Pull the plug on Oracle Cerner in the VA! Two House Representatives urge return to VistA, send bill to Veterans’ Affairs committee

Hold your hand up if this comes as a complete surprise. A Congressman who was the top Republican on a subcommittee overseeing technology at the Department of Veterans Affairs (VA) has evidently had quite enough of the Oracle Cerner problems in implementing Cerner Millenium. Rep. Matt Rosendale of Montana has introduced H.R.608, titled “To terminate the Electronic Health Record Modernization Program of the Department of Veterans Affairs”. It would pull the plug on Oracle within 180 days, dissolve the VA Electronic Health Record Modernization Integration Office, and restore VistA/CPRS. In other words, back to the drawing board.

It was co-sponsored by Rep. Mike Bost of Illinois who is the chairman of the House Committee on Veterans’ Affairs, where the bill was referred on 27 January. Rep. Rosendale is now the chair of the House Veterans Affairs Subcommittee on Technology Modernization. 

This follows on last week’s two-day slowdown of both the VA and MHS Genesis systems, last summer’s Congressional hearings and the roasting that Oracle Health’s head Mike Sicilia and VA heads received over the OIG report on the ‘unknown queue’ that created 149 adverse events, and October’s delay in further Oracle Cerner rollouts in the VA from January 2023 to June.

While the likelihood that the bill would pass both House and Senate, and be signed into law, is low, H.R. 608 is one very heavy and clever cudgel for getting Oracle–and the VA staff involved with the conversion–to Pay Attention! Fix The Problems! There’s also leverage far beyond the VA EHR. Oracle has multiple Federal contracts which could be jeopardized or defunded. Stay tuned to further developments in VA’s Tower of Trouble and Oracle’s Mound of (Acquired) Misery.  Hat tip to HISTalk for the heads up, actually obtaining a screenshot of part of the bill which has not yet been posted on Congress.gov.  FCW.

Rounding out week: Oracle Health engineering head departs; Hive ransomware KO’d by DOJ; Google sued by DOJ on antitrust, lays off another 12,000; Pearl and Precision Neuro raise, Enabled Healthcare ADAPT grant

Oracle Health engineering executive VP Don Johnson ankles after six months. Mr. Johnson, who was a nine-year veteran of Oracle, came up through the cloud infrastructure area starting in 2014, after a previous stint from 2005 at Amazon Web Services. He led product strategy, engineering, and operations before shifting over to Oracle Health. Oracle’s Cerner acquisition has been one Tower of Trouble, a Mound of Misery, even before it closed last June. Being barked at by Congress and the GAO over the VA and MHS, plus eroding relationships with health systems over EHR problems, and with the pressure from the tip-top to fix it fast and get on with the transformation of healthcare, could lead one to consider a long trip to a Remote Pacific Island. The Register. Hat tip to HISTalk.

In one for our side, the Department of Justice (DOJ) announced that the international ransomware network known as the Hive was shut down. Its servers in Los Angeles and darknet sites were seized. The DOJ continues to pursue charges against Hive members. The Hive ransomware was used in attacks on an estimated 1,300 companies worldwide since June 2021, yielding about $100 million in ransom payments. Hospital systems attacked were numerous, including Memorial Hermann Health System in Houston and a Louisiana health system.   DOJ release 26 Jan, Healthcare IT News, HealthITSecurity

The problems at Google continue with a DOJ civil antitrust lawsuit released earlier this week accusing Google of monopolizing multiple digital advertising technology products. For those of us in marketing who came up with a choice of multiple search engines and ad technologies, Google’s monopoly of the “ad tech stack” that website publishers depend on to sell ads and that advertisers rely on to buy ads is very real, and very expensive. You live and die by Google algorithms on your search ranking, both natural search and optimization. In other words, you deal with Google or nobody. So the DOJ lawsuit, joined by eight states, is, in this Editor’s view, overdue. Few are drawing a line between this antitrust suit and the layoffs of 12,000 Google staff (6%) last week plus the cutbacks at Verily, but this Editor will. DOJ release, CNBC

Funding raises in seed, Series A and B are the most common–two of note in Series B this past week:

  • Pearl Health raised a $75 million Series B of $55 million in equity capital and an anticipated $20 million in a line of credit. The round was led by Andreessen Horowitz’s Growth Fund and Viking Global Investors. Pearl is a developer of services and software for independent providers to enable them to better participate in value-based care through consolidating healthcare data and then using that information to create personalized patient care plans.  Release, MedCityNews 
  • Precision Neuroscience raised $41 million, also in a Series B.  Precision is another brain-computer interface technology like Synchron [TTA 17 Dec 22], in this case focused on treatment of neurological illnesses and events such as stroke, traumatic brain injury, and dementia. Leading the round is Forepont Capital Partners. Mobihealthnews 

In even earlier-stage companies, grants from accelerators are still present and are significant. Enabled Healthcare is a startup that has received a grant of $50,000 from Village Capital’s ADAPT program, It is one of four receiving an equity-free, peer-selected grant. ADAPT, funded by MetLife Foundation, supports innovation and development of solutions for key issues related to climate change, healthcare and wellness, and economic mobility. Enabled was selected from over 130 startups. Enabled combines in-person and virtual monitoring approaches to better coordinate care for those with complex needs on Medicare and Medicaid, and will go live in March. Release 

Mid-week news roundup: CVS Health Virtual Primary Care launches, VA’s two-day Oracle Cerner EHR slowdown, and microsampling blood + wearables for multiple tests

CVS Health finally has Virtual Primary Care up and running. First announced by CVS last May, Virtual Primary Care provides primary care, 24/7 on-demand care, and scheduled mental health services to Aetna members nationwide enrolled in eligible fully-insured and self-insured commercial health plans. Members in VPC can schedule urgent care, 24/7 on-demand care (that may vary by plan), an in-office primary care visit, Minute Clinic visits, and expanded virtual mental health services. Amwell announced that it would be the provider in August on their Q2 2022 earnings call. The release mentions that board-certified physicians and nurse practitioners will be delivering primary care services through physician-led care teams and coordinating with CVS pharmacists. This applies to virtual mental health services as well. (One trusts that this in-network approach will avoid the problems they experienced with Cerebral and Done Health on their prescribed ADHD drugs.) Health records, lab results, and medications are shareable via the patient CVS Health Dashboard. At this point, there is no mention of further rollouts to other plans. Becker’s.

Somebody threw sand in the Oracle Cerner EHR gears at the VA–and it started at MHS. A report from the Spokane Spokesman-Review seems to be the only report out there (other than HISTalk picking it up) on the two-day slowdown in the Oracle Cerner Millenium EHR rolled out at the VA and the Department of Defense’s Military Health System (MHS Genesis) that covers active duty. On Monday and Tuesday, there was a “major slowdown” that did not abate until Tuesday afternoon.  It affected more than half of all MHS providers, as well as VA clinics and hospitals in Washington, Idaho, Oregon, and Ohio. Mann-Grandstaff clinicians reported problems to the Spokesman, which contacted the VA. Their press secretary Terrence Hayes confirmed that changes made to the system by the DOD, which shares a database with the VA, “had the unintended consequence of interrupting services that provide connectivity to the network.” The system slowed down from screen to screen, requiring clinicians to work extra time to make all entries, and was not resolved until configuration changes were made. This is another incident adding to a Very Large Dogpile, including interoperability between VA and MHS versions, 498 outages between September 2020 and June 2022, plus two veteran deaths.

And maybe Stanford, forever associated with Theranos, is trying to get its reputation back–in running multiple blood tests on microsamples. A new paper published in Nature Biomedical Engineering by a group of 17 researchers led by Stanford Medicine determined that valid tests could be run on a microsample (10 μl) of blood that could be drawn from a finger prick at home to test for thousands of metabolites, lipids, cytokines, and proteins. This testing would be paired with data captured from wearables. They tested reactions to food (Ensure shake) and the effects of physical activity on blood with wearables monitoring heart rate and step count, plus a continuous glucose monitor (CGM) to profile individual physiological status, including cortisol. Unlike Theranos, it’s not done in a ‘lab in a box’ in a supermarket trying to duplicate (fake?) existing diagnostic tests, and it employs mass spectrometry molecule-sorting technology in a lab. Becker’s.

Healthcare cyberattack latest: NextGen EHR ransomwared by AlphV/BlackCat, back to normal – 93% of healthcare orgs had 1-5 ransomware incidents

Cyberattacks on healthcare continue their drip-drip-drip. The latest is on an EHR/practice management platform used by small to enterprise-sized specialty practices, NextGen Healthcare. The hacker group associated with the AlphV/BlackCat ransomware moved into the system on 17 January. For a short time, they reportedly exhibited NextGen information on their extortion site but later took it down. NextGen reported a short-term disruption to operations. A NextGen spokesperson stated that “We immediately contained the threat, secured our network, and have returned to normal operations,” the spokesperson said. “Our forensic review is ongoing and, to date, we have not uncovered any evidence of access to or exfiltration of client data. The privacy and security of our client information is of the utmost importance to us.”  NextGen has also stated to this Editor that no patient data was affected.

NextGen is used by about 2,500 practices in the US, UK, India, and Canada, including over 20 specialties.

The group behind AlphV/BlackCat ransomware has an infamous history. Reputedly, the gang has been kicking around since 2012 and was the same group of charmers that attacked the Colonial Pipeline in 2021, using the Darkside ransomware in May 2021 that dried out gas stations across the US East Coast. Their next ransomware edition, BlackMatter, targeted agriculture during fall 2021. Healthcare IT News, The Record/Recorded Future News

More severe attacks affecting 93% of healthcare organizations. While NextGen contained the attack quickly, both the Censinet/Ponemon Institute and Fortified Health Security’s 2023 Horizon Report tracked 2022 healthcare data breaches and concluded that while the number of incidents didn’t change much, their severity ramped up. More according to SC Media in these reports: 

  • Over a dozen of the biggest incidents in 2022 each impacted well over 1 million records
  • Nearly half of the respondents experienced a ransomware attack in the last two years
  • 93% faced between one to five ransomware-related incidents
  • Outages lasted upwards of 35 days

The common ground with NextGen is danger to patient safety, because electronic record damage can translate quickly into unavailable patient care.

Updated PharmaCare Services, a pharmacy management company based in Texas, is listed as a victim on BlackCat’s extortion site. They were exhibited with NextGen and remained when NextGen’s listing was challenged and then taken down. PharmaCare is staying mum on any ransomware disruptions, according to GovInfoSecurity.

One ray of hope is improved medical device security, included in the ‘omnibus’ budget package approved in late 2022. FDA will be required to enforce new standards for premarket device submissions. One is a software bill of materials, adequate evidence to demonstrate the product can be updated and patched, and a description of security testing and controls. This was before Congress in the Protecting and Transforming Cyber Health Care (PATCH) Act which didn’t go far, but elements of which found their way into the omnibus. A needed change for medical devices and long expected by manufacturers. SC Media

Using wearables to monitor biomarkers related to neuropsychiatric symptoms post-traumatic event

Tracking biomarkers related to post-traumatic outcomes via a wrist-worn wearable. A January study published in JAMA Psychiatry (full text) monitored 2,021 participants who experienced traumatic stress exposure, mainly from car accidents but also physical assault, sexual assault, serious falls, and a mass casualty incident. 

The Advancing Understanding of Recovery After Trauma (AURORA) study examined adverse posttraumatic neuropsychiatric outcomes after traumatic stress exposure, especially among socioeconomically disadvantaged patients. Qualifying patients used the (Alphabet) Verily Life Sciences’ Study Watch for a minimum of 21 hours a day over the eight-week tracking period, starting with screening and qualification in the emergency department (ED). 

  • Participants used smartphones to complete a rotating battery of questionnaires consisting of 10 common adverse post-traumatic neuropsychiatric sequelae (APNS) symptom domains: pain, depressive symptoms, sleep discontinuity, nightmares, somatic symptoms, difficulty with concentration, thinking, or fatigue, avoidance of trauma reminders, trauma reexperiencing, anxiety, and hyperarousal.
  • Using the wearable’s accelerometer feature, it monitored eight significant biomarkers for pain, sleep, and anxiety. A reduction in 24-hour activity variance was associated with greater pain severity. Six others were associated with rest-activity measures indicative of changes in pain over time and one with repeated sleep-wake disruption indicative of changes in pain, sleep, and anxiety.

Depending on the data plus self-reporting on the questionnaires, the patient could be recovering or worsening post-event. The study concluded that “wrist-wearable device biomarkers may have utility as screening tools for pain, sleep, and anxiety symptom outcomes after trauma exposure in high-risk populations.” This Editor notes that over time, wearable monitoring was coupled with plentiful subjective information.

The group was selected from an initial 19,019 patient pool drawn from 27 emergency departments. 3,040 patients met the study criteria including being within 72 hours of the trauma, aged 18 to 65 years, and were able to speak and read English. They also provided informed consent and completed baseline assessments for a final completion group of 2,021. Most of the participants were female, half of the study were African American, 34% were white and 11% were Hispanic. Nearly 80% of the study did not have a college degree, while 64% earned $35,000 per year or less. The study was headed by a team at the University of North Carolina at Chapel Hill.  Also Mobihealthnews

Theranos Holmes trial updates: did she book a one-way flight to Mexico last year, or were the prosecutors reckless and wrong?

The latest skirmish between prosecution and defense. Did Elizabeth Holmes book a flight to Mexico with the intent to flee–or not? According to the prosecution last week, Holmes in December 2021 had booked a one-way ticket to Mexico that was scheduled for the end of January 2022. The departure date was after her conviction in early January that year [TTA 4 Jan 22]. Moreover, the prosecution claims that now revealed fiancé Billy Evans flew not only to Mexico but also to South Africa, and was out of the country for weeks.

The defense in its filing countered that Evans booked the flight in late December 2021 under her name. She had hoped to be acquitted and then free to attend a wedding of close friends in Puerto Vallarta in late January 2022. In the defense filing, “Once the verdict was issued, Ms. Holmes did not intend to make the trip.” She would also be unable, as any trip would require court approval, her passport was expired, and as is customary, in the possession of the District Court.

According to the defense, Evans visited Mexico for four days, returning to California across the Tijuana toll bridge with a credit card receipt. The Cape Town, South Africa flight was weeks later–20 February 2022 departing San Francisco via Newark, returning 4 March via United and in economy class.

Why are the travel plans being made public by the prosecution now? Why is Evans being pulled into it? Holmes has been convicted for a year, sentenced, and is currently appealing. The prosecution knew much earlier about Holmes’ booked-but-untaken flight to Mexico and asked the defense about them via email. When told, prosecutor Jeff Schenk thanked defense lawyer Lance Wade. “I suspected there was an explanation, and I look forward to receiving additional information tomorrow.” The next day from Schenk, “Thank you again for the background information, confirmation, and for addressing this situation quickly. I do not believe there is need for us to discuss this further.” 

The timing is interesting because the prosecution filing objecting to Holmes’ freedom on bail while on appeal had to be filed by 19 January for a hearing by Judge Edward Davila on 17 March [TTA 10 Jan]. Was this one ‘see, see?’ objection? Will there be more? Mercury News

Note: New York Air (737-300 above) is remembered fondly by your Editor as she was this airline’s ad manager for 3 1/2 years in her Life Before Telehealth. It ceased operations in early 1987, merged into Continental Airlines in an ill-starred event called ‘The Big Bang’. (No, we didn’t fly to Mexico — neither will Elizabeth Holmes for the next decade.)

CVS, Walgreens, Walmart….Dollar General health clinics?

Can Dollar Tree and Family Dollar be far behind? A possible new entrant to the onsite clinic wars may be Dollar General in piloting DocGo clinic vans in three Tennessee stores. DG Wellbeing will be providing urgent, preventative, and chronic care at three locations, two days a week each, with two in Clarksville and one in Cumberland Furnace, from 10am to 8pm based on current FAQs. DocGo vans will be located adjacent to the stores, in the parking lot. Appointments and walk-ins, Medicaid, Medicare, TRICARE, some commercial insurances, and cash are accepted.

Certain lab tests plus blood work are done either onsite or sent out. Medical staff on the van can write prescriptions. Some referrals (e.g. imaging) are done while other referrals are not available.

As to their strategy, you have to hand it to Dollar General. They get some good press from this. They are starting small in working through the details, outsourcing the healthcare part, and seeing if there’s sufficient demand to 1) expand and if promising 2) model the customer demographics–what we marketers call customer personas. If it doesn’t work, no Theranos-sized holes in their budgets–it’ll be GoneGone to DocGo.

Dollar General started to make moves into health about two years ago by noting the scarcity of health products in rural and underserved areas. They started to add more healthcare products (what they know about) on their shelves as part of the initial phase of the DG Wellbeing initiative and appointed a chief medical officer, Dr. Albert Wu. Currently, Wellbeing is in 3,200 stores (of 18,000+) with up to of 400 items per store. This past July, DG created a healthcare advisory panel including Dr. Patrick Carroll, chief medical officer of Vida Health; Dr. Katy Lanz, chief strategy and product officer at Personal Care Medical Associates and former chief clinical officer at Aspire Health; Dr. Von Nguyen, clinical lead of public and population health at Google; and Dr. Yolanda Hill, a board-certified physician in pediatrics and adolescent medicine. On Dollar General’s third quarter earnings call last December, CEO Jeff Owen noted the expansion of stores and the test of the DocGo vans to expand their services into rural health. Watch out Walmart, CVS, and Walgreens! Healthcare DiveForbes, Mobihealthnews

Their healthcare provider, DocGo, last week announced a partnership with Redirect Health, a platform offering directed to enterprises that provides on-demand, urgent mobile care to businesses in New Jersey and New York. DocGo SPAC’d on Nasdaq in 2021 and, unlike other SPACs, hasn’t cracked. Other than one wobbly point last year, it’s generally held its share price within a dollar or two of its initial offering range, which in this past year has to be considered good news.

Industry org news: ISfTeH International Conference call for presentations, new leaders for ATA Policy Council

The International Society for Telehealth and e-Health (ISfTeH) is holding its International Conference in Winnipeg, Manitoba, Canada this year, 31 May to 2 June. It is being organized in collaboration with the University of Manitoba’s College of Rehabilitation Sciences and with support from Tourism Winnipeg. If you are interested in submitting a presentation proposal, go online to https://easychair.org/cfp/ISFTEH2023, or contact the Conference Chair, Dr. Amine Choukou (amine.choukou@umanitoba.ca). Abstracts are due on 3 February and full presentations by 17 February. Go to their main website (link above) for a link to the conference website (to come). ISfTeH is one of the oldest organizations in telehealth–a 25-year-old global federation of 45 national professional organizations in the field of telemedicine and eHealth, plus institutional, corporate, and individual members in over 35 countries worldwide.  Hat tip to Frederic Lievens of ISfTeH.

The American Telemedicine Association (ATA) announced new leadership joining their ATA Policy Council. Mary Griskewicz, MS, FHIMSS, director of federal policy, Cigna, joins the Policy Council as chair, along with Alyssa Keefe, system senior vice president, public policy and advocacy, CommonSpirit Health; Leslie Krigstein, vice president, government affairs, Transcarent; and Sarah-Lloyd Stevenson, MPH, senior manager, Amazon. Current chair Mark Hayes, senior vice president, Federal policy and advocacy, Ascension, remains on the Policy Council as immediate past chair. Readers should note the new mix of organizations. The ATA Policy Council makes final determinations on policy positions taken by the ATA and ATA Action, the ATA’s affiliated trade organization. Reminder–ATA 2023 is 4-6 March. Release

UKTelehealthcare launches TECS consultancy in partnership with TECS Advisory

UKTelehealthcare is partnering with TECS Advisory, one of the UK’s leading sector-specific advisory businesses, to create a Technology Enabled Care consultancy arm. The closure of the analog phone network is coming in 2025–only two years away–and many phone providers are already transitioning their systems. While UKTelehealthcare has been staging meetings and trainings for members (calendar and resources here), this consultancy can now offer a wider and more specific level of support.

Gerry Allmark, UKTelehealthcare’s Managing Director, said: “We are very happy to be working in partnership with TECS Advisory to deliver a range of consultancy services to our members and the wider TECS industry to support them in developing and growing their businesses.”

The scope of these services include: 

  • Strategic analysis
  • Evaluating services and technologies
  • Sales and marketing
  • Implementing new technologies and systems
  • Business plans
  • Improvement plans
  • Cultural change programmes
  • Bid writing/management – Specifications
  • Options appraisals
  • Mergers & acquisitions

More information on this development to serve telehealth in the UK, for clients ranging from NHS and Local Authority Housing, Health and Social Care Commissioners and Providers, Housing Associations, Residential Care Providers, and more, is on the news section of their website here. Hat tip to Gerry Allmark

Interesting pickups from JPM on CVS, Talkspace, Veradigm backs Holmusk, ‘misunderstood’ Babylon Health; six takeaways

Out of a decidedly soggy JPMorgan healthcare conference that concentrated mainly on pharma and biotech, there was some news in the downtrodden health tech and related areas. Selected from FierceHealthcare’s Heather Landi’s take:

CVS Health’s open checkbook for the right companies in primary care, provider enablement, and home health was a throwback to the palmy days of 2020-21. A big announcement at JPM was their investment in in-home kidney care and end-stage renal disease management provider Monogram Health. Their Series C raise of $375 million was lead-funded by CVS Health, Cigna Ventures, Humana, Memorial Hermann Health System, and SCAN.  Release, Mobihealthnews This added up to a busy January for CVS with leading Carbon Health‘s $100 million series D [TTA 11 Jan] and $25 million for Array Behavioral Care [TTA 12 Jan].

Talkspace, the cracked telemental health SPAC most recently rumored to be in buy talks with Amwell, touted their “defined, very significant path to profitability within a short period of time.” New CEO Jon Cohen, MD, a surgeon and veteran healthcare exec, touted the strength of the telemental health model, the effectiveness of their asynchronous messaging therapy for depression and anxiety,  and their market change from consumer to employers and health plans. Talkspace has some distance to go, quickly, with a loss through Q3 2022 of $61 million on revenues of $89 million and a share price today of $0.74, which means eventual delisting from Nasdaq. Is a quick buy in their future?

Veradigm, still settling in on their new corporate name, has its own bet on behavioral health data on the analytics side, with a lead investment in Holmusk‘s $45 million Series B. Holmusk will pull in de-identified patient data from Veradigm to their NeuroBlu Database.  Release

And on to Babylon Health, where Ali Parsa must feel like Eric Burdon of the 1960s blues group The Animals in the depth of being ‘misunderstood’Dr. Parsa promises a path to breakeven by end of 2024.  Babylon’s revenue is on target to hit over $1 billion. They operate in over 15 countries with well over 5 million transactions. But their SPAC cracked too from a high of $272 per share after listing in October 2021 to today’s price just above $11, leaving a lot of investors in the lurch. Even though Q3 revenue increased by $288.9 million versus $74.5 million in 2021, an increase of $214.4 million or 3.9x, and the Q3 loss correspondingly widened to $89.9 million, the loss was significantly lower as a percentage of revenue. They are also converting from a foreign private issuer to a domestic, planning a reverse share split, and selling non-core businesses like the Meritage IPA [TTA 22 Nov 22] It’ll either be more correctly understood by Mr. Market or…be bought?

Arundhati Parmar in MedCityNews had a tart take on the proceedings, leading with the convergence of therapeutics with devices and data, Primary Care-Primary Care-Primary Care, billion-dollar bolt-on acquisitions that may be good for biopharma (but not necessarily so in health tech where integration is leading), and innovative therapies that don’t save but actually cost mo’ money. All of which is no surprise to our Readers. And why is there a JPM every year? Healthcare insanity may be catching.

Teladoc laying off 6%, reducing real estate, in move to “balanced growth” and profitability

Following on Teladoc’s mildly upbeat announcement of improved Q4 2022 revenue, now the layoffs. Today, employees were informed that 300 positions, about 6% of Teladoc’s workforce, will be departing. Timing was not disclosed. Based on the employee memo and disclosure in their Securities and Exchange Commission (SEC) 8-K filing, the cuts will affect only non-clinical staff and eliminate ‘redundant’ positions acquired in their 2020 merger with Livongo. CEO Jason Gorevic’s statement to employees cited the “challenged economic environment”, transitioning to “balanced growth of revenue and profitability,” and bottom-line growth. Gorevic cited a path to profitability via refocusing on commercial business under the ‘whole person care’ concept covering Primary 360, chronic care management, and mental health, as well as the BetterHelp consumer behavioral health business. 

Released employees will receive severance including payouts based on years of service and grade level, 2022 bonuses, subsidized healthcare benefits under COBRA, BetterHelp therapy access, and job search assistance. Their office space footprint is also being reduced in select markets.  These and other Q4 actions will not have a material impact on 2022 financial operating results.

This Editor, who as a marketer been made redundant a few times due to company acquisitions and once in a business closure, is puzzled that Teladoc carried overlapping Livongo staff for two years after the August 2020 acquisition. The typical non-senior executive in the acquired company usually gets anywhere from ‘depart close of business’ to six months depending on their function or project assignment. Rarely, one finds a berth and even that can be temporary until the next reorg. Perhaps Livongo staff were needed for enterprise customers or Teladoc staff didn’t have the app expertise. The Livongo integration was reportedly an exceptionally bumpy one as well. This Editor also recalls Mr. Gorevic’s statements last May at the time of their Q1 2022 $6.6 billion writeoff of the Livongo acquisition: the competition in telemental health, the rising cost of paid search advertising, expensive keywords driving towards direct-to-consumer telehealth driving up the cost of acquisition, and the long cycle of closing B2B deals [TTA 4 May 22]. Amazing how these costly factors were not cited. In fact, Teladoc has launched TV advertising for Livongo, and for enterprise customers has created a new app that debuted at CES earlier this month that integrates primary care, mental health, and chronic condition management.

In any case, talking about profitability is now fashionable, based on the memes at JPM around partnerships and robust ecosystems. Even if profitability remains way off there on the distant horizon. Also Healthcare Dive, Mobihealthnews

‘KillNet’ Russian hacktivist group targeting US, UK health info in Ukraine revenge: HHS HC3 report

Warnings about DDoS (distributed denial of service) ramped up at the end of last year–only three weeks ago. Here’s one reason why.KillNet” is a pro-Russian hacktivist (hackers who advance a cause) group that recently claimed responsibility for DDoS attacks as payback for US and UK military support of Ukraine. A senior member of KillNet with the nom de guerre Killmilk has threatened the US in general “with the sale of the health and personal data of the American people because of the Ukraine policy of the US Congress”. 

The US Health and Human Services (HHS) Health Sector Cybersecurity Coordination Center (HC3)’s Analyst Note (link to PDF) gave two examples of KillNet claims:

  • A “US-based healthcare organization that supports members of the US military and claimed to possess a large amount of user data from that organization”
  • Hacking threats against the NHS, specifically ventilators in hospitals and the Ministry of Health. This was in reaction to the May 2022 arrest of a 23-year-old alleged KillNet member accused of being connected to attacks on Romanian government websites. KillNet demanded his release in return for not attacking. Daily Mail  

Other institutions are hardly exempt. In the UK, KillNet DDoS attacks in November reportedly affected Bankers Automated Clearing Service (BACS), the London Stock Exchange, and the official website of the Prince of Wales. Computer Weekly

DDoS attacks are their leading weapon. KillNet uses publicly available DDoS scripts and IP stressers for most of its operations although it has its own. Before aligning with Russian state interests, it was a hacking-for-hire operation available for $1,350 per month, including a single botnet with a capacity of 500GB per second and 15 computers. This Editor noted previously that DDoS attacks may be a convenient cover or smokescreen for other cybercrime activity. While IT goes into crisis mode over the DDoS, other attacks and information gathering on systems preparing for future attacks may be taking place. [TTA 22 Dec 22].

This updates an earlier Cybersecurity & Infrastructure Security Agency (CISA) Cybersecurity Advisory (CSA) jointly issued by the US, UK, Australia, and New Zealand (the Five Eyes group), that broadly assessed multiple threats from Russian state organizations such as the Federal Security Service (FSB) and the Foreign Intelligence Service (SVR), as well as cybercrime groups like KillNet which have aligned themselves for the duration with Russia. KillNet has grown over the past year and now has subgroups organized under Cyber Special Forces of the Russian Federation and LEGION 2.0. SOC Radar

The best defense is a good offense. HC3’s advice on preparation to mitigate a DDoS threat includes enabling web application firewalls to mitigate application-level DDoS attacks and implementing a multi-content delivery network (CDN) solution to minimize the threat of DDoS attacks by distributing and balancing web traffic across a network. The HC3 Analyst Note is heavily footnoted with other sources for additional incidents. SC Media, Cybernews

Weekend short takes: Theranos’ Holmes post-prison mental health + more on Shultz and Balwani; global M&A, funding roundup

It’s been a bumpy road this second week of the New Year, with the passing away of genius guitarist Jeff Beck, Lisa Marie Presley, and historian Paul Johnson, the unrelenting Harry Hullabaloo, a rain-soaked downer of a JP Morgan healthcare conference, plus a certain 1967 Chevrolet Corvette convertible (Goodwood Green, 327 ci/350 hp) keeping garage company with…classified files.

Elizabeth Holmes’ post-prison future already being planned–and it’s all about her. But not as before. After her 11 years and three months (pending appeal) in (whatever) Federal prison she will be assigned to, her three years of supervised release are being planned for her. In an ‘exclusive’, celebrity website TMZ reports that Holmes will be required to complete a mental health program that she will pay for (details undisclosed). If her probation officer has any reasonable suspicion that she’s violating the terms of her release, her home, office, vehicle, and property will be subject to police search, including DNA collection. No details in the article beyond that. At this point, Holmes should be working with prison consultants (yes, there are such people, and they are not your legal team) in setting her expectations for Club Fed Life, planning her day-to-day in prison, and readying a reentry plan draft that can make her probation a bit easier on all.

In related Theranos news, a soon-to-be published biography of George Shultz, a government supremo during the Nixon and Reagan Administrations, claims that by then aged 90+ emeritus supported Holmes to the point of fixation. In a nearly 20-year tenure at Stanford’s Hoover Institution, respected and honored by all but with no medical expertise, he suddenly became a huge backer of Holmes, helped her get financing through his network of contacts, joined the board, and invited her to family gatherings. Grandson Tyler Shultz, who joined Theranos with his grandfather’s encouragement, became one of several whistleblowers, leading to a family rift never quite mended at the elder’s death at 100. More in the Guardian

Sunny Balwani also filed a motion this week to stay out of prison during his appeal process, arguing he presents no flight or public safety risk. The Law360 article on the 10 January 25-page filing is unfortunately paywalled.

London-based Huma is buying Frankfurt-based Alcedis, a data specialist for clinical trials. Huma will form an advanced clinical trials division with digital solutions across the entire development pipeline, from early stage through to Phase IV hybrid and fully decentralized trials. Terms were not disclosed. Formerly the mysterious Medopad [TTA 28 May 21], Huma seems to have settled into decentralized clinical trials and disease management using wearable tech and apps. Last March, AstraZeneca took a $33 million [£25 million] share in the company, with Huma acquiring their asthma and heart failure patient platform. Release, Crunchbase, Mobihealthnews

In Singapore, Amplify Health is acquiring AiDA Technologies. AiDA has developed machine learning tech to automate underwriting, claims processing, and detect fraud, waste, and abuse. Amplify has similar lines of business plus digital health programs for chronic disease management. Terms were not disclosed. Fintech Singapore. Also covered in the same Mobihealthnews article are:

  • India’s Dozee receiving funding from the UK government’s British International Investment (BII) for India’s MillionICU initiative. The BII investment will be used to convert 6,000 conventional hospital beds in about 140 public hospitals’ ICUs to stepdown beds. The MillionICU initiative’s goal is to convert one million ICU beds. Express Healthcare (India)
  • Taiwan’s largest hospital, Chang Gung Memorial, has adopted TPIsoftware’s SysTalk.Chat for AI-powered text and smart voice-enabled customer service. The Apo voice and text agent assists 80,000 ‘person-times’ per month in patient intake and setting appointments, admissions, and medical information. This saves 50% of time in appointment scheduling via texts or calls that happen within 2~3 minutes.  AsiaOne (PRNewswire release)

Rock Health puts a kind-of-positive spin on digital health’s ‘annus horribilis’ 2022–a boring 2023

Your Editor will be blunt. 2022 was a bucket of cold water, a bursting of bubbles, and generally an annus horribilis (as the late Queen Elizabeth referred to 1992, 30 years prior) for digital health, healthcare tech, and healthcare in general.

Here are the highlights of Rock Health’s 2022 full-year report on digital health funding for US-based digital health companies, published late last week and presented this week at JPM, through the gimlet eye of your Editor: 

Total funding for 2022 was $15.3 billion. There were 572 deals, averaging a deal size of $27 million.

  • 2022 was just over half in activity compared to 2021’s “to the moon”: $29.3 billion over 738 deals averaging $39.7 million.
  • 2022 also barely made it past the pandemic year of 2020 with $14.7 billion over 480 deals averaging $30.6 million.
  • 2022 Q4 fell into a hole: $2.7 billion versus 2021’s $7.4 billion

If 2021 matched prior growth trends instead of the bubble it was, 2022 would have been viewed as flat or slightly down. 

Late stage mega deals fell into the same hole. In 2022, 35 digital health startups raised rounds of $100M or more, compared to 2021’s 88 and even 2020’s 43. 

The Covid-driven investment boom across digital health that characterized 2021 is over. The economy with a 6-8% rate of inflation, energy shortages in much of the world, supply chain disruptions, rising interest rates on money, and the rising possibility of recession led to investor cold feet. It ended the 2019-2021 takeoff and started a down cycle.

Recalibration to a ‘more sustainable run rate’ when it comes to investment

“Disrupting healthcare” may sound good, but it has a spotty track record of success. What’s attractive long term? Incremental transformation within conventional healthcare operations that in this Editor’s view cut time, cost, increase reliability, simplify processes and/or workflows, improve interoperability, reduce operational burden, or improve communication. Preferably, a combination of several of the previous!

D2C startups are particularly vulnerable to the economy–they run hot, multiple companies jump in, and then they’re cold. They have to invest a lot of money to establish a presence with consumers and that money is no longer cheap or available. Some with a decent consumer footprint can focus on B2B entry, though that is a long-buy cycle move.

Most companies will be focusing on the near term, with some of the smarter ones planting some ‘seeds’ for the future

A witty note in their report: “In the current VC climate, strong horses will beat out unicorns…though investors run the risk of betting on the wrong equine.” (Editor’s note–it may be hard to tell the difference. And unicorns have horns that poke bubbles.)

What was hot?

  • Series A deals, the conservative bets of VCs. Yet, in Rock Health’s view, these may be riskier: “investors are more likely to pay more on a risk-adjusted basis for a startup than its later-stage funders, twisting the risk-adjusted valuation upside down.” 
  • In clinical indications, mental health stayed top of the pops. Cardiovascular and oncology rose along with dark horse reproductive and maternal health. What fell? Diabetes.
  • In value propositions (sic), on-demand healthcare and R&D flipped positions from 2021. Dark horses nonclinical workflow, disease monitoring, and care coordination moved into the top 5

And what players had problems? Health systems and the tech giants seeking to move into healthcare and away from ad-based or transactional revenue. As we’ve seen, Amazon dumped Care and is facing scrutiny over One Medical, Alphabet is cutting Verily, and Meta is overall pulling back. Microsoft seems to be concentrating on incrementals and Apple has other concerns over sourcing and patents.

Rock Health’s conclusion is ‘kind-of-positive’. (What, you expected doom and gloom?) “We expect that 2023 will be built up on slow, steady, and maybe even boring strategies for healthcare startups and enterprises alike: managing cash, re-structuring to accommodate revenue volatility, and investing in technology infrastructure.”

Mid-week roundup: Teladoc gets BetterHelp to boost Q4 ’22 revenue; fundings for Array, Paytient, Telesair, three others; layoffs hit at Alphabet’s Verily, Cue Health

Teladoc may finish 2022 better than expected, at least in revenue. At the JPMorgan (JPM) annual healthcare conference, CEO Jason Gorevic shared a revised but still preliminary projection that Q4 would finish up a tick higher than expected–between $633 million and $640 million in revenue, versus their projection during Q3 that the low side would be $625 million. FY2022 revenue was updated to be the $2.403 billion to $2.41 billion range. The big contributor? Their mental health app BetterHelp. Their growth, according to Mr. Gorevic, is “staggering’. Silicon Valley Bank (SVP) analyst Stephanie Davis calculated a growth rate of 43% for the business, up from previous management targets. Teladoc’s optimism is tempered by the no/slow growth economy projected for this year, both direct to consumer and corporate. To help boost the latter, it is launching a new app for health plan members and company employees access to all of Teladoc’s clinical programs. Healthcare Dive, Becker’s

Despite the uncertain economy, funding continues in various rounds, especially in still-hot areas such as remote/virtual behavioral therapy and payments, but nowhere near the bubbly level of 2021:

CVS Health’s open piggybank helped to fund NJ-based Array Behavioral Care’s $25 million Series C. Other investors included HLM Venture Partners, OSF Healthcare System, Wells Fargo, and three others. Array will use the funds to scale its virtual behavioral therapy platform.  Mobihealthnews, Crunchbase

In that interesting area called healthcare fintech, the cleverly-named Paytient now has an additional $40.5 million in Series B funding, bringing their total to $63 million. Paytient provides corporate employees, health plan members, and health system patients with a card-based Health Payment Account (HPA) that includes a line of credit. Release, Mobihealthnews 

In hospital-to-home respiratory care, still in stealth Telesair raised $22 million in Series A funding, led by Pasaca Capital with participation from existing and new investors such as Honeywell Investors, ZhenCheng Capital, Shangbay Capital plus three others. According to the release, funding will be used for the commercialization of the Bonhawa Respiratory Humidifier for use in the ICU and the development of a second-generation, revolutionary product for hospital-to-home. Mobihealthnews   

Also highlighted in Mobihealthnews‘ article is a $10 million Series B for ModifyHealth, which delivers prepared, medically tailored meals and provides advice from dieticians. ModifyHealth provides certified low FODMAP meals for those with irritable bowel syndrome or small intestinal bacterial overgrowth (SIBO), as well as Mediterranean, low-sodium, and gluten-free (celiac disease) diet meals. Censinet, a developer of healthcare cybersecurity software, also landed $9 million in a funding round led by MemorialCare Innovation Fund, Rex Health Ventures, and Ballad Ventures plus five others for a total of over $22 million.  Release  CARI Health, a San Diego startup developing a wearable sensor for medication management, gained $2.3 million in seed funding from the San Diego Angel Conference plus four other funds. Release

The pace of layoffs may have slowed, but the numbers have not.

Alphabet’s Verily health tech development unit is discharging 15% of current staff, estimated at 240 people.  This is part of a reorganization designed to move to financial independence from Alphabet/Google. It’s categorized among Google units as ‘Other Bets’ which is appropriate given that so far, their bets haven’t hit any jackpots. An example we covered back in 2015-16 was a glucose monitoring contact lens developed with Alcon, an on-the-face of it Preposterous Idea that died about that time. Current discontinued areas include remote patient monitoring for heart failure and micro needles for drug delivery. Employees were told to leave the office for the remainder of the week; further information including separation would be sent to them via email. Since 2017, it has raised over $2 billion. You wonder where it went. CNBC

Cue Health, a home diagnostics company, is cutting 388 employees, about 26% of its workforce, effective March. This is in addition to an 170-person manufacturing worker layoff during the summer. Cue bet heavily on growth of its at-home molecular Covid testing packs sold direct on a membership plan [TTA 12 Nov 2021], plus to pharmacies and to businesses. It expanded from about 100 workers in 2020 to more than 1,500. That growth has cratered along with the entire testing market for a pandemic that is no longer there. According to Mobihealthnews, they have submitted to the FDA for new test such as an EUA for a combination flu and COVID-19 diagnostic as well as de novo clearances for its flu and COVID-19 standalone tests. 

 

CVS works their plan in Oak Street Health buy talks, Carbon Health $100M investment + clinic pilot; VillageMD-Summit finalizes (updated)

CVS, Walgreens, Amazon, Walmart all chasing the same type of companies to expand their service continuum. During their Q2 2022 earnings call, CVS Health announced that they were determined to enhance their services in three categories: primary care, provider enablement, and home health. And CVS’ CEO Karen Lynch was pretty blunt about it: “We can’t be in the primary care without M&A” (sic). So CVS’ latest moves should come as no surprise.

Oak Street Health: CVS is in talks with this value-based care primary care provider for primarily older adults in Medicare and Medicare Advantage plans. With 100 offices nationally, it’s not too small, not too large to combine with other operations. As a public company traded on the NYSE but puttering along in the $13-$22 per share range since the fall from a high of $30 in August, the news of CVS’ interest has boosted them above $28 and a market cap of just under $7 billion. Although Oak Street has previously maintained that they have no interest in a sale, it has never been profitable and is on track to lose $200 million this year. That is not a good look for CVS but they are working a strategy. Previously, CVS walked away from primary care group Cano Health [TTA 21 Oct 22]. Bloomberg News (paywalled) reported that CVS could pay $10 billion which would be over $40 a share. Healthcare Dive, Reuters

Carbon Health: CVS leads their Series D with a $100 million investment plus piloting Carbon Health operations in primary and urgent care clinics in their retail stores. However, the deal came at a price. Last week, prior to the investment announcement, Carbon announced that it would wind down lines of business in public health, remote patient monitoring, hardware, and chronic care programs, cutting 200 jobs in addition to a June cut of 250, at the time about 8% of their workforce. Carbon will now concentrate on their clinic core business. 100 are presently located across Arizona, Nevada, Colorado, Kansas, Florida, Massachusetts, and California (San Francisco, Bay Area, and San Jose).

In the last two years, Carbon raised $350 million and grew by acquiring four clinic chains. It diversified by buying Steady Health (chronic care management in diabetes) and Alertive Health (remote patient management)–both businesses they are departing. Reportedly last month they bought Inofab Health, an Istanbul-based digital health platform for patients with asthma, chronic obstructive pulmonary disorder, and cystic fibrosis. Crunchbase, FierceHealthcare, Mobihealthnews, SF BizJournal,

CVS is still working its Signify Health acquisition past the Department of Justice (DOJ) and the Federal Trade Commission (FTC). It went into a Second Request for information in late October under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which adds 30 days to the review timetable after the Second Request has been complied with. There is some competitive overlap between CVS and Signify in home health management and accountable care organization (ACO) operations, and some divestitures may be necessary. A closing in Q1 as planned seems optimistic. Acquiring Oak Street may complicate matters since their clinics operate as a Direct Contracting Entity (DCE, now ACO REACH). This present administration is not friendly towards healthcare consolidation of any type, especially with entities participating in Federal programs. (See UHG’s acquisition of Change Healthcare, with court approval being appealed by DOJ.) Reaching (so to speak) deep into CMS programs could be a red flag.

Walgreens’ VillageMD finalized their Summit Health acquisition for $8.9 billion yesterday (9 Jan) (updated). Now with 680 provider locations in 26 markets and 20,000 employees, the group adds to VillageMD’s primary care practices specialty practices in neurology, chiropractic, cardiology, orthopedics, and dermatology plus 150 City MD urgent care locations. 200 VillageMD locations are already adjacent to Walgreens locations. Walgreens Boots Alliance (WBA) and Evernorth, the health services business of Cigna, were the two investors. WBA raised full-year sales guidance from $133.5 billion to $137.5 billion. The current chair and former chief executive officer of Summit Health, Jeffrey Le Benger, MD, will be the interim president until VillageMD finds a permanent president reporting to VillageMD CEO Tim Barry. Release, RevCycleIntelligence, Forbes  At this point, Walgreens hasn’t moved forward with the rumored acquisition of ACO management services organization Evolent Health [TTA 1 Oct 22], which would be far more complex. 

Amazon is still awaiting Federal approval for One Medical as well as in multiple states (Oregon only the first; expect scrutiny). It is also closing Amazon Care and opening asynchronous non-face-to-face telehealth service Amazon ClinicWalmart continues on an internal strategy of opening Walmart Health clinics in underserved areas. Earlier in 2022, they announced the opening of more health ‘superstores’ in Florida, having established 20 in Arkansas, Illinois, and Georgia starting in 2019. Walmart’s approach to retailing health services and products, since getting serious about it in 2018, has wavered with multiple changes of strategy and executive departures [TTA 22 Nov 22]