Short takes: Dexcom G7 now directly connects to Apple Watch, Brightside Health acquires Lionrock, Aktiia CALFREE gains CE Mark for optical BP monitoring not requiring calibration

Further consolidation in telemental health–and digital health device improvements.

The Dexcom G7 CGM now connects directly to the Apple Watch. The wearable Dexcom sensor will now send information direct to the user’s Watch without the iPhone intermediary, which makes it very convenient for users. According to Dexcom’s statement, the Bluetooth capabilities built into the system were designed to communicate blood glucose readings to multiple display devices  simultaneously and independently. The Dexcom connectivity to the Apple Watch will be available in the US, UK, and Ireland, to launch in additional markets later this month. One wonders when they’ll expand to non-Apple watches. The G7 sensor remains a prescription item, unlike the OTC Stelo which received FDA clearance in March with a launch later this summer [TTA 12 Mar]. Mobihealthnews

Telemental health provider Brightside acquires Lionrock Recovery, expands into substance use disorder therapy. Brightside, which concentrates on providing virtual psychiatric and therapeutic treatments for anxiety and depression, adds virtual intensive outpatient programs (IOP) and outpatient addiction treatments (OP) for substance use disorder (SUD). Founded in 2010, Lionrock is accredited by the Joint Commission and takes a personalized approach to care, leveraging technology to provide therapeutic approaches for those struggling with alcohol and drug use. Participants in IOP attend individual and group therapy sessions, engage in evidence-based lessons, obtain psychiatric treatment and medication as needed, and have access to lab testing and additional peer support communities. No purchase price nor management transitions were disclosed. Back in March, Brightrock added $33 million of Series C funding. Release

Aktiia’s new non-calibration optical blood pressure monitoring system receives Europe CE Mark. Switzerland-headquartered Aktiia’s new CALFREE optical blood pressure (BP) monitoring system, using input from common optical sensors, is the first in their lineup that does not require prior calibration with a traditional BP cuff. Their earlier systems required monthly calibration. The Aktiia system works off data from optical sensors of the type used in smartphone cameras and smart watches. The business objective is integrating medical-grade blood pressure tracking not requiring BP cuff calibration into a wide range of consumer devices. Aktiia presently claims 70,000 customers in seven countries. It is not yet FDA cleared but their website for the US indicates that they are coming in 2025. Release, Mobihealthnews

Oracle’s Q4/FY 23 earnings push Cerner to background, stock price soars on AI deals; 81% of VA clinicals really can’t stand Cerner

Oracle keeps blue side up but disappoints Mr. Market, Cerner results now fall into the background as stock price soars despite misses. Oracle kept it upbeat in reporting its Q4 and FY2023 results this past Tuesday 11 June, and it paid off.

  • Its Q4 revenue of $14.3 billion was up 3%, with Q4 GAAP earnings per share was $1.11 while non-GAAP (adjusted) earnings per share was $1.63.
  • FY23 revenue totaled $53.0 billion, up 6%, with GAAP earnings per share at $3.71, while non-GAAP earnings per share was $5.56. 

Overall results were disappointing for Wall Street analysts. The blue side is that the stock has surged big time with a YTD high yesterday, closing above $140. The secret sauce? New AI-related contracts and demand for Oracle Cloud Infrastructure. On the call and in the release Oracle CEO Safra Catz announced new cloud sales to Google and Microsoft for OpenAI and ChatGPT. OpenAI will run deep learning and AI workloads on Oracle Cloud. Oracle also sold 30 contracts worth $12 billion in Q4.

The surprise on the call for this Editor? The Cerner business will no longer be identified and broken out, which is major league unusual for a specific, large product line. From HIStalk News 6/12/24: CEO Safra Catz said, “I will no longer be breaking out the Cerner business in my results. And even though it will begin to grow modestly throughout the year in both revenue and operating margins, it’s not necessary to break it out anymore because it is now operating in a growth mode.” A way of concealing ongoing bad news? Major hat tip to HIStalk on the earnings call summary, Investors Business Daily, Oracle earnings release

Not that many at the VA, MHS, or elsewhere actually like Cerner. An internal and unpublished survey for the Department of Veterans’ Affairs (VA) by KLAS, obtained by Bloomberg News, reported results for Oracle Cerner, and they were close to disastrous. On the metric “Users who feel the health software enables “high-quality care”, here were the results on positive answers by the doctors, nurses, and other users of Oracle’s EHR:

  • 19% for VA Oracle Cerner
  • 30% for DOD Oracle Cerner (MHS–Ed.)
  • 49% Average US Oracle Cerner
  • 71% Average Epic Systems Customer

That means that 81% of VA users, in the five facilities and offsite center where it’s been deployed, now for over a year and with consultants over it like paint on a brand new car, believe the Oracle Cerner system does not do Job #1 of healthcare–enabling high-quality healthcare. “There is a trend toward improvement, however, most users still indicate a negative experience,” according to VA researchers quoted in the report.

The other big surprise is that 70% of MHS users believe exactly the same. MHS is the ‘success story’ implementation, jointly with Leidos, and now complete. (Ken Glueck, please take note)

KLAS also contrasted this to their existing information for US EHR users. 49% of Cerner US users believe it facilitates high-quality care–contrasting unfavorably with 71% of Epic customers. However, these numbers are not comparable to either the VA or MHS as most hospital systems have been in place for years/decades, and have had abundant time to shape them against system needs plus work out the inevitable ‘bugs’. But the performance of Cerner versus Epic on this metric translates to preference in the small world of healthcare. 

Drilling down into the survey:

  • About 22% of VA respondents said their training on the new system was helpful
  • About 45% said they had received communication about why the VA was moving to the new EHR

The survey was conducted in March-April 2024 as part of VA’s ongoing evaluation of the Oracle Cerner EHR. Responders were 2,000 Cerner EHR users, with a 25% response rate of those solicited. The report was for VA leadership and for Congress. In a response to Bloomberg, Terrence Hayes, press secretary for the VA, said “That’s why we conduct surveys like this: to better understand the experience of our providers in the field, so we can make the EHR better for staff and veterans alike.”

Seema Verma has a long and troubled row to hoe to make this work for VA, MHS, and all Cerner users. Nowhere to go but up. Becker’s

News roundup: Teladoc’s new CEO from major payer, Steward Health lives with $250M injection, Waystar’s IPO raises $968M, NeuroFlow acquires Owl

Teladoc wraps up CEO search in record time–two months. On Monday, Charles “Chuck” Divita joined the company as chief executive officer with a board of directors seat. Divita comes from GuideWell, where he was executive vice president, commercial markets, earlier chief financial officer, and previously group VP and chief accounting officer at Florida Blue for a total of over 12 years. GuideWell is the parent of Blue Cross Blue Shield health plans in Florida and covers 38 million people in 50 states through Florida Blue, Triple-S Salud (Puerto Rico), Truli for Health, Florida Health Care Plans, and Capital Health Plans. Interim CEO Mala Murthy resumes her CFO position

Long-time CEO Jason Gorevic departed in early April in a haze of red ink. Mr. Divita will find the turnaround situation facing him at Teladoc a real challenge compared to Blue Health Plan World. Undoubtedly he was hired due to his extensive CFO experience plus understanding of the payer market. Teladoc needs to achieve profitability, something never accomplished in 20 years. It also faces heavy competition, the growing obsolescence of its foundational model accelerated by the boom/bust pandemic, self-inflicted damage created by the Livongo acquisition, the underperforming BetterHelp, and frankly, its mixed track record in good judgment and accountability [further analysis–TTA 9 Apr]. Mr. Market barely responded with a continuing deterioration in share price. Do not be surprised when (not if) there are major changes and cuts at Teladoc, including removing its HQ from high-tax Purchase, New York to Florida, the new CEO’s home state.  Release, FierceHealthcare, Healthcare Dive

Steward Health beats deadline of 14 June, finds $250 million to pay the bills. The lenders announced Tuesday 11 June are existing FILO (first in last out) private credit lenders Sound Point Capital and Brigade Agency Services, Chamberlain Commercial Funding, WhiteHawk Finance LLC, Owl Creek Investments I LLC, OneIM Fund I LP, MidOcean Credit Fund Management; Brigade Capital Management, LP which are now debtors in possession (DIP). They will be presented to the US Bankruptcy Court, Southern District of Texas, later this week, which is conducting Steward Health’s dissolution with sales starting in July. The FILO lenders were approached earlier, starting in March and up through last week, but could not come to an offer until now. The $250 million is structured as $75 million of the loan immediately upon court approval, with the remaining $150 million “available in draws not to exceed $50 million per draw.” The funds will keep Steward operations going and ‘maximize value’ until they can be sold in July and August. Healthcare Dive, FierceHealthcare, Release

Waystar finally drops IPO, raises $967.5 million. The offering of 45 million shares debuted at $21.50 a share on Nasdaq, midpoint in the indicated range and giving Waystar a fully diluted valuation of $3.69 billion.  It is the largest health tech IPO since 2022. Back in October 2023, Waystar projected an $8 billion valuation which was a non-starter [TTA 29 May]. WAY closed near-flat today at $21.70. Previous funders will continue with shares in the company, with EQT AB, Canada Pension Plan Investment Board (CPPIB), and Bain Capital will beneficially own approximately 29.2%, 22.3%, and 16.8%. Its payment and RCM tools claim 30,000 customers representing approximately 1 million distinct providers, but lost money in 2022 and 2023. FierceHealthcare, Reuters

Behavioral health platform NeuroFlow acquires Owl. Purchase price was not disclosed. Both companies are in the data insights and analytics portion of telemental health delivery and integration into care management programs. The combination now integrates NeuroFlow’s platform across primary and specialty care settings to provide a 360-degree view of a population’s behavioral health risk. In 2023, NeuroFlow acquired Capital Solution Design, the parent company of Behavioral Health Lab and BHL Touch which have provided workflow support to clinical teams at the Department of Veterans Affairs for over 15 years and other care organizations. The combined organizations will cover 17 million lives on the platform with payers and providers in all 50 states, including Atlantic Health System (NJ), Emory Healthcare (GA), and Colorado Access, Centennial State’s Medicaid plan. Eric Meier, Owl’s chief executive officer, will transition to NeuroFlow’s president of behavioral health markets. Other transitions and headquartering are not disclosed.Their funding topped $52 million between 2019 and 2022. Release, Mobihealthnews

Theranos’ Holmes and Balwani appeal fraud convictions, $450M investor restitution

An interesting Tuesday at the Ninth Circuit Court of Appeals in San Jose, California. A three-judge Federal appeals court held hearings yesterday (11 June) on separate appeals on the convictions found and restitution imposed on both Elizabeth Holmes and Ramesh ‘Sunny’ Balwani, the former CEO and president of Theranos. The Holmes hearing was 50 minutes before Judges Jacqueline Nguyen, Ryan Nelson, and Mary Schroeder.

Holmes is seeking a complete overturn of the trial and jury verdict primarily on the basis of Judge Edward Davila including evidence favorable to the prosecution and not including defense-favorable evidence. She was not there as serving her time to mid-August 2032 in Bryan, Texas. Representing her for the defense was Amy Saharia of Williams & Connolly LLP, considered to be one of the US’ top appellant litigators.

  • Favorable to the prosecution was Theranos’ chief scientist Kingshuk Das, MD’s testimony. Dr. Das was the final Theranos lab director who worked there March 2016 to June 2018–and voided two years of Edison Lab tests. Saharia is claiming that the prosecution was improper in putting him on the stand since he was not qualified by the court as an ‘expert witness’ and was allowed to express his opinion, specifically in statements allowed by Judge Davila including “I found these instruments to be unsuitable for clinical use.”

Going back to TTA’s original coverage of 11 Nov 2021 (which the coverage below largely has not), Dr. Das was hired to respond to CMS’ deficiency report that went to the prior lab director two months before. The subject line: “CONDITION LEVEL DEFICIENCIES – IMMEDIATE JEOPARDY.” The report went on to say that “it was determined that your facility is not in compliance with all of the Conditions required for certification in the CLIA program.” and concluded that “the deficient practices of the laboratory pose immediate jeopardy to patient health and safety.” After speaking with Holmes and dealing with her position that it wasn’t an instrument failure, but rather a quality control and quality assurance issue, he voided every Edison lab test made in 2014 and 2015–between 50,000 and 60,000. Holmes was told, but she didn’t believe Das or previous lab directors about the Edison problems. Also testifying was a contract offsite co-lab director in 2014-15 who expressed her reservations to one of Dr. Das’ predecessors –who also happened to be Sunny Balwani’s dermatologist. 

Judge Nelson said during the hearing that “There’s a pretty good story here for Ms. Holmes” and “They do have a pretty good basis for some unfairness here.” in how Judge Edward Davila allowed this testimony.  Judge Nguyen also seemed to agree with the defense position that Judge Davila went too far in allowing opinions from Dr. Das that under the rules would require his being vetted as an expert. Judge Nelson added that the conviction was supported by “pretty overwhelming evidence.” For Dr. Das, the conundrum was that he was called in as the former lab director to testify on Holmes’ knowledge of the problems the Edison lab had but he also had a level of expertise involving the labs. The Federal prosecutor on the appeal, Kelly Volkar, countered with how Judge Davila “carefully parsed” the Das testimony and sustained defense objections during the trial. While having concerns that Das strayed into opinions and Judge Davila allowed it, Judges Nguyen and Schroeder stated that much of Das’ testimony concerned what he observed at the company.

Reportedly, much of the hearing time focused on this one point. Saharia again insisted that “She [Holmes] in good faith believed in the accuracy of this technology” and did not knowingly misrepresent it.

  • Not including defense-favorable testimony was another alleged Davila mistake. In the defense presentation, Judge Davila allowed testimony from former laboratory director Adam Rosendorff without including more evidence of government investigations of his work after quitting Theranos in 2014. These were direct attacks on his competence in running a lab facility. However, in our 6 October 2021 coverage, the defense grilled Rosendorff on his work at uBiome and PerkinElmer; both came under Federal investigation during his tenure.

A final Holmes defense point was made on how these ‘errors’ made by Judge Davila unfairly shaped the jury decision, where she was found guilty by a jury on only four counts of the prosecution’s 11.

The panel did not provide any timeline for issuing a ruling, other than in ‘due course’. This can be anywhere from a few weeks to over a year. The track record for Federal Court appeals tends to be dismal for the defense. 

Far less coverage was given to the separate Sunny Balwani hearing. This centered on the fact that the restitution of $450 million to investors ordered by Judge Davila’s order was incorrect and part of the “nature of investing in a private company.”  His defense counsel, Patrick Looby, also representing Holmes, made a most interesting spin on how fraud did not rob Theranos of ‘residual value’. “The fact that the investors may have had difficulty selling their shares is not owing to the fraud.” Volkar for the prosecution stated that the investors had no opportunity to do any recouping of their losses. Looby also contended that the prosecution presented distorted evidence against Balwani in a different narrative than against Holmes. Balwani was convicted on all 12 charges and is serving 12.9 years at the Federal Terminal Island facility. No timeline for a ruling was reported.

Mercury News, AP, Yahoo Finance  The Ninth Circuit also has an unusual web page on the Holmes appeal with case information plus notifications of public proceedings.

Short takes: Holmes legal team appealing Tuesday 11 June; Steward Health asset sale OK’d, needs funding; fundings for Sword Health, Eko Health

Elizabeth Holmes may be in Bryan, Texas serving time, but the appeals go on. Her legal team will appear before the US Court of Appeals for the Ninth Circuit at 9am next Tuesday 11 June. Her initial appeal was filed in December 2022 [TTA 15 Dec 2022] with full 132-page legal briefs in April 2023 [TTA 19 Apr 2023].

Holmes’ team is seeking a complete overturn of the trial and verdict. The appeals center on an unjust conviction based on prosecutorial misrepresentations, such as Holmes being told that the Theranos technology worked and thus not misrepresenting it to investors at that time, and actions by Judge Edward Davila in the presentation of evidence in including evidence favorable to the prosecution and not including defense-favorable evidence. The appeal also includes, according to earlier reports, an accusation that Judge Edward Davila used the wrong legal standard in sentencing Ms. Holmes and thus over-sentenced her. Holmes will not be present for the appeal as is customary.

Her 11 year sentence is currently, based on Bureau of Prisons standards for good behavior, cut down to about 9 years. Her chances are slim that the appeal will succeed, based on overall rates, Judge Davila’s reputation for thoroughness, and his presiding over two identical cases, the other for ‘Sunny’ Balwani with the same evidence and a similar but longer sentence. There is no public word on whether Mr. Balwani is also appealing. He is serving his time at Terminal Island, California. Mercury News  Our back file on Theranos is best accessed through TTA’s search tab, keyword Theranos or Holmes.

Another fine legal mess is unfolding in Texas with the US Bankruptcy Court, Southern District of Texas, hearings on Steward Health’s dissolution.

  • On Monday 3 June, Judge Christopher Lopez approved a two part plan for the asset sale. Part 1 would be about the Massachusetts assets, with most of the system’s hospitals (eight) and its physician group. Bid deadline is 24 June and the first sale hearing is timed for 11 July. Massachusetts is the most contentious of the states Steward operated in, with state regulators taking the most actions against the company. Part 2 is the Florida and Texas asset sale, timed for a bid deadline of 12 August and first sale hearing of 22 August.
  • The US Department of Justice filed an objection 30 May to the sale, stating that it does not allow enough time for their regulatory review of the physician group sale to UnitedHealth Group’s Optum [TTA 18 Apr] and insisting that it must be reviewed before any sale. This effectively holds up the Part 1 sale. FierceHealthcare
  • The other spanner in the works for the DOJ is that Steward is flat out of money to run their hospital and practice assets. Without additional funds, on 14 June they will be broke, busted, skint by two Fridays from now. Steward’s lenders were before Judge Lopez yesterday (4 June) to try working that out. Current debtor-in-possession (DIP) Medical Properties Trust, which put up $75 million, won’t put up any more money until assets are sold. Other lenders want to put up only limited amounts of money. To lure lenders, Judge Lopez approved an emergency motion on Monday to permit a “commitment fee” offer of up to $6.75 million to third-party lenders and up to $750,000 to reimburse one or more lenders for expenses incurred during due diligence. Healthcare Dive. Will that attract another DIP? Only time, and not a lot of it, will tell.

In happier news, there are fundings for two health tech companies:

  • Sword Health announced a $130 million round in an unlabeled mix of primary and secondary sale. Their total funding is now $340 million, with lead from Khosla Ventures. Valuation is up to $3 billion, up 50% from its Series D valuation. The funding announcement was made in conjunction with a product announcement by the digital/remote MSK therapy company for Phoenix, the AI Care Specialist, which will be integrated across their entire offerings. Release
  • Eko Health’s Series D raised $41 million from ARTIS Ventures, Highland Capital Partners, NTTVC, and Questa Capital. Eko’s device and platform enhance the early detection of cardiac and pulmonary diseases during physical exams. Most recently, the FDA cleared Eko’s Low EF detection AI [TTA 5 Apr]. The new funding will be used for US expansion and expansion into key international markets, supported by new strategic investments from Double Point Ventures in the U.S., Singapore-based global investor EDBI (the corporate investment arm of the Singapore Economic Development Board), and LG Technology Ventures, backed by the LG Group of South Korea. Cardiac detection powered by AI are ‘perfect together’, at least for investors. Release, Axios

Breaking: multiple London hospitals, borough GPs declare ‘critical incident’ from ransomware attack via third party pathology vendor

Breaking News. A group of London hospitals, plus GP services across several boroughs, have been affected by a third-party ransomware attack and have declared a critical incident. The vendor, Synnovis, is a provider of pathology services in a partnership between two London-based hospital trusts and SYNLAB UK & Ireland. The attack started on Monday 3 June. Synnovis reported in its statement yesterday that it affected all its IT systems and interrupted many Synnovis pathology systems. Synnovis “was the victim of a ransomware cyberattack”, according to chief executive Mark Dollar. Affected patient tests via Synnovis include blood, bowel and various swabs.

The hospitals affected are King’s College Hospital, Guy’s and St Thomas’, including the Royal Brompton and the Evelina London Children’s Hospital. These hospital trusts are partners in Synnovis with SYNLAB UK & Ireland, Europe’s largest provider of testing services. GP services affected are in the boroughs of Bexley, Greenwich, Lewisham, Bromley, Southwark and Lambeth. The critical incident has affected primary care and delayed operations on patients plus blood transfusions, with reported diversions of emergency patients, though reports are varying on the last.

According to the Synnovis statement, the incident has been reported to law enforcement and the Information Commissioner, and they are working with the National Cyber Security Centre and the Cyber Operations Team. There is no information yet available attributing a ransomware organization., Sky News, BBC News

This is a developing story

News roundup: Change responsible for data breach notices; 37% of healthcare orgs have no cybersec contingency plan; health execs scared by Ascension breach; CVS continues betting on health services; Plenful’s $17M Series A

HHS agrees with providers that the data breach notification is on Change Healthcare, not them. Health and Human Services’ Office for Civil Rights (OCR) moved quickly to formally change the FAQs that kicked off the 100+ provider letter [TTA 23 May]. Now “Covered entities affected by the Change Healthcare breach may delegate to Change Healthcare the tasks of providing the required HIPAA breach notifications on their behalf.” “Covered entities” in this case refers to the providers. Only one entity–Change or the provider–“needs to complete breach notifications to affected individuals, HHS, and where applicable the media.” Providers must contact Change Healthcare for the delegation. 

Chad Golder, general counsel and secretary at the American Hospital Association (AHA) said in their statement, “As we explained then, not only is there legal authority for UnitedHealth Group to make these notifications, but requiring hospitals to make their own notifications would confuse patients and impose unnecessary costs on providers, particularly when they have already suffered so greatly from this attack.” HHS notice, Healthcare Dive

Meanwhile, UHG still does not know the extent of the breach which started in late February. Knowing the extent of the breach is needed to start notifications. It has not formally notified HHS of the breach long past the 60-day mandated window (see #3 in the HHS FAQs). This may create an ‘unreasonable delay’ (see #6). Not all Change systems are back up either–see the Optum Solutions page that has plenty of red Xs.

Only 63% of healthcare organizations have a cybersecurity response plan in place, leaving 37% without a plan. This is based on a survey of 296 IT/data security/management executive respondents working at healthcare organizations in the US performed by Software Advice, an advisory and consulting firm. Other findings:

  • Nearly 1 in 3 have had a data breach in the last three years
  • 42% of practices have experienced a ransomware attack, and of those, 48% say the attack impacted customer data
  • 34% failed to recover data after the ransomware attack
  • 55% of medical practices allow access to more data than employees need to do their job which makes them more vulnerable to attacks
  • While 41% of data breaches are attributable to malicious hacking, another 39% are due to malware, 37% are due to social engineering and phishing scams, 36% are due to software vulnerabilities, and 30% are due to employee error.

It would have been helpful if Software Advice in its report had broken down the type of practices surveyed. Healthcare Dive

Meanwhile, healthcare executives were ‘scared’ by the Ascension Health breach, as they should have been. Katie Adams’ piece in MedCityNews explores reactions from five different C-suite hospital executives about the recent attack on Ascension. The IT and data officers are from MD Anderson, Yale New Haven Health, CommonSpirit Health, Allegheny Health Network, and UPMC. The overall take was that threats are more common than ever, bad actors are abundant and getting better (using tools that can make amateurs into pretty good “bad actors” via “LLM products and have them help you build ransomware code.”), managing weaknesses in third-party vendors that live in the cloud is a Herculean task, phishing, and the need for ‘government’ to be involved. 

This Editor notes that the rush for providers into generative AI, given this environment, is perhaps premature. Yet here they go; researchers from Mount Sinai’s Icahn School of Medicine used structured data, such as vital signs, and unstructured data, such as nurse triage notes, to develop models predicting hospital admissions using ChatGPT-4. It supposedly can learn from fewer examples than other machine-learning models currently used and use data from traditional models. Becker’s

Ascension is slowly coming back, now projecting that all their locations will have their EHRs restored by the week of 14 June. Currently, only Florida, Alabama and Austin are up and running. Ascension Rx retail, home delivery and specialty pharmacy sites are now open as well. They will have some ‘splainin’ to do to HHS OCR. Ascension update site

CVS is confident in the future of its retail health despite their struggles with Minute Clinics and Oak Street.  Despite the struggle of retail health clinics at other providers such as Walgreens/VillageMD and the shutdown of Walmart Health, Sree Chaguturu, MD, CVS Health’s executive vice president and chief medical officer, expressed complete confidence at a recent industry conclave, thINc360 – The Healthcare Innovation Congress. This is despite the closures of dozens of Minute Clinics in Southern California and New England [TTA 31 May] out of their 1,100 total plus that CVS seeking an investment partner for Oak Street [TTA 29 May]. Dr. Chaguturu returned time and again to the 10,000-odd CVS Pharmacy locations and their leverage within communities, leaning very hard on the 5 million people coming in daily and the ‘opportunity for their pharmacists to engage’. As a CVS customer at a small location, those busy pharmacists aren’t engaging with me unless I have a script to fill or need an OTC decongestant that’s on the state signoff list due to an ingredient. In fact, CVS locations have rather few people nowadays, including behind checkout counters. Then again, it was a meeting speech. FierceHealthcare

Concluding on a brighter note, Plenful’s Series A came in at a tidy $17 million. Plenful developed and markets an AI-assisted workflow-automation platform for pharmacy and healthcare operations, claiming that it automates over 95% of the work for disparate administrative workflows. Features include 340B audit, document processing, contracted rates optimization and inventory planning, and pharmacy cycle revenue and reporting. Founded in 2021, the company has already lined up some impressive clients. Lead investor TQ Ventures was joined by Mitchell Rales (cofounder and chairman of Danaher), Susa Ventures, Waterline Ventures, and Bessemer Partners, the lead for last September’s $9 million seed funding for a total of $26 million. Crunchbase, Mobihealthnews

NHS electronic patient records linked to 100 ‘serious harm’ issues, with ~50% of NHS England trusts reporting patient issues: BBC News

EHR harm is not exclusive to the VA, or the US. An investigation published last week by BBC News uncovered problems with IT systems used by NHS England regional trusts to manage patient records. Through a Freedom of Information (FOI) request, it uncovered multiple problems with Electronic Patient Record (EPR) systems that could affect patient care or lead to potential harm. Their investigation found that “IT system failures have been linked to the deaths of three patients and more than 100 instances of serious harm at NHS hospital trusts in England.”

The NHS has spent £900 million over the past two years in pushing trusts to procure EPR systems and to go entirely paperless. The original deadline of end of 2024 has long since been modified to 2026.

Currently, each trust manages its own IT adoption. Teaching hospitals are at the top with the best IT, whether EPRs or operational and clinical systems. Acute care hospitals come next with current systems and infrastructure. The trusts also commission and pay for community and mental health organizations plus general practitioners. They tend to be at the end of the technology chain, without data centers but maybe a computer room. There are lots of variations between trusts, plenty of custom systems, and paper. And as in the US, systems were not necessarily interoperable. (Background courtesy of Rackspace)

The NHS published last November that 90%, or 189, trusts had contracted for and adopted EPRs. EPRs adopted by the trusts include Oracle Cerner, Epic, Meditech, and Dedalus Orbis (replacing the ancient Lorenzo).

What the BBC found through the FOI:

  • 89 trusts confirmed they monitored and logged instances when patients could be harmed as a result of problems with their Electronic Patient Record (EPR) systems. Almost half recorded instances of potential patient harm linked to their systems.
  • Nearly 60 trusts reported IT problems that could affect patient care.
  • There were 126 instances of serious harm linked to IT issues across 31 trusts
  • There were three deaths across two trusts related to EPR problems
  • At the County Durham and Darlington NHS Foundation Trust, more than 2,000 incidents of potential patient harm and three other serious incidents were connected to their new Cerner EPR

Additionally, hundreds of thousands of medical letters went unsent to patients. From the FOI, 200,000 letters were not sent across 21 trusts. Last September, a separate BBC investigation found that 24,000 letters from Newcastle hospitals had not been sent from their EPR system, with more than 400,000 letters lost in computer systems at hospitals in Nottingham.

Separate from the FOI, the BBC report goes into two of the deaths relating to EPR lost information.

  • At Sheffield Teaching Hospitals Trust, a sickle cell anemia and cerebral palsy patient, Darnell Smith, aged 22, was admitted to the Royal Hallamshire Hospital with cold like symptoms in November 2022. His personal care plan was not easily visible in the hospital’s computerized records. He didn’t get the hourly checks he needed for heart rate, blood pressure and temperature. After the records were found, Mr. Smith was then moved to critical care, put on a ventilator the next morning, and died from pneumonia two weeks later. The coroner in this case warned of a “real risk of further deaths” if care teams couldn’t access needed medical information.
  • At University Hospital of North Durham, Emily Harkleroad collapsed and was taken to A&E, where a pulmonary embolism was diagnosed. However, due to errors in the newly installed Cerner EPR, she didn’t receive the blood thinners she needed and died the morning after admission. The coroner found that the EPR did not clearly identify which patients were the most critically ill and needed to be prioritized, a complaint that clinicians at the hospital had previously expressed.  

Clinicians who came forward to the BBC pointed to EPRs making critical information difficult or impossible to find–it could be “buried anywhere”, creating medication errors, and “incorrect patient details on theatre (sic) lists, incorrect operations listed, incorrect allergy status”. 

Professor Joe McDonald, a former NHS clinical leader, dubbed the current rollout of EPRs across trusts “a broken jigsaw” because very few are interoperable. His conclusion: “There is undoubtedly a culture of cover-up in the NHS and nowhere is that stronger than in the health IT sector. It’s not safe. It’s really not safe.”

BBC News also included a response from Professor Erika Denton, national medical director for transformation at NHS England. She stated that EPRs represent an improvement over paper and patchwork systems and have been shown to improve safety and care for patients. “However, like any system, it’s essential that they are introduced and operated to high standards, and NHS England is working closely with trusts to review any concerns raised and provide additional support and guidance on the safe use of their systems where required.”  Also Daily Mail and Yahoo News Canada (reprint of the BBC News article if blocked).

Short takes: Virtual Therapeutics, Akili in $34M merger; why health clinics are struggling; Dollar General, DocGo call it quits; Clover Assistant AI debuts; fundings for Wanda Health (UK), Updoc (AU); Telstra buys out Fred IT (AU)

Two mental health companies with complementary digital therapeutics plan to merge. Virtual Therapeutics, which approaches mental health through VR-enabled games, and Akili Interactive, with online prescription games designed for ADHD and other cognitive impairments, yesterday announced plans to merge. The new company will retain the Virtual Therapeutics name and go private, with Akili operating as a subsidiary. The cash buyout to Akili shareholders will be based on $0.4340 per share of common stock (Nasdaq) or $34 million, a premium around 4%. Akili had announced on 29 April that it was seeking “strategic alternatives”. Shares were trading then at $0.235 so the offering is over an 80% premium to that time. In May, Akili announced a reduced Q1 2024 net loss compared to Q4 2023. The transaction is expected to close in Q3, subject to Akili retaining a specified cash position and a tender conversion. Management transitions have not been disclosed. Release, MedTechDive

Why are all the health tech clinics struggling–at once? CNBC polls a group of experts and deduces that what it calls the “2.0 version of primary care” in Walmart Health, CVS Minute Clinics (closing dozens of Minute Clinics in Southern California and New England), and  Walgreens’ VillageMD, is foundering under:

  • Thin to non-existent margins–reimbursements are low, but the expenses of running them are high
  • Lack of ‘volume selling’
  • Lack of workforce–doctors don’t want to go to rural areas, which was Walmart’s bet. Nurse-practitioners can’t care for patients (and bill) if they also are detailed to do cleanup 
  • Cross-selling a flop–if you’re in for a pint of milk, Advil, or shampoo, you’re not going into the clinic, and vice versa

A 3.0 model may have a lot of variants, such as One Medical’s subscription model ($9/month for Amazon Prime members). Walgreens is opening a few in-store health clinics in the Hartford, Connecticut area to be run by Hartford HealthCare. In Arizona, a local Be Well Health Clinic near Arizona State University operates in a Walgreens and treats only sexual health issues. Kroger’s Atlanta-area Little Clinics will focus only on senior care.

One 3.0 experiment, DocGo’s vans in Dollar General parking lots, is over. Last year’s headscratching move to place DocGo’s urgent, preventative, and chronic care vans at specified hours in rural Dollar General parking lots [TTA 24 Jan 2023] was canceled some weeks ago. It never expanded beyond the three Tennessee locations, two in Clarksville and one in Cumberland Furnace that started last year. Endpoints

Health plan Clover to separately market their Assistant AI tool for clinical decision-making. Counterpart Assistant will be offered to other payers outside Clover Medicare Advantage along with providers in ACOs and value-based care enablers (sic) as an AI-assisted service, in a hybrid SaaS and per member per month (PMPM) shared-savings model. The pitch is to lower per-life customer acquisition cost and allow physicians to use one tool for all MA patients. FierceHealthcare

Fundings in UK and Australia:

UK’s Wanda Health adding a 30% investment from VC investment group NetScientific plc. Wanda Connected Health Systems Ltd. has operations in Bristol and Seattle.  It’s a second-time-around for NetScientfic, as it was an early Wanda investor but sold its 90% interest in Wanda US to Deeptech Disruptive Growth Investments Ltd in 2019. Wanda Health provides remote patient monitoring feeding into a virtual care platform. Insider Media

Australia’s Updoc telehealth raised A$20 million ($13.2 million) in investment from ASX-listed capital investor Bailador. It offers virtual consultations, online prescriptions, specialist referrals, pathology referrals, and medical letters for a single payment or on subscription. The funding will be used for international expansion and technology development. To date, it has served 200,000 Australians.  Mobihealthnews

In more news from Down Under, Telstra Health buys out the remainder of Fred IT Group. Telstra already owned 50% of the pharmacy IT solutions provider and is buying out the Victoria branch of the Pharmacy Guild of Australia and Paul Naismith, Fred IT co-founder and CEO. The CEO, management, and employees will remain in place. Fred IT, through eRx, is the only national electronic prescription delivery service in Australia since last year. Right Said Fred? Mobihealthnews

Oracle’s Glueck kicks back hard at Business Insider’s ‘deadly gamble’ article, Epic’s Faulkner (now with additional audio commentary)

Oracle is making great progress at the VA. And they want EHR interoperability. Epic doesn’t. Take that, Business Insider! And Judy Faulkner! Ken Glueck, an EVP at Oracle, authored an Oracle blog post (or at least one written under his name) that has generated much industry controversy. It first goes after Business Insider for daring to criticize the problems on the Oracle Cerner rollout that made it into five (count ’em, five) VA regional systems, calling it a ‘regurgitated story’. It calls the ‘deadly gamble’ headline ‘clickbait’, moves to patting itself on the back for the apparently non-problematic EHR rollout in about 3,900 locations in the DOD-Military Health System (partnering with Leidos), then swerves to stating the obvious in kicking around poor old, outdated VistA that meets very different needs and a massive population at the VA, and ends with a tap dance around the Oracle Cerner EHR problems at the VA citing all the progress that Oracle is making. It builds to a final slam fest, taking a minor quote in the article regarding why Oracle’s Larry Ellison preferred to buy Cerner–a ‘more relaxed approach to data privacy’–and expanding that to hard personal takedowns of Epic and its founder Judy Faulkner.  It then gets personal with BI, depicting the publication as “rooting against us” which he finds “invigorating”.

One can understand the craving for Oracle management to respond to BI. It’s a media outlet that apparently doesn’t have the most friendly relationship with Oracle. (But since when is that a feature of the Fourth Estate?) The article vividly takes Oracle to task, weaving together an accessible story out of dry facts and the many technical failures well documented by the VA, the OIG, and in Congressional hearings. It’s framed in the noble ambitions of Oracle’s founder Larry Ellison to transform healthcare which, in this Editor’s view, are treated sympathetically. The extremely well-read review last week of the BI article notes all, as well as the lack of contrast with the non-eventful DOD-Military Health System’s implementation and why it went largely according to plan, including the joint Lovell MHS/VA EHR. While this Editor tends to cast a gimlet eye at the clichéd mention of ‘transforming healthcare’, she still has some hope that progress in simplification, transparency, better-informed decisions, and truly intelligent assistance that enables human providers to heal their patients will be made in the next decade. And in that, she is on the side of Mr. Ellison as well as most founders and companies in health tech chronicled in TTA’s articles since 2005.

You have to give Mr. Glueck some credit for not holding back on how he really feels. Unfortunately, he was writing a corporate communication even if it was slotted in Oracle’s blog pages. He’s worked in corporate for decades and early in his career in government in the late Senator Joe Lieberman’s (D-CT) office. From the blunt view of a marketer, he should know better. Tone matters. And the frostier the tone, the better. If even a response is needed. Consider: is responding to this a smart move? What are the knock on effects?

In fact, it’s almost a textbook on how not to respond to negative press.

  • The headline sets up a straw man argumentBusiness Insider is not responsible for healthcare modernization, nor conceivably will ever be. It’s a cheap shot. 
  • The overly personal tone, written (one can guess) as he was seething about the BI article, undermines the response.
  • Nearly all of the same points could have been made in a concise, objective, fact-by-fact rebuttal that would be far more powerful in its restraint.
  • It meanders. It’s defensive. It’s easy to read into the Congressional Record or at the next hearing of the Veterans Affairs committee by a House member or Senator who’d like to see Oracle Cerner derailed at the VA. 
  • Where it truly goes off the rails is the personal invective directed at their competition. “…Epic’s CEO Judy Faulkner is the single biggest obstacle to EHR interoperability. She opposes interoperability because it threatens Epic’s franchise.” Mr. Glueck goes further in stating that Oracle enables provider collaboration across silos, while “Epic’s contracts expressly appropriate all patient EHR data as Epic’s own.” This is a fair criticism if true but maybe Epic’s hospital customers like it that way for their own reasons like security.

The blog comes across as barely restrained and defensive, especially versus Epic, the #1 EHR. When your EHR is losing ground to the competition, this is not a good look. It hands Epic another club to beat Oracle with. When your audience consists of professional hospital and practice executives, plus the VA and Congress, who right now aren’t overly happy with your EHR and are firing Oracle or considering it, this is almost guaranteed to backfire. It also gives a provocative article in a small online publication (ask Elon Musk) what Oracle doesn’t want–very long legs and a long shelf life. Plus now, there is even more reason for BI to beat up on Oracle.

Perhaps ignoring it, coupled with a sober internal communication (email/intranet/Slack) on the progress being made with the VA EHR (given that internal comms leak onto Reddit and similar), would have been the best response choices. And what about a conversation with BI? 

Like the old Sicilian saying about revenge, dishes like this should be served cold. 

Some interesting responses to the Oracle blog post are in HIStalk Reader Comments 5-31-24   Also Becker’s

And if anyone at Oracle wants a free tutorial in what not to do to respond to negative press, from the perspective of someone who’s had to deal with it in two industries…

Listen to Editor Donna provide extra commentary–a take on this take–on the Ken Glueck blog and this article. Now on Soundcloud (~18 minutes).

Perspectives: How Collaborative Care Combats Physician Burnout

TTA has an open invitation to industry leaders to contribute to our Perspectives non-promotional opinion and thought leadership area. Today’s contribution is from Sussan Nwogwugwu, DNP, PMHNP, Clinical Leader at Done. In this article, Dr. Nwogwugwu discusses physician burnout, how it can affect delivery of care, and how collaborative and comprehensive care can mitigate burnout.

Done is a leading provider of telehealth services for individuals with ADHD, dedicated to delivering comprehensive, patient-first care. With a network that spans more than 35 states, Done connects individuals with ADHD to experienced, board-certified providers for personalized treatment plans and medication management. 

Physician burnout is a significant concern, as it affects not only physician well-being but the quality of care they deliver.

The state of primary physician burnout
The American Medical Association found that at the end of 2021, nearly 63% of physicians had reported burnout symptoms. This was roughly a 66% increase from the preceding year, highlighting the urgent need for systemic changes to support physician mental and emotional health. Increasing burnout is attributed to excessive workload, administrative burdens and lack of support and resources.

Collaborative care and its benefits
Collaboration between a team of multidisciplinary healthcare professionals decreases clinician workload and leads to enhanced job satisfaction. Additionally, feelings of isolation and burnout among physicians are reduced. Most importantly, the continued skill building and exchange of knowledge contribute to professional growth.

For mental health patients, collaborative care ensures holistic care and access to specialized services and continuity of care, particularly for patients managing chronic conditions.

Comprehensive care supports providers
A collaborative care model is designed to reduce the burden on primary care providers; and enhance clinician well-being and patient care by integrating comprehensive behavioral health support within the primary care framework. Comprehensive care supports providers in several ways:

Impact analysis
Impact analysis, primarily powered by data analytics software, provides insights into treatment effectiveness. It is particularly helpful in guiding interventions.

Impact analysis further addresses burnout and other issues by identifying areas for improvement, ultimately guaranteeing effective resource allocation and helping track the progress of interventions over time for better adjustments.

Evidence-based interventions (EBI)
EBI enables providers to use resources efficiently by enlightening them on what works and does not. It also enhances job satisfaction and morale, ultimately leading to better patient outcomes. Finally, using evidence-based treatments reduces the chances of facing legal action if something goes wrong.

Physicians leverage technology to learn more about EBIs across various medical fields; that can include digital libraries/databases, clinical decision support systems, mobile applications, telehealth platforms and online resources.

Frequent reviews and an inclusive patient approach
Frequent reviews help identify and address areas for practice improvement due to informative feedback they provide. An inclusive patient approach reduces burnout and provides a sense of fulfillment among providers by nurturing greater patient engagement and increasing satisfaction.

Comprehensive care supports patients
In addition to benefiting health care providers, comprehensive care benefits patients, too.

Impact analysis
Impact analysis fosters an in-depth understanding of a patient’s needs and responses to treatment, leading to more personalized care. Patients can also make informed decisions about their health and treatment options, guided by physician recommendations on helpful online resources.

Evidence-based interventions
EBI supports patients, reduces the risk of adverse effects, and ascertains that patients receive appropriate, high-quality, rigorously tested and proven care. Additionally, since EBI is founded on research and clinical evidence, it guarantees better health outcomes.

Frequent reviews and an inclusive patient approach
Frequent reviews enable personalized care and continuous treatment plan adjustment per each patient’s progress and feedback. Remote patient monitoring technologies like smart watches or mobile health apps help to track key health metrics and symptoms, thereby fostering patient empowerment and ensuring adherence to treatment plans by involving them in their own care.

Why medicine is shifting toward value-based care
Medicine is gradually shifting to a value-based care model to deliver patient-centered, effective, cost-efficient healthcare. This is in response to the conventional fee-for-service model that incentivizes quantity over quality, which results in unnecessary procedures, fragmented care and unsustainable healthcare costs.

Technology, a key defining factor in value-based care, leverages EHRs, telemedicine platforms and data analytics tools to refine ADHD care and eliminate draining tasks that lead to burnout.

Telemedicine platforms enable remote consultations, making it easier for patients to access specialized services without the need for physical visits. Additionally, data analytics tools track patient outcomes and identify trends, allowing for more personalized and effective treatment plans.

Through integrating EHRs, telemedicine platforms and advanced data analytics, multidisciplinary healthcare teams can streamline communication and coordination. EHRs provide team members access to up-to-date patient information, thereby reducing errors and enhancing continuity of care.

Collaborative + comprehensive care = value-based care
Collaborative and comprehensive care, combined with technology tools, contribute to value-based care by enhancing patient experience and treatment outcomes; and optimizing resource utilization.

These care models collectively promote improved population health, foster accountability and transparency and encourage continuous improvement.

Through collaborative care models, the value of health care is maximized and aligns with value-based care goals, alleviating increasing levels of physician burnout.

News roundup: Waystar $1B IPO is on (updated); CVS looking for Oak Street PE partner; 23andMe net loss doubles to $667M, may go private; Otsuka dives into digital therapeutics; HoneyNaps’ $12M no snooze

Waystar finally getting around to starring in its IPO. Again. The on-again/off-again public offering for this healthcare payments software platform developer is back on, according to their Form S-1 filed yesterday (28 May) with the Securities and Exchange Commission (SEC). Their first filing draft was in October 2023 on Nasdaq which would have valued the company at $8 billion. The IPO was again revived in December and postponed. This filing for WAY floats 45 million shares valued between $20 and $23 which would raise $1 billion with a far more reasonable valuation of $3.7 to $3.83 billion (latter updated per Waystar). Lead book-running managers are JP Morgan, Goldman Sachs & Co. LLC, and Barclays.

Cornerstone investors, who purchase stock before the formal listing, have expressed interest in buying up to $225 million in shares; these investors include funds managed by Neuberger Berman and a wholly-owned subsidiary of sovereign wealth fund Qatar Investment Authority. 

Underwriters have a 30-day option to purchase up to 6.75 million shares at the IPO price less the underwriter discount. Their current investors are EQT AB, Bain Capital, Francisco Partners, and the Canada Pension Plan Investment Board. The net proceeds from the offering will repay outstanding indebtedness. No timing is stated for when the IPO will happen. Usually, there are roadshows for institutional investors that showcase the prospectus (in the S-1) and positive points such as their $5 billion in annual transactions. After the listing, the current investors will still have substantial shares: EQT, CPPIB, and Bain will own about 29.2%, 22.3%, and 16.8% stakes respectively. 

Release, Morningstar, FierceHealthcare, Reuters

CVS Health is reaching out for a private equity partner to expand Oak Street Health’s clinics. Bloomberg News reported this unusual move by CVS with a handful of private equity firms to explore what was termed by ‘insiders’ as a joint venture. It’s all very preliminary and a JV may not be the final form. OSH is far smaller than rivals One Medical (Amazon) and VillageMD (Walgreens) but CVS apparently does not want to go it alone to fully take on the development cost. On February investor calls, CVS projected building out to 300 clinics by 2026. Reuters

Even in early 2023 with rivals Amazon (One Medical), Walgreens (VillageMD), and Walmart Health on primary care clinic buying and building binges, CVS’ buy for $10.6 billion for the ‘runt of the litter’ was widely derided as a waste of money [TTA 16 Feb, 2 Mar 2023]. OSH had only 169 offices in 21 states. It was also a money loser, $510 million in the red in 2022 and $200 million projected in 2023, with no breakeven predicted until 2025. A large part was due to OSH’s patient population, heavily skewed towards Medicare Advantage and underserved, high-risk patients. Those factors have gotten worse, not better. CMS has now tightened payments on MA with new rates and on reimbursement for diagnoses, making the growth of this population even riskier. Further dimming prospects for a willing partner: Walmart Health is shutting at end of June and VillageMD has shed or is shedding 140 locations to perhaps 620.  

23andMe’s losses double while revenue shrinks by 31%. Things continue to dim at the beleaguered genetics testing company. Their Q4 ending 31 March 2024 (FY24) closed with a net loss of $209 million on $64 million in revenue, compared to a net loss of $64 million on $94 million in revenue in the prior year Q4. In adjusted EBITDA, Q4 lost $33 million, compared to a loss of $39 million in prior year Q4. Net loss in full year FY24 was $667 million on revenue of $220 million, versus prior year’s loss of $312 million on revenue of $299 million. Adjusted EBITDA was $176 million versus prior year’s $161 million. As previously reported [TTA 20 Apr], CEO and co-founder Anne Wojcicki may offer to buy out the 80% of shares she does not already own. In developments, 23andMe has introduced an ancestry feature called Historical Matches, three new genetic reports for 23andMe+ members covering breast, colorectal, and prostate cancer based on polygenic risk scores, and some clinical trials moving forward. 23andMe also lost revenue in mid-year from GSK’s expiring agreement, had an impairment relating to Lemonaid Health, and of course (but not mentioned here) their massive 6.9 million record data breach. Shares closed today at $0.61, slightly up from April’s lows. Release

Otsuka America bucks the down trend, moves into digital therapeutics with Otsuka Precision Health. The Japanese pharmaceutical company’s US division is moving forward with a new digital health unit, Precision Health (OPH), headed by 14 year veteran Sanket Shah. Their first rollout later this summer will be based on the newly FDA-cleared Rejoyn, the first prescription digital therapeutic authorized for the adjunctive treatment of major depressive disorder (MDD) symptoms. Rejoyn was developed in conjunction with Click Therapeutics. Mr. Shah and Otsuka are taking the longer view in terms of development, that future developments will be about both partnerships and solo effort, and that the road is long–and littered with the burnt-out shells of failed companies like Pear Therapeutics, Babylon Health, and way back to Happtique. Otsuka has had its own digital health learning experience. They partnered in 2017 with Proteus Digital Health’s smart pill tech for its Abilify MyCite anti-depressant. After abruptly ending the partnership, Otsuka bought the smart pill technology out of bankruptcy [TTA 19 Aug 2020]. Release, Healthcare Dive 

One funding of note this week is HoneyNaps‘ $11.6 million Series B. Hi Investment Partners, QUAD Investment Management, and Industrial Bank of Korea led the South Korean sleep diagnostics company’s funding. HoneyNaps has an FDA-cleared (2023) bio-signal monitoring and AI-assisted sleep diagnosis software, SOMNUM, that will be introduced to the US market. In the release, the company CFO announced plans to “further advance the AI to expand its application to other critical areas such as cardiovascular disease, dementia, and Parkinson’s disease”. Mobihealthnews

Breaking news: Veradigm may sell, merge, or seek ‘strategic alternatives’; appoints new interim CEO effective June (updated)

Breaking: Veradigm puts itself up for sale or ‘strategic alternatives’–but in the meantime replaces its interim CEO. The pre-holiday week and weekend break was undoubtedly a busy one at healthcare data systems/services Veradigm, the former Allscripts.

Sale? Merger? Something else? Crossing the wires today (Tuesday) at 7am Eastern Time US was the announcement that Veradigm is exploring “potential strategic alternatives that may include, but are not limited to, a sale, merger, strategic business combination or other transaction.” What was a puzzle was the next line in the carefully worded release: “The Company cannot assure that its exploration will result in Veradigm pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms, if at all.” The release goes on to explain that there is no timetable for “any transaction” and that it was the last word until if and when something happens.

The doubt around ‘attractive terms’ seems unwarranted, as the same release also reaffirms their 2024 guidance of annual revenue between $620 million and $635 million and adjusted EBITDA between $104 million and $113 million. As of calendar Q1 close, they had cash/equivalents on hand of $343 million, funded debt of $208 million (the principal of 2019 convertible notes), creating net cash of $135 million. 

Veradigm appears in good shape, despite their delisting from Nasdaq earlier this year due to financial reporting problems two years running (2022, 2023, and 2024 to date), created by bad software, leading to continuing violations of Nasdaq listing rules. This led to the December resignations of CEO Richard J. Poulton and CFO Leah S. Jones and their replacement for a six-month term by Dr. Shih-Yin (“Yin”) Ho, coming from the board, as CEO, and Lee Westerfield from Clearsense as CFO. At that time, the board announced a search for permanent replacements [TTA 14 Dec 2023].  

Shares trade on the ‘pink sheets’ (OTC Markets OTCPK) under MDRX closing today at $8.70, up over $1.00 from last Friday.

Interim CEO departs, interim CFO stays. A second release today announced that Dr. Ho will depart the interim CEO slot on 7 June but interim CFO Lee Westerfield will continue. Dr. Ho’s place as interim CEO will be taken by Tom Langan, Veradigm’s president and chief commercial officer (CCO), reporting directly to executive chairman Greg Garrison and the board. No interim president/COO was named. From the release, Dr. Ho will not be returning to the board or any other function with Veradigm which is a most interesting exit. During her time, the company in February acquired ScienceIO, a generative AI/LLM company to add AI capabilities, and in January bought Koha Health, which fit into their revenue cycle management functions for MSK [TTA 27 Feb]. Lee Westerfield will be continuing as interim CFO until 24 December. Another change: this release made it clear that no permanent executive appointments will be made “while the separately announced exploration of strategic alternatives is in process.”

What does this mean? This Editor projects that offers for parts or all of Veradigm’s business are in the pipeline, whether they are relisted on Nasdaq or not. In a company of this size, breadth, and apparent good health, the jobs of CEO, president, and chief commercial officer (CCO), typically two to three positions, are never collapsed into one person. In this unique situation, this eliminates one or two C-level compensation packages. Going back to December 2023, a CEO had to be temporarily slotted in as the company was still listed on Nasdaq. Leaving a vacancy would not have been acceptable. Regarding the CFO position, in a sale or other “strategic alternative to maximize shareholder value”, a CFO is more important than even a CEO in working out the financial details, which for Veradigm are more complicated than usual. 

In fact, this move could be seen as telegraphed in February. When accepting its Nasdaq delisting, Veradigm’s board adopted a limited duration stockholder rights plan that issues by means of a dividend one preferred share purchase right for each outstanding share of Company common stock to stockholders of record on the close of business on 8 March 2024. This becomes exercisable only if a person or group secures beneficial ownership of 10% or more of the outstanding shares in the next year. The rights plan is obviously designed to compensate shareholders in the event of a takeover not approved by the board (i.e. a hostile takeover) via accumulation of stock and make a sale to an unapproved buyer less attractive, though it hasn’t stemmed the filing of various shareholder class-action lawsuits. Crain’s Chicago BusinessHealthcare Innovation

Editor’s further note: It is not unknown to break up a company in order to maximize shareholder value. The parts can be worth more than the whole. GE is the most recent example. More akin to Veradigm, Cendant Corporation, in which this Editor was once part of as a manager/director in the Avis Rent A Car unit, was sold or spun off in parts in 2005-6. Once a giant in hotel, car rental, timesharing, real estate brokerage, online booking, and other parts of travel, by 2005 the primary shareholder/CEO decided that the share value was not reflective of the company value, and proceeded to sell and spin off its businesses–rather smartly before the real estate crash in 2007-8. Perhaps Veradigm does not see a way forward in running its diverse healthcare businesses even where it has a strong and currently profitable position or there is pressure from its largest shareholders to cash out. It is always worth looking at shareholders. Close to 22% of its shares are institutionally held but widely distributed among them. The largest holders are Silver Point Capital (2.29%), Tyro Capital Management (1.5%), and a host of Vanguard and DFA funds totaling under 10%. Insiders hold only 1.3%  Yahoo Finance

Our Readers should not be surprised at any one of several outcomes in the coming months.

Short takes: Cue Health shuts (updated for Ch. 7), Walmart Health lays off, Walgreens sells $400M share in Cencora, $26M Series B for Expressable

Cue Health gets the clue to shut down operations. It will be a Memorial Day to remember for the 480 remaining US employees of the San Diego-based company. Come Tuesday, none of them will be returning to work. The 230 scheduled earlier this month to wind up in July, plus the remaining 250, have their last day and paycheck on Friday 24 May, according to the WARN Act paperwork filed with the state of California. Notices were doled out to employees by the chief human resources office. The notice includes company leadership, presumably also including the new (since March) CEO Clint Sever. Cue has overseas operations in Hyderabad, India; it is unknown whether that will be affected. 

Update 28 May: Cue Health filed for Chapter 7 today in the District of Delaware to formally wind down its business. The press release stated that the board attempted to pursue additional financing or a strategic transaction. The next steps will be a bankruptcy trustee appointment to sell the Company’s assets. This will be used to pay creditors in accordance with the provisions of the Bankruptcy Code. Release  

Cue Health’s collapse follows the news on 15 May that the US Food and Drug Administration (FDA) invalidated Cue Health’s main business in Covid-19 Tests for Home and OTC Use and for the authorized lab test version, advising that the tests be tossed in the trash. Their remaining test is one for Mpox on an EUA. Two other tests developed for flu and RSV are still under FDA review. At its peak, it had over 1,500 employees and was valued at $3 billion. Undoubtedly, none of this is a surprise to Cue’s employees who’ve been hanging on. Presumably the released employees will be lucky to receive their final paychecks and can forget about severance or health insurance via COBRA since that requires an existing business. Our best wishes to all of them.  San Diego Union-Tribune, Becker’s, MedTechDive

Another unsurprising layoff is that of 74 workers at Walmart Health Virtual Care located in Phoenix. Last month, Walmart announced the closing of Virtual Care along with its 51 Health Centers for primary and urgent care, having never scaled its model. The WARN Act notice was filed with Arizona on 17 May. Employees were offered severance of 90 days if they were unable to close another Walmart position. This is on top of Walmart relocating most positions, including remote, to Bentonville, with some in the San Francisco and NYC areas. Becker’s, FierceHealthcare The Health Centers are closing on 28 June per an update from Walmart. Walmart is also ending its Walmart Flex Medicare Advantage plan through UnitedHealthcare which was available solely in Georgia. There is no word about other Georgia and Florida programs in conjunction with Centene’s Ambetter and Orlando Health. TTA 30 April

Walgreens Boots Alliance (WBA) cashed in another $400 million sale of Cencora stock. The funds will be used for debt paydown and general corporate purposes. Their share of Cencora, a drug distributor formerly known as Amerisource Bergen, is now at 12% from 13% as recently as February. In that month, they sold 2% for $992 million in shares [TTA 14 Feb]. There is no change to their board representation (Ornella Barra, COO International) nor the partnership. WBA release

And to wind up with a little bit of good news, Expressable raised a $26 million Series B, for a total of $45.5 million since 2019. The virtual speech therapy provider will be using the funds for further development of their care delivery platform, expansion of their clinical network of W2-employed speech-language pathologists, and acceleration of their growth in health plans and provider partnerships. The round was led by HarbourVest Partners, with participation from Digitalis Ventures and existing investors F-Prime Capital and Lerer Hippeau. Release   Hat tip to past colleague Amy VanStee, VP of content and marketing.

News roundup: 100+ medical orgs pile on Change/UHG; Teladoc hit with second class-action suit; Congress demands Oracle EHR improvement–or else; Transcarent intros WayFinding; Centivo buys Eden Health

The fallout from the Change cyberhack hangs like smog over UHG. On Monday, the American Medical Association (AMA), along with about 100 other signatories from nationwide medical associations including CHIME and AHIMA, sent a strongly worded letter to Health and Human Services Secretary Xavier Becerra. It requested a clear delineation of responsibilities for breach reporting requirements created by the 21 February Change Healthcare ALPHV/Blackcat ransomware attack. Reporting is required by HHS’ Office of Civil Rights (OCR) under HIPAA.

Specifically, the AMA letter requested 1) more public clarity around reporting responsibilities to patients for the data breach and 2) that all reporting and notification responsibilities will be handled by Change Healthcare, not the providers. “OCR should publicly state that its breach investigation and immediate efforts at remediation will be focused on Change Healthcare, and not the providers affected by Change Healthcare’s breach”. To date, this doesn’t seem to be OCR’s position.

  • The AMA and signatory organizations maintain that it “is the responsibility of the covered entity which experienced the breach—UHG—to fulfill its obligations in regard to reporting the breach to OCR, notifying each affected individual, as well as any further HIPAA breach reporting requirements that may be applicable, such as notifying state Attorneys General and media outlets.”
  • OCR, on the other hand, has gone on the record in April as stating in their FAQs that “while the covered entity is ultimately responsible for ensuring individuals are notified, the covered entity may delegate the responsibility of providing individual notices to the business associate. Covered entities and business associates should consider which entity is in the best position to provide notice to the individual, which may vary, depending on the circumstances, such as the functions the business associate performs on behalf of the covered entity and which entity has the relationship with the individual.” (Providers can be considered business associates)

In other words, the providers want the full responsibility of contacting patients, state attorneys general, media, and others (e.g. class action lawyers) to be Change Healthcare’s. They do not want to be forced to contact their patients and, in all fairness, at this point do not know which patients were affected because they are not privy to Change Healthcare’s information. UHG has not yet produced a breach report to OCR. AMA letter to Becerra, Healthcare Finance News

When the stock falls, blame the marketing spend! The latest class-action lawsuit filed against Teladoc blames the company for spending money in digital and other media advertising promoting BetterHelp, their telementalhealth unit. The suit cites Teladoc’s public statements such as a “long runway” for BetterHelp’s membership growth and that spending would be inefficient due to the saturated category. Yet spending increased in 2023. The lawsuit charges that this directly deteriorated the company’s revenue, leading to a substantial fall in its stock price. Charged are Teladoc, and at the time CEO Jason Gorevic and CFO Mala Murthy. Stary v. Teladoc Health, Inc. et al., was filed on May 17 in the US District Court for the Southern District of New York. No response yet from Teladoc. Docket on Justia, Mobihealthnews

The House and Senate Veterans’ Affairs Committees jointly introduce legislation on VA’s EHR modernization. The Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act would require the Department of Veterans Affairs to exercise even greater oversight of the Oracle Cerner implementation in these areas:

  • The quarterly reports to Congress would include additional quality metrics on user adoption, employee satisfaction, and employee retention/turnover where the Oracle Cerner EHR is introduced. This adds to existing required reporting on spending and performance.
  • Regarding additional rollouts, the VA secretary must certify that the sites are ready. He also must furnish corroborating data to Congress “demonstrating that all facilities currently using the Oracle Cerner EHR system have recovered to normal operational levels.”
  • If there is no improvement (presumably to this standard) at Oracle Cerner locations within two years of the bill’s enactment, the program will be terminated.
  • VA must also report on the status of VistA with details about “the operation and maintenance costs and development and enhancement costs” of the software and “a list of modules, applications or systems” within VistA that VA plans to retire or continue to use. 

HIStalk 17 May, NextGov/FCW

‘Not for sale’ Transcarent introduces an AI-assisted platform, WayFinding. The platform designed for end users of Transcarent’s enterprise health navigator combines generative AI with instant access to care providers to integrate benefits navigation, clinical guidance, and care delivery on a single platform. The personalized guidance enables the member to find a provider, find out costs, and guides to the best clinical action to take next. It then connects them to medical professionals or provides direct access into digital point solutions. It integrates information on details of the employer plan, ancillary benefits, the member’s medical history, and connection to clinical specialists. There is no information in the overly padded release on when the new platform will be available or how it will be offered to existing and new customers. This follows on Transcarent’s $124 million Series D funding two weeks ago.  FierceHealthcare, Mobihealthnews, TTA 8 May

Centivo acquires Eden Health virtual care. The purchase price was not disclosed. Centivo, headquartered in Buffalo NY, is  a health plan for self-funded employers. Eden, also providing services to employers, is a concierge provider that offers through a mobile app primary care, mental health, and care navigation services, plus workplace pop-up clinics. Eden also has technology that connects providers’ EMRs to their app. Eden’s services will be fully integrated into Centivo, which will enable it to expand to 50 states and increase from its current 120 employer base to 160. The combined organizations cover about 2 million eligible patients in companies ranging from Fortune 100 size to small businesses. Eden’s CEO will serve as a senior advisor to Centivo, but there is no other indication of employee transition.  Release, FierceHealthcare

Must read: Oracle’s ‘deadly gamble’ on Cerner (new with audio file!)

Larry Ellison’s $28 billion bet on Cerner is drawn and quartered in this Must Read. If any further confirmation is needed that Cerner was the proverbial pig-in-poke for Ellison’s Big Vision of welding all that Cerner EHR data with Oracle’s massive technology, it is right here. Ashley Stewart and Blake Dodge, writing for Business Insider, do a masterful job of painting how badly Ellison and Oracle misjudged what they were getting into with what proved to be Cerner’s “broken and dysfunctional system” that in the VA implementation has been put on hold, with one exception, for a year or maybe more.

What Ellison thought he was buying in 2021 could be summarized by what he said at Oracle CloudWorld in fall 2023. FTA: What if, instead of guesswork, doctors could lean on generative AI to comb through a patient’s medical records, along with those of millions of other patients? With such a massive database, doctors could spot the warning signs of disease faster, reduce the need for trial and error, and make better-informed decisions about treatment. In other words, pump all that massive data into Oracle’s AI models and watch all that data, now going to waste, transform healthcare.

The problem was Cerner itself. Its EHR was not the wonder that Ellison saw circa 2005 when he first approached them and was rebuffed as a Silicon Valley interloper. It had become a system that wore lead boots compared to Epic. In the provider market, it was sinking to a distant #2. But one revelation in the article is that by 2020 Oracle saw Cerner as a must-have. As a smaller system, it was perceived as more interoperable between health systems, providers, and with third parties. Data would be more readily accessible. Pandemic-era relaxations on data sharing further loosened restrictions on access. The looseness appealed to Ellison and Company–and Cerner’s book of business would also help Oracle compete in cloud computing with Amazon (AWS) and Microsoft.

But Healthcare Reality dawned with the first implementations in the VA that started in 2020, a big win that turned into a rolling disaster that led to unknown queues, vanishing prescriptions, records, and appointments, and much more as chronicled here in the past four years, by Congressional investigations, and the VA’s OIG. No, the problems weren’t easily ‘fixable and addressable’ in Mike Sicilia’s (Oracle) words to Congress in hearings shortly after the acquisition closed. In fairly short order, the rollout came to a screeching halt after thousands of Oracle fixes, with only five systems implemented through last June, no end of disasters, patient deaths, and exacerbated illnesses. Other than the Lovell/MHS joint facility March rollout, there will be no further installations planned by the VA until the next fiscal year that starts in October. The most optimistic timeline for resumption is by end of this calendar year. As Congress is making clear, without proof of improved performance par with VistA in the current systems, do not hold your breath for any new ones.

An additional revelation in the article is that over time, VistA had become so customized to each VA medical center that Cerner could never meet those demands expected by the staff. It stopped trying, leading to more dissatisfaction. Perhaps that standardization looks good at the 40,000 foot level, but there were reasons for the customizations based on the veteran population and practice. Things that took two minutes in VistA now took ten in Cerner–if you were lucky. In the closed VistA system, those customizations were passed around other centers and regions–in VA-speak, Veterans Integrated Services Networks or VISNs. (Editor’s note: recalling from one of her former companies, any IT vendor implementing a system VISN by VISN soon learned about each one’s unique demands at multiple levels.)

“Oracle is still learning what they have actually acquired from Cerner,” according to an Oracle executive quoted in the article. The VA has become a ‘shackle’ trapping the Ellisonian Grand Vision of Oracle’s Transforming Healthcare–in time for him to enjoy his victory. Cerner’s slide to a distant #2 has reduced All That Data that made Cerner worth $28 billion, adding to a crushing debt load that this Editor and others noted in 2022. Layoffs and freezes haven’t made much difference, but have led to the loss of experienced Cerner support. The VA failures and drain of resources to fix it, the vacuum in support, and technical problems have led to, in a Providence system executive’s words, the perception that Cerner is ‘circling the drain’. And perception becomes reality. Health systems are choosing the costly route of moving now rather than later. The article mentions two major systems defecting to Epic, Intermountain and UPMC, but they are only two out of the 12 that announced in 2023. 

The narrative succeeds in bringing together many threads, but most of all in bringing to life the dry facts of Cerner’s many patient failures in the VA, including the individual deaths from the unknown queues [TTA 18 Mar 2023] and the human story of the Two Charlies–Charlie Bourg (himself affected by the unknown queue) and Charlie Monroe, both veterans near Spokane’s Mann-Grandstaff VA medical center. They advocate for veteran patients affected by the Cerner EHR’s many flaws.

One of the flaws not mentioned is Cerner’s odd lack of concentration on training criticized by Congress in 2023 [TTA 19 Apr 2023]. Another sequel or extension to this article could delve into the DOD-Military Health System’s implementation, a Leidos-Cerner project that has had few of the reported problems of Cerner Millenium in the VA. This was quoted by a former VA official as a ‘terrible decision’ that knocked onto the VA in implementing into a much larger and more complex healthcare system. Hat tip to HIStalk 5/22/24

Editor’s Closing Note: A wise doctor told me once that most errors in practice are made at the beginning and at the end of one’s career. In business, your Editor has seen this parallel happen time and time again. Even the smartest of chairmen and CEOs, when they stay too long at the fair, often make poor decisions. Is it age? Illness? No one left with the courage to tell them no, this is a bad move, this isn’t working? I think of the last years of Centene’s leader Michael Neidorff, 25 years in leadership, ousted by an activist shareholder. Mark Bertolini of Aetna, shoved aside from the merger with CVS he engineered. Frank Lorenzo, who created the biggest airline combine ever, Texas Air Corporation. Even legends like Larry Ellison at 79 may not be what they were. In attempting to capstone his storied career, and with the best of intentions in transforming the broken, dysfunctional healthcare system, has he made a gamble that could bring Oracle to its knees?

Listen (for the first time!) to Editor Donna read this article with extra asides and comments (plus a small flub or two). Now on Soundcloud.

Our view from last week: Is Oracle Health’s Big Vision smacking into the wall of Healthcare Reality? Their business says so.