The 50,000 foot pick as CEO of the JP Morgan Chase-Berkshire Hathaway-Amazon health joint venture

US healthcare is abuzz at the choice that JP Morgan Chase-Berkshire Hathaway-Amazon made to head their healthcare JV: Dr. Atul Gawande, currently practicing general and endocrine surgery at Brigham and Women’s Hospital and teaching as a professor at the Harvard T.H. Chan School of Public Health and Harvard Medical School. Dr. Gawande is presently an executive director of Ariadne Labs, a healthcare innovation center, a writer of four best sellers on healthcare and noted as an outspoken theorist on how the ‘broken’ healthcare system in the US can be fixed. (This Editor’s definition of ‘broken’ is slightly different, encompassing countries like Venezuela, Cuba, Zimbabwe, post-WWII Germany, and the Ceausescu-era Romania where the basics are simply not there for the average person.)

Dr. Gawande will transition to chairman of Ariadne and retain his surgical and teaching positions.

Praise for Dr. Gawande comes from many quarters. Andy Slavitt, the former head of CMS during the previous administration, said “There are few better people in health care” and praised his ‘moral leadership’ when approached by Messrs. Dimon, Bezos, and Buffett. Jeff Bezos: “We said at the outset that the degree of difficulty is high and success is going to require an expert’s knowledge, a beginner’s mind, and a long-term orientation. Atul embodies all three, and we’re starting strong as we move forward in this challenging and worthwhile endeavor.”

What is missing from this sterling public health advocate and practitioner’s resumé is obvious: real business management experience. Among his three soon-to-be-bosses, there is plenty of pontificating from 50,000 feet–for but one example, see this Editor’s POV on Jamie Dimon’s annual shareholder letter [TTA 10 Apr]. Here is what they stated as the purpose of the JV back in January: “partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs” and setting up an independent company “free from profit-making incentives and constraints. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.” And more in that vein. (Whew!) It was eye-rolling, even shortly after the announcement back in February.

But actually getting this done is not a TEDTalk. First, there is the hard in-the-trenches work to bring both the management and the 1 million employees of three very different companies onto the same page. Second, it is running the gauntlet of regulations on the national level (that CMS and HHS) plus in 50 states, if this combine chooses to operate as an insurer or PBM. Third, if they don’t, there is getting the cooperation of insurers (payers) who aren’t in business to lose money. There is not only regulation, but also what they are willing and can afford to do. This Editor noted back in January that large companies, including these three, “generally self-insure for healthcare. They use insurers as ASO–administrative services only–in order to lower costs. Which leads to…why didn’t these companies work directly with their insurers to redo health benefits? Why the cudgel and not the scalpel?”

This Editor would expect that a group of skilled senior, operationally focused executives will be hired to work under Dr. Gawande in Boston, where this unnamed-yet venture will be headquartered. There may be some more high-profile senior executives with unconventional backgrounds. From this (lower than 50,000 feet) perspective, Dr. Gawande will be the attention-getting CEO, spokesman, and pace-setter; others will be doing the heavy lifting behind the scrim. 

Beyond the usual glowing coverage on CNBC and TechCrunch, those in the business of healthcare are already expressing more sanguine opinions on the enterprise and how Dr. Gawande will be leading it with multiple medical, teaching, and writing commitments. Modern Healthcare has a fairly balanced article.

Scary Monsters, Take 3: one week later, JPMorgan Chase takes heat, Amazon speculation, industry skepticism

It’s the Week After the Amazon/Berkshire Hathaway/JPMorgan Chase announcement of their partnership in a non-profit joint venture to lower healthcare costs for their 1.1 million employees, and there’s a bit of a hangover. Other than a few articles, there’s been relative quiet on this front. This could be attributed to the financial markets’ roller coaster over the past few days, at least in part due to this as healthcare stocks were hardest hit. In the US, healthcare is estimated to be 18 percent of the economy based on Centers for Medicare and Medicaid Services (CMS) actuarial statistics for 2015…and growing. 

Jamie Dimon, CEO of JPMC, had some ‘splainin’ to do with some of the bank’s healthcare clients, according to a report in the Wall Street Journal (paywalled) summarized on MarketWatch. He assured them that the JV would be to serve only the employees of the three companies. JPMC bankers handling the healthcare sector also needed some reassuring as they are “paid handsomely to help clients with mergers and other deals and worry the move could cost them business.”

Speculation on Amazon’s doings in healthcare remains feverish. A more sober look is provided by the Harvard Business Review which extrapolates how healthcare fits into Amazon’s established strength in delivery systems. Amazon could deliver routine healthcare via retail locations (Whole Foods, Amazon Go), same day prescription delivery, passive data capture developed for Amazon Go sold as a service to healthcare providers (on the model of Web Services), and data analytics.

Headlines may have trumpeted that the three-way partnership would ‘disrupt healthcare’, but our Readers in the business have heard this song before. While agreeing with their intent, this Editor differed almost immediately with the initial media cheering [TTA 31 Jan]. The Twitterverse Healthcare FlashMob in short order took it down and apart. STAT racks up some select tweets: in the ACO model, savings come when providers avoid low-value care; the contradiction of profitable companies avoiding profit; that the removal of healthy employees from existing plans will increase inequity and the actuarial burden upon the less insurable; the huge regulatory hurdle; and the dim view of investment advisory firm Piper Jaffray that it will not be a ‘meaningful disruptor’. 

In this Editor’s view, there will be considerable internal politicking, more unease from JPMC customers, and a long time before we find out what these three will be doing.

Rounding up the roundups in health tech and digital health for 2017; looking forward to 2018’s Nitty-Gritty

click to enlargeOur Editors will be lassoing our thoughts for what happened in 2017 and looking forward to 2018 in several articles. So let’s get started! Happy Trails!

2017’s digital health M&A is well-covered by Jonah Comstock’s Mobihealthnews overview. In this aggregation, the M&A trends to be seen are 1) merging of services that are rather alike (e.g. two diabetes app/education or telehealth/telemedicine providers) to buy market share, 2) services that complement each other by being similar but with strengths in different markets or broaden capabilities (Teladoc and Best Doctors, GlobalMed and TreatMD), 3) fill a gap in a portfolio (Philips‘ various acquisitions), or 4) payers trying yet again to cement themselves into digital health, which has had a checkered record indeed. This consolidation is to be expected in a fluid and relatively early stage environment.

In this roundup, we miss the telecom moves of prior years, most of which have misfired. WebMD, once an acquirer, once on the ropes, is being acquired into a fully corporate info provider structure with its pending acquisition by KKR’s Internet Brands, an information SaaS/web hoster in multiple verticals. This points to the commodification of healthcare information. 

click to enlargeLove that canary! We have a paradigm breaker in the pending CVS-Aetna merger into the very structure of how healthcare can be made more convenient, delivered, billed, and paid for–if it is approved and not challenged, which is a very real possibility. Over the next two years, if this works, look for supermarkets to get into the healthcare business. Payers, drug stores, and retailers have few places to go. The worldwide wild card: Walgreens Boots. Start with our article here and move to our previous articles linked at the end.

US telehealth and telemedicine’s march towards reimbursement and parity payment continues. See our article on the CCHP roundup and policy paper (for the most stalwart of wonks only). Another major change in the US is payment for more services under Medicare, issued in early November by the Centers for Medicare and Medicaid Services (CMS) in its Final Rule for the 2018 Medicare Physician Fee Schedule. This also increases payment to nearly $60 per month for remote patient monitoring, which will help struggling RPM providers. Not quite a stride, but less of a stumble for the Grizzled Survivors. MedCityNews

In the UK, our friends at The King’s Fund have rounded up their most popular content of 2017 here. Newer models of telehealth and telemedicine such as Babylon Health and PushDoctor continue to struggle to find a place in the national structure. (Babylon’s challenge to the CQC was dropped before Christmas at their cost of £11,000 in High Court costs.) Judging from our Tender Alerts, compared to the US, telecare integration into housing is far ahead for those most in need especially in support at home. Yet there are glaring disparities due to funding–witness the national scandal of NHS Kernow withdrawing telehealth from local residents earlier this year [TTA coverage here]. This Editor is pleased to report that as of 5 December, NHS Kernow’s Governing Body has approved plans to retain and reconfigure Telehealth services, working in partnership with the provider Cornwall Partnership NHS Foundation Trust (CFT). Their notice is here.

More UK roundups are available on Digital Health News: 2017 review, most read stories, and cybersecurity predictions for 2018. David Doherty’s compiled a group of the major international health tech events for 2018 over at 3G Doctor. Which reminds this Editor to tell him to list #MedMo18 November 29-30 in NYC and that he might want to consider updating the name to 5G Doctor to mark the transition over to 5G wireless service advancing in 2018.

Data breaches continue to be a worry. The Protenus/DataBreaches.net roundup for November continues the breach a day trend. The largest breach they detected was of over 16,000 patient records at the Hackensack Sleep and Pulmonary Center in New Jersey. The monthly total was almost 84,000 records, a low compared to the prior few months, but there may be some reporting shifting into December. Protenus blog, MedCityNews

And perhaps there’s a future for wearables, in the watch form. The Apple Watch’s disconnecting from the phone (and the slowness of older models) has led to companies like AliveCor’s KardiaBand EKG (ECG) providing add-ons to the watch. Apple is trying to develop its own non-invasive blood glucose monitor, with Alphabet’s (Google) Verily Study Watch in test having sensors that can collect data on heart rate, gait and skin temperature. More here from CNBC on Big Tech and healthcare, Apple’s wearables.

Telehealth saves lives, as an Australian nurse at an isolated Coral Bay clinic found out. He hooked himself up to the ECG machine and dialed into the Emergency Telehealth Service (ETS). With assistance from volunteers, he was able to medicate himself with clotbusters until the Royal Flying Doctor Service transferred him to a Perth hospital. Now if he had a KardiaBand….WAToday.com.au  Hat tip to Mike Clark

This Editor’s parting words for 2017 will be right down to the Real Nitty-Gritty, so read on!: (more…)

The Theranos Story, ch. 39: good news, bad news, and the ugly lawsuit news

click to enlargeIt’s that darn well again! Theranos‘ News of the Week ran the gamut from cheap, to expensive, to potentially business terminating.

Cheap was the settlement of the Center for Medicare and Medicaid Services (CMS) civil penalty against the company for a pinprick of $30,000. What remains: that Theranos cannot own or operate any labs for the next two years. As the company has downsized and done the Silicon Valley pivot to developing labs and testing platforms, the settlement is the barn door closing after the horse has exited and crossed the state line. Theranos press release,

Expensive was the settlement of the Arizona legal action brought by the state Attorney General, Mark Brnovich. $4.65 million settled matters, providing full refunds for 175,940 Arizona consumers who ordered between 2013 and 2016 approximately 1.5 million blood tests and 7.8 million results. Also on the tab are $200,000 in civil penalties, $25,000 in attorneys’ fees, and a claims administrator to dole out the refunds. While it was estimated that only 10.5 percent of tests were inaccurate, the consumer fraud charges were easier for Theranos to settle without admitting wrongdoing. A solid win for the AG as well. Background on this in Ch. 33. Ars Technica, Bloomberg, Theranos press release

Potentially disastrous is the go-ahead given to one of the many lawsuits against Theranos, also charging Elizabeth Holmes and former CEO Ramesh ‘Sunny’ Balwani. The US District Court for the Northern District of California ruled in the case brought by two shareholders, Robert Colman and Hilary Taubman-Dye, represented by Hagens Berman (Ch. 27), that most of the claims of investor fraud would proceed. Theranos’ sole success was having the charge of misrepresentation of securities under the California Corporations Code dismissed on the technicality of purchase from a third party seller. The more damning claims of direct misrepresentation by Ms Holmes and Mr Balwani, mentioning news articles and their advertising campaign, were upheld. Interestingly, the plaintiffs must now show cause why the third party sellers (Lucas Venture Group, Celadon Technology Fund, SharePost), should not be included as defendants. The stage is now set for a class-action lawsuit with potentially thousands of other investors. Theranos page on Hagens Berman website, District Court ruling document.

The final countdown is at the bank. In March, Theranos reported $150 million in cash (ch. 38), down from $200 million in January. Subtract $30,000 to CMS, $4.65 million to Arizona, legal fees, pending lawsuits, and running expenses–with no investors and revenue in–and a burn of about $50 million a quarter, it will be Taps for Theranos before end of year.

Humana-Omada Health diabetes prevention program could cut $3 bn in Medicare expense: study

A study performed by insurer Humana using the Omada Health program for diabetes prevention effectively lowered weight, improved cholesterol, blood glucose and mood. 500 volunteer subjects from Humana’s Medicare Advantage program, enrolled during 2015, lost an average of 13 to 14 pounds over a year (7.5 to 8 percent). They also saw improvements in cholesterol levels, blood glucose levels and subjective measures of moods and self-care. Individuals were chosen from administrative medical claims based on metabolic syndrome diagnosis or a combination of three of four of the following diagnoses: prediabetes, hypertension, dyslipidemia, and obesity. Based on the researchers’ calculations, this type of prevention program among this group if widely implemented among overweight adults could reduce Medicare costs by $3 bn over 10 years, not only for diabetes but also heart disease and high blood pressure.

Omada Health’s program included an online small group support, personalized health coaching, digital tracking tools, and a weekly behavior change curriculum. These one-hour lessons focused on a single topic were delivered via laptop, tablet, or smartphone, and included interactive games or exercises, written reflections, and goal-setting activities. The content was approved by the CDC Diabetes Prevention Recognition Program. Data was gathered via wireless scale, pedometer for physical activity, online food intake logging and standard lab results. “In conclusion, this study demonstrated that older adults who agreed to participate in this program were able to engage meaningfully and gain important health and wellness benefits during a relatively short time frame.”

While the cost reduction estimate is exactly that, other studies directionally confirm health improvement and savings: the National Diabetes Prevention Program (NDPP) which is the model for the Omada program, the BMJ/Noom Health study, and the Fruit Street/VSee telehealth program being used by St. Jude Children’s Research Hospital, University of South Florida and University of Michigan. mHealth Intelligence, study (full text in Journal of Aging and Health/Sage Journals)

Health execs’ wish list for 2017: security, analytics, pop health…and telehealth (US)

click to enlargeHealthcare IT News published the results of their October survey of 95 healthcare executives as to their forward plans (resolutions?) for 2017. It’s unsurprisingly centered on upgrades to the following areas:

  • Data security (52 percent)–definitely making up for lost time and spending due to the obvious threats from hacking and data breaches. In November alone, nearly two incidents a day (57) and over 458,000 records were reported by healthcare entities to HHS. (Protenus Breach Barometer)
  • Data analytics (51 percent)–figuring out what to do with all that patient data generated by….
  • Patient engagement and population health (44 percent each)–demanded by quality standards in CMS’ MACRA Quality Payment Program (QPP), including the Merit-Based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs)
click to enlargeThe surprises come here–the technologies they expect to introduce or investigate. Analytics and workflow correspond to the last two points above, but what is compelling is an apparent tipping point for technology which links the patient to care monitoring and access: telehealth (44 percent), smart medical devices (41 percent) and remote patient monitoring (34 percent). These overlap (as in telehealth and RPM require smart medical devices), yet these are strong numbers if they accurately reflect these execs’ actual (or eventual) spending. (Does it point to more clinically validated use of trackers like Fitbit? The Magic 8 Ball does not tell here….)

The presence of 2016-17’s ‘It Girl’, precision medicine (21 percent), which applies both data analytics and genomics to improve patient outcomes, isn’t surprising with the emphasis on quality care.

One can quibble that the sample size is small N, and the report doesn’t confirm the selection details like title, location, and type of organization, but the direction has to be cheering on many fronts. HITN’s overview, survey results (16 slides)

The Theranos Story, ch. 28: when the SecDef nominee is on the Board of Directors

click to enlargeDoes ‘Mad Dog’ ‘Warrior Monk’ James Mattis, General, USMC (ret.) have a blind spot when it comes to Theranos? President-Elect Donald J. Trump has selected him as the next Administration’s nominee for Secretary of Defense. A remarkable leader and, yes, scholar (check his background in various sources), but he has some ‘splaining to do, in this Editor’s opinion.

This Editor leads with this question because those who have been following the Continuing Saga (which, like the Nordics, seems never-ending) know that Theranos stuffed its Board of Directors (BOD), prior to last October, with a selection of Washington Luminaries, often of a great age: Henry Kissinger, George Shultz, Sen. Sam Nunn, Sen. Bill Frist (the only one with an MD), William Perry and Gary Roughead, a retired U.S. Navy admiral. It also reads like a roster of Hoover Institution Fellows except for Sen. Frist, who sticks to the East Coast. Another interesting point: Hoover is based at Stanford University, an institution from which Elizabeth Holmes dropped out to Follow Her Vision. Obviously, there was an accompanying Vision of Washington Pull.

Also joining the BOD as of July 2013, well before The Troubles, and shortly after his retirement, was Gen. Jim Mattis (also a Hoover Fellow, photo above). When the Washington Luminaries were shuffled off to a ‘board of counselors’ after the Wall Street Journal exposé hit in October, Gen. Mattis remained on the governing BOD. Unlike his fellow Fellows, he had actually been involved with a potential deployment of the lab testing equipment. As we previously noted, as commandant of US Central Command (CENTCOM is Middle East, North Africa and Central Asia), he advocated tests of the Theranos labs under in-theatre medicine conditions in 2012-13. Leaked emails cited by the Washington Post (in Gizmodo) and also in the Wall Street Journal indicate the opposition from the US Army Medical Research and Materiel Command at health-intensive Fort Detrick MD, which oversees medical research, based on the undeniable fact that the equipment and the tests weren’t FDA-cleared, which remained true two years later…and which Gen. Mattis tried to get around, being a good Marine. Nonetheless, the procurement of Theranos equipment was halted. DOD permitted him to join the BOD after retirement as long as he was not involved in any representations to DOD or the services. (Wikipedia bio)

Yesterday, Theranos also announced that it is dissolving (draining?) the ‘board of counselors’. They led with a BOD shuffle, with Daniel J. Warmenhoven, retired chairman of NetApp, replacing director Riley P. Bechtel, who is withdrawing for health reasons. (Warmenhoven also serves on the Bechtel board, so they are keeping an eye on the estimated $100 million they invested). Gizmodo and Inc. While effective January 1, the Theranos website has already scrubbed the counselors and updated the BOD.

However, Gen. Mattis remains a director, until such time as he actually becomes Secretary of Defense, which is not a lock for Senate approval by a long shot. First, he requires a Congressionally approved waiver demanded by the National Security Act of 1947, as he has been retired only four years (as of 2017) not the required seven. Second, his involvement with Theranos has already been questioned in the media. After all, it is a Federal Poster Child of Silicon Valley Bad Behavior: censured by CMS, under investigation by SEC and DOJ. It is a handy, easily understandable club with which to beat him bloody (sic). WSJ’s wrapup.

In this Editor’s opinion, the good General should have left in October, but certainly by April when CMS laid the sanctions down, banning Ms Holmes and Mr Balwani from running labs for two years in July. What is going on in the ‘Warrior Monk’s’ mind in sticking around? Is there anything to save? 

If the WSJ articles are paywalled, search on ‘Gen. James Mattis Has Ties to Theranos’ and ‘Recent Retirement, Theranos Ties Pose Possible Obstacles for Mattis Confirmation’.  Oh yes…see here for the 27 previous TTA chapters in this Continuing, Consistently Amazing Saga.

The Theranos Story, ch. 24: looking for the nadir in Walgreens’ lawsuit

click to enlargeWhen will we find the nadir of Theranos’ business practices? Between the excruciating details of the Walgreens lawsuit and the treatment of an employee who knew the truth in 2014 (part 2), the bottom, like Jacob’s Well in Texas at left, may be unfindable.

The first is what is revealed in the public version (filed 15 Nov) of the civil complaint filed with the US District Court, District of Delaware (PDF). While heavily redacted in parts of text and in the exhibits, it is damning if all true–and there is little available information that does not fit Walgreens‘ narrative, though this Editor was left wondering why red flags about Theranos didn’t flap ‘n’ fly at Walgreens much earlier, especially with a reported $140 million investment at stake.

The relationship began in January 2010. A March presentation by Theranos included some astonishing claims: the Theranos finger-stick blood draw lab analysis had been comprehensively validated by ten of the leading fifteen pharmaceutical companies over seven years; that bio-pharma companies, “prominent research institutions, and US and foreign government health and military organizations” had already used the technology; that Theranos was capable of launching it in retail stores by end of 2010. They also represented that they were positioned with FDA to introduce the technology outside of clinical studies. Johns Hopkins, contracted by Walgreens to validate their methodology, could only work with data provided by Theranos.

Did anyone at Walgreens think to check with said pharmas, researchers, government health and military organizations? There was time. The master agreement was not signed until 2012 and pilot stores opened in 2013.  (Pages 5-10, section 24 through 50). Interestingly, pages 11-12 which may deal with the labs, as well as many other parts, are heavily redacted.

In short, there is a gap of at least two years when Walgreens could have double-checked Theranos’ claims and methods, especially in the crucial period before pilot locations were opened. (To be fair, Theranos successfully maintained a veil of secrecy and a wall of PR smoke.) But the repercussions were huge.  It seems that Walgreens only woke up from the dream when the Wall Street Journal published its investigation another two years later in October 2015. In the immediate aftermath of the article, Walgreens learned that Theranos had abandoned the finger-stick draws…and that the head of the Newark CA lab was a full-time dermatologist onsite once a week (page 15).

After that point, the Theranos fan dance with Walgreens accelerates.

  • Theranos concealed the January and March 2016 CMS notices and subsequent reports on its labs to Walgreens until again the WSJ publicly revealed it (pages 17-18, 25). They also attempted to conceal the CMS rejection of the Plan of Correction for its labs (page 24).
  • Theranos accused Walgreens of breaching the agreement and confidentiality to the WSJ , and also cited delay in building out Wellness Centers–in February 2016 (pages 20-21)
  • Walgreens received nothing but evasions from Theranos including no notification of ‘tens of thousands’ voided results, including critical PT/INR coagulation results, until after the WSJ broke that bit of news on 18 May (page 26).

By 12 June 2016, the wheels were fully off (and the world was minding, indeed) and Walgreens called the breach of warranty. But even then, this was not until a final push–lawsuits were filed against both Theranos and Walgreens starting in late May.

One wonders how many reputations are on a stake (to mix two metaphors) at Walgreens Boots. Details in Ars Technica (which obtained the PDF and broke the story) and of course Neil Versel’s acerbic POV in MedCityNews. Hat tip to reader David Albert MD of AliveCor.

See here for the 23 previous TTA chapters in this Continuing Saga.

The Theranos Story, ch. 22: the human cost of lab error (updated)

click to enlargeSave this one for the coffee or lunch break. What is the cost of a lab error on the human psyche? It can be mildly upsetting to you and your doctor, warning of a developing condition and some changes have to be made–or make for a very bad day/week/months. It can be falsely reassuring or simply confusing.

We know that in April, Theranos flunked a CMS review, and in May voided all test results from its proprietary Edison devices from 2014 and 2015, as well as some other tests it ran on conventional machines. The results were not only off, but way off, according to the WSJ. “Notes from the CMS inspection show that 834 out of 2,890 quality-control checks run on the Edison in October 2014, or 29%, exceeded the company’s threshold of two standard deviations from its average result. Standard deviation is a statistical measurement of variation. In addition, 80% of the 834 quality-control checks that raised a red flag under Theranos’s internal standards were more than three standard deviations from its average result, the inspection notes show.”

They also failed to notify patients for weeks or months, and often not until forced to. At least 10 lawsuits have been filed in Arizona and California. Some of the human stories of Theranos’ improbable lab results, which included tens of thousands of patients, with the cost of retesting, repeated doctor visits and agonizing suspense :

  • After five widely different Theranos blood coagulation tests in six weeks, a retired marketer living in Arizona and his doctor so distrusted the results that the latter recommended that he stop taking warfarin and switch to a milder medication. This patient found out only last Friday that Theranos had corrected a September 2015 test showing his blood taking more than six times longer than normal to clot. The other four tests showed the warfarin wasn’t thinning his blood enough. Contradictory results confusing both doctor and patient on treatment.
  • A thyroid cancer survivor got thyroxine results (T4) from three tests conducted in October 2014. The extremely high results could have indicated hyperthyroidism at the least, or a more serious condition. The results–false after retesting failed to confirm.
  • A breast cancer survivor had extremely high levels of estradiol, which could have been produced by a rare adrenal tumor that can secrete estradiol or an elevated risk of breast-cancer recurrence. Again, false results but found only after retesting.

The comments under the article are worth the long scroll. (They are running 98 percent in favor of Holmes for Prison 2017. Also there are a few shots at Walgreens’ role in legitimatizing Theranos by putting their centers in store; this embarrassing part of the story isn’t over, in this Editor’s opinion.) What is evident–fraud perpetrated on patients and doctors–and anyone who invested. David Boies, their legal supremo and board member, is gonna have a full docket between this and the various legal actions taken by the Alphabet Agencies.

Agony, Alarm and Anger for People Hurt by Theranos’s Botched Blood Tests. If the WSJ is paywalled, search under the headline text.

See here for the agony of TTA’s 21 previous Theranos chapters. We hope that John Carreyrou and the WSJ investigative team, which we’d assume includes Mr Weaver, this article’s author, are awarded the Pulitzer Prize.

Population health is everywhere (US)

Last week, CMS published the ominously dubbed Final Rule on MACRA (the Medicare Access and CHIP Reauthorization Act of 2015) which utterly changes how physicians are compensated by Medicare and the various monetary incentives they have in quality and patient-centered care. This Editor is not going to get into interpretation of 2,300+ pages, but her belief is that this will not be effective in 2017 as designed, as literally it is over-complex and not understood by those who implement patient care. The dizzying models include Merit-Based Incentive Payment System (MIPS) and for the daring, the Advanced Alternative Payment Model (APM). All great business for the 100 or so ‘value-based consultants’ ready to help those expensively organized ACOs which thought they’d be rich from Meaningful Use. Oh, and what about the patient and their well-being in the meantime?? Healthcare Dive, Healthcare IT News and here  Don’t hunt for CMS’ fact sheet–it’s here. Don’t look for much about telemedicine and remote monitoring, which apparently was included in the law but not in the Final Rule for MIPS but is a part of the Advanced APM. Congress may act to expand Medicare’s payment policy on telehealth, but don’t hold your breath for it happening this year. POLITICO Morning eHealth 19 Oct

But population health and the data analytics that’s needed to get a handle on both large-scale patient health trends to allocate care where it is needed, and the financial metrics that organizations need, is hot. Verily Life Sciences (Alphabet-Google’s ever versatile healthcare tech arm) is allying itself with 3M Health Information Systems. (This Editor bets that you never thought that the Post-It Notes company was in health information!) According to the article, 3M’s part has to do with its business in coding, classification and risk-stratification methodologies. Verily will bring to the party data analytics, algorithms and software development. Healthcare IT News

This Editor also noted IHS Markit’s analysis of MACRA mixed with a bit from ATA’s Fall Forum. One insight: And now CMS plans to tie 90 percent of traditional Medicare fee-for-service payments to value-based payments in 2018. A lagninappe: “MACRA will help telemedicine to simply become another modality within healthcare delivery.” The wrapup is quite illuminating.

As identified during a recent consumer survey conducted by IHS Markit on digital health trends in the US, patients are interested now more than ever in sharing their healthcare data, and provider communication is at a low: (more…)

The Theranos story, ch. 17: closing the barn door after the horse

click to enlarge And it may work, though the horse is in the next county. Late last week, with American eyes elsewhere, Theranos announced that they hired two executives with regulatory responsibility–a chief compliance officer and an VP regulatory and quality–and formed a new board committee focused on same. The CCO is Dave Guggenheim, the former assistant general counsel for regulatory law at HIT/medical distribution giant McKesson. The VP, Daniel Wurtz, comes from a similar senior director position at biotech Thermo-Fisher Scientific.

The country maxim, ‘closing the barn door after the horse has bolted’, applies. In fact, the horse is in town and having a growler of beer at the local tavern. The Newark, California lab is shut and the principals, including the CEO Ms Holmes, are technically prohibited from operating a lab for at least two years (that means you, Ms Holmes) starting in a month. Messrs Guggenheim and Wurtz (or similar) should have been on board years ago. Even small companies in our field realize they HAVE to do this!

This also doesn’t affect the interesting interest that DOJ and SEC have in Theranos. [TTA 10 July]

However, this Editor will take the contrarian view that somehow, some way, the ‘fix’ is being worked out, if not in. Don’t make reservations for the fire sale quite yet. The ban on Ms Holmes won’t take place for another month, minimum. That gives time for David Boies, their legal supremo, and his firm to stall for more time, and time for some calls to ask favors from friends, of which he has many in this administration. More than likely, Boies on behalf of Theranos will appeal the CMS rulings to an administrative judge. Ms Holmes may take the hit, but may get a handsome payday to depart despite her reported control, if the investors can salvage something out of the company.

At HQ, they may be rehearsing saying ‘mea culpa, mea culpa, mea maxima culpa’ three times, kneeling deeply, in preparation to Going Forth And Sinning No More.

The Object Lessons taught by the Theranos Troubles, to us in healthcare tech, continue.

WSJTheranos Hires Compliance, Regulatory Executives  (more…)

Theranos denouement: CMS closes lab, fine, 2-year ban on Holmes (breaking)

click to enlargeBreaking News. Theranos has been slapped very soundly by the Centers for Medicare & Medicaid Services (CMS) for violations arising from operations at their Newark, California laboratory. The fine is not disclosed. CMS has revoked the lab’s certificate and also prohibits the owners and operators of the lab from operating a lab for at least two years. That means that Elizabeth Holmes, the CEO, her management and anyone immediately involved with the Newark lab is effectively out of a job.

As the Theranos press release was issued well after hours Thursday night US Eastern Time, there’s no mention of the board actually removing her, but that is another shoe that this Editor expects to drop sooner, not later. COO Sunny Balwani was removed in May [TTA 19 May] Who is not tainted who can actually run the company? Is there a capable person in the industry who wants to touch it? As has been revealed, Ms Holmes still controls the company [TTA 27 Apr].

The revocation will be in effect in 60 days, according to the Wall Street Journal*, but the Newark lab has been closed. There is no mention of the Palo Alto lab which was also under scrutiny [TTA 20 Apr].

The details appear to be lifted or nearly lifted from the CMS order, and are quoted directly from the Theranos release: (more…)

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. (more…)

Theranos–the drama and examination continues

The latest chapters:

Theranos’ boards–the advisory board chock full of Blast From The Past political figures like George Shultz, Sam Nunn, Bill Frist and Henry Kissinger–and a governing board–are standing by CEO/founder Elizabeth Holmes. Of course, they have essentially no choice, because Ms Holmes utterly and completely controls the company in the Silicon Valley Manner. The governing board, split off from the advisory board after The Troubles started last October–consists of Ms. Holmes, COO Sunny Balwani, Riley Bechtel of the eponymous construction firm, retired Marine Corps General James “Warrior Monk” Mattis and David Boies, prominently featured in both articles below. Mr Boies is politically well wired and the kind of attorney you call in when you are facing Big Trouble and need Big Defense–or Offense. These boards of course bear responsibility for the governance of the company, including fiduciary, and the actions being taken by CMS, the US Attorney’s office in San Francisco and the Securities and Exchange Commission (SEC) may be making for some sleepless nights. New York Times, Vanity Fair (which overlaps the NYT article)

Trust But Verify is the extraordinarily apt ‘eyebrow’ on this ‘rise and fall’ Quartz article reviewing l’affaire Theranos by a professor of medicine at Dartmouth College. For the non-scientists among us, it gives a layman’s explanation on why venous blood for most tests is needed versus fingerpricks (the latter mixes blood and tissue fluid, and doesn’t accurately measure large molecules such as proteins and lipids–but fine for the smaller blood glucose molecules, as testing diabetics know). It also touches on the Icahn Institute/Mount Sinai study [TTA 26 April, see comment] and points to the Smoking Gun of boards largely not constituted of those with medical or biochemical expertise.

Update: Bloomberg explores a POV in an opinion piece that blood tests are inherently variable, and only one factor in a proper diagnosis. Theranos’ promises to run multiple blood tests on a tiny quantity of blood are not only suspect but also that the “assumption that succeeding in this quest would improve public health” is specious indeed. Theranos and the Blood Testing Delusion

The stakes are high, and getting higher, for Ms Holmes, indeed.

[Ed. Donna’s comment below our earlier article, Theranos’ triple whammy: CMS, DOJ and SEC, addresses some concerns our Readers may have about our coverage. While we are a website interpreting the news and the Editors generally refer to multiple published sources in an article to supply various points of view, we also express our opinions. We try our level best to be fair, to stay in good humor and buttress our points. When you the Reader has a point to add, differs with our interpretation, or believes that your Editors are hanging too far out on that swaying limb, please feel free to comment. We do have a Comments policy which isn’t onerous…it’s posted here.]

Unspinning the Theranos scientific advisory board communications spin

click to enlargeSpinning oh so flatly…..As reported in MedCityNews (and here) yesterday, Theranos has made a Radio City Rockettes-showy move in opening at least part of its scientific books to a prestigious group of eight academic researchers from top-flight institutions. The Theranos press release is a masterpiece of positive spin to counter the negative results of the CMS report released last Thursday. However, when the fine-spun web is picked apart by Matthew Herper, a staff reporter for Forbes, it embarrassingly falls apart. The clues are all there, of course, in the elided language, the lack of specificity on numbers, the over-the-top quotes from the CEO and one of the advisory board members….

Upon interviewing three members of the scientific and medical advisory board, the glowing statement of Dr Helfet–who had been a co-chair of Theranos’ existing scientific board–was revealed as not quite accurate in the impression it gave.

  • The full advisory board has not met as a group yet. The impression was given in the release that they did.
  • They were split into three groups, each spending about a day at the Palo Alto HQ “viewing data shown to them by the company about its blood tests, examining Theranos’ Edison machines, and asking questions”. They did not visit any working labs, including the two under CMS fire.
  • Drs Ladenson and Spitalnik thought that what they saw looked “promising” and “intriguing” but would not answer questions on whether Theranos’ devices were ready to be used. Eight hours for Dr Spitalnik was, as he stated, was enough to whet the appetite, but not more than that.

It remains that Theranos has not published one peer-reviewed study, despite promises, promises. The company leadership took in a lot of investor money, gained a $9 billion valuation, got Safeway and Walgreens as partners (now rescinded)–never proving that Theranos’ tests would do what they said they would do. Besides being the bottom line and the one proposition that must be proved, they potentially endangered trusting patients in Arizona and California. And gave a black eye and probably a broken nose to innovation in and consumer access to lab testing.

At least the Yak-52 aerobatic aircraft and its pilot are in a planned, recoverable flat spin. Nothing about Theranos’ spin can be. Forbes

Theranos flunks CMS review. Is there a there, there?

There is no kinder way to put it. The impression that Theranos is equivalent to what writer Gertrude Stein said of her vanished home in Oakland, California–‘there is no there there’–is building. The US Center for Medicare and Medicaid Services (CMS) after multiple inspections in 2014 and 2015, found that the company failed its own standards on its proprietary Edison blood-testing and analysis system. Cited by the Wall Street Journal, which had access to the full 121-page report, is that “erratic quality-control results for Edison-run tests were frequent in July 2014 and from February 2015 to June 2015.” Overall, Edison devices produced test results that differed widely from traditional lab machines for the same blood samples. Additional problems were unqualified staff, blood samples at the wrong temperature and delays in notifying patients of flawed tests.

Theranos has promised to make further corrections at its Newark, California testing site but it may be too late. “CMS has deemed the company’s plan inadequate and plans to impose sanctions against Theranos, according to people familiar with the matter. In January, the agency said the punishment could range from fines to suspending or revoking the lab’s certification to legally test human samples.” (WSJ)

No stronger case has been made for an early-stage company under-promising and over-delivering than this, especially in health. There is no joy in hearing the grand slam of its $9 billion valuation cratering, but on the other hand, there are a lot of other worthy startups and early-stage companies which could have used the funding. A high profile fail such as this scares off investors from angels to VCs worldwide and tarnishes the entire health tech sector as well as young entrepreneurs. Also many of us looked forward to inexpensive, retail driven, minimally sampled blood testing.

In this Editor’s view, the wide-eyed CEO Elizabeth Holmes should attend more to the integrity of her company’s operations and less to working political connections such as Hillary Clinton fundraisers (last month) and putting everyone from Henry Kissinger, George Shultz and retired Marine Gen. James Mattis on the company’s board of governors (BioSpace). In Marine-speak, knock it off.

Ed. note: If the WSJ is paywalled (search on the headline “Theranos Devices Often Failed Accuracy Requirements” to get around it), see BioSpace. Previous coverage in TTA here.

Update 7 Apr: Some effort in the operations integrity area was made with another Theranos announcement of eight Scientific and Advisory Board members appointed (only two with any previous connection to the company) and three scientific review sessions at their Palo Alto HQ. MedCityNews