Saturday, May 30, 2020

PEU COVID-19 Science Makes The Lancet


Would citizens be concerned if greedy math whizzes made healthcare treatment decisions?   The financial world already experienced this change.  Business Insider described Wall Street's quants:

“We do it with maths,” he says. “We buy stock market data and we analyse it. It’s like weather forecasting."

“Some of the guys who come from pure science and maths backgrounds are used to solving a problem and it works,” Patrick Boyle says. “They think they can find a formula that will perfectly describe how the market moves. That is the philosopher’s stone – it is utterly impossible.” The danger is that in only seeing numbers and patterns the human dimension is forgotten.

“I was working with the best of the best,” he says. “My bank employed the brightest engineers, chemists and scientists – and we were all working together to get richer. The chemical and physics and health industries are worse off because of what we do because I tell you this: if there was a pay bonus structure similar to what we had in the City for curing cancer, we’d have found a cure for cancer.”
Or COVID-19?  A recent study published in The Lancet concluded:

"Covid-19 patients who received the malaria drug were dying at higher rates and experiencing more heart-related complications than other virus patients. The large observational study analysed data from nearly 15,000 patients with Covid-19 who received the drug alone or in combination with antibiotics, comparing this data with 81,000 controls who did not receive the drug."
It came under fire from researchers across the globe.

This "observational study" was a retrospective review of medical records, not the result of a double blind clinical study, the gold standard for studying medication efficacy.  Data came from Surgisphere, which described itself in a press release:

About Surgisphere
The Surgisphere Corporation, founded in 2007, is creating a seismic transformation in healthcare, so that the world can become a healthier place. For medical organizations who need to measure and increase performance with precision, QuartzClinical fulfills on the promise of advanced business intelligence and connects knowledge from data in ways that empower your entire organization to make better decisions every day at every level.
The February 2019 press release stated:

QuartzClinical announced the availability of a new suite of sophisticated machine learning-powered data warehousing and clinical registry tools.

These new tools permit 24/7/365 access to mission-critical data in a secure, cloud-based environment. The data warehouse system uses machine learning and sophisticated artificial intelligence to rapidly correct errors in structured and unstructured data, thus minimizing the cost and time associated with data entry. This system is fully integrated into the QuartzClinical cloud-based healthcare data analytics platform, thus allowing a hospital to fully leverage a smart business intelligence solution within days – not months.

The new clinical registry tools can be used by any healthcare entity, including hospitals, clinics, pharmaceutical companies, and device manufacturers. These tools use a secure, cloud-based architecture to store data in a fully HIPAA-compliant manner. Machine learning and artificial intelligence algorithms power the data entry systems, thus enabling rapid acquisition of key clinical metrics with minimal effort. These new tools are expected to replace traditional data entry systems that rely upon nurses, data entry staff, and technicians. The result is higher quality data that is timelier and more comprehensive, thereby solving many of the issues faced by large database research studies.
 Surgisphere subsidiary Quartz Clinical said the following on its website:

The precision of QuartzClinical provides hyper-accurate predictive models using machine learning. Flexible enough to be applied to a single procedure, this model takes into account dozens of different variables and provides an overall accuracy of 81%. Imagine having a prediction engine that can be applied at the individual patient level to determine the chance that they will be readmitted. Extremely flexible and scalable, the model is self-learning and individualized to the particular hospital system, so the results are always customized.
Using QuartzClinical can guide individual patient care and directly impact the quality of that care while reducing costs.
The Lancet publication is not the result of a controlled experiment but a review of patient medical records.  How did they get access to 96,000 records so quickly?  Surgisphere clarified in their response to questions about their work:

The sophistication of the data retrieval requires that we link directly with the Electronic Health Records (EHRs) of our collaborating hospitals, and all information is transferred in a deidentified manner. Thus, these demands require that we work exclusively with healthcare institutions that utilize well established EHRs. 
Having worked on both the hospital and outpatient side of healthcare I know the sole use of historical medical records to conduct clinical research is highly questionable.  Electronic records can sometimes push around inadequate information faster.

It's an "after this, therefore because of this" exercise vs. an experiment, whereby an intervention is made and the impact assessed, immediately and over time. 

The question of causation vs. correlation arises.  Consider the Super Bowl stock market indicator:

The Super Bowl indicator is a theory wherein we can predict the stock market’s year end closing price based on which conference wins the Super Bowl. The theory claims that if the NFC team wins the stock market will finish the year higher, and if the AFC team wins the market will finish lower. Most of the traders I know are highly logical and analytical and are quick to dismiss the theory as hokum and of course they are right. I think. Oddly the Super Bowl indicator has an 80% success rate.
Surgisphere's Quartz Clinical "provides an overall accuracy of 81%," beating the Super Bowl indicator by 1%.

I'm not sure I want my healthcare decisions driven by the same math that fuels Wall Street's short term bets, especially if the underlying data may be suspect.  I have seen outstanding healthcare professionals perform time saving workarounds that bypassed large sections of an EHR system.  I learned which sections were unreliable and where to look for useful information on patients.

Operational definitions are critical for accurate data collection.  One might consider the founding of a company to be a specific date, say date of incorporation.  Consider Surgisphere's own representations of their founding.

.
Data mining found three dates ranging from 1998 to 2007 to 2008.  Texas has an incorporation date of June 2012 and Illinois records show April 2016.  Which date would Surgisphere enter into the electronic corporate record?

PEU Report found no evidence that Surgisphere is owned by a private equity firm, the normal focus of this blog.  However, I fear science is being distorted in the pursuit of massive profits, a distinct feature of the greed and leverage boys.

Update 5-31-20:  ZeroHedge ran a piece asking why "the Lancet study failed to test HQC with zinc."  The Lancet study did not test any drugs.  It data mined clinical records for information on their effectiveness.  A better representation might be "the Lancet study failed to retrospective assess the use of HQC in combination with zinc for hospitalized patients in facilities with contracts with Surgisphere subsidiary Quartz Clinical."

Update 6-3-20:   The Guardian ran a story questioning Surgisphere's data and its founder.  How could bad data mining be interpreted as a scientific experiment?

Update 6-4-20:  Three researchers retracted the study published in The Lancet.

Update 6-7-20:  New questions arise as to how Surgisphere got its data.  Bloomberg picked up the banner.

Disclosure:  PEUReport followed Peak Prosperity's Chris Martenson and his COVID-19 coverage since late January and am grateful for his many contributions.. 

Friday, May 29, 2020

PEU Healthcare Expanding


Healthcare private equity ownership brought Americans surprise medical billing.  What's next for unsuspecting citizens?   Private equity underwriters (PEU) made the news recently for wound care and kidney disease.

Wound Care

A Carlyle Group affiliate recently expanded into the wound care arena.

Tissue Analytics, an automated tech-savvy wound and predictive analytics company with skin imaging capabilities, has been acquired by software solution provider for the medical industry, Net Health.

Following the acquisition’s closure, Tissue Analytics’ AI applications will be combined with Net Health’s existing electronic health records system, WoundExpert, so that clients of the merged entity will be able to upload wound images and measurements digitally.

In 2017 The Carlyle Group and growth equity investor Level Equity, along with Net Health management, acquired Net Health, which offers cloud-based clinical documentation, practice management and billing solutions for specialized outpatient providers.

At the time of the initial Net Health deal Carlyle's press release stated:

Net Health serves healthcare professionals in 98% of the largest hospital chains as well as private practices around the country—driving workflow in more than 3,000 urgent care, wound care, physical therapy, speech and language therapy, occupational therapy, occupational medicine, employee health, and workplace medicine facilities each day
In July 2019 Net Health bought out Optima Healthcare Solutions:

Outpatient software provider Net Health on Tuesday announced a plan to acquire Optima Healthcare Solutions, expanding its presence into the post-acute marketplace.  The Pittsburgh-based Net Health positioned the move as a strategic push to extend its reach into Optima’s base of contract therapy companies, skilled nursing facilities, senior living communities, and hospices.
Skilled nursing facilities and senior living communities have been hard hit by the coronavirus pandemic.  42% of all COVID-19 deaths have taken place in nursing homes and assisted living facilities.

Kidney Disease

Floridians with Humana health insurance who have kidney disease will have their care managed by Healthmap, a private equity affiliate.  New York based PEU Windrose Health Investments took an $85 million stake in Healthmap last year.

Humana CEO Bruce Broussard has a strong private equity background, having served as U.S. Oncology's CEO under PEU Welsh, Carson, Anderson & Stowe.  Broussard partnered with WCAS and TPG Capital in a July 2018 deal for Kindred at Home, a national home health and hospice company.  He has since  expanded his collaboration with his former employer around Humana primary care sites.

The human kidney removes toxins from the body.  Private equity is toxic to America's healthcare system.  Greed and the pursuit of massive profits distort behavior.  I expect the PEU boys to inflict more grievous wounds on our healthcare system as they suck out cash for themselves and investors.  That's who they truly serve

Wednesday, May 27, 2020

Carlyle Out of Africa



WSJ reported The Carlyle Group is leaving Africa.  It's four senior executives will take over an existing Carlyle Africa fund and manage it as a separate firm.  Consider the history Carlyle leaves behind as it exits the continent.

The Carlyle Group wined and dined Libyan strongman Colonel Ghadafi's son Saif in Washington, D.C. in 2008.  Carlyle co-founder David Rubenstein visited Tripoli in 2006 and said this in 2010:


"I am very bullish on the prospects for Africa. Nothing compares with Africa in terms of economic growth as a percentage over the next decade, [partly because] it is starting from a low base."
The African Development Bank invested $50 million in a Carlyle Group fund in 2012. 

In 2013 President Obama dined with Carlyle co-founder David Rubenstein at the White House then broke bread again with Carlyle executives during a trip to Africa.

Carlyle participated in a Power Africa meeting in 2016 just after the World Economic Forum meeting in Davos, Switzerland.  Rubenstein said it would take a very long time to make modest progress on income inequality, a frequent topic at Davos.  Carlyle had two subsidiaries in African tax haven Mauritius.

Carlyle's handling of Cobalt Energy's oil assets in Angola drew the attention of U.S. regulators.

The Carlyle Group dropped fundraising for a Middle East/North Africa fund during an ebola outbreak.  Now the PEU is jettisoning a Carlyle Africa fund in the midst of a global COVID-19 pandemic. 

Update 5-28-20:  The new firm is Alterra Capital.  While distancing itself from the continent “Carlyle continues to believe Africa is an important region strategically and maintains its active presence on the continent.”

Saturday, May 23, 2020

Billionaires Won as Unemployment Soared

Forbes reported:

America's billionaires saw their wealth increase by $434 billion during the course of the global pandemic, according to a new report, a staggering figure that coincided with upheaval to the global economy and more than 38 million Americans filing for unemployment.
The Forbes 400 Richest Americans had a minimum of $2.1 billion to make the cut (as of December 2, 2019).  A number of private equity underwriters (PEU) made the list, although some chose to show their income source as something other than private equity.

Also, I included recently pardoned "Junk Bond King" Michael Milken as a founder of the greed and leverage boys.  Pardoner President Donald Trump was #275 on the list with $3.1 billion, the same as Carlyle Group co-founder David Rubestein.




The Federal Reserve Bank, headed by two former Carlyle Group executives, rode to the rescue for the billionaire class after the March 16th coronavirus inspired stock crash.  Fed Chair Jay Powell and Vice Chair Randall Quarles were PEU boys before they joined the Federal Reserve Bank.

They have bailed out their brethren

Wednesday, May 20, 2020

PEU Wake Up Calls



Wall Street on Parade did a piece on Fed Chief Jay Powell and Vice Chair Randall Quarles being former Carlyle Group executives.  It also highlighted a number of Carlyle bankruptcies and the carnage left behind.


American Compass, a Republican think tank, came out against private equity.

“The buying and selling of companies, the mergers and divestments, the hedging and leveraging, are not themselves valuable activity,” the group warned in a bluntly worded primer laying out its Coin-Flip project. “They invent, create, build and provide nothing.” 
PEUReport chronicled the evils of private equity since 2007.  The Fed flooded the financial system with money in Fall 2008.  Carlyle's Randall Quarles helped land Carlyle's sweet BankUnited deal from the FDIC.   Trump Commerce Secretary Wilbur Ross made huge money on that same deal when he partnered with Carlyle to buy BankUnited with massive FDIC subsidies.

Bloomberg wrote in October 2019 how private equity had taken over the world and won the 2008 financial crisis.  That crisis is the template for Federal Reserve interventions around the coronavirus pandemic.



The greed and leverage boys stand to win big again. 

Sunday, May 17, 2020

Billionaires Make Own Rules

 
Billionaires Jeff Bezos and Elon Musk are apparently above the law.  Bezos refused to testify before Congress while Musk opened his California Tesla plant in violation of state lock-down orders and county public health rules.

On May 1, 2020 the House Judiciary Committee issued a press release:

House Judiciary Committee Chairman Jerrold Nadler (D-NY), Antitrust Subcommittee Chairman David N. Cicilline (D-RI), Subcommittee Ranking Member F. James Sensenbrenner (R-WI), Subcommittee Vice Chairman Joe Neguse (D-CO), Representative Pramila Jayapal (D-WA), Representative Ken Buck (R-CO), and Representative Matt Gaetz (R-FL) sent a letter to Jeff Bezos, the CEO and Founder of Amazon, calling on him to appear before the Committee to testify about competition concerns relating to Amazon's business practices.
 Yahoo News reported on May 15th:
Amazon.com Inc said on Friday it would make an "appropriate" executive available to the U.S. House of Representatives Judiciary Committee to testify about allegations related to how the company uses third-party sellers' data.
Wealthy executives and celebrities can continue flying private jets thanks to $27 million in government funds, a grant that does not need to be repaid.  Its founder donated to President Trump's campaign.

Thursday, May 14, 2020

CNBC Edits Rubenstein's Comment to Wilfred Frost


Yesterday I saw irritation/snippyness in Carlyle co-founder David Rubenstein's response to CNBC host Wilfred Frost.  

Rubenstein held it together when Wilfred asked about damage to Carlyle's reputation for backing away from American Express Global Travel deal.

In a followup question about Material Adverse Event clauses Rubenstein said something about Frost's job which was edited out of the CNBC's clip.   It seemed snippy and that may be why his reply got snipped.  It could also be the price of a future CNBC interview.   Have to keep the oligarch's happy.

Sunday, May 10, 2020

Carlyle Bids for India's Animal Health Compay, SeQuent Scientific

The Carlyle Group recently sold nearly all its shares in an Indian healthcare diagnostics company, only to turn around and invest in an animal healthcare company. 

VC Circle reported:

Private equity firm Carlyle has agreed to acquire up to 74% of animal healthcare company SeQuent Scientific Ltd for Rs 1,580 crore (about $210 million) in what would be its biggest control-oriented deal in India.
This is also one of the few buyout deals that Carlyle has struck in India even though it has had a buyout team in India for a decade and a half.
SeQuent functions in the animal health segment through subsidiary Alivira Animal Health. It also provides analytical services.
SeQuent and its two co-founders are also promoters of two other listed companies – Strides Pharma Science Ltd and Solara Active Pharma Sciences Ltd.
One month ago SeQuent wrote about the company's status under the coronavirus pandemic:

Pharmaceuticals and specifically Animal health industry which we cater to, has been categorized as an essential industry across the globe and hence there has been no perceptible impact on the industry. Within the animal health industry, we cater to the production animals' segment, which is not a discretionary spend and hence lock-downs or economic slow-downs have little impact on this business. On the contrary, we do see some positive momentum given that we straddle the generics space which offers better cost dynamics to our customers.
Economic Times reported:

The final negotiations took longer because of the price correction in the stock, said one of the people. Carlyle revised their price downwards after the stock came off, he said. This could not be independently verified.

The Sequent stock has been volatile for the last few months in anticipation of a sale, reaching a 52-week high of Rs 99.35 on February 24 and then a low of Rs 55.25 the very next month, on March 19.

Carlyle has a wide exposure in the animal health space through multiple investments in the last two decades. It had acquired animal nutrition and care products firm Manna Pro Products and sold it in 2017 to Morgan Stanley Capital Partners. The group had sold Saprogal, a producer of animal feed, to the Spanish private equity group Mercapital in 2005.

Sequent manufactures 26 commercial APIs and 1,000 finished dosage formulations (FDFs) of 12 dosage forms and markets those in more than 100 countries.
The company manufactures active pharmaceutical ingredients in plants around the world.

Our API factories in India did see slight manpower availability disruption at the start of the lockdown, but the situation has since getting better. We expect this situation to continue in the medium term and adequate procedures are in place to continue the BCP for the remainder of the COVID-19 crisis.

Many of our global businesses have shown great resilience during these times. Factories at Spain, Turkey, Germany and Brazil are operating at normal levels while all non-manufacturing related staff are working from home.

We have however put on hold our capacity expansion project at the Germany plant, which was scheduled to be initiated from July 2020 till more clarity emerges. Our ongoing expansion at Vizag have also been suitably moderated to minimise human presence at the site, without impacting the growth prospects.
The plant in Vizag, India is US FDA approved for animal health manufacturing.  India stopped exporting pharmaceutical ingredients, then relaxed the ban somewhat.

The U.S. lacks the ability to produce treatments and/or vaccines to address COVID-19

At least 80% of the active ingredients found in all of America's medicines come from abroad - primarily China, according to the Senate Finance Committee.
What does Carlyle see in SeQuent that could produce massive returns during a pandemic?

Carlyle Cancels American Express Deal, Raises Cash


The Carlyle Group announced it plans to cash in on CoreSite Realty and Al-Nabil Food Industries.  The CoreSite stock sale should garner over $200 million. 

Carlyle did not attend the closing of American Express Global Business Travel and was sued for failing to execute the deal.

Qatar's sovereign wealth fund (SWF) is suing Carlyle for failure to close the AmEx travel deal.  Carlyle counter-sued, saying owners violated several terms of the purchase agreement.

In March 2008 Carlyle Capital Corporation (CCC) declared bankruptcy.  Carlyle sold CCC as a safe investment to a Kuwaiti SWF.  Mad Middle Eastern money sued Carlyle in the same Delaware court.  Carlyle won.

Carlyle Capital failed six months prior to the Fall 2008 financial crisis.  The AmEx Travel deal failed two months after the U.S. awakened to a global pandemic.

Upddate 5-12-20:  Bloomberg did a story on the Qatar SWF lawsuit over Carlyle's no show at closing.

Update 5-13-20:  Carlyle wanted their share of a $484m shareholder dividend that fell to $55 million as funds were repurposed to operations due to the coronavirus.

Update 5-28-20:  FT wrote about Carlyle's reneging on AmEx travel deal.  It said, "The acrimonious ending to the partnership also complicates Carlyle’s plans to show that private equity firms — having attained fame as corporate raiders — can be a force for stability." Carlyle's attorney on the case spoke with Law.com.

Sunday, May 3, 2020

Organizational Coronavirus Conflicts: Nobody Declares


 Carlyle Group co-founder David Rubenstein interviewed Dr. Anthony Fauci on April 28th on behalf of the Washington Economic Club.  Rubenstein asked Dr. Fauci about the origin of the virus and whether it could have been leaked from a Wuhan lab.  Fauci went down the evolutionary biology road and said it's likely a naturally occurring virus.

The good doctor failed to mention $3.7 million in U.S. government funding for Wuhan Institue of Virology's collection of naturally occurring bat coronoaviruses and an additional $3.7 million for gain of function research into those naturally occurring bat coronaviruses. 


Gain of function research enhances a virus' pathogenic effects and/or its transmissibility  Dr. Fauci has been a proponent of such research.  In the past Fauci "expressed support of studies that aim to remain ahead of what is likely occurring in the natural world."


Dr. Fauci did not declare his organization's role in funding the Wuhan Virology Lab in his answer regarding possible release from a Chinese lab.  U.S funded research was to predict spillover potential for the virus to spread from bats to humans.  The proposal stated:

"We will use S protein sequence data, infectious clone technology, in vitro and in vivo infection experiments and analysis of receptor binding to test the hypothesis that % divergence thresholds in S protein sequences predict spillover potential."
Likewise, Rubenstein did not declare that Carlyle purchased a blood products software maker as COVID-19 spread from China.  Plasma is one blood product and convalescent plasma is under study for treating for COVID-19.  Dr. Fauci's organization plays a role in the analysis and dissemination of treatments for the deadly coronavirus.

In 2009 Dr. Fauci told CSPAN the flu kills 36,000 Americans a year.  In just over two months the novel bat coronavirus killed 67,200 in the U.S.

Private equity exploded since 2009 and currently infects our political system, the economy and the Federal Reserve Bank.  The greed and leverage boys sought and continue seeking massive government assistance.  They have connections to achieve their aim.  Fed Chief Jay Powell and Vice Chair Randall Quarles are former Carlyle executives.

The public is hard pressed to believe U.S. funding to make bat coronaviruses more lethal and transmissible at a Wuhan lab had no role in the current pandemic.  China's quality problems are legendary.  Tainted baby formula killed infants while The Carlyle Group owned a Chinese milk company.  China gave the U.S. lethal blood thinner and toxic pet food after U.S. companies sent work to Chinese suppliers.

None of these disturbing patterns came to light in David Rubenstein's interview with Dr. Fauci.  They did talk Brad Pitt and NBA basketball.