Legal roundup: Dorsata sues athenahealth, provider group on trade secret theft, Nevada terms Friday Health Plans

July 28, 2023 | by

Dorsata, a women’s health-focused EHR, filed a lawsuit on 19 July against athenahealth and provider group Unified Women’s Healthcare. The suit has nine counts that allege unfair and deceptive acts and practices, breach of oral contract, breach of fiduciary duty, common law fraud, unjust enrichment, theft of trade secrets, tortious interference with current customers, breach of nondisclosure agreement, and commercial disparagement. 

A joint venture that went very sideways. After Unified purchased Women’s Health USA in 2021, an existing customer of Dorsata, athenahealth approached Dorsata to create a joint solution to pitch to Unified. According to Dorsata, which signed a non-disclosure agreement, Dorsata provided trade secrets to athenahealth and the two made oral agreements to approach Unified as a joint venture. Dorsata developed a software product for this, vU, but to finance it had to borrow $6 million from athenahealth. Unbeknownst to Dorsata, athenahealth created its own version of vU using Dorsata’s information to sell into Unified, cutting out Dorsata. Provisions in the promissory note prevented Dorsata from competing with athenahealth. Unified is also named as a defendant as it aided athenahealth’s actions and failed to act while athenahealth cut Dorsata out of their business. 

The suit has been filed in the civil court of Suffolk County, Massachusetts and is searchable here. Dorsata is seeking damages incurred from a loss of expected profits, the value of injury to reputation, a loss of company valuation, the value of future lost business as well as damages for unlawfully gained commercial marketplace advantage. “We’ve been severely damaged, and we hope the court will rectify the situation,” David Fairbrothers, cofounder and CEO of Dorsata, told Mobihealthnews in an email. athenahealth has stated that the suit is ‘without merit’. Becker’s

Friday Health Plan’s last state, Nevada, shuts down their plans. The Nevada Division of Insurance is terminating all Friday plans effective 31 August. After the liquidation on 1 September, Nevada Life and Health Insurance Guaranty will pay provider claims through 31 August. Approximately 2,000 members of Friday’s plans will have to scramble to find coverage on Nevada’s Silver State Health Insurance Exchange (NevadaHealthLink.com) during the special enrollment period (SEP) ending 31 October. The Nevada exchange offers six different health plan carriers with 100 different options. Nevada, like Colorado, had hoped that the plan might survive until the end of the year. Earlier this month, Colorado terminated Friday Health Plans [TTA 20 July]. Friday leaves behind a lot of members in the lurch, providers who are wondering if their states will pay them, over 300 former employees, state insurance departments having to guarantee hundreds of millions in payments in seven states, and embarrassment by the state regulators and by CMS. FierceHealthcare, Nevada DOI release

Mid-week roundup: Colorado terms Friday Health Plans; Cano 3 continue to savage board; Amazon Pharmacy layoffs; hacking attacks: QuickBlox, Barts Health; Phreesia buys MediFind; financing pops for K Health, Amino

July 20, 2023 | by

Colorado liquidates, terminates insolvent insurtech Friday Health Plans. The Colorado Division of Insurance (DOI) had placed it into receivership in June after the company declared it would close, unable to find funds to operate its plans. On Monday, the DOI moved to liquidate its operations and terminate the plan effective 31 August. Their 30,000 policyholders on individual Affordable Care Act (ACA) exchange plans will be scrambling to find new coverage. In the receivership move, DOI had hoped that Friday had enough funds to keep the state plan solvent through end of year, but they did not. According to the Colorado Sun, Friday still owed unpaid Federal taxes as well as roughly $2 million in fee payments to the state’s insurance exchange, Connect for Health Colorado, which left the DOI without much hope. Friday had previously just about shut down its headquarters in Alamosa. This leaves not only 30,000 individuals scrambling, but also out eight months and perhaps thousands of dollars in deductibles as these plans tended to be high deductible. Colorado DOI opened a special enrollment period (SEP) for Friday policyholders and insurance brokers starting immediately through 31 October.  Providers are protected somewhat through the state’s Colorado Insurance Guaranty Association but many stopped taking Friday-covered patients last month. Friday’s crash-and-burn is the worst example of an insurtech’s demise to date and not promising for policyholders in other states such as Texas, Georgia, Oklahoma, and Nevada. Healthcare Dive

The Cano 3 attack in the continuation war with the Cano Health board. In the latest episode of this telenovela, resigned directors Barry Sternlicht, Elliot Cooperstone, and Lewis Gold, who among them have about 35% of the company’s shares, are still supporting interim CEO Mark Kent but pressing hard to oust three of the directors reelected at the last shareholder meeting, including Marlow Hernandez, the founder and former CEO. What’s new is that they have declared war on Sol Trujillo as chairman and Angel Morales as chair of the audit committee as allies of Dr. Hernandez. In addition to divesting five directors and the interim chief legal officer plus ending their high monthly equity awards, they support divesting non-core assets. Mark Kent will have to be Clark Kent ducking into the phone booth to succeed in this. Press release  Mr. Sternlicht cannot be in a good mood, as Starwood Capital Group is in default on a $212.5 million mortgage on an Atlanta office property, Tower Place 100, in the continuing souring of the commercial real estate market. Fortune

Amazon Pharmacy has laid off 80 employees, mostly pharmacy technicians and team leaders, in continuing cutbacks there. This is the former PillPack. One would think that it would be expanding based on the growing medical needs of One Medical and Amazon Clinic. About the latter which was to roll out nationally today but was questioned on data privacy grounds, as of today there is no update announcement. To date, Amazon has released an amazing 27,000 workers. Semafor, Becker’s

Cybersecurity also racked up some hacks in the past week or so:

  • A popular software framework used in telehealth and financial applications, QuickBlox, was found to have several critical security flaws. The QuickBlox SDK (Software Development Kit) and API (Application Programming Interface) that are used for developing chat and video applications had a vulnerability that led researchers to take over multiple accounts and compromise the user database and extract PHI. The vulnerability also permitted a hacker to impersonate a physician or patient and alter health records. This was reported by Team82 and Check Point Research (CPR) teams but have since been fixed. Blow-by-blow with screenshots in Cybersecuritynews and overview in Becker’s.
  • Barts Health NHS Trust was hacked by BlackCat, a/k/a ALPHV. What was stolen was about 70 terabytes of data, which BlackCat claims as the largest breach in UK medical history. ALPHV listed the stolen data, including employee identification documents, including passports and driver licenses, and internal emails labeled “confidential”, around 30 June. Barts runs five London-based hospitals and serves more than 2.5 million patients. The Barts Health hack adds to NHS misery with an earlier attack on a University of Manchester NHS dataset with information on 1.1 million patients across 200 hospitals. The same CLOP Russian ransomware gang that got Johns Hopkins [TTA 19 July] also got Ofcom, the UK’s communications regulator.  TechCrunch

Yes, there is good news in M&A and funding:

Phreesia is buying MediFind. No purchase price or management transition was disclosed. Phreesia is a patient intake platform that grew from a tablet used in practices for scheduling and patient check-in to a fully featured platform for workflow, claims, outreach and patient education. MediFind uses machine learning and analytics to connect patients with leading experts, clinical trials, health systems, and healthcare technologies. Phreesia is one of the few 2019 vintage IPOs to not crater–it’s trading on the NYSE at above $32 though as recently as end of 2021 its share price was double. Phreesia release.

K Health gained an unlettered venture round of $59 million from Cedars-Sinai, its new partner, plus current investors, including Valor Equity Partners, Mangrove Capital Partners, and Pico Venture Partners. This brings funding for this Israeli company to $330 million through a Series E. K Health’s platform uses a chat function that pre-screens patients with symptoms, uses AI to suggest possible diagnoses based on that person’s medical history, age, and gender, and will connect with a doctor or nurse if needed–which sounds somewhat like Babylon Health and Zipnosis. The chat can be used for primary care, some pediatric areas, urgent and chronic care management. K Health claims that 10 million individuals have interacted with K Health’s AI, and 3.1 million patients in 48 states have chatted with a doctor or nurse. FierceHealthcare

Amino, a navigation platform, received $42 million in credit financing from Oxford Finance. This was the final part of its $80 million venture raise in May. Amino connects physical and mental healthcare providers and benefits programs with members at self-insured employers and health plans, managed by third-party administrators, brokers, and human resources. Members access recommendations for providers and relevant benefits. Amino’s total funding is $125 million, mostly in venture rounds. Its last letter round was a Series C in 2017. It’s a busy sector with similar companies like Accolade, Rightway, and Transcarent.  Mobihealthnews

Why the ‘insurtechs’ didn’t revolutionize health insurance–and the damage they may have done

July 7, 2023 | by

crystal-ballIce water on hopes that many placed in ‘insurtechs’. This is the umbrella term that healthcare dubbed the upstart tech-enabled, health tech-friendly US payers which were supposed to deliver health insurance plans more efficiently (buy online!), more conveniently using apps and telehealth, with strong networks and at a lower delivery cost to consumers, from those who needed individual plans to Medicare Advantage. Around 2019-2020, these insurers gained billions in funding before going public through IPO or SPAC: Bright Health’s $500 million Series E in 2020 was only a chunk of their total $2.4 billion; Oscar Health raised $1.6 billion, Clover Health $1.3 billion. All three have struggled to stay clear of the insolvency precipice, with Friday Health Plans going over [TTA 23 June]. Bright Health Group will be exiting the insurance business after this year with the stock sale of their plans to Molina Healthcare–provided they survive to Q1 2024 [TTA 6 July]. Oscar and Clover have exited states and cut back offerings. In April, in a real retrenching, Oscar hired on Mark Bertolini, late of Aetna, pushing back a founder to an operational role. 

This Editor, in a marketing assessment for a client two years ago, believed as many did that Insurtechs Were The Future. At the very least, their practices would be adopted by the legacy insurers: easy online enrollment, lower premiums, predictive analytics, machine learning, digital documentation, online health education via apps, outsourcing areas such as customer service 24/7 and even marketing. Even those like Cigna through their Ventures arm bet some millions on insurtechs redefining payer-member relationships and payer structure, gaining better margins at profitable lines of business like Medicare Advantage (MA) and special needs plans (SNPs). After all, these plans did have people with decades of experience at insurers in their management, didn’t they, and they’d know what NOT to do. (And that’s the problem with gazing into crystal balls…eyestrain.)

Marissa Plescia’s article in MedCityNews is an excellent review on why the insurtechs’ centre did not hold. Key points made from her dive among the experts:

  • They underpriced and took heavy losses to grow their member base
  • They didn’t understand that some ‘inefficiencies’ in the health insurance market exist for reasons–perhaps not good ones, like state mandates through their departments of banking and insurance, but they exist and cannot be ignored. [Ed.–health education for MA has to be provided or at least available in written form in most if not all states]. Compliance can’t be skirted or ignored. Were they paying attention to the compliance of their plans?
  • They didn’t pay provider claims efficiently or at all [the SSM lawsuit of Bright]–a nifty way to lose networks and be sued by states, very damaging if the network wasn’t all that competitive to begin with.
  • Contracted rates with providers weren’t competitive. Were they managing risk adjusting coding well? 
  • Did they leverage sales channels beyond online such as brokers and their provider network? What about customer service?
  • The plans were not sticky enough to create some loyalty to an infamously non-loyal product

The insurtechs perhaps expected the technology to do too much–and for legacy payers to not catch up to them if they weren’t already moving there. Another problem–they (largely) were.

Disruption–but not the Clayton Christensen definition. Their disruption so far has been financial and legal (insolvency, cracked SPACs, lawsuits, share prices below $1.00, and delistings pending), loss of coverage for members; unpaid providers. With this track record, investors will avoid this category beyond the legacies. States won’t approve new plans from new companies. (This Editor believes that there are some overlooked positives such as inclusion in marketing of specialized and underserved groups, as well as some forced streamlining of processes.) There will be survivors–Alignment Health, kind of a below-the-radar operation and an afterthought in funding at $375 million, is in a few states and is mentioned. It’s also hard to bet against Bertolini leading Oscar–except that this is maybe Act V for him and he’s had his share of bunts and misses (bunt–ActiveHealth Management, misses–Healthagen, CarePass, iTriage) before his contentious departure from CVS. But in this particular widening gyre, while more revelations will be at hand, innovative newcomers in health plans won’t be seen for a long time, if ever. If the saga of airline deregulation (1980-1995) is a model, payer disruption just took a fraction of that time.

Week-end roundup: Walmart Health adds 3 FL centers; wearables nudge close to 50%; Dandelion cardiac AI performance pilot; Aledade’s $260M Series F; $10M for DUOS’ older adult assistance platform; Friday Health Plans to close

June 23, 2023 | by

Walmart Health continues Florida expansion with three new centers opening this week–two in Orlando and one in Kissimmee. This adds to their present five in the central Florida area: Orlando, Kissimmee, Ocoee, Sanford, and Winter Garden. By fall, plans are to have 23 in Florida, tracking to the Q1 2024 plan for 75 total, including 28 new locations in the Dallas (10), Houston (8), Phoenix (6), and Kansas City MO (4) metros [TTA 3 Mar]. Becker’s

New study by AnalyticsIQ indicates nearly half the US population may be adopting wearables and using digital health. Usage doubled in the midst of the pandemic (2020-21) with 46% reporting using at least one type of consumer health technology over the past six months. 35% of the 8,000 respondents used smartwatches, with Fitbit (42%) edging out Apple Watch (38%) followed by Samsung Galaxy Watch and Garmin Vivoactive. By other wearable device type:

  • Blood pressure devices: 59% of survey respondents
  • Sleep monitors: 21%
  • ECG monitors are still a niche: 11%
  • Biosensors such as glucose monitors, hormone monitors, fall detectors, and respiratory monitors are still niche at 8%, but the business grew to $25 billion in 2021
  • Smart clothing: a surprising 6%.

Unsurprisingly, wearable health tech usage skewed heavily towards Generation X-ers and men. Among ethnic groups, black and Latino groups had the highest usage.  Healthcare Dive

Dandelion Health testing cardiac dataset for AI reliability and bias. Starting with their data on ECG waveform algorithms, this startup will be validating the performance and bias of artificial intelligence across key racial, ethnic and geographic subgroups. NYC-based Dandelion is a public-service focused precision analytics company that works with three healthcare systems–Sharp HealthCare (San Diego, California), Sanford Health (Sioux Falls, South Dakota) and Texas Health Resources (Arlington, Texas) to aggregate and de-identify clinical data for roughly 10 million US patients. The validation pilot will start on 15 July and last for an initial period of three months. It may be expanded to include additional clinical data modalities such as clinical notes and radiology imaging. According to their founder and CEO Elliott Green, the “pilot program answers the question, does your algorithm do what it’s supposed to do? And does it do it fairly, for everyone?”  Release, Healthcare IT News

Who said big, late raises are a thing of the past? Not if your company is Aledade, which has solidly succeeded in management services for independent primary care practices transitioning to value-based care models. They just gained a shiny new Series F of $260 million on top of last June’s $123 million Series E for a new valuation of $3.5 billion. The Series F round was led by Lightspeed Venture Partners along with Venrock, Avidity Partners, OMERS Growth Equity, and Fidelity Management. Aledade has grown to manage 1,500 practices and has acquired in recent months Curia (data analytics for advance care planning) and Iris Healthcare (care planning technology). The additional funds will be used to opportunistically add capabilities into its platforms. FierceHealthcare, Bloomberg (paywalled)

Somewhat more in the recent range is DUOS’ $10 million venture capital raise for a total of $33 million. Leading the round were Primetime Partners, SJF Ventures, and CEOc’s Aging Innovation Fund managed by Castellan Group. What’s unusual is that the platform addresses older adults’ needs as a personal assistant in areas such as care, support in social determinants of health (SDOH), housing, and transportation against Medicare Advantage plan benefits, local community resources, and government programs. The benefit for the older person is to close gaps in care and increase utilization of Medicare Annual Wellness Visits (AWVs). Originally targeted to older adults, the company is broadening its markets to health plans, providers and employers. Release, Mobihealthnews, Home Health Care News

Insolvent ‘insurtech’ Friday Health Plans loses last two health plans to state receivership, will close. Colorado and North Carolina were the last two states the company operated in. Both states’ insurance departments put Friday into receivership this week after the insurer notified them that they could not raise additional cash to continue operations. This affects 35,000 and 39,000 individual health policyholders respectively. Texas, Georgia, Oklahoma, and Nevada were previously placed in receivership. State insurance regulators have assured providers that they can expect to be paid for their services per their contracts. Members generally need to find new insurance companies quickly, however. 323 Friday employees in Alamosa, Colorado, their headquarters, will be laid off between 23 June (this Friday) and 6 July, without the previously promised 60 day notice nor any notice of severance or benefit continuation. Friday is the largest employer in this Denver/Colorado Springs suburb. In its brief lifespan, Friday raised over $300 million and lost over $700 million. FierceHealthcare 22 June, 21 June.  Alamosa Valley Courier  Additional commentary by industry analyst Ari Gottlieb on LinkedIn