Theranos, The Trial of Elizabeth Holmes, ch. 7: Edison labs consistent–in deficiency and strange results

November 11, 2021 | by

And Elizabeth Holmes knew. The last two years of Theranos’ existence, were, to put it mildly, fraught, for anyone honest. Job 1 for the very last in a parade of lab directors, Kingshuk Das, MD, was to respond to CMS on substantial deficiencies found in a November 2015 on-site inspection. The CMS deficiency report, sent to the prior lab director in January 2016, two months before Dr. Das’ start, had a subject line that would grab anyone’s immediate attention: “CONDITION LEVEL DEFICIENCIES – IMMEDIATE JEOPARDY.”

The report went on to say that it was determined that your facility is not in compliance with all of the Conditions required for certification in the CLIA program.” and concluded that “the deficient practices of the laboratory pose immediate jeopardy to patient health and safety.”

Dr. Das found some interesting things in his early days on the job, such as the Edison labs producing results detecting abnormal levels of prostate-specific antigen (PSA)–in female patients. When he brought this to Holmes’ attention, she quoted a few journal articles stating that certain rare breast cancers in women might present that result. This didn’t seem quite plausible to Dr. Das. Holmes then told him that it wasn’t an instrument failure, but rather a quality control and quality assurance issue. Nevertheless, Dr. Das went back and voided every Edison lab test made in 2014 and 2015, stating to Holmes that the Edison labs were not performing from the start. Most Theranos results sent to patients were produced on third-party machines made by Siemens and others, often on inadequately sized blood samples. 

As Dr. Das testified to the defense, many skilled people at Theranos earnestly tried to fix the problems with the Edison lab machines, but, as The Verge put it in part, if Holmes didn’t believe Dr. Das, other employees, or multiple preceding lab directors that the machines were really, truly broken, did it matter?

The defense is maintaining that Holmes didn’t really understand the lab details and was heavily influenced (ahem!) by president Sunny Balwani. However, the Babe in the Medical Startup Woods defense falls apart when there’s no Sunny to blame–he departed shortly after Dr. Das’ arrival. 

The actual theme–a long-term pattern of deception aimed at those who wanted to believe, and ponied up Big Bucks--was reinforced by a witness before Dr. Das. Lynette Sawyer was a temporary co-lab director for six months during 2014 and 2015, but never came to the Theranos site. It seems that her main duties were signing off remotely on documents using Docusign and backing up then-lab director Dr. Sunil Dhawan, Balwani’s dermatologist who came to the lab a handful of times. Even more amazingly, she was unaware of Theranos’ signature ‘nanotainers’ and the backup use of third-party devices. After her six-month contract was up, she departed, uncomfortable with Theranos’ procedures.

Kicking off the day was Judge Davila’s regular admonition to those in the public section of the courtroom to type vewy, vewy quietly. Then the video display for exhibits broke down. This led to a two-hour delay while the court found an antique projector to show the images to the jury and the public on a blank wall.

One wonders if the tapping plus the tech breakdown topping off the Parade of Fraud is leaving the jurors numb–or wanting to jump into the well above, even if there is no bottom. CNBC, Wall Street Journal (15 Oct), 5KPIX

TTA’s earlier coverage: Chapter 6, Chapter 5, Chapter 4 (w/comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1

To be continued….

 

 

News & deal roundup: Oak Street adds telespecialty RubiconMD, ATA plumps for wider telehealth access, yet claims fall to 4%, West Suffolk NHS adds Zivver mail/file security, Northwell’s $100M for AI–and miss industry shows yet?

October 29, 2021 | by

Primary care network Oak Street Health acquired virtual specialty telehealth provider RubiconMD for $130 million. Oak Street is a 19-state network of physicians in care centers who specialize in Medicare patients. RubiconMD has 230 specialists who provide doctor-to-doctor teleconsults (eConsults) in 120 specialties, with an emphasis on cardiology, nephrology, and pulmonology, which is a strong fit for Oak Street. RubiconMD also has separate offerings for specialty care panels and behavioral health. The $130 million includes up to $60 million in cash or cash/stock, subject to achievement of defined performance milestones. Management transitions were not disclosed. Release, FierceHealthcare

The American Telemedicine Association wants to preserve wider telehealth access into 2022–even if the public health emergency (PHE) for Covid has to be extended. Although the Medicare Physician Fee Schedule proposed by CMS for 2022 includes areas of wider telehealth access and reimbursement (temporary access under Schedule 3 added in 2021) into 2023 regardless of the PHE, Congressional action is required to permanently expand telehealth beyond the existing programs mostly for rural areas. If necessary, ATA is advocating that Health & Human Services (HHS) extend the PHE through 2022 so that telehealth access and reimbursement are preserved. ATA release, FierceHealthcare

While this Editor can understand ATA’s frustration and the sincerity of its aims, it distorts the emergency meaning of a PHE that is just about nonexistent except for mandates. And telehealth claims, even with current access, have sunk down to a tick above 4%, 60% of which are mental health codes (FAIR Health July national data). Too many providers, too little demand? 

The West Suffolk NHS Foundation Trust (WSFT) has selected Zivver UK to secure its mail and file transfer systems, as it migrates from NHS Mail to Microsoft 365. It includes encrypted email to patients as a core requirement meeting NHS digital standards, and ease of use for both sender and recipient in MS Outlook. 4,800 staff at WSFT, which covers 280,000 people who live in West Suffolk. Release. Hat tip to HISTalk for this and the next two stories.

Northwell Health backs AI health startups via joint venture with Aegis Ventures with $100 million stake. The JV between the two New York-based companies “will ideate, launch, and scale AI-driven companies to address healthcare’s most challenging quality, equity, and cost problems” with stakeholders across Northwell’s extremely large system. According to the release, “Northwell has a track record of success in AI research, including the development of a landmark algorithm that predicts patients’ overnight stability to reduce the need to wake them for vital sign checks.” Nice to know that a health system appreciates patient sleep. 

And finally–miss the grip and grin of a F2F industry trade show and presentations? Your Editor, who was once a habitué of meetings from Boston to Florida, does. Really! Virtual conferences, once fun, are now tedious. So enjoy this walk through of HLTH21 by Ben Rooks, the Investor Man, at the Boston Seaport (a great venue, though not precisely central), right down to the barbers, puppy rescue, disco ball, and juice shots. Courtesy of HISTalk

Theranos, The Trial of Elizabeth Holmes, ch. 5: how to easily fool rich people and their investment offices

October 28, 2021 | by

It seems like smart people with big money like to jump into wells with no bottom, too. Yesterday’s testimony by Lisa Peterson in the Elizabeth Holmes trial indicated that Ms. Holmes knew her ‘marks’ as well as any grifter at the horse track. She concentrated on Very Rich People, whose Very Large Private Investment Funds are handled by ‘family offices’. Those offices handled investments for families such as DeVos (one of the top 100 richest families in the US), Walton (Walmart), and Cox (media). Holmes targeted five or six of these family offices, with the come-on line that she was seeking them because, after all, institutional investors wanted to recoup their investment via going public too soon for the Miracle Blood Lab.

Perhaps it was the prospect (and prestige) of backing a revolutionary healthcare technology, or large denominations falling from the sky, or just leaving it to their advisors, but they believed the sizzle, didn’t check that the steak was soy–and lost up to nine-figure sums. For these family offices, and for Rupert Murdoch, the losses were embarrassing, not life-affecting.

The former Secretary of Education Betsy DeVos did not testify either, leaving it to Lisa Peterson, who oversees private equity investments for RDV Corp., the DeVos family office. Ms. Peterson, who wouldn’t have the job if she weren’t decently savvy, drew a picture for the prosecution of being consistently lied to by Ms. Holmes and Theranos executives before committing to a $99 million investment through its legal entity Dynasty Financial II, LLC on 31 October 2014:

  • Holmes and Balwani showed financial projections of $140 million in revenue in 2014 and $990 million in 2015. Peterson testified she did not know that both 2012 and 2013 had zero revenue–a real lapse on her part, in this Editor’s view
  • Theranos claimed validation by ten major pharmaceutical companies, including Pfizer (in last week’s testimony, revealing that their validation was forged)
  • The RDV Corp. group was told multiple times that Theranos would offer hundreds of tests via finger stick with the analyzer at 50% of the cost
  • The DeVos investors supposedly never knew that third-party analyzers were doing all the testing. Both the pharma company validation and testing were critical in the underwriting agreement, Peterson said.
  • Holmes told Peterson the analyzers were being used in military helicopters (false) and that the company did not buy third-party analyzers (false, again).
  • Prior to the investment, three members of the DeVos family and Peterson’s boss Jerry Tubergen met with Holmes at Theranos’ Palo Alto headquarters on 14 October. Cheri DeVos had her blood drawn and tested using the Theranos lab. The family subsequently doubled their investment.

The binders were thick, the press articles at that stage were effusive, and both Safeway and Walgreens were going to roll it out in their stores. All the risk was on those companies for the execution, according to Petersen’s notes. 

So what we see is a classic ‘fake till you make it’ strategy, designed to play on two major retailers looking to buck up their pharmacy areas and select private investors with major funds. The articles in the WSJ and Fortune were fulsome to the point of parody. Holmes made an impact on supposedly cynical writers and Jim Cramer of CNBC’s ‘Mad Money’, who was highly influential on markets and investors at that time. It was to Cramer that Holmes made the famous statement, “This is what happens when you work to change things, and first they think you’re crazy, then they fight you, and then all of a sudden you change the world.” Whether she was scripted or really thought she was The Second Coming of Steve Jobs, it’s an audacious statement worthy of Napoleon or George S. Patton–which she had to walk back to Mr. Cramer and others in the press by early 2016 when the John Carreyrou/WSJ reporting made its own impact. The family offices questioned Holmes, of course, based on the email trail–and Theranos consistently downplayed the news to them as well as denying anything was wrong to the press.

What this Editor would like to know is once the signals went sideways, did any of these private offices’ investment managers get into Theranos to do some overdue due diligence and turn over some rocks, knowing that snakes might well fly out–or just let it ride?  CNBC, KTVU Fox 2 tweetstream 

What is somewhat risky may be the jury. The possibility of a mistrial has increased with halfway to go.  There have been three jurors removed, with their seats filled from the five alternates selected. Three more losses would lead to fewer than 12 jurors. Now the prosecution and defense could agree to go on–not a likely scenario. Judge Davila has increased the jury day by an hour daily to speed the trial up, but reports indicate the usual work and family problems. One juror was recently dismissed for playing a sudoku puzzle in the jury box due to “fidgetiness”. Choosing a jury was difficult in this tech area as few with the background and intelligence to understand financial fraud would be willing, for work and personal safety reasons, to appear on the jury. The defense is looking to unseal the juror questionnaires for their own strategic reasons. But CNN makes a mountain out of a speed bump, since Judge Davila is unlikely to pave any roads towards a mistrial.

Unfortunately, the Mercury News, Bloomberg, and WSJ, which would be primary sources, are paywalled.

TTA’s earlier coverage: Chapter 4 (see new comment from Malcolm Fisk), Chapter 3, Chapter 2, Chapter 1

To be continued….

Google joins the behavioral health wars, adds new senior executive from Headspace

October 28, 2021 | by

Google, having disbanded Google Health as a unit and scattered their products and teams internally, has decided that behavioral health is worth spending on across business lines. Megan Jones Bell, Psy.D., formerly chief strategy and science officer of Headspace, recently purchased by Ginger, rejoins Google this week as their first clinical director of consumer and mental health. 

She will be overseeing Google’s approach to mental health, supervising a team of clinicians, as well as coordinating primarily consumer-facing products such as the controversial verification of health information on Google-owned YouTube, across Google Search, Maps, Fitbit, and Cloud, medical products like the Care Studio EHR search app, depression screeners, and for employee health and safety. FierceHealthcare, Becker’s HealthIT

At least initially, Google does nothing in a small way. At HLTH21, Google’s chief health officer Karen DeSalvo, MD boasted that “Our get up every morning, raison d’être, is impact. It’s helping billions around the world be healthier.” Then followed broad and ambitious statements about social determinants of health (SDOH) and advancing health equity. Both have become a standard script for executive speeches at these conferences, virtual and in-person.

When scattered across multiple lines of business, it’s a little difficult to track ROI. And perhaps, that is the real Googly Goal. This Editor is of the opinion [TTA 24 Aug] that health is only a part-time pursuit for Big Tech, and that the real game is monetizing data–on people and what can be sold to healthcare organizations. When Big Tech tries to solve the problem of health by itself–which surely sounds what Dr. DeSalvo is about–it stumbles. Just ask David Feinberg, who decamped for Cerner after many frustrations at Google.  

Doro AB splitting in two, Doro Care changing name to Careium

October 27, 2021 | by

Sweden’s Doro AB announced today that it is dividing itself into two companies. Doro Phones will continue to be known as Doro. Doro Care will adopt a new name, Careium. This will involve a formal redistribution of shares to current shareholders. The plan is that Careium will be listed on Nasdaq First North Growth Market for Nordic small to mid-sized companies early in December 2021. The actual distribution will be disclosed at an Extraordinary General Meeting on 22 November.

According to Doro’s release on the corporate change, this started in 2020 with the separation of the phone and care business lines. Doro’s board of directors (BOD) believes that the now-former Doro Care “has now achieved the right conditions to act independently and develop outside Doro. A distribution and listing of Careium’s shares is considered to be able to contribute to Careium being able to continue to develop its business model and offering.” 

Careium’s logo is live–but not its website, which has but a discreet notice that it is under construction. There is a link to Doro Care in the UK only highlighting their three companies: Centra, Eldercare, and Welbeing–though what is not stated is the future of these three trade names. For their debut day, a standard marketing procedure (SMP) would be to go live with a home page containing the brand name change statement here. Another mystery: why the Careium website links only to the UK, and not to the websites of all the countries where Doro Care operates: Germany, France, the Netherlands, Norway, Sweden, and Spain.

And speaking of trade names….Careium will have difficulty using that name if their business development eventually includes the US, because there is a small home care company in Illinois called Careium Home Health which may, or may not, have protected that name. 

What do you think of the new name? Does it sound like something out of the Roman Empire, or is it a good choice? (It’s better than Facebook’s new moniker of Meta-whatever)

Hat tip to Adrian Scaife, head of collaboration and marketing at Alcuris.

Serious swerving indeed: 23andMe buys Lemonaid Health for $400 million

October 27, 2021 | by

From genomic testing to telehealth and prescription delivery is quite a swerve. Or a pivot, as they say. 23andMe, the richly financed (via a February SPAC with Virgin Group) and valued ($4.8 billion market cap) DNA tester, originally marketed to trace ancestry and analyze for health information, announced the acquisition of Lemonaid Health. A telehealth company that markets their quick diagnosis of conditions such as mental health, erectile dysfunction, thyroid, and sinus infections with fast delivery of medications, it’s quite a changeup for 23andMe, at least on the surface.

But, as this Editor opined as far back as 2018 in advocating a Genomic Bill of Rights and revisited in 2020, consumer genetic testing for the above as a model was finito just before the pandemic started. (When was the last time you saw a formerly lederhosen-clad actor trumpeting their new kilt or imagining their connection to famous dead people?) There were plenty of questions about the ethics of consumer-driven genomic testing as practiced by 23andMe and Ancestry.com. Consumers found it difficult to opt-out of how their genomic data was being used commercially, and understanding if it was being protected, as it likely was not.

The real gold for 23andMe is, of course, selling all that data to pharmaceutical companies. So in that context, Lemonaid, as really a marketer of meds, is not the stretch that it seems on the surface. But, there’s more. For 23andMe, which has consistently covered its cake of business aims in a thick and sticky icing of customer-focused mission, from their blog and signed by CEO Anne Wojcicki: “We are acquiring Lemonaid Health so that we can bring true personalized healthcare to 23andMe customers. Personalized healthcare means healthcare that is based on the combination of your genes, your environment, and your lifestyle — with recommendations and plans that are specific to you.” Meanwhile, Lemonaid, widely advertised online and on TV with quick telehealth consults, brings in the cash.

The transaction was announced at $400 million in a cash and stock deal, with 25% of the total deal value in cash and the rest in shares. Paul Johnson, CEO and co-founder of Lemonaid Health, will become the General Manager of the 23andMe consumer business and will continue to run Lemonaid Health. Ian Van Every, Managing Director, UK and also a co-founder, will manage and grow UK operations. According to Crunchbase, total investment in Lemonaid was a relatively small $57.5 million in five rounds since 2015, up to a Series B. Release. Reuters

PERS/RPM catchup: VRI bought by ModivCare for $315M; Connect America buys AI-powered RPM 100Plus, opens new SC center

October 27, 2021 | by

ModivCare buys VRI. While your Editor was on holiday leave enjoying the beautiful beaches of late-late summer, the long-rumored sale of PERS and remote patient monitoring provider VRI [TTA 9 July] closed on 22 September. The buyer is a non-emergency medical transportation (NEMT), home care (Simplura), and meal delivery company once known as Circulation and now ModivCare. Purchase price is $315 million, subject to customary purchase price adjustments. VRI generated $56 million of revenue and $21 million of adjusted EBITDA for the twelve-month period ended June 30, 2021. The majority owner of VRI since 2014 was Pamlico Capital. VRI will remain HQ’d in Franklin, Ohio and Sullivan, Illinois. Jason Anderson remains as its CEO under ModivCare. Business Wire release, ModivCare news site. And PERS Insider has an insightful article with a link to the investor presentation

VRI gives ModivCare immediate revenue, as well as impressive capabilities in medical alert systems, established monitoring centers, connecting care in the home plus other residential settings, and cross-selling in ModivCare’s relationships with Medicare Advantage and Medicaid (state) plans. Your Editor became familiar with VRI as far back as 2006 in her QuietCare days, then when Andy Schoonover and Chris Hendricksen ran VRI (and your Editor wished they’d buy the company). Andy Schoonover is now the CEO of CrowdHealth, a community-based provider of health services.

ModivCare has managed 48.2 million trips through the industry’s largest network of contracted transportation companies. They recently signed another agreement with Uber Health to provide on-demand transportation in underserved communities. They claim to be the largest NEMT company in the US with a 40% market share and trades publicly on NASDAQ with a market capitalization of $2.3 billion. NEMT is one of the linchpins of social determinants of health (SDOH). 

And Connect America treated itself to a snack after the big meal of Lifeline. PERS Insider broke the news on their purchase of 100Plus, supposedly the first AI-powered RPM company. Terms, purchase price, and management changes were not disclosed. Their pitch is to providers with an essentially turnkey system: identify eligible patients, perform patient consent and training, ships devices directly to your patients ready to use, and a ‘virtual medical assistant’ to monitor patients. The AI part of this is Ava, an AI-enabled, text message-based chatbot. This strengthens Connect America’s small RPM division, ConnectVitals. Release  

Connect America also announced in August that they will be opening a new facility to consolidate the scattered Lifeline operations into a single purpose-built location. The new $1 million, 25,000 square-foot facility will bring 71 jobs to the area and will open by end of year. PERS Insider, Upstate Business Journal 

News roundup: Grand Rounds rebrands as Included Health, HealthEdge buys Wellframe, TytoCare rings Google Chime

October 20, 2021 | by

Grand Rounds Health rebranding to Included Health. Virtual care and navigation telehealth company Grand Rounds, which merged with Doctor On Demand back in May, is adopting the new and inclusive name, Included Health. Aside from the full rebranding as a company that is “turning the existing model on its head” for those who “feel marginalized by today’s healthcare, and it’s all about subtraction, taking things away from us,” as Owen Tripp, CEO stated in the announcement at HLTH21, it’s also a convenient name. Around the time the merger was being finalized, this Editor noted that Grand Rounds had acquired a small care concierge/health navigation targeting the LGBTQ+ community called…Included Health [TTA 28 May]. Release, FierceHealthcare

HealthEdge acquires Wellframe. HealthEdge, which specializes in payer administrative and clinical systems connectivity and automation software, announced their intent to acquire digital health and care management company Wellframe. Terms were not disclosed. Wellframe currently serves more than 33 million members. HealthEdge stated that they would be integrating their GuidingCare and HealthRules Payor with Wellframe’s systems, along with Wellframe co-founder and CEO Jake Sattelmair, his leadership team, and approximately 150 employees. While there’s some overlap, the two companies greatly complement each other in integrating payer systems to work more efficiently end-to-end in member and care management.  Release

TytoCare Chimes In. Telehealth diagnostic TytoCare upgraded its two-way video capabilities using the Amazon Chime platform. Its new video features include enhanced video quality, multi-party calls, and the ability for clinicians to conduct remote visits on any tablet, including iPads. TytoCare enables users to perform remote physical exams of the heart, skin, ears, throat, abdomen, and lungs, plus measure blood oxygen levels, heart rate, and body temperature. Release

Short takes: Walgreens now majority share of VillageMD, CareCentrix; Lark Health lifts $100M, UnitedHealth Group’s profitable Q3 and Change delay

October 14, 2021 | by

Walgreens has ‘gone big’ with its VillageMD primary care practice investment, putting on the table $5.2 billion. It’s now t the majority owner with 63% of the company, up from 30% last year. Their projected number of co-located full-service Village Medical practices is projected to grow to 600 by 2025, up from a current 52. VillageMD is still planning an IPO in 2022, making for a potential great ROI for Walgreens. Walgreens Boots Alliance also invested $330 million in CareCentrix, a post-acute and home care provider, for 55% of the company. CareCentrix was a recent investor in Vesta Healthcare [TTA 9 April]. Wrapping it all up is their new Walgreens Health, for tech-enabled consumer-directed primary care, post-acute care, and home care.

Weight loss and chronic conditions app Lark Health flew into a $100 million Series D, led by Deerfield Management Company, with PFM Health Sciences and returning investors Franklin Templeton, King River Capital, Castlepeak, IPD, Olive Tree Capital, and Marvell Technology co-founder Weili Dai. Their total funding since 2011 is over $195 million (Crunchbase). Lark claims an AI-based platform for individual coaching in weight loss along with related conditions such as diabetes, pre-diabetes, diabetes prevention, cardiovascular, and behavioral health. The platform logs and provides immediate feedback on food and tracks data from sources like Apple Health. The new funds will be used for R&D and to expand its virtual care integrations to more payers. Current payer partnerships include Anthem, Highmark BCBS, and Medical Mutual. Release, MedCityNews, FierceHealthcare

UnitedHealth Group, parent of UnitedHealthcare and Optum, reported $4.1 billion in profit for Q3, notching $72.3 billion in revenue for the quarter, a tidy gain over year prior’s $65.1 billion. The mega-acquisition of Change Healthcare to fold into OptumInsight is further delayed, being worked towards a closing of early 2022, having hit more than a few strong regulatory headwinds and the rocks of DOJ [TTA 14 Aug].  Becker’s Payer Issues, FierceHealthcare 

Theranos, The Trial of Elizabeth Holmes, ch. 3: Safeway, Walgreens execs testify to deception, frustration with Holmes, failed pilots and labs (updated)

October 13, 2021 | by

It’s Tuesday, and it’s another court day in Silicon Valley’s Big Trial, this time with the former C-level executives of Safeway and Walgreens who did the partner deals with Theranos–and rued the days Elizabeth Holmes walked in their doors. Updated for additional Tuesday testimony reports.

Former Safeway (supermarket) CEO Steve Burd returned to the stand for more prosecution questions and a turn with the defense. Mr. Burd had formed Safeway Health to introduce Theranos in 2010, after Ms. Holmes personally negotiated a deal with Safeway without attorneys. Ms. Holmes definitely wove a spell on Mr. Burd. “There are very few people I had met in the business that I would actually say are charismatic. She was charismatic, she was very smart, and she was doing one of the hardest things you can do in a business, and that’s to create an enterprise from scratch.” Always decisive, ‘she owned the room’.

From that point, and after an unusually high 100 hours of due diligence (updated, ArsTechnica 13 Oct), it was full speed ahead. But the potholes turned up fast after Ms. Holmes had convinced Safeway to invest in the company, claiming that they could run 95% of tests on one cartridge and that they could handle the volume from hundreds of store testing sites. During a pitch to the Safeway board, board member Michael Shannon offered his blood draw for a PSA test, the screening test for prostate cancer. The Theranos Edison machine “made a bunch of noise,” but never delivered a result, even after Ms. Holmes said something about getting it later (updated, ArsTechnica 13 Oct).

By the time the pilot started with regular blood draws, from the testimony, “there were results that didn’t make any sense. Samples were lost and samples were not properly cooled. He also said tests took days to come back when other companies could deliver in 24 hours. In an email to Holmes, Burd wrote: “I am genuinely concerned that Safeway’s lab reputation gets worse by the day.” By 2012, Safeway had built out 98% of 960 planned stores to hold Theranos testing sites, but had long since blown past the $30 million estimate. Multiple launch dates were missed over two years. By November 12, Mr. Burd had reached the end of his tether. “I can only recall having been discouraged once in the last 62 years. That said, I am getting close to my second event. ” and “This does not feel like a partnership, I’ve never been more frustrated.”

Theranos never rolled out to the public with Safeway. Mr. Burd retired from Safeway after a long career in May 2013.

Apparently the defense cross conducted by Kevin Downey is concentrating on The Big Chance that Safeway took with Theranos, after all a ‘startup’ that never built out their technology for consumer use, and all the regulatory hurdles the company faced. Mr. Burd confirmed it but he and the board reviewed the agreement and included requirements such as a CLIA waiver to operate the lab devices, negotiating preferred network status with commercial health plans, and a network of partners. Most of all, Safeway negotiated the right to terminate the agreement if the pilot failed and Theranos did not obtain FDA clearance. On the redirect, the government maintains that Theranos started in 2003 and purported to be making money (!!).

Up next for the prosecution was Wade Miquelon, former CFO of Walgreens. Walgreens was the only Theranos partner to put Theranos centers in their store. He testified to the presentation he received in 2010 which was similar to those received by investors. It included claims that Theranos’ technology could “run comprehensive blood tests” from a finger stick in real time and that it had partnerships with major pharmaceutical companies and military organizations–some of which were semi-true, the rest fictional. Apparently, some of the validation reports from pharmaceutical companies were false–while they had logos, there was one from Schering-Plough where its name was misspelled and never noticed by anyone at Walgreens. The prosecution had already established to the jury in opening arguments on 8 September that the Pfizer report endorsing the technology had also been faked. It had been written by Theranos, with a Pfizer logo added. 

Mr. Miquelon testified that he was never told that third-party labs were being used.“My understanding is, the blood would be tested on the [Theranos] Edison device,” adding later, “My understanding was that the base level testing would be able to do 96 percent of the testing done at labs.” He stated that third-party testing would be to check calibrations and accuracy. Relying on such testing would be beside the point of cost and time savings. 

Mr. Miquelon’s testimony will continue on Wednesday.

KTVU2’s coverage is nearly all tweets so it’s assembling a picture from many fragments. Ars Technica on Mr. Burd.  Updated: Additional information on Mr. Miquelon: Fortune, Washington Post

Walgreens sued Theranos in 2016 for $160 million invested [TTA 9 Nov 2016]. The company was one of the few able to claw back substantial funds, a paltry $25 million, in August 2017. Safeway settled in June 2017 for an undisclosed amount. They had built out 800 centers and cost the company $360 million before the agreement was axed (updated for cost, ArsTechnica 13 Oct).

If you have access to the WSJ, their coverage details a trail of forged documents, massive fundraising–and losses, and partner deception. The NY Times ran an interesting ‘color’ article on the atmosphere in the San Jose courtroom. The trial is settling into a groove. Two court artists (complete with art) have interesting impressions of Ms. Holmes and the participants. The spectators appear to be primarily retirees with the time to line up for the 34 seats in the courtroom and 50 in an overflow room, though the testimony goes over the head of many. Ms. Holmes’ family and partner accompany her daily. And two jurors have departed, one a Buddhist who became uncomfortable with the idea of punishing Ms. Holmes. Judge Davila has already extended trial hours one hour to get through the stack of witnesses a little faster.

Our previous coverage: Chapter 1, Chapter 2

To be continued….

Mental health apps Headspace, Ginger to merge into $3B Headspace Health

August 27, 2021 | by

Two acquisition prospects, Headspace and Ginger, decided to beat the heat and merge. The two companies, currently headquartered in Santa Monica and San Francisco, will combine into Headspace Health. From the context of the release, the Ginger brand will be sunsetting. The merger is expected to close in Q4 subject to the usual regulatory and financial approvals. Financial terms were not disclosed. The combined company claims a valuation of $3 billion.

Leadership will combine from both companies. Russell Glass, Ginger’s present CEO, will be CEO of Headspace Health. CeCe Morken will remain CEO of Headspace and take on the additional role of President for the combined entity. 

Digital mental health continues to be hot in a hot August. Headspace, which started as a mindfulness and meditation app in 2010, then sidled into behavioral coaching to mitigate stress and aid in sleep, to date raised $216 million through a Series C (Crunchbase). Ginger, a cognitive therapy service with both self-guided coaching and psychiatric video consults, was founded in 2011 and raised $220 million through a Series E. Headspace has a direct to consumer focus with business partnerships with Google, Roche, and employers, while Ginger has developed into a benefit for payers like Cigna and Amerihealth Caritas. The combined company claims it will cover 100 million lives direct-to-consumer and through its more than 2,700 employers and health plan partners.

It is obvious from the management setup and the overpadded release (sorry, but it’s true!) that the lead company in this is Headspace. Can an IPO be far away? Release, Healthcare Dive

Telehealth Wars: Amwell’s raises game with buys of SilverCloud and Conversa Health (updated); Teladoc’s slow member, hospital growth lead to $133M Q2 loss

July 29, 2021 | by

Updated. Amwell’s announcement today (28 July) of the twin acquisitions of SilverCloud Health and Conversa Health for the tidy total sum of $320 million in cash and stock was, if not quite a ‘see ya and raise ya’ move, a confirmation that Amwell was going to raise its game, at long last, versus Teladoc. SilverCloud provides digital telehealth programs for common behavioral health conditions. A spinoff of Trinity College Dublin, it counts as US clients Kaiser Permanente, Optum, and Providence Health, plus over 80 percent of NHS’ mental health service. Conversa is a StartUp Health portfolio company that developed a scalable care management triage system for at-risk patients that provides automated patient outreach and engagement tools that can move them to higher levels of care where needed. Clients include Northwell Health, UCSF Health, UNC Health, Merck, MedStar Health, and Prisma Health. 

For Amwell, this expands their capabilities in the hot behavioral health area and, with Conversa, into a care management platform targeted to providers, pharma, and payers. They see digital workflows, patient engagement, a longer-term relationship with their consumer base through the continuum of care, through these two companies’ hospital, health system, health plan, and employer clients.

The wrinkle? Neither company is all that far along–SilverCloud has total funding of only $26 million but is more established with 750,000 clients and 300 organizations. Conversa’s Series B was a tiny $8 million for total funding of $34 million. Amwell also paid a premium price. According to Healthy Skeptic, a blog written by long-time UnitedHealth Group senior healthcare executive Kevin Roche, their combined revenue was $15 million–more than a 20x multiple of the purchase price. The other challenge for Amwell? Making all the systems work together in a meaningful way–and to market what can be a confusing picture properly. Amwell press release, Mobihealthnews

Update 2 August. The Irish Times, undoubtedly working a local contact at Silver Cloud, ascertained that Silver Cloud was purchased by Amwell for a price in excess of $250 million. That means a tidy payday of €23 million ($27.3 million) for the company’s founders – Ken Cahill, James Bligh, Karen Tierney, Dr John Sharry, and Gavin Doherty. If that is so, Conversa was bought for $70 million or less. One wonders why a shell game tactic was used, as Conversa is known to be an early-stage company. Hat tip to HISTalk today.

For Teladoc, growing beyond urgent care, plus integrating the former Livongo and InTouch Health, presents difficulties. Telehealth usage continues to shrink as in-person visits rebound save for behavioral health, which is also bad news for the payers as utilization goes up. Teladoc now struggles to add new members after last year’s pace. Their hospital business that came with last year’s acquisition of InTouch Health is growing more slowly than expected [TTA 16 July]. The expected cross-sales traction with the former Livongo hasn’t caught fire yet, but that may change with myStrength Complete and the myStrength app going live with health plans or employers starting this month. The first enterprise customers are a major Blues plan (likely HCSC) and a Fortune 100 employer. [TTA 14 May]. Teladoc is also growing into other areas with more continuous user engagement, such as chronic care, weight management, and primary care. That program, Primary360, is in “very very late-stage” discussions with multiple payers. Teladoc, which has never been profitable, lost $133.8 million for Q2.   Healthcare Dive

IBM Watson Health’s stumble and possible fall

July 21, 2021 | by

This Editor hadn’t thought about or seen news about IBM Watson Health in over a year…and likely, neither did you. Granted, our minds have been Otherwise Engaged, but for the company that was supposed to dominate AI and health analytics, it’s notable that TTA’s last two articles mentioning Watson Health was 25 April 2019, on a report that its Drug Discovery unit was being cut back as the latest in a series of executive cutbacks and lawsuits (MD Anderson on a failed oncology initiative), and 14 Feb 2020 on 3M’s lawsuit on unauthorized use of their software.

The New York Times in an investigative piece (may be paywalled or require signup for limited access), brings us up to date on what is happening at IBM Watson, and it’s not bright for Watson Health. IBM, like so many other companies, badly underestimated the sheer screaming complexity of health data. Their executives believed they could translate the big win on the “Jeopardy!” game show in 2011, based on brute computing power, into mastery of healthcare data and translation into massive predictive models. The CEO at the time called it their ‘moon shot’. Big thinkers such as Clayton Christensen chimed in. IBM managers sang its praises to all in healthcare who would listen. This Editor, on a gig at a major health plan in NJ that was ‘thinking big’ at the time and used IBM consultants extensively, in 2012 was able to bring in speakers from Watson for an internal meeting.

But we haven’t been on the moon since 1972 (though probes have visited Mars). Since the big push in 2011-12, it’s been one stumble after another. According to the Times:

  • The bar was set much too high with oncology. Watson researchers knew early on in their research at the University of North Carolina School of Medicine that their genetic data was filled with gaps, complexity, and messiness. The experience was similar with Memorial Sloan-Kettering Cancer Center. The products growing out of the UNC and MSKCC research, Watson for Genomics and Watson for Oncology, were discontinued last year. These were in addition to the MD Anderson Cancer Center initiative, Oncology Expert Advisor for treatment recommendations, that was kicked to the curb [TTA 22 Feb 2017] after $62 million spent. At the same time, IBM’s CEO was proudly announcing at HIMSS17 that they were betting the company on multiple new initiatives. 
  • Watson Health, formed in 2015, bought leading data analytics companies and then didn’t know what to do with them. TTA noted in August 2018 that Phytel, Explorys, and Truven Health Analytics were acquired as market leaders with significant books of business–and then shrank after being ‘bluewashed’. HISTalk, in its review of the Times article, noted that along with Merge Healthcare, IBM spent $4 billion for these companies. IBM’s difficulties in crunching real doctor and physical data were well known in 2018 with revealing articles in IEEE Spectrum and Der Spiegel. 

Six years later, Watson Health has been drastically pared back and reportedly is up for sale. Smaller, nimbler companies have taken over cloud computing and data analytics with AI and machine learning solutions that broke problems down into manageable chunks and business niches.

What’s recoverable from Watson? Basic, crunchy AI. Watson does natural language processing very well, as well as or better than Amazon, Google, and Microsoft. Watson Assistant is used by payers like Anthem to automate customer inquiries. Hardly a moonshot or even clinical decision support. For business, Watson applications automate basic tasks in ‘dishwashing’ areas such as accounting, payments, technology operations, marketing, and customer service. The bottom line is not good for IBM; both areas bring in a reported $1 billion per year but Watson continues to lose money. 

Volte-face: VA now puts their Cerner EHR implementation on hold

July 16, 2021 | by

The US Department of Veterans Affairs has pulled a 180° on the Cerner EHR implementation. In a move worthy of the old-time moonshine runners, VA Secretary Denis McDonough went before the Senate Veterans Affairs Committee on Wednesday to announce that the deployment of the Cerner system in the VA is on hold. This is after maintaining two weeks ago [TTA 2 July] that they were sticking with Cerner and the implementation, pending a further review.

In the interim, the VA Office of Inspector General (OIG) issued two reports that criticized the unreliable estimating process for various upgrades to the system, including lack of complete documentation, and the implementation of the Cerner EHR at Mann-Grandstaff VA Medical Center in Spokane, Washington, starting in October 2020. HealthcareITNews

In a classic ‘falling on one’s sword’ in the Wednesday hearing, Secretary McDonough told the committee that the project review found multiple “governance and management challenges” as well as patient safety concerns and system errors. He attributed them to VA and Cerner leadership, or lack thereof. For instance, VA clinicians couldn’t easily find help from Cerner on the initial rollout at Mann-Grandstaff VA Medical Center. The clinician using it called the help desk, reaching a Cerner employee there but a week. The Cerner EHR also generated duplicate prescriptions and confused patients.

The approach to implementing the modernized Cerner EHR approach will be ‘reimagined’ (DC-speak for redoing what should have been done right the first time, which started in 2017). This will start with a new, enterprise-wide governance structure to manage the project and integrate it with other modernizations, according to the Secretary. He admitted that the original plan to roll out the EHR by geographic area was a mistake. It will also not be synchronized with the Department of Defense rollout, which has proceeded without serious hitches. Go-lives will now be based on evidence of readiness, such as training, infrastructure, and management.

The Deputy Secretary has been designated to be directly in charge of the project. Acting undersecretary for health Richard Stone, MD, who had been in charge of the Cerner implementation, resigned in June after not being considered for the deputy secretary post. Secretary McDonough pitched the senators on quickly confirming nominee Donald Remy, with whom he will be speaking on big decisions. (One would hope. Mr. Remy, who was confirmed on 15 July. )

The final straw for the senators was budget. HISTalk summarizes: “The cost of the project, which was originally estimated at $10 billion when Cerner was awarded a no-bid contract in 2017, has risen to over $20 billion. McDonough has ordered a new budget estimate for the entire project, which will include the several billion dollars of infrastructure upgrades that the original estimate missed.”

Looks like the Old Gray Mare of EHRs, VistA, will be lingering for awhile. This Editor lays even money that the senators will be discussing the same issues, such as revenue cycle management, in 2025. Becker’s Hospital Review, Federal News Network

The implications of Teladoc’s integration into Microsoft Teams

July 16, 2021 | by

The Big News this week was the terse announcement by Microsoft and Teladoc that Teladoc’s Solo application for hospitals and health systems will be integrated into Microsoft Teams applications. The integration includes workflows and through Solo, integration into EHRs while remaining in Teams.

During the pandemic, many health systems resorted to Microsoft Teams to communicate internally and one-on-one with patients. Integration means that while on the Teams consult, a clinician can securely access clinical data included within the EHR and workflows via Teladoc Health Solo without leaving it. It can also connect care teams on the consult. The release also mentions the magic words artificial intelligence and machine learning, without giving examples. 

As of now, with telehealth receding to perhaps 5% of visits based on claims [TTA 9 July], it’s a strategic win for Teladoc to integrate with a part of the Microsoft suite widely used by providers. It also builds on an existing relationship between the companies, as Teladoc already uses Azure as one of its cloud providers. Health systems still have to license Teladoc Solo if they do not already, and engineering work is yet to be done. Teladoc has a substantial foothold in this market due to its July 2020 acquisition of InTouch Health. InTouch’s hospital-to-home telehealth is now Teladoc Solo, with a separate line of business into the specialty telehealth consult market through its portable wheeled telehealth carts for in-hospital use. It’s notable that the InTouch brand remains, albeit visibly transitioning to Teladoc.

According to Credit Suisse’s analysis (page 3), 46% of C-Level executives from hospitals and health systems (combined representing 563 hospitals) said that they currently work with Microsoft Teams as a telemedicine vendor. 11% said they already work with Teladoc/InTouch Health.

As for telehealth already used by providers, such as Zipnosis’ ‘white label’ triage/telehealth system (now owned by insurtech Bright Health) and Bluestream Health, can they compete? Also FierceHealthcare

An ‘insider’ point of view on the Connect America acquisition of Philips Lifeline

July 9, 2021 | by | 2 Comments

This Editor, through a search initiated due to reader Adrian Scaife’s comment on the article below, happened on a back article from a news source on the Connect America acquisition of Philips Lifeline. Who knew (as they say) that there was a newsletter solely devoted to the PERS business? The article was written from a real insider point of view with a complete background on Connect America, Lifeline, and also why Philips put Lifeline up for sale.

  • It’s likely that Philips bought high and sold low. In 2006, Philips purchased Lifeline for a reported $750 million, then HealthWatch for an additional $130 million. At the time of the announcement, PE Hub put the value of the company in the $200-400 million range. It’s understandable that with the rise of smartphones and mobile, wrist-worn band-type PERS, the value of what is largely a traditional PERS company would suffer, but the best case is a 60 percent loss over 14 years.
  • The industry believes that Philips mismanaged the company. Example: dealers did not have 4G/LTE cellular equipment to replace the 3G in the field. The phrases ‘a mess’ for the organization and ‘run the Lifeline name into the ground’ aren’t used lightly.
  • For the past few years, Lifeline has been in the shadow of Philips’ other clinically-oriented healthcare systems. As this Editor noted, Philips has divested or spun off multiple businesses in North America.
  • Philips ran the business without understanding its unique dynamics, including dealer networks and a B2B +B2C market of home health agencies and senior housing combined with direct-to-consumer sales. They focused on the latter and kept it on short rations for the past few years.
  • They were also slow to market with innovations and had a significant amount of negative publicity on the performance of AutoAlert for fall detection starting in 2011 (Editor Steve) and in 2014.

The Philips Lifeline saga was a longer and more costly version of Tunstall’s acquisition of AMAC. At the time of sale, Lifeline was #1 in PERS, and AMAC was #3. Even with Tunstall’s expertise and the addition of remote patient monitoring, the US market was Too Tough For Tunstall. They sold in 2019 to…drum roll…Connect America.

The article includes excerpts from an interview with CEO Janet Dillione, a review of the Connect America team, and well wishes from those insiders. PERS Insider (Subscription to the weekly newsletter is free and found here.)

Another irony: Just prior to the acquisition, Dennis Shapiro, the former head of Lifeline, passed away on 16 February, aged 87. Mr. Shapiro was responsible for the company creating the first modern PERS radio pendant, telephone-connected base unit, and call center monitored service in 1980.