental health professionals and youths. None of them were aware of the apps.
"I'm not hearing anything," said Loretta Whitson, executive director of the California Association of School Counselors. "It's like crickets."
Whitson said she doesn't think the apps are on "anyone's" radar in schools, and she doesn't know of any schools that are actively advertising them. Brightline will be presenting its tool to the counselor association in May, but Whitson said the company didn't reach out to plan the meeting; she did.
Concern Over Referrals
Whitson isn't comfortable promoting the apps just yet. Although both companies said they have a clinical team on staff to assist, Whitson said she's concerned that the coaches, who aren't all licensed therapists, won't have the training to detect when users need more help and refer them to clinical care.
This sentiment was echoed by other school-based social workers, who also noted the apps' duplicative nature — in some counties, like Los Angeles, youths can access free virtual counseling sessions through Hazel Health, a for-profit company. Nonprofits, too, have entered this space. For example, Teen Line, a peer-to-peer hotline operated by Southern California-based Didi Hirsch Mental Health Services, is free nationwide.
While the state is also funneling money to the schools as part of Newsom's master plan, students and school-based mental health professionals voiced confusion at the large app investment when, in many school districts, few in-person counseling roles exist, and in some cases are dwindling.
Kelly Merchant, a student at College of the Desert in Palm Desert, noted that it can be hard to access in-person therapy at her school. She believes the community college, which has about 15,000 students, has only one full-time counselor and one part-time bilingual counselor. She and several students interviewed by KFF Health News said they appreciated having engaging content on their phone and the ability to speak to a coach, but all said they'd prefer in-person therapy.
"There are a lot of people who are seeking therapy, and people close to me that I know. But their insurances are taking forever, and they're on the waitlist," Merchant said. "And, like, you're seeing all these people struggle."
Fiscal conservatives question whether the money could be spent more effectively, like to bolster county efforts and existing youth behavioral health programs.
Republican state Sen. Roger Niello, vice chair of the Senate Budget and Fiscal Review Committee, noted that California is forecasted to face deficits for the next three years, and taxpayer watchdogs worry the apps might cost even more in the long run.
"What starts as a small financial commitment can become uncontrollable expenses down the road," said Susan Shelley of the Howard Jarvis Taxpayers Association.
New technologies are making it easier for companies to fix prices and discriminate against individual consumers, the Biden administration's top consumer watchdog said Tuesday.
Algorithms make it possible for companies to fix prices without explicitly coordinating with one another, posing a new test for regulators policing the market, said Lina Khan, chair of the Federal Trade Commission, during a media event hosted by KFF.
"I think we could be entering a somewhat novel era of pricing," Khan told reporters.
Khan is regarded as one of the most aggressive antitrust regulators in recent U.S. history, and she has paid particular attention to the harm that technological advances can pose to consumers. Antitrust regulators at the FTC and the Justice Department set a record for merger challenges in the fiscal year that ended Sept. 30, 2022, according to Bloomberg News.
Last year, the FTC successfully blocked biotech company Illumina's over $7 billion acquisition of cancer-screening company Grail. The FTC, Justice Department, and Health and Human Services Department launched a website on April 18, healthycompetition.gov, to make it easier for people to report suspected anticompetitive behavior in the health care industry.
The American Hospital Association, the industry's largest trade group, has often criticized the Biden administration's approach to antitrust enforcement. In comments in September on proposed guidance the FTC and Justice Department published for companies, the AHA said that "the guidelines reflect a fundamental hostility to mergers."
Price fixing removes competition from the market and generally makes goods and services more expensive. The agency has argued in court filings that price fixing "is still illegal even if you are achieving it through an algorithm," Khan said. "There's no kind of algorithmic exemption to the antitrust laws."
By simply using the same algorithms to set prices, companies can effectively charge the same "even if they're not, you know, getting in a back room and kind of shaking hands and setting a price," Khan said, using the example of residential property managers.
Khan said the commission is also scrutinizing the use of artificial intelligence and algorithms to set prices for individual consumers "based on all of this particular behavioral data about you: the websites you visited, you know, who you had lunch with, where you live."
And as health care companies change the way they structure their businesses to maximize profits, the FTC is changing the way it analyzes behavior that could hurt consumers, Khan said.
Hiring people who can "help us look under the hood" of some inscrutable algorithms was a priority, Khan said. She said it's already paid off in the form of legal actions "that are only possible because we had technologists on the team helping us figure out what are these algorithms doing."
Traditionally, the FTC has policed health care by challenging local or regional hospital mergers that have the potential to reduce competition and raise prices. But consolidation in health care has evolved, Khan said.
Mergers of systems that don't overlap geographically are increasing, she said. In addition, hospitals now often buy doctor practices, while pharmacy benefit managers start their own insurance companies or mail-order pharmacies — or vice versa — pursuing "vertical integration" that can hurt consumers, she said.
The FTC is hearing increasing complaints "about how these firms are using their monopoly power" and "exercising it in ways that's resulting in higher prices for patients, less service, as well as worse conditions for health care workers," Khan said.
Policing Noncompetes
Khan said she was surprised at how many health care workers responded to the commission's recent proposal to ban "noncompete" clauses — agreements that can prevent employees from moving to new jobs. The FTC issued its final rule banning the practice on Tuesday. She said the ban was aimed at low-wage industries like fast food but that many of the comments in favor of the FTC's plan came from health professions.
Health workers say noncompete agreements are "both personally devastating and also impeded patient care," Khan said.
In some cases, doctors wrote that their patients "got really upset because they wanted to stick with me, but my hospital was saying I couldn't," Khan said. Some doctors ended up commuting long distances to prevent the rest of their families from having to move after they changed jobs, she said.
Two months after a cyberattack on a UnitedHealth Group subsidiary halted payments to some doctors, medical providers say they're still grappling with the fallout, even though UnitedHealth told shareholders on Tuesday that business is largely back to normal.
"We are still desperately struggling," said Emily Benson, a therapist in Edina, Minnesota, who runs her own practice, Beginnings & Beyond. "This was way more devastating than covid ever was."
Change Healthcare, a business unit of the Minnesota-based insurance giant UnitedHealth Group, controls a digital network so vast it processes nearly 1 in 3 U.S. patient records each year. The network is a critical conduit for shuttling information between most of the nation's insurance companies and medical providers, who submit claims through it to get paid for treating patients.
For Benson, the cyberattack continues to significantly disrupt her business and her ability to pay her seven other clinicians.
Before the hack brought down the system, an insurance company would process a provider's claim, then send a type of receipt known as an "electronic remittance," which details the amount the provider was paid and whether the claim was denied. Without it, providers don't know if they were paid correctly or how much to bill patients.
Now, instead of automatically handling those receipts digitally, some insurers must send forms in the mail. The forms require manual entry, which Benson said is a time-consuming process because it requires her to match up service dates and details to divvy up pay among her clinicians. And from at least one insurer, she said, she has yet to receive any remittances.
"I'm holding on to my sanity by a thread," Benson said.
The situation is so dire, Alex Shteynshlyuger, a urologist who owns a practice in New York City, said he had to transfer money from his personal accounts to pay his office bills.
"Look, I am freaking out," Shteynshlyuger said. "Everyone is freaking out. We are like monkeys in a cage. We can't really do anything about it."
Roughly 30% of his claims were routed through Change's platform. Except for Medicare and certain Blue Cross plans, he said, he has been unable to submit claims or receive payment from any insurers.
The company is encouraging struggling providers to reach out to the company directly via its website, said Tyler Mason, vice president of communications for UnitedHealth Group.
"I don't think we've had a single provider that hasn't been helped that's contacted us." As part of that help, Mason said, UnitedHealth has sent providers $7 billion so far.
Ever since the February cyberattack forced UnitedHealth to disconnect its Change platform, the company has been working "day and night to restore services" and has made "substantial progress," UnitedHealth CEO Andrew Witty told shareholders April 16.
"We see a fairly normal claims receipts and payments flow going on at this point," Chief Financial Officer John Rex said during the shareholder call. "But we'll really want to be careful on that because we know there are certain care providers out there that may have been left out of it."
Rex said the company expects full operations to resume next year.
The company reported that the hacking has already cost it $870 million and that leaders expect the final tally to total at least $1 billion this year. To put that in perspective, the company reported $99.8 billion in revenue for the first quarter of 2024, an 8.6% increase over that period last year.
Meanwhile, the House Energy and Commerce Health Subcommittee held a hearing April 16 seeking answers on the severity and damage the cyberattack caused to the nation's health system.
Subcommittee chair Brett Guthrie (R-Ky.) said a provider in his hometown is still grappling with the fallout from the attack and losing staff because they can't make payroll. Providers "still haven't been made whole," Guthrie said.
Rep. Frank Pallone Jr. (D-N.J.) voiced concern that a "single point of failure" reverberated around the country, disrupting patients' access and providers' financial stability.
Lawmakers expressed frustration that UnitedHealth failed to send a representative to the Capitol to answer their questions. The committee had sent Witty a list of detailed questions ahead of the hearing but was still awaiting answers.
As providers wait, too, they are trying to cover the gaps. To pay her practice's bills, Benson said, she had to take out a nearly $40,000 loan — from a division of UnitedHealth.
A team of Montana researchers is playing a key role in the development of a more effective vaccine against tuberculosis, an infectious disease that has killed more people than any other.
The BCG (Bacille Calmette-Guérin) vaccine, created in 1921, remains the sole TB vaccine. While it is 40% to 80% effective in young children, its efficacy is very low in adolescents and adults, leading to a worldwide push to create a more powerful vaccine.
One effort is underway at the University of Montana Center for Translational Medicine. The center specializes in improving and creating vaccines by adding what are called novel adjuvants. An adjuvant is a substance included in the vaccine, such as fat molecules or aluminum salts, that enhances the immune response, and novel adjuvants are those that have not yet been used in humans. Scientists are finding that adjuvants make for stronger, more precise, and more durable immunity than antigens, which create antibodies, would alone.
Eliciting specific responses from the immune system and deepening and broadening the response with adjuvants is known as precision vaccination. "It's not one-size-fits-all," said Ofer Levy, a professor of pediatrics at Harvard University and the head of the Precision Vaccines Program at Boston Children's Hospital. "A vaccine might work differently in a newborn versus an older adult and a middle-aged person."
The ultimate precision vaccine, said Levy, would be lifelong protection from a disease with one jab. "A single-shot protection against influenza or a single-shot protection against covid, that would be the holy grail," Levy said.
Jay Evans, the director of the University of Montana center and the chief scientific and strategy officer and a co-founder of Inimmune, a privately held biotechnology company in Missoula, said his team has been working on a TB vaccine for 15 years. The private-public partnership is developing vaccines and trying to improve existing vaccines, and he said it's still five years off before the TB vaccine might be distributed widely.
It has not gone unnoticed at the center that this state-of-the-art vaccine research and production is located in a state that passed one of the nation's most extreme anti-vaccination laws during the pandemic in 2021. The law prohibits businesses and governments from discriminating against people who aren't vaccinated against covid-19 or other diseases, effectively banning both public and private employers from requiring workers to get vaccinated against covid or any other disease. A federal judge later ruled that the law cannot be enforced in health care settings, such as hospitals and doctors' offices.
In mid-March, the Bill & Melinda Gates Medical Research Institute announced it had begun the third and final phase of clinical trials for the new vaccine in seven countries. The trials should take about five years to complete. Research and production are being done in several places, including at a manufacturing facility in Hamilton owned by GSK, a giant pharmaceutical company.
Known as the forgotten pandemic, TB kills up to 1.6 million people a year, mostly in impoverished areas in Asia and Africa, despite its being both preventable and treatable. The U.S. has seen an increase in tuberculosis over the past decade, especially with the influx of migrants, and the number of cases rose by 16% from 2022 to 2023. Tuberculosis is the leading cause of death among people living with HIV, whose risk of contracting a TB infection is 20 times as great as people without HIV.
"TB is a complex pathogen that has been with human beings for ages," said Alemnew Dagnew, who heads the program for the new vaccine for the Gates Medical Research Institute. "Because it has been with human beings for many years, it has evolved and has a mechanism to escape the immune system. And the immunology of TB is not fully understood."
The University of Montana Center for Translational Medicine and Inimmune together have 80 employees who specialize in researching a range of adjuvants to understand the specifics of immune responses to different substances. "You have to tailor it like tools in a toolbox towards the pathogen you are vaccinating against," Evans said. "We have a whole library of adjuvant molecules and formulations."
Vaccines are made more precise largely by using adjuvants. There are three basic types of natural adjuvants: aluminum salts; squalene, which is made from shark liver; and some kinds of saponins, which are fat molecules. It's not fully understood how they stimulate the immune system. The center in Missoula has also created and patented a synthetic adjuvant, UM-1098, that drives a specific type of immune response and will be added to new vaccines.
One of the most promising molecules being used to juice up the immune system response to vaccines is a saponin molecule from the bark of the quillay tree, gathered in Chile from trees at least 10 years old. Such molecules were used by Novavax in its covid vaccine and by GSK in its widely used shingles vaccine, Shingrix. These molecules are also a key component in the new tuberculosis vaccine, known as the M72 vaccine.
"The vaccine shows 50% efficacy, which doesn't sound like much, but basically there is no effective vaccine currently, so 50% is better than what's out there," Evans said. "We're looking to take what we learned from that vaccine development with additional adjuvants to try and make it even better and move 50% to 80% or more."
By contrast, measles vaccines are 95% effective.
According to Medscape, around 15 vaccine candidates are being developed to replace the BCG vaccine, and three of them are in phase 3 clinical trials.
One approach Evans' center is researching to improve the new vaccine's efficacy is taking a piece of the bacterium that causes TB, synthesizing it, and combining it with the adjuvant QS-21, made from the quillay tree. "It stimulates the immune system in a way that is specific to TB and it drives an immune response that is even closer to what we get from natural infections," Evans said.
The University of Montana center is researching the treatment of several problems not commonly thought of as treatable with vaccines. They are entering the first phase of clinical trials for a vaccine for allergies, for instance, and first-phase trials for a cancer vaccine. And later this year, clinical trials will begin for vaccines to block the effects of opioids like heroin and fentanyl. The University of Montana received the largest grant in its history, $33 million, for anti-opioid vaccine research. It works by creating an antibody that binds with the drug in the bloodstream, which keeps it from entering the brain and creating the high.
For now, though, the eyes of health care experts around the world are on the trials for the new TB vaccines, which, if they are successful, could help save countless lives in the world's poorest places.
Carrie Lester looks forward to the phone call every Thursday from her doctors' medical assistant, who asks how she's doing and if she needs prescription refills. The assistant counsels her on dealing with anxiety and her other health issues.
Lester credits the chats for keeping her out of the hospital and reducing the need for clinic visits to manage chronic conditions including depression, fibromyalgia, and hypertension.
"Just knowing someone is going to check on me is comforting," said Lester, 73, who lives with her dogs, Sophie and Dolly, in Independence, Kansas.
At least two-thirds of Medicare enrollees have two or more chronic health conditions, federal data shows. That makes them eligible for a federal program that, since 2015, has rewarded doctors for doing more to manage their health outside office visits.
But while early research found the service, called Chronic Care Management, reduced emergency room and in-patient hospital visits and lowered total health spending, uptake has been sluggish.
Federal data from 2019 shows just 4% of potentially eligible enrollees participated in the program, a figure that appears to have held steady through 2023, according to a Mathematica analysis. About 12,000 physicians billed Medicare under the CCM mantle in 2021, according to the latest Medicare data analyzed by KFF Health News. (The Medicare data includes doctors who have annually billed CCM at least a dozen times.)
By comparison, federal data shows about 1 million providers participate in Medicare.
Even as the strategy has largely failed to live up to its potential, thousands of physicians have boosted their annual pay by participating, and auxiliary for-profit businesses have sprung up to help doctors take advantage of the program. The federal data showed about 4,500 physicians received at least $100,000 each in CCM pay in 2021.
Through the CCM program, Medicare pays to develop a patient care plan, coordinate treatment with specialists, and regularly check in with beneficiaries. Medicare pays doctors a monthly average of $62 per patient, for 20 minutes of work with each, according to companies in the business.
Without the program, providers often have little incentive to spend time coordinating care because they can't bill Medicare for such services.
Health policy experts say a host of factors limit participation in the program. Chief among them is that it requires both doctors and patients to opt in. Doctors may not have the capacity to regularly monitor patients outside office visits. Some also worry about meeting the strict Medicare documentation requirements for reimbursement and are reluctant to ask patients to join a program that may require a monthly copayment if they don't have a supplemental policy.
"This program had potential to have a big impact," said Kenneth Thorpe, an Emory University health policy expert on chronic diseases. "But I knew it was never going to work from the start because it was put together wrong."
He said most doctors' offices are not set up for monitoring patients at home. "This is very time-intensive and not something physicians are used to doing or have time to do," Thorpe said.
For patients, the CCM program is intended to expand the type of care offered in traditional, fee-for-service Medicare to match benefits that — at least in theory — they may get through Medicare Advantage, which is administered by private insurers.
But the CCM program is open to both Medicare and Medicare Advantage beneficiaries.
The program was also intended to boost pay to primary care doctors and other physicians who are paid significantly less by Medicare than specialists, said Mark Miller, a former executive director of the Medicare Payment Advisory Commission, which advises Congress. He's currently an executive vice president of Arnold Ventures, a philanthropic organization focused on health policy. (The organization has also provided funding for KFF Health News.)
Despite the allure of extra money, some physicians have been put off by the program's upfront costs.
"It may seem like easy money for a physician practice, but it is not," said Namirah Jamshed, a physician at UT Southwestern Medical Center in Dallas.
Jamshed said the CCM program was cumbersome to implement because her practice was not used to documenting time spent with patients outside the office, a challenge that included finding a way to integrate the data into electronic health records. Another challenge was hiring staff to handle patient calls before her practice started getting reimbursed by the program.
Only about 10% of the practice's Medicare patients are enrolled in CCM, she said.
Jamshed said her practice has been approached by private companies looking to do the work, but the practice demurred out of concerns about sharing patients' health information and the cost of retaining the companies. Those companies can take more than half of what Medicare pays doctors for their CCM work.
Physician Jennifer Bacani McKenney, who runs a family medicine practice in Fredonia, Kansas, with her father — where Carrie Lester is a patient — said the CCM program has worked well.
She said having a system to keep in touch with patients at least once a month has reduced their use of emergency rooms — including for some who were prone to visits for nonemergency reasons, such as running out of medication or even feeling lonely. The CCM funding enables the practice's medical assistant to call patients regularly to check in, something it could not afford before.
For a small practice, having a staffer who can generate extra revenue makes a big difference, McKenney said.
While she estimates about 90% of their patients would qualify for the program, only about 20% are enrolled. One reason is that not everyone needs or wants the calls, she said.
While the program has captured interest among internists and family medicine doctors, it has also paid out hundreds of thousands of dollars to specialists, such as those in cardiology, urology, and gastroenterology, the KFF Health News analysis found. Primary care doctors are often seen as the ones who coordinate patient care, making the payments to specialists notable.
A federally funded study by Mathematica in 2017 found the CCM program saves Medicare $74 per patient per month, or $888 per patient per year — due mostly to a decreased need for hospital care.
The study quoted providers who were unhappy with attempts to outsource CCM work. "Third-party companies out there turn this into a racket," the study cited one physician as saying, noting companies employ nurses who don't know patients.
Nancy McCall, a Mathematica researcher who co-authored the 2017 study, said doctors are not the only resistance point. "Patients may not want to be bothered or asked if they are exercising or losing weight or watching their salt intake," she said.
Still, some physician groups say it's convenient to outsource the program.
UnityPoint Health, a large integrated health system based in Iowa, tried doing chronic care management on its own, but found it administratively burdensome, said Dawn Welling, the UnityPoint Clinic's chief nursing officer.
For the past year, it has contracted with a Miami-based company, HealthSnap, to enroll patients, have its nurses make check-in calls each month, and help with billing. HealthSnap helps manage care for over 16,000 of UnityHealth's Medicare patients — a small fraction of its Medicare patients, which includes those enrolled in Medicare Advantage.
Some doctors were anxious about sharing patient records and viewed the program as a sign they weren't doing enough for patients, Welling said. But she said the program has been helpful, particularly to many enrollees who are isolated and need help changing their diet and other behaviors to improve health.
"These are patients who call the clinic regularly and have needs, but not always clinical needs," Welling said.
Samson Magid, CEO of HealthSnap, said more doctors have started participating in the CCM program since Medicare increased pay in 2022 for 20 minutes of work, to $62 from $41, and added billing codes for additional time.
To help ensure patients pick up the phone, caller ID shows HealthSnap calls as coming from their doctor's office, not from wherever the company's nurse might be located. The company also hires nurses from different regions so they may speak with dialects similar to those of the patients they work with, Magid said.
He said some enrollees have been in the program for three years and many could stay enrolled for life — which means they can bill patients and Medicare long-term.
A pair of heart devices linked to hundreds of injuries and at least 14 deaths has received the FDA's most serious recall, the agency announced Monday.
The recall comes years after surgeons say they first noticed problems with the HeartMate II and HeartMate 3, manufactured by Thoratec Corp., a subsidiary of Abbott Laboratories. The devices are not currently being removed from the market. In an emailed response, Abbott said it had communicated the risk to customers this year.
The delayed action raises questions for some safety advocates about how and when issues with approved medical devices should be reported. The heart devices in question have been associated with thousands of reports of patients' injuries and deaths, as described in a KFF Health News investigation late last year.
"Why doesn't the public know?" said Sanket Dhruva, a cardiologist and an expert in medical device safety and regulation at the University of California-San Francisco. Though some surgeons may have been aware of issues, others, particularly those who do not implant the device frequently, may have been in the dark. "And their patients are suffering adverse events," he said.
The recall involves a pair of mechanical pumps that help the heart pump blood when it can't do so on its own. The devices, small enough to fit in the palm of a hand, are implanted in patients with end-stage heart failure who are waiting for a transplant or as a permanent solution when a transplant is not an option. The recall affects nearly 14,000 devices.
The HeartMate 3 is a mechanical pump designed for patients with end-stage heart failure and manufactured by Thoratec Corp., a subsidiary of Abbott Laboratories. Known as a left ventricular assist device, the HeartMate 3 helps the main pumping chamber of the heart pump blood to the rest of the body. The device can be used by patients awaiting a heart transplant or for long-term therapy. The device is powered by a cable that is attached to the pump and exits the body through a surgical opening and connects to a controller and batteries or other power source, according to the manufacturer's instruction manual.
Amanda Hils, an FDA press officer, said the agency is working with Abbott to investigate the reported injuries and deaths and determine if further action is needed.
According to the FDA's recall notice, the devices can cause buildup of "biological material" that reduces their ability to help the heart circulate blood and keep patients alive. The buildup accumulates gradually and can appear two years or more after a device is implanted in a patient's chest.
Doctors were advised to watch out for "low-flow alarms" on the devices and, if they do diagnose the obstruction, to either monitor the patient or perform surgery to implant a stent, release the blockage, or replace the pump. "Rates of outflow obstruction are low," Abbott spokesperson Justin Paquette said in an email, adding that patients whose devices are functioning normally "have no reason for concern."
A review of the FDA device database shows at least 130 reports related to HeartMate II or 3 that mention the complication reported by regulators. The earliest such report filed with the FDA dates to at least 2020, according to a KFF Health News review of the database.
Monday's alert is the second Class 1 recall of a HeartMate device this year.
In January, Abbott issued an urgent "correction letter" to hospitals about a separate issue in which the HeartMate 3 unintentionally starts and stops due to the pump's communication system, which cardiologists use to assess patients' status. The FDA alerted the public in March.
In February, Abbott issued another urgent letter to hospitals about the blockage problem, asking them to inform physicians, complete and return an acknowledgment form, and pay attention to low-flow alarms on the device's monitor that may indicate an obstruction. The company said in the letter that it is working on "a design solution" to prevent the blockages.
A study published in 2022 in the Journal of Thoracic and Cardiovascular Surgery reported the obstruction in about 3% of cases, though the incidence rate was higher the longer a patient had the device.
The only other Class 1 recall issued for the HeartMate 3 was in May 2018, when the company issued corrective action notices to hospitals and physicians warning that the graft line that carries blood from the pump to the aorta could twist and stop blood flow.
The FDA recall notice issued Monday includes additional guidance for physicians to diagnose the blockage using an algorithm to detect obstructions and, if needed, a CT angiogram to verify the cause.
At present, the HeartMate 3, which was first approved by the FDA in 2017, is the only medical option for many patients with end-stage heart failure and who do not qualify for a transplant. The HeartMate 3 has supplanted the HeartMate II, which received FDA approval in 2008.
If the new recall leads to the device being removed from the market, end-stage heart failure patients could have no options, said Francis Pagani, a cardiothoracic surgeon at the University of Michigan who also oversees a proprietary database of HeartMate II and HeartMate 3 implants.
If that happens, "we are in trouble," Pagani said. "It would be devastating to the patients to not have this option. It's not a perfect option — no pump ever is — but this is as good as it's ever been."
It's not known precisely how many patients have received a HeartMate II or HeartMate 3 implant. That information is proprietary. The FDA recall notices show worldwide distribution of more than 22,000 HeartMate 3 devices and more than 2,200 of the HeartMate II.
The blockage complication may have gone unreported to the public for so long partly because physicians are not required to report adverse events to federal regulators, said Madris Kinard, a former FDA medical device official and founder of Device Events, a company that makes FDA device data more user-friendly for hospitals, law firms, and investors.
Only device manufacturers, device importers, and hospitals are required by law to report device-related injuries, deaths, and significant malfunctions to the FDA.
"If this is something physicians were aware of, but they weren't mandated to report to the FDA," Kinard said, "at what point does that communication between those two groups need to happen?"
Dhruva, the cardiologist, said he is looking for transparency from Abbott about what the company is doing to address the problem so he can have more thorough conversations with patients considering a HeartMate device.
"We're going to expect to have some data saying, ‘Hey we created this fix, and this fix works, and it doesn't cause a new problem.' That's what I want to know," he said. "There's just a ton more that I feel in the dark about, to be honest, and I'm sure that patients and their families do as well."
[Update: This article was updated at 5:20 p.m. ET on April 16, 2024, with a response from Abbott Laboratories, which it provided after publication.]
Nearly half of people who lost their government coverage signed back up weeks or months later — suggesting they should never have been dropped in the first place.
This article was published on Friday, April 12, in KFF Health News.
Nearly a quarter of adults disenrolled from Medicaid in the past year say they are now uninsured, according to a survey released Friday that details how tens of millions of Americans struggled to retain coverage in the government insurance program for low-income people after pandemic-era protections began expiring last spring.
The first national survey of adults whose Medicaid eligibility was reviewed during the unwinding found nearly half of people who lost their government coverage signed back up weeks or months later — suggesting they should never have been dropped in the first place.
While 23% reported being uninsured, an additional 28% found other coverage — through an employer, Medicare, the Affordable Care Act's insurance marketplace, or health care for members of the military, the survey by KFF found.
"Twenty-three percent is a striking number especially when you think about the number of people who lost Medicaid coverage," said Chima Ndumele, an associate professor of health policy at the Yale University School of Public Health.
Going without insurance even for a short period of time can lead people to delay seeking care and leave them at financial risk when they do.
Seven in 10 adults who were disenrolled during the unwinding process say they became uninsured at least temporarily when they lost their Medicaid coverage.
Adrienne Hamar, 49, of Plymouth Meeting, Pennsylvania, said she struggled to enroll in an Affordable Care Act marketplace plan this winter after the state informed her that she and her two children no longer qualified for Medicaid. They had been enrolled since 2020. She said phone lines were busy at the state's marketplace and she couldn't complete the process online.
Hamar, who works as a home health aide, and her children were uninsured in March. But since April 1, they've been enrolled in a marketplace plan that, with the help of government subsidies, costs $50 a month for the family.
"I was very relieved," she said. Unsure of their insurance status, Hamar said, her 23-year-old daughter delayed getting a dental checkup.
Hamar's struggles were common, the survey found.
Of adults enrolled in Medicaid before the unwinding, about 35% who tried to renew their coverage described the process as difficult, and about 48% said it was at least somewhat stressful.
About 56% of those disenrolled say they skipped or delayed care or prescriptions while attempting to renew their Medicaid coverage.
"People's current insurance status is likely to be very much in flux, and we would expect at least some of the people who say they are currently uninsured to reenroll in Medicaid — many say they are still trying — or enroll in other coverage within a short period of time," said Jennifer Tolbert, a co-author of the KFF report and the director of KFF's State Health Reform and Data Program.
The survey didn't include children, and the KFF researchers said their findings therefore couldn't be extrapolated to determine how the Medicaid unwinding has affected the overall U.S. uninsured rate, which hit a record low of 7.7% in early 2023. Nearly half of enrollees in Medicaid and the related Children's Health Insurance Program are children.
The unwinding, in which states are reassessing eligibility for Medicaid among millions of Americans who enrolled before or during the pandemic and dropping those who no longer qualify or did not complete the renewal process, won't be completed until later this year. Enrollment in Medicaid and CHIP grew to a record of nearly 94.5 million in April of last year, three years after the federal government prohibited states from cutting people from their rolls during the covid-19 public health emergency.
Nationally, states have disenrolled about 20 million people from Medicaid in the past year, most of them for procedural reasons such as failure to submit required paperwork. That number is expected to grow, as states have a few more months to redetermine enrollees' eligibility.
Among adults who had Medicaid prior to the start of the unwinding, 83% retained their coverage or reenrolled, while 8% found other insurance and 8% were uninsured. The share left uninsured was larger in states that have not expanded Medicaid under the ACA (17%) than in states that have (6%). Forty states have expanded Medicaid to cover everyone with an income under 138% of the federal poverty rate, or $31,200 for a family of four this year.
The KFF survey found that nearly 1 in 3 disenrolled adults discovered only when they sought health care — such as going to a doctor or a pharmacy — that they had been dropped from Medicaid.
Indira Navas of Miami found out that her 6-year-old son, Andres, had been disenrolled from Florida's Medicaid program when she took him to a doctor appointment in March. She had scheduled Andres' appointment months in advance and is frustrated that he remains uninsured and his therapy for anxiety and hyperactivity has been disrupted.
Navas said the state could not explain why her 12-year-old daughter, Camila, remained covered by Medicaid even though the children live in the same household with their parents.
"It doesn't make sense that they would cover one of my children and not the other," she said.
Kate McEvoy, executive director of the National Association of Medicaid Directors, said the sheer volume of millions of people being redetermined for eligibility has overwhelmed some state call centers trying to support enrollees.
She said states have tried many ways to communicate with enrollees, including through public outreach campaigns, text, email, and apps. "Until the moment your coverage is at stake, it's hard to penetrate people's busy lives," she said.
The KFF survey, of 1,227 adults who had Medicaid coverage in early 2023 prior to the start of the unwinding on April 1, 2023, was conducted between Feb. 15, 2024, and March 11, 2024. The margin of sampling error was plus or minus 4 percentage points.
KFF Health News correspondent Daniel Chang contributed to this article.
A wide-ranging lawsuit filed Friday outlines a moneymaking scheme by which large insurance sales agency call centers enrolled people into Affordable Care Act plans or switched their coverage, all without their permission.
According to the lawsuit, filed in U.S. District Court for the Southern District of Florida, two such call centers paid tens of thousands of dollars a day to buy names of people who responded to misleading advertisements touting free government "subsidies" and other rewards. In turn, sales agents used the information to either enroll them in ACA plans or switch their existing policies without their consent.
As a result, the lawsuit alleges, consumers lost access to their doctors or medications and faced financial costs, such as owing money toward medical care or having to repay tax credits that were paid toward the unauthorized coverage.
Some consumers were switched multiple times or had duplicative policies.
"We allege there was a plan that targeted the poorest of Americans into enrolling in health insurance through deceptive ads and unauthorized switching," to gain compensation for the sign-ups or capture the commissions that would have been paid to legitimate insurance agents, said Jason Doss, one of two lawyers who filed the case following a four-month investigation.
Doss and Jason Kellogg, the other lawyer on the case, which was filed on behalf of several affected policyholders and agents, are seeking class action status.
Named as defendants are TrueCoverage and Enhance Health, which operate insurance call centers in Florida and other states; Speridian Technologies, a New Mexico-based limited liability company that owns and controls TrueCoverage; and Number One Prospecting, doing business as Minerva Marketing, which is also a lead-generating company. The lawsuit also names two people: Brandon Bowsky, founder and CEO of Minerva; and Matthew Herman, CEO of Enhance Health. Attempts to reach the companies for comment were unsuccessful.
According to the lawsuit, the call centers had access to policyholder accounts through "enhanced direct enrollment" platforms, including one called Benefitalign, owned by Speridian.
Such private sector platforms, which must be approved by the Centers for Medicare & Medicaid Services, streamline enrollment by integrating with the federal ACA marketplace, called healthcare.gov. The ones included in this case were not open to the public, but only to those call center agencies granted permission by the platforms.
One of the plaintiffs, Texas resident Conswallo Turner, signed up for ACA coverage in December through an agent she knew, and expected it to go into effect on Jan. 1, according to the lawsuit. Not long after, Turner saw an ad on Facebook promising a monthly cash card to help with household expenses.
She called the number on the ad and provided her name, date of birth, and state, the lawsuit says. Armed with that information, sales agents then changed her ACA coverage and the agent listed on it five times in just a few weeks, dropping coverage of her son along with way, all without her consent.
She ended up with a higher-deductible plan along with medical bills for her now-uninsured son, the lawsuit alleges. Her actual agent also lost the commission.
The lawsuit contains similar stories from other plaintiffs.
The routine worked, it alleges, by collecting names of people responding to online and social media ads claiming to offer monthly subsidies to help with rent or groceries. Those calls were recorded, the suit alleges, and the callers' information obtained by TrueCoverage and Enhance Health.
The companies knew people were calling on the promise "of cash benefits that do not exist," the lawsuit said. Instead, call center agents were encouraged to be "vague" about the money mentioned in the ads, which was actually the subsidies paid by the government to insurers toward the ACA plans.
The effort targeted people with low enough incomes to qualify for large subsidies that fully offset the monthly cost of their premium, the lawsuit alleges. The push began after March 2022, when a special enrollment period for low-income people became available, opening up a year-round opportunity to enroll in an ACA plan.
The suit asserts that those involved did not meet the privacy and security rules required for participation in the ACA marketplace. The lawsuit also alleges violations of the federal Racketeer Influenced and Corrupt Organizations Act, known as RICO.
"Health insurance is important for people to have, but it's also important to be sold properly," said Doss, who said both consumers and legitimate agents can suffer when it's not.
"It's not a victimless crime to get zero-dollar health insurance if you don't qualify for it and it ends up causing you tax or other problems down the road," he said. "Unfortunately, there's so much fraud that legitimate agents who are really trying to help people are also being pushed out."
Tax season is never fun. But some tax filers this year face an added complication: Their returns are being rejected because they failed to provide information about Affordable Care Act coverage they didn't even know they had.
While the concern about unscrupulous brokers enrolling unsuspecting people in ACA coverage has simmered for years, complaints have risen in recent months as consumers discover their health insurance coverage isn't what they thought it was.
Now such unauthorized enrollments are also causing tax headaches. Returns are getting rejected by the IRS and some people will have to pay more in taxes.
"It's definitely gotten worse over the past year. We've helped three to four dozen people this year already," said Erin Kinard, director of systems and intake for the Health and Economic Opportunity Program at Pisgah Legal Services in North Carolina, which helps low-income families enroll in ACA plans and get tax help.
Neither the IRS nor the Centers for Medicare & Medicaid Services, which oversees the federal Obamacare marketplace, responded to questions about the problem.
The IRS did, however, issue an FAQ in February instructing consumers on what to do if their electronically filed returns are rejected because of ACA issues.
Unauthorized sign-ups can happen in several ways, Kinard and others said. Some rogue agents troll online enrollment portals that are accessible only to brokers but are integrated with the healthcare.gov website. When those agents open a new policy or switch an already enrolled policyholder to a different plan, they garner the associated monthly commissions. Other consumers unwittingly sign up when they respond to advertisements touting gift cards or government subsidies then are transferred to agents who enroll them in health coverage. It's happening even after new rules were put in place requiring agents to get written or recorded consent from clients before making changes.
CMS has not released details on how many consumers have been affected or how many agents have been sanctioned for participating in such schemes.
There's also no public tally of how many taxpayers are facing problems as a result. And the tax consequences can come as a surprise.
"Many people are finding out when they go to e-file their taxes and it bounces back and the IRS says it can't accept your return," said Christine Speidel, an associate professor and the director of the Federal Tax Clinic at Villanova University's Charles Widger School of Law.
Returns are rejected if the IRS has information indicating the taxpayer has ACA coverage but the returns don't include forms that help determine whether premium tax credits paid on the policyholder's behalf to insurers were correct. If their income was misstated by the rogue broker who enrolled them, for example, they might not have qualified for the full amount paid. Or, if they had affordable employer coverage, they would not have been eligible for ACA subsidies at all.
Ashley Zukoski, an ultrasound technologist in Charlotte, North Carolina, had employer coverage but now faces a tax bill for an ACA plan she said she never signed up for. She reached out to KFF Health News after it reported on such unauthorized plan enrollments.
Unbeknownst to her, she said, a broker in Florida enrolled her family in an ACA plan in late February 2023, even though Zukoski had coverage starting that January through her job. The broker listed an income that qualified the household for a full subsidy, so Zukoski never received a premium bill.
Her first inkling that something was amiss came early in 2024 when she received a special form, called a 1095-A, which showed she had an ACA plan. After reporting the problem to the federal marketplace, she sought to get the 1095-A voided so she would not be liable for the plan's premium subsidies paid by the government to the insurer.
But, because Zukoski's pharmacy had billed the ACA plan instead of her job-based coverage, her request was denied. She plans to appeal.
In the meantime, the family has filed an extension on their taxes.
"Instead of getting a $4,100 refund, we now owe almost $700 in taxes based on the 1095-A and premium tax credit applied," Zukoski said.
With the April 15 federal tax filing deadline upon us, there are some important steps for affected consumers to take, tax and insurance experts said.
First, because it could take weeks to get corrected forms, experts recommend filing for an extension to buy more time. When consumers file for that extension, they should also pay any taxes owed to avoid penalties and interest.
In general, consumers who at any point in the year think they are victims of an unauthorized enrollment or plan switch should report it immediately to the relevant federal or state ACA marketplace and request a corrected Form 1095-A. But move fast. Appeals to cancel coverage retroactively must be made within 60 days of discovering the fraudulent enrollment, Speidel said.
Consumers can ask for help filing a complaint with federal or state regulators by contacting their own insurance agents or seeking help from assisters or "navigator" programs, which are government-funded nonprofit groups that help people enroll or deal with insurance problems.
Navigators and assisters are fielding many such cases this year and can submit what are called "complex case forms," which help federal officials investigate such complaints, said Lynn Cowles, program manager for Prosper Health Coverage, a navigator program in Texas.
MODESTO, Calif. — When American Advanced Management made a bid for the bankrupt Madera Community Hospital last year, many local officials and others involved in trying to reopen the facility didn't take the company seriously.
The 11-year-old firm, based in Modesto, was already running a handful of small, rural hospitals, but Madera had far larger and more prestigious suitors, including Trinity Health and then Adventist Health.
After those two entities had backed out, the bankruptcy judge tentatively greenlighted the AAM proposal. But a nonprofit community group later objected in a court filing, citing concerns about AAM's commitment to fully reopen the hospital and airing allegations of "dishonesty, fraud, perjury, and maladministration."
The Madera Coalition for Community Justice and other critics of the AAM deal hoped that Adventist and the University of California-San Francisco, which made a last-minute joint proposal in February to take over the hospital, might get another look.
But Gov. Gavin Newsom all but ended the drama on April 8 by announcing the state had approved the AAM plan and would provide a $57 million loan from a fund for distressed hospitals to help reopen and operate the Madera facility.
The closure of the hospital in January 2023 left Madera County, home to 160,000 people, largely Hispanic agricultural workers, without a general acute care facility. Like many rural hospitals in California and around the country, the Madera hospital had suffered financial and demographic challenges, including a large proportion of patients on low-paying government insurance programs, low patient volumes, and difficulty attracting talent, in addition to pandemic-related pressures.
AAM has committed to pay up to $30 million to creditors and reopen the hospital as soon as late summer. The company has a portfolio of nine hospitals, many of them in underserved regions of California.
"American Advanced Management has a proven track record of reopening closed hospitals in California and saving others from the brink of closure," said Matthew Beehler, the company's chief strategy officer.
It remains uncertain whether AAM can make the Madera hospital financially viable. Reopening alone will cost millions, and many of the same constraints that led to the bankruptcy remain. In its final two years of operations, the Madera hospital lost $14 million.
Beehler said AAM would aim for "operational efficiency" through centralized administration and "elevate the quality of care" to attract more patients. "These strategic investments and improvements are designed to stabilize the hospital's financial footing and ensure its sustainability in the long term," he said.
According to a recent study by the Pittsburgh-based Center for Healthcare Quality and Payment Reform, 30% of California's 56 rural hospitals and the same percentage of rural hospitals nationwide are at risk of closing.
"The economics of small hospitals is such that it is unlikely they are going to be highly profitable," said Harold Miller, the center's CEO.
The group objecting to AAM, along with many members of the community, are particularly worried that the company won't reopen the Madera hospital's labor and delivery department, where over 700 babies were born in 2022.
Labor and delivery at many rural hospitals are among the first services new owners cut because they tend to lose money, said Ge Bai, professor of health policy and management at Johns Hopkins University's Bloomberg School of Public Health.
Beehler said a reopened Madera would provide "many of the ancillary services" related to pregnancy and that AAM would "regularly evaluate" whether it makes financial and clinical sense to have a labor and delivery unit at the hospital.
'Someone Has to Take a Stand'
AAM is the brainchild of Gurpreet Singh Randhawa, who says he is its sole owner.
Singh, a gastroenterologist-turned-entrepreneur, has amassed hospitals and other health care-related companies, as well as numerous real estate holdings. Public records show dozens of businesses that are or have been associated with Singh.
After graduating from medical school in India in 2000, Singh completed further training in New York and New Jersey before moving to California in 2008. In an interview, Singh said he was inspired to open his first hospital after seeing a friend drive three hours round trip to the Sacramento area every day to visit his father in a long-term acute care hospital because Modesto didn't have one of its own.
Singh said he thought "‘someone has to take a stand,' so I took that stand." He said he spent $36 million to open Central Valley Specialty Hospital at the site of a shuttered facility in Modesto. It opened in mid-2013, marking the beginning of AAM.
Since then, AAM has acquired numerous hospitals and clinics in Northern California and the Central Valley, including Colusa Medical Center and Glenn Medical Center in 2017, Sonoma Specialty Hospital in 2019, and Coalinga Regional Medical Center in 2020.
In 2023, the firm took over management of the troubled Orchard Hospital in Gridley, California. Last September, AAM announced it had taken over operations of Kentfield Specialty Hospital, with locations in San Francisco and Marin County. It also owns a rehabilitation hospital in Amarillo, Texas.
AAM lost a combined $22.3 million in 2021 and 2022, state data shows. But Beehler said the company returned to profitability in 2023 and expects profit margins in the high single digits this year. He estimated that AAM's total operating revenue will jump to approximately $400 million in 2024 from $290 million in 2023, mainly due to the addition of three hospitals.
The source of the funds to finance the company's growth is not entirely clear. Singh cited family wealth and real estate, but he declined to discuss his family's money. The firm's agreement with the Madera hospital says AAM will have "immediately available funds in cash" to meet its obligations. The $57 million approved by the state this week will be a key source of funding.
Beehler said another source of cash to finance growth is AAM's earnings on longer-term care. Central Valley Specialty Hospital has been profitable since its first full year of operations in 2014, posting cumulative earnings of over $66 million through 2022, according to data from the state's Department of Health Care Access and Information. Coalinga Regional Medical Center has a 99-bed skilled nursing facility in addition to its acute care beds, and Sonoma Specialty Hospital recently added 21 beds, according to Beehler.
Acute vs. Long-Term Care
Critics fear AAM might take the Madera hospital in the direction of long-term care, depriving the community of a viable acute care facility. Cece Gallegos, who recently lost her bid for a seat on the Madera County Board of Supervisors, said in a campaign mailer that the firm would turn Madera into "a glorified nursing home."
Beehler rebuffed that notion, saying the company couldn't do that even if it wanted to. He said the conditions imposed by the state attorney general "require an acute care hospital with fully functional ER and ancillary services." The attorney general's conditions, however, require AAM only to make "commercially reasonable efforts" to provide those services.
Singh and his health care businesses have hit plenty of bumps as they've grown.
In 2018, AAM took over management of Sonoma West Medical Center, a publicly owned hospital in the city of Sebastopol that had declared bankruptcy. In 2019, AAM acquired it outright and changed its name to Sonoma Specialty Hospital. Later that year, a bankruptcy trustee sued Singh, AAM, and the hospital for allegedly taking money that belonged to its predecessor, and the parties settled for $1.15 million. Beehler said AAM did not retain any of the money but used it for hospital operations and became "an unintended victim." The company chose to settle, he said, "to bring finality to this complex issue."
In 2021, the state fined AAM's Pacific Gardens Medical Center $276,000 for four situations that put patients in "immediate jeopardy," including one in which inadequate training caused an intravenous dose of fentanyl to drip into a patient nearly seven times as rapidly as the doctor had ordered.
AAM had reopened the hospital in January 2021, about three years after buying it out of bankruptcy. Its license was suspended less than five months later, according to the California Department of Public Health. Beehler said the hospital had reopened as a pandemic surge hospital with support, including the provision of nurses and physicians, from the state's Emergency Medical Services Authority. "By its nature, a surge facility opening is temporary," he said.
The accelerated timeline for getting it open contributed to the patient-jeopardy situations, he said.
In 2022, the California Department of Health Care Services sued Sonoma Specialty Hospital, Singh, and AAM, accusing them of illegitimately seeking, and accepting, $270,000 from a program that provides federal financing for certain public hospitals.
DHCS said it had told AAM that it wasn't eligible for the money, because it was now a for-profit facility, but that the company refused to pay it back. In February, a Sonoma County judge sided with DHCS. DHCS spokesperson Leah Myers said in an emailed statement that the state does not typically have to sue to recover money. Beehler said AAM "disputes that there is any liability" and is appealing the decision.
Another Singh venture was Advanced College, a private vocational school for health care professionals with three locations in central and Southern California. After receiving numerous complaints, state regulators ordered the school to cease operations in December 2022, alleging it had falsified records and test results, and "failed to provide documentation of sufficient financial resources."
Joshua Maruca, the school's custodian of records, said Advanced College disagreed with the state's allegations but had already been planning to shut down for other reasons, so it did not contest them.
Bank of the West also sued Singh and several of his businesses for repeated defaults on over $4.7 million in loans, mostly related to the college. The lawsuit was settled, but one of the bank's lawyers, Wayne Terry, said he could not discuss the settlement. Beehler said the loans were not part of AAM's financials. The bank was "paid fully," he said.
The company's critics say the state didn't sufficiently scrutinize AAM before approving the loan and the operating plan this week.
"The state agencies and the Attorney General, all tasked here with protecting the public interest, have utterly failed to do the basic due diligence that would ensure Madera Community Hospital is resurrected as a viable going concern, under the stewardship of a reliable, trustworthy, and capable operator," the MCCJ said in the court filing opposing the challenge to its objection.
AAM said in a statement that it was "grateful" to Newsom and the state for approving the deal, and "honored to serve the Madera community." The bankruptcy court is likely to give its final blessing next week.