The object lesson of HealthSpot continued its sad revelations in a Columbus, Ohio Federal bankruptcy court Thursday (10 March) with the confirmation of liquidation under Chapter 7 rather than reorganization under Chapter 11. According to the report in MedCityNews, the bankruptcy trustee is now accepting offers for the assets valued by HealthSpot at $5.1 million. The bulk of these assets–$3.5 million–consist of 191 telemedicine kiosks of which 54 had been deployed with customers such as Rite Aid and Cleveland Clinic. The trustee has been permitted by the court to list these assets on a website. Whether there is any market for the hardware, or the intellectual property of HealthSpot, is a very open question indeed.
Some digging by this Editor has revealed a possible precipitating event to the company’s shutdown, and an obvious, non-recoupable drain on the time and funds of a teetering company. A District Court order issued 4 December on the patent infringement legal action by Nevada-based Computerized Screening [TTA 8 Jan] is now available online. It appears to have been conceded by Computerized Screening as “non-infringement on the basis of the absence of the limitation of “controller”” which is technically a win for HealthSpot. But HealthSpot then sought in September to collect attorney’s fees of a stunning $829,500 from Computerized Screening (more…)
The shock continues with HealthSpot. On Wednesday the company filed for Chapter 7 liquidation in US Bankruptcy Court for the Southern District of Ohio in Columbus. The laundry list: assets of $5.2 million, about $3.5 million in inventory, and $23.3 million in liabilities, including convertible notes of $10 million from cable/broadband company Cox Communications, $6 million from investor Xerox and an undisclosed amount from the Ohio Development Services Agency. HealthSpot had raised close to $44 million since 2011. Their bankruptcy attorney David Whittaker cited cash flow; with only $1.1 million in revenue over the past three years, according to the filing, including $600,000 in 2015, no elaboration was needed. There’s not much left in assets to sell: 191 kiosks, mostly in storage (137) and 54 operating but shuttered at customer sites. The remaining value in liquidation (a/k/a pennies on the dollar) is dependent on whether the name, the kiosks and the IP are purchased. The last is problematic due to the current legal action by Computerized Screening [TTA 8 Jan] We hope this is not a sad harbinger of digital health in 2016, though we have already sensed that the unicorns are heading Over The Rainbow or wherever they go to pasture, but it’s not reassuring. Columbus Business First, MedCityNews.
Update: Neil Versel in his Throwback Thursday took a look at HealthSpot’s steak and salad days at International CES 2013. (See comments for this Editor’s impressions of HealthSpot at ATA 2014.) Perhaps good marketing, but symptomatic of the capital burn, doomed by a lack of sales and quite possibly, a solution that would have knocked it out of the park in 2010. As the old fighter pilot said, ‘timing and luck are everything.’
Or are successful startups fitting into their game? Chris Seper in MedCityNews paints the picture of one side of a quandary. The ‘healthcare establishment’ fundamentally and to its detriment does not understand and is threatened by the startup and innovation process. A startup may begin with an idea which is, in his words, ‘almost always flawed, sometimes deeply’. If the founders are smart, they will test their ideas, validate them and change them appropriately. If not, they will fail. But it is easier for the Establishment to point at the most egregious of the bad ideas and use them to rationalize the status quo.
But being congenital contrarians, we paint the house on the other side of the street. Has the Establishment caught up with–or in some cases, co-opted startups, making them and their funders ‘do their diligence’ and be more cautious before emerging? This Editor would argue yes, and largely for the better.
**The ‘Wild West’ days are over. A few years ago, a truly bad or deeply flawed health tech idea or could easily find funding, because it was all blank slate, new and ‘transformative’.The sexiest hooks were Quantified Self, sleep, employer health incentives, interactive coaching, genomics, app prescribing and (last) wearables. A lot of founders imagined themselves as the Steve Jobs of Healthcare, down to the black turtleneck. Now there is a history of success and failure. The railroads reached the dusty frontier towns.
**There’s now a ‘Startup Establishment’. National accelerators (more…)
AnthemHealth didn’t encrypt, Blueprint Health collects, HealthSpot funds again, Sense4Baby goes to Europe, Apple Health pilots in hospitals and buddi gets bigger still.
Another hack attack claimed major US health insurer AnthemHealth, the former WellPoint. It’s estimated that 80 million of its customers, former customers and employees had data breached: names, addresses, dates of birth, emails, employment information, income, medical IDs and SSIs. The Wall Street Journal reports that Anthem didn’t encrypt data for analytics reasons. It’s unconfirmed where the hackers originated but Bloomberg’s latest report tags the usual Chinese state-sponsored suspects. Unusually, it was reported within days of discovery; Anthem has called in Mandiant (FireEye) to beef up its cybersecurity. Other reports: WSJ, Modern Healthcare….The Blueprint Health accelerator has a new initiative, the Collective. It is designed to pair up major healthcare providers and payers with startups and early stage companies. So far signed up are Aetna, AstraZeneca, HP, Montefiore, North Shore LIJ, New York-Presbyterian, Samsung, EmblemHealth, Philips and Razorfish Healthware. More information here….The HealthSpot Station telehealth/telemedicine kiosk is readying a $11.6 million funding round from four investors soon, based on (more…)
About two months ago [TTA 13 Nov 14], we noted Xerox’s interesting investment in telehealth/virtual consult kiosk HealthSpot Station. We thought at that time that Xerox was not active in healthcare services and thus found the HealthSpot Station investment unusual. Right on the diagnostics, wrong on the data crunching. Notably, their Midas+ subsidiary concentrates on healthcare quality management, analytics and benchmarking solutions. Midas+ has entered into the readmissions fray by combining its proprietary database, compiled over 1,900 Xerox hospital clients, with five years of Medicare and claims data to help hospitals better predict 30-day same-cause readmissions. The Midas+ Readmission Penalty Forecaster uses the data to project in “near real-time” both patient patterns and reimbursement rates. Commenting to MedCityNews, Justin Lanning, SVP and managing director of Xerox Healthcare Provider Solutions, said the Forecaster has a 1.5 percent margin of error within the predictive model, with quarterly updates provided to participating hospitals. Midas+ also offers, beyond the model, onsite consulting. HealthSpot Station theoretically could throw off a lot of data on outpatient disease and treatment. Midas+ Forecaster white paper, eWeek.
We also note that MedCityNews, one of the livelier publications that covers a wide swath of the US healthcare scene, is being acquired by Breaking Media, a New York City-based digital publisher. CEO Chris Seper will remain with the publication. Article.
(Boffo: extremely good or successful, sensational–Webster)
Adding to Monday’s news of ATA’s telemedicine accreditation program was American Well‘s near-simultaneous announcement of an $81 million Series C funding. This brings total funding for the eight year-old Boston-based company to over $128 million, though it is not yet profitable. According to Modern Healthcare, “The capital injection will be used to serve a number of big projects the firm has underway, company co-CEO Dr. Ido Schoenberg said in an interview. Among those are campaigning to ease regulatory constraints, scaling its provider networks and customer outreach, working with insurers to secure more favorable reimbursement and working on its technology, he said.” The institutional, private equity, and corporate investors alluded to in the company release were not disclosed. Its mobile app, Amwell, claims over 1 million downloads with a year-to-year 1,000 percent increase. Major partners include payers Anthem Health, EmblemHealth, the Blue Cross Blue Shields of Massachusetts and Louisiana, Optum Health as well as corporate clients. American Well press release, BostonInno, SEC filing. (Note to American Well: you’re telemedicine, not telehealth)
If this round of funding represents a substantial bet on American Well’s future, another is the new relationship between Walgreens‘ and rival MDLIVE. (more…)
The day after this Editor posted on telehealth/virtual consult kiosk HealthSpot Station‘s new partnerships with Mayo Clinic and major drug retailer Rite Aid, Xerox announced their investment in the company. Xerox is not a business services organization one immediately associates with healthcare technology, but perhaps not anymore, based on this quote from Connie Harvey, Xerox’ chief operating officer of Commercial Healthcare: “HealthSpot is at the center of healthcare’s shift to a patient-centered model of care, and our investment in the company demonstrates Xerox’s commitment to transforming traditional healthcare into a high-value delivery system for patients, providers and payers.” Xerox will also be supplying BPO–business process outsourcing–services for cloud hosting, system integration, claims eligibility and claims submissions. But there’s more…. (more…)