News roundup: UHG CEO’s Bad Day at Capitol Hill; Kaiser’s 13.4M data breach; Walgreens’ stock beatup; Cigna writes off VillageMD; Oracle Cerner shrinks 50%; Owlet BabySat gets Wheel; fundings for Midi, Trovo, Alaffia, Klineo

May 2, 2024 | by

It was a Bad Day at Boot (Capitol) Hill for UnitedHealth Group’s CEO Andrew Witty. On May Day, he was the Man In The Arena facing two Congressional grillings–the first from the Senate Finance Committee in the morning, and the second in the afternoon from the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations. The precipitating event was the Optum/Change Healthcare data breach and system hacking by ALPHV/BlackCat, a disruption which is as of today not fully resolved.  Millions of patients may have had data stolen and exposed–a number that has yet to be determined, but an outcome for which UHG, while paying the ransomwaristes, has prepared. Already, the VA has notified 15 million veterans and families of that possibility.

This Editor will be linking below to multiple articles and Mr. Witty’s prepared testimony. Interested Readers can also refer to YouTube for extensive links to video testimony. Highlights:

  • Both houses criticized the slow response and amount of financial assistance given to providers after the shutdown of Change’s systems prevented (and still is preventing) timely claims processing and payment. While ‘near normal’ volumes of medical claims and 86% restoration of payment processing sounds good, that leaves a lot of wiggle room on over two months of totally disrupted processing and payment. The billion or so cited sounds impressive but much of this is in loans. Most practices and groups simply do not have the financial cushion or billing skillset to bridge this disruption, to pay back loans, or to bookkeep this.
  • Also criticized at this late date was UHG being unable to determine how many individuals had PHI exposed in the breach.
  • As to cause, the description of UHG finding that surprise, surprise, Change’s systems were way out of date, stored on physical servers versus the cloud, and used Citrix remote access without multi-factor authentication (MFA) was utterly savaged. According to Mr. Witty, ALPHV after days of knocking around got in on the one server that did not have MFA authentication.

The blunt fact is that UHG had close to two years (January 2021-Oct 2022) before the buy closed. Due diligence consisting of a full audit had to have been done on Change’s IT systems. They processed what UHG wanted to buy. In this Editor’s estimation, Job #1! for UHG should have been ensuring that Change’s systems were hardened, then upgrading to what Mr. Witty called UnitedHealth’s standards. This Editor will go further. A minimum requirement for the sale should have been security hardening. There was time before the closing.

Senator Thom Tillis, R-North Carolina, had the best riposte. He brought a copy of “Hacking for Dummies” to the hearing, highlighting MFA. I doubt he was much moved by UHG now bringing in cybersecurity company Mandiant to both investigate and harden their systems, nor by UHG having to pay ransom, without knowing whose data was compromised.

  • Beyond the breach, UHG was called ‘monopolistic’ by both Republican and Democrat Members. There were calls to break up UHG as not ‘too big to fail’. UHG has grown by acquisition and consolidation of services. As this Editor has speculated, this is likely coming to an end with the new, much more stringent Merger Guidelines. This sentiment paints a large, unmissable target on UHG’s back for aiming FTC’s and DOJ’s missiles. (DOJ also has a huge score to settle with UHG dating back to the failure to block the Change sale.)

By the end of the day, Mr. Witty looked quite the worse for wear–tie and collar askew, slightly sweaty, versus the perfect poses of the various Members. Becker’s, FierceHealthcare, Axios, HealthcareDive    Mr. Witty’s Senate testimony statement, House testimony statement

Speaking of data breaches, Kaiser Permanente reported a big one to Health and Human Services (HHS). This relates to ad tracker information shared with third-party advertisers such as Google, Microsoft, and X. Kaiser used it in secured areas of their website and mobile apps. Information disclosed could be name and IP. Kaiser reported it on 12 April but only disclosed on 25 April that 13.4 million records may have been affected. The ad trackers have since been removed. TechCrunch, FierceHealthcare 

Walgreens stock not recovering. April was WBA’s worst month in five years and May is no better, with the stock muddling around $17.50. The month slid around 18%. Their 52-week high was $33. As of now, CEO Tim Wentworth’s actions such as closing locations and writing down VillageMD haven’t convinced Mr. Market of WBA’s worth, but in fairness it’s early in his tenure. In the Insult to Injury Department, it was revealed that the IRS is seeking to claw back $2.7 billion in unpaid 2014-2017 taxes. Crain’s Chicago Business

Cigna is also writing down its interest in VillageMD. Almost forgotten is that in late 2022, Cigna invested $2.5 billion into VillageMD. They have now written down $1.8 billion of that ‘low teens’ ownership. The planned tie was connecting Village Medical into Evernorth, Cigna’s medical services area. It was also supposed to provide Cigna with an annual return on investment, but one assumes it did not. The writeoff threw Cigna’s Q1 into the red with a net loss of almost $300 million versus a prior year profit of $1.3 billion, despite a strong quarter that grew revenue 23% versus prior year to $57.3 billion. Healthcare Dive

Oracle Health has been successful–in shrinking Cerner by close to half. Records of employment at Cerner’s Kansas City-based operation have declined from 11,900 people in 2022 (Kansas City Area Development Council) to a current 6,400 (internal documents). Cerner itself reported 12,778 local full-time-equivalent employees in 2022. Oracle had multiple layoffs of Cerner affecting Kansas City workers and has consolidated multiple office buildings and campuses. Becker’s

In more cheerful news:

Baby monitor Owlet announced a strategic partnership with Wheel for Owlet’s BabySat. BabySat is Owlet’s FDA-cleared prescription vital signs monitor for infants 1-18 months. Wheel clinicians can now prescribe BabySat which enables parents to order BabySat from Owlet and other suppliers. With Wheel, BabySat also integrates with durable medical equipment (DME) suppliers who accept and can bill for the product through many insurance providers for partial or full reimbursement. Wheel is a virtual care platform and physician/nurse-practitioner online network available direct to consumer and to enterprises. Owlet release

And rounding up funding:

MidiHealth closed a $60M Series B funding. This was led by Emerson Collective with participation from Memorial Hermann, SemperVirens, Felicis, Icon Ventures, Black Angel Group, Gingerbread Capital, Able Partners, G9, and Operator Collective for a total of $99 million in funding. Midi provides virtual support for women going through peri- and full menopause. The fresh funding will help them expand national insurance coverage, hire and upskill an additional 150 clinicians by end of year, diversify service lines, and scale to care for 1 million+ women per year by 2029. Release

Trovo Health launched with $15 million in seed funding, led by Oak HC/FT. The NYC-based AI-powered provider task assistance platform will use the funding to build its technology platform, clinical operations, and leadership team. Mobihealthnews 

In the same roundup, NYC-based Alaffia Health scored a $10 million Series A round. This was led by FirstMark Capital with participation from Aperture Venture Capital. Alaffia creates generative AI solutions for payment integrity in health insurance claims operations, with the aim of eliminating insurance fraud, waste, and abuse for health plans, third-party administrators, self-insured employers, stop-loss carriers, and government agencies. Their total raise to date is $17.6 million. Paris-based Klineo also raised €2 million for its oncology clinical trials search platforms, assisted by AI, for the use of doctors and patients. BPIFrance and business angels participated in the round.

News roundup: Owlet’s Dream Sock, BabySat go to market; General Catalyst’s HATco agrees to buy Summa; Cigna’s contrasting provider strategy; new ElliQ robot assistant debuts at CES

January 18, 2024 | by

JP Morgan’s Healthcare Conference (JPM) and CES are as expected big generators of news around digital health–here’s a selection from then and more:

Owlet launches Dream Sock and BabySat at CES. Both were FDA-cleared in November and June 2023 respectively. The Dream Sock baby monitor received first-of-kind de novo clearance for pulse oximetry and sends real-time Health Notifications for low pulse rate, high pulse rate, and low oxygen to parents’ smartphones. Target market is infants 1-18 months and 6 to 30 pounds with direct sale on the Owlet website at $299.

The BabySat is the prescription-only version (left) targeted to infants 1-18 months and 6-30 pounds, but with acute or chronic medical conditions. It also has the unique capability not only to track vital signs but also for the provider to customize alarms for oxygen saturation and pulse rate. Owlet’s BabySat information page explains in plain English the type of medical conditions where the BabySat would be of assistance and the steps to obtain a prescription that is fulfilled through their partner AdaptHealth. A virtual Rx and insurance reimbursement are in the works. A small drawback is that it is only usable with an iPhone. Happily, their stock is also on the rebound at the highest point in six months. Having followed them since the ‘telehealth for the bassinet set’ days of 2012-2013, their continued independence, their rebound from some dark days, as well as their focus on baby health, this Editor continues to wish them bonne chance. Owlet release (via Yahoo Finance).

Big Investor General Catalyst announced their first acquisition move for the Health Assurance Transformation Corporation (HATCo) not at JPM but today (17 Jan). Summa Health is a $1.8 billion (in revenue) non-profit integrated healthcare system headquartered in Akron, Ohio that encompasses hospitals, community medical centers, a health plan, an accountable care organization, a multi-specialty physician organization, medical education, research and the Summa Health Foundation. HATCo’s objective is to transform healthcare towards a goal of “health assurance”, defined as “a more affordable, accessible and proactive system of care” where presumably their extensive experience in investing in healthcare gives them expertise. [TTA 10 Oct 2023] The letter of intent initially sets up a partnership with immediate investment in Summa while due diligence takes place, then when completed moves to a definitive agreement with details of the acquisition and a transaction price in the next few months. Summa would move from a non-profit to a for-profit in becoming a subsidiary of HATCo. According to their information, current management will remain in place.

Summa’s incentive is to stem losses, reportedly at $37 million through Q3 2023, more than double the prior year. HATCo in November stated its desire to buy a health system in Summa’s $1 to $3 billion range. As usual, the buy is subject to regulatory approvals and a final closing date.  HATCo release, Summa Health statement on “our future”, FierceHealthcare

To the contrary, Cigna prefers to partner, not own, healthcare providers. As a payer closer by many degrees to hospitals and practices than General Catalyst, structured much like UnitedHealth Group with Evernorth its counterpart to Optum, they have avoided the aggressive ownership of physician practices. UHG employs about 10%–90,000–physicians through ownership of practices as of December 2023. MedPageToday  At JPM, Cigna CEO Eric Palmer emphasized ‘strategic relationships’ like a minority share of VillageMD (majority owned by Walgreens) in their acquisition of Summit Health, and creating an ‘ecosystem’ that connects to the best partners. Their investments will be wrap-around services in home health, behavioral and virtual care now that a merger with Humana is once again off the table. Becker’s Payer They’ll have some cash to do so; Cigna’s sale of their Medicare Advantage business will likely be to Health Care Service Corporation (HCSC) and fetch $3 to $4 billion. Becker’s Payer

Intuition Robotics debuts ElliQ 3 at CES. An interactive desktop companion robot designed to improve social connection and alleviate loneliness of older adults and those with assistive needs, the new version updates the robot hardware and software capabilities including generative AI capabilities powered by Large Language Model (LLM). The new design from Yves Behar’s design studio, Fuseproject, is also 1.3 pounds lighter and has a 36% smaller footprint which makes it easier to both place and handle, along with a fully integrated screen. Technical improvements include an octa-core SoC and a built-in AI processing unit (APU); 33% more RAM, twice the amount of computing power and memory, and an inclusion of a dual-core AI processing unit (APU), all of which are needed to power generative AI for greater ‘conversant’ capabilities. The LLM technology integrated into the Relationship Orchestration Engine makes real-time decisions regarding actions, scripted conversation, and generative AI conversations. For instance, the person speaking with ElliQ may talk about activities and beliefs, which are stored and classified. In another conversation, ElliQ may use that information to suggest participation in activities and social interactions, while ensuring that the context and flow of conversation is ‘guardrailed’ and appropriate. The AI can also assist the person in activities such as painting or writing poems together.

Current partners include the New York State Office for the Aging, Inclusa (a Humana company), and the Area Agency on Aging of Broward County, as well as newer partners like The Olympic Area Agency on Aging, Ypsilanti Meals on Wheels, and others. Release

Israel-based Intuition Robotics most recently raised $25 million in August 2023 in an unlettered round with $20 million in venture capital plus $5 million in venture debt. TTA 19 Sept 2023

Short takes: Owlet Dream Sock FDA clearance; Best Buy-Mass General partner for at-home care; Amazon offers Prime members deeper One Medical discount

November 10, 2023 | by

Some really good news for Owlet. The Dream Sock finally got to the mountain top and received de novo FDA clearance for pulse oximetry. To date, it is the only over-the-counter medical pulse oximetry device for the baby market. This adds to the device’s Baby’s Live Health Readings, including pulse rate and oxygen saturation level. The platform also provides Health Notifications, which send alerts to a smartphone with lights and alarm sounds if baby’s readings fall outside of preset ranges. Existing and new Dream Sock buyers will be upgraded to the new features by end of 2023. The Dream Sock is for use with infants 1-18 months and 6 to 30 pounds. Pricing observed for the current Dream Sock is in the $300 range. Owlet release

This follows FDA clearance for the prescription BabySat in June [TTA 21 June]. That is scheduled to be introduced later this year in the US only. The non-prescription Dream Duo, which combines the Dream Sock with a baby cam, will continue to be sold. 

Financially, things have improved a lot since last year. The stock as of 11 July was restored to NYSE listing, but it required a reverse split and an 18 month compliance plan, Currently, it’s trading at about $4.80 which is NYSE compliant, up from well below $1 in June. Also in July, they hired a new president and chief revenue officer, Jonathan Harris, from recently acquired air purification system Molekule. In August, they reported a Q2 adjusted EBITDA loss of $4.3 million, narrowed substantially from prior year Q2’s $16.7 million. This was achieved on lower revenue of $13.1 million versus last year’s $18.3 million. Q1 revenue was $10.7 million. Q3 will be reported on 13 November. Release  Having followed them since the ‘telehealth for the bassinet set’ days of 2012-2013, their continued independence, and their focus on baby health, this Editor continues to wish them bonne chance.

Mass General Brigham’s hospital-to-home and home care programs get a Best Buy boost. Mass General plans to integrate Best Buy’s delivery capabilities for their Healthcare at Home program in several areas. For Home Hospital acute care, Best Buy will supply the Current Health remote patient monitoring program to build out a technology-enabled clinical delivery model that connects patients to nurses, paramedics, advanced practitioners, and physicians. For Home Care, Best Buy will supply Lively Mobile Plus personal emergency response system (PERS) and leverage out capabilities such as Geek Squad to supply Mass General Brigham (MGB) patients with delivery of home-based care and logistics management for the care team. MGB plans to introduce Best Buy as part of Home Hospital in five Boston-area acute care hospitals. The program is for patients with heart disease, chronic obstructive pulmonary disease (COPD) and infections. While their Home Care operation is stated by MGB to be the largest certified provider in New England, the Home Hospital program can presently cover only 33 patients at a time. MGB’s goal is to shift 10% of inpatient care to patients’ homes over the next five years, so expanding capacity and capabilities are critical. FierceHealthcare, Mobihealthnews, MGB release

Get your One Medical now, just $99 per year or $9 a month! It’s an offer hard to refuse for Amazon Prime members. It’s half off the annual membership of $199, with additional members up to five for only $6 a month or $66 annually. What Prime members get is 24/7 virtual care access without further charge through their app that includes video chats with licensed providers plus their “Treat Me Now” service, fast care for common issues like cold and flu, skin issues, allergies, and urinary tract infections. It does not include any One Medical in-office services, if available in the member’s area. The 200 million+ Prime members were briefly offered in February a $144 membership but apparently this new incentive is not only at a deeper discount, but also longer term or permanent.

Time to make that $3.9 billion acquisition pay off. This push is clearly to build up One Medical membership, which stood at only 836,000 members at end of 2022, and build up cash flow. Amazon is not reporting on the success of the earlier discount offer. A question this Editor has–if 1 million Prime members signed up–that’s only a 0.5% rate–does One Medical have the telehealth capacity to serve these patients, especially at peak usage such as cold and flu season?

Prime members are also able to access Amazon Care, which is virtual only, cash-only by medical event asynchronous telehealth services. If a Prime member goes in person to a One Medical practice, they do take insurance. FierceHealthcare, Healthcare Dive, Amazon Prime offer page

Wednesday roundup: Owlet BabySat monitor clears FDA; Rosarium Health seed $1.7M led by Rock Health; Optum Startup Studio shuts; CareRev lays off 100, changes CEOs; pet telehealth Fuzzy shuts, leaves workers and vendors in lurch

June 21, 2023 | by

Owlet’s BabySat medical pulse-oximetry device receives FDA clearance. The wire-free sock design connects to a mobile app and tracks pulse rate and oxygen saturation level. The app alerts parents and caregivers when those readings fall outside ranges set by a physician. Launch is projected for later in 2023. Unlike other Owlet socks and systems, it will be by physician prescription only for babies that the doctor determines should have additional monitoring at home. There is a button for interested consumers (and presumably clinicians) to be notified of release information. Owlet release, Owlet product page, Mobihealthnews.  The original Smart Sock continues to be offered as a consumer product outside of the US and Canada. Owlet’s Dream Sock tracks non-clinical quality sleep quality indicators, including heart rate, average oxygen, wakings, and baby movements. In December 2022, FDA accepted Owlet’s de novo application for an enhancement to Dream Sock that provides heart rate and oxygen notifications in addition to sleep monitoring tools [TTA 18 Mar]. Perhaps these mean a turnaround is in the offing in this now much smaller company. They received a $30 million private placement lifeline in February, but the stock on the NYSE, while rising, is still well below $1. [TTA 16 May].

Rosarium Health receives a pre-seed round of $1.7 million from Rock Health and two other investors. It’s surprising because Rosarium is in the business of medically necessary home modifications to enable safe aging at home. Not your typical digital healthy, sexy, techy, buzzy Rock Health investment. But one that bears a few important checkmarks: since 2019, the Centers for Medicare & Medicaid Services (CMS) has covered home modifications in two different programs: Medicare Advantage (MA) through supplemental benefits, and Medicaid, through Medicaid Waivers (Section 1115 Waivers) or Medicaid Managed Care programs. In the current environment, that assurance of payment makes it most attractive indeed. Rock Health was joined by Primetime Partners with participation from Flare Capital. Rock Health release

Just when you think it’s getting better….

  • Optum Startup Studio fades to black–report. Startup Studio was Optum’s startup incubator and graduated over 100 early-stage companies that received mentorship and a chance to pilot their offerings through Optum’s companies and systems plus receive $25,000 to $50,000 in non-dilutive grant funding. The report in Axios attributed the program’s end to a reorganization within Optum that left mentors like Liz Selvig, who joined it in 2022, out in the cold. The timing could not have been worse for just-shuttered fertility planning startup Bunnii. Optum’s abandonment quickly killed interest from a potential lead investor who looked at Optum’s program and piloting as a vote of confidence. This Editor notes that the website and application pages are still live.  If this report is incorrect, we invite Optum to contact us.
  • CareRev, a short-term nursing/CNA staffing app platform, reportedly is laying off 100 employees or one-third of its staff. The same reports claim $100 million raised to date, but Crunchbase lists ~$50 million through a Series A in April 2021. Earlier this month, CareRev’s co-founder and CEO, Will Patterson, BSN, RN, resigned after The Information inquired on allegations that he used drugs and encouraged employees to try LSD and cannabis. CareRev subsequently named Brandon Atkinson, formerly COO of cardiac digital health Cleerly Health. Release. Becker’s
  • Fuzzy, a veterinary care digital health/e-commerce startup based in San Francisco, folded last week without paying employees or vendors. It raised about $80 million through a Series C from 2016. Backers included Icon Ventures, Greycroft, Crosscut, and Matrix Partners, private vet practices in the US, UK and Germany plus individual investors. Its $15/month subscription-based model included 24/7 live chat and telehealth, ship-to-home prescriptions, educational content, vet-curated pet items, and programs for nutrition, training, and obedience. The bad part: reports from employees on Twitter and Glassdoor indicated that the company stopped paying health insurance and salaries two weeks ago but were not formally notified of the company shutting until Saturday 16 June, and that vendors as well as contractors were misled on payment for weeks. The website is dark and CEO Zubin Bhettay’s LinkedIn profile plus Twitter handle are gone. Coverager