When ‘the centre cannot hold’: three board members exit at Cano Health, failure looms at Bright Health Group

April 7, 2023 | by

Surely some revelation is at hand? The first: the high-profile board troubles at primary care provider Cano Health. Last Friday, three directors resigned loudly from the board: Barry Sternlicht, Elliot Cooperstone, and Lewis Gold. Sternlicht, the chairman of Starwood Capital Group and for some years the CEO of Starwood Hotels in the 1990s, is a ‘name’ real estate and private investor. The other two are hardly slouches: Cooperstone is founder and managing partner of private equity firm InTandem Capital Partners; Gold is co-founder and board chairman of behavioral health company Advanced Recovery Systems. They resigned as a group due to differences with the CEO and management. 

The trio filed a 13-D with the Securities and Exchange Commission as a partnership to change things, “including, but not limited to, the replacement of the CEO, sale of non-core assets and enhancement of shareholder value.” Sternlicht’s release detailed their grievances with CEO Marlow Hernandez, including dubious transactions with a Miami medical claims recovery company, MSP Recovery (also known as LifeWallet), but mainly around the burn-through of the $800 million PIPE raised along with the June 2021 SPAC via Sternlicht’s JAWS Acquisition Corp.–an eye-watering total of $1.4 billion for a valuation at that time of $4.4 billion. From his release, Sternlicht apparently could not get the time of day from Hernandez. “I have never witnessed such poor corporate governance at any company, let alone a public company, and I have been involved in at least nine and served as chairman or CEO of six.”

Certainly, there is a case around shareholder value. The stock has cracked by over 90% from the initial price of $15. Sternlicht also had $50 million reasons to be mad as an investor of that amount in the PIPE. Cano Health called his “method of resignation particularly reckless.” But one wonders what Cano’s physicians are thinking, as well as the health plans with which they work, when three high-profile board members bolt the company, one of them with a stellar track record and some fame, with prejudice. Yet the majority of the board members were seemingly fine with how the company was run.

Last October, Cano, a 4,000 employee value-based primary care provider to mainly underserved markets, had its tires kicked by CVS Health [TTA 21 Oct 22] but the deal never got beyond discussions, and Humana, which has a right-of-first-refusal, made no moves. Share price fell from that time from just above $8 to today’s close of $1.25 on the NYSE. The time may be right for a payer or a provider group to make a cheap pickup, but not if the company has intractable troubles–and now there is a deep-pocketed rival. MedCityNews, New Times (Miami)  The New Times article digs deeper into the MSP Recovery relationship and CEO John Ruiz. MSP Recovery specializes in collecting from primary insurers that don’t pay and put the burden on commercial or public plans like Medicare or Medicaid. As of December 2022, the company owed Cano roughly $60 million in receivables, not a drop in their bucket.

Now to Bright Health Group, an insurtech which may well be on the brink of utter failure and the dubious distinction of being one of the largest failures of a Minnesota business, if their local media (Star-Tribune, unfortunately tightly paywalled) is accurate. Reports one month ago were dire: investors were told that Bright was facing credit insolvency, having run through $350 million in revolving credit. It also violated a liquidity covenant and desperately needed $300 million to cover it by end of April.  This did not stop the company from paying out about $4 million in bonuses to its management team–outrageously at 100%. Two of the bonuses are to ex-company members. Meanwhile, hundreds of their once 2,800+ employee group are being discharged.

18 months ago, Bright Health seemed to be the most promising insurtech out there, with a healthy Medicare Advantage (MA) plan base, family and individual plans, substantial growth, acquisitions of Zipnosis (‘white label’ telehealth triage for health systems), development of the NeueHealth value-based care provider management network, and a blue-chip management group. But it also lost $1.5 billion in 2022 on top of $1.2 billion in 2021 and has $1.2 billion in debt. Bright exited individual and family plans in six states plus cut back MA expansion plans and will no longer offer individual, family, or Medicare Advantage plans outside of California.

With Bright Health shares down to $0.20 and delisting looming, Bright asked shareholders to attend a 4 May meeting to approve a reverse stock switch “at a ratio of not less than 1-for-15 and not greater than 1-for-80.” It’s just a small problem of the share price….

Far more disastrously for Bright, state departments of banking and insurance are taking action. Tennessee and Florida placed the company under supervision; reportedly Illinois is considering the same. Texas may precipitate matters. According to strategic analyst Ari Gottlieb, the Texas Department of Insurance is preparing to place Bright Health’s Texas subsidiary into receivership. Such an action will constitute an immediate Event of Default under Bright’s Credit Agreement. Bright can then choose default–or seek bankruptcy protection.

Shockingly, over a million Americans have had to find a new health plan due to what is happening at Bright. Now, where’s the Barry Sternlicht they need on the board to take action? Are the directors from investors like Bessemer and New Enterprise Associates in cloud-cuckoo land with management?

FierceHealthcare. Both Fierce’s and this article quote liberally from Ari Gottlieb’s posts on LinkedIn, the most incisive coverage this Editor has seen so far: Since Bright Health’s executive compensation approach is best described as pay-for-failure from one month ago, Bright Health’s $4 million pay-for-failure cash bonuses… from two weeks ago, and from earlier this week, The Texas Department of Insurance is preparing for anticipated litigation…  Others are listed in his feed here. 

TTA Bright: THINKMD, Save the Children partner for digital child health assessment

April 6, 2023 | by

Putting digital diagnostics in the pocket of healthcare workers, worldwide. Isn’t a story that is bright and cheerful, about doing something good, needed right now? THINKMD is a digital clinical intelligence platform that uses machine learning (ML) to analyze key clinical data and to provide a dynamic evaluation similar to a physician’s assessment. It uses a web app that works offline as well. What THINKMD does is to basically transfer a knowledge base plus how a physician would logically approach the medical situation, followed by a care plan, to a health worker without those advanced skills in a remote area. Product demo

THINKMD already works with Save the Children in Bangladesh, Indonesia, and Kenya. Save the Children is a well-known, century-old international organization that is on the ground in 120 countries working for the welfare and health of children. Since 2017, in the existing partnership, they have achieved over 366,000 high-quality clinical assessments performed by over 400 frontline health workers. The agreement is to license THINKMD’s platform to Save the Children in order to expand the existing partnership between the organizations, enabling adoption and scaling of THINKMD’s platform to improve the health of children globally. It is the first such agreement for Save the Children. THINKMD is currently being used in a total of 10 countries. Hat tip to Nick Olsson of ‘We Are Explorers’. THINKMD release plus a blog post by co-founder Dr. Barry Finette about the agreement

Digital health’s funding time machine dialed back to 2019–before the SVB implosion: Rock Health

April 5, 2023 | by

Rock Health’s 2023 Q1 report tries to put a good face on an implosion. The good: Q1 followed their Retro Time projection; the 2020-first half 2022 bubble was over, but digital health was snapping back to 2019 funding levels. The bad: while things were snapping back, Silicon Valley Bank (SVB), the favored bank of most Silicon Valley VCs and the companies they funded, imploded due to mismanagement.  This Editor would add two corollary nervous-making bank failures on SVB’s heels: Signature Bank (some East Coast healthcare, but too many uninsured deposits and a lot in crypto, taken over by Flagstar Bank/NYCB) and Credit Suisse (pending a Swiss government shotgun marriage with UBS). Add another unnecessary Federal Reserve rate hike to kill growth and the end of the pandemic PHE regulation suspensions that fueled telemental health, plus inflation at about 8-10%…. Like that 1949 Studebaker Starlight coupe, are we coming, or going?

Sidebar: This Editor has heard from other sources (not Rock Health) that ‘dry powder’ (funds) are low for VCs and barely existent on the provider (health system) side. Their own investors, now leery, are cutting back on their exposure. Where there is dry powder, fintech and biopharma are seen as better bets. VCs sense the bottom hasn’t yet been found in digital health valuations. Payers like UHG and CVS are making big deals but not in digital health. If they are, they are small ‘pocket lint’ pickups. Private equity? Largely kicking tires. Family offices and high net worth individuals are generally staying out of the healthcare picture unless there are other compelling (usually personal) reasons to invest. (Theranos still hangs heavy over these last two funders.)

Back to Rock Health, total Q1 funding was $3.4 billion across 132 deals. Yet only six mega deals (over $100 million) accounted for 40% of the funding early in the quarter: Monogram Health (in-home care, $375M), ShiftKey (PRN nurse scheduling, $300M), Paradigm (drug trials, $203M), ShiftMed (another healthcare workforce scheduler, $200M), Gravie (broker benefit solution, $179M) and Vytalize Health (MSO for providers, $100M). To call these ‘mega deals’ is an overstatement. In 2021 or even in 2022 these would have been seen as outstanding Series A and decent Series B-D+ raises. In 2021, the top mega deals crested $500 million.

The remaining 126 sliced up the remainder ($2.043 billion) of the pie, with a median value of only $16 million per deal. Throwing in the six ‘mega deals’, the overall median increased to $25.9 million. That tracks closely with 2019/2022, allowing for some inflation. Comparisons with full year medians: 2019–$19.8 million, 2020–$31.9 million,  2021–$39.9 million, 2022–$26.7 million. 

The IPO window remains closed tight. No easy exits for investors in late-stage companies. Those that went public during the bubble, with few exceptions, have cracked. From the report: “Digital health stocks started 2023 trading almost 50% lower than they did at the start of 2021, pushing some recently-exited players like Pear Therapeutics to explore going private.” (Under $1.00 per share, Pear is currently exploring a sale in toto, in parts, or merger.) According to this chart shown by Arundhati Parmar, MedCity News’ editor-in-chief, during his VC panel at ViVE [TTA 31 Mar], only two of 17 publicly traded digital health companies that went public have share prices in excess of their IPO: Progyny (also profitable) and HealthEquity. Many are near or below the critical $1.00 mark. (This chart does not include Babylon Health which is trading around $5 and reorganizing to become a US company.) He also pointed out that only two of the 17 are profitable.

These deals now also come with strings attached: valuation adjustments and operational revamps which usually mean staff layoffs, but can also be operational in closing/selling off lines of business. Growth is not the key metric anymore–profitability or a road to it is. Recent examples are Komodo Health and Carbon Health, where their substantial fundings ($200 and $100 million respectively) were tied to jettisoning LOB and staff. 

Last but certainly not least in putting a damper on digital health funding and growth is the end of the prolonged pandemic PHE. This relaxed rules for telehealth platforms around HIPAA compliance and also in mental health prescribing without in-person visits of DEA-controlled substances in Schedule 2 and 3-V. This puts a definite halt to telemental health’s expansion, fueled by drug prescriptions and none-too-fussy signups (see: Cerebral) but also too many virtual players in one niche (Mindstrong ceasing business with remaining assets bought out by SonderMind). New telehealth platforms largely complied with HIPAA but penalties for non-compliance are returning and platforms have to secure data. FTC is an added factor with its own privacy microscope.

Even the eternally optimistic Rock Health likens 2023 in digital health to a stormy sea with “turbulent waters’ resulting in “patched up ships and resilient mindsets.” Now that is a stunning mix of metaphors. Your Editor chooses a classic phrase penned by Joseph L. Mankiewicz and uttered with flair by Bette Davis in ‘All About Eve‘: “Fasten your seatbelts; it’s going to be a bumpy night.” And it’s only Q1. Also Mobihealthnews

ViVE post-script: VC panel opines in midst of digital health’s new reality (depression?), and extra ViVE from an attendee

March 31, 2023 | by

Not everything at ViVE this week was fun and music. The organizers included a timely panel discussion with four VCs exploring the crash of digital health funding, enterprises, and whither the fall of the VCs’ favorite bank, Silicon Valley Bank (SVB). It was moderated by MedCityNews‘ editor-in-chief Arundhati Parmar, who published an interview with Zane Burke, late of Livongo and now CEO of Quantum Health, pointedly asking whether Livongo’s sale to Teladoc was a smart one given the troubling post-script [TTA 3 Feb]. The participants — Lee Shapiro, managing partner at 7wireVentures, Emily Melton, managing partner at Threshold Ventures, Richard Mulry, president and CEO of Northwell Holdings, and Ambar Bhattacharyya, managing partner of Maverick Ventures–evidently weren’t given a diet of softballs, either. 

Parmar started with a quote from a recent article in another publication: “The run on SVB was a textbook result of the myopia and egoism that has swallowed the venture capital industry whole.” This refers to the advice that many VCs gave their invested companies–get your money out now. That was the same invested money that the VCs insisted be in SVB, in accounts such as payables and receivables. At least these VCs seemed to realize that now, somewhat obliquely. Shapiro called it a ‘tragedy of the commons’, B-school terminology that refers to too many people using a common resource ruining it because no one is responsible for it. More to the point, he pointed to some in the VC ‘community’ advising their companies to move their money out of SVB, creating the self-fulfilling prophecy of a run on the bank killing it. Melton pointed to social media and everyone rushing to take care of themselves without reflecting on the consequences of their actions.

The next quote and chart that Parmar presented had to do with that Old Devil Profitability in companies that IPO’d. Only two of 17 are profitable and they’ll be a surprise–Privia Health (VBC models for providers), and Progyny (riding the fertility and benefits bubble). Rather abashedly, the panel admitted to valuation frothiness leading to over-valuation, and a new sobriety and realism leading to (drum roll) an emphasis on profitability. Bhattacharyya noted that VCs were pushing growth up until last year. Now, it’s value, ruled by the “Rule of 40” –combined growth rate and profit margin that exceeds 40%, even better cash flow positive, which are tough bars to achieve for all but the most well-positioned (and fortunate) companies. “That’s now the playbook. So we’ve all transitioned to that.” A defensive playbook, in Shapiro’s view. (A close to impossible one that may stifle innovation, in this Editor’s view, though bootstrapped companies have always earned her admiration.)

To that point, Melton, noted that now more than ever, banking institutions like SVB and similar institutions need to work with founders and VCs to bring innovations to market. “One of the things I’m very fearful of is that we get into an environment where people are risked off and retreat right when we need people to be actually leaning in more now than ever.” Larger banks will be happy to take the money–according to Kruze Consulting, an accounting firm that focuses on startups, about half of its clients that recently changed banks moved to JPMorgan Chase–but will a JPM take up ongoing startup risk? 

Does this begin to feel like Catch-22? (Apologies to Joseph Heller) Or health tech back around 2006-2010?  

One comment towards the end hit home for this Editor, having seen it way up close. Too many founders 1) have an idealistic view of the business they started and can’t separate from it, and 2) there’s a time to exit stage left and do something else with your life. One company that may pull it off in its changeover of CEOs is Oscar Health. I’d add that no CEO should be in that seat for more than 5 years, even in well-established, doing-well companies–much less coming close to dying in place as CEO after 25 years as happened recently at one large, publicly traded payer. Very important: every company should have a succession/coverage plan operative from Day 1, because Stuff Happens. The full article in MedCityNews here. Another shorter take, same panel, in Mobihealthnews.

The next chapter for SVB is that after a Federal bailout (and the realization that the SF Federal Reserve was wearing blinders when it came to watchdogging the bank’s health and solvency), it was mostly sold this past week to First Citizens Bank & Trust Company, a regional bank from Raleigh, North Carolina. SVB’s UK holdings were bought much earlier by HSBC. Also up for sale: Leerink Partners, an investment banker for health care and life sciences companies, that was rebranded as SVB Securities. Jeff Leerink, the founder who still heads it, is trying to get it back through a management buyout. WBUR

A more ViVEcious view of the meeting is over at HISTalk, The most substantive sessions this attendee heard were the opening Tuesday by Micky Tripathi, the National Coordinator for HIT at the Office of the National Coordinator (ONC) for Health Information Technology, and a presentation by Shiv Rao (Abridge) and Joon Lee (UPMC) on generative AI. The downside was that most of the Tuesday presentations came off like walking ads, the CHIME track was separate with some members-only, and that exhibitors got little value by staying over Wednesday as the crowd vanished to 20%. Money quote: “ViVE shoots for a vibe of youth, energy, innovation, and fun in its branding, themes, opening remarks, and evening entertainment. Sounds great until you remember that your ticket cost nearly $3,000.” Ouch! That stings! Well, nobody’s perfect. A successful 2023 means that ViVE will be landing in Los Angeles 25-28 February 2024. For many, it’s on to HIMSS23 in a couple of weeks.

Is Oracle Cerner’s VA EHRM implementation going to be tied up? Senate Veterans Affairs Committee says yes–with two oncoming trains (bills).

March 31, 2023 | by

Both Republican and Democrat Senators proposed separate bills on Wednesday with the same purpose–fix the implementation of Oracle Cerner’s EHR in the VA and increase oversight. Members of the Senate Committee on Veterans’ Affairs want to put the brakes on the entire implementation process until at minimum certain requirements have been met and the EHR modernization (EHRM) works at a level surpassing the existing VistA system.

The Republican bill drafted (without number yet) is being introduced by Bill Cassidy, MD (R-LA) and Jerry Moran (R-KS), joined by John Boozman (R-AR), Mike Rounds (R-SD), Thom Tillis (R-NC), Marsha Blackburn (R-TN), Kevin Cramer (R-ND), Tommy Tuberville (R-AL), Jim Risch (R-ID), Mike Crapo (R-ID), Mike Braun (R-IN) and Steve Daines (R-MT). In its present form, the six-page bill calls for a complete halt to implementation until the following is achieved:

  • Meeting improvement objectives in uptime and system-wide stability as defined by the VA Secretary and staff
  • Submission of a 30-day report to the Senate VA Committee systems that includes reporting on Department of Defense networks within the Federal electronic health record environment, training, and workflows for facilities of differing complexity
  • Quarterly reports on readiness and deviations
  • Individual readiness certifications for each facility receiving the Oracle Cerner EHR

Overall, the draft reads like an interim reform measure that is at the opposite pole from their colleagues in the House, who’d like to call the whole thing off and terminate the EHRM in H.R. 608 [TTA 1 Feb].  Bill Cassidy’s office release is short and to the point

The Democrat bill, not yet drafted but promised in a release from Patty Murray’s (D-WA) office really brings out the pitchforks and pitch. At length. With lots of quotes from Senators Murray, Chairman Jon Tester (D-MT), and Sherrod Brown (D-OH) designed to make hay with their states. (But will they put the needed fear in Oracle’s Mike Sicilia and Larry Ellison, two men who could buy and sell these senators?) Here’s a sample of the fire: 

  • Develop clear metrics to guide whether and how VA should go forward with the new EHR at additional VA facilities and require additional resources to support those facilities;
  • Require VA and Oracle Cerner to fix the technology features connected to the health safety and delivery issues found in VA’s March 2023 Sprint Report;
  • Not move forward with the new EHR at other VA health facilities until the data at the existing five facilities demonstrates an ability to deliver health care to veterans at standards that surpass metrics using VA’s VistA system or that meet national health operations standards as determined by the Under Secretary for Health;
  • Appoint a lead senior negotiator and leverage other federal agencies and independent outside experts to offer advice and strategies for managing aggressive EHR contract negotiations with Oracle Cerner to protect taxpayers and veterans;
  • Develop an alternative “Plan B” strategy for a new EHR in the event Oracle Cerner will not agree to new contract terms that protect taxpayers and increase accountability and penalties for poor performance or when VA data shows it cannot get the technology to work to serve veterans efficiently and safely

The normal Senate processes may unify these bills and make them bipartisan–a good start. But this ‘great deliberative body’ needs to move quickly as the entire VA health system is at stake. (This Editor notes that the Ellisonesque crowing about the transformation of healthcare has been notably absent these past few months, perhaps absorbed by the troubles, the Cerner layoffs, and reputed difficulties with Cerner health system clients.) Hat tip to HISTalk today.

Also on Wednesday, the House, which holds fiscal purse strings, is considering capping the VA’s budget at fiscal 2022 levels. Secretary Denis McDonough at a House Appropriations Committee meeting stated that there would be a $345 million shortfall within the VA Office of Information Technology (OIT) affecting the EHRM, as well as a $465 million shortfall in infrastructure and technology funding regarding major construction elements. In OIT, the EHRM is the third largest outlay with cybersecurity the largest. The FY2024 proposed budget has $6.4 billion for the OIT’s ongoing modernization and veteran IT services, with $1.9 billion for the EHRM alone. FedScoop

Mid-week corral: CVS closes Signify Health; Bertolini to lead Oscar Health; ViVE highlights from Wellvana, AWS, Everly Health; Better Therapeutics lays off 35%, CoverMyMeds 815

March 30, 2023 | by

CVS closed its acquisition of Signify Health today. This $8 billion transaction ($30.50/share) adds a network of more than 10,000 clinicians nationally, including the 170-provider Medicare ACO group originally organized by Caravan Health. It was beneficial to the major shareholder group, New Mountain Capital and their investors, which owned 60% of Signify and have a tidily profitable exit. The CVS press release stated that Signify would continue to operate as a ‘payer-agnostic’ business within CVS Health. As earlier stated, Kyle Armbrester, Signify’s CEO, will continue to lead the business. Also Healthcare Dive (updated)

The bulldog engineer of the CVS-Aetna merger, Mark Bertolini, now tapped to head Oscar Health. Bertolini, the former chairman/CEO of Aetna (center), in the past three years since his unwilling (according to him) departure from the CVS board of directors [TTA 6 Feb 2020], has not been idle. From 2022, he was co-CEO of asset management firm Bridgewater Associates, and in the last 18 months, he has been a ‘strategic advisor’ to insurtech Oscar. Now he moves to the CEO office effective next Monday (3 April) and joins their board. Co-founder Mario Schlosser (left) steps back from CEO to president of technology, reporting to Bertolini, and joins the board. Joshua Kushner, a co-founder and major investor (Thrive Capital), as well as executive chairman of the board, is on the right in the leadership picture supplied with the Business Wire release.

Once a skeptic of insurtechs like Oscar, Bertolini by his statements is now a true believer. In a call with investors on Tuesday, he cited their technology that included digitization, individualization, and personal care. A major factor is that consumers are more comfortable since the pandemic with telehealth. Oscar was a pioneer in offering free telehealth with their plans.

Investors have pressed Oscar to get over to a profitable state by next year. Oscar has not been profitable since its 2012 founding by Schlosser, Kushner, and the long-departed Kevin Nazemi. In the time since Bertolini joined as an advisor, they have largely shed their Medicare Advantage business and concentrated on their individual market and ACA plans, which have seen huge growth along with overall record enrollment on the exchanges. But Oscar paused on new ACA signups in Florida and hauled back its glitchy and over-featured +Oscar tech platform [TTA 24 April 2021], which is now available unbundled. 2022 financials were substantially in the red with a loss of $610 million on revenue of $4 billion (Oscar release). However, the news of Bertolini moving to Oscar’s helm was met with a round of investor confidence. Share price moved from Monday’s close of $3.41 to $6.70 midday Tuesday and has largely stayed in the $6.00 range. Oscar release on Business Wire, FierceHealthcare, Healthcare Dive, YahooFinance

ViVE, the digital health spinoff of HLTH, concluded its annual meeting in Nashville this year with an announced attendance of 7,500, including 650 startups, 425 investors, and 330 hosted buyers. The energetic start on Sunday was sadly marked on Monday with the shooting at the local Covenant School where six were killed. Impressions from an anonymous attendee to HISTalk today were that most of the sessions were panels (which gets more people up front, but can be sunk by a dull moderator) versus individual speakers (who can either be fabulous or duds). Content could have been more inspiring and, as usual, many speakers are throwing out headlines for those in media to write about. This Editor has read relatively little so far but more will come this week. Highlights so far:

  • Nashville-based Wellvana Health, which provides technology for healthcare providers and health systems to implement value-based care, raised a stunning Series B of $84 million for a total raise of $140 million. Heritage Group and Valtruis co-led the investment with participation from Memorial Hermann Health System. The funding will be used to expand from its present 22 states and over 100,000 lives. Their current agreements are with multiple payers, Medicare Advantage, and three national contracts for the 2023 ACO REACH model. FierceHealthcare, Mobihealthnews
  • Everly Health is moving beyond its current home testing kits to integrate lab testing with telehealth. This will cover certain conditions, such as COVID-19, flu, sexually transmitted infections (STIs), urinary tract infections (UTIs), thyroid, weight management, and men’s and women’s health. Cost is out of pocket $59 and if insurance covers, $10-50. In its weight management program, Everly will offer GLP-1 drugs, a class of drugs that includes Ozempic and Wegovy, to qualified patients. FierceHealthcare
  • Amazon Web Services (AWS) announced 23 startups for their 2023 Healthcare Accelerator: Global Cohort for Workforce. This year’s accelerator cohort is finding solutions for the healthcare industry in three core areas for healthcare employees: retention, deployment, and training. More on the accelerator here and the list here, including 10 from the UK. FierceHealthcare
  • Health systems are demanding a quick ROI on their digital expenditures, according to a panel of CIOs and digital officers from Providence, Allegheny Health Network, Sutter Health, and Adventist Health. It should not be a surprise to anyone that they are looking for returns in the next year or so–yet are pushing forward with investments because of inflation and increased workforce pressures. FierceHealthcare

Another digital cognitive behavioral therapy trims. Better Therapeutics is reportedly releasing 35% of staff, or 15 people, in yet another cutback of another company in the formerly high, wide, and flying sector. Better specializes in prescription digital therapeutics to address cardiometabolic diseases such as diabetes. Better SPAC’d in 2021 [TTA 8 April 2021] hitting the market at $10.25 and currently trading on Nasdaq at about $0.60. According to their SEC filing, they are trying to stretch remaining cash to reach potential FDA marketing authorization and subsequent commercial launch of BT-001 in Type 2 diabetes. Better is in the same jam as competitors Pear Therapeutics and Akili Interactive, both paring back to the bone and looking for buyers, according to Mobihealthnews. Also LayoffsTracker. 

CoverMyMeds, a division of healthcare giant McKesson, is also laying off 815 by mid-April and closing its Scottsdale, Arizona office. The Arizona office has the company’s patient support center; workers there will be given the option to move to Columbus, Ohio. Other offices including Columbus (Franklinton) and Atlanta will be condensed and space leased out. CoverMyMeds automates the prior authorization process for medications for payers. What is unusual is that the company, bought for about $1 billion in 2017, accounted for $1.1 billion of McKesson’s $70.5 billion in 2022 revenue, and $136 million in McKesson profit–the most profitable of their four divisions. Columbus Dispatch, Layoffs.fyi

Short takes and updates: FTC may not be done with CVS-Oak Street, VistA moves to cloud–why?, Oracle Cerner lays off 10%. at least

March 24, 2023 | by

The CVS-Oak Street Health buy may be finalized on paper for $10.6 billion, but it’s not a done deal. While the papers are signed and the preparations may be underway for a closing at the end of the year, it’s still subject to Federal and state approvals [TTA 9 Feb]. This week, Senator Elizabeth Warren, a one-time presidential candidate who cherishes her bully pulpit as a member of two finance committees (but chair of none), sent a letter (office release) to the Federal Trade Commission (FTC) to “carefully scrutinize” the deal.  In addition, she urges FTC to “retrospectively review similarly consummated deals and challenge in court any mergers that have reduced competition in violation of antitrust laws”. FTC is a prime candidate for a nudge because their newly activist stance needs little encouragement for the commissioners to pull out the cudgels.

CVS may very well find itself challenged as well by the Department of Justice (DOJ)–a more complicated action since it requires preparing a case, going to Federal Court, filing papers, and convincing a judge that it involves true antitrust issues worthy of further examination. CVS  may well be spending time in Federal and state courts before the closing, and likely expects it. Even so, DOJ appears to be positioned on the sidelines. There is a memorandum of understanding between DOJ and Health and Human Services sharing concerns about antitrust.  DOJ may also be tired of complicated, labor-intensive suits like UnitedHealth Group and Change Healthcare that wound up in favor of the defendants and with egg on DOJ’s face [TTA 23 Mar]. Unlike DOJ, FTC has more latitude and they have been using it. Thus Sen. Warren’s appeal is a strategic one. FierceHealthcare

Yet where does it end? Horizontal integration or consolidation–businesses buying similar businesses–has obvious limits. But vertical integration–owning part or all of the care continuum or means of production–is less obvious. It can make healthcare more available and effective. But it may reduce competitive opportunity and create a ‘one or none’ business model. That is where the Feds tend to step in unless it’s a bank (of late). 

VistA’s new tune is ‘I’m Still Here’–in the cloud. Yes, VistA, facing phase-out at the VA, is moving its system to the cloud, and has major reasons why. Reginald Cummings, the deputy chief information officer for VA’s infrastructure operations,  explained during a panel discussion of the Association for Federal IRM (AFFIRM) that the ‘lift and shift’ (the hip IT term for this) was done for two things: to move it away from being multiple systems running at each facility, and to ‘containerize’ it,  packaging the application together with the resources it needs to operate, such as the operating system itself, the storage and interfaces. This improves security and portability. The real news is that VA is now admitting that it will take years to transition to Oracle Cerner. According to Daniel McCune, a VA software executive, VA may need VistA for another 10 years. (Perhaps 15?) Supposedly, this isn’t modernization…but it does keep a legacy system running indefinitely, like the Energizer Bunny, which would 1) suit many at VA, and 2) perhaps avoid dealing with the Oracle Cerner issues. No mention is made in the article if this makes transitioning to Oracle Cerner easier, which this Editor finds odd. The chair of the panel discussion, Tom Temin, is also the article author on Federal News Network. As some of our international Readers know, VistA is used in countries such as India as open-source software (WorldVista.org).

And speaking of Oracle Cerner, the layoffs are on. Rumors have it as high as 10% of Oracle Cerner’s global workforce of about 28,000. It is surmised that at Cerner’s former HQ sites in Kansas City, the layoffs may be several hundred, though no WARN notices for group layoffs have been filed with Missouri. These notices are required when layoffs are at least 50-499 employees if they represent at least 33% of the total active workforce, excluding any part-time employees; or 500 or more employees (excluding any part-time employees) in which case the 33% does not apply. (DOL WARN Act guide) The Cerner workforce in the KC area was about 12,000 at one point. Severance packages were reported to be four weeks plus one week per year of service.

In addition, Oracle employees who were working from an Oracle office but transitioned to remote work during the pandemic must return to in-office work at their previous campus. They will be notified by managers in the next 30 days whether they will be full time in office, ‘flex’ or hybrid without an assigned space, or continuing as remote. Perhaps this is why WARN notices were not filed. Many workers moved out of area, and refusal to return to office can be called quitting. HISTalk, Becker’s

Week-end update: Breaking–Theranos lab director suing Hulu, Disney for defamation; ‘green shoots’ for SonderMind, Cognito, Vital, MedArrive; 3 in Asia; Telstra Australia’s new CTO

March 24, 2023 | by

Key Theranos prosecution witness suing Disney and Hulu for misrepresentation and defamation. It’s not only the FTC but also Adam Rosendorff, MD, the former lab director for Theranos who quit in late 2014, who is fighting against misrepresentation, in this case a fictionalized portrayal of the lab director character. l’affaire Theranos was lightly fictionalized in the docudrama ‘The Dropout” that ran on Hulu in 2022. Dr. Rosendorff is suing both Hulu, its corporate parent, Disney, plus other listed producers, in a New York State Supreme Court lawsuit (link and PDF) for defamation. The summons was filed in New York County (Manhattan) Thursday.

While his name was not used, the lab director named ‘Mark Roessler’ in “The Dropout” was portrayed, according to the summons, as unethical and unfit. He was “shown as covering up Theranos’ fraudulent scheme, thereby endangering patients’ lives … and as otherwise unfit to practice medicine,” “falsely portrayed as a perjurer, a criminal, and of being completely unfit to practice his profession.” In the docudrama, Roessler orders the destruction of damaging lab results, falsifies records, and engages in dishonest behavior. The reality was that Dr. Rosendorff testified against both Elizabeth Holmes and Sunny Balwani in their trials as an invaluable prosecution witness, detailing the failures of the lab tests in his testimony and affidavits [TTA 1 Oct and 6 Oct 2021]. He quit Theranos on these issues and more after 18 months when Holmes and Balwani refused to correct them. “Both the media and defendants’ reckless disregard is sufficient evidence of the malice which a public figure must show to establish claims for defamation.”

Being a whistleblower ain’t for sissies. Being tagged as part of Theranos’ demise and years in endless legal proceedings broke him professionally and fractured him mentally, as revealed after Holmes’ conviction. It became grist for yet more defense appeals that failed [TTA 20 Oct, 26 Oct 2022]. Reuters, New York Post

A (remainder) sale, partnership, and funding roundup–a few green shoots of spring

SonderMind buys out the remains of Mindstrong. The deal is for the remainder of Mindstrong’s tech assets and about 20 related staff. Price was not disclosed. Mindstrong ceased operations as of 10 March and announced they would lay off 100+ employees including the CEO and CFO no later than 15 April according to their filed WARN notice. It raised over $160 million since 2014 including a $100 million Series C in 2020. SonderMind is also in virtual mental health, assessing potential patients, matching them with a therapist in their state, who will see the patient virtually or in-person. According to SonderMind, Mindstrong’s tech will add to personalized care journeys, clinical notes templates, and improved measurement-based services.  SonderMind has had its own series of layoffs, with a 15% cut late in 2022. The deflation of telemental health continues. Mobihealthnews, Digital Health Business & Technology

Neurotech company Cognito Therapeutics raised $73 million in a Series B. It was led by FoundersX Ventures, adding new investors Starbloom Capital, Alzheimer’s Drug Discovery Foundation, WS Investment Company, and IAG Capital. Total funding is now $93 million. Cognito has developed an external neuromodulation device for neurologically degenerative diseases. It uses sensory stimulation to evoke gamma oscillations, which are believed to play a part in memory operations. It is concentrating on improving cognition and memory in Alzheimer’s Disease early-to-mid-stage patients. Cognito is being investigated as part of the HOPE study for Alzheimer’s Disease.  It received FDA Breakthrough Device Designation in 2021 and has completed a Phase 2 trial. Mobihealthnews, Business Wire release

Vital, a patient experience software developer, raised $24.7 million in a Series B. The funding was led by Transformation Capital, with support from Threshold Ventures, strategic health system investors and Vital CEO/Mint.com creator Aaron Patzer. Total funding is now over $40 million. Vital provides real-time patient updates and messaging services for patients and families admitted to hospitals and EDs, as well as follow-ups such as appointments. Business Wire release

MedArrive, an in-home care provider, is partnering with Ouma Health, for maternal-fetal care of women on Medicaid coverage. MedArrive deploys a field provider network for in-home care including testing, assessments, SDOH, and extension of provider services. The technology includes a fully integrated care management platform. Ouma Health is a maternal-fetal telehealth service including behavioral health. Release

And some Asia-Pacific updates…

In Vietnam, online pharmacy Medigo received $2 million in Series A funding, led by East Ventures, with participation from Pavilion Capital and Touchstone Partners. Intellect, a telemental health startup based out of Singapore, received undisclosed funding from global healthcare provider IHH Healthcare for its regional expansion. In India, EHR startup DocPlix raised Rs 5 crore ($600,000) in a pre-series A funding round led by Eris Lifesciences. Mobihealthnews

In Australia, Telstra Health’s new CTO is Farhoud Salimi. He joins in April from eHealth NSW where he held the position of Executive Director, Service Delivery (CTO) among others in a 15-year tenure. Mr. Salimi replaces Russel Duncan, who retired at the end of last year. Telstra release, Mobihealthnews

DOJ drops appeal to block UHG-Change; more hints that FTC will be hunting big game with Amazon

March 23, 2023 | by

DOJ has walked away from trying to stop the already-closed UHG-Change Healthcare merger. The US Department of Justice, which had appealed in November the District Court of DC approval in late September of UnitedHealth Group’s acquisition of Change Healthcare, on antitrust grounds, decided ‘enough egg on face’ and dropped its appeals court filings on 21 March. DOJ did not respond to Reuters’ report. Change is being integrated into OptumInsight and will be kept separate from the health plans. The DC District Court ruling found that DOJ did not conclusively prove its allegations of antitrust and loss of competition in services to hospitals and other providers. Statements from UHG’s competitors such as Cigna, Aetna, and Elevance (Anthem) that the acquisition would not lead them to ‘stifle innovation’ also weakened the DOJ’s case. Had the appeal been successful, it would have forced separation of Change Healthcare’s businesses, which are being quickly integrated into OptumInsight.  Healthcare Dive, Becker’s. Also TTA 4 Oct and 22 Nov 22.

Elsewhere in DC, it’s hunting season for the FTC, and its sights are fixed on Big Game called Amazon. POLITICO confirmed the speculation (or gave advance notice) [TTA 3 Mar], that FTC was building a multi-layered case beyond the Amazon-One Medical buy and warnings about failing to maintain consumer privacy [TTA 3 Mar] to include multiple practices. The POLITICO report indicates that there are at least six ongoing investigations by the FTC’s competition and consumer protection teams, with three apparently near the boiling point of action:

  • Blocking the acquisition of iRobot, famous for its Roomba robot vacuums. Amazon’s $1.7 billion acquisition has stalled with FTC rumoring action and Amazon apparently shutting down any further information. It does not have UK or EU approvals, which gives the FTC some more time to build a case. iRobot is the largest maker of robot vacuums. An acquisition would be expected to shut out competitive manufacturers marketing on Amazon such as Samsung. Their report indicates that FTC’s staff attorneys are leaning toward suing to stop the deal. Court action is expected in the next few months or sooner. 
  • Privacy investigations involving data security from their Ring camera/security system business and the Alexa voice assistant. The Alexa investigation also involves potential violations of the Children’s Online Privacy Protection Act. iRobot, Ring, and Alexa also tie into another FTC concern that Amazon is cornering the market on connected home devices.
  • Retail operations. These possibly could be around bundling services through the Prime subscription business and how competitor data is used on the Amazon platform to ‘outmuscle’ them. There is also a deceptive advertising probe around the use of the “Amazon Choice” label for certain products, including pay-to-play practices.

There is also scrutiny of how Prime and other Amazon services entice customers in with offers for expensive subscriptions, then make it extremely difficult or opaque to unsubscribe. This deceptive practice is called a “dark pattern”. Stay tuned.

Theranos update: Holmes, Balwani reprieved on surrender–for now–and Theranos’ creditors try to claw back $25M

March 22, 2023 | by

Both Elizabeth Holmes and Sunny Balwani enter the final stages of legal actions before their respective trips to Club Fed and what used to be called the ‘rock pile’. Between late last week and today, one of Theranos’ late leaders got some additional days, weeks, perhaps a month of freedom, while the other is left hanging until April. Surprisingly, Theranos, the late company, is not actually dead as the proverbial doornail, at least as creditors are concerned–it’s as simple as ABC.

  • Sunny Balwani’s surrender date, set for 2 pm PT Thursday 16 March, was delayed hours before his surrender when lawyers filed an appeal of Judge Davila’s 9 March ruling denying his request to remain free while appealing his conviction. It automatically triggered the stay while the Ninth Circuit Court of Appeals considers the appeal. Timing on this is not known.
  • Balwani’s defense also appealed to change the Bureau of Prisons’ ruling sending him to the Atlanta Federal penitentiary. This prison has been dogged by scandals, security lapses, and prisoner abuse allegations. As of now, Balwani’s Federal prison will be Terminal Island near San Pedro, about 30 miles from Los Angeles. Judge Davila’s recommendation was Lompoc in Santa Barbara county, about 250 miles from San Jose. It is not known why the BOP declined the judge’s recommendation, nor why the reassignment to Terminal Island, which once hosted Al Capone. CBS News
  • On Friday, Holmes was in court to delay her 27 April surrender to the Bryan, Texas Federal prison, pending her appeals. Legal observers believe this is unlikely now based on Judge Davila’s decision on Sunny Balwani.
  • Before the court session, a man in the gallery attempted to serve her with a paper demanding repayment of two overdue promissory notes she signed while CEO. The now-disclosed December suit by Theranos ABC, an entity set up by creditors, was filed in Superior Court of California in Santa Clara County. It tagged her with repayment of three notes totaling over $25 million, the first two overdue:

August 2011 in the amount of $9,159,333.65, originally due 2016 and extended by the board for five years, now overdue 
December 2011 in the amount of $7,578,575.52, originally due 2016 and extended by the board for five years, now overdue
December 2013 in the amount of $9,129,991.10, due 2018, extended for five years and due in December

According to the complaint, “Theranos ABC has demanded payment of Promissory Note #1 and Promissory Note #2 from Holmes, but Holmes has failed to pay any amounts on account of Promissory Note.”  CNBC, Guardian

  • This would be in addition to whatever is decided on restitution. As we noted on 9 March, “the prosecution is trying to establish that Holmes’ restitution should be in the vicinity of $878 million, up from an earlier estimate of $804 million. This contrasts with the $381 million that Judge Davila used for sentencing purposes, but under Federal law the guidelines for the latter differ. The prosecution is calculating the full loss of the investors “directly harmed” by Holmes’ criminal conduct.” However, Holmes’ defense is arguing that she actually owes nothing because 1) her crimes didn’t cause the collapse of Theranos and 2) that the prosecution had not shown that the investors “relied on the offense conduct when deciding to invest.” Both this and the appeal will be decided by Judge Davila in early April.   Fox News

Whether Holmes or Balwani will be able to pay even small amounts to the creditors or those who suffered losses due to the Theranos fraud remains doubtful. Holmes is not married to her fiance, Billy Evans, and apparently is being supported by him and her family. Balwani may have some funds, but not $900 million. 

FTC takes off the gloves, v2: a walk on the technical side of ad pixel tracking

March 22, 2023 | by

FTC explains its actions versus GoodRx and Teladoc’s BetterHelp. If ad trackers leave you a little “pixelated”, this FTC blog (who would have thunk?) is a decent explanation of what ad trackers, a/k/a third-party tracking pixels, do. They’re not evil, as some of the FTC statements would have you think, and have legitimate uses in tracking how your website pages are being used (and by whom). But GoodRx and BetterHelp in particular went too far in information gathering, sloppy handling, and monetizing customer information with third parties. 

  • Pixels, once tiny images, are now extensive bits of JavaScript or HTML code that send information back to the owner of the page they’re on. Consumers are of course totally unaware of their use.
  •  These codes can send back basic, non-identifiable, and useful information to marketers, such as pageviews, clicks, and interactions with ads or with their pages.
  • Unfortunately, code can be written to send back far more detailed information back to marketers, such as names, answers to questionnaires, email addresses, financial information, and more. Some of this can be hashed (a form of masking) but can be decoded. This is potentially sensitive information that needs to be handled carefully and with the assumption of confidentiality. 
  • As mentioned in our TTA articles, this information can be monetized by companies and provide an additional revenue stream. This type of information has value to ad networks (Apple, Microsoft, Google, Meta etc.), data brokers, social networks (Facebook, TikTok), advertisers, and others. 
  • Neither site asked permission from users to retain information nor to use it for third-party ad targeting.

The FTC blog then goes on to discuss their concerns and where FTC will go even more extensively into areas such as consumer harm and how companies manage the data. You don’t have to be a HIPAA-covered entity to fall under FTC’s purview–just capture consumer health data then share it with third parties or make deceptive representations.

Digital health companies are on notice to be concerned about yet another Federal three-letter agency. Expect more actions by FTC beyond GoodRx (getting off lightly at $1.5 million) and BetterHelp (dinged for $7.8 million which will somehow be returned to consumers). 

Week-end roundup: Owlet in rebuilding mode including FDA submissions, Zus Health raises $40M, SpectrumAi’s autism therapy $20M Series A

March 18, 2023 | by

Owlet Baby Care, developers of a baby sock health monitor (that TTA has followed since 2013!), is trying its best to pivot to profitability. After going public via the then-popular-like-hot-muffins SPAC route in early 2021, then being forced to pull its original Smart Sock off the market in November 2021 by the FDA due to medical device claims without 510(k) marketing clearance [TTA 16 Feb 22], it spent the first half of 2022 introducing the new Dream Sock and Dream Duo at retail, then in second half dramatically cutting back marketing spend and staff. Their 2022 revenue of $69.2 million dropped 8.7% from 2021’s $75.8 million in 2021, but operating expenses increased 18.7% for a net loss of $79.3 million last year. After last August’s layoffs, the company now has fewer than 100 people compared with 227 earlier in 2022. Another change in strategy: after spurning the FDA and the medical device clearance process before the SPAC, in October they filed for an FDA 510(k) for BabySat, a prescription device to alert on baby heart rate or blood oxygen saturation falls out of a prescribed range. In December, FDA accepted a de novo submission for an enhancement to Dream Sock that provides heart rate and oxygen notifications in addition to sleep monitoring tools (release). In February, it raised a $30 million private placement financing of convertible preferred stock.  Mobihealthnews, Owlet Q4/FY 22 earnings release, financing release

Two fundings of note even as Silicon Valley Bank and Signature Bank exit to the Bank Graveyard…

Point-of-care shared data platform Zus Health raises $40 million. Financing was raised from JAZZ Venture Partners, F-Prime Capital, Maverick Ventures, and Andreessen Horowitz (a16z). Zus Health is led by digital health veteran Jonathan Bush, founder of athenahealth, which he departed in 2018. The financing will be used to add new data sources, build workflow and referral tools, and introduce integration pathways so providers can use external patient data. Zus also announced a partnership with primary care EHR/tech company Elation Health to integrate the Zus Aggregated Profile to enable real-time access of expanded patient records from hospitals, clinics, labs, and pharmacies. Release, Mobihealthnews

SpectrumAi’s Series A raised $20 million from CVS Health Ventures with participation from Cobalt Ventures, and follow-on investments from seed investors F-Prime, Frist Cressey and Autism Impact Fund. SpectrumAi focus is to improve therapies in use for autism. Its Twyll EHR uses applied behavior analysis (ABA), a therapy used with autistic patients, plus Patterns, its network analytics platform, to improve data capture and objective measurement of ABA therapy. According to the release, “Autism is the fastest growing developmental disability in the United States driving unprecedented growth in the ABA industry. ABA is intensive and long-term therapy, averaging up to 25-40 hours each week. Measurement of ABA therapy’s efficacy to date has been limited to subjective parent and provider surveys.”

VA EHR update: four deaths traced to Oracle Cerner EHR; four safety issues identified by VA EHRM Sprint Team

March 18, 2023 | by

The Senate Veterans Affairs Committee is unhappy. Very unhappy. With good reason. The ongoing problems with the Department of Veterans Affairs (VA) rollout of the Oracle Cerner EHR multiply. There were six instances of ‘catastrophic harm’ attributed to a feature of the EHR modernization program since the rollout, four of which resulted in the death of a veteran patient. According to information given to the staff of Senator Richard Blumenthal (D-CT), one fatality was at Spokane’s Mann-Grandstaff VA Medical Center and the other three died as patients in the VA Central Ohio Healthcare System, launched in April 2022. The nonfatal cases happened to veteran patients in the Inland Northwest (also Spokane).

While Senator Patty Murray (D-WA), the chair of the powerful Appropriations Committee, threatened to withhold further funding for the EHR migration, Senator Jon Tester (D-MT) is not fed up enough to be in favor of terminating the contract, as the House Veterans Affairs technology subcommittee head, Rep. Matt Rosendale (R-also MT), proposed in January in H.R. 608, [TTA 1 Feb] now in the House Subcommittee on Oversight and Investigations. The VA has paid Oracle Cerner $4.4 billion on the contract so far, with a refund of $325,000 paid as compensation for ‘incomplete technology and poor training’. Obligations through the contract are at least $9.4 billion. It comes up for renegotiation on 17 May and VA’s contracting officer, Michael Parrish, has testified he will push for a more favorable contract

The Government Accountability Office is also unhappy. The GAO, which calculated the above obligations, told the committee that the EHR contract “as currently written, has not sufficiently motivated Oracle-Cerner to perform better,” and that the current terms of the contract are “not necessarily in the best favor of the government in this particular case.” The GAO surveyed VA users of the Oracle Cerner EHR and found that only 6% agreed the system enabled quality care. Some of this may be reluctance to change technologies after 40 years of VistA, as Senator Marsha Blackburn (R-TN) pointed out in what this Editor expects is a ‘devil’s advocate’ statement, but there is also a fatigue factor–it’s the fourth attempt at replacing VistA.  Federal News Network 16 March, Spokane Spokesman-Review, Becker’s HealthIT

The VA’s EHRM Sprint Team identified four main issues in the EHR Modernization Sprint Report (PDF) released on 10 March.

1) Unknown queue and related issues (including medications)
2) No show and cancelled appointment orders failed to route to scheduling queues
3) Add Referral button not creating visible external site referral for worklist action
4) Usability issues with the EHR application, allowing providers to order procedure charge codes for imaging without ordering the actual clinical imaging

There were 30 safety issues examined by the team (pages 6-7) of 450 submitted. The report also identified EHR workarounds for VA medical centers that conduct medical research, an issue that surfaced publicly with Ann Arbor Healthcare System in delaying their go-live until 2024 [TTA 1 Mar]. They also examined the Data Collection Workbooks (DCW) process to better ensure consistency with VA standards through moving to a standardized approach. The VA is developing an Enterprise Site Readiness Dashboard for determining if a site is ready to migrate their EHR. Federal News Network 13 March

Mid-week roundup: TytoCare’s Wheeze Detection clears FDA, OpenLoop telehealth’s $15M Series A, PointClickCare buys PatientPattern EHR, last info session for Health Wildcatters’ 2023 accelerator

March 16, 2023 | by

TytoCare receives FDA clearance for its lung sound monitoring algorithm. Wheeze Detection, which analyzes lung sound data for adults and children aged two and above, will be added to Tyto Insights for the remote diagnosis of developing lung conditions. The AI algorithm in Tyto’s decision support software analyzes their database of lung sounds against the patient’s, recorded by TytoCare’s stethoscope device, to determine if wheezing or other abnormal sounds are detected. Wheeze Detection was previously CE-marked for Europe. It’s an important addition as respiratory conditions account for 40% of their diagnoses over time through the TytoCare home-based telehealth + device diagnostic kit. Tyto Insights is part of TytoCare’s Home Smart Clinic, released last November, for at-home remote care targeted to providers and health plans. It includes Tyto Engagement Labs configured for each specific program and cohort that delivers on expected ROI and improved health outcomes. Tyto release

A substantial Series A round to OpenLoop. OpenLoop is a turnkey white-label telehealth with staff platform that targets two interesting segments: providers and digital health companies. Their $15 million Series A was led by Nava Ventures, with participation from new investors UnityPoint Health Ventures and PrimeTime Ventures, and existing investors SpringTide Ventures and ManchesterStory, adding to their existing $25 million in funding. Their network has 6,000+ certified clinicians across all 50 states, offers 30+ digital health specialties, and has capabilities in 15 languages. Also announced was the addition of a nationwide insurance payer network that allows clients to offer reimbursable services to patients instead of cash pay-only options, plus a payer coverage and revenue cycle management (RCM) service. Release

Senior/home care coordination platform PointClickCare acquires EHR Patient Pattern. Patient Pattern adds to PointClickCare’s position with long‐term and post‐acute care providers as well as with other high-needs populations with its EHR and care management platform that serves Medicare Advantage Special Needs Plans, ACO REACH participants, and PACE programs. Terms, timing, and management transitions were not disclosed. Release

And down in Dallas, Health Wildcatters is rounding up the dogies for its 2023 Accelerator. Their last info session on the application process is on 4 April from 2-3pm CDT. Their Accelerator is a three-month program, September-November, that includes only 8 to 12 startups. There’s intensive training, introductions to their 200-strong mentor and investor network (hopefully none from SVB or Signature Bank!), plus investment from Health Wildcatters. More information on the Accelerator here, registration for the application info session here, and 2023 application here. Final applications are due by 31 May.

News from ATA 2023: debate over DEA in-person prescribing requirement, winners of Telehealth Innovators Challenge, 2024 board chair announced

March 15, 2023 | by

The American Telemedicine Association’s annual conference, ATA2023, which wrapped two weekends ago, had some major debates, awards, and some board changes.

Special ‘listening’ session on DEA’s proposed changes on telemedicine prescribing of controlled substances. This would resume the in-person visit requirement for Schedule III-V non-narcotic controlled medications. A 30-day limit on a prescription would be permitted for a telehealth remote visit and prescription, but an in-person visit would be required during that period or thereafter before any renewal. The DEA proposed rule issued 24 February (draft here) includes allowing care to be delivered uninterrupted for 180 days after the end of the public health emergency (PHE) ending 11 May, but then requires an in-person physician visit. ATA opposes this new requirement for patients who were prescribed these medications solely during telehealth during the PHE (release 25 Feb). Public comment on the proposed rule is open for 30 days (27 March). A representative of the DEA was in the audience for the Monday 6 March discussion moderated by Kyle Zebley, ATA’s senior vice president of public policy. Other telehealth measures were extended for two years in last year’s passage of the 2023 Federal budget bill [TTA 4 Jan]. Healthcare Finance

Winners were announced for ATA’s Telehealth Innovators Challenge. The four categories and winners were:

Femtech and Women’s Health Winner: SimpliFed. SimpliFed is a virtual breastfeeding and baby feeding provider network that improves access to professional lactation support.

In-patient Care Solutions Winner: Great Speech. Great Speech provides speech therapy through a network of 200+ therapists and adds artificial intelligence (AI) technology and proprietary algorithms.

The Patient Experience: Clearstep Health. Clearstep guides healthcare consumers to the best next steps for care based on their symptoms, insurance, location and preferences via a virtual triage system set up for providers. 

Tools That Deliver Care: Strados Labs. The Strados Cardiopulmonary Platform, using the RESP Biosensor, captures wheezing, coughing, and other lung sounds plus respiratory dynamics, then to a clinician portal supported by machine learning algorithms.

SimpliFed also won the overall Judges’ Choice Award. Oshi Health, a virtual-first gastrointestinal care clinic integrating evidence-based medical care and behavioral health support into a convenient, high-touch, data-driven care model, received the overall People’s Choice Award. Release

Sree Chaguturu, MD, has been named Chair-elect of ATA’s Board of Directors for a two-year term starting May 2024. Dr. Chaguturu is executive vice president and chief medical officer, CVS Health. He has served on the ATA Board of Directors since December 2020. He will follow Kristi Henderson, DNP, CEO, MedExpress and senior vice president of the Center for Digital Health and Innovation for Optum Health, who is now Immediate Past Chair. Release

News roundup: Transcarent buys 98point6’s virtual care; Best Buy-Atrium hospital-at-home; Walgreens/VillageMD buys another practice group; WW-Sequence digital weight management; UKTelehealthcare events; 300 out at Color

March 9, 2023 | by

Enterprise health navigator Transcarent is buying 98point6’s virtual care platform and related assets. 98point6’s tech is a text-based virtual care platform that uses an AI chatbot to collect and relay health information to a provider. According to CEO Glen Tullman’s interview with Forbes, the assets picked up in addition to the tech include 98point6’s physician group, self-insured employer business, and an irrevocable software license in a deal worth potentially $100 million. This fits in Transcarent’s platform that works with large employers to steer their employees to higher quality, lower cost care settings based on actual users only in risk-based agreements, versus the more common per member per month care management model. 98point6 will continue in a leaner form, licensing its software to third parties, but out of the treatment business. Its major relationship is with MultiCare Health System in Washington state. 98point6 had raised over $260 million from 2015 through a 2020 Series E.  Mobihealthnews

Best Buy Health is providing telehealth equipment and installation to North Carolina-based Atrium Health’s hospital-at-home program. In the three-year deal, Best Buy’s Geek Squad will install peripherals based on the patient’s needs, transmitted through a Current Health telehealth mobile connectivity hub and using their software. Terms were naturally not specified, but Atrium is purchasing the devices from Best Buy. The Geek Squad services serve for both installation and retrieval after care. Atrium is paid via insurance including Medicare and Medicaid. Atrium, part of Ascension Health, has 10 hospitals in the program already and is aiming for 100 patients in the program each day. CNBC

VillageMD expands again, adds Starling Physicians in Connecticut. Starling has 30 primary care and multi-specialty practices, including cardiology, ophthalmology, endocrinology, and geriatric care. VillageMD’s total is now over 700 locations. Transaction costs were not disclosed. VillageMD has been on an acquisition tear, powered by Walgreens’ and Evernorth-Cigna funding for Summit Health, Family and Internal Medicine Associates in central Kentucky, and Dallas (Texas) Internal Medicine and Geriatric Specialists. HealthcareFinance, Healthcare Dive.

WW (the former Weight Watchers) has an agreement to acquire Sequence, a subscription telehealth platform for clinical weight management. Sequence is targeted to healthcare providers specializing in clinical care, lifestyle modification, and medication management for patients being treated for overweight and obesity. It also manages the navigation of insurance approvals. Terms were not disclosed, but Sequence since going live in 2021 serves 24,000 members and has a $25 million annual revenue run-rate business. WW is building out a clinical weight management pathway and intends to tailor a nutrition program for this segment. Release

UKTelehealthcare has an upcoming digital event, TECS Innovation Showcase 2 on Wednesday 15th March 2023 (10:30-12:30 GMT). Also, there are links to the webinars given during today’s event, TECS Innovation Showcase 1, January’s Analogue to Digital Transformation Update, and several more. Register for the 15 March event and links/passwords for previous events here or click on the UKTelehealthcare advert at the right and go to the Events page. These events concentrate on the analogue-digital switchover and TECS in the UK.

Color, a population health technology company that expanded into Covid-19 testing and later telemental health during the pandemic, is now laying off 300. Their CEO Othman Laraki confirmed in a post on LinkedIn (which seems to be a corporate communications trend) that this reflects decreased demand for Covid testing and the end of the public health emergency. Their future direction will be in distributed testing and telehealth for government programs and prevention tools for employers and large healthcare companies. The CEO’s post included a spreadsheet of the laid-off individuals including links to their LinkedIn profiles and desired positions, another corporate trend in addition to those laid off posting about it almost immediately. It seemed to be heavy on software engineers, data scientists, support leads, and product managers.

The company pivoted from genomics to public health with major Series D and E raises of $167 and $100 million respectively in 2021, totaling $482 million since start in 2014, and was valued at $4.6 billion by November 2021. It bought into behavioral health services with the acquisition of Mood Lifters, an online guided group support system, in 2022. The (happy) decline of Covid is affecting testing-dependent businesses across the board. Lucira Health, which had received a EUA for its combination Covid/flu testing, filed for Chapter 11 bankruptcy reorganization in February.  Beckers, Mobihealthnews 3 Mar, 27 Feb