Small private practices and health-care providers are facing mounting financial pressures as crucial reimbursement systems remain down for the ninth day, following the cyberattack on Change Healthcare.
Change Healthcare offers tools for payment and revenue cycle management that help facilitate transactions between providers and most major insurance companies. Its parent company UnitedHealth Group discovered that a cyber threat actor breached part of the unit’s information technology network on Feb. 21, according to a filing with the U.S. Securities and Exchange Commission.
As a result, the company isolated and disconnected the impacted systems “immediately upon detection” of the threat, the filing said.
The fallout has caused a ripple of disruption across the U.S. health-care system.
Doctors told CNBC the outage has left them unable to check patients’ eligibility for treatment or fill prescriptions electronically, which has created more administrative responsibility for workers that are already overwhelmed by clerical work. Perhaps more importantly, providers have been unable to receive reimbursements from insurers, effectively grinding many health systems’ revenue cycles to a halt.
Smaller and mid-sized practices that rely on reimbursement cash flow to operate are making tough decisions about how to stay afloat. If the outage drags on for too long, experts say some practices may have to close their doors for good.
Dr. Purvi Parikh, an allergist and immunologist with a private practice in New York City, told CNBC that the breach has been a “mess” and a “big stressor.” Like many others, she said her practice hasn’t been able to receive reimbursements from insurers for patient visits, which makes it difficult for the practice to pay for operational expenses like payroll and medical supplies.
Switching to a new platform could take weeks, Parikh said, so there’s no immediate workaround available. As of Thursday, Change Healthcare has not shared any updates about when it expects its systems to be back online.
“The most frustrating part is that nobody has any answers or solutions,” Parikh said. “We’re kind of just stuck.”
Change Healthcare on Thursday said that ransomware group Blackcat is behind the attack. Blackcat, also called Noberus and ALPHV, steals sensitive data from institutions and threatens to publish it unless a ransom is paid, according to a December release from the U.S. Department of Justice.
The company said it is working with law enforcement and third party consultants like Mandiant, which is owned by Google, and cybersecurity software vendor Palo Alto Networks to assess the breach.
“Patient care is our top priority and we have multiple workarounds to ensure people have access to the medications and the care they need,” Change Healthcare said in a statement to CNBC.
Dr. Kiranjit Khalsa, an allergist and immunologist who runs an independent practice in Scottsdale, Arizona, said her staff has been working longer hours to try and accommodate the extra work as a result of the breach, as well as manually calling in prescriptions.
She said the problems around reimbursement have been the “biggest burden,” since she is worried about how she can continue to support her patients and employees. Khalsa is considering cutting back hours for staff and even closing the clinic for a few days.
“I worry about providing for them,” Khalsa told CNBC in an interview. “I also worry about: Where am I going to get this money if it does not come through? Do I need to take a loan out to keep the clinic afloat?”
Even when Change Healthcare’s systems do come back online, there are a lot of unanswered questions about what will happen next, according to Dr. Dan Inder Sraow, an interventional cardiologist who owns a private practice around Phoenix, Arizona. He said it’s not clear whether Change Healthcare will take on the responsibility of processing all the claims or if he’ll need to hire additional staff to help.
“I don’t think that people are aware that the actual people providing the services are not able to extract revenue for those services,” Dr. Sraow told CNBC. “We don’t know how long that’s going to be, and that’s such a dangerous, dangerous thing.”
Dr. Jesse Ehrenfeld, president of the American Medical Association, said he has spent days fielding calls from concerned colleagues.
He said he spoke with one doctor who runs an oncology practice and only has up to two weeks’ worth of cash on hand. If the outage drags out, the practice won’t be able to buy the chemotherapy that its patients depend on for treatment.
Since many providers are operating on razor-thin margins, Ehrenfeld said there is a possibility that some will go out of business.
“We have so many practices that are on the fringe, particularly smaller practices, where they are just scraping by,” Ehrenfeld told CNBC in an interview. “Any aberration in the system where, ‘Oh, you don’t get checks for two weeks,’ obviously is a situation that does put practices at risk.”
In 2022, Change Healthcare merged with the provider Optum, which services more than 100 million patients in the U.S. and is owned by UnitedHealth, the country’s biggest health-care company by market cap.
The American Medical Association vocally opposed the merger, writing in a letter to the DOJ that the union could stifle competition, give UnitedHealth access to large data stores and potentially disrupt patient care.
The merger ultimately went through, but the DOJ has recently launched an antitrust investigation into UnitedHealth, according to a Wall Street Journal report Tuesday.
“It’s just sort of like a perfect storm of regulatory issues [and] lack of competition — and unfortunately, the people who are really going to suffer are patients and individuals who work in the healthcare system,” said Dr. Ravi Parikh, a retina specialist that owns and operates a practice in New York City.
The cyberattack has left Parikh’s clinic without a way to receive reimbursements for the expensive medications it administers. He said he has been thinking about contingency plans, such as seeking out cheaper medications and asking some patients to pay upfront, but his focus is on providing the best care possible.
“The health care system could eventually come to a halt because a lot of clinics and pharmacies might not be viable,” Parikh said.
Microsoft owns lots of Nvidia graphics processing units, but it isn’t using them to develop state-of-the-art artificial intelligence models.
There are good reasons for that position, Mustafa Suleyman, the company’s CEO of AI, told CNBC’s Steve Kovach in an interview on Friday. Waiting to build models that are “three or six months behind” offers several advantages, including lower costs and the ability to concentrate on specific use cases, Suleyman said.
It’s “cheaper to give a specific answer once you’ve waited for the first three or six months for the frontier to go first. We call that off-frontier,” he said. “That’s actually our strategy, is to really play a very tight second, given the capital-intensiveness of these models.”
Suleyman made a name for himself as a co-founder of DeepMind, the AI lab that Google bought in 2014, reportedly for $400 million to $650 million. Suleyman arrived at Microsoft last year alongside other employees of the startup Inflection, where he had been CEO.
More than ever, Microsoft counts on relationships with other companies to grow.
It gets AI models from San Francisco startup OpenAI and supplemental computing power from newly public CoreWeave in New Jersey. Microsoft has repeatedly enriched Bing, Windows and other products with OpenAI’s latest systems for writing human-like language and generating images.
Microsoft’s Copilot will gain “memory” to retain key facts about people who repeatedly use the assistant, Suleyman said Friday at an event in Microsoft’s Redmond, Washington, headquarters to commemorate the company’s 50th birthday. That feature came first to OpenAI’s ChatGPT, which has 500 million weekly users.
Through ChatGPT, people can access top-flight large language models such as the o1 reasoning model that takes time before spitting out an answer. OpenAI introduced that capability in September — only weeks later did Microsoft bring a similar capability called Think Deeper to Copilot.
Microsoft occasionally releases open-source small-language models that can run on PCs. They don’t require powerful server GPUs, making them different from OpenAI’s o1.
OpenAI and Microsoft have held a tight relationship shortly after the startup launched its ChatGPT chatbot in late 2022, effectively kicking off the generative AI race. In total, Microsoft has invested $13.75 billion in the startup, but more recently, fissures in the relationship between the two companies have begun to show.
Microsoft added OpenAI to its list of competitors in July 2024, and OpenAI in January announced that it was working with rival cloud provider Oracle on the $500 billion Stargate project. That came after years of OpenAI exclusively relying on Microsoft’s Azure cloud. Despite OpenAI partnering with Oracle, Microsoft in a blog post announced that the startup had “recently made a new, large Azure commitment.”
“Look, it’s absolutely mission-critical that long-term, we are able to do AI self-sufficiently at Microsoft,” Suleyman said. “At the same time, I think about these things over five and 10 year periods. You know, until 2030 at least, we are deeply partnered with OpenAI, who have [had an] enormously successful relationship for us.
Microsoft is focused on building its own AI internally, but the company is not pushing itself to build the most cutting-edge models, Suleyman said.
“We have an incredibly strong AI team, huge amounts of compute, and it’s very important to us that, you know, maybe we don’t develop the absolute frontier, the best model in the world first,” he said. “That’s very, very expensive to do and unnecessary to cause that duplication.”
President Trump’s new tariffs on goods that the U.S. imports from over 100 countries will have an effect on consumers, former Microsoft CEO Steve Ballmer told CNBC on Friday. Investors will feel the pain, too.
Microsoft’s stock dropped almost 6% in the past two days, as the Nasdaq wrapped up its worst week in five years.
“As a Microsoft shareholder, this kind of thing is not good,” Ballmer said, in an interview with Andrew Ross Sorkin that was tied to Microsoft’s 50th anniversary celebration. “It creates opportunity to be a serious, long-term player.”
Ballmer was sandwiched in between Microsoft co-founder Bill Gates and current CEO Satya Nadella for the interview.
“I took just enough economics in college — that tariffs are actually going to bring some turmoil,” said Ballmer, who was succeeded by Nadella in 2014. Gates, Microsoft’s first CEO, convinced Ballmer to join the company in 1980.
Gates, Ballmer and Nadella attended proceedings at Microsoft’s Redmond, Washington, campus on Friday to celebrate its first half-century.
Between the tariffs and weak quarterly revenue guidance announced in January, Microsoft’s stock is on track for its fifth straight month of declines, which would be the worst stretch since 2009. But the company remains a leader in the PC operating system and productivity software markets, and its partnership with startup OpenAI has led to gains in cloud computing.
“I think that disruption is very hard on people, and so the decision to do something for which disruption was inevitable, that needs a lot of popular support, and nobody could game theorize exactly who is going to do what in response,” Ballmer said, regarding the tariffs. “So, I think citizens really like stability a lot. And I hope people — individuals who will feel this, because people are feeling it, not just the stock market, people are going to feel it.”
Ballmer, who owns the Los Angeles Clippers, is among Microsoft’s biggest fans. He said he’s the company’s largest investor. In 2014, shortly after he bought the basketball team for $2 billion, he held over 333 million shares of the stock, according to a regulatory filing.
“I’m not going to probably have 50 more years on the planet,” he said. “But whatever minutes I have, I’m gonna be a large Microsoft shareholder.” He said there’s a bright future for computing, storage and intelligence. Microsoft launched the first Azure services while Ballmer was CEO.
Earlier this week Bloomberg reported that Microsoft, which pledged to spend $80 billion on AI-enabled data center infrastructure in the current fiscal year, has stopped discussions or pushed back the opening of facilities in the U.S. and abroad.
JPMorgan Chase’s chief economist, Bruce Kasman, said in a Thursday note that the chance of a global recession will be 60% if Trump’s tariffs kick in as described. His previous estimate was 40%.
“Fifty years from now, or 25 years from now, what is the one thing you can be guaranteed of, is the world needs more compute,” Nadella said. “So I want to keep those two thoughts and then take one step at a time, and then whatever are the geopolitical or economic shifts, we’ll adjust to it.”
Gates, who along with co-founder Paul Allen, sought to build a software company rather than sell both software and hardware, said he wasn’t sure what the economic effects of the tariffs will be. Today, most of Microsoft’s revenue comes from software. It also sells Surface PCs and Xbox consoles.
“So far, it’s just on goods, but you know, will it eventually be on services? Who knows?” said Gates, who reportedly donated around $50 million to a nonprofit that supported Democratic nominee Kamala Harris’ losing campaign.
AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.
Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.
“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.
The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid.
“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.
AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.
Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.
