Got a data breach? Blame the victims like 23andMe did!

January 19, 2024 | by

23andMe wished its breached customers Happy New Year by putting the blame…on them!

The hacking that started with 14,000 records and grew to exposing the records and personally identifiable information (PII) of 6.9 million users, about half their customer database, has spawned over 30 class action lawsuits in the US, plus lawsuits in Ontario and British Columbia, Canada. 23andMe, in their responses to law firms and on their blog, told lawyers and users–not unexpectedly–that the data breaches were due to 23andMe users recycling log in credentials, such as passwords, that were used on other–breached–websites, and failed to update them on 23andMe after these incidents.

However, as this Editor noted when this first broke in December, this credential stuffing doesn’t account for the targeting nor the hacking of users who claimed they had unique credentials, including the US National Security Agency (NSA) cybersecurity director Rob Joyce who creates a unique email for each of his accounts (!). It also doesn’t account for how 14,000 brute-force hacked records grew exponentially to 6.9 million records. One reason may be data sharing with a partner, MyHeritage, in adding functionality to Family Tree, or sharing their information by opting into 23andMe’s DNA Relatives feature. 

It also does not account for how 23andMe squarely blamed users–that they were negligent in whatever passwords they used, that two-factor authentication was available since 2019 (but optional), that the information taken didn’t include highly sensitive information such as Social Security number, driver’s license number, or financial information. Therefore any lawsuits were futile, per a letter from 23andMe’s Greenberg Traurig to one of the class action firms, Tycko & Zavareei LLP. Afterwards, 23andMe reset all passwords and instituted mandatory multi-factor authentication, closing the barn door after the horse, cow, and goat got out and made it to the next county.

Playing into this is the weakness of US law around what constitutes ‘reasonable security procedures’ for securing personal information–and that is from the wording of the California Privacy Rights Act (CPRA), which may be the US’ toughest privacy law. On one hand, users have responsibility for a decent, unique password every time–but on the other hand, 23andMe bears responsibility for securing its shared data and not letting a breach get wildly out of hand like this one did. And what if next time it’s the actual DNA information?

The insult to injury: In December, 23andMe changed their terms of service to essentially indemnify themselves. Users had to agree, in the terms of service, exactly 30 days to opt out of the right to participate in a class action lawsuit and instead submit to private arbitration in the event of a dispute.

Not owning up to some fault is not the way to build customer confidence. Especially with a company in a faltering sector now trading around $0.70 per share. TechCrunch, ArsTechnica

News roundup #2: Bright.md sells remaining customers to 98point6; Netsmart EHR up for $5B possible sale; Caregility intros two new telehealth systems

January 19, 2024 | by

More from JP Morgan’s Healthcare Conference (JPM), CES, and after:

Bright.md’s remaining assets sold to 98point6. Now stay with your Editor as we sort through this. Bright.md was sold, we thought, to Cigna’s Evernorth MDLIVE telehealth unit last October, announcing at HLTH that MDLIVE would add Bright.md’s asynchronous telehealth technology to their platform. Evidently, Bright.md had other assets not included in that sale, namely the right to service 17 asynchronous telehealth provider customers such as Baptist Health and UAB Medicine. Those customers have been purchased by 98point6, a company that last year transitioned out of direct care into being a licensor of real-time and asynchronous telehealth, plus other software for clinical decision support and EMR integration.

98point6 pivoted last March by selling their physician group, self-insured employer business, and an irrevocable software license to Transcarent, in a deal worth potentially $100 million. What they bought from Bright.md can only be interpreted as those 17 customers were not obliged to go with MDLIVE in that earlier transaction. Those 17 customers now will license 98point6’s asynchronous telehealth. 98point6’s purchase price is 45% in cash and 55% in equity. 98point6 is also taking on six former Bright.md staff in commercial and sales. Another small puzzle is that the Bright.md website remains unchanged with last entries in July 2023 and no mention of MDLIVE. The company’s most recent LinkedIn posts also end in July 2023, yet a sample of the executive staff indicates that they remain employed at Bright.md. Axios, 98point6 release

Netsmart Technologies exploring $5 billion sale. The company is reportedly exploring a sale of its EHR and related software business via Goldman Sachs and William Blair in the coming weeks which could fetch up to $5 billion. The EHR has an estimated 754,000 users at community health centers, behavioral health centers, hospice care, and non-profits. This year’s EBITDA is estimated to be about $250 million. 

The current owners, GI Partners and TA Associates, bought it between 2016 and 2018, but its roots go back to 1992 (with an acquired company back to 1968). It went public in 1996, moved private in 2006, then went through various private equity owners including Allscripts, moving from NYC to Great River, Long Island and presently to Overland Park, Kansas. If the sale, likely to another group of PE investors, is successful, it would demonstrate signs of life in the dead healthcare M&A market.  Reuters   Axios’ sources estimate closer to a $4 billion sale

Another during CES announcement came from Caregility, which announced two new point of care telehealth edge devices. The APS200 Duo is the company’s first dual-camera, all-in-one system with onboard edge computing and a dedicated graphics engine. The new APS100 Pro is a second generation model of their all-in-one system with a wide-angle camera for remote patient observation. This can be upgraded with the APS FlexCam, an external high-definition 40x power zoom video camera for virtual nursing programs and remote patient examinations. The devices connect to the Caregility Cloud virtual care platform with multiple audio and video streams for clinical and care applications supporting workflows in acute and ambulatory settings. Release. Caregility also contributed a Perspectives on virtual nursing and telehealth in November.

Breaking: appeals court continues ITC ban on Apple Watches with working pulse oximetry (updated)

January 18, 2024 | by

Breaking  US appeals court lifts temporary injunction, bans sale of new pulse oximetry-functioning Watch 9 and Ultra 2. Yesterday, the US Appeals Court for the Federal Circuit dropped the first shoe and that landed against Apple’s head. The court ruled against continuing the short-term stay against the sale and importation of new Watch 9 and Ultra 2 watches equipped with functioning pulse oximetry (blood oxygen, SpO2). That ban is now in effect. The ban is a result of the International Trade Commission’s (ITC) Limited Exclusion Order that found that Apple violated Masimo’s patents on pulse oximetry (SpO2) sensors and software that became effective on 31 December.

Apple’s workaround was to disable the pulse oximetry software for new watches they sell in Apple Stores and ship to third parties.  The hardware is still inside, but readings are disabled by the watchOS. These new versions have a /A after the model number. This workaround allows the US Customs and Border Protection (CBP)’s Exclusion Order Enforcement (EOE) branch to permit new Watch 9 and Ultra 2 watches to be imported and sold. TTA 17 Jan

Reports have confirmed that existing models that were already sold or distributed before the ban through retailers will continue to have working SpO2 software. The court decision does not require pushing a software update that disables the blood oxygen reading. These pre-ban Watches sold by third parties and on the used market do not have the /A after the model number. Other Apple Watch models that never had the pulse oximetry feature were unaffected by the ban.

Of note, the appeals court cleverly separated the Apple Watch importation from the appeal of the ITC ruling. That ‘other shoe’ is a decision on whether Apple can appeal the ITC ruling, initiating the long appeals process. That decision is pending but due shortly. See TTA 28 Dec 2023 for the timeline.

Another possible outcome is that Apple settles with Masimo at some point, an action that seems obvious, but not in Apple’s suites. CNBC, 9to5Mac has the best explanation of the model changes with commenters reflecting the split jury on whether SpO2 readings are all that critical for Watchaholics. This story is developing and will be updated.

Update 19 Jan   This Editor enjoyed reading Strate-gee’s writeup on the latest developments in Masimo v. Apple. He digs into the roots of the dispute which go quite far back, to 2022 and Apple’s poaching of Masimo employees working directly on their pulse oximetry including their chief medical officer and chief scientist. The first employee went to Apple and then started his own company. He was found to have appropriated Masimo’s trade secrets and technology. Another finding: in the Masimo letter to the appeals court (included in the article) stating that the redesign of the Apple Watch “eliminates any irreparable harm”, part of the EOE proceeding is confidential and thus the EOE decision document is not public. His speculation is that this may be a key to whether the already in circulation Watch 9 and Ultra 2 models will in future have their blood oxygen reading disabled via an Apple software update.

 

News roundup: Owlet’s Dream Sock, BabySat go to market; General Catalyst’s HATco agrees to buy Summa; Cigna’s contrasting provider strategy; new ElliQ robot assistant debuts at CES

January 18, 2024 | by

JP Morgan’s Healthcare Conference (JPM) and CES are as expected big generators of news around digital health–here’s a selection from then and more:

Owlet launches Dream Sock and BabySat at CES. Both were FDA-cleared in November and June 2023 respectively. The Dream Sock baby monitor received first-of-kind de novo clearance for pulse oximetry and sends real-time Health Notifications for low pulse rate, high pulse rate, and low oxygen to parents’ smartphones. Target market is infants 1-18 months and 6 to 30 pounds with direct sale on the Owlet website at $299.

The BabySat is the prescription-only version (left) targeted to infants 1-18 months and 6-30 pounds, but with acute or chronic medical conditions. It also has the unique capability not only to track vital signs but also for the provider to customize alarms for oxygen saturation and pulse rate. Owlet’s BabySat information page explains in plain English the type of medical conditions where the BabySat would be of assistance and the steps to obtain a prescription that is fulfilled through their partner AdaptHealth. A virtual Rx and insurance reimbursement are in the works. A small drawback is that it is only usable with an iPhone. Happily, their stock is also on the rebound at the highest point in six months. Having followed them since the ‘telehealth for the bassinet set’ days of 2012-2013, their continued independence, their rebound from some dark days, as well as their focus on baby health, this Editor continues to wish them bonne chance. Owlet release (via Yahoo Finance).

Big Investor General Catalyst announced their first acquisition move for the Health Assurance Transformation Corporation (HATCo) not at JPM but today (17 Jan). Summa Health is a $1.8 billion (in revenue) non-profit integrated healthcare system headquartered in Akron, Ohio that encompasses hospitals, community medical centers, a health plan, an accountable care organization, a multi-specialty physician organization, medical education, research and the Summa Health Foundation. HATCo’s objective is to transform healthcare towards a goal of “health assurance”, defined as “a more affordable, accessible and proactive system of care” where presumably their extensive experience in investing in healthcare gives them expertise. [TTA 10 Oct 2023] The letter of intent initially sets up a partnership with immediate investment in Summa while due diligence takes place, then when completed moves to a definitive agreement with details of the acquisition and a transaction price in the next few months. Summa would move from a non-profit to a for-profit in becoming a subsidiary of HATCo. According to their information, current management will remain in place.

Summa’s incentive is to stem losses, reportedly at $37 million through Q3 2023, more than double the prior year. HATCo in November stated its desire to buy a health system in Summa’s $1 to $3 billion range. As usual, the buy is subject to regulatory approvals and a final closing date.  HATCo release, Summa Health statement on “our future”, FierceHealthcare

To the contrary, Cigna prefers to partner, not own, healthcare providers. As a payer closer by many degrees to hospitals and practices than General Catalyst, structured much like UnitedHealth Group with Evernorth its counterpart to Optum, they have avoided the aggressive ownership of physician practices. UHG employs about 10%–90,000–physicians through ownership of practices as of December 2023. MedPageToday  At JPM, Cigna CEO Eric Palmer emphasized ‘strategic relationships’ like a minority share of VillageMD (majority owned by Walgreens) in their acquisition of Summit Health, and creating an ‘ecosystem’ that connects to the best partners. Their investments will be wrap-around services in home health, behavioral and virtual care now that a merger with Humana is once again off the table. Becker’s Payer They’ll have some cash to do so; Cigna’s sale of their Medicare Advantage business will likely be to Health Care Service Corporation (HCSC) and fetch $3 to $4 billion. Becker’s Payer

Intuition Robotics debuts ElliQ 3 at CES. An interactive desktop companion robot designed to improve social connection and alleviate loneliness of older adults and those with assistive needs, the new version updates the robot hardware and software capabilities including generative AI capabilities powered by Large Language Model (LLM). The new design from Yves Behar’s design studio, Fuseproject, is also 1.3 pounds lighter and has a 36% smaller footprint which makes it easier to both place and handle, along with a fully integrated screen. Technical improvements include an octa-core SoC and a built-in AI processing unit (APU); 33% more RAM, twice the amount of computing power and memory, and an inclusion of a dual-core AI processing unit (APU), all of which are needed to power generative AI for greater ‘conversant’ capabilities. The LLM technology integrated into the Relationship Orchestration Engine makes real-time decisions regarding actions, scripted conversation, and generative AI conversations. For instance, the person speaking with ElliQ may talk about activities and beliefs, which are stored and classified. In another conversation, ElliQ may use that information to suggest participation in activities and social interactions, while ensuring that the context and flow of conversation is ‘guardrailed’ and appropriate. The AI can also assist the person in activities such as painting or writing poems together.

Current partners include the New York State Office for the Aging, Inclusa (a Humana company), and the Area Agency on Aging of Broward County, as well as newer partners like The Olympic Area Agency on Aging, Ypsilanti Meals on Wheels, and others. Release

Israel-based Intuition Robotics most recently raised $25 million in August 2023 in an unlettered round with $20 million in venture capital plus $5 million in venture debt. TTA 19 Sept 2023

Apple removes pulse oximetry from Watches to dodge ban; AliveCor advances patent review v. Apple (two big updates!)

January 17, 2024 | by

Apple redesigns US versions of the Watch 9 and Ultra 2 to delete pulse oximetry, gains approval from US Customs and Border Protection (CBP). The CBP enforces the International Trade Commission (ITC) ban on the original Watch 9 and Ultra 2 models that found that Apple violated Masimo’s patents on pulse oximetry (SpO2) sensors and software. The ban went into effect on 31 December but models were pulled from sale by 24 December.

While Apple’s emergency appeal of the ITC Limited Exclusion Order filed on 26 December grinds on in the US Court of Appeals for the Federal Circuit, right now the ITC ban is on a short-term stay that will be decided in the next few days. The appeals court will decide shortly whether Apple’s appeal will go forward and whether the Watch pulse oximetry version ban will be stayed until the completion of the appeal, typically another 18 months [TTA 28 Dec 2023].

Apple’s new versions of the Watch 9 and Ultra 2 without pulse oximetry skirts the ban and may be the longer term solution if the appeals court decides to uphold the ITC ban on the original models. According to HIStalk reporting Bloomberg News‘ coverage, the new versions have already been shipped to Apple Stores but not released for sale. Apple also has not disclosed whether previously sold Apple models will continue to have their pulse oximetry operative, or disabled via an update.

Masimo’s position is that Apple selling Watches without the disputed pulse oximetry is not a problem. They sent a letter to the appeals court confirming that “redesigned Watch products definitively do not contain pulse oximetry functionality” and thus are outside the scope of the import ban. In fact, “Apple’s claim that its redesigned watch does not contain pulse oximetry is a positive step toward accountability” around intellectual property rights. According to MedTechDive, Masimo’s CEO Joe Kiani is open to a settlement.

The appeals court decision on granting Apple a full appeal and stay of the ban of the watches with pulse oximetry is pending but may be decided in the next few days. It’s nice to have money to be able to redesign two flagship smartwatches, which Apple certainly does! 9to5Mac, Digital Trends

Updated 18 Jan  Federal appeals court continues import ban on Apple Watches with working pulse oximetry, Apple appeal on ITC LEO still pending

Apple’s other nemesis, ECG monitoring system AliveCor, is back with the US Patent Trial and Appeal Board (PTAB) about Apple’s patent infringements. AliveCor shared with this Editor that the PTAB is instituting an inter partes review (IPR) of two AliveCor petitions on Apple patents asserted against AliveCor: claims 11–20 of US Patent No. 10,866,619 (the ‘619 patent’) and claims 1–22 of US Patent No. 10,076,257 B2 (“the ’257 patent’). AliveCor continues to be engaged in an antitrust court action with Apple on its ECG technologies in Apple Watches in the US District Court of Northern California.

AliveCor’s statement to this Editor: 

AliveCor applauds the U.S. Patent Trial and Appeal Board (PTAB) decisions to institute Inter Partes Review (IPR) of two patents Apple meritlessly asserted against AliveCor.  These institution decisions closely follow last week’s decision by the Court in the Northern District of California to stay the underlying district court case while the PTAB analyzes the validity of Apple’s patents.  Institution decisions directed to Apple’s remaining asserted patents are expected in the coming months.

Separately, our antitrust case against Apple is proceeding in the U.S. District Court,  Northern District of California, where the judge will decide several pending motions before setting a trial date for later this year. Our cases are among many recent developments revealing the extent of Apple’s bullying.

Unlike Masimo, Apple licensed AliveCor’s ECG technology in early Apple Watches, then took action when Apple introduced its own ECG in the Apple Watch 4 in 2020.

Updated 18 Jan  The US District Court of Northern California on 17 January upheld the continued stay of Apple’s patent infringement countersuit pending the outcome of the PTAB’s Inter Partes Review (IPR) of the 257 and 619 patents. In addition, the order reveals that the PTAB has a pending decision on whether to institute IPRs on US Patent Nos. 10,270,898 and 10,568,533. Both AliveCor and Apple are required to inform the District Court of any new IPRs ordered, as well as on the current IPRs at minimum every six months to update the Court on their status and any appeals. Court order PDF

Wrapping up many changes at Walgreens, VillageMD, CVS Health, Oracle Health

January 11, 2024 | by

Walgreens’ multitudinous c-c-c-changes from the suites to the streets. Financially, Walgreens’ US Healthcare segment in Q1 2024 (Oct-Dec 2023) grew sales to $1.9 billion versus prior year’s $989 million. This included VillageMD’s revenue from Summit Health and some growth at CareCentrix (home care) and Shields Health Solutions (specialty pharmacy). But losses continued, with an operating loss of $456 million and adjusted operating loss of $96 million, reduced from the prior year’s $152 million loss. This is also after their November layoff of several senior staff and 5% of corporate workers following a May layoff [TTA 10 Nov 2023]

  • On the earnings call, new CEO Tim Wentworth confirmed that VillageMD has closed 27 under-performing clinic locations. This is a little less halfway through the 60-location previously announced closure. This is a key part of the $1 billion in 2024 cuts announced at the end of last quarter by then-acting CEO Ginger Graham [TTA 18 Oct 2023]. Healthcare Dive
  • VillageMD’s weakness has been filling physician ‘patient panels’. A patient panel is one doctor’s patient count treated over typically 12 to 18 months. This can be as high in primary care as 2,500 patients, though no numbers were cited for VillageMD. According to Wentworth, VillageMD is now “on a diet”; fewer locations, more patient concentration at available clinics, patient panels and profitability goes up. Or so the math goes. Forbes
  • Walgreens also has trouble in the IT department. Key indicators: Neal Sample is their third CIO in a year, layoffs in staff among employees and contractors, departures of key managers, and the need for new technology including AI to support operations. Graham has cited the new pharmacy inventory system to more accurately forecast demand using AI as an example of the direction she sees IT taking. (Let’s hope it will quiet the rebellious pharmacists.) The former CIO, who departed in September, stocked up on AI and engineering talent at the expense of other needed roles. The Wall Street Journal’s deep dive from December.

Year’s end brought a stop to some of the musical chairs in the CVS Health C-suite. CFO and appointed president of Health Services Shawn Guertin turned his leave of absence due to family health reasons into a formal departure at the end of May. Interims Tom Cowhey moves from SVP corporate finance to CFO and Mike Pykosz, the CEO of Oak Street Health, becomes president of Health Care Delivery. Release, FierceHealthcare

Oracle Health also has the music up and the chairs out.

  • General Manager Travis Dalton is departing on 1 March to join MultiPlan as president and CEO. He succeeds Dale White, who moves to executive chairman replacing the retiring chairman Mark Tabak after 23 years with the company. MultiPlan is a payer cost management company that serves about 700 payers in payment and revenue integrity, network-based and analytics-based services. Dalton is the fifth of 10 senior executives from Cerner to depart after the late 2021 sale to Oracle.MultiPlan release, HIStalk 1/5
  • Oracle Health’s chairman, Dr. David Feinberg, has also been making some transitional moves of his own, joining Aegis Ventures as a senior advisor while remaining at Oracle. His role is to help Aegis work with a consortium of health systems on developing and launching digital health products. Interestingly, there has been no disclosure of the percentage of time he will spend at Oracle versus Aegis. Dr. Feinberg also is a Humana board member. He joined Cerner from Google Health and within a few months, Cerner was sold.  Modern Healthcare

A timely webinar Fri 12 Jan: Protecting a lifeline – preparing for the digital voice switchover (UK)

January 4, 2024 | by

Free Zoom webinar: Protecting a lifeline, preparing for the digital voice switchover
Friday 12 January, 13:00 (1 pm) GMT
Information and registration

The digital switchover, the 2G and 3G phaseout…these issues are roiling UK telecare services. Will providers be ready for VoIP with enhanced services by the end of 2025? Will their customers be left without crucial services? The Digital Poverty Alliance is sponsoring a webinar with guests Kamran Mallick, CEO at Disability Rights UK, and Dennis Reed, Director of Silver Voices, as they share their concerns for their customers and some experiences of the switchover. This webinar will also consider the practical steps providers should be taking to protect their customer’s needs, and ensure no one is left without crucial services as part of the switch. 

It couldn’t be more timely. As VoIP systems have been implemented, failure incidents of telecare and PERS alarms have escalated to the point where last month Michelle Donelan, the UK Technology Secretary, demanded that telecoms stop forcing the non-voluntary conversion of copper lines to VoIP on the elderly and disabled. Both BT and Virgin Media on Monday 18 December announced that they paused their rollouts. Even The Telegraph has campaigned for a re-think of the “big switch”. Telegraph (via Yahoo Finance Canada)

More about Silver Voices’ campaign to delay the switchover of traditional copper wire landlines to internet-based telephone systems (VoIP or Digital Voice). VoIP is far more versatile but not as reliable as copper (although when copper fails…). Everyone with internet knows the loss of voice and device connectivity when it goes out and how battery backup systems are short-lived at best, if there at all. Cellular/mobile can be used as backup, but many areas of the UK are without reliable cell coverage–which can also fail in storms.

Hat tip to Adrian Scaife via LinkedIn   Also see resources and events available through TTA’s partner, UKTelehealthcare–also linked on sidebar

News roundup: Cano Health gets 2nd NYSE delisting warning; Veradigm acquires Koha Health RCM, faces class-action lawsuit; Bright Health-Molina sale closes; Devoted Health’s $175M Series E (updated)

January 3, 2024 | by

Cano Health gets another billet-doux from the NYSE. Spoiling the confetti and champagne, tech-based primary care provider Cano Health was notified on 29 December that it faced delisting from the NYSE, this time not for the share price (which is above $1 at $5.23) but for its total market capitalization. The NYSE has a pesky rule (Section 802.01B) that a company’s total market capitalization must be above $50 million over a 30 trading-day period and its stockholders’ equity must be above $50 million. The timeline: Cano has 10 business days from the 29th to respond to the NYSE to state intent to cure the deficiencies, and 45 days from that time to submit a business plan to regain compliance within 18 months. If accepted, shares will continue to trade. In its release, Cano announced accelerating its ‘transformation plan’ to further cut costs, divesting operations and terminating underperforming affiliate operations to save approximately $290 million by the end of 2024, which includes the $65 million of previously planned cost reductions. They will also need to pay $30 million in pre-tax charges to resolve exiting leases and staff termination charges. Earlier in December, Cano appointed two independent directors, Patricia Ferrari and Carol Flaton, both with strengths in restructuring companies and their financials. It also established a three-person finance committee, to assist in trimming down the company and exploring a sale. Release

Veradigm buys Koha Health, which specializes in orthopedic/musculoskeletal (MSK) revenue cycle management (RCM). Acquisition cost and management transitions were not disclosed. The purchase of Koha adds to Veradigm’s RCM portfolio in ambulatory health. Koha, based in Merrimack, New Hampshire, was still owned and run by younger members of the founding family.  Veradigm is still working out over a year of trouble with its Nasdaq listing and has changed out its CEO and CFO recently [TTA 14 Dec]. Release. Also HIStalk 1/3/24   

Updated  Veradigm faces a shareholder class-action lawsuit on its share price. As is typical in these cases, there is a lead plaintiff (John M, Erwin) represented by a law firm (in this case Robbins Geller Rudman & Dowd LLP of San Diego) which is filed on behalf of a class, in this case individuals who bought shares between 26 February 2021 and 13 June 2023 and suffered losses. It charges Veradigm as well as certain of its current and former top executive officers with violations of the Securities Exchange Act of 1934.  This centers around Veradigm’s ongoing problems in stating its financials from Q3 2021 and overstating its earnings from there through 2023, negatively affecting the share price. The lawsuit was filed 22 November 2023 in the US District Court for the Northern District of Illinois. Robbins Geller is now seeking other plaintiffs to join in the suit. Release, Justia Dockets & Filings, Mobihealthnews

Wrapping up another continuing story, Bright Health closed the sale of its California plans to Molina Healthcare on New Year’s Day. With the proceeds, reduced to $425 million [TTA 20 Dec 23], Bright as predicted cleared what was owed on its credit facility with JP Morgan, reduced on Friday by $30 million to approximately $298 million. The remaining funds will go to their cash position ($90 million in unregulated cash plus approximately $155 million in excess cash surplus after reserving for expenses) and $110 million from escrow, and now on its sole continuing value-based primary care business, NeueHealth. Cash reserves do not include CMS Repayment Agreements which come due on or before 14 March 2025, sufficiently far in the future (?). No mention of repayments to their lender New Enterprise Associates (NEA) or the Texas Department of Insurance clawing back money owed out of its insolvent Texas plan. You have to hand it to Bright Health. They’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) to stay alive until, they hope, 2025.  [TTA 5 Dec].  Release 29 Dec. Release 2 Jan   FierceHealthcare

Updated  And one more bright spot: $175 million raised by Devoted Health. Devoted is a combination of Medicare Advantage (MA) plans with in-house telehealth and in-home care delivered by Devoted Medical. The Series E was funded by a lead syndicate composed of The Space Between (TSB), Highbury Holdings, GIC, Stardust Equity, Maverick Ventures, and Fearless Ventures with an arms-length list of other participants. Devoted was started by two brothers, former athenahealth and government IT leaders Ed and Todd Park, CEO and executive chairman respectively. Devoted release, Becker’s. Fierce Healthcare, Mobihealthnews

What a difference a little over two years makes. At the time of their hefty $1.15 billion Series D, raised in the heady days of October 2021, they were considered one of the smaller, more specialized ‘insurtechs’ along with Alignment Health. Now they are walking tall in a field of damaged or expired payers: Bright Health, Oscar, and Clover among the survivors, and Friday Health Plans deceased. Devoted now states that its MA plans serve 140,000 members in 299 counties across 13 states, as of December 2023. Most impressively, 94% of their members in Star-eligible plans are in 4 to 5 Star plans. Their HMO plans in Florida and Ohio were all 5 Star plans. 

Some thoughts on the insurtechs, why the hype didn’t quite pan out, and the damage they may have done [TTA 7 July 2023].

Breaking: ban on sale of Apple Watches 9 and Ultra 2 stayed by federal appeals court Wed 27 December

December 28, 2023 | by | 2 Comments

Apple Watch 9, Ultra 2 available again for sale–at least well into January, as appeals court decides. It should come as no surprise that Apple quickly appealed the US International Trade Commission (ITC) ruling of 26 October that prohibited Apple from importing either model and won a temporary stay of enforcement. The ITC ruling found that Apple in the Series 6 and later violated Masimo’s patents on pulse oximetry (SpO2) sensors and software. ITC rulings are sent to the US president in a 60-day process that ended in no presidential veto and thus final approval on 25 December. Apple, anticipating compliance and moving in an orderly fashion, pulled both models from online sale 3 pm Eastern Time on Thursday 21 December, while Store sales ended on Christmas Eve. [TTA 21 Dec]

On Tuesday 26 December (Boxing Day), Apple filed for an emergency stay of the ban in the US Court of Appeals for the Federal Circuit which was granted almost immediately, on Wednesday 27 December. This prevents Homeland Security’s Customs and Border Protection (CBP) from enforcing the import ban until the court can consider Apple’s motion to stay the ban pending its full appeal. The timeline now, after this emergency stay, is that the ITC has until 10 January 10 to file its opposition, with Apple’s reply due on 15 January. If the court grants Apple its desire for a full appeal after that and to stay enforcement of the Limited Exclusion Order (LEO) until that appeal is decided, the enforcement timeline then typically pushes forward another 18 months. Masimo is contesting the action saying there was no emergency as Apple had already stopped selling their watches with pulse oximetry features. Apple, as the infringer on Masimo’s patents as found by the ITC, has to show the court that the stay is justified.

With the Court of Appeals ruling in place, Apple is resuming online sales today (Thursday 28 Dec) at noon Pacific Time (3pm Eastern Time).

Yet another wrinkle is that Apple has proposed a modification to both of these watches to the CBP. They are now seeking a judgment that the modified version is outside of the ITC Limited Exclusion Order. The ban also affected owners of older Apple Watches with pulse oximetry readings, as out-of-warranty watches’ hardware would not be considered repairable. 

The most legally comprehensive article on this is by Dennis Crouch at Patently-O. Bloomberg, Axios, and The Guardian. The New York Post has a backgrounder on the relationship between the current president and Masimo’s CEO, which appears to be a close one but, based on another company’s history that follows, is likely to not be pertinent to the ITC decision or approval. (This Editor notes that Apple for decades and currently has been considerably influential in government matters and business policy. It is not unusual here in the US or elsewhere for that matter that company leaders play the donation game. We eschew additional comment.)  

Apple and others’ patents–not perfect together. AliveCor is in a similar situation in its own patent legal actions with Apple: winning in an ITC patent determination approved by the White House, negative PTAB actions, then Apple appealing. AliveCor is currently engaged in an antitrust court action with Apple in the US District Court of Northern California [TTA 19 July and prior] with a decision expected in 2024. Unlike Masimo, Apple licensed AliveCor’s ECG technology in early Apple Watches, then took action when Apple introduced its own ECG in the Apple Watch 4 in 2020.

It also shows that Apple has, shall we say, a certain pattern of updates to its Watch lines that may infringe on the patents of smaller companies. Again, all Apple would need to do is license these patents and pay royalties. It might be cheaper than lawyers and lawsuits.

TTA is off for the holidays–and wishes our Readers a holly, jolly!

December 22, 2023 | by

Like most of our Readers, TTA will give the keyboard a needed rest and be off from Friday 22 December till Tuesday 2 January. Alert emails will be sent to subscribers (become one here, it’s free) on Friday, Saturday, and Wednesday (skipping Christmas Monday and Boxing Day Tuesday).

Breaking news, comments, or holiday messages may be sent to Editor Donna.

Editor Emeritus Steve and Donna send our very best wishes for a Happy (or Merry) Christmas and a Happy, Healthy, Peaceful, and Prosperous New Year!

Short takes: ransomware op BlackCat busted by FBI, websites shut–for now; health systems lay off IT staffers; retailers collecting way too much PII including health

December 22, 2023 | by

FBI busts BlackCat/ALPHV ransomware. In an Eliot Ness-like move, the Federal Bureau of Investigation (FBI) got busy and delivered a nice present to healthcare organizations for Christmas. According to two 19 December articles in Bleeping Computer (article 2), the FBI seized operational darknet websites for the ALPHV ransomware operation (article 1) and created a decryptor to help approximately 500 companies recover their data for free, negating $68 million in ransom demands. The details are a little thin, but Bleeping reconstructed in article 2 what they could out of the search warrant. The FBI arranged with a confidential human source (CHS) to become a backend affiliate, meaning the CHS could log in and use ALPHV’s affiliate panel to manage extortion and ransom campaigns. It sounds like a rather nifty platform with lots of management and negotiation tools if you’re extorting a victim company. How the FBI got the decryption keys is another matter they are mum on, as not available through the affiliate panel, but “they obtained 946 private and public key pairs associated with the ransomware operation’s Tor negotiation sites, data leak sites, and management panel”. 

US law enforcement was assisted by their counterparts in Europol, plus law enforcement in Denmark, Germany, UK, Netherlands, Germany, Australia, Spain, and Austria. This is the third breach of the same gang; as Bleeping Computer put it, they’ll “rebrand under a new name as they have done in the past” in a few months.

But maybe faster than that. Some added details from Healthcare IT News sourced from KrebsonSecurity:  BlackCat briefly unseized its darknet site, wiped out the FBI screen above (courtesy Bleeping Computer), and put in a ‘we’re unseized’ notice (in the Krebs article) that they were still open for business at a different location, offering affiliates a 90% payout, and that for affiliates, you could ransomware anything, anywhere (hospitals and nuclear plants cited!) except those located in Russia and the CIS. 

Given ransomware, hacking, cybersecurity threats, and maintaining/upgrading operations, you’d think hospitals would be hiring, not firing, IT workers. But noooooo. Becker’s listed seven health systems that are either pinkslipping IT staff or transferring them to outsourced companies. They are Kaiser–115 nationwide; Novant Health–unknown due to ‘changing up their IT system’; Tower Health (Reading PA)–outsourced staff to a vendor; Mass General Brigham–staff reduction via voluntary buyouts in effect 22 November; Bon Secours Mercy Health–layoffs plus eliminating open roles; Care New England–outsourced staff to health IT provider Kyndryl; Franciscan Health–moved 61 to a vendor. Pennywise, pound foolish.

Here’s more than money you’ve left behind with your online holiday shopping–data, and lots of it. This study from Incogni Research is unnerving, as it goes far beyond what you think you’ve shared–you buy nasal spray in the winter, allergy eyedrops in the spring, etc.– to what retailers are actually collecting on you. This Editor will cite only the companies in healthcare–CVS, Walgreens, Amazon, and Walmart–according to their study:

  • All four collect PII data that includes customers’ identifiers (like their names, online identifiers, and driver’s license numbers), characteristics of protected classifications (like marital status, ancestry, and disabilities), commercial information (like purchase history and property records), and audio/electronic/visual information (like video and/or audio recordings of consumers).
  • Walmart, CVS, and Walgreens additionally collect Social Security numbers, union membership status, and sex-life data.
  • Their apps collect 15 to 20 data points, such as exact location, personal data, financial data, health and fitness, messages, photos and videos, audio files, files and docs, app activity, web browsing, app info and performance, device or other IDs

Users can opt out of some of these, but most do not. And some go to third parties. And all had been breached at one time or another, whether at the retailer or at the vendor level. Prepare to be shocked and dismayed. Release on DR Journal

News roundup: Apple Watch flagships cease sale due to Masimo ITC ruling (updated); Noom, WW enter GLP-1 telehealth business; Oracle sees health side up despite Cerner drag; Cigna has multiple bidders for MA business

December 21, 2023 | by

Apple Watch Series 9 and Ultra 2 going off sale in the US this week, upholding the ITC patent ruling favoring medical device developer Masimo. On 26 October, the International Trade Commission (ITC) ruled that Apple in the Series 6 and later violated Masimo’s patents on pulse oximetry (SpO2) sensors and software. [TTA 27 Oct] While this is awaiting presidential approval in the 60-day review period which ends on Christmas Day, Apple proactively restricted US sales of its flagship Series 9 and Ultra 2 watches which contain the blood oxygen sensors. (The SE model does not and continues to be available for direct sale.) According to 9to5Mac, online sales end on 3 pm Eastern Time on Thursday 21 December, while in-Apple Store sales stop after Christmas Eve. Of course, this won’t stop resales of existing stock through outlets like Amazon, Best Buy, and eBay. Under the ITC order, Apple cannot import either model after 25 December as the ITC issued a Limited Exclusion Order (LEO) plus a Cease and Desist Order (CDO). 

The ITC is rarely vetoed by the White House in patent actions. After that point, Apple is free to appeal in Federal District Court, which is highly likely and where the deepest pockets usually win. Also HIStalk 20 Dec and Strata-gee 21 Dec

There are other wrinkles with Masimo, though. Strata-gee.com earlier this month (13 Dec) timelines Masimo’s patent difficulties with the US Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) ruling against the very same patents, decisions upheld by the Federal Circuit Court. The PTAB also ruled against Masimo in the requested review of two Apple patents. Apple’s retaliation is to threaten lawsuits on Masimo’s new smartwatches. The icing on this messy cake is the November Delaware Chancery Court decision against Masimo, awarding $17.8 million in legal fees to activist investors/shareholders Politan Capital Management and Politan Capital NY LLC in a board fight that culminated in two seats to Politan directors.  One can sense that Apple is biding its time, though they could end all of this by negotiating a royalty to Masimo. Updated: see report on the stay effective 27 December here.

Noom and WW enter the weight loss drug-by-telehealth race. Ozempic and Wegovy, GLP-1 agonists, are increasingly popular in off-label use for obesity to produce weight loss, prescribed and managed by telehealth teams.

  • Noom, previously stressing behavioral change via app coaching direct-to-consumer, in October announced at HLTH Noom Med, a drug-focused program prescribing medications such as Saxenda (liraglutide), Wegovy (semaglutide), and the new Zepbound (tirzepatide), a dual GLP-1/G1P, all of which are injectable medications along with other GLP-1 medications such as Ozempic.
  • WW or WeightWatchers last week announced the WeightWatchers Clinic program. Via their recently acquired telehealth weight loss platform Sequence, it will offer weight loss meds and team management.  

They join Teladoc in developing weight loss programs, though Teladoc supports a physician-based care product for employers [TTA 21 April]. Both Noom and WW emphasize that member patients must qualify for the programs based on weight, BMI, and medical condition. Participants are educated through materials, coaching on behavioral management, managing appetite, and nutrition, especially in maintaining adequate protein as these medications not only induce weight loss, but also muscle loss (sarcopenia). One hopes that their teams are also knowledgeable on how these medications that slow down digestion to induce a feeling of fullness don’t mix well with surgical sedation, and that they issue cautions to patients before elective surgery. MedCityNews, FierceHealthcare, Forbes   

Noom has also replaced most of its top management since its new CEO joined in July. There’s a new CFO, chief technology officer (CTO), general counsel, two senior VPs (corporate development and partnerships, healthcare sales and services) a senior director of brand and communications, chief growth officer, chief product officer, and head of people. FierceHealthcare

Oracle Q2 results miss forecasts in rebuilding Cerner. Oracle Health, including the former Cerner, and slowing cloud growth were the culprits in their fiscal Q2 2024. Total revenue was $12.9 billion, up 5% in US dollars (4% in constant currency). Analysts expected $13.05 billion. Excluding Cerner, growth would have been 6% though Oracle did not separately break out revenue for the Cerner EHR business. Investors have noted two consecutive quarters of off-track growth and a weaker forecast for the remainder of the year. According to CEO Safra Catz and chairman Larry Ellison on the earning call, many upgrades and “modernizations” are being made to Cerner Millenium that will wrap up this FY. Half of Millenium customers will be moving over to Oracle Cloud Infrastructure (OCI) by February. They are also “rewriting” Cerner’s health and data intelligence platform, Cerner HealtheIntent, to get into population-scaled health management. ‘Transforming healthcare’ is an expensive proposition indeed. No word on the VA.  FierceHealthcare, Oracle release

And a quick follow up on Cigna’s sale of their Medicare Advantage business. Two payers so far–Health Care Service Corp. (HCSC) and Elevance–are reported to be bidding for Cigna’s MA business. The value of the business is estimated to be about $3 billion and with just under 600,000 members as of September. Both HCSC and Elevance are much larger players in MA. HCSC has over 1 million MA members in Blue Cross Blue Shield affiliates in Illinois, Texas, New Mexico, Oklahoma, and Montana. Elevance, the former Anthem, has over 2 million MA members. Bidding is expected to close this week. While MA is losing money for Cigna, they could refuse to sell if bids are unsatisfactory. FierceHealthcare, Becker’s

Follow up: Molina reduces Bright Health’s $510M California plan sale to $425M

December 20, 2023 | by

Not unexpectedly, Molina Healthcare is not going to pay the original purchase price for Bright Health’s California plans in Q1 2024. In July, Bright Health trumpeted a $600 million salvage deal with Molina, one of the few ‘pure’ health plan companies left. For Molina, they would pay $510 million plus a $90 million tax benefit for Bright’s two California Medicare Advantage (MA) plans–Brand New Day and Central Health Plan. One of the caveats of the deal was the ability to reduce the payment due in Q1 2024 based on the purchased plans’ financials and Star ratings. Unfortunately for Bright Health, neither financials nor ratings are good. Molina is reducing their payment accordingly to $425 million, unceremoniously, paying less for more membership in MA. Release

Why Bright is dimming rapidly. Bright’s health plans have failed or closed shop in multiple states [TTA 20 Apr] after disastrous 2022 performances. Most recently, their Texas plans were seized for liquidation. In these plans, the Center for Medicare & Medicaid Services (CMS) assesses risk adjustment payments that Bright owed to other plans in states where they did business [TTA 5 Dec]. That has been calculated as $380 million–$89.6 million alone in Texas. The bottom line: Bright owes money everywhere–not only to other payers for where they operated in 2022 but also to JP Morgan–$380 million to pay off its credit facility due in February. 

Ari Gottlieb of A2 Strategies on LinkedIn plus interviewed in Becker’s and MedCityNews, has been following this closely as this Editor has noted in his earlier coverage of insurtechs. His over/under is that Bright will pay off JP Morgan first, perhaps kick some over to their lender New Enterprise Associates (NEA), and leave CMS and payers owed in multiple states holding a bag of stale or soggy chips. He explains the escrow setup with Molina plus other factors such as management bonuses (!!!) for completing the transaction. A smart move in his eyes is that the Texas Department of Insurance, by liquidating the TX plans and blocking actions by Bright, may be able to claw back over $125 million out of NeueHealth, a Bright subsidiary.

Absent another Loaves-and-Fishes miracle, reserved for our Redeemer, this Editor cannot see how Bright doesn’t go dark in 2024. One possibility to this Editor: NEA ponies up more investment on top of their $60 million credit facility engineered in August. Given the coal scuttle that is the current state of M&A, they may see this as their only alternative with their investment cash, to push for a recovered and small Bright. Absent a Chapter 7 breakup, what company would buy the liabilities to payers and lenders for what is left–NeueHealth? Then have DOJ and FTC turning a microscope on them? Perhaps in June 2024, but not now.

You have to hand it to Bright Health. They have done a masterful job of tying states, CMS, other health plans, and even Molina into Gordian knots that buy time against what seems to be the inevitable.

DOJ and FTC finalize Merger Guidelines, deliver coal for holiday stockings and the New Year (updated)

December 20, 2023 | by

DOJ and FTC deliver a scuttle of coal for healthcare holiday stockings. The Department of Justice (DOJ) and the Federal Trade Commission (FTC) finalized the Merger Guidelines that were drafted back in July [TTA 20 July]. They update prior guidelines first issued in 1968 that have been revised six times since then. They are not legally binding but demonstrate how each agency will examine any merger or acquisition going forward–and are advance notice on how they can and will stop either. US antitrust law is based on three acts passed by Congress: The Sherman Antitrust Act (1890), the Clayton Act (1914), and the Federal Trade Commission Act of 1914, now in US Code Title 15.

After 30,000 public comments in the 60-day period, the published Guidelines are now down to 11, but in context based on this Editor’s read (caveat, not a lawyer nor play one on TV) are not materially different than the July draft of 13, perhaps considered unlucky. The language in each Guideline restates the draft language in substantially more restrictive language and interpretation. The agencies’ stated purpose is that when two companies propose a merger that “raises concerns” on one or more of these Guidelines, the agencies “closely examine” whether the effect of the merger may be to substantially lessen competition or to tend to create a monopoly (sometimes referred to as a “prima facie case”). Two “C” words are repeated throughout–concentration and consolidation. 

The guidelines are verbatim from the 51-page DOJ/FTC document (PDF link) issued 18 December and are grouped on how the agencies use these guidelines. They are effective immediately.

Distinct frameworks the agencies use to identify that a merger raises prima facie concerns (1-6)

Guideline 1: Mergers Raise a Presumption of Illegality When They Significantly Increase Concentration in a Highly Concentrated Market.
Guideline 2: Mergers Can Violate the Law When They Eliminate Substantial Competition Between Firms.
Guideline 3: Mergers Can Violate the Law When They Increase the Risk of Coordination
Guideline 4: Mergers Can Violate the Law When They Eliminate a Potential Entrant in a Concentrated Market
Guideline 5: Mergers Can Violate the Law When They Create a Firm That May Limit Access to Products or Services That Its Rivals Use to Compete
Guideline 6: Mergers Can Violate the Law When They Entrench or Extend a Dominant Position

How to apply those frameworks in several specific settings (7-11)

Guideline 7: When an Industry Undergoes a Trend Toward Consolidation, the Agencies Consider Whether It Increases the Risk a Merger May Substantially Lessen Competition or Tend to Create a Monopoly
Guideline 8: When a Merger is Part of a Series of Multiple Acquisitions, the Agencies May Examine the Whole Series
Guideline 9: When a Merger Involves a Multi-Sided Platform, the Agencies Examine Competition Between Platforms, on a Platform, or to Displace a Platform
Guideline 10: When a Merger Involves Competing Buyers, the Agencies Examine Whether It May Substantially Lessen Competition for Workers, Creators, Suppliers, or Other Providers
Guideline 11: When an Acquisition Involves Partial Ownership or Minority Interests, the Agencies Examine Its Impact on Competition

The Guidelines are summarized in the Overview. Section 2 explains them more completely with how the agencies apply the Guidelines. Section 3 identifies rebuttal evidence that companies could typically present, and Section 4 presents a non-exhaustive discussion of analytical, economic, and evidentiary tools the Agencies use for evaluation. 

More coal, Ebenezer Scrooge. As this Editor described the draft guidelines in July, it it is hard to see that any merger or acquisition of like companies or even complimentary organizations building out capabilities or platforms could pass. Each one of these Guidelines is a tripwire and once tripped, can trip others. Each one of these can be used by FTC and DOJ to present to a Federal district court, where decisions are now more influential than the body of US Supreme Court decisions. Healthcare Dive notes the Illumina decision in the Fifth Circuit appeals court, liberally cited in the Guidelines document. This is forcing Illumina’s divestiture of cancer test developer Grail, earlier purchased for $7.1 billion. 

So now the coal’s been delivered…what will 2024 and out look like?

  • This will freeze M&A for months as companies try to figure this out. It’s not hard to guess that the imminent publication of the Guidelines nudged the termination of the Cigna-Humana deal. Hospital and health system mergers will continue to find nothing but discouragement.
  • Watch for an acceleration of existing company failures in 2024 and disruption in the current funding structure. Smaller healthcare companies, fattened on the investment binge of 2020-21, but now betting on a buyout from a near competitor, are either going to stick it out on their own or run out of runway. VC and PE companies investing not strategically, but for the purpose of a 18-24 month exit or quick payday, will largely be out of luck. Public companies may languish unless they move quickly to profitability. This may stimulate a new look at investing–strategic investors that look at the very long term–or not. (JP Morgan in January will be verrrrry interesting.)
  • Companies that have grown organically or benefited from previous acquisitions but need to acquire capabilities for a platform to continue to be competitive will also be affected. These could trip Guideline 9 and if found to be anti-competitive, may trip Guideline 8: “If an individual transaction is part of a firm’s pattern or strategy of multiple acquisitions, the Agencies consider the cumulative effect of the pattern or strategy.”
  • The behemoths like UnitedHealth Group, Walgreens Boots Alliance, and CVS Health will have no rivals for many years. The flip side: they will have trouble making additional acquisitions without forcing divestitures, or find buyers when they wish to divest money-losing units.
  • Partnerships may accelerate–with all their risks of purloined IP and monetary disputes. But smaller companies may use it to band together without antitrust risk.
  • The SPAC (special purpose acquisition company) may make a comeback. They will not have any antitrust conflicts but risk a chancy public market, at least in the US. 
  • The conglomerate–unrelated businesses under a holding or investment company–may rise again, as it did in a tight antitrust environment in the 1960s. Remember Gulf + Western and LTV (Ling Temco Vought)–both gone? Berkshire Hathaway is a prime example of a current conglomerate. Foreign investment groups may also find US healthcare an attractive proposition.
  • Offshore reincorporation. Much as Medtronic moved its corporate headquarters from Minneapolis to Dublin, Ireland, companies may move offshore to friendlier climes like Ireland, Estonia, Hungary or the Visegrad nations, and the Channel Islands, effecting their M&A there and making their US branches operational only. 

But…there’s more. Both DOJ and FTC will be reviewing the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines. Fasten your seatbelts, it’s going to be a bumpy year. 

FTC press release (which makes clear what agency is leading!), Crowell (law firm) short analysis, PrivateFundsCFO

Additional sources added 2 January: National Law Review (article by Foley & Lardner), Healthcare Finance News

News roundup: with chronic conditions peaking, Twin Health’s metabolic AI gains $50M, Talkspace and Evernow partner for women’s mental health

December 15, 2023 | by

Chronic conditions on the rise, according to United Health Foundation. The non-profit philanthropic arm of UnitedHealth Group released its annual America’s Health Rankings 2023 report. The report considers 87 measures from 28 distinct data sources for 2022. Topline results in their summary are concerning. 

  • Eight chronic conditions reached their highest level in AHR’s tracking history: arthritis, depression, diabetes, asthma, cancer, cardiovascular diseases (CVDs), chronic obstructive pulmonary disease (COPD),  and chronic kidney disease (CKD).
  • 29.3 million adults, or 11.2% of the population, reported having three or more chronic conditions.
  • During 2021 and 2022, depression rates grew to 21.7% or 54.2 million people. Diabetes incidence rose to 11.5% or 31.9 million adults.
  • Disparities are pronounced between demographic groups. From the overview:
    • Hispanic adults were 2.1 times and black adults were 1.8 times more likely, respectively, to have uncontrolled A1C compared to multiracial adults.
    • In 2013-2016, asthma-related emergency room visits were 2.5 times higher among black compared with white adults with asthma.
    • White adults with hypertension were 1.5 times more likely to have their blood pressure “controlled” compared to black adults with hypertension.
  • Premature death increased 9% between 2020 and 2021: drug deaths increased 15%, firearm deaths 7%, and homicide increased 33%.

The report also ranked the healthiest states as New Hampshire, Massachusetts, Vermont, Connecticut, and Minnesota. Bottom-ranked: Louisiana, Mississippi, Arkansas, Oklahoma, and Alabama. The annual report includes sub-reports focusing on the health of women and children, mental and behavioral health, seniors, and Covid-19. FierceHealthcare

Twin Health’s AI approach to Type 2 diabetes as a metabolic disease gains a $50 million Series D. This late-year raise in a difficult funding market was led by Temasek with participation from existing investors ICONIQ Growth, Sofina, Peak XV, and Helena, adding to their October 2021 $140 million Series C. Twin Health’s main platform is the Whole Body Digital Twin which models an individual’s metabolism from data points collected daily via wearable sensors, clinical lab parameters, and self-reported preferences. The concept of a ‘digital twin’ to guide both the patient and the care team is a relatively new one, created on an app available to both the patient and their Twin Health licensed clinical care team. Their method is to provide individualized guidance on nutrition, sleep, stress, and activities to heal the metabolism and root causes of diabetes, intending to reverse Type 2 diabetes metrics and medication use within six months. Financially, they also have an attractive model–full risk with employers and health plans, being paid when their employees and members get results. According to their founder and CEO Jahangir Mohammed to Axios, “Twin is currently conducting two randomized controlled trials — one in India and one in the U.S. — analyzing whether people using its approach can successfully enter diabetes remission or “reversal.”  Mobihealthnews, Twin Health release

Addressing both mental and women’s health is an interesting partnership between Talkspace and Evernow. Evernow, which focuses on telemedicine treatment for women 40+ during perimenopause and menopause, is partnering with Talkspace to address mental health issues that are prevalent at that time. Evernorth’s survey using their records of over 100,000 patients found that 61.4% of women surveyed reported feeling symptoms of anxiety and/or depression.

  • Evernow members in multi-month plans will gain free access to Talkspace’s mental health resources in their self-guided program that has 400 self-guided therapy sessions plus on-demand workshops and classes. Virtual therapy offered by Talkspace has a $100 discount.
  • Talkspace members also have discounted access to Evernow programs, with a three-month plan for $129 or a 12-month plan for $348.
  • They are also bundling their programs together for enterprises and employers.

Evernow is also moving into AI capabilities through the Early Access Partnership with Hippocratic AI, a generative AI company developing safety-focused large language models for healthcare. Talkspace recently won a $26 million three-year contract with New York City’s Department of Health and Mental Hygiene for NYC Teenspace, a free therapy program for those aged 13 to 17. Release, Mobihealthnews, MedCityNews

Signs of the next phase in 2024? Veradigm CEO, CFO booted (updated); SmileDirectClub fails, TeleDentists steps up; FruitStreet sues Sharecare for $25M; Walgreens’ former CEO Roz Brewer’s platinum parachute

December 14, 2023 | by | 3 Comments

As your Editor reflects on 2023’s BloodOutOfARock versus 2020-2021’s Alcoholic Bender or the ‘new normal’ touted by the Usual Suspects (with 2022 only a burp on the way), she actually sees some Signs of Hope. 

Having lived through the Digital Health Slough of Despond of 2008-2009 as the marketer for an early telemonitoring company, there are many actions that to the observant are markers that the board is being cleared of the also-rans and never-should-have-beens. They are like dead plants and brush that need to be cleaned out so that new growth can happen. We are cycling through some of them already as we move to a New Reality and winding this up, with some examples. 

  • Early stage companies still in the red, with promising financials, but needing to get to the next stage, suddenly unable to get even modest funding (an early indicator of funding drought)
  • Large companies that can get funding snapping up smaller companies at knock-down rates to fit a ‘vision’. Watch for fill-ins, add-ins, bolt-ons that later are revealed to have taken place ‘just in time’. (And may be sold or spun off later in the cycle.)
  • Large companies veering off into lines of business that look like meadows but are minefields–and hiring expensive senior executives who don’t know one or the other but then have to run both at very high levels. They then depart (or are departed) with expensive packages.
  • VCs and PEs really snapping the purses shut–and shutting. (The latest is OpenView in Boston, not even much of a healthcare player except for a couple in HIT over a decade ago but a recently participant in a Series B for RPM Optimize Health)
  • Public companies moving from party-hearty unicorns to hoarding pens and Post-It notes to locking the doors bankrupt in two to three years. (Cracked SPACs, IPOs, and more)
  • Too many players competing with each other with near-identical services in what turns out to be a limited market–and gaining advantage by cutting patient health, privacy, and regulatory corners. (DTC telemental care and drug prescribing)
  • Layoffs at companies that over-hired in the boom spreading to larger companies that largely did not, cutting their next generation of leaders in response to Mr. Market and creating internal chaos. (Instigating panic at blue-chips like CVS and Walgreens)
  • Stupid (yes) acquisitions being acknowledged and cleaned off the books–none too quietly, but done for survival’s sake. (Somewhere there should be a memorial to Teladoc-Livongo. Sorry, Teladoc.)
  • Increased Federal and state regulation of normal business processes. (FTC’s sudden prominence adding to the usual DOJ antitrust pile-on and senatorial posturing)
  • A general cleansing of the cant and hype infecting a sector. (Look to the conferences and press releases for changes in language.)

In this Editor’s observation, another latter-stage sign is when C-levels don’t survive management failures and are sent packing. Another is seeing a small company sue a larger one over failed partnerships, usually involving IP or program design theft. This past week had examples of these two, plus examples tracking with the above markers.

Veradigm still minus 2022-23 financial statements, boots and replaces its CEO and CFO. The former Allscripts has failed to file financial statements for full year 2022 and to date in 2023 due to a massive flaw in its financial reporting software adopted in 2021 that affected its revenue reporting going back to then. While it is still trading on Nasdaq despite 14 November and earlier 16 August, 18 May, and 20 March notices from the exchange under Nasdaq Listing Rule 5250(c)(1) (Veradigm release), there still is no resolution about when their statements will be filed with the SEC. The company’s latest move was to force the resignations of CEO Richard J. Poulton and CFO Leah S. Jones, replacing them with two interims. From the board, Dr. Shih-Yin (“Yin”) Ho becomes CEO for six months and Lee Westerfield, CFO of Clearsense, becomes CFO. Mr. Poulton, a 10-year veteran, will receive a $1.6 million severance. Ms. Jones will receive a six-month continuation of salary plus additional payments to “provide business-development related services” which is corporate-speak for paying you to transition to her replacement. The board will search for permanent replacements for the CEO and CFO positions.

According to their announcement, the management changes resulted from “the Audit Committee’s previously disclosed, ongoing independent investigation, which is being conducted by legal counsel and relates to the Company’s financial reporting and internal controls over financial reporting and disclosure controls”. Reading it, Job #1 for the new team appears to be reviewing the fiscal 2023 guidance that was released on 18 September and regaining compliance with the Nasdaq Listing Rule. Veradigm also reiterated that they will have a 2020-22 revenue reduction “relating to certain revenue recognition practices.”  

Additional board changes include the chairman, Greg Garrison, as executive chairman and the appointment of Carol Zierhoffer (bio), retired CIO of Bechtel Corporation, as lead independent director. Perhaps Ms. Zierhoffer can help with the conundrum of a software company engaged in vital health and financial information transmitted via practice EHRs and practice management having its own massive accounting software problem derailing them for two years. CFO Dive has more details on the audit and a shareholder suit filed in November.

Update: A Nasdaq panel spared Veradigm’s exchange listing, for now. Mark 27 February 2024 as the date Veradigm is required to provide their 2022-2023 financial reporting to Nasdaq as required under Listing Rule 5250(c)(1). This was reported in Veradigm’s 8-K filing to the SEC on 13 December. Note that Nasdaq’s release states “The Company plans to file its Form 10-K and the Form 10-Qs as soon as possible; however, no assurance can be given as to the definitive date on which such periodic reports will be filed.” (Editor’s emphasis) Stay tuned. Healthcare Dive, 

No rescue for direct-to-consumer clear dental aligner provider SmileDirectClub. SmileDirect, which along with Byte (acquired 2021 by dental industry giant Dentsply Sirona), NewSmile, SnapCorrect, and several others market DTC aligners and teledentistry, failed to find a buyer or new financing after its Chapter 11 filing in September. The plan centered around the once-billionaire founders buying the company back, but they could not get their main lender HPS Investment Partners and other creditors owed $900 million, nor new investors, on board.

Heavily advertised SmileDirect IPO’d in 2019 with a valuation of $8.9 billion, but never turned a profit from its combination of DIY and teledentistry. Other drains were a patent fight with CandidCare and multiple patient complaints including jaw damage, migraines from misalignment, and tooth loss. Candid, like Invisalign, now works only through dentists who do the impressions, filings for tooth separation if needed, progressive aligner delivery, and tracking progress over what is typically one year for children, teens, and adults (over 60% of business). 

In the FAQs on the lone page on its website, SmileDirect no longer will honor customer contracts for aligners and dental checkups or lifetime guarantees, but continues to demand payment from patients on SmilePay contracts. (Good. Luck. With. That!) The Hill, Fortune, HIStalk 11 Dec. For the teledentistry service The TeleDentists, it is a marketing opportunity to join with Byte in prescribing and providing dentist services for their clear aligners (email promotion). The TeleDentists is also partnering with WebMD Care for consumers seeking care after researching a dental condition. (Release) 

(Editor’s note: Having gone through Invisalign as an adult to correct a growing problem with alignment, your Editor cannot conceive of a DIY approach to a complex process that also required a significant amount of daily self-discipline.)

Fruit Street Health sues former partner Sharecare for $25 million. The interestingly named Fruit Street provided its diabetes management program to digital health conglomerate Sharecare as part of Sharecare’s unified virtual health management platform for individuals and enterprises. Starting in 2018, Fruit Street had a business agreement with Sharecare to offer its CDC-recognized diabetes prevention program (DPP) on Sharecare’s platform. Sharecare now has its own diabetes prevention program, “Eat Right Now”, which Fruit Street claims violates the terms of its agreement. The lawsuit was filed in Fulton County, Georgia. Sharecare claims not only that the lawsuit is without merit, but also that Fruit Street owes them $3 million in payments.

Fruit Street was founded in 2014 as a public benefit corporation [explained here TTA 24 Feb] headquartered in NYC by Laurence Girard. It is modestly funded at $35 million. Atlanta-based Sharecare was founded 2018 by serial entrepreneur and WebMD founder/CEO Jeff Arnold with Mehmet Oz, MD, surgeon, TV celebrity, and former Senate candidate. Sharecare went public on Nasdaq in the palmy days of early 2021 via a SPAC with Falcon Capital Acquisition Corp. It broke out of the gate with a $3.9 billion valuation, but like most SPACs it cracked downward within months and shares now trade at an anemic $0.99. In January, current CEO Arnold will be transitioning to executive chairman. Long-time Centene exec and retired president Brent Layton will move from a board director position to the CEO chair (release). MedCityNews, Axios, 

Former Walgreens CEO Roz Brewer eyewatering compensation revealed. A final example of our third bullet above is the excellent financial arrangement Ms. Brewer had with Walgreens Boots Alliance. Her package of compensation and stock options awarded by the board was $71 million for about 30 months, which included a $4.5 million signing bonus to lure her from Starbucks, over half a million in moving expenses, and $60 million in three years of compensation. According to the information in The Messenger, a good portion was in stock which fell in value 57% during her time at Walgreens, continuing a trend before her arrival. It was also consistent with an executive termination without cause, which also tied her to non-disparagement and non-disclosure agreements. Was her departure by mutual agreement with the board? That is fairly typical language, but reports in the article attributed the real cause in this statement from a source indicating loss of confidence by the most important man at WBA, Stefano Pessina: “Stefano thought she was a lightweight and unable to do the hard, transformational things he needed her to do.” (Was buying the majority of VillageMD, starting the joint store/practice location plan, buying CareCentrix and specialty pharmacy Shields Health Solutions during her tenure, not quite enough? Perhaps too much spent in a hot market and not enough return, especially by VillageMD on Summit Health and CityMD?) 

Her departure and replacement by a healthcare veteran with directly related management and organizational expertise, Tim Wentworth, is yet another example of this particular cycle coming to completion. And now that we’re in the midst of clearing the field, what happens next?