Short takes: CVS’ $1.12M Q2 net income loss, forecast spurs 5,000 layoffs; Signify’s in-home kidney exams; Indonesia’s Halodoc $100M D; FeelBetter raises $5.9M; Medicare breach hits 612,000 beneficiaries

August 3, 2023 | by

A mixed picture for CVS Health. Their Q2 reporting was almost schizophrenic, depending on whose reporting you read. Healthcare Finance highlighted their $1.12M net income loss–tiny when compared to the size of the company– but apparently one of the factors driving a layoff of 5,000 corporate, non-customer facing staff. From FierceHealthcare, CVS is still quite profitable at $1.9 billion, but that is down 36%. Revenue of $88.9 billion was up 10% from prior year. The results beat Wall Street analyst estimates of $2.12/share with adjusted earnings of $2.21/share. 

Despite the overall good picture of Q2, financial projections trended down for the full year. CVS in Q2 started a restructuring plan which cost $496 million in pre-tax income, expected to be completed by year’s end. 2023 is projected to have increased Medicare Advantage costs, higher drug utilization, and lower consumer spending expectations affecting retail operations. Added to their acquisition binge of Signify Health and Oak Street Health, which together totaled $18.6 billion, their 2024 earnings per share projections for 2024 fell from $9 to a range of $8.50 to $8.70. Timing was not disclosed for the 5,000-person reduction among corporate staff. It is not known whether this will affect Aetna and CVS Caremark (pharmacy benefit). CVS has 300,000 employees (75% full time) including part and full-time retail workers. They are also reducing corporate travel, plus the use of consultants and vendors. (CVS is known to have extremely low contractor rates already.) The restructuring is projected to save $700 to $800 million next year, but cold comfort to the 5,000 who won’t be there.  FierceHealthcare. We’ll see.

One of those CVS purchases, Signify Health, is moving forward with an in-home option for evaluating kidney function as part of in-home exams of Medicare Advantage members. This evaluation will include urinalysis and estimated glomerular filtration rate testing which are relatively simple and cost-effective to administer in-home. It fits within their in-home exam protocols and will support early detection and diagnosis of kidney disease plus management of those with chronic kidney disease for earlier and better treatment. End-stage renal disease (ESRD) costs $37.3 billion to Medicare. FierceHealthcare

Going far, far East to Indonesia, virtual health provider Halodoc scored $100 million in a Series D funding round. Lead investor was Astra International with Openspace and Novo Holdings. This brings their total funding to $245 million. Halodoc provides online and app-based health services for 20 million active platform users claimed. Services include telehealth, medicine ordering, lab test, and doctor appointment booking. They also manage third-party health insurance purchase and at-home health testing. Their network includes more than 20,000 medical practitioners, 3,300 hospitals, and 4,900 pharmacies. On the website, there are a wide variety of services, including wellness. Unfortunately, to read it, you’ll have to know Indonesian (Malay)–and there are some pictures of intriguing recipes there! Mobihealthnews

Contrasting this to an exceedingly modest raise by a new Boston/Tel Aviv medication management company, FeelBetter. Their $5.9 million unlettered raise was led by Firstime Ventures and Shoni Health Ventures, with participation from Random Forest VC, The Group Ventures, and previous investor Triventures for a total of $8 million. FeelBetter uses AI tools to create what they call Pharmaco-Clinical Intelligence to identify patients at risk and deliver insights on gaps in care to personalize medication management to change the risks of polypharmacy. Release, Mobihealthnews  They also issued a study on how FeelBetter could be used to effectively risk stratify emergency department use and hospitalizations among patients 65+ with multiple chronic conditions and complex medication regimens to avoid the 10-30% of hospitalizations that include medication issues. Release

No week seems to pass by without a data breach of some sort, but it’s unusual when Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) are attached to it. A contractor to the Medicare program, Maximus Federal Services, Inc. (Maximus), used a vendor, Progress Software, and their MOVEit Transfer software, which is a popular file transfer software for transmitting sensitive data. There was a vulnerability in this software that has previously been exploited by Russian ransomwareistes CLOP with Johns Hopkins currently being sued for their breach [TTA 19 July]. Maximus detected the unusual activity, an outside entity copying files, from 27 to 31 May. CMS is reporting that about 612,000 Medicare beneficiaries may have been affected by the breach which may have exposed personally identifiable information (PII) and/or protected health information (PHI). CMS and Maximus are notifying the beneficiaries this week and offering 24 months of free credit monitoring service. CMS release, Federal News Network, Progress page,  Deep Instinct backgrounder on MOVEit’s zero-day vulnerability

House appropriates $1.9B for Oracle Cerner VA EHR modernization, $5.2B for telehealth, plus other technologies; Oracle lays off more Cerner staff

August 3, 2023 | by

House appropriations for the VA in FY 2024 were passed last week, including requirements for the VA/Oracle Cerner EHR Modernization program. The House allocated $1.9 billion in total for VA’s Oracle Cerner EHRM program. According to the report in FedScoop, the topline amount is broken down as follows: $1.2 billion for the Oracle Cerner-operated contract, $424 million for infrastructure readiness, and $253 million for program management. 

The budget is part of the Military Construction, Veterans Affairs, and Related Agencies Appropriations Bill 2024 (full bill). The bill goes to the Senate after the summer recess. See pages 53 and 54 for the EHRM.

Key points:

  • This appropriation is the sole source of funding for the EHR modernization program. “No authority is provided for funds from other VA accounts to be transferred into this account nor for funds from this account to be transferred out to other accounts.”
  • Reaffirms “quarterly reporting of obligations, expenditures, and deployment schedule by facility and the Office of Deputy Secretary to administer the initiative”
  • There is also a 25% contingency upon the VA Secretary to report any outstanding issues impacting the stability and usability of the system, certifying and detailing any changes to the deployment timeline, certifying the status of outstanding issues, and whether
    the system is ready and optimized for further deployment at VA sites. 
  • ” The Government Accountability Office is directed to continue quarterly performance reviews of EHRM deployment and to report to the Committees each quarter.”

Reports will start within 30 days of the enactment of the appropriations bill looking back on “each new requirement and customized interface added in fiscal years 2022 and 2023, including the cost of each, reasons for inclusion, and whether they were outside of the scope of the contract within 30 days of enactment of this Act.” At 45 days, the bill requires a briefing on how the Department plans to set enterprise standards. The bill also confirms that no new deployments are scheduled for FY2024 and the 25% of funds set aside for FY2023 in deployment will not be released. Also EHR Intelligence

The bill also allocates $5.2 billion for telehealth and connected care (page 42). This covers services in home telehealth, home telehealth prosthetics, and clinic-based telehealth. The bill encourages expanding telehealth capacity to address backlogs for disability exams and healthcare appointments when appropriate. Our top story on 9 June was the award of Home Telehealth monitoring contracts to incumbent Medtronic and newcomers Cognosante, Valor Healthcare, and DrKumo.

Included in other budget lines are healthcare technologies (pages 33-34) such as bioelectronic medicine/AI, early detection diagostics, focused ultrasound therapy, medical image exchange, migraine prevention and treatment, and respiratory illness diagnostics using 4-dimensional images of lung function. 

Meanwhile, Oracle is laying off more Cerner employees. Your Editor is basing this on a Reddit 1 August thread that has no totals but indicates that employees were told yesterday (1 August), given two weeks notice to 15 August, and that the layoffs hit areas such as revenue cycle, 10% of CernerWorks, and properties. CernerWorks hosts, manages, and monitors client systems by providing data center hosting services for Cerner EHRs and other SaaS. Whether any of this affects the VA is to be determined, but their Federal service area had 500 to a rumored 1,200 layoffs in June. This was not much of a surprise with the near-completion of the DOD Military Health System EHR implementation and the holdup save one of the VA’s implementations (except the joint VA-MHS Lovell facility in Chicago). Our Readers have heard this here first.

Done (and split) deal! Informa to “manage” HIMSS Global Health Conference & Exhibition (updated)

August 2, 2023 | by

Gimlet EyeIt’s now a “landmark partnership”. From a non-announcement announcement by Informa in its H1 financials to today (seven days), we have gone from Informa’s “exclusivity to acquire the HIMSS Global Health Exhibition/Conference” to a “partnership” as follows:  Informa will manage the HIMSS Exhibition, while HIMSS will oversee the content and programming. This will expand the combined conference and exhibition. (Informa taking over conference logistics aren’t specified, but assumed from later on in the release.)

No transaction costs are disclosed. The word ‘acquire’ is not used once.

It may be the best possible deal for both. The press release (on Yahoo Finance) and identically in the news section on HIMSS.org content is masterful in saying very little in a lot of words. Here’s this Editor’s view of the deal:

  • It avoids the biggest problem–without HIMSS content, the conference would lack a strong reason why to go and spend money on participation and exhibiting. (This Editor guessed right on that.) Minus HIMSS, it would be easy for exhibitors and participants to walk away from it or say ‘maybe next year’. A lot of what has driven HIMSS is FOMO.
  • It would lose 50+ years of Society legitimacy, continuity, and goodwill as an unaffiliated conference
  • This gives HIMSS, as a society, an annual conference as part of member value (Guessed right on this too)
  • Informa would be hard-pressed to organize the conference content by year’s end, as there’s basically less than eight months to March
  • It absolves the HIMSS organization of being responsible for venue negotiations, expo design, logistics, travel arrangements, and all the messy expenses such as Freeman. Their vulnerability showed in the last-minute cancellation in 2020. It’s now in professional hands. 
  • It may generate some needed cash for HIMSS in this FY (not disclosed) 

HIMSS24 will be taking place in March in Orlando as originally planned, managed by Informa’s South Florida Ventures unit. Informa promises “improved digital features, enhanced registration processes, marketing tools, and cutting-edge product discover applications”. One would also hope improved travel arrangements.

There is no information in the release about Informa involvement in the 18-21 September APAC conference (too soon?) nor mention of any future international conferences, though Informa is certainly capable of staging and managing them.

Open issue–HIMSS Media is not mentioned in the release. Media tie-ins and merchandising are a substantial source of revenue for that division. But the lack of mention is not a ‘no’ and if HIMSS is generating the conference content, it’s likely that HIMSS Media will do the merchandising.

Surprisingly, the press ‘break’ is not yet up on HIMSS Media (Healthcare IT News, Mobihealthnews, Healthcare Finance News). Update–an 18 minute video hosted by editor Mike Miliard is up on Healthcare IT News 3 August.

  • The name will not be changed.
  • HIMSS has been considering bringing in an outside organization to manage the conference for some time and had been speaking with Informa over the past year.
  • Mr. Wolf of HIMSS stated that their conference organizing people will be moving over to Informa.
  • Mr. McAvoy of Informa touted the tools that HIMSS will now be able to access–enhanced tools that Informa has developed and amortized over multiple conferences.
  • More to come

A new day for HIMSS in a competitive conference market. Except the link to the conference page at the end of the release, https://www.himss.org/global-conference.–does not open the conference page but goes to a ‘page not found’. Oops! Hint: it’s misconfigured to include the period in the URL.

Previous coverage: More thoughts 2 August, Informa to acquire 27 June    Follow up 8 Aug, answers to questions:

 

More thoughts on the pending sale of the HIMSS Global Conference

August 2, 2023 | by

In the absence of a real announcement, speculation has been everywhere on the not-yet-done deal between HIMSS and Informa. As reported last week [TTA 27 July], HIMSS will be selling the annual Global Conference to Informa PLC, the largest B2B trade show operator on the Planet Earth. There has been no communication as of this writing from HIMSS to members or chapters, nor any announcements in HIMSS Media. The only corporate confirmation came through Informa PLC’s H1 financial report.

From LinkedIn, Tom Foley, who is the head of GenieMD telehealth and also hosts a podcast called The Virtual Shift via HealthcareNOWRadio and Answers Media Network (headed by Roberta Mullin and Carol Flagg, with whom this Editor worked some years back) had two posts on the pending ‘exclusivity to acquire’. In the later post, he addresses the fact that HIMSS has already been booked by most exhibitors as HIMSS, not as a ‘third-party conference’, and asks for market responses. The earlier post is about the ‘announcement’ and is largely the same as his comment on TTA’s original article. Other than these and spinoff posts from other commenters, Other than we Happy Few, LinkedIn posts have been on the QT and very hush-hush on the subject. Interesting as so many on LinkedIn are HIMSS, HLTH, ViVE and other health conference exhibitors and attendees.

Which leads this Editor to turn to the pointed, yeasty HIStalk where their Editors have dug around HIMSS and turned up some interesting things. This Editor encourages Readers to go to the source articles linked below for their analysis. I will add some points and commentary to each, especially on the Form 990s:

  • Monday Morning Update 7/31/23 speculates on HIMSS’ financials reported in their Form 990 as a 501 (c)(6) non-profit. Their last FY filing is for fiscal 2020. Since HIStalk does not, here is the link to that Form 990 2020 in Candid, a public database on non-profits (the former Guidestar and Foundation Center). On the organization page, click on the Form 990 tab for the first 2020 dropdown, which is for their FY starting 1 July 2019 to 30 June 2020. In 2020, HIMSS had total revenue of $28.7 million, a severe drop from 2019 where revenue was over $111.9 million (line 12). Their expenses were over $82.6 million for an operating loss of over $53.9 million. This represents the effects of the cancellation of the 2020 conference, which in 2019 ‘conferences and meetings’ reported $42.8 million in revenue and in 2020 only $1.9 million. Using this information and from Informa’s track record, HIStalk does some calculations on projected sales prices.
  • This Editor also examined the second 2020 dropdown, which is a six-month first-half report from 1 July to 31 December 2020. Revenues rose to $65.1 million with expenses of $42.6 million for an operating profit of $17.9 million. Conference revenue was a tiny $8.7 million but higher than the full year. HIMSS under a joint Health 2.0 banner had a Middle East-based virtual conference in November and HIMSS Media promoted some ‘HIMSS20’ content as digital sessions.
  • News 8/2/23 has reader comments on a HIMSS initiative for vendors called Accelerate, which has apparently been inactive for some time, executive salaries, and speculation on why the delay on the Form 990s.

What remains problematic is HIMSS’ future involvement, if any, in a conference that has been branded as HIMSS for over 50 years and has already been sold into as HIMSS’. How will Informa handle that? Invite HIMSS to sponsor it? Then again, what will be HIMSS’ future as a member-based society without a conference and with a subsidiary, HIMSS Media, that makes money off sponsorships both pre and post and content during the conference? It seems that both buyer and seller would benefit from a shared relationship.

This is a developing story and will be updated.

Amazon Clinic announces 50-state rollout 1 August. Were the privacy issues fixed?

August 1, 2023 | by | 2 Comments

At least the disclaimers are new and improved. Amazon today, on its news page, announced that Amazon Clinic was being rolled out to all 50 US states from the previous 33. You will be paying in cash (no insurance accepted) for services, which now include live 24/7 telehealth (via two ‘white-labels’, Wheel and SteadyMD) in addition to asynchronous (messaging) telehealth, for treatment of about 30 common mild and chronic conditions such as rosacea, gout, eczema, UTIs, and the ever-popular erectile dysfunction and hair loss. Access is provided through the Clinic website or the Amazon app. Providers set fees on a one-time and ongoing basis. Prescriptions can be filled individually or through Amazon Pharmacy. The service is not available to those below 18 or above 64, which is a mystery as those 65+ are perfectly capable of paying in cash and suffer from the same maladies. (Age discrimination, anyone?)

As to the reported delay from 27 June on the service expansion [TTA 27 June], an Amazon spokesperson denied that privacy concerns expressed by two US senators (Warren and Welch) and in the Washington Post had any effect and in fact, denied that there was any delay.  FierceHealthcare.

It is unknown whether Amazon replied to the senators’ letter that cited where consumer information went, that it may be redisclosed, and denial of service (inability to complete registration) if a user during registration did not agree to waive HIPAA and give Amazon access to the patient’s personal information file.

Looking at the news, website and privacy disclosures, there are multiple disclaimers wherever one looks that seem to address these concerns.  On the news release, there is a link labeled Read more about how privacy is built into Amazon Clinic’s core. Excerpts below (main points in red):

We do not sell customer information.

Amazon doesn’t sell customers’ personal information. Amazon Clinic also doesn’t use a customer’s personal health information to market or advertise other products in the Amazon.com store.

We ask for HIPAA authorization to make things easier for customers.
One of the complaints we hear a lot about traditional health care is how many times customers are asked to fill out forms over and over again. To solve this problem, Amazon Clinic asks customers for permission (through the HIPAA authorization) to allow us to save their information and patient records if their health care provider leaves Amazon Clinic. This supports continuity of care and makes it easier for customers to work with different provider groups, because they won’t have to fill out the same form multiple times or lose access to their visit history. Customers have the option to accept or decline the HIPAA authorization before getting treatment—customers who decline can still receive care from Amazon Clinic.

Privacy disclosure on the Amazon Clinic site is the same in consumer-oriented language and with a revocation notice:

What we do (and don’t do) with your information
We use your information to make your healthcare experience easier. We send it to your healthcare providers and pharmacies when you’re being treated, and we save it so you won’t have to fill out the same forms over and over again—even if your healthcare provider were to leave Amazon Clinic. We’ll never sell your information to anyone and we don’t use your personal health information to market or advertise other products available on Amazon.com.
We respect your preferences
If you don’t want us to save your health information, you can still get care through Amazon Clinic. However, you should know that if the healthcare provider(s) you’ve used leave Amazon, we’ll be required by law to delete your health information and you’ll have to re-enter it if you visit us again.
You can change your mind
If you give us permission to save your health information, then change your mind, that’s OK. To revoke your HIPAA Authorization, just email your request to clinic.privacy@amazon.clinic. Make sure to include your name, date of birth, address, and phone number, or download the HIPAA revocation form, fill it out, and send it as an attachment to your email.

Unless this is not operating reality, Amazon may have come to its senses and installed proper guardrails on this service. Amazon is making a massive bet on healthcare by building Clinic, Amazon Pharmacy, and paying $3.9 billion for One Medical which is currently unprofitable. They are betting that to their captive audience, basic healthcare can be delivered like merchandise and that more complex primary care can be folded into the Amazon continuum. In Amazon Clinic, it’s betting that it can one-up established players like Ro and Hims as well as Teladoc and Amwell.

A hard look at Amazon reveals that the strategy compensates for losses in other areas, such as their basic businesses with layoffs of 27,000, including Amazon Pharmacy and the Washington Post, and shuttering Amazon Care last year. Technology hasn’t been much of a winner, with Halo terminated yesterday and with privacy concerns (again) around Alexa, Kindle, and Ring security cameras. AWS is no longer the cash cow mooing in the meadow that subsidizes various ventures, with growth down by half and plenty of competition [TTA 16 June]. Amazon has few friends in DC, not even at the Washington Post. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have held up their $1.7 billion buy of iRobot for one year as of this month, and are still scrutinizing One Medical.

If the guardrails are made of Silly Putty and there are consumer complaints, Senator Warren, who has a long history of sparring with Amazon, will be issuing more letters. She will huddle with FTC and DOJ, where there’s a dartboard with Amazon’s name on it. Note to Amazon: Senator Warren is up for reelection in 2024, and she needs a high-profile issue.

Legal roundup: Dorsata sues athenahealth, provider group on trade secret theft, Nevada terms Friday Health Plans

July 28, 2023 | by

Dorsata, a women’s health-focused EHR, filed a lawsuit on 19 July against athenahealth and provider group Unified Women’s Healthcare. The suit has nine counts that allege unfair and deceptive acts and practices, breach of oral contract, breach of fiduciary duty, common law fraud, unjust enrichment, theft of trade secrets, tortious interference with current customers, breach of nondisclosure agreement, and commercial disparagement. 

A joint venture that went very sideways. After Unified purchased Women’s Health USA in 2021, an existing customer of Dorsata, athenahealth approached Dorsata to create a joint solution to pitch to Unified. According to Dorsata, which signed a non-disclosure agreement, Dorsata provided trade secrets to athenahealth and the two made oral agreements to approach Unified as a joint venture. Dorsata developed a software product for this, vU, but to finance it had to borrow $6 million from athenahealth. Unbeknownst to Dorsata, athenahealth created its own version of vU using Dorsata’s information to sell into Unified, cutting out Dorsata. Provisions in the promissory note prevented Dorsata from competing with athenahealth. Unified is also named as a defendant as it aided athenahealth’s actions and failed to act while athenahealth cut Dorsata out of their business. 

The suit has been filed in the civil court of Suffolk County, Massachusetts and is searchable here. Dorsata is seeking damages incurred from a loss of expected profits, the value of injury to reputation, a loss of company valuation, the value of future lost business as well as damages for unlawfully gained commercial marketplace advantage. “We’ve been severely damaged, and we hope the court will rectify the situation,” David Fairbrothers, cofounder and CEO of Dorsata, told Mobihealthnews in an email. athenahealth has stated that the suit is ‘without merit’. Becker’s

Friday Health Plan’s last state, Nevada, shuts down their plans. The Nevada Division of Insurance is terminating all Friday plans effective 31 August. After the liquidation on 1 September, Nevada Life and Health Insurance Guaranty will pay provider claims through 31 August. Approximately 2,000 members of Friday’s plans will have to scramble to find coverage on Nevada’s Silver State Health Insurance Exchange (NevadaHealthLink.com) during the special enrollment period (SEP) ending 31 October. The Nevada exchange offers six different health plan carriers with 100 different options. Nevada, like Colorado, had hoped that the plan might survive until the end of the year. Earlier this month, Colorado terminated Friday Health Plans [TTA 20 July]. Friday leaves behind a lot of members in the lurch, providers who are wondering if their states will pay them, over 300 former employees, state insurance departments having to guarantee hundreds of millions in payments in seven states, and embarrassment by the state regulators and by CMS. FierceHealthcare, Nevada DOI release

Close of week short takes: Q2 earnings up for GEHC, Talkspace; UnitedHealth invests $11M in SDOH; fundings for two AI startups, K4Connect, UpLift, Family First

July 28, 2023 | by

Winding up this week on nothing but positive news.

GE Healthcare was up smartly on revenue. For Q2, GEHC reported revenue of $4.8 billion, up 7% versus Q2 prior year, and a 9% organic revenue growth.  The adjusted earnings before interest and taxes (EBITDA) was $711 million versus $719 million prior year, with net income slightly down at $418 million versus $485 million prior year. Adjusted earnings per share was $0.92. Orders were up 6%. GEHC is adjusting its earnings upward by one percentage point for the full-year guidance on organic revenue growth and 10 cents in adjusted EPS at the midpoint. GEHC spun off from GE in January. Mobihealthnews

Talkspace had a far more mixed picture. Their Q2 revenue climbed 19% versus prior year to $35.6 million. This was due to an 82% increase in B2B revenue partially offset by a 41% consumer revenue decline. The other good news was that they narrowed net loss to $4.7 million from the prior year’s $23 million. Adjusted for EBITDA, the loss was $4 million. Another positive factor was that operating expenses were reduced 32% to $24.2 million. They are seeing an increase in revenue for 2023 to $137 million to $142 million and moving towards breakeven by end of Q1 2024. Another entrant in the crowded telemental health space, Talkspace went public in 2021 through a SPAC, trading as high as $11.95. Late last year, it flirted with delisting on Nasdaq, but is currently trading at $1.70. Mobihealthnews

UnitedHealthcare’s big bet on social determinants of health (SDOH) involves $11.1 million in grants to 66 nonprofits across 12 states. Part of their Empowering Health initiative, the grants help organizations that aid uninsured individuals and underserved communities in areas such as food insecurity, nutrition, social isolation, memory loss, behavioral health issues, health literacy efforts, and more. Since its start in 2018, UnitedHealthcare invested $62 million in grants that serve more than 11 million people in 30 states and the District of Columbia. MedCityNews, UnitedHealthcare news

Digital health and AI fundings are also ramping up–a little–in the $9-15 million range:

  • Two generative AI startups, Hippocratic AI and GenHealth AI, had early funding rounds in the $15 million range. Hippocratic AI is a safety-focused large language model (LLM) for healthcare competing with GPT-4, outperforming it on 105 of 114 healthcare exams and certifications. Their second seed round funding of $15 million from Cincinnati Children’s and HonorHealth adds to their May $50 million seed. GenHealth AI raised $13 million in a venture round from Obvious Ventures and Craft Venture. Their form of generative AI they call a large medical model (LMM) trained on medical-event data called DOOG-E. Two Washington veterans joined their board: Dr. Don Rucker, former national coordinator for health IT in the Trump administration and currently on the 1upHealth board, and Aneesh Chopra, the first chief technology officer of the US in the Obama administration.
  • Senior housing focused K4Connect received a venture round of $9 million from AXA Venture Partners and Bryce Catalyst with existing investors Forté Ventures, Intel Capital, the Ziegler-LinkAge Fund, and Topmark Partners, for a total of $41 million. K4Connect is positioned as an operating system (FusionOS) that integrates multiple senior living technologies. Mobihealthnews
  • Telementalhealth provider UpLift raised $10.7 million in Series A funding from Ballast Point Ventures with participation from Front Porch Ventures, Kapor Capital, and existing investor B Capital for a total raise of $22 million. UpLift is a direct to consumer therapy model which promotes both insurance coverage, affordable rates, and medication management. Another Series A funding of $11 million went to Family First, a technology platform for enterprises that supports caregivers’ mental health and wellbeing, The round was led by RPM Ventures and Eos Venture Partners.  Mobihealthnews

Informa PLC to acquire HIMSS Global Health Conference and Exhibition (updated)

July 27, 2023 | by | 1 Comment

HIMSS to exit ‘HIMSS’. For more years than most of us care to remember, the five letters have meant more than the association (Healthcare Information and Management Systems Society). It’s been all about the annual conference in (usually) Las Vegas or Orlando. Prime expo booth locations are so prized that usually one member of the team is negotiating and pre-booking the next year at the conference. Thus it came as a major surprise to the industry that HIMSS plans to sell the Global Health Conference to Informa PLC. Transaction cost is undisclosed as it is “exclusivity to acquire” the conference and the deal is not closed. The news was buried in Informa’s half-year financial report (PDF, see page 5 under ‘Market Specialisation: Further depth in Healthcare Technology’ and isn’t even on Informa’s news page as of mid-afternoon EDT 27 July, nor on HIMSS’ website (Ed. note–neither as of mid afternoon 28 July). Hat tip to HIStalk today

It is not known if the deal will affect the upcoming HIMSS23 APAC conference in Jakarta on 18-21 September, nor how it will affect the 2024 Conference in Orlando 11-15 March which is already requesting speaker proposals.

HIMSS the Conference is the largest healthcare conference in the world and except for the off years around the pandemic, attracts on average 35,000 healthcare professionals from more than 90 countries to over 200 educational sessions and 1,200 exhibitors. Informa is a trade show powerhouse as the largest in B2B conferences grouped under Informa Markets, Informa Connect (including life sciences), and Informa Tech. Their recent Tarsus acquisition includes healthcare (Health Connect Partners) and anti-aging & aesthetics (A4M Spring Congress) plus a joint venture, Tahaluf, with the Saudis in the burgeoning Middle East conference market.

What will be left of HIMSS after the conference divestiture? It will be the society itself with a mission of reforming the global health ecosystem through the power of information and technology. The basics are benefits for members around professional development, where the conference originally started, and public policy/advocacy. HIMSS has an extensive series of initiatives such as Accelerate Health and Gravitate Health (list here). Not on the main website is HIMSS Media, which includes Healthcare IT News, Mobihealthnews, Healthcare Finance, and HIMSS TV, though losing the conference reduces a major link to advertisers and cash flow as part of a package and content, plus content syndication, custom webinars, and data/lead generation packages.

There is no mention of any continuance of HIMSS ties to the conference and content at this time, though as mentioned neither HIMSS nor Informa have announced the conference acquisition via the usual press releases–or HIMSS Media. The association with ‘the’ society for IT executives, CIOs, and technology was its ace card for over 50 years. Will HIMSS completely walk away, as CHIME did, bolting to ViVE in 2022, or lend its presence and prestige? Trade Show Executive, FierceHealthcare, Healthcare Innovation

Perhaps, and this is only your Editor’s speculation, the merchandising and lift around the HIMSS Conferences were so labor-intensive that HIMSS lost focus on its mission as a member organization. Their handling of the 2020 conference cancellation mere days before the event then not refunding registration and booth fees until 2021 and 2022 under duress was an unforced error that left a bad taste. Other large conferences such as HLTH and its digital health spinoff ViVE in the past two years have peeled off attendees, exhibitors, and ‘buzz’ in a way that other smaller conferences in the past did not. HIMSS the Conference was increasingly tagged as overly tied to Big Med Device and Big HIT, coming off as ‘stodgy’ and “awkward” post-pandemic. (That wasn’t supposed to happen with buying Health 2.0’s conferences squarely based among digital health innovators, but that was killed off even before the pandemic, as were HIMSS’ regional conferences.) With marketing cutbacks at many companies affecting booths and attendees, needing to pick where to spend your trade show dollars, that this was the time to sell could have been obvious. Informa could very well reinvigorate the conference as something new and different.

This is a developing story and will be updated.

Mid-week news roundup: $105M senior debt to Headspace; Nextech bought for $1.4B; Teladoc’s Better(Help) Q2 boosts 10%; Peppermint’s online ‘clubhouse’ for seniors, PathAI lays off 87

July 27, 2023 | by

Mostly good news this midweek…

Headspace gained some needed cash–a $105M senior debt facility–from Oxford Finance. The company can use it. Their more recent headlines were for layoffs (15% earlier this month) and the telemental health space, which boomed during the pandemic, now can best be described as challenged. Headspace expanded to the UK in January. As noted with the layoffs, Headspace never SPAC’d but after acquiring Ginger for a $3 billion valuation back in the crazy days of 2021, hasn’t had an easy time of it. Their financing will be used for expansion and for opportunities. The problem is that telemental health has too many lookalike/soundalike competitors including the 9,000 lb. elephants (see Teladoc) all going after the same targets–direct to consumer, enterprise, and health plan markets. It’s a rocky road to that cliché, a path to profitability. Business Wire, FierceHealthcare

Nextech was bought by TPG for a tidy $1.4 billion. Nextech is a healthcare IT company with cloud-based specialty EHRs, analytics, and practice management systems. Specialties they cover are dermatology, ophthalmology, orthopedics, plastic surgery, and med spa. TPG is investing in Nextech through TPG Capital, its US and European late-stage private equity platform. The exit was made by Thomas H. Lee Partners. TPG has previously invested in Lyric (formerly known as ClaimsXten), WellSky, and IQVIA. TPG release, FierceHealthcare

Teladoc had good Q2 news for investors, with a 10% boost aided by BetterHelp’s performance.  TDOC beat The Street ever so slightly with a 10% quarterly revenue boost to $652 million. They also narrowed net loss to $65 million, or a loss of 40 cents per share. BetterHelp’s performance was up 18% in revenue, with $292 million in Q2, hardly dented by their $7.8 million FTC settlement in March. Integrated care was up 5% for $360 million in revenue. In Q2 2022, Teladoc took a $3 billion impairment charge as the second part of writing off its Livongo buy [TTA 30 July 2022]  and their Q1 wasn’t much better with a $6.6 billion writeoff [TTA 4 May 2022]. It showed in TDOC’s share price which has been up about $5 since the announcement on 25 July.  On the investor call, CEO Jason Gorevic is betting on BetterHelp and weight management [TTA 21 April] being introduced this quarter, though for the latter recent health concerns on Ozempic as a weight loss drug, insurers increasingly refusing to pay for it (Medicare does not, and it costs upwards of $1,000/month), and substantial competition from other weight loss players may cloud the outlook. FierceHealthcare, Q2 earnings

Peppermint appealing to older adults with online ‘clubhouses’. Out of NYC-based VC/developer Redesign Health , Peppermint’s purpose is to address senior loneliness through virtual clubs. Older adults can practice hobbies or contribute their knowledge as ‘experts’. Peppermint is kicking off with $8 million in seed funding partly out of Primetime Partners and partnering with senior centers affiliated with the Massachusetts Council on Aging (MCOA). This Editor wonders if $9.99 per month (nearly $120/year) with a 30-day free trial is a sustainable model for those minding their dollars in this inflationary time. Release, MedCityNews

AI pathology company PathAI is releasing 87 employees, according to a Massachusetts-filed WARN notice. Of the 87, 51 live in the Bay State with 36 mainly remote workers outside it. It’s considered to be one of Massachusetts’ largest health tech companies with an estimated 600 employees. The layoffs are effective 31 July. The company has had over $255 million in funding through a 2021 Series C including General Atlantic and Labcorp. (Crunchbase) One month ago, they added a new president of biopharma and chief business officer, Matt Grow (release).  BostInno (paywalled), Becker’s

FTC, HHS OCR scrutiny tightens on third-party ad trackers, sends letter to 130 hospitals and telehealth providers

July 27, 2023 | by

If you’ve checked on your legal department, they may resemble Pepper (left). Hospitals and telehealth companies have been put on notice by letter agencies HHS Office for Civil Rights (OCR) and the Federal Trade Commission (FTC) that personal health information–not just protected health information (PHI) covered by HIPAA–that can be transmitted to third-parties by ad trackers like Meta Pixel is now forbidden, verboten, not permitted. In the joint statement by OCR and FTC, hospitals, providers, and telehealth providers were explicitly told that use of these online trackers is being equated with violations of consumer privacy. Their release specified “sensitive information” such as health conditions, diagnoses, medications, medical treatments, frequency of visits to health care professionals, and where an individual seeks medical treatment. Hospitals and telehealth companies also cannot plead ignorance of what their developers did, as the responsibility is being put squarely on them to monitor the data going to third parties out of websites and apps. 

“The FTC is again serving notice that companies need to exercise extreme caution when using online tracking technologies and that we will continue doing everything in our powers to protect consumers’ health information from potential misuse and exploitation.” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said. At OCR, which historically had its hands full with HIPAA violations and data breaches, their scope has broadened. “Although online tracking technologies can be used for beneficial purposes, patients and others should not have to sacrifice the privacy of their health information when using a hospital’s website,” said Melanie Fontes Rainer, OCR Director. “OCR continues to be concerned about impermissible disclosures of health information to third parties and will use all of its resources to address this issue.” Both HHS and FTC can take action without the time-consuming legal actions that DOJ must undertake.

True to FTC’s renewed use of the 2009 Health Breach Notification Rule, the letter sent to 130 hospital systems and telehealth providers came down hard on anything that could be interpreted as personal health information. Even for health organizations not covered by HIPAA, the letter is explicit on their obligation to protect against disclosure to third parties and to monitor the flow to third parties even if not used for marketing. Without explicit consumer authorization, it can “violate the FTC Act as well as constitute a breach of security under the FTC’s Health Breach Notification Rule.” Previous TTA coverage on third-party trackers and FTC actions here. Health IT Security

Between the DOJ and FTC alone, with actions on ad trackers and changes to antitrust guidelines, they have made the spring and summer of 2023 a most interesting and busy one for hospital and healthcare company legal departments. It’s even more amazing that given this background and on notice, Amazon just keeps flouting basic regulations about health information usage, such as for Amazon Clinic–which to date has not rolled out. TTA 27 June

Another antitrust shoe drops: FTC, DOJ publish Draft Merger Guidelines for comment–what are the effects?

July 20, 2023 | by

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have published for public comment a draft of revised corporate merger guidelines. These update prior guidelines from 1968 which have been revised six times since. These are stated as incorporating comments from hearings and comments that started in January. 

The Draft Merger Guidelines on FTC.gov are open for comment for the next 60 days (18 September), cleverly during a time when most of Washington DC is repairing to cooler climes for summer holidays. They are centered on what DOJ Antitrust and FTC loftily call The 13 Guidelines. These will be used singly or in combination for these agencies to determine “whether a merger is unlawfully anticompetitive under the antitrust laws.” 

  1. Mergers should not significantly increase concentration in highly concentrated markets;
  2. Mergers should not eliminate substantial competition between firms;
  3. Mergers should not increase the risk of coordination;
  4. Mergers should not eliminate a potential entrant in a concentrated market;
  5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete;
  6. Vertical mergers should not create market structures that foreclose competition;
  7. Mergers should not entrench or extend a dominant position;
  8. Mergers should not further a trend toward concentration;
  9. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series;
  10. When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform;
  11. When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers;
  12. When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition; and
  13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly

Assistant Attorney General Jonathan Kanter of the Antitrust Division stated in the DOJ/FTC release, “Today, we are issuing draft guidelines that are faithful to the law, which prevents mergers that threaten competition or tend to create monopolies. As markets and commercial realities change, it is vital that we adapt our law enforcement tools to keep pace so that we can protect competition in a manner that reflects the intricacies of our modern economy. Simply put, competition today looks different than it did 50 — or even 15 — years ago.” Not to be outspoken, FTC Chair Lina M. Khan, got her dibs in: “With these draft Merger Guidelines, we are updating our enforcement manual to reflect the realities of how firms do business in the modern economy.” Here the DOJ Antitrust Division takes the communications lead but the draft is published by FTC. These guidelines require no ratification by Congress as they are administrative in nature.

To this Editor, it is hard to see that any merger or acquisition of like companies or even complimentary organizations could pass. Consider the following scenarios: a leading telehealth or remote patient monitoring company offers to buy a struggling early-stage AI/ML or data analytics company to expand its capabilities, a larger health system buys a failing community hospital, one hotel looks to buy another down the street, VCs or equity investors look to exit just about anything through a sale. Every one of these situations triggers one or more of these guidelines.

Coupled with the proposed changes to the Premerger Notification under the Hart-Scott-Rodino Act (HSR Act) [TTA 29 June] now published in the Federal Register (29 June), open for comment until 28 August, we may be looking at the last few years as the Last Good Time for M&A, even with current restrictions in place.

As your Editor said last month, “For those surprised that FTC is taking the lead on this, this once-sleepy agency woke up late last year in a heckuva bad humor and is now taking a far more activist role in corporate oversight in areas such as privacy.” This was powered by a 2021 executive order by the current president for any and all mergers to be scrutinized. Earlier, FTC and DOJ withdrew antitrust policy statements that they now feel are overly permissive. FierceHealthcare

Already industry machers such as the American Hospital Association, Federation of American Hospitals, Pharmaceutical Research and Manufacturers of America (PhRMA) have asked the FTC mildly and politely for a further 60-day extension of the comment period. This includes non-healthcare organizations such as the American Hotel & Lodging Association and the Consumer Technology Association which runs CES. (Don’t hold your breath) FierceHealthcare

crystal-ballIn the cloudy crystal ball, this Editor sees a rush to complete acquisitions 1) below the HSR threshold ($111 million) and 2) in general before the new antitrust guidelines are adopted–and they will be as they are administrative measures and not laws. To reiterate previous comments, overall it will further depress M&A and investor exits, especially in healthcare and with mid-size private and public companies, funding beyond Series A/B, and valuations.  If you start a business, inherit one, or are trying to turn around one that has lost its markets or unprofitable–but can’t sell it in the future, what you have is a ton of frozen value and uninterested lenders. Will a thousand flowers bloom, like they did in airline deregulation 1980-1995–drive businesses to friendlier countries like Ireland or Poland–then lead to stagnation? Perhaps a new era of conglomerates of unrelated businesses a lá LTV and Gulf+Western in the 1960s? Tell your Editor and fellow Readers below.

Mid-week roundup: Colorado terms Friday Health Plans; Cano 3 continue to savage board; Amazon Pharmacy layoffs; hacking attacks: QuickBlox, Barts Health; Phreesia buys MediFind; financing pops for K Health, Amino

July 20, 2023 | by

Colorado liquidates, terminates insolvent insurtech Friday Health Plans. The Colorado Division of Insurance (DOI) had placed it into receivership in June after the company declared it would close, unable to find funds to operate its plans. On Monday, the DOI moved to liquidate its operations and terminate the plan effective 31 August. Their 30,000 policyholders on individual Affordable Care Act (ACA) exchange plans will be scrambling to find new coverage. In the receivership move, DOI had hoped that Friday had enough funds to keep the state plan solvent through end of year, but they did not. According to the Colorado Sun, Friday still owed unpaid Federal taxes as well as roughly $2 million in fee payments to the state’s insurance exchange, Connect for Health Colorado, which left the DOI without much hope. Friday had previously just about shut down its headquarters in Alamosa. This leaves not only 30,000 individuals scrambling, but also out eight months and perhaps thousands of dollars in deductibles as these plans tended to be high deductible. Colorado DOI opened a special enrollment period (SEP) for Friday policyholders and insurance brokers starting immediately through 31 October.  Providers are protected somewhat through the state’s Colorado Insurance Guaranty Association but many stopped taking Friday-covered patients last month. Friday’s crash-and-burn is the worst example of an insurtech’s demise to date and not promising for policyholders in other states such as Texas, Georgia, Oklahoma, and Nevada. Healthcare Dive

The Cano 3 attack in the continuation war with the Cano Health board. In the latest episode of this telenovela, resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold, who among them have about 35% of the company’s shares, are still supporting interim CEO Mark Kent but pressing hard to oust three of the directors reelected at the last shareholder meeting, including Marlow Hernandez, the founder and former CEO. What’s new is that they have declared war on Sol Trujillo as chairman and Angel Morales as chair of the audit committee as allies of Dr. Hernandez. In addition to divesting five directors and the interim chief legal officer plus ending their high monthly equity awards, they support divesting non-core assets. Mark Kent will have to be Clark Kent ducking into the phone booth to succeed in this. Press release  Mr. Sternlicht cannot be in a good mood, as Starwood Capital Group is in default on a $212.5 million mortgage on an Atlanta office property, Tower Place 100, in the continuing souring of the commercial real estate market. Fortune

Amazon Pharmacy has laid off 80 employees, mostly pharmacy technicians and team leaders, in continuing cutbacks there. This is the former PillPack. One would think that it would be expanding based on the growing medical needs of One Medical and Amazon Clinic. About the latter which was to roll out nationally today but was questioned on data privacy grounds, as of today there is no update announcement. To date, Amazon has released an amazing 27,000 workers. Semafor, Becker’s

Cybersecurity also racked up some hacks in the past week or so:

  • A popular software framework used in telehealth and financial applications, QuickBlox, was found to have several critical security flaws. The QuickBlox SDK (Software Development Kit) and API (Application Programming Interface) that are used for developing chat and video applications had a vulnerability that led researchers to take over multiple accounts and compromise the user database and extract PHI. The vulnerability also permitted a hacker to impersonate a physician or patient and alter health records. This was reported by Team82 and Check Point Research (CPR) teams but have since been fixed. Blow-by-blow with screenshots in Cybersecuritynews and overview in Becker’s.
  • Barts Health NHS Trust was hacked by BlackCat, a/k/a ALPHV. What was stolen was about 70 terabytes of data, which BlackCat claims as the largest breach in UK medical history. ALPHV listed the stolen data, including employee identification documents, including passports and driver licenses, and internal emails labeled “confidential”, around 30 June. Barts runs five London-based hospitals and serves more than 2.5 million patients. The Barts Health hack adds to NHS misery with an earlier attack on a University of Manchester NHS dataset with information on 1.1 million patients across 200 hospitals. The same CLOP Russian ransomware gang that got Johns Hopkins [TTA 19 July] also got Ofcom, the UK’s communications regulator.  TechCrunch

Yes, there is good news in M&A and funding:

Phreesia is buying MediFind. No purchase price or management transition was disclosed. Phreesia is a patient intake platform that grew from a tablet used in practices for scheduling and patient check-in to a fully featured platform for workflow, claims, outreach and patient education. MediFind uses machine learning and analytics to connect patients with leading experts, clinical trials, health systems, and healthcare technologies. Phreesia is one of the few 2019 vintage IPOs to not crater–it’s trading on the NYSE at above $32 though as recently as end of 2021 its share price was double. Phreesia release.

K Health gained an unlettered venture round of $59 million from Cedars-Sinai, its new partner, plus current investors, including Valor Equity Partners, Mangrove Capital Partners, and Pico Venture Partners. This brings funding for this Israeli company to $330 million through a Series E. K Health’s platform uses a chat function that pre-screens patients with symptoms, uses AI to suggest possible diagnoses based on that person’s medical history, age, and gender, and will connect with a doctor or nurse if needed–which sounds somewhat like Babylon Health and Zipnosis. The chat can be used for primary care, some pediatric areas, urgent and chronic care management. K Health claims that 10 million individuals have interacted with K Health’s AI, and 3.1 million patients in 48 states have chatted with a doctor or nurse. FierceHealthcare

Amino, a navigation platform, received $42 million in credit financing from Oxford Finance. This was the final part of its $80 million venture raise in May. Amino connects physical and mental healthcare providers and benefits programs with members at self-insured employers and health plans, managed by third-party administrators, brokers, and human resources. Members access recommendations for providers and relevant benefits. Amino’s total funding is $125 million, mostly in venture rounds. Its last letter round was a Series C in 2017. It’s a busy sector with similar companies like Accolade, Rightway, and Transcarent.  Mobihealthnews

Legal roundup: Teladoc class-action suit dismissed; NextGen EHR $31M Federal settlement; significant AliveCor-Apple antitrust ‘spoiliation’ update; class action suits filed against HCA, Johns Hopkins

July 19, 2023 | by

The latest legal activity in digital health and cybersecurity:

Teladoc’s pending class action lawsuit by shareholders was tossed. This was originally filed in June 2022 after the crash of Teladoc’s shares after The Big Livongo Writeoff in May 2022. Shareholder Jeremy Schneider, represented at the time by Jeremy Alan Lieberman of Pomerantz LLP, filed a lawsuit in the US Federal Court for the Southern District, located in downtown Manhattan, representing shareholders who purchased Teladoc shares between 28 October 2021 and 27 April 2022. The lawsuit cited materially false statements that Teladoc made on its business, operations, competition, and prospects that were overly positive and inflated share value. Judge Denise Cote agreed with Teladoc’s 20 January motion to dismiss based on specific disclosures that Teladoc made in multiple SEC filings in that period from the 2020 10-K on that countered claims made in the class action lawsuit.

Reading Judge Cote’s decision, Teladoc used specific limiting and warning language (what marketers call ‘downside’ language) on the risks around the merger. Their executives in public statements indicated that operations and competition were challenging.  The class action suit failed to prove conclusively that the statements it identified were ‘materially misleading’ and would mislead a reasonable investor. Other statements made by executives were “largely non-actionable statements of opinion and/or expressions of corporate optimism”, a/k/a “puffery”. Class action suits of this type that go to Federal courts (versus state courts) rarely succeed due to the high bar of proof and volumes of case law at the Federal level.

This Editor noted that this particular class action did not include Mr. Schneider nor Pomerantz LLP. Different plaintiffs were represented by Labaton Sucharow LLP and The Schall Law Firm. Teladoc reportedly had no comment.  Judge Cote’s opinion (Casetext), Mobihealthnews, Healthcare Dive

Easier to settle for $31 million than fight the Feds. Charged with violating the False Claims Act (FCA) and providing illegal incentives for referrals (the Anti-Kickback Statute that applies to Federally funded healthcare), NextGen Healthcare decided to settle with the Department of Justice (DOJ) for a whopping $31 million. The settlement does not admit wrongdoing by NextGen, which in its defense told Healthcare Dive that the claims made were over a decade old–and they were. At the time, their EHR used an auxiliary software that was designed only to perform the certification test scripts, thereby gaining 2014 Edition certification criteria published by HHS’s Office of the National Coordinator (ONC). In this Ur-time of EHRs, fixes like this weren’t (ahem) unusual. Compounding it was that the EHR then lacked certain additional required functionalities, including the ability to record vital sign data, translate data into required medical vocabularies, and create complete clinical summaries. Making NextGen’s decision the proverbial ‘no-brainer’ was that the controversial US Supreme Court ruling in June ruled that under the FCA, defendants are now liable for claims they suspect or knowingly believe are false, versus the previous objective standard. The Anti-Kickback Statute violation was blatant.  NextGen was giving credits often worth as much as $10,000 to current healthcare customers whose recommendation of NextGen’s EHR software led to a new sale, along with incentives such as tickets to sports and entertainment events. Anti-Kickback is one of those ‘biggies’ that the average healthcare employee is trained on within their first 60 days. DOJ release

The AliveCor-Apple Federal antitrust case had a small but important split decision regarding ‘spoiliation’ in the discovery process that could impact the case’s outcome–and future litigation. This June US District Court for the Northern District of California order went against AliveCor in part of what it sought–that Apple’s deleted emails to and from Apple’s then Director of Health Strategy should be considered adverse by a jury. But Apple was then found at fault for deleting them despite their relevance to the case with a ‘duty to preserve’ that started on 25 May 2021 with the antitrust litigation. In general, emails such as these to and from relevant people are subject to a litigation hold.

  • The director departed Apple only one week prior, 14 May 2021. His emails were auto-deleted at some point in accordance with company policy. In the discovery process, through other documents, AliveCor determined over a year later that the director was, indeed, relevant to the case.
  • The order states that Apple should have preserved his emails from the start as he was an individual with potentially relevant information. From the order, “[the director] worked on strategic health initiatives, and the record shows that he regularly corresponded about the Apple Watch and AliveCor with individuals Apple did identify as relevant.” “Apple did not take reasonable steps to preserve electronically stored information that should have been preserved in the anticipation or conduct of litigation…” While it may have been “irresponsible and careless”, it wasn’t purposeful which then would have been considered for sanctions, but there is considerable strong language in the order that Apple’s counsel didn’t disclose the loss of this information even while under oath in a deposition. 
  • In the ‘adverse’ consideration, AliveCor did not gain what it wanted, which was an assumption that the lost emails were prejudicial–that they contained relevant material to AliveCor and Apple’s strategy of eliminating competition. “To the extent they existed, additional emails relevant to these topics may have been useful to enhance AliveCor’s case, but AliveCor has not shown that the absence of these emails will prevent it from proving its antitrust claims.”

AliveCor provided this Editor with a statement on the order:

“The Northern District of California judge’s description of Apple’s actions as ‘irresponsible and careless, and perhaps even grossly negligent’ in their handling of emails belonging to its former Director of Health Strategy that supported our pending antitrust case speaks to Apple’s usual playbook of shamelessly using legal tactics to steamroll innovative companies like AliveCor. Even though the judge stopped short of granting our motion to instruct the jury that they should assume the deleted emails were negative for Apple’s case, we are confident in the outcomes of our antitrust case and grateful for the outpouring of support we have received as we continue to hold Apple accountable.”

Editor’s note: she thanks an AliveCor representative for sharing this information along with the redacted court order. Apple is free to contact this Editor with its own statement.

Recent AliveCor versus Apple coverage on patents: ITC presidential review, ITC vs. PTAB, PTAB decision

Last but certainly not least, a class action lawsuit against HCA. To no one’s surprise, it was filed last week (12 July) in the US District Court for the Middle District of Tennessee, as HCA is headquartered in Nashville. The plaintiffs are named Gary Silvers and Richard Marous, two HCA patients living in Florida, and was filed by two law firms, Shamis & Gentile and Kopelowitz Ostrow Ferguson Wieselberg Gilbert. The suit claims that HCA failed in their duty of confidentiality to protect sensitive information– personally identifiable information (PII) and protected health information (PHI)–that was contained in the hacked records. While HCA has released that the records did not include the most sensitive clinical information as it was used for email communications, the volume of 27 million rows of data that was apparently unencrypted potentially affects 11 million individuals [TTA 12 July]. The suit charges HCA with failure to safeguard ‘Private Information’ as a reasonable expectation using reasonable security procedures in light of current regulations (HIPAA, FTC), plus the susceptibility of healthcare organizations to cyberattacks which is well known. It seeks monetary damages plus injunctive and declaratory relief. This lawsuit is likely the first of many. Healthcare Dive, Healthcare IT News, HIPAA Journal

These lawsuits based on hacking and cybersecurity responsibility are becoming routine. On 7 and 10 July, Johns Hopkins was sued twice. This was for a May ransomware data breach on a software vulnerability called MOVEit that was exploited by a Russian ransomware group called CLOP. This may have compromised, according to the first suit, tens to hundreds of thousands of records, including sensitive PHI. Both suits allege negligence, breach of fiduciary duty, breach of confidence, invasion of privacy, breach of implied contract, and unjust enrichment. They seek monetary damages and injunctive relief. Both were filed in US District Court for the District of Maryland.  Becker’s, Healthcare Dive, HIPAA Journal

News roundup: MHS Genesis EHR completes US rollout, telehealth selective savings by disease, CarePredict’s $29M funding, Amazon Alexa *Spying on You*

July 14, 2023 | by

At least one part of Oracle Cerner’s work is done. The Military Health System (MHS), which covers 9.6 million active duty beneficiaries and 205,000 medical providers, announced yesterday that the rollout of the Genesis EHR is complete in the continental US. The final go-live was at Wright-Patterson Air Force Base, which covers 6,800 clinicians and providers in military hospitals and clinics across Ohio, Virginia, Maryland, Indiana, Texas, and Kentucky. It was also deployed at the National Oceanic and Atmospheric Administration, NOAA Corps, which is under the Department of Commerce. The final 14% of the MHS system is overseas. That rollout will start in September 2023, including Landstuhl Regional Medical Center in Germany and Royal Air Force Lakenheath in the UK. Bases in Guam, South Korea, and Japan will follow in October. DOD’s one joint facility with the VA, the James A. Lovell Federal Health Care Center in Chicago, will deploy in March 2024. All other VA healthcare centers are on hold indefinitely. With the wrapup of MHS Genesis and the pause on VA’s Millenium rollout, Oracle has reportedly laid off over 500 staff on these Federal projects [TTA 16 June]. DVIDS release

 Telehealth’s selective savings. A new study out of the University of Texas-Austin McCombs School of Business found, like other studies such as Epic Research’s, that telehealth visits reduced future outpatient visits, in their study within 30 days, by 14%. This saved $239 per patient in outpatient costs. But telehealth was more effective for some specialties than others. It had the most impact on cost reduction for behavioral health, metabolic disorders, dermatology, and musculoskeletal (MSK) disorders, with a significant reduction of 0.21 outpatient visits per quarter (an equivalent cost reduction of $179). This suggested to the researchers a substitution of telehealth versus traditional clinic visits. But telehealth’s impact was nearly nil when it came to circulatory, respiratory, and infectious diseases, not significantly reducing the number of future visits or costs. The study sampled hospital-based outpatient clinics in Maryland from 2012 (not a typo) to 2021. Becker’s, UT News, Informs Pubonline (abstract only)  

Senior living monitoring system CarePredict adds $29 million from four main investors. This is a Series A-3, which one assumes adds on to an existing Series A, which was $9.5 million in 2019. The round was co-led by SV Health Investors’ Medtech Convergence Fund and Aspire Healthtech Partners with existing institutional investors Secocha Ventures and Las Olas Venture Capital plus private family offices and individual investors. CarePredict pioneered a wearable bracelet, the Tempo, that wirelessly tracks residents’ activities of daily living (ADLs) in assisted living (AL), independent living (IL), and continuing care (CCRC) settings. Interpretation of ADLs in a platform can predict changes in health and wellbeing leading to better health and extended residence. CarePredict has expanded its platform reporting with other tracking such as context beacons, visitor and wander management, PinPoint digital contact tracing, and family communication apps. CarePredict release, Mobihealthnews

How much does Amazon have on you? If you are a user of Amazon’s Echo system, you already know that Alexa is always listening to you. What you may not know is that Amazon stores that information in a database, including parts of overheard conversations that have nothing to do with Alexa, since Alexa is always on. Even if you (like your Editor) don’t have an Echo but have a Kindle (unlike your Editor) or use the app residing on most smartphones, Amazon knows what you read, what you flip through, and your start and stop times. The Amazon Sidewalk mesh network, used with Alexa and Ring cameras, extends the reach of your router and shares your network with your neighbors. This is in addition to your shopping and even what you look at. In the context of the rollout of Amazon Clinic pending, delayed to 19 July [TTA 27 June], where Amazon is 1) only an intermediary to providers but 2) demand access to all your PHI and PII before allowing access to them, can we as professionals admit this is a glaring privacy violation and that the FTC is actually right?

Kim Komando, well known for her radio and online shows advising non-techies on tech, has an excellent article on how Amazon is piling up information on us all. This is based on a 2021 Reuters investigation and also contains a link to her interview with the two Reuters reporters. The article also describes how to find out what Amazon has on you. Warning–they don’t make it easy. She also addresses the Amazon clinic issue in a FoxNews article.

Thursday short takes: Fold Health VBC $6M round, Vivalink’s RPM in Burma rural health, Vytalize adds two to board, layoffs at TytoCare, IntelyCare

July 13, 2023 | by

Fold Health celebrated its first birthday by securing a $6 million round. Investors were Iron Pillar and global angel investors for total funding of $12 million. Fold’s platform is for primary care providers transitioning to value-based care and outcome-based payment models and need to manage workflow, care management, and patient data. Their claim is that it is the first end-to-end platform of this type that seamlessly integrates with EHRs. The founders originally came from athenahealth via their Praxify acquisition. Athenahealth provided the initial $6 million seed funding round. Fold release, TTA 21 July 2022

Vivalink, an RPM developer with a suite of medical wearables including a multi-function ECG patch, is part of a rural healthcare initiative on the border of Thailand and Burma. They have donated multiple sets of the rechargable ECG monitor which pairs with a real-time patient monitoring mobile app that can operate ‘off the grid’ in what appears to be a store and forward mode. It is lightweight and small at 7.5 grams in weight and 3.5 inches in length. In this remote area, clinicians can use the ECG patch to monitor patients in the preoperative assessment area, during the surgical procedure under sedation, and during the recovery period. The company promotes both conventional RPM monitoring and decentralized clinical trials. Vivalink release

Vytalize Health, a management services organization (MSO) that organizes independent primary care practices into Medicare accountable care organizations (ACOs) that enjoyed one of the few mega-fundings in H1 at $100 million, added two board members with substantial payer, quality reporting, and provider experience: David Wichmann, the former CEO of UnitedHealth Group from 2017 to 2021; and Amy Compton-Phillips, MD, currently the chief medical officer at Press Ganey and former Providence Health executive. Vytalize is in a highly competitive Medicare ACO/MSO segment with competitors such as Aledade, Privia Health, Evolent Health, CVS Health, Optum, and Collaborative Health Systems (Centene). FierceHealthcare, Vytalize release

Layoffs continue to affect healthcare both in the US and overseas.

  • New York/Tel Aviv-based TytoCare has laid off 20 employees, 10% of its 200-person workforce. 10 are in Israel, where it employs 135 people. TytoCare, which TTA has covered since 2016 as it’s diversified from home-based telehealth + device diagnostics primarily for child home care into providers and health plans and most recently for respiratory wheeze detection, had a last round of $50 million in March 2021. CTech/Calcalist (Israel), Becker’s, Jewish Business News
  • Boston-based IntelyCare, which helps providers organize nursing shifts, manage workflow, and staffing, has laid off staff after a reorganization. The number was not disclosed but was estimated at about 30. Most information is paywalled, but its last funding was a Series C at $115 million. Boston Business Journal

 

“Hope is not a business model”–advice from two VCs, with a bit more advice on basic banking

July 12, 2023 | by

With yesterday’s article on how digital health funding is resuming its 2019 ‘long and winding road’ trajectory, with 2020-2022 now revealed as a complete aberration (though Rock Health is having trouble admitting it), your Editor returned to two saved articles in her ‘pinned tab file’ to glean some advice for the funding-lorn. 

Funding advice for health tech and digital health companies was the theme of this recent article in MedCityNews. Two Merck Global Health Innovation Fund executives spoke at a late June NYC conference, the fund’s president, Bill Taranto, and vice president Joe Volpe. They highlighted three key points but more between the lines. Editor’s comments follow:

Don’t be afraid of down rounds (or flat rounds) if you need to survive  This referred to the inflated valuations digital health companies received in 2021-22, whether they were profitable or not. The down-round stigma is why we are now seeing a wave of unlabeled and lower-amount rounds for companies that raised Series A and B rounds only 12-24 months prior. “Lack of cash causes bankruptcy.” Quite true, but what if the company never hits the ‘inflection point’ and putters along longer than funders expected at breakeven or mildly profitable? They admitted that unlabeled rounds are a survival tactic. As noted yesterday, they cannot go on forever or even for another 24 months. Prediction: valuations will be coming down in a second-order effect by next year, as well as more companies going private, selling lines of business or IP, or being acquired for unknown amounts.

Expect slower timelines   Startups used to plan six to eight months in advance of fundraising, now they are advised to start a year or more. This reverts back to the norm this Editor personally observed in the first hype curve of 2006-8 where early-stage companies would no sooner close a round or private financing than plan for the next. Note rounds–equity offered in return for notes convertible into shares–are popping up. Volpe described this as frustrating for larger investors like Merck because other investors are taking due diligence to the max and once committed, Merck is having to fund or bridge the company longer. This is a repeat of 2007-8. Investors have lost the fear of missing out (FOMO) that drove 2021-22 funding. They are often happier to walk away and keep their powder dry–if they have any. [TTA 5 Apr]

Get your narrative right  “The most important thing a company has to do before pitching to investors is ensure that it can clearly and honestly describe its narrative, Taranto explained.” More than that, a company has to be realistic about its future. Don’t tell a story that investors will have difficulty believing. Identify what’s the inflection point, when will it be, and is it a hockey stick or a garage lift? Here is where the old saw ‘underpromising and overperforming’ come in handy, as well as running lean. Do this enough and investors will like you a lot. You may also want to get some outside help in crafting and wordsmithing that narrative from a person not invested in the company’s future or your parents.

Now that you have the money, some basic banking and money management advice for founders and company management. We are already seeing amnesia around the events of March-April when four US (SVB, First Republic, Silvergate, and Signature) and one Swiss bank (Credit Suisse) went belly-up, putting a giant hole in the fisc of both startups and VCs. Founders and startup execs can be forgiven for concentrating on The Big Idea, though they seem to be in abundance lately and is no guarantee of success. Now, your Editor has no special financial expertise but as a marketer, has always been dependent on good relations with the financial folks for her budget. Companies come and go, whether small or large, healthcare to car rental to airlines, but there’s much in common when it comes to money.

Your little company may be better off with a big bank. Healthcare Dive looked at this while the collapses were happening. Their article’s point was that dealing with a major bank can be reassuring to investors. A big bank may be what is left in some markets. The downsides are that they move slowly and may not be agreeable to short-term cash loans or bridges. 

Nest your eggs in multiple baskets. Diversify your banking business and keep it below FDIC insurance levels. Spread accounts among a major bank and your regionals. Develop multiple relationships. It’s not being disloyal, it’s being smart. This may also affect where you locate your business. Ask your funders for contacts, but avoid what funders urged prior to March–to go to one bank like SVB or Signature and put all your business there as part of a quid pro quo. It didn’t turn out well for those who did.

Trust but verify. Expect that a bank will be an honest and skilled steward of your precious funds, payables and receivables. But your financial head/CFO should spend a fair amount of time regularly checking that they are and remain so. As to your bank, community responsibility can be positive, but it’s management time taken away from their main business which is stewarding your money. Be insistent on this. If you see their management has many unfilled spots, spends more time on ‘issues’ than on banking, plays in politics, grows too fast, has a lot of investments in crypto, is in play or taken over, execute Plan B and go elsewhere. 

Don’t skimp on your financial staff, policies, and procedures. You may be able to contract for sales, marketing, and R&D, but financial governance–probably not, unless you’re very small and willing to go fractional. Hire a good CFO and give him or her the right staff and power. Adopt rigorous budget and reporting procedures that are adhered to from top down. Don’t assume you or your partners can do it all alone, even if you have Harvard MBAs, or your accountant can do it. And watch your CFO like a hawk. One of the best combinations I’ve observed is a CFO and general counsel. 

Thoughts? Comment below.