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DOD-Military Health System (partnering with Leidos), then swerves to stating the obvious in kicking around poor old, outdated VistA that meets very different needs and a massive population at the VA, and ends with a tap dance around the Oracle Cerner EHR problems at the VA citing all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….donna.cusano@telecareaware.com

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).

Midweek news roundup: Optum exiting telehealth, laying off; Advocate Health selling MobileHelp; VA notifying 15M veterans re Change PHI breach, Oracle moving to Nashville–maybe? (updated)

Optum Virtual Care closing, staff layoffs in progress. Optum Everycare CEO Jennifer Phalen on an 18 April internal conference call announced that the unit would close. According to sources, some employees would have layoff dates in July. No further details were available on other layoffs or plans for integrating Virtual Care’s capabilities into other Optum units, except for generalities. “We are com­mit­ted to pro­vid­ing pa­tients with a ro­bust net­work of providers for vir­tu­al ur­gent, pri­ma­ry and spe­cial­ty care op­tions,” and “We con­tin­u­al­ly re­view the ca­pa­bil­i­ties and ser­vices we of­fer to meet the grow­ing and evolv­ing needs of our busi­ness­es and the peo­ple we serve.” a spokesper­son for Unit­ed­Health said to End­points, a biopharma publication from the University of Kansas which broke the story.

For Optum, this is the second shoe drop about layoffs and closures in less than two weeks. Reports from social media and layoff-specific boards indicated that thousands were being laid off, from their plans to urgent care and providers [TTA 23 Apr]. These were not confirmed by Optum nor by UnitedHealth Group. It’s not known if this unit’s closure was included in the total. 

The larger picture is that it is symptomatic of the sudden growth, then equally sudden consolidation, of general telehealth. Optum opened the unit in April 2021 as the pandemic entered year 2. Utilizing existing capabilities, UHG claimed it facilitated more than 33 million telehealth visits in 2020, up from 1.2 million in 2019. The number looks sky high but in that time of practices closing it was a free-for-all in telehealth–and ‘facilitating’ is a nebulous catchword that could mean a practice using Facetime, telephones, or an EHR/population health platform module. Commercial claims for telehealth have remained at 4 to 5% since (FAIR Health, Jan 2024). Even during the pandemic’s first year, telehealth claims hit a peak of 13 percent in April 2020 that dropped fast to 6% by August 2020. Well over 60% are for behavioral telehealth claims.

A leading indicator: Last June, Optum Everycare’s CEO from their 2021 start, Kristi Henderson, a former Optum SVP for digital transformation, departed to become CEO of Confluent Health, a national network of occupational and physical therapy clinics. It was about as far away as one could get from telehealth, digital transformation, and Amazon Care, her former employer that expired in 2022.

Apparently, UHG and Optum see no further need for a virtual care specialty unit, instead integrating it into plans and other Optum services. According to MedCityNews, industry analysts aren’t surprised. Both Amwell and Teladoc have had well-known struggles. The latest: Walmart, after investing millions into their unit that included full clinics and a virtual care service, also made news on 30 April that it is closing both. Also greatly on UHG’s mind: cleanup after the Change debacle, making Mr. Market happy, and the looming antitrust action by DOJBecker’s, Healthcare IT News, 

In another sign that healthcare investors are selling off ancillary businesses, Advocate Health is selling PERS provider MobileHelp. It “no longer fit the strategic priorities of Advocate Health” according to their 22 April audit report (see document pages 10 and 13) and was authorized last December.

Advocate, through its investment arm Advocate Aurora Enterprises, acquired both MobileHelp, one of the earliest mobile PERS, and sister company Clear Arch Health, a remote patient monitoring provider, in April 2022. Cost was not disclosed at that time but later was reported to be $290.7 million. The plan at the time was to combine both MobileHelp and Clear Arch with a senior care/home health provider earlier acquired by Advocate for $187 million, Senior Helpers. That company was sold in March to Chicago-based private equity firm Waud Capital Partners for an undisclosed amount. The MobileHelp sale is expected to close later this year. Buyer and price are not disclosed. The expected loss on the MobileHelp sale was figured into FY 2023 as part of an asset impairment write-down of $150 million, which Advocate said was “related to the expected loss on the sale of MobileHelp.” The PERS and RPM business is a largely consolidated ‘cash cow’ type of business that (Editor’s prediction) will be snapped up by another player like Connect America, Alert One, or a smaller player like ModivCare. Milwaukee Business Journal, Becker’s, Crain’s Chicago Business (requires subscription)

VA admits that some veterans may be affected by Change Healthcare data breach, PII/PHI disclosure. While Department of Veterans Affairs Secretary Denis McDonough at this time believes that “there’s no confirmation yet” that veteran data was exposed, the scope of the Change Healthcare breach has led VA to formally alert via email 15 million veterans and their families of the possibility. The email also included information “about the two years of free credit monitoring and identity theft protection” that Change Healthcare is offering to those affected by the attack. The VA maintains that the attack resulted in only a temporary delay in filling 40,000 prescriptions but did not cause “any adverse impact on patient care or outcomes,” according to a department spokesman. NextGov/FCW 26 April, 23 April 

In related news, HHS as of 19 April had not received any notification from Change Healthcare nor UHG. They are required to file a breach report as providers and also as covered entities. They have 60 days from the breach occurrence on 21 February to report, which is coming right up. Becker’s

If Larry said it, it must be true…assemble the moving boxes. At an Oracle conference in Nashville last week, Oracle chairman Larry Ellison said to Bill Frist of investment firm Frist Cressey Ventures that he planned to move the company to that city as “It’s the center of the industry we’re most concerned about, which is the healthcare industry.” It’s their second public Larry and Billy meetup in the last few months, the last in November at the Frist Cressey Ventures Forum where Ellison had previously touted Nashville. Ellison is investing in and building a 70-acre, $1.35 billion campus on Nashville’s riverfront. Oracle is currently HQ’d in Austin, Texas having moved in 2020 from Redwood City, California but with extensive facilities remaining in the state. Texas and Tennessee have one thing in common–a superior business climate. Both are long on lifestyle, though Austin is not as temperate (read, hot) as Nashville. What Nashville has that Austin doesn’t is being a healthcare hub. At least in Ellison’s view, healthcare is where it’s at and so is Nashville. So as long as he’s running Oracle from his manse on Lanai, Oracle does what Larry says. Healthcare Dive, Healthcare IT News, The Tennessean

More fun facts about Larry Ellison and Nashville: David Ellison, his son, is founder of Skydance Media, a major Hollywood production company (Mission: Impossible and others) and negotiating a zillion-dollar merger with Paramount Pictures. David’s wife is a singer trying to make it in Music City and they have a home there. Kind of like the age-old trend of moving the HQ near where the CEO’s living. On moving the HQ to Nashville from Austin, this would affect perhaps 2,500 workers based there currently. Most of Oracle’s workers are dispersed and work remotely. 6,400 of former Cerner-ites are still in Missouri and 7,000 remain in California. Big hat tip to HIStalk—scroll down and see more about Larry and Billy’s talk, which also covered cybersecurity, the NHS (which uses Cerner), and automating hospitals and the hospital-payer interface.

Weekend roundup: NHS Dumfries (Scotland) cyberattacked; delisted Veradigm’s strong financials; One Medical NY patients’ coverage clash; Suki voice AI integrates with Amwell; Legrand and Possum extended; Zephyr AI’s $111M Series A

NHS Scotland’s Dumfries and Galloway region reported on Friday 15 March a “focused and ongoing” cyberattack affecting their 148,500 patients. Information is light at this point, but the region has reported system incursions that may involve the acquisition of patient data. “We have reason to believe that this could include patient-identifiable and staff-identifiable data.” Police Scotland, the Scottish Government, the National Cyber Security Centre, and the NHS have all been notified along with law enforcement. This story is developing. NHS D&G cyberattack page, BBC News, The Record, Cybercrime Magazine Top News 15 Mar

Delisting from Nasdaq hasn’t hurt Veradigm’s results in the slightest. As TTA and others noted in late February, Veradigm management telegraphed their strong financial state while announcing the acquisition of ScienceIO, an AI data company. These are all unaudited revenue numbers:

  • For 2023, revenue between $608 million and $622 million, net income from continuing operations is estimated between $49 million and $58 million.
  • For 2024, their estimate is for revenue growth ranging from $620 million to $635 million, with adjusted EBITDA of between $104 million and $113 million, with net cash of $140 million subsequent to the ScienceIO acquisition.

Veradigm’s repositioning post-ScienceIO will be around healthcare intelligence with scaled and proprietary LLM products supporting physicians & providers, payers, and life science research enterprises. Release

Now about those 2022 and 2023 financial reports that went sideways due to their financial software. Lee Westerfield, their interim chief financial officer, stated at the Barclays 26th Annual Global Healthcare Conference that the audit process is not only “prolonged” but also not fully in the company’s hands but with auditors. While they won’t say it out loud, it seems that Veradigm hasn’t let the Nasdaq delisting cramp their style, nor making money, at all.  Crain’s Chicago Business

New York-area One Medical patients caught in the UnitedHealthcare-Mount Sinai clash. Mount Sinai, one of the leading hospital systems of the New York metro, is in a dispute with UnitedHealth on their upcoming insurance contract.  Mount Sinai requested higher payments for hospital stays and physician visits, not unexpected given the duration of most of these contracts span several years and inflation has bitten hard over the past two years, but UHG rejected this. The lack of a contract as of Thursday 14 March means that as of 22 March, patients of Amazon-owned One Medical practices in the New York area with UnitedHealthcare and Oxford insurances (Oxford is an insurance brand of UHG) will not be in-network if receiving services through Mount Sinai’s hospital network. One Medical is part of Mount Sinai’s clinically integrated network (CIN) but apparently this has no impact. This Editor is betting that Amazon did not figure on provider/payer disputes of this type–it may be the first of many affecting One Medical with hospital networks. Becker’s

Some good news from Amwell around their new partner, Suki AI. The Suki voice-enabled AI powered digital assistant will be integrated into Amwell’s platform Converge. The voice assistant will not require a separate app as fully integrated into Converge and into Amwell providers’ existing workflows. Suki Assistant leverages natural language processing to help clinicians complete notes 72% faster on average, according to Suki, and also supports coding and dictation. A date was not specified for implementation. Suki has partnered with with multiple EHR systems, including most recently Meditech. The Amwell platform is used by providers at more than 55 health plans covering 90 million lives, plus 2,000 hospitals and health systems. Suki release, Healthcare IT News

In more partner news in the UK, Legrand and Possum have extended their now 14-year reseller agreement. Possum continues as the exclusive reseller for the NOVO range of Legrand telecare products in the UK and Ireland. Read more about it on TSA Voice and UKTelehealthcare. While you’re there, our UK Readers can also seek our supporter UKTH’s continued training events and resources on the 2025 Digital Switchover. Legrand is a long-time advertising supporter of TTA.

Zephyr AI raises $111 million in Series A financing. Revolution Growth, Eli Lilly & Company, Jeff Skoll, and EPIQ Capital Group financed a bountiful Series A scarcely seen since 2022. As you’d expect, Zephyr has this year’s flavor, having integrated AI into precision medicine for oncology and cardiometabolic disease. Zephyr’s earlier seed round of $18.5 million was raised in March 2022 (Crunchbase). From the release: “The new funds will enable Zephyr AI to further enhance its analytical speed and fortify its extensive collection of training and validation data sets. Moreover, the funds will support the expansion of the company’s scientific and commercial teams to expedite the delivery of its rapidly growing pipeline of insights to the market.”

Telemental news roundup: Brightside Health expands Medicaid/Medicare partners; Blackbird Health gains $17M Series A; Nema Health’s PTSD partnership with Horizon BCBSNJ

Mental health, whether pure ‘telemental’ or an integrated in-person/virtual model, remains one of the healthier (so to speak) sectors of digital health.

Brightside Health announced today a series of new and expanded health plan partnerships as well as expanded state coverage for Medicare and Medicaid plans.

  • CareOregon with a new contract to serve Medicaid beneficiaries.
  • Blue Shield of California with a new contract to serve Medicare Advantage enrollees.

These add to Brightside’s partnerships announced last October:

  • Blue Cross and Blue Shield of Texas–expanded contract to include Medicare Advantage coverage.
  • Centene’s expansion of coverage state-by-state, including Nebraska Total Care Medicaid and Wellcare Medicare Advantage.
  • Optum for UnitedHealthcare Medicare Advantage members
  • Lucet for Florida Blue members

Under traditional Medicare, coverage now includes Texas, California, Delaware, Arizona, New York, Washington, Florida, North Carolina, Michigan, and Illinois.

Beneficiaries and members can access Brightside’s virtual psychiatric therapy including medication, plus cognitive and behavioral therapy with independent skill practice, and Crisis Care, Brightside’s program for those with elevated suicide risk. With the new partnerships, Brightside is now estimating that they cover approximately 100 million lives–one in three US covered lives–and is seeking to further expand these partnerships as well as to traditional (original) Medicare Part B beneficiaries. Brightside Health was founded well before the gold rush in telemental health–2017–and has raised over $81 million over five rounds up to a Series B in March 2022, mainly led by Acme Capital (Crunchbase). Brightside release, Yahoo! Finance, Psychiatric Times

Blackbird Health raised $17 million in a Series A funding. This was led by Define Ventures with participation from Frist Cressey Ventures and GreyMatter, for a total raise of $23 million to date. Blackbird addresses the other side of the spectrum from Medicare–pediatric mental health in an integrated in-person and telemental health model–and serves patients aged 2-26. Blackbird’s care model considers in an ‘understand-first’ approach how children’s brains develop over time and the impact that growth has on mental health. Another unique aspect is that they developed a series of ‘Blackbird Biotypes’ based on 50 million data points drawn over a decade that identify patterns of behavior in clusters of individuals with similar symptoms-linked brain features. These assist in assessment, accurately identifying the underlying root cause of symptoms, and proposing integrated and personalized treatment plans. Blackbird claims this approach results in substantially lower use of medications and ED utilization. Last year, Evolent Health co-founder and COO Tom Peterson joined the company after his own family’s experience with Blackbird’s therapeutic model to help it scale from its three clinics and 40 providers in the Mid-Atlantic region. Blackbird release, Forbes

Startup Nema Health, a virtual clinic targeting a single condition–post-traumatic stress disorder (PTSD)–is now in-network in Horizon Blue Cross Blue Shield of NJ (Horizon BCBSNJ) commercial plans. Nema’s model is virtual care for PTSD from evaluation and virtual therapy sessions, starting with intensive sessions 3-5 times per week for 2-4 weeks, through support from a designated peer mentor plus messaging and interactive exercises. Based in NYC, Nema is in-network with UnitedHealthcare/Optum, Oxford, Oscar, and Connecticare in the states of New York, New Jersey, and Connecticut. Horizon is New Jersey’s largest insurer. Nema claims that 76% of their patients no longer meet PTSD criteria after completing Nema therapy. Nema is at seed stage funding of $4.1 million from .406 Ventures and Optum Ventures, raised last November. FierceHealthcare, Nema release

Why this matters:

Since 2020, telemental health got a black eye (and then some) from ADHD and opioid medication-assisted treatment (MAT) providers such as Cerebral, Done Health, Truepill, and others. Thriving during the pandemic, many of them are now facing various Federal charges. Others, like Calm, are basically meditation and sleep apps. The real need, and provider shortage, remains.

The need for psychiatric care and support for Medicare and Medicaid covered populations is high, but clinical supply is low.

  • According to the Center for Medicare and Medicaid Services (CMS) in announcing the state-based Innovation in Behavioral Health (IBH) eight-year, eight-state integrated care model last month, among the 65 million Americans currently enrolled in Medicare, 25% have at least one mental illness, with 40% of Medicaid members experiencing mental illness or substance use disorders (SUDs).
  • Yet provider shortages have worsened over time–as of 2020, The Commonwealth Fund estimated that an additional 7,400 providers (not necessarily psychiatric MDs) were needed to meet demand. Studies cited in Psychiatric Times (2022) estimate that the current shortage of psychiatrists, running at 6%, is expected to be between 14,280 and 31,109 psychiatrists by 2024. Distribution is concentrated in urban areas and their suburbs as well. It doesn’t help that physicians entering psychiatry in 2003-13 decreased by 0.2% and their average age is 55. Even in well-covered geographic areas, retiring doctors with no replacements have created coverage shortages.
  • For child psychiatry, the American Academy of Child and Adolescent Psychiatry (AACAP) reports that there are just 14 psychiatric specialists for every 100,000 children in America. 

Further confirmation of the New Reality for digital health–lower valuations, more exits, fewer startups, tech buyers not seeing ROI

In the wrap ups of 2023 last December and a month later in January, this Editor summarized it as not a year of slow, steady growth as predicted by the experts in January 2023, but one of utter turmoil starting in March, peaking mid-summer when M&A cratered and the Feds cracked down on antitrust and privacy. By year’s end, picking through the debris, we saw it as a ‘clearing’ year of the “also-rans and never-should-have-beens” that were funded willy-nilly in 2020-2022. 

The good, bad, and ugly are facing the music in 2024′. Our latest in POVs on the New Reality surrounding digital health/health technology. 

More exits of various types, reduced valuations, need to fundraise again among digital health startups. Katie Adams of MedCityNews, which of the mainstream online health news websites has the tartest takes on the business, interviewed two investors in digital health. Their POVs:

Cheryl Cheng, CEO of Vive Collective (Menlo Park, California)

  • Raised large rounds in 2021? These companies now face ‘valuation overhangs’ that aren’t ‘bridged by organic growth’ and a far tighter investment environment with reduced valuations and exits. (That exit may be a sale–or a shutdown–Ed.)
  • Investor priority? Profitability, not growth.
  • What counts in today’s environment in raising capital? Be within 24 months of being EBITDA positive. (EBITDA=earnings before interest, taxes, depreciation and amortization). Steady growth in last two years also counts as a positive. Raising money will be less difficult–not easy. (No more rivers of free-flowing money to fill one’s buckets–Ed.)
  • Have a point solution? Many providers have point-solution fatigue and are pushing toward platforms. That alone will force some startups to sell.

Ian Wijaya, managing director at investment bank Lazard

  • What are the big questions of startup boards that include investors? How many months of cash runway are left? If markets are improving, is now the time to explore a sale jointly with a financing?
  • What drives the pricing? The “specific quality of the company and the value it can achieve across its strategic alternatives.”
  • What should startups do? Thoroughly explore their strategic alternatives and separate what is actionable from what is fantasy.
  • The best deal? When companies are bought, not sold–when the buyer initiates the process, not when the company puts up the ‘For Sale’ sign. That requires a little sleight of hand in engaging with potential buyers well in advance and creating a competitive environment, which requires time.

Not a good environment for startups, either. If Redesign Health is a bellwether of startup creation–their business is building healthcare companies which are then spun off–their layoff of 77 staff from their New York-based 200 to 250 (estimated) is not a good sign. The cuts are from the areas that support new venture creation. Redesign started in 2018. According to FierceHealthcare, Redesign has started up 65 healthcare companies (over 50 stated on the website), including 40 in the past two years, but only 35 are current on their website. They are backed by a ‘who’s who’ of investors who have $165 million with, in September 2022, a $1.7 billion valuation, but they’re not going anywhere. But it’s a sign that Redesign is backing off from actively forming new startups, and likely working to ensure the survival of those in the portfolio like the challenged Calibrate.  BNN Breaking

The tech buyer market has a problem that could interfere with all the above: ROI. It turns out that while payers and providers are integrating digital health into their systems, 71% in the Ernst & Young (EY) survey said that their hospital expenses weren’t decreased by said implementation. But then there’s efficiencies.

  • 93% of respondents said emerging technology is an asset for providers and that the technology has positively affected operational efficiency (but efficiency isn’t translating into savings?)
  • 90% said their departments have more time to take care of the needs of providers thanks to pushing administrative tasks to a digital system
  • But while 86% acknowledged the potential for reducing costs via digital health, 70% said they have yet to see a return on investment

Mobihealthnews

And in this year, providers are where it’s at if you’re investing–especially for-profit hospitals. This is the first time in years, according to TD Cowen analyst Gary Taylor at a Nashville Health Care Council event. Providers are finally experiencing meaningful lower labor costs. However, non-profits have come out of the past few years in uncertain to poor shape and for-profits will pick up their market share, facilities, and technology. Conversely, payers are adjusting to increased Medicare Advantage costs that have turned profits into losses (e.g. Humana, Cigna’s exit, the Cano Health and Bright Health failures). Medical utilization is rising and CMS is cutting back on benchmark payments to payers. Becker’s

All reasons why 2024 will be a most interesting year. To be continued. 

Facing the Music of the New Reality: Amazon Pharmacy & One Medical restructure; Walgreens shakes up health exec suites again, cashes out $992M in Cencora; new takes on NeueHealth; Cue Health, Nomad Health layoffs

Amazon delivers a Dose of Reality in shrinking Pharmacy, One Medical. Using the “realigning some resources to help accelerate our efforts” meme, there are about 115 to 400 staff who will be ‘transitioned’ out of their present jobs, according to sources (Business Insider, Seeking Alpha). Areas affected were not disclosed. However, the Amazon division likely taking the hardest hit is One Medical, according to these sources.

  • Amazon has already announced that One Medical must reduce operating losses by $100 million this year. A large step they are taking is to close One Medical’s corporate offices in New York, Minneapolis, and St. Petersburg, Florida, reducing its San Francisco office space to one floor. They cited to industry publications that most employees are remote workers.
  • Unsurprisingly, Amazon is targeting major cost reductions. Fixed operating costs that are currently at 41% of total revenue will be reduced to 20% by 2028. Cost per patient visit will be reduced from $372 in 2023 to $322 in 2024, from $372 in 2023.
  • Legal, finance, and technology teams will report to Amazon’s healthcare business structure
  • Operating areas will increase from four to seven, reporting to a new head of operations
  • CFO Bjorn Thaler will move to a new position focused on growth initiatives, reporting to VP of Health Services Neil Lindsay

At the time of the acquisition, industry thinkers were wondering what Amazon would do with the money-losing One Medical clinics, for which they paid $3.9 billion but never turned a profit and lost $420 million in 2022, its last year of independent operations. Neither membership nor revenue has been reported since the 2023 closing. In 2022, One Medical had 700,000 patients, 8,000 company clients and 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. Amazon has been promoting One Medical online and on TV, most aggressively to its Prime members with promotional membership pricing. 

Amazon has aggressively cut tens of thousands of jobs and costs since 2023 in its Audible, Prime Video, Twitch and Buy with Prime units, and completely shut down Halo, its entry in fitness bands and sleep trackers. It has also been aggressively challenged on patient privacy and cross-using information by the FTC, most recently around Amazon Clinic.

Not mentioned in reporting was the FTC and DOJ scrutiny One Medical’s acquisition received between Amazon’s offer and the closing. The two agencies declined to move at that time [TTA 23 Feb 23], but FTC is continuing to build its case against Amazon–and One Medical may be a factor. For context on Amazon’s situation, Readers may want to review last December’s assessment of Amazon to date, Has Amazon lost its ‘edge’ in healthcare? Or finally seeing reality?   FierceHealthcare, Healthcare Finance, Healthcare Dive

Walgreens’ Reality includes C-suite reshuffles, scaring up cash. The new president of US Healthcare and EVP reporting to CEO Tim Wentworth is Mary Langowski. She is currently CEO of Solera Health. Her prior experience at CVS was as EVP and chief strategy and corporate development officer. Moving to an advisor position is the current president, John Driscoll. US Healthcare includes VillageMD, Summit Health/CityMD and CareCentrix. In addition, Manmohan Mahajan was appointed as permanent CFO, having held the position on an interim basis from July. Elizabeth Burger was named as EVP and chief HR officer from a similar position at industrial Flowserve, replacing Holly May who departed in November and is now with Petco. Crain’s Chicago Business, FierceHealthcare

Slipping under this was a further sale of Walgreens’ position in Cencora, the former AmerisourceBergen, a highly diversified pharmaceutical distributor. The sale of approximately $942 million of Cencora common stock was subject to the completion of the Rule 144 sale, and included a concurrent share repurchase by Cencora of approximately $50 million for a total to WBA of $992 million. WBA’s position is now 13% versus 15%; partnership and board representation remains in place. From the WBA release, “Proceeds to Walgreens Boots Alliance will be used primarily for debt paydown and general corporate purposes, as the company continues to build out a more capital-efficient health services strategy rooted in its retail pharmacy footprint.”

Is NeueHealth creating its own Reality? At the end of January, Bright Health Group faded to black and relit as NeueHealth, its value-based care medical practice division, and moved its HQ from poky, cold, failing Minneapolis to Doral, Florida. It sold or closed all its health plans in a heap of losses, most of which have bills coming due via CMS Repayment Agreements which come due on or before 14 March 2025. Most of the industry is shaking its head in wonder that NeueHealth has made it this far.

The discussion in MedCityNews is worth reading. It includes Ari Gottlieb of A2 Strategy who points out that the company is $1.4 billion in debt to the likes of investors Cigna Ventures, New Enterprise Associates, and CalSTRS. They owe $89 million to Texas to cover risk liabilities for its shuttered ACA plans. Over $100 million remains in escrow from the Molina sale to cover obligations from its Medicare Advantage plans. Mr. Gottlieb predicts that NeueHealth will be drained and go bankrupt before the Feds come calling in March 2025. Another analyst, Tyler Giesting, director of healthcare and life sciences at West Monroe, takes a sunnier view that NeueHealth is in a sector, value-based care, that payers are interested in and will buy into, as long as the practices perform. This Editor will reiterate her wonder at NeueHealth’s management maneuvers. They’ve managed to play multiple ends against the middle and tie masterful Gordian knots (pick your analogy) to stay alive until, they hope, 2025 and better times. 

More Reality delivered in two layoffs in once-hot companies that thought pandemic les bon temps rouler would last forever:

  • San Diego-based Cue Health, a biotech company that produced Covid-19 tests, is laying off another 245 employees. This adds to the 884 workers in primarily San Diego laid off last year. Cue grew to over 1,500 employees when it got the first FDA approval for its 20-minute molecular test kits to supply the US government, the NBA, Google, and other large companies. Cue IPO’d in September 2021 at $200 million and $16/share, with a valuation of $3 billion. Its shares on Nasdaq are today at $0.25. The company also offers a test for mpox (monkeypox) and is seeking FDA approval for its RSV and Flu test kits. San Diego Union-Tribune
  • New York City-based Nomad Health, a healthcare staffing service that took advantage of the pandemic demand for travel nurses but had not fully transitioned into other temporary healthcare workers, released 17% of staff, from 691 to 572 employees. Nomad was reeling not only from lower demand but also correspondingly lower rates. It raised $200 million to date from investors such as Adams Street Partners and Icon Ventures. Forbes

And the final Reality is how healthcare companies, from providers to digital health, are phrasing what seems to be endless layoffs. Euphemisms such as rightsizing, org change, involuntary career events, corporate outplacing, and offboarding are all being used to sweeten for public consumption that a lot of people, hired so eagerly in 2020-22, are losing their jobs. From the Bloomberg article (paywalled), “They somehow seem to believe that if they use language that is more vague and less emotional, that people won’t get as upset,” said Robert Sutton, PhD, professor of management science and organizational behavior with Stanford University School of Engineering. Instead, euphemisms tend to have the opposite effect. Becker’s  This Editor has been both a survivor and a victim of same, being in marketing which is always vulnerable. Contract and consulting work, which anticipate a stronger market, are like the Sahara–few and dry water holes. Expect layoffs and a dead market for experienced talent to be a major factor in this year’s US elections, despite the reported low unemployment numbers (that no one believes anymore).

2023 was buying time, 2024 is face the music time: Rock Health

Rock Health’s year-end wrapup, which usually makes a splash, didn’t this year. It was released this year in conjunction with the JP Morgan Healthcare Conference in the week after New Year’s, which almost guaranteed it would fly below the radar.

Another analogy: if you were doing aerobatics, 2023 for digital health was maintaining a flat spin from altitude if you could (left/above), 2024 would be getting out of the flat spin and into level flight before you and the ground had a meeting, so to speak.

Rock Health’s summary of 2023 was minus their typical frothiness:

  • It was back to 2019 across the board, as if 2020-21 never happened.
    • Full year 2023 raised $10.7 billion across 492 US deals. It was the lowest amount of capital invested since 2019, which finished with $8.1 billion across 413 deals. By comparison, 2022’s total was $15.3 billion across 577 deals.
    • Q4 2023 was the lowest funding quarter since Q3 2019, with an anemic raise of $1.9 billion across 122 deals.
  • M&A was left for dead, unexpectedly so from their earlier projections. (Note to Rock Health–it could be the negative attitude toward deals emanating from Washington)
  • A and B stage companies had trouble raising money in the usual lettered way. 81% of currently active venture-backed startups that raised a round in 2021 didn’t raise a labeled one in 2023. Some resorted to ‘extensions’ that further diluted existing ownership or unlabeled rounds that left more questions about when the next raise was going to be. Unlabeled rounds hit an all-time record of 44% of total raises, double that of 2022. (This Editor notes that there were no analyses of C and D rounds, because there were so few.)
  • “Silent rounds” of financing happened but were hard to gauge–and because they were inside, didn’t measure the attractiveness or competitiveness of the company in the real market. It was pure, simple survival of the company and the investment.
  • Startup shutdowns, in their view, were no higher than usual–less than 5% of venture-backed US digital health companies (i.e., have raised >$2M).

In this Editor’s view, the percentage does not capture the prominence of the startup shutdowns: Babylon Health, Quil Health, Pear Therapeutics, OliveAI, Smile Direct, Cureatr, SimpleHealth, The Pill Club, Hurdle. It also doesn’t count Amazon shutting down Halo, Cano Health’s parting out before this week’s bankruptcy, as well as Bright Health’s (now NeueHealth) divestitures and shutdowns through 2023 leading to their becoming a very different company in 2024. 

For 2024, Rock Health is seeing:

  • The return of labeled raises (A, B, C etc.) In their view, many companies will not be able to manage this without moving into ‘hot’ areas like obesity care (cue the Ozempic), value-based care enablement, or AI. Those that can’t will either have ‘down’ rounds or close (see this week’s closing of Astarte Medical in the NICU segment because they wouldn’t integrate AI).
  • M&A will increase, with acquirers buying low among the now cash-strapped companies. This Editor would add that both DOJ and FTC will have their say about this, having published new Merger Guidelines in December.
  • Publicly traded companies will ‘recalibrate’, which is a polite way of saying a lot of companies will face delisting. As of 31 December 31, 2023, at least 17% of public digital health companies trading on the NASDAQ or NYSE were noncompliant with listing standards. This Editor notes that 23andMe is the latest cracked SPAC in jeopardy. Some will rally, the strongest may IPO. BrightSpring Health IPO’d on 26 January, Waystar’s is pending. 

Their sobering conclusion. Too many companies were created in the last few years of the boom. “2024 will be a year of recalibration and consolidation. Some startups will rally, finding that high capital efficiency and exceptional offerings pay off to secure them their next major fundraise. Others will need to make the tough call to wind down operations or accept lower-than-hoped-for M&A offers, particularly in saturated segments.”

At last, Rock Health and TTA have met on similar ground. This Editor’s take back in December. From ‘Signs of the next phase in 2024’:

“…the board is being cleared of the also-rans and never-should-have-beens. They are like dead plants and brush that need to be cleaned out so that new growth can happen. We are cycling through some of them already as we move to a New Reality and winding this up.”

Additional TTA views on 2024: The New Reality permeating JPM, and Peering through the cloudy crystal ball into 2024

Signs of the next phase in 2024? Veradigm CEO, CFO booted (updated); SmileDirectClub fails, TeleDentists steps up; FruitStreet sues Sharecare for $25M; Walgreens’ former CEO Roz Brewer’s platinum parachute

As your Editor reflects on 2023’s BloodOutOfARock versus 2020-2021’s Alcoholic Bender or the ‘new normal’ touted by the Usual Suspects (with 2022 only a burp on the way), she actually sees some Signs of Hope. 

Having lived through the Digital Health Slough of Despond of 2008-2009 as the marketer for an early telemonitoring company, there are many actions that to the observant are markers that the board is being cleared of the also-rans and never-should-have-beens. They are like dead plants and brush that need to be cleaned out so that new growth can happen. We are cycling through some of them already as we move to a New Reality and winding this up, with some examples. 

  • Early stage companies still in the red, with promising financials, but needing to get to the next stage, suddenly unable to get even modest funding (an early indicator of funding drought)
  • Large companies that can get funding snapping up smaller companies at knock-down rates to fit a ‘vision’. Watch for fill-ins, add-ins, bolt-ons that later are revealed to have taken place ‘just in time’. (And may be sold or spun off later in the cycle.)
  • Large companies veering off into lines of business that look like meadows but are minefields–and hiring expensive senior executives who don’t know one or the other but then have to run both at very high levels. They then depart (or are departed) with expensive packages.
  • VCs and PEs really snapping the purses shut–and shutting. (The latest is OpenView in Boston, not even much of a healthcare player except for a couple in HIT over a decade ago but a recently participant in a Series B for RPM Optimize Health)
  • Public companies moving from party-hearty unicorns to hoarding pens and Post-It notes to locking the doors bankrupt in two to three years. (Cracked SPACs, IPOs, and more)
  • Too many players competing with each other with near-identical services in what turns out to be a limited market–and gaining advantage by cutting patient health, privacy, and regulatory corners. (DTC telemental care and drug prescribing)
  • Layoffs at companies that over-hired in the boom spreading to larger companies that largely did not, cutting their next generation of leaders in response to Mr. Market and creating internal chaos. (Instigating panic at blue-chips like CVS and Walgreens)
  • Stupid (yes) acquisitions being acknowledged and cleaned off the books–none too quietly, but done for survival’s sake. (Somewhere there should be a memorial to Teladoc-Livongo. Sorry, Teladoc.)
  • Increased Federal and state regulation of normal business processes. (FTC’s sudden prominence adding to the usual DOJ antitrust pile-on and senatorial posturing)
  • A general cleansing of the cant and hype infecting a sector. (Look to the conferences and press releases for changes in language.)

In this Editor’s observation, another latter-stage sign is when C-levels don’t survive management failures and are sent packing. Another is seeing a small company sue a larger one over failed partnerships, usually involving IP or program design theft. This past week had examples of these two, plus examples tracking with the above markers.

Veradigm still minus 2022-23 financial statements, boots and replaces its CEO and CFO. The former Allscripts has failed to file financial statements for full year 2022 and to date in 2023 due to a massive flaw in its financial reporting software adopted in 2021 that affected its revenue reporting going back to then. While it is still trading on Nasdaq despite 14 November and earlier 16 August, 18 May, and 20 March notices from the exchange under Nasdaq Listing Rule 5250(c)(1) (Veradigm release), there still is no resolution about when their statements will be filed with the SEC. The company’s latest move was to force the resignations of CEO Richard J. Poulton and CFO Leah S. Jones, replacing them with two interims. From the board, Dr. Shih-Yin (“Yin”) Ho becomes CEO for six months and Lee Westerfield, CFO of Clearsense, becomes CFO. Mr. Poulton, a 10-year veteran, will receive a $1.6 million severance. Ms. Jones will receive a six-month continuation of salary plus additional payments to “provide business-development related services” which is corporate-speak for paying you to transition to her replacement. The board will search for permanent replacements for the CEO and CFO positions.

According to their announcement, the management changes resulted from “the Audit Committee’s previously disclosed, ongoing independent investigation, which is being conducted by legal counsel and relates to the Company’s financial reporting and internal controls over financial reporting and disclosure controls”. Reading it, Job #1 for the new team appears to be reviewing the fiscal 2023 guidance that was released on 18 September and regaining compliance with the Nasdaq Listing Rule. Veradigm also reiterated that they will have a 2020-22 revenue reduction “relating to certain revenue recognition practices.”  

Additional board changes include the chairman, Greg Garrison, as executive chairman and the appointment of Carol Zierhoffer (bio), retired CIO of Bechtel Corporation, as lead independent director. Perhaps Ms. Zierhoffer can help with the conundrum of a software company engaged in vital health and financial information transmitted via practice EHRs and practice management having its own massive accounting software problem derailing them for two years. CFO Dive has more details on the audit and a shareholder suit filed in November.

Update: A Nasdaq panel spared Veradigm’s exchange listing, for now. Mark 27 February 2024 as the date Veradigm is required to provide their 2022-2023 financial reporting to Nasdaq as required under Listing Rule 5250(c)(1). This was reported in Veradigm’s 8-K filing to the SEC on 13 December. Note that Nasdaq’s release states “The Company plans to file its Form 10-K and the Form 10-Qs as soon as possible; however, no assurance can be given as to the definitive date on which such periodic reports will be filed.” (Editor’s emphasis) Stay tuned. Healthcare Dive

No rescue for direct-to-consumer clear dental aligner provider SmileDirectClub. SmileDirect, which along with Byte (acquired 2021 by dental industry giant Dentsply Sirona), NewSmile, SnapCorrect, and several others market DTC aligners and teledentistry, failed to find a buyer or new financing after its Chapter 11 filing in September. The plan centered around the once-billionaire founders buying the company back, but they could not get their main lender HPS Investment Partners and other creditors owed $900 million, nor new investors, on board.

Heavily advertised SmileDirect IPO’d in 2019 with a valuation of $8.9 billion, but never turned a profit from its combination of DIY and teledentistry. Other drains were a patent fight with CandidCare and multiple patient complaints including jaw damage, migraines from misalignment, and tooth loss. Candid, like Invisalign, now works only through dentists who do the impressions, filings for tooth separation if needed, progressive aligner delivery, and tracking progress over what is typically one year for children, teens, and adults (over 60% of business)

In the FAQs on the lone page on its website, SmileDirect no longer will honor customer contracts for aligners and dental checkups or lifetime guarantees, but continues to demand payment from patients on SmilePay contracts. (Good. Luck. With. That!) The Hill, Fortune, HIStalk 11 Dec. For the teledentistry service The TeleDentists, it is a marketing opportunity to join with Byte in prescribing and providing dentist services for their clear aligners (email promotion). The TeleDentists is also partnering with WebMD Care for consumers seeking care after researching a dental condition. (Release

(Editor’s note: Having gone through Invisalign as an adult to correct a growing problem with alignment, your Editor cannot conceive of a DIY approach to a complex process that also required a significant amount of daily self-discipline.)

Fruit Street Health sues former partner Sharecare for $25 million. The interestingly named Fruit Street provided its diabetes management program to digital health conglomerate Sharecare as part of Sharecare’s unified virtual health management platform for individuals and enterprises. Starting in 2018, Fruit Street had a business agreement with Sharecare to offer its CDC-recognized diabetes prevention program (DPP) on Sharecare’s platform. Sharecare now has its own diabetes prevention program, “Eat Right Now”, which Fruit Street claims violates the terms of its agreement. The lawsuit was filed in Fulton County, Georgia. Sharecare claims not only that the lawsuit is without merit, but also that Fruit Street owes them $3 million in payments.

Fruit Street was founded in 2014 as a public benefit corporation [explained here TTA 24 Feb] headquartered in NYC by Laurence Girard. It is modestly funded at $35 million. Atlanta-based Sharecare was founded 2018 by serial entrepreneur and WebMD founder/CEO Jeff Arnold with Mehmet Oz, MD, surgeon, TV celebrity, and former Senate candidate. Sharecare went public on Nasdaq in the palmy days of early 2021 via a SPAC with Falcon Capital Acquisition Corp. It broke out of the gate with a $3.9 billion valuation, but like most SPACs it cracked downward within months and shares now trade at an anemic $0.99. In January, current CEO Arnold will be transitioning to executive chairman. Long-time Centene exec and retired president Brent Layton will move from a board director position to the CEO chair (release). MedCityNews, Axios

Former Walgreens CEO Roz Brewer eyewatering compensation revealed. A final example of our third bullet above is the excellent financial arrangement Ms. Brewer had with Walgreens Boots Alliance. Her package of compensation and stock options awarded by the board was $71 million for about 30 months, which included a $4.5 million signing bonus to lure her from Starbucks, over half a million in moving expenses, and $60 million in three years of compensation. According to the information in The Messenger, a good portion was in stock which fell in value 57% during her time at Walgreens, continuing a trend before her arrival. It was also consistent with an executive termination without cause, which also tied her to non-disparagement and non-disclosure agreements. Was her departure by mutual agreement with the board? That is fairly typical language, but reports in the article attributed the real cause in this statement from a source indicating loss of confidence by the most important man at WBA, Stefano Pessina: “Stefano thought she was a lightweight and unable to do the hard, transformational things he needed her to do.” (Was buying the majority of VillageMD, starting the joint store/practice location plan, buying CareCentrix and specialty pharmacy Shields Health Solutions during her tenure, not quite enough? Perhaps too much spent in a hot market and not enough return, especially by VillageMD on Summit Health and CityMD?) 

Her departure and replacement by a healthcare veteran with directly related management and organizational expertise, Tim Wentworth, is yet another example of this particular cycle coming to completion. And now that we’re in the midst of clearing the field, what happens next?

Digital technology falling (even) short(er) in NHS nursing: QNI report (UK)

When health tech ‘magic’–isn’t. Roy Lilley and his several times per week newsletter (NHSManagers.net, subscribe here) are really must reads for our UK readers dealing with the foibles of the NHS and NHS Digital. Billions have been poured into digitization of records and equipping district (community) nurses with laptops and access to apps that connect them to patient information. All of which is apparently, a flop for the money spent. 

The Queen’s Nursing Institute (QNI) has published a study, Nursing in the Digital Age 2023, via its data gathering and analytics area, the International Community Nursing Observatory (ICNO). It obviously should be microscope-read by NHS Digital, but also by US developers (and in other countries) with clinical users. (Oracle Cerner, Epic, and 00’s of EHRs and workflow apps–take notice).

Mr. Lilley outlines the level of failure here–from his article

  • 5 yrs ago; 32.7% reported problems with lack of compatibility between different computer systems… in 2022 the figure had risen to 43.1%.
  • 5 yrs ago; around 85% of respondents reported issues with mobile connectivity… in 2022 this figure was around 87%.
  • 5 yrs ago; 29.5% reported problems with device battery life… in 2022 the figure was almost 53%.

The overall take of the QNI study is that nurses are highly digitally literate and embrace technology at scale, but in practice, the apps and the hardware have become impediments as the workload increases. For non-UK readers, district nurses travel a lot, often working from home–akin to home care or rural nurses in the US. Points from their executive summary:

  • Hardware–battery life, weight of laptop, old laptops, ergonomics not only from weight but also when working in cars. Safety and confidentiality issues lead many nurses to take the work home, leading to delays.
  • Software–connectivity, authentication, multiple platforms, little integration, repetition of data entry, and poor connectivity and software design leading to interrupted workflows.
  • Some scheduling tools cause workload issues, such as over-allocation of work, unmanageable workloads and loss of personal autonomy.
  • Systems design–impersonal, designed to act as a barrier to interacting with patients.
  • Duplicative workload–repetition with dual entry on paper and into platforms because of poor connectivity and software design
  • The use of electronic health records (EHR) and similar platforms was mixed in terms of productivity gains and work capture. 

Another issue: “Moving technology-enabled care (remote monitoring) to the community appears to have shifted work from the hospital to the community”, meaning an increased workload on nurses where specialists or non-nursing staff could do this. 

Mr. Lilley summarizes as a service what both the hardware and software should be accomplishing:

Just ten simple things:

  1. Who is the patient,
  2. where have they come from.
  3. See their record, have they been sick before and…
  4. What we did we do?
  5. Anything in their history that’s a red flag?
  6. What do we do to fix them up this time and…
  7. Record how we did it.
  8. Figure out what worked,
  9. What did it cost and…
  10. Do we want to do it again.

Both Mr. Lilley’s newsletter and the study (PDF) are must reads wherever you live. Especially if you are a software designer.

No wonder nurses are single-day rolling striking!

(He also has an interesting take on ChatGPT, AI for copywriting and reporting, which we will take on next week….) Hat tip to Editor Emeritus Steve.

AliveCor loses Patent Office ruling with Apple; three patents invalidated

Apple prevails in the patent infringement suit by AliveCor–and got three AliveCor heart monitoring patents invalidated as ‘unpatentable’. In the duel of patent infringement claims dating back to May 2021 between AliveCor and Apple, the US Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) not only ruled that Apple did not infringe on AliveCor’s patents, but also threw out the AliveCor patents that were the basis for the infringement. AliveCor had sued Apple for patent infringement on their ECG technology in three US patents: No. 10,595,731 (“the ’731 patent”); No. 10,638,941 (“the ’941 patent”); and No. 9,572,499 (“the ’499 patent”) in their Apple Watches 4, 5, and 6. [TTA 29 Apr 21, 9 July 21

The term ‘unpatentable’ is used when the PTAB deems the patent, even when granted in the past, too obvious or too general. When the PTAB finds that, they throw out the patent and it is no longer valid.

Apple of course crowed that they developed their own patents fully on their own, and not from the time when AliveCor’s ECG monitoring was incorporated into earlier Apple Watches. Apple is up to the Series 8. AliveCor has already announced it will appeal and await the pending ruling from the International Trade Commission (ITC) to block the import of Apple Watches. The ITC’s initial determination in June was positive [TTA 28 June] and AliveCor of course is ‘cautiously optimistic’ on the Final Determination due in a few days (12 December). With the PTAB’s finding, it is far less likely that the ITC will impose an import block when AliveCor’s patents have been invalidated.  9to5Mac, Mobihealthnews

AliveCor has moved forward with its KardiaMobile series, including a credit card-sized device (left), and has enjoyed substantial investment, with an August Series F (amount undisclosed) round led by GE Healthcare. 

Patent invalidation is a danger in any patent infringement lawsuit. In 2015, Bosch Healthcare, which had bought HealthHero, an early RPM platform marketed as Health Buddy, and ViTelNet, was a serial patent challenger. They went after Philips, Viterion (while owned by Bayer), both to a draw, and won against a slew of barely-out-of-the-cradle companies forgotten by nearly all of us such as Alere Health, MedApps, Waldo Health, and Express MD Solutions. Then they sued Cardiocom in 2012 with the same expectation. Except that a year later, Cardiocom was acquired by Medtronic. Deep-pocketed Medtronic fought back hard–and by 2015, the PTAB invalidated most of Bosch’s key patents. Bosch withdrew from the US market abruptly in 2015. TTA 19 June 20157 September 2015 primarily about the ongoing Teladoc-Amwell dustups

Given their funding and device development, AliveCor will likely not face Bosch’s fate, but such invalidations have consequences yet to be determined and litigated. 

“Big Story” update: where Elizabeth Holmes will spend 11 years, Cerebral sues former CEO Robertson, Amwell buying Talkspace?

Where will Elizabeth Holmes serve her sentence, whatever it is? A story that got lost in the Thanksgiving shuffle was Bloomberg News’ (paywalled) report that Judge Edward Davila recommended that she be remanded to a minimum security Federal women’s prison in Bryan, Texas, outside of Houston. What has previously been mentioned in the press and by legal commentators is that she would likely serve her time in a northern California minimum security prison about an hour from her present home, the Federal Correctional Institution in Dublin, California. According to commentators, the larger Bryan facility may be better than Dublin, which is a satellite camp. Bryan  “…compared to other places in the prison system, this place is heaven. If you have to go it’s a good place to go,” Alan Ellis, a criminal defense lawyer, told Bloomberg. The final say will be made by the Federal Bureau of Prisons. The selection is important because Federal inmates typically serve a minimum of 85% of their time, unlike time served in state prisons. Gizmodo reports on Bloomberg’s reveal

Holmes’ reporting to prison is scheduled for 27 April 2023. Her appeal to the Ninth Circuit Court of Appeals must be filed within two weeks of sentencing, which by this Editor’s calendar is 2 December but may be later due to the holiday. Holmes may be permitted to stay out of custody pending appeal if it extends beyond the surrender date if the judge permits. 

Editor’s commentary: One wonders whether Holmes’ appeal will be successful. One factor is what Judge Davila acknowledged: “What is the pathology of fraud? Is it the inability to accept responsibility?” Even in her personal statement during the sentencing, there is evasion. Holmes did admit some sorrow about patients and investors relating to her own failings (back to her again), but sorrow is not responsibility. Moreover, Holmes did not refer to making amends for that sorrow created by the Fraud That Was Theranos. Her defense continues to blame others, like Sunny Balwani, former president and live-in. Even the 130 character letters, many from others who knew her only briefly, blamed others including Balwani, almost tracking to the defense’s talking points. The case proved conspiracy with Balwani, who will likely be sentenced on 7 December for what is expected to be something close to the full 20 years as convicted on all 12 counts.

The tables are turned by Cerebral on co-founder/former CEO Kyle Robertson. Only a week or so ago, Robertson (through his attorneys) reportedly sent a letter to Cerebral management demanding access to documents detailing “possible breaches of fiduciary duty, mismanagement and other violations of law.” [TTA 18 Nov] Now Cerebral is suing Robertson for his default on a $49.8 million loan taken this past January to buy 1.06 million shares of common stock in the company. According to the filing in New York Supreme Court, he is personally liable for $25.4 million, plus interest and attorney’s fees. After his dismissal 18 May, he had six months to repay the loan or direct Cerebral to repurchase or cancel the shares. According to the lawsuit, “Robertson repeatedly asserted that he would not repay the loan.” The troubled company laid off 400 or more in October and is now valued at a fraction of last year’s $4.8 billion valuationStay tuned. HealthcareDive, Mobihealthnews

A cracked SPAC may get itself sold. Talkspace, which has had a year of challenges since its SPAC, apparently is in talks to be acquired by Amwell. According to Calcalist, an Israeli business publication, Amwell is in advanced talks to acquire it for $1.50 per share, or about $200 million. This is quite a comedown from when Talkspace was valued in January 2021 at $1.4 billion. It executed its SPAC in June [TTA 25 June 2021] and hit Nasdaq at $8.90 per share. Today it closed at $0.88, so Amwell’s offer would be close to double. It would also remove another problem. Nasdaq notified Talkspace on 18 November that they were on the verge of delisting their stock, as it was trading for over 30 consecutive business days at under $1.00 per share.

The ‘advanced’ term is interesting because this past June, reports indicated that Talkspace rejected overtures by Amwell and Mindpath. The amount bandied about at that time was $500 million and a sale was expected during the summer. (What a difference six months of economic uncertainty makes.) 

In November 2021, founders Roni and Oren Frank stepped down and their COO resigned shortly thereafter on a conduct-related allegation. Shareholders started to sue starting then. YTD results have also been dismal, with losses of $61 million on revenues of $89 million.

Talkspace would bolster Amwell’s mental health capabilities in telepsychiatry with a DTC and enterprise product. If the company hung on to most of their $184 million in cash reported in June (of the SPAC’s $250 million), for Amwell it also would be a deal that almost pays for itself. HealthcareDive, FierceHealthcare

The Theranos denouement: ‘Humble, hardworking’ Elizabeth Holmes sentencing Friday; prosecution and defense paint different pictures (updated)

Elizabeth Holmes finally faces the music and perhaps the mercy of Judge Edward Davila on Friday, 10 am PT. Convicted on four felony counts of 11 and defrauding investors of over $144 million, the prosecution has called for Holmes to go to Federal prison for 15 years of the maximum 20, plus three years of supervised release. Restitution of $804 million would go to investors plus a fine of $250,000 for each charge. In US Attorney Stephanie Hinds’ 46-page pre-sentencing memo to Judge Davila, the prosecution states that she was blinded by ambition. “She repeatedly chose lies, hype and the prospect of billions of dollars over patient safety and fair dealing with investors. Elizabeth Holmes’ crimes were not failing, they were lying—lying in the most serious context, where everyone needed her to tell the truth.” They called her crimes “extraordinarily serious, among the most substantial white collar offenses Silicon Valley or any other district has seen.” and that her actions damaged the trust and integrity that is needed for Silicon Valley investors to trust companies to fund ideas before profits are seen. The cut: “She stands before the Court remorseless. She accepts no responsibility. Quite the opposite, she insists she is the victim.”

In all fairness, her defense has relentlessly painted Holmes as exactly that, from young, naive, battered, psychologically and sexually abused Trilby to Sunny Balwani’s Svengali. Their argument in their 82-page sentencing memo argues for mitigation to the point of no sentence at all, or a minimal sentence of no more than 18 months in home confinement plus her continuing service work. Supporting her character as a ‘humble, hardworking, and compassionate woman who deeply wants to give what she can to the world” and not motivated by greed or personal gain were character testimony letters from Billy Evans, her partner, as one would expect, but also from some unexpected places: the Senator from this Editor’s home state of New Jersey, Cory Booker, who knew her starting in 2012, and a former EPA head, William Reilly, who worked with Holmes’s father back in the George H.W. Bush administration. Their memo cited 130 letters.

Also revealed by the defense: Holmes is not only the mother of a year-old son but also pregnant. Evans’ letter contains another heartbreaking fact. Her beloved ‘wolf’ of a husky dog, Balto, was tragically killed by a mountain lion while she and Evans were living in seclusion in a rural area. While they lived in San Francisco, according to him, they were harassed by reporters, ordinary people, and threatening letters, so they hit the road for at least 6 months living in a camper.

Holmes’ ability to pay $804 million to the likes of Safeway and Walgreens seems to be a bit of a reach, as Holmes never cashed out of Theranos stock–at its peak valued at  $4.5 billion–is unemployed with no prospects, and is widely assumed to be, as they say, flat broke as are her parents. As to her sentence, what is widely expected is a multi-year sentence. If that happens, the defense will request that she remains free on bail (a motion for stay) while the filing to the Federal Appeals Court is made, a process that can take a year or more from filing to a decision. 

Judge Davila’s record has been to take in all the circumstances and to be measured in sentencing. After several years, he is intimately familiar with Theranos to the likely point of dreaming about it at night. Factors he may consider in sentencing, start of her term, where it will be served, restitution and fines: lack of flight risk, Holmes’ young child, and her current condition both physical and financial. Savvy court watchers have noted that if Federal law enforcement is in the courtroom, Holmes may initially be taken to prison and held, then freed on bail pending appeal. The jury convicted her on only four out of 11 counts (and threw out the 12th), but it remains that the prosecution proved and the jury decided that she was fully capable of engineering fraud, not once but several times, leaving Balwani’s Mesmerizing Influences aside.

Balwani’s own sentencing on 12 charges, with the same maximum of 20 years in Federal prison, is scheduled for 7 December, Pearl Harbor Day, at 10 am PT.

The Mercury News articles, while thorough, are paywalled: 11 November (defense memo), 11 November (Billy Evans letter), 14 November (prosecution filing). FierceBiotech, MedCityNews

The US Attorney, Northern District of California summary: U.S. v. Elizabeth Holmes, et al.  District Court documents here.

NBC Bay Area will cover the sentencing live here at 10 am PT, 1 pm ET, 6 pm GMT.

News roundup: cybersecurity benchmarking study, Tyto Care’s Home Smart Clinic, Long Island’s $2.6B life sciences hub, Singapore’s Speedoc raises $28M, NantHealth’s sinking feeling, Hims & Hers revenue up 95%

Censinet, the American Hospital Association (AHA), and KLAS Research announced at industry confab CHIME22 Fall Forum a benchmarking study on health system cybersecurity. The study, currently enrolling hospital and health system participants, according to the release will enable a comparison of cybersecurity investments, resources, performance, and maturity to peer organizations across key operational cyber metrics. It will also cover NIST Cybersecurity Framework (NIST CSF) and Health Industry Cybersecurity Practices (HICP). Censinet provides healthcare risk management solutions, consolidating enterprise risk management and operations capabilities. Hat tip to HISTalk 9 Nov.

TytoCare’s latest is the rollout of the Home Smart Clinic, a platform that combines TytoCare’s FDA-cleared handheld for remote physical exams; Tyto Insights, their AI-powered diagnostic support that aids diagnosis in remote physical exams; Tyto Engagement Labs, a suite of user engagement services including behavioral science-backed blueprints, consulting services, and marketing tailored to each specific program and cohort; and support for multiple provider models and different patient populations. The new platform is targeted to health plans and providers. Release (Yahoo)

Long Island NY’s proposed Midway Crossing project, creating a life sciences hub in quaintly named Ronkonkoma, would cost about $2.55 billion, but create an estimated 4,300 science, technology, engineering, and healthcare positions. They’d also be lucrative, with salaries mostly well over $100,000 a year. The proposal was authored (sic) by Michael Dowling, president of Northwell Health, and James Hayward, PhD, president and CEO of Applied DNA Sciences, and appeared in Newsday (paywalled). Its 179 acres would include a STEM educational center, research labs, biotech manufacturing facilities, health care offices, a hotel and convention center plus connect to the LIRR and Long Island-MacArthur airport. While approved by local authorities, it now needs funding. Becker’s

Traveling to the far Pacific…Speedoc, a home health company based in Singapore, raised $28 million. Speedoc offers app-based video consults and home visits, non-emergency ambulance transport, and remote monitoring for several chronic conditions. It is available in nine cities in Singapore and Malaysia. According to Mobihealthnews, it is also one of the technology partners for the two-year pilot of the Mobile Inpatient Care@Home initiative by the Ministry of Health’s Office for Healthcare Transformation. The pre-Series B funding round was led by its new investors Bertelsmann Investments, Shinhan Venture investment, and Mars Growth. Vertex Ventures Southeast Asia & India, which led its $5 million Series A funding round in 2020, also participated. 

Our Readers with very long memories will remember that transformative health darling, NantHealth. This Patrick Soon-Shiong NantWorks company, originally in genetic sequencing for cancer research, was caught en flagrante in a ‘pay to play’ scheme with the University of Utah funding NantHealth and providing data that would prove useful to other Soon-Shiong companies [TTA 18 April 2017]. It’s long since pivoted to payer/provider data solutions (NaviNet). What’s not improved is their bottom line. It lost $13.7 million, or $0.12 cents per share, increasing loss by 26% from 3Q 2021. Shares on NasdaqGS are trading at $0.31. Yahoo!Finance/SimplyWallSt. Another tip of the cap to HISTalk 9 Nov.

And who said all of telehealth is suffering? Online direct-to-consumer marketer Hims & Hers posted a third consecutive $100 million+ quarter in revenue. Their Q3 revenue was up 95% versus Q3 last year, reaching $144.8 million. They also gained 70,000 new online subscribers for a total of 991,000, up 80% year over year. Q4 guidance is up to $159 million to $162 million, with a full-year revenue forecast of $519 million to $522 million. And yes–they’re profitable. Their embarrassing TV spots notwithstanding, they seem to have found The Magic Formula. FierceHealthcare

Oracle’s Big Vision will be missing a lot of people; layoffs hit Cerner, customer experience, marketing staff

‘Healthcare Transformation’ will ring hollow for the many employees at Oracle and Cerner who will be getting 60-day notices — or less — to depart.

One group is within Oracle in the US customer experience division and marketing, and apparently more. According to Bloomberg, the customer experience area that provides analytics and advertising services had been lagging for some time and has been reorganized, losing in the process junior sales employees, a division sales director, and marketing positions. Numbers are not provided, nor information on severance. Also Becker’s.

On the Oracle thread on TheLayoff.com, Oracle Cloud Infrastructure (OCI) North America has been substantially downsized effective 15 August, especially those supporting a Startups product. 

More extensive are the Cerner cuts. This Editor has been following postings as they happen on both the Reddit r/cernercorporation and TheLayoff threads (Oracle thread here). Areas mentioned appear to be primarily internal/non-customer facing: technical project management in population health, enterprise change management, enterprise process improvement, multiple VPs, sales engineers, application services/support, marketing (of course), talent acquisition, and other areas. People ranged from new hires who had offers pulled, to those under one year, to highly experienced employees with a decade or two in the company. UK tech site The Register has an estimate from one posting of 10,000 layoffs. Given that Cerner has about 20,000 employees, that is close to 50%.

As is typical of mass layoffs, those at Cerner reported that they were notified en masse by managers on Monday through snap meetings. Their packages were cleverly designed to skate through the 60-day WARN notice to the state in the US, providing for an end date in 60 days, just before the official cutover to Oracle on 1 October. Severance packages without insurance or benefits after the 60 days were two weeks for every year at Cerner, not particularly generous given the uncertain economy and freezes all over tech. If the individual sought and was offered a position at Oracle, the severance package would be pulled, which is the usual maneuver to discourage any internal job-seeking from this group.

There is no indication of any cuts to Cerner outside the US, yet. The Independent, citing The Information, indicated that further Oracle cuts may come from Canada, India, and Europe. Oracle has a goal of saving $1 billion.

In this Editor’s view, Oracle is erasing Cerner as fast as it can [TTA 19 July] and doing internal housecleaning (bloodletting) at the same time. As to the former, Mike Sicilia’s testimony to the Senate committee about Cerner at the VA [TTA 28 July] had a distinct tone of cleaning up the previous regime’s mess–this should be no surprise. Yet Cerner’s tippy-top management remains in place, with generous compensation and separation arrangements in place [TTA 19 July with links to prior articles]. Cerner’s healthcare customers should take note, either way.

Having been there and done that more than once, our best wishes to everyone affected. Remember that you are not your job, pack up your learnings in your kit bag for a new journey, and you will land a good job soon.

Hat tip to HISTalk as well for covering this story and reaching many on the provider and partner side in the industry that we do not.

Oracle’s ‘new sheriff’ moving to fix Cerner EHR implementation in the VA: the Senate hearing

Last week’s (20 July) hearing on the VA’s increasingly wobbly EHR transition from VistA to Cerner showcased Oracle’s executive vice president for industries Mike Sicilia. His testimony to the Senate Committee on Veterans’ Affairs had a heaping helping of ‘the new sheriff has arrived in Dodge City’.  As of six weeks ago, after the Transformational Big Vision kvelling faded, Cerner’s painful stumbles became Oracle’s VA Migraine [TTA 21 July, 21 June]. Cerner is now part of the Oracle Global Health business unit that falls under him.

First, the pledge made in his statement: “Unlike Cerner alone, Oracle brings an order of magnitude more engineering resources and scale to this formidable challenge.” After outlining the work that Oracle has done for CDC and NIH on Covid-19, he testified:

You should consider that in effect the VA, the Department of Defense (DoD) and the Coast Guard obtained a new, vastly more resourced technology partner overnight to augment Cerner. We also strongly believe in this mission and consider it not only a contractual obligation but a moral one to improve healthcare for our nation’s veterans and their caregivers. We intend to exceed expectations. 

Of the list of 36 issues detailed by the committee to VA Deputy Secretary Remy, Sicilia condensed them into three main areas: performance, design, and functionality. The concrete moves are:

  • Oracle will move the implementation to the cloud and rewrite Cerner’s pharmacy module, completing both tasks within 6-9 months
  • They have set up a ‘war room’ consisting of Oracle’s top talent of senior engineers and developers, working on the entire DoD/VA EHR systems as priority #1, with the first order of work a top-to-bottom analysis. While integrating with the Cerner team, the statement makes it clear that Oracle “brings an order of magnitude larger engineering team than Cerner”.
  • The Cerner EHR system is currently running on a dated architecture with technology that is in some cases two decades old and thus will be moved within 6-9 months to Oracle’s Generation 2 cloud. (That must be reassuring to thousands of hospitals and practices!)
  • Shortly after the closing, Oracle fixed a database bug that caused 13 of the last 15 outages, and as of last week there were no further outages. 
  • Testifying on the status of the “unknown queue”,  he stated it was designed to account for human error rather than to mitigate it, so it will be redesigned–it will be automated more on the front end and on the back end will have a better process.
  • Oracle will “start over” with the Cerner pharmacy module, rebuilding it as a showcase of a cloud-optimized web application.

VA’s EHR leaders also testified at the Senate hearing. Terry Adirim, Executive Director of the Electronic Health Record Modernization Integration Office at the VA, confirmed that unsurprisingly, Cerner’s next rollouts scheduled for the Boise VA Medical Center and other centers have been postponed indefinitely due to multiple ongoing system stability issues: change control and testing; challenges with increased capacity; basic functionality; its resilience design, and its response in last resort disaster situations. These specific issues overlapped but were more specific than those covered in Sicilia’s statement, which focused on the actions that Oracle would take.

Adirim and Kurt DelBene, the VA’s CIO, were roasted by the senators as painting a “very rosy picture”. The OIG report itemized at least 60 recommendations before going further. Adirim, to his credit, noted that DoD had similar stability issues in its system which was a warning, but the VA’s system is far more complex and care oriented than DoD which presumably exacerbated those issues. FedScoop and especially HISTalk’s Monday Morning Update 7/25/22

Amazon moves to acquire One Medical provider network for $3.9B (updated)

Amazon joining the in-person provider network space for real. Amazon Health Services last week moved beyond experimenting with in-person care via provider agreements (Crossover Health, TTA 17 May) to being in the provider business with an agreement to acquire One Medical. Earlier this month, news leaked that One Medical as 1Life Healthcare was up for sale to the right buyer, having spurned CVS, and after watching their stock on Nasdaq plummet 75%.

  • The cash deal for $3.9 billion including assumption of debt is certainly a good one, representing $18 per share, a premium to their $14 share IPO in January 2020. (The stock closed last Wednesday before the announcement at just above $10 per share then plumped to ~$17 where it remains.)
  • The announcement is oddly not on One Medical’s website but is on Amazon’s here.
  • The buy is subject to shareholder and the usual regulatory approvals. The IPO was managed by JP Morgan Securities and Morgan Stanley. It is primarily backed by Alphabet (Google).
  • One Medical’s CEO Amir Dan Rubin will stay on, but there is no other executive transition mention.
  • Also not mentioned: the Iora Health operation that serves primarily Medicare patients in full-risk value-based care models such as Medicare Advantage (MA) and Medicare shared savings, quite opposite to One Medical’s membership-based concierge model. However, Iora’s website is largely cut over to One Medical’s identity and their coverage is limited to seven states.

There is a huge amount of opinion on the buy, but for this Editor it is clear that Amazon with One Medical is buying itself into in-person and virtual primary care for the employer market, where it had limited success with its present largely virtual offering, and entree with commercial plans and MA. One Medical has over 700,000 patients, 8,000 company clients and has 125 physical offices in 12 major US markets including NYC, Los Angeles, Boston, and Atlanta. It has never turned a profit. Looking at their website, they welcome primarily commercial plans and MA (but not Medicare supplement plans).

Amazon, with both a virtual plus provider network, now has a huge advantage over Teladoc and Amwell, both of which have previously brushed off Amazon as a threat to their business. There is the potential to run two models: the current Amazon Care pay-as-you-go model and the One Medical corporate/concierge model. This puts Amazon squarely in UHC’s Optum Health territory, which owns or has agreements with over 5% of US primary care practices, is fully in value-based care models such as Medicare shared savings through its ACOs, and is aggressively virtual plus integrating services such as data analytics, pharmacy, and financial. Becker’s

What doesn’t quite fit is Iora Health and the higher cost/higher care needs Medicare market that is less profitable and requires advanced risk management, a skill set that Amazon doesn’t have. This Editor will make a small prediction that Iora will be sold or spun off after the sale.

This Editor continues to believe that the real game for Amazon is monetizing patient data. That has gained traction since we opined that was the real Amazon Game in June and October last year, To restate it: Amazon Care’s structure, offerings, cheap pricing, feeds our opinion that Amazon’s real aim is to accumulate and own national healthcare data on the service’s users. Then they will monetize it by selling it to pharmaceutical companies, payers, developers, and other commercial third parties in and ex-US. Patients may want to think twice. This opinion is now shared by those with bigger voices, such as the American Economic Liberties Project. In their statement, they urged that the government block the buy due to Amazon’s cavalier attitudes towards customer data and far too much internal access, unsecured, to customer information (Revealnews.org from Wired). Adding PHI to this is like putting gasoline on a raging fire, and One Medical customers are apparently concerned. For what it’s worth, Senator Bernie Sanders has already tweeted against it.   MarketWatch

Whether this current administration and the DOJ will actually care about PHI and patient privacy is anyone’s guess, but TTA has noted that Amazon months ago beefed up its DC lobbying presence last year. According to Opensecrets.org, they spent $19.3 million last year. In fairness, Amazon is a leading Federal service provider, via Amazon Web Services. (Did you know that AWS stores the CIA’s information?)  One Medical is also relatively small–not a Village MD/Village Medical, now majority owned by Walgreens Boots. This is why this Editor believes that HHS, DOJ, and FTC will give it a pass, unlike UHG’s acquisition of Change Healthcare, especially if Amazon agrees to divest itself of the Iora Health business.

Treat yourself to the speculation, including that it will be added as an Amazon Prime benefit to the 44% of Americans who actually spend for an Amazon Prime membership. It may very well change part of the delivery model for primary care, and force other traditional providers to provide more integrated care, which is as old as Kaiser and Geisinger. It may demolish telehealth providers like Teladoc and Amwell. But as we’ve also noted, Amazon, like founder Jeff Bezos, deflects and veils its intents very well. FierceHealthcare 7/25, FierceHealthcare 7/21, Motley Fool, Healthcare Dive