Short Takes: Amazon buys symptom checker Health Navigator; Ettain Group acquires EHR consultant Leidos Health (updated)

Amazon’s acquisition of startup Health Navigator, a developer of online symptom checking and triage tools sold to other digital companies to integrate into their digital health solutions, is another foray into healthcare. In this case, Health Navigator is a straightforward fit into their Amazon Care unit which provides enterprise virtual care benefits. No transaction amount, leadership, nor timing are mentioned. This is unlike their purchase earlier this year of online pharmacy PillPack for a stunning $700+ million. After roadblocks on getting the patient data they need [TTA 12 Sept], and other stumbles, PillPack has been folded into their consumables group and right now is not challenging CVS or Walgreens in any meaningful way. CNBC

Charlotte NC-based ettain group has purchased EHR consultancy Leidos Health. The divesting parent, Leidos Inc. is best known to our Readers for its contract with the US Department of Defense in the replacement of the ancient AHLTA EHR with a Cerner system. The acquisition will reinforce Ettain’s healthcare IT sector. Leidos Inc. remains in business in the government and private healthcare sectors for consulting and retains the MHS Genesis contract. Unfortunately, the announcement is dimmed by a poorly written and elliptical release.

Update: A spokesperson for ettain group (lower case correction) has clarified via email that they have “acquired Leidos Health LLC which is a commercial EHR staff augmentation services business. This is not to be confused with Leidos Inc, the original parent company that still maintains a health business that manages the DOD MHS Genesis program. Basically, the ettain group transaction doesn’t include MHS Genesis.”

News and event roundup: Amazon PillPack, Humana joins CTA, NH’s telemedicine go, Fitbit Lives Healthy in Singapore, supporting Helsinki’s older adults, events

Now that we are past the unofficial end of summer, it’s time to spin that lasso and rope us some news.

Amazon’s PillPack loses a critical data partner. Electronic prescriptions clearinghouse Surescripts terminated their data contract with ReMy Health, which supplied PillPack with information on patients’ prescriptions. Surescripts found fraud in several areas of their relationship with ReMy Health including medication history, drug pricing, and insurance billing. Now PillPack has to obtain it the old-fashioned way–by asking the patient. This can lead to errors and inaccuracies in things like dosages and whether a drug is brand-name or generic. Now PillPack, in the lurch, is seeking a direct relationship with Surescripts. Seeking Alpha, CNBC

Health plan Humana is the first payer to join the Consumer Technology Association (CTA). Humana has been building up his data analytics and digital health capabilities with new ‘studios’ in Boston and hiring USAA’s CTO.  It’s piloting an app for Medicare Advantage patients to connect them with pharmacists and medication management via Aspen RxHealth plus working on a virtual digital primary model with telemedicine provider Doctor on Demand. Fierce Healthcare

New Hampshire is joining the telemedicine reimbursement bandwagon, with its legislature and Gov. Sununu approving primary care providers and pediatricians to bill Medicaid and private insurance for telemedicine visits starting in January 2020. This also ties into rural telehealth. AP, Mobihealthnews

Internationally….Fitbit is partnering with Singapore’s Health Promotion Board (HPB) for the Live Healthy SG behavioral change program, based on the Fitbit Premium program, starting in late October. Mobihealthnews A-P   In Finland, Digital Service Center Helsinki is creating digital tools and virtual care systems to enable older adults to safely and independently live at home, including socialization to prevent loneliness. It’s a significant challenge as over 22 percent of Finland’s population is over 65. Mobihealthnews Europe-UK

Events:

The 9th International Digital Public Health Conference series (#DPH2019), 20-23 November, Marseille, France. This conference is billed as the digital health partner of the 12th European Public Health Conference and brings together the areas of public health, computer and data science, medtech, and NGOs. Conference information here.

Aging 2.0 New York Global Innovation Showcase 4 December, NYC. One of a series of global Aging 2.o events, startups will present aging-focused innovations. Want to pitch? It’s still open–apply here. Register to attend here. Additional information on this and on CREATE’s Design for Older Adults Workshop on 21-22 October at Weill Cornell is here.

 

The CVS-Aetna merger hearing draws to a dreary, weary close

The train is moving so slowly on the tracks that even Pauline is getting some shut-eye. The minimal coverage given to last Wednesday’s hearings in the Court of Judge Richard Leon on the CVS-Aetna merger is understandable, as the hearing trod the well-worn path without a hint of when this will all Wind Up:

  • The Department of Justice argued that the concerns over the merger were settled via divestiture of its pharmacy benefit management (PBM) operation
  • The amici curiae witnesses (AIDS Healthcare Foundation (AHF), the American Medical Association (AMA), Consumer Action and U.S. PIRG) countered that it’s nowhere near enough, that the PBM competition represented by a new company would not be enough and higher drug prices would result.
  • Anything said by the DOJ attorneys or the ability to call more witness after the earlier hearing was derided by Judge Leon as “phantasmagorical,” “violating the first rule of holes”, and typified by the generally favorable to the judge Columbus Dispatch as “scolding”.

This Editor found no mention of the five states–California, Florida, Hawaii, Mississippi, and Washington–which were supposed to participate in the hearing to support the DOJ position [TTA 17 June]. One has to presume that they were not very vocal or permitted to be so.

Instead much was made of the judge’s interest in the AIDS Healthcare Foundation (AHF) remedies targeting relief for specialty and community pharmacies:

  • All rival pharmacies should have non-discriminatory access to CVS Caremark’s pharmacy networks at fair reimbursements that cover actual drug costs and dispensing costs.
  • Managed care plans should not be denied access to CVS Pharmacy networks, and that managed care plans’ access should be at a fair price.
  • All Aetna plan members must be allowed to opt out of any CVS/Caremark specialty or other mail order programs.

So the hearings wind down, with increased speculation that Judge Leon will simply disallow the merger sometime in the future, which will set up another round of court actions by the merged organizations on the merits and whether the Tunney Act can even be used in this way. And meanwhile, online pharmacies like PillPack scoop up the cream off CVS Caremark’s business. Healthcare Dive, Yahoo News.

CVS-Aetna merger closes, but hardly ‘rubber stamped’ in Federal court

The deal is done, but expect unhappy holidays. As expected, the $69 million CVS-Aetna merger closed the week after Thanksgiving, on Wednesday 26 November, and are proceeding with their integration. Later that week, a Federal judge in the Washington, DC District Court complained at a hearing that both companies had treated him as a “rubber stamp” for the agreement. He was “less convinced” than the Department of Justice that the merger was legal under US anti-trust law. Yesterday (Tuesday 3 Dec), Judge Richard Leon ordered both companies and the DOJ to file briefs by 14 December “to show why their integration should not be halted while he considers whether or not to approve the consent decree reached in October,” according to Reuters.

This is despite various pounds of flesh:

  • The Department of Justice imposing the condition that Aetna sell its Medicare Part D drug plan business to far smaller WellCare Health Plans
  • New York State’s Department of Financial Services extracting concessions around their concerns: acquisition costs will not be passed onto consumers through increased premium rates or to affiliated insurers; maintaining current products for three years; privacy controls; cybersecurity compliance. Oh yes, a small $40 million commitment to support health insurance education and enrollment. (Healthcare Finance 26 Nov)
  •  But New York is a piker in its demands compared to California. The Department of Managed Health Care Director approved the merger based upon:
    • Minimal increases in premiums–and no increase due to acquisition costs
    • Investing $240 million in the state healthcare delivery system, including $166 million for state healthcare infrastructure and employment; $22.8 million to increase the number of healthcare providers in underrepresented areas like Fresno and Walnut Creek by funding scholarships and loan repayment programs; and $22.5 million to support joint ventures and accountable care organizations (ACOs) in value-based care (Healthcare Finance 15 Nov)

A CVS spokesman said in an email after the hearing: “CVS Health and Aetna are one company, and our focus is on transforming the consumer health experience.” (CNBC)  That transformation according to CVS president Larry Merlo involves expanding healthcare services beyond their present clinics to managing high-risk, chronic conditions, and transitions in care. Aetna’s expertise will be invaluable here as well as in an rumored expansion to urgent care (Seeking Alpha). All to out-maneuver Amazon, of course, which is promoting (on TV) PillPack and has applied for additional pharmacy licenses to ship drugs to customers in Washington, New Mexico and Indiana from their Phoenix facility (Healthcare Finance).

It appears that Judge Leon has his own serious reading of the 1974 Tunney Act, which requires a Federal court to ensure the agreement is in the public interest, despite the states and the DOJ.

Cigna’s $69 million acquisition of Express Scripts clears US Department of Justice hurdle

As reported on 8 Sept, the DOJ announced on Monday that they have formally cleared the Cigna acquisition of pharmacy benefits manager Express Scripts. This puts together a major payer with a PBM manager, the latter area considered to be challenged for profitability as the PBM drug rebate model may be substantially less profitable in the future. Federal policy pressure is ramping up from Health & Human Services (HHS), with Secretary Alex Azar only last week promising disruptive change and more transparency in drug pricing.

CVS (PBM-Caremark) with Aetna is in the works and Anthem is creating its own PBM called IngenioRx. UnitedHealthcare has its own OptumRx for some years. 

Another point of pressure on the entire PBM category is the Amazon-Berkshire Hathaway-JP Morgan combine, sometime in the future when the hype and speculation on What Amazon Will Do turns into actual plans beyond their acquisition of tiny, specialized player PillPack for an exorbitant $1bn [TTA 4 July]. 

The DOJ investigation took six months, reviewed more than 2 million documents, and more than 100 industry people were interviewed.

Cigna and Express Scripts now must negotiate over 50 state departments of banking and insurance–over 50 because some states have two. Both companies already have shareholder approval, and the lack of overlap in their businesses limits the possibility of divestitures. Their advocacy website is here. But state DOBIs can be unpredictable, as Cigna found out with Anthem. (Their contentious breakup is still being contested in court–and Cigna could use the contractual breakup money to ease the Express Scripts debt estimated at $15 bn. Forbes.  Bloomberg, Healthcare Dive

Rock Health’s ‘Another record-breaking first half’ in digital health funding is actually–flat. (With a Soapbox Extra!)

The Breathless Tone was the clue. “It’s déjà vu for digital health, with yet another record breaking half for venture funding.” It was déjà vu, but not of the good sort. This Editor hates to assume, so she checked the year-to-year numbers–and first half 2018 versus 2017 broke no records:

  • 2018:  $3.4 bn invested in 193 digital health deals 
  • 2017: $3.5 bn invested in 188 digital health companies [TTA 11 July 17]

But ‘flat’ doesn’t make for good headlines. Digging into it, there are trends we should be aware of — and Rock Health does a great job of parsing–but a certain wobbliness carried over from 2017 even though the $5.8 bn year finished 32 percent up over 2016, analyzed here [TTA 5 Apr 18]. Their projection for 2018 full year is $6.9 bn and 386 deals.

Let’s take a look at their trends:

  • “The future of healthcare startups is inextricably linked to the strategies of large, enterprise-scale healthcare players—as customers, partners, investors, and even potential acquirers.” It’s no mistake that the big news this week was Amazon acquiring tiny, chronic-conditions specializing prescription supplier PillPack after a bidding war with Walmart for an astounding $1bn, making its 32 year-0ld founder very rich indeed and gaining Amazon pharmacy licenses in 49 states. (Prediction: Walmart will be pleased it lost the war as it will find its own solutions and alliances.) 
    • Enterprise healthcare players are cautious, even by Rock Health’s admission, but the big money is going into deals that vertically integrate and complement, at least for a time–for example, Roche’s purchase of Flatiron Health. And when it doesn’t work, it tends to end in a whimper–this May’s quiet sale by Aetna of Medicity to Health Catalyst for an undisclosed sum. Back in 2011, Aetna bought it for $500 million. (Notably not included in the Rock Health analysis, even though they track Health Catalyst and the HIE/analytics sector.)
  • The market is dependent on big deals getting bigger. If you are well-developed, in the right sector, and mature (as early-stage companies go), you have a better shot at that $100 million B, D, E or Growth funding round. B rounds actually grew a bit, with seed and A rounds dipping below 50 percent for the first time since 2012. 
  • The Theranos Effect is real. Unvalidated, hyped up claims don’t get $900 million anymore. In fact, there’s real concern that there’s a reluctance to fund innovation versus integration. The wise part of this is that large fundings went to companies validating through clinical trial results, FDA clearance (or closing in on it), and CDC blessing.
  • The dabbling investor is rapidly disappearing. 62 percent of investors in first half had made prior investments in digital health including staying with companies in following rounds.
  • Digital health companies, like others, are staying private longer and avoiding public markets. Exits remain on par with 2017 at 60. Speculation is that Health Catalyst and Grand Rounds are the next IPOs, but there hasn’t been one since iRhythm in October 2016. The Digital Health public company index is showing a lot less pink these days as well, which may be an encouraging sign.
  • Behavioral health is finally getting its due. “Behavioral health startups received more funding this half than in any prior six-month period, with a cumulative $273M for 15 unique companies (nearly double the $137M closed in H1 2016, the previous record half for funding of behavioral health companies). Of these 15 companies, more than half have a virtual or on-demand component.”

Keep in mind that Rock Health tracks deals over $2 million in value from venture capital, excluding government and grant funding. They omit non-US deals, even if heavily US funded. 

Their projection for 2018 full year is $6.9 bn and 386 deals. Will their projection pan out? Only the full year will tell!

A Soapbox Extra!

Rock Health, like most Left Coast companies, believes that Vinod Khosla is a semi-deity. This Editor happens to not be convinced, based on predictions that won’t pan out, like machines replacing 80 percent of doctors; making statements such as VCs have less sexual harassment than other areas, and even banning surfers off his beach. He was at a Rock Health forum recently and made this eye-rolling (at least to this Editor) statement:

Is there one area in the last 30 years where the initial innovation was driven by an institution of any sort? I couldn’t think of a single area where innovation—large innovation—came from a big institution. Retailing wasn’t disrupted by Walmart, it was by Amazon. Media wasn’t changed by CBS or NBC, it was by YouTube and Twitter. Cars weren’t transformed by Volkswagen and GM—and people said you can’t do cars in startups—but then came Tesla.

Other than making a point that Clayton Christensen made a decade or more ago, the real nugget to be gained here is that formerly innovative companies that get big don’t grow innovation (though 3M tends to be an exception, and Motorola didn’t do too badly with the cell phone). They can buy it–and always have. 

Go back a few more decades and all of these companies were disrupters–and bought out (or bankrupted) other disrupters. CBS and NBC transformed entertainment through popularizing radio and then TV. VW created the small car market in the US and saved the German auto industry. GM innovated both horizontally (acquiring car companies, starting other brands) and integrated vertically (buying DELCO which created the first truly workable self-starting ignition system in 1912).

YouTube? Bought by innovator Google. Twitter? Waiting, wanting to be bought. Innovation? Khosla is off the beam again. Without Walmart, there would be no Amazon–and Amazon’s total lifetime profit fits nicely into one year of Walmart’s. Tesla is not innovative–it is a hyped up version of electric car technology in a styled package that occasionally blows up and remains on the borderline of financial disaster. (Model 3, where art thou?)

I’d argue that Geisinger, Mayo Clinic, and Intermountain Healthcare have been pretty innovative over the last 30 years. Mr. Khosla, read Mr. Christensen again!

PharmaTech Innovations/Health 2.0 NYC Wed 19 July –speakers confirmed, reserve now!

Wednesday, 19 July, 6-8:30 pm at Cohn Resnick LLP, 1301 6th Avenue, NYC

Health 2.0 NYC‘s July event examines innovation in the pharmaceutical business. It’s changing radically, from companies like PillPack which disrupt traditional pharmacies to apps that monitor clinical trials or prescribed as adjuvant therapies. Presenters on Wednesday night include:

  • Dan Conely – Managing Director, NJ Angels, active investor in drug discovery automation
  • Grace Cordovano, PhD – Enlightening Results – CEO and private cancer patient advocate. She founded Enlightening Results, LLC in 2010 to foster private, personalized patient advocacy services.
  • Jodie Gillon – Achillion Pharmaceuticals, Senior Director, Patient Advocacy and Professional Affairs

Early stage companies presenting: ClearRx. Other speakers/presenters to come. 

For $25, you get engaging speakers, beverages, food, and plenty of networking time amongst the like-minded and leaders in health tech! More information and registration on the Health 2.0 NYC Meetup page. (Disclaimer: Editor Donna is an event host and TTA is a long-time sponsor and supporter of Health 2.0 NYC) 

Better’s fast fail, ending health assistance service 30 Oct

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/10/Better.png” thumb_width=”150″ /]Better is sadly not. This two-year old service that provided personal health assistance, including a real, live health assistant, to guide members through health questions, the thickets of insurance claims, finding doctors and specialists, apps and more, announced earlier this week that it was ending operations as of 30 October. While it was announced via their Twitter feed on Tuesday, most of the industry learned of it through Stephanie Baum’s article in MedCityNews today. Better formally debuted only 16 months ago [TTA 23 Apr 14] and at the time this Editor felt that it was a service in the right direction, a kind of ‘concierge medicine for the masses’ needed when individuals have to direct more and more of their own care.

A solid start, as our Readers have seen, does not guarantee success, but this fast fail is still fairly shocking. A concern at the time was the pricing for the full service model at $49/month, which later became the family price (individuals were $19.99/month). CEO/co-founder Geoff Clapp was among the most Grizzled of Health Tech Pioneers; he had been a co-founder of Health Hero/Health Buddy from 1998 to its sale to Bosch Healthcare, a very long pull in telehealth, and he had spent much of his post-Health Hero time generously advising other startups. Yet despite the involvement of blue chip Mayo Clinic as a service provider, its financial backing from their investment arm and socially-oriented VC Social+Capital Partnership, it managed to raise only its initial seed funding of $5 million (CrunchBase).

So what happened? (more…)

Unicorns to Series A–health tech funding gained in (perhaps) the nick of time

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/08/1107_unicorn_head_mask_inuse.jpg” thumb_width=”150″ /]Money, money everywhere–unicorns get the headlines, but the companies are still (largely) small

Up until early August, this Editor would have assumed that our Readers would look at this funding roundup as a bracing windup to a largely positive eight months and a veritable Corvette Summer for healthcare technology funding. We may have to give back the keys a little sooner than we imagined. Will the dropping market affect digital health as 2008-9 did–‘out of gas’ for years? Or will it barely affect our motoring onward? Despite the Dow Jones average hitting an 18 month low today, we hope it’s closer to the latter than the former. though the new and big entrant to digital health investing is the country most affected, China.

Our roundup of the August Action includes ZocDoc, Fitbit, Alphabet, PillPack, Owlet and more, along with a few comments:

**ZocDoc, a NYC-based online medical care appointment service that matches patients with doctors by location and schedule, had the most sensational round with last week’s Series D funding of $130 million, giving it a valuation of $1.8 bn. It took over a year after the filing (June 2014) and was led by two foreign funds (London-based Atomico and Edinburgh-based Baillie Gifford) with additional funding from Founders Fund, which previously participated in raises of $95 million.

Though it claims 60 percent coverage in the US  and ‘millions of users’ (numbers which have been quoted for some years), ZocDoc won’t disclose profitability nor volume–metrics that would be part of any IPO.

Direction? Points given for deciphering this windy statement (quoted from Mobihealthnews): (more…)

A med reminder app that manages and delivers those pills

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/07/Pillpack_phone_and_watch1-482×362.jpg” thumb_width=”150″ /]Medication compliance apps have been with us almost since the start and have had a certain popularity. However, most are essentially alarm clocks reminding the patient to take what pill at what time. Some have added refill reminders and interact with pill dispensers or smart caps. They also require a lot of work to manually fill in medication and dosing information. PillPack goes another few yards by integrating one-stop pharmacy-based med management, coordinated through a database that aggregates identified patient prescription information from pharmacies and insurance claims.  (more…)