The Theranos Story, ch. 50: DOJ indicts Holmes, Balwani for fraud

click to enlargeThe other shoe drops into this bottomless well. If Elizabeth Holmes and Sunny Balwani thought that the March SEC action [TTA 15 Mar] would be it, they were misinformed. Today, the Department of Justice, US Attorney’s Office for the Northern District of California, charged them with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to CNBC, they were arraigned in US District Court in San Jose Friday morning. Both were released on $500,000 bond each and ordered to surrender their passports. Holmes’ parents appeared with her in court.

“Wire fraud” in US law is fraud that is enabled and takes place over phone lines or involves electronic communications. By appearing online, making phone calls, emailing materials such as marketing materials, statements to the media, financial statements, models, and other information, Ms. Holmes and Mr. Balwani defrauded potential investors. Patients and doctors were defrauded by ads and other types of solicitations to use Theranos’ blood testing services, despite the fact that they knew the test results were unreliable.

Both Ms. Holmes and Mr. Balwani will have plenty of time to explain their sincere belief that their test devices and methods would be validated with time…but they had to, in Silicon Valley parlance, fake it till they made it. Indictments of this type take about two years to conclude, especially if they are big (as a formerly $9 bn valued company is) and tangled. Ms. Holmes will undoubtedly release statements on how she is being martyred like Saint Joan, how this doesn’t happen to men in Silicon Valley, and that they are allowed to fail but she can’t. Perhaps she was under the spell of the 19 years-her-senior Svengali Balwani. (Minus the Jobsian black turtlenecks, one anticipates her next choice of wardrobe. Sackcloth tied with a rope? Chain mail?)

Expect the doors to shut soon. Fortress Investment Group, which loaned Theranos $65 million (of a reported $100 million) in December 2017, was reportedly coming for the assets (as they are wont to do) by the end of July, according to the Wall Street Journal and other sources. 

Ms. Holmes is–finally–removed as CEO. Theranos announced that David Taylor, the company’s general counsel, has been appointed CEO as well as general counsel, while Ms. Holmes will remain as founder and board chair. None of this is reflected on their website. In fact, Mr. Taylor is nowhere to be found on the website’s leadership page. 

The estimable John Carreyrou, who broke the story in the WSJ and is the author of Bad Blood [TTA 13 June], on The Street’s Technically Speaking podcast at 06:00 shared this insight on how Theranos got away with bad tests. While both FDA and CMS highly regulate lab testing and the machines that perform them, neither actively police “lab-developed tests, which refer to tests fashioned with their own methods and devices” for blood testing. Basically, according to Mr. Carreyrou, Holmes and Balwani, our Bonnie and Clyde, “drove a truck right thru that loophole and took advantage of it.” Far beyond B&C, $1 bn of investors’ money is the Federal Reserve of banks.

On the indictment: WSJ, CNBC. The Northern District release on the indictment is here. Another essay by Mr. Carreyrou published 18 May is available to those who can get past the paywall. Hat tip to Bill Oravecz.

Two NY area events: Mission Physician Transition and ‘Their Big Idea’

Tuesday, 26 June: Mission Physician Transition, hosted by Health 2.0 NYC and MedStartr, 6-9 pm, at McCarter & English, 825 Eighth Avenue, NYC

Physicians are increasingly dissatisfied with just being clinicians and want to get involved in healthcare innovation. Similarly, innovative companies need the clinician’s insight into how care actually works in order to create solutions that work for doctors, patients, and all stakeholders in the healthcare value chain. Speakers/panelists to be announced. To register, go through Meetup here.

Thursday, 28 June: Entrepreneur’s Forum–Their Big Idea. Hosted by BioInc@NYMC & iCANny, 5-7 pm, at NY Medical College’s The Café, 19 Skyline Drive, Hawthorne, NY 

Four entrepreneurs present the ideas which they believe could be The Next Big Thing. Moderated by Dan Potocki of Finis Ventures who is experienced in spearheading business development and strategic initiatives for industry-leading data analytics tech startups. Cost: $15 non-members; $12 members, and includes wine and cheese refreshments. Register in advance here.

TTA’s Week: Babylon’s Samsung deal, VA Home Telehealth secret player revealed, Healthy.io tests at Salford Royal renal, and the book’s thrown at Theranos

 

 

Following up with ‘old friends’: Babylon’s Big Deal with Samsung, VA’s Home Telehealth awards, and The King’s Fund’s meeting draws close. An analysis of analogue versus digital telecare. And Theranos is ‘The Woman Who Came to Dinner’ and won’t leave.  

The King’s Fund Digital Health & Care Congress coming soon on 10-11 July (Time grows short!)
Rounding up the news: Babylon’s Samsung Health UK deal, smartphone urine test debuts, a VA Home Telehealth ‘announcement’, Aging 2.0’s NY Happy Hour (Babylon’s big chance, VA HT’s worst kept secret revealed, Salford Royal trials Healthy.io)
CMS urged to further reimburse telehealth remote patient monitoring with three new CPT codes (How codes can change the profit picture of health tech)
The Theranos Story, ch. 49: CEO Holmes reportedly raising funds for a new company–and feeling like Joan of Arc (John Carreyrou’s Theranos book is just out; Elizabeth Holmes isn’t Monty Woolley and not St. Joan either)  See Ch. 50 for the DOJ indictment
OnePerspective: Analogue telecare is a dead horse: stop flogging it (And go digital–the perspective from the CEO of Communicare247)

Teladoc’s and Doro’s big international acquisitions mark the cross-border trend. More US/UK summer events plus two opportunities for speaker spots and award nominations. 

Rounding up more Events of Summer–plus speaker submissions closing soon! (RSM, miniHIMSS NYS, Health 2.0 NYC, Newark Venture Partners, TSA, The King’s Fund, Connected Health Summit)
International acquisition roundup: Doro and Welbeing; Teladoc and Advance Medical (Go big or go home)

The most important event in two weeks’ time: the Future of Medicine on June 13th at the RSM!

‘Comfort companions’ hit the tech mainstream. VA goes ‘Anywhere’ in telehealth. UK’s BBH Awards open for technology. And does your tech address both medical and social needs?

CNET spotlights ‘comfort companions’ and therapy robots (Much needed despite cost)
VA’s ‘Anywhere to Anywhere’ telehealth initiative finalizes (Despite no Secretary at the helm)
Building Better Healthcare Awards 2018 open for entries (UK) (BBH Awards in multiple healthcare areas)
The magic quadrant matrix strikes again for health tech and investment potential (Where does your tech fall?)

Despite the chill of a damp May, there was warmth and intriguing health tech at the Hungarian Consulate in NYC. Plenty of spring/summer UK/US events to look forward to. And what not to look forward to in a malware attack like WannaCry.

Hungary’s burgeoning med and health tech scene comes to NYC (A rarely seen view in the US of the Other Side of Europe)
Events roundup: The King’s Fund, SEHTA, RSM, VR4REHAB, Parks Associates, HealthIMPACT, Telemedicine SPS (A lot of dates for your calendar)
WannaCry’s anniversary: have we learned our malware and cybersecurity lessons? (Hard lessons, but hardly a shake out of complacency.)

Gartner confirms that blockchain has hit the Peak of Inflated Expectations. A seemingly thoughtful piece on disease app adoption turns out to be less than advertised. Meanwhile, the acquisitions, consolidations, awards, and company news keep on coming.

Blockchain deployment not matching the hype–so far. 34% of CIOs have ‘no interest’. (Not a fit yet for healthcare)
Can chronic disease apps get adopted? Is it as simple as four steps? HBR states the obvious. (An article outside the real world)
News roundup: First Stop, GlobalMed, American Well, Avizia, Medicity, Health Catalyst, Allscripts, Welbeing, BenevolentAI (A bumper crop of repositioning and acquisition news)
Health 2.0 NYC Empowered Patients event rescheduled to 16 May; apply now to the Digital Health Breakthrough Network (NYC) (Two NY-centric events/startup funding)

What’s next? A Silicon Valley company’s fit of good governance? The second coming of Withings? Health tech and IT avanti in Italia? Orangeworm initiating massive HIT upgrades?

Health tech founder ousted over alleged ‘acts of intimidation, abuse, and mistrust’: some reflections (Soapbox) (He taps out)

Nokia throws in towel on digital health, negotiates Withings sale to co-founder Eric Carreel (What’s next for Nokia?)

Confronto Nazionale sul Software in Sanità (National Comparison on Healthcare Software), 4-5 July, Rome (Italy tries to figure out what’s next)

Alerts moving to Thursdays; TTA seeks contributors (Help out the Editors!)

Orangeworm malware running wild in hospitals for three years: multiple reports (It was inevitable)


http://tanew.info/kfdh18eLondon 10-11 July at The King’s Fund. Case study-oriented sessions include creating the right culture for large-scale digital change, using digital technology to improve quality of care, prevention and changing behaviors, population health informatics, tools for self-management, and much more. Click the advert at left or here to find out more and to register.

 


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The King’s Fund Digital Health & Care Congress coming soon on 10-11 July

Time has flown by since this Editor first mentioned this event and now it’s less than a month away. This year’s meeting features case studies in creating the right culture for large scale digital change, using digital technology to improve quality of care, prevention and changing behaviors, population health informatics, tools for self-management, reducing clinical variation, mobile working in community services, and much more. Featured speakers include Matthew Swindells of NHS England, the Rt Hon Paul Burstow of TSA, Ruth Rankine of the Care Quality Commission, and more. See the agenda here for Day 1 and Day 2. (TTA’s own Charles Lowe will be chairing Breakout T2B: Quality improvement 11:45am on Tuesday 10 July.) Two very full days 10-11 July, Tuesday and Wednesday, at The King’s Fund’s London location. For more information, click the advert in the right sidebar or here

Rounding up the news: Babylon’s Samsung Health UK deal, smartphone urine test debuts, a VA Home Telehealth ‘announcement’, Aging 2.0’s NY Happy Hour

click to enlargeHuge or Ho-Hum? Babylon’s ‘Ask an Expert’ feature is now available within the Samsung Health app as of the start of June. It will need to be activated at a cost of £50 per year, or £25 for a single consultation. Babylon’s service with over 200 GPs is now available on millions of Samsung Galaxy devices in the UK. Babylon now claims half a million users of its private GP services and 26,500 registered in London with its NHS-funded and controversial GP at Hand app.

Is it as our Editor Charles, quoting Niccolo Machiavelli writing in The Prince, “Nothing is more difficult to undertake, more perilous to conduct or more uncertain in its outcome than to take the lead in introducing a new order of things. For the innovator has for enemies all those who have done well under the old and lukewarm defenders who may do well under the new”. The debate rages–see the comments below the Pulse Today article. 

Healthy.io is introducing a test of its urinalysis by smartphone test with Salford Royal NHS Foundation Trust’s new Virtual Renal Clinic. 50 patients will received the Dip.io kit to test their urine. Dip.io uses the standard urine dipstick test combined with a smartphone application that guides the user through scanning in the results with a smartphone camera and sends the result to their doctor. Healthy.io claims this is a first-of-kind technology and system. According to Salford Royal, chronic kidney disease (CKD) costs the NHS £1.45 billion in England alone. The company is part of the NHS Innovation Accelerator Programme. Digital Health News

In what has been the worst kept secret in US telehealth, 1Vision LLC and AMC Health finally announced they were partners in 1Vision’s over $258 million Home Telehealth award by the Department of Veterans Affairs (VA) [TTA 6 Feb 17]. The news here is that the AMCH release states that they have an “Authority to Operate (ATO)”, which means they can provide Home Telehealth services using AMC Health’s CareConsole to VA-enrolled veterans and their families. This last step is very important because it is a common post-award point of failure for new awardees. Earlier this year, the Iron Bow/Vivify Health award failed on the country of origin of Vivify’s kit, dooming the implementation [TTA 16 Jan] and Iron Bow’s award. (Vivify Health has gone on.) Medtronic, as a long-term incumbent, has few worries in this regard, though any new equipment has to be cleared. The mystery is if Intel-GE Care Innovations, the last new awardee, has passed the ATO bar. AMC Health/1Vision release. 

And on the social front for New Yorkers, raise a Pint 2.0 at Aging 2.0’s NYC Happy Hour, Tuesday 18 July at 310 Bowery Bar, 6pm. Aging 2.0 website, where you can check for a chapter and events near you.

CMS urged to further reimburse telehealth remote patient monitoring with three new CPT codes

The Centers for Medicare & Medicaid Services (CMS), which controls payments to doctors for the Medicare and state Medicaid programs, has been urged by 49 healthcare organizations and technology vendors to further unbundle the controlling CPT code for remote patient monitoring (RPM), 99091. The 2018 Physician Fee Schedule (PFS) Final Rule finally separated RPM from telemedicine remote visits by permitting separate payment for remote physiological data monitoring by unbundling CPT 99091 to reimburse for patient-generated health data (PGHD)–a new term. The letter to Administrator Seema Verma proposes 2019 adoption of three additional American Medical Association CPT Editorial Panel-developed codes which further break down various aspects of RPM, while maintaining 99091. 

CPT codes for Medicare and Medicaid are important because they also influence private insurers’ reimbursement policies. Practices which get paid for RPM are more likely to adopt enabling technologies if they are affordable within how they are paid. 

CMS started to include telehealth RPM in 2015 in a chronic care management code, 99490, but specifically prohibited the use of CPT 99091 in conjunction with CCM. This created a lot of confusion after some brief moments of hope by tying technology to a complex CCM model.

It’s possibly a ‘light at end of the tunnel’ development for hungry tech companies, but one which won’t be determined till end of year when PFS rules are released. Also Healthcare Dive.

The Theranos Story, ch. 49: CEO Holmes reportedly raising funds for a new company–and feeling like Joan of Arc

click to enlargeHere’s the place where your money will go if you’re an investor. John Carreyrou has now compiled his reporting for the Wall Street Journal on Theranos into a new book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, and it is a Must Read for this Editor and anyone interested in the nexus of Tech, Healthcare, and Hype. (The link goes to AbeBooks, a worthy marketplace for independent booksellers.)

According to Mr. Carreyrou, the founder/CEO Miss Elizabeth Holmes–still leading the company despite settling with the SEC on fraud charges, surrendering her voting control, barred from serving as a public company director or officer for 10 years, and still fighting civil lawsuits–is raising fresh funds for a new venture.

Your eyes did not fool you.

Theranos was a Dogpile of Deceit. From hacking standard Siemens blood testing machines to work with tiny samples, falsifying test results, faking up the Edison test machine, to company financials, it was one lie on the other, chronicled for our Readers in nearly 50 chapters and multiple references. 

Mr. Carreyrou was asked by former Timesman and Vanity Fair reporter Nick Bilton whether, in this unmistakable pattern, Ms. Holmes was a sociopath. Mr. Carreyrou wisely refrained from diagnosis based on a used DSM-V, being a reporter and not her psychiatrist. From Mr. Bilton’s interview podcasted on ‘Inside the Hive’:

“At the end of my book, I say that a sociopath is described as someone with no conscience. I think she absolutely has sociopathic tendencies. One of those tendencies is pathological lying. I believe this is a woman who started telling small lies soon after she dropped out of Stanford, when she founded her company, and the lies became bigger and bigger,” Carreyrou said. “I think she’s someone that got used to telling lies so often, and the lies got so much bigger, that eventually the line between the lies and reality blurred for her.”

Mr. Carreyrou, and by inference anyone who doubted her, like her CFO, and especially those who went public with criticism–well, we are the Bad Guys:

“She has shown zero sign of feeling bad, or expressing sorrow, or admitting wrongdoing, or saying sorry to the patients whose lives she endangered,” he said. He explained that in her mind, according to numerous former Theranos employees he has spoken to, Holmes believes that her entourage of employees led her astray and that the bad guy is actually John Carreyrou. “One person in particular, who left the company recently, says that she has a deeply engrained sense of martyrdom. She sees herself as sort of a Joan of Arc who is being persecuted,” he said.

Mr. Carreyrou was set upon by this ‘martyr’s’ legal pitbulls, one David Boies, until he wisely exited stage left with a bushelful of worthless stock [TTA 21 Nov 16].

(And what is it about Stanford University that fosters people like Ron Gutman, recently ousted from HealthTap over employee abuse and intimidation charges in what may be a Silicon Valley First? [TTA 3 May] Here we have someone who plays with people’s lives and health in vital blood testing. Aren’t some ethics courses long overdue?) 

Mr. Bilton makes the extremely fine point that Silicon Valley will continue to be magnetically attracted to founders equipped with a ‘reality-distortion field’ (as he termed Steve Jobs). SV will relegate Theranos to a biotech outlier. Yet as long as Silicon Valley MoneyMen like Tim Draper will back the likes of Elizabeth Holmes as long as they have a good line of (stuff), despite being embarrassingly proven not just (and only) wrong, but now perpetrating fraud, the Jobsian Myth and black turtlenecks will rise again like Dracula. (Another analogy comes to mind, but precocious children might be reading this.)

We haven’t heard the last of her.

An excellent interview by Tom Dotan of Mr. Carreyrou is podcasted on The Information’s 411 in “You’re So Vein”, which gets the award for Title of the Week (trial signup required, or listen on SoundCloud). Starting at 15:00, interesting comments on the why of Sunny Balwani and Ms. Holmes’ series of ‘marks’ including George Shultz. Also Gizmodo and Politico’s Morning eHealth newsletter.

OnePerspective: Analogue telecare is a dead horse: stop flogging it

Editor’s Note: ‘OnePerspective’ articles are written by industry contributors on issues of importance to our Readers. They reflect the opinions of their authors and are archived under ‘Perspectives’.

click to enlargeBy: Tom Morton

Call failures to alarm receiving centres in the UK are rising but the reasons for this are currently the subject of hot debate.

The problem is linked to the roll out of the next generation network (NGN) replacing the UK’s analogue Public Switched Telephone Network (PSTN), a task which will be complete by 2025.

What is not debatable is that 1.7m of the most vulnerable in our society are being placed at risk as calls to alarm receiving centres (ARCs) increasingly fail or are delayed in their delivery due to incompatibilities of existing technologies.

At the Telecare Services Association (TSA) conference in November 2017, technology-enabled care services company Appello, with circa 100k telecare system users, identified a 7.5 percent call failure rate and announced the problem as “deeply worrying”.

At the same event, Communicare247 presented a report which highlighted a significant 12.3 percent spike in call failures identified by Falkirk Council. This was part of an ongoing analogue to digital assessment program operating across 12 percent of the existing Scottish telecare user base, and significantly this spike occurred in Falkirk within a short three month period. Both Falkirk Council and Appello have published their evidence of increasing call failures in a TSA whitepaper.

The TSA white paper, A Digital Future For Technology Enabled Care, highlights that the 1.7million people in the UK reliant on telecare need answers as their service is “threatened by disruption as UK telecommunications shift from analogue to digital”.

Yet the link to call failures and the rollout of NGN has been called into question by a major equipment provider. In a recent blog, they asked a very challenging question: Are network issues causing a greater number of alarm call failures?

Their answer delivered by the blog was, in essence, ‘maybe not yet’.

In a comparison between one ARC, where call failures were high versus another where they were low, the blog claimed that “while the use of NGN networks has grown in the last few years this cannot account for the increasing trend”.

As a potential compromise, the author also said that they could overcome any potential issues through the use of hybrid terminal adaptors (ATAs).

However, evidence both in the UK and Sweden plainly demonstrates call failures increase as the network switches to digital. (more…)

Rounding up more Events of Summer–plus speaker submissions closing soon!

click to enlargeTime flies and so does your calendar! In addition to the important RSM event next Wednesday (maybe more so than the G8 Summit or the NoKo talks, but neither are introduced by Editor Charles!), here are more for your consideration.

Wednesday, 13 June: New York State Chapter’s annual miniHIMSS, “Healthcare on Broadway,” has a full day of speakers in four acts with an emphasis on healthcare advances in NY State and technology applicability. New World Stages in Manhattan starting at 8am. More information here, registration here.

Tuesday, 26 June: Mission Physician Transition into healthcare tech hosted by Health 2.0 NYC and MedStartr, 6-8 pm. More information on Meetup.

Wednesday, 27 June: Newark Venture Partners hosts their 3rd annual Demo Day for their 2018 class at Prudential Center, Newark NJ. Doors open at noon, presentations start at 1:30pm. Investors in NVP span tech, financial, and healthcare with Amazon, Prudential Financial, Dun & Bradstreet, RWJ Barnabas, Horizon BCBSNJ, TD Bank, and Panasonic. Free registration and more details here

Saturday, 30 June: Deadline for speaker submissions for the Connected Health Summit: Engaging Consumers on 28-30 August in San Diego.  The online form is here. TTA is a media partner of the CHS.

Tuesday-Wednesday 10-11 July: The King’s Fund Digital Health and Care Congress. More information here. TTA is an event supporter of the Congress. 

Friday 10th August: Deadline for entries/nominations for the ITEC Awards 2018, to be awarded at the TSA’s annual International Technology Enabled Care Conference 2018 16-17 October in Birmingham. The winners in five categories will be announced on 16 October during the Gala Dinner. 

International acquisition roundup: Doro and Welbeing; Teladoc and Advance Medical

Two international telecare/telehealth/telemedicine M&A deals made the news this last week.

Sweden’s Doro AB acquired Welbeing, headquartered in Eastbourne UK. Welbeing (formally Wealden and Eastbourne Lifeline) is a telecare provider of home-based personal alarms which supports about 75,000 residents in local systems. Their revenue in last fiscal year (ending 9/17) was £7.6 million (SEK 90m). Doro operates in the UK and about 40 countries, with a core business in mobile phones specially designed for older adults. Their Doro Care solutions provide digital telecare and social services for older adults and the disabled in the home. Doro is paying SEK 130 million (£11.1 million) for the acquisition of Welbeing, equal to eight times estimated EBITDA for the financial year 2017/2018, with 85 percent cash and 15 percent in Doro shares with a bonus based on financial performance. Release 

Making a few headlines in the US is telemedicine leader Teladoc’s purchase of Barcelona’s Advance Medical for a hefty $352 million, giving Teladoc a major international footprint especially valuable for its corporate clients and major payers. Advance Medical provides complete telemedicine services in 125 countries in over 20 languages. Even more valuable is their knowledge of local healthcare delivery systems, global expert medical opinion, and chronic care. The acquisition also gives Teladoc an international network of offices and a significant entreé with international health insurance companies. Mobihealthnews, Seeking Alpha (Teladoc investor slideshow)