A weekend potpourri of health tech news: mergers, cyber-ransom, Obama as VC?

As we approach what we in these less-than-United States think of as the quarter-mile of the summer (our Independence Day holiday), and while vacations and picnics are top of mind, there’s a lot of news from all over which this Editor will touch on, gently (well, maybe not so gently). Grab that hot dog and soda, and read on….

Split decision probable for US insurer mergers. The Aetna-Humana and Anthem-Cigna mergers will reduce the Big 5 to the Big 3, leading to much controversy on both the Federal and state levels. While state department of insurance opposition cannot scupper the deals, smaller states such as Missouri and the recent split decision from California on Aetna-Humana (the insurance commissioner said no, the managed care department said OK) plus the no on the smaller Anthem-Cigna merger are influential. There’s an already reluctant Department of Justice anti-trust division and a US Senate antitrust subcommittee heavily influenced by a liberal think tank’s (Center for American Progress) report back in March. Divestment may not solve all their problems. Doctors don’t like it. Anthem-Cigna have also had public disagreements concerning their merged future management and governance, but the betting line indicates they will be the sacrificial lamb anyway. Healthcare Dive today,  Healthcare Dive, CT Mirror, WSJ (may be paywalled) Editor’s prediction: an even tougher reimbursement road for most of RPM and other health tech as four companies will be in Musical Chairs-ville for years.

‘thedarkoverlord’ allegedly holding 9.3 million insurance records for cyber-ransom. 750 bitcoins, or about $485,000 is the reputed price in the DeepDotWeb report. Allegedly the names, DOBs and SSNs were lifted from a major insurance company in plain text. This appears to be in addition to 655,000 patient records from healthcare organizations in Georgia and the Midwest for sale for 151 – 607 bitcoins or $100,000 – $395,000. The hacker promises ‘we’re just getting started’ and recommends that these organizations ‘take the offer’. Leave the gun, take the cannoli.  HealthcareITNews  It makes the 4,300 record breach at Massachusetts General via the typical unauthorized access at a third party, once something noteworthy, look like small potatoes in comparison. HealthcareITNews  Further reading on hardening systems by focusing on removing admin rights, whitelisting and endpoint security. HealthcareDataManagement

Should VistA stay or go? It looks like this granddaddy of all EHRs used by the US Veterans Health Administration will be sunsetted around 2018, but even their undersecretary for health and their CIO seem to be ambivalent in last week’s Congressional hearings. According to POLITICO’s Morning eHealth newsletter, “The agency will be sticking with its homegrown software through 2018, at which point the VA will start creating a cloud-based platform that may include VistA elements at its core, an agency spokesman explained.” Supposedly even VA insiders are puzzled as to what that means, and some key Senators are losing patience. VistA covers 365 data centers, 130 separate VistA systems, and 834 custom installations, and is also the core of many foreign government systems and the private Medsphere OpenVista. 6/23 and 6/24

click to enlargeDr Eric Topol grooves on ‘The Fourth Industrial Revolution’ of robotics and AI. But first medicalized smartphones will be putting healthcare in the hands of patients. They will gather and platform data from sensors which make our current medical monitors look puny–labs, ECGs, medical history, even voice and gait will all feed in from external and internal sources. The bedroom will become the center of home health. As predicted at this week’s Healthcare Financial Management Association annual conference in Las Vegas. HealthDataManagement

click to enlargeOne of those advanced sensors may well be the Sparo Labs Wing lung function sensor and app which recently gained FDA 510(k) clearance. A compact device to measure peak flow and FEV1, it connects directly into a smartphone headphone jack. Target markets are direct to consumer for asthma, COPD and other lung diseases such as cystic fibrosis. Pricing undisclosed. MedCityNews

In Unicorn News, scandal-ridden Zenefits, once a high-flying ($4.5 bn!) cloud-based health benefits broker that ran into compliance (and party-hearty) problems, cut its valuation by more than 50 percent to $2 billion to get rid of some legal claims. 10 percent of employees took a voluntary buyout, plus an additional 350 were laid off, presumably involuntarily. Fortune.  The too-hip-for-yer-teeth health insurance company Oscar got whacked by the Federal risk adjustment program for $2 million in payments in New Jersey and $31 million in New York. That’s the penalty CMS levies under ACA against insurance companies with too many low-risk young and healthy versus high risk, un-hip older and sicker. And if this makes sense to you, I have a bridge in Brooklyn, price reasonable… Oscar lost $100 million last year (Forbes). POLITICO Morning eHealth and also CMS’ summary report on 2015 transfersTeladoc, fresh from its patent victory versus American Well, spent over $150 million on HealthiestYou, a mobile patient engagement platform targeting small to mid-sized employers, mainly to get Teladoc into this group. HealthiestYou claimed to be at breakeven this year, with $8 million in revenue YTD. The deal was 15 times the company’s 2015 revenue. MedCityNews

Finally no Unicorn Review would be complete without some Theranos news. The Cleveland Clinic‘s CEO has yet to hear from Ms Elizabeth Holmes on their generous offer to help test their lab machinery. Dr Toby Cosgrove thought it was “on its way”….and he’s “disappointed”. Did you check the mailroom? CNBC. House Democrats on the House Energy and Commerce Committee are eagerly joining the pile-on. They want a company hearing on the lab fiasco. Or else. Will they hold their breath till blue in the face? Lie down on the floor of the House? Morning Consult. More on Unicorns and Cracking Markets in TTA 11 May and 17 Feb

And speaking of former Unicorns, President Barack Obama, chatting with Bloomberg Businessweek, was asked about his future plans. Citing conversations with Silicon Valley and investors that pulled together his ‘interests’ in science and organization (!) in a ‘really satisfying’ way, throwing in some ‘genomics’ and ‘precision medicine’ jargon, it has led to speculation of a post-presidential future as a health tech VC. Fast Company. Of course, there’s no experience of private business or funding, unless you can spell ‘regulation’, or any scientific background. Ah yes….Healthcare.gov! But does it matter? No one expects him to front his own funds–just to be in front, so to speak, for the right compensation. Is it too much to expect a quiet, non-meddlesome and dignified retirement from a former president?

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