FTC takes off the gloves: $7.8M fine for Teladoc’s BetterHelp, warns Amazon (and everyone else) on One Medical patient privacy

March 3, 2023 | by

The Federal Trade Commission (FTC) goes to ‘bare knucks’. BetterHelp, Teladoc’s promising telemental business, settled a complaint brought by the FTC in a 4-0 vote over ad trackers and sharing consumer health data with third parties. The ad trackers shared data with  Facebook, Criteo, Pinterest, and Snapchat for ad retargeting to these customers, knowing their situation. While the $7.8 million fine has to be approved by a Federal judge (as does GoodRx’s), the $7.8 million will be returned to consumers whose data was shared. How this will be done is a question mark to this Editor, but the tracking was done from 2013 (prior to Teladoc’s buy in 2015) to 2021, so quite a few will be eligible. According to the complaint, BetterHelp made false and deceptive statements to users about the disclosure of their information and formally “disseminated, or caused to be disseminated, misleading and deceptive representations regarding its compliance with federal health privacy laws.”

BetterHelp did not disclose to users that it was sharing personal information with third parties and never obtained consent. In fact, they assured users on intake that their information would be private, between them and their therapist. BetterHelp did not offer disclosure of information sharing and an opt-out form until October 2021. The information shared was extensive:

  • Intake questionnaire answers, such as whether the user was experiencing suicidal thoughts, and if they belonged to a group such as LGBTQ, teens, or Christians
  • Prescriptions
  • Prior therapy history if any
  • Email addresses and IP addresses
  • Financial status

The decisions on sharing information were delegated to a junior marketing analyst without training in PHI and protecting privacy from 2017. There was no formal compliance review or employee training in HIPAA practices. BetterHelp also displayed various logos, including HIPAA, to assure users that their information adhered to governmental standards and practices for health, when it clearly did not. (Editor’s note: as a marketer, both are shocking with Teladoc as a parent company well aware of these issues.)

Why this is important: Ad tracking is a form of revenue for companies, which now will be effectively shut off. This presents a decline in revenue hopes for Teladoc, which in January positioned BetterHelp as a bright spot of ‘balanced growth’. Expect that BetterHelp will be only the first of these companies in telemental health counseling to receive a working over from a newly-aggressive FTC–and with a return to in-person visits required for Schedule 2 meds, further depressing the entire category.  Complaint, Healthcare Dive, Mobihealthnews

FTC’s shot across the bow to Amazon and everyone in DTC digital health. With Amazon closing the buy of One Medical, the FTC issued a 1 1/2 page public statement warning both companies that because of privacy representations they have made prior to and after the acquisition, any failure to maintain consumer privacy will be in violation of Section 5 of the FTC Act. FTC will be looking at ‘false net impressions’ and “make clear not only how they will use protected health information as defined by HIPAA but also how the integrated entity will use any One Medical patient data for purposes beyond the provision of health care. ” And in closing, a broader warning:

The Commission has long taken the position that personal health information is sensitive data and has reaffirmed this position through recent enforcement actions. Further, companies that fail to have adequate safeguards or controls in place to protect sensitive data or fail to obtain consumers’ express affirmative consent for marketing based on sensitive data such as health data may be in violation of the law.

The law requires companies to treat sensitive data with great care. Accordingly, the parties and the market more broadly should be on notice that the Commission will continue to monitor this space and bring enforcement actions whenever the facts warrant.

Hat tip to HISTalk 3 March   TTA on FTC issues with Amazon post-closing 23 Feb

More gimlety views on CVS-Oak Street Health, Amazon-One Medical acquisitions

March 2, 2023 | by

Perhaps this Editor is not that much of an Outlier in thinking that these deals don’t beat, say, sliced bread. Oak Street Health (OSH) disclosed its financials in an SEC 10-K filed on Tuesday. One must wonder what CVS is seeing in the company other than bulking up its primary care profile. Their loss grew to $510 million from 2021’s $415 million. While OSH grew impressively in 2022 with a 51% increase in revenue to $2.2 billion, driven by 40 new centers ending with a total of 169 facilities in 21 states, expenses grew exponentially for the new patients: medical claims expenses grew 48%, cost of care went up 49%, and sales and marketing up 38%. Scalable, so they claim; profitable, not till 2025 at earliest.

Other problems were revealed in the 10-K. OSH has substantial business from other payers, which may not be pleased that CVS owns a small payer called Aetna, though has pledged to keep OSH payer-neutral. OSH leases or licenses most of its care centers from Humana. That payer also accounted for 32% of its 2022 capitated revenue. Centene’s plans and HealthSpring made up an additional 23%. Other, more routine concerns are regulatory review, attrition of physicians and clinician staff, and last but not least, breakup fees ($500 million if CVS walks away, $300 million if it’s OSH). When you add these to other factors as outlined in our earlier article, such as the Medicare Advantage and high-need populations, CVS is cutting off a hefty slice of loaf, especially considering that the more complex Signify Health buy is due to close this quarter. Earlier opinions on the buy [TTA 16 Feb], Healthcare Dive

Now to Amazon and One Medical. This Editor received her invitation to buy a One Medical membership earlier this week (left). Countering this Editor’s analysis from last week, which maintains that Amazon is already under a broad antitrust microscope viewed by the Federal Trade Commission (FTC) and the Department of Justice (DOJ), Healthcare Dive counters, quite logically and in the view of their experts, that if either agency was going to object, they would have done so before the closing, and the grounds were likely too novel. The article concedes that the FTC could take action further down the road, for instance if Amazon violates HIPAA or consumer privacy with ad trackers. Instead, the focus is on objections by consumer groups, Amazon leveraging health data, privacy violations, and a general consumer unease around Amazon dealing with their health issues.

  • Consumer protection group Public Citizen urged regulators to block the deal in a letter to regulatory groups after it was announced last summer. For instance, it could bundle One Medical and Prime membership (a no-brainer). By tying the two together, Amazon could gain consent for using patient data from health records. Amazon could also serve ads for products related to medical conditions without that access (that old Pixel/ad tracker business again). These concerns are publicly shared by two FTC commissioners.
  • “Analysts said that data acquisition was likely a big driving factor for the deal. After linking One Medical’s data with that from its other products and services, Amazon can analyze petabytes of healthcare data in the cloud and use the findings to better manage the health of One Medical’s Medicare population, build new products and pinpoint people with rare diseases to solicit participation in clinical trials, according to (market research firm) Forrester’s (Natalie) Schibell.” [Editor] That would, of course, require patient consent. 
  • Forrester noted that the consumer unease around Amazon in healthcare is substantial. 34% of surveyed adults weren’t at all comfortable with Amazon for healthcare needs with an additional 17% only somewhat more comfortable (tier 2). Trust levels are low, and it would take only one or two incidents, such as a security breach or HIPAA violations, to destroy it. This Editor would add that if One Medical practices were not managed impeccably, that would go viral among individual and corporate members, in a way that Amazon Care did not.

Breaking: Amazon closes One Medical $3.9B buy, despite loose ends–and is the Antitrust Bear being poked?

February 23, 2023 | by

The Big Deal closes, but loose ends and larger issues remain. Today’s news of Amazon closing its purchase of the One Medical primary care group is being received in the press, especially the healthcare press, enthusiastically. This Editor cannot blame her counterparts, as since last year there’s not been much in the way of good news, compared to 2020-21’s bubble bath. Her bet as of a couple of weeks ago was that the deal would not go through due to Amazon’s financial losses in 2022 and/or that the FTC would further hold it up, both of which I was wrong, wrong, wrong on. (Cue the fresh egg on the face.)

Wiping off said egg, here is what Amazon is buying and their first marketing move. (Information on size and more from the 1 Life 2022 year end 10-K):

  • Amazon acquired 1Life Healthcare Inc. for $3.9 billion, or $18 per share in cash.
  • The practices are primarily branded as One Medical, closing out 2022 with 836,000 members and 220 medical offices in 27 markets
  • It is a value-based primary care model with direct consumer enrollment and third-party sponsorship across commercially insured and Medicare populations. Their Net Promoter Score (NPS) is an extremely high 90. (NPS is a proprietary research metric that indicates customer loyalty and satisfaction.)
  • They also have at-risk members from the $2.1 billion Iora Medical acquisition in seven states, in Medicare Advantage (MA) and Medicare shared savings value-based care (VBC) arrangements [TTA 27 July 22].
  • One Medical has contracts with over 9,000 companies, establishing Amazon at long last in the desirable corporate market.
  • One Medical also provides a 24/7 telehealth service exclusively to employees of enterprise customers where there are no clinics.
  • Amazon will be offering a discounted individual membership of $144 versus $199 for the first year, without an Amazon Prime subscription.

The Federal Trade Commission (FTC), which had additional questions about the buy as part of a Second Request in the Hart-Scott-Rodino Act reporting process, did not act in time to prevent the closing. Nor did the SEC or DOJ. This is CEO Andy Jassy’s first Big Deal at Amazon and certainly, the champagne and kvelling are flowing at HQ plus One Medical’s investors and shareholders for a successful exit. But should Amazon be looking over their shoulder? 

What are the open issues? Is a large, hungry Bear called Antitrust being poked, or lying in wait for its prey?

  • The FTC has the right to probe into the transaction despite the closing and a deadline passing for antitrust review. In FierceHealthcare and STAT, FTC spokesman Douglas Farrar is quoted as telling the WSJ (paywalled) in a statement that “The FTC’s investigation of Amazon’s acquisition of One Medical continues. The commission will continue to look at possible harms to competition created by this merger as well as possible harms to consumers that may result from Amazon’s control and use of sensitive consumer health information held by One Medical.”
  • As previously reported here, only in December did the FTC send out subpoenas to current and former One Medical current and former customers as part of its investigation. That’s late to stop a buy–unless FTC had something else larger in mind.
  • Early February reports in Bloomberg and the WSJ indicated that this may be part of a larger FTC action in developing a wide-ranging antitrust lawsuit against Amazon on multiple anticompetitive business practices. Their chair, Lina Khan, is highly critical of Amazon’s business practices. Amazon’s buy of iRobot, maker of Roomba, which at $1.7 billion was a comparative snack, is still not closed and has received a lot of negative attention for possible misuse of consumer information. 
  • Sidebar: This FTC is ‘feeling its oats’ on antitrust. GoodRx found itself making history as FTC’s first culprit of the 2009 Health Breach Notification Rule, used to prosecute companies for misuse of consumer health information. This was for their past use of Meta Pixel, discontinued 2019, to send information to third-party advertisers. One Medical is a HIPAA-covered entity which puts it at a far higher risk level. 
  • The Department of Justice (DOJ) has not publicly moved to approve or disapprove–yet. 
  • The change of ownership has not been reported as passing muster by regulators in multiple states. Example: Oregon approved it, but with multiple stipulations [TTA 6 Jan]–and there are only five One Medical clinics in Oregon. States like New York, Massachusetts, Connecticut, and California are not exactly pushovers for approval, with California alone having two approval entities.
  • Congress is increasingly feisty on data privacy–consumer health information and its misuse in telehealth [TTA 9 Feb]. 

Will this be ‘buy now, regret later’, a lá Teladoc’s expensive acquisition of Livongo, or Babylon Health going public with a SPAC? Is this a clever trap laid for Amazon?

  • Amazon is already under a Federal and state microscope on data privacy. Information crossing over from One Medical to their ecommerce operations such as Pharmacy and Prime will just add to the picture. 
  • Accepting Medicare/Medicare Advantage increases scrutiny on quality metrics and billing, to name only two areas. At-risk patients in Medicare and other VBC models, especially Medicare Shared Savings Program (MSSP) fall under CMS scrutiny. Amazon may take a look at that and spin-off/sell off the former Iora Health practices/patients.
  • Amazon has failed in healthcare previously, as a partner in the misbegotten Haven and in its own Amazon Care ‘home delivery’/telehealth model selling to companies, now closed. Its asynchronous virtual care service, Amazon Clinic, is too new to judge its success. 
  • Office-based, brick-and-mortar healthcare provided by doctors, nurses, and allied health professionals is an entirely new area for Amazon. Will they be satisfied with their new masters–and new metrics? It is also expensive. One Medical has never been profitable and did not project breakeven for years. (If one asks how this is different than CVS acquiring Oak Street Health, or Walgreens acquiring VillageMD and Summit Health, CVS and Walgreens have experience for decades in multiple aspects of providing healthcare–profitably and in compliance.)
  • One wonders how heavy of a hand Amazon will place on One Medical’s operations. How their management, doctors, and other professionals will feel after a year or two of Amazon ownership is anyone’s guess. This Editor doubts they will remain in place or silent if unhappy.
  • Selling to enterprises–and account retention–is a vastly different relationship-building process and buyer journey than 1:many consumer transactions. One Medical made a go of it with 9,000 companies and enrolling employees at about a 40% rate, so they did something right. By contrast, Amazon failed to sell Amazon Care well to companies. Humility and service, for starters, are required.
  • Last but certainly not least, is how Amazon will deal with regulation and compliance at multiple levels.

Expect that the FTC and DOJ will not be done with Amazon any time soon in what looks like a wider antitrust pursuit that may take some time, which they have. Amazon has tens of millions in government business (AWS) at stake and shareholders expecting a reversal of losses. Pro tip to Amazon: run One Medical as a separate operation with minimal integration and no information sharing until past this. And then some.  Healthcare Dive, Becker’s

Is CVS’ Oak Street Health deal genius? Or a waste of time and $10B?

February 16, 2023 | by

A sample of the split opinion. In the buccaneering between CVS and Walgreens, plus Walmart and Amazon, to add primary care, CVS definitely buckled the swash with three deals: Signify Health (being questioned by DOJ and FTC) [TTA 21 Oct 22 latest], a $100 million investment in Carbon Health [TTA 11 Jan], and Oak Street Health [TTA 9 Feb]. These are in line with their strategy of acquiring companies to expand their capabilities in primary care, provider enablement, and home health. The wisdom of the first–primary care–is being questioned by a few in healthcare. 

The basic argument is that primary care is money-losing, ‘unless you have significant ancillary revenue and downstream referral income’ according to Randy Davis, vice president and CIO of CGH Medical Center, based in Sterling, Illinois. Oak Street’s Medicare Advantage business is also money-losing because of its dependence on increasing severity scores (risk adjustment) and is generally an ‘uphill battle’. This Editor will add that as previously noted–and lauded in CVS’ release–Oak Street is notable for serving underserved patient populations–50 percent of Oak Street Health’s patients have a housing, food, or isolation risk factor. That equates to greater expenses that may or may not be reimbursable. Oak Street certainly has proven the money-losing part, forecasting a loss of $200 million for 2023 and not projecting a profit until 2025. Mr. Davis was blunt, calling it a deal that made no sense and “CVS better have a plan they implement in 18 months or they’ll get slaughtered.”

Another rap on the deal is that it is not big enough. Given the size of Oak Street at about 169 offices and the national figure is quoted as 600,000 ambulatory sites, it’s tiny. However, what isn’t considered is Aetna’s existing relationships with primary care physicians through ACOs formed as joint arrangements, and if Signify Health goes through, the Signify/Caravan ACOs. In fact, this may be a factor in the DOJ/FTC consideration of antitrust.

Others see opportunity in integrating primary care into CVS’ retail locations (Carbon Health) and serving historically underserved communities–much the same tack that Walgreens is taking with VillageMD (acquiring Summit Health) and Walmart with Walmart Health clinics. Becker’s Hospital Review

And as to Amazon, this Editor’s prediction is that Amazon will strike its Jolly Roger and sail away from the One Medical buy.

CVS works their plan in Oak Street Health buy talks, Carbon Health $100M investment + clinic pilot; VillageMD-Summit finalizes (updated)

January 11, 2023 | by

CVS, Walgreens, Amazon, Walmart all chasing the same type of companies to expand their service continuum. During their Q2 2022 earnings call, CVS Health announced that they were determined to enhance their services in three categories: primary care, provider enablement, and home health. And CVS’ CEO Karen Lynch was pretty blunt about it: “We can’t be in the primary care without M&A” (sic). So CVS’ latest moves should come as no surprise.

Oak Street Health: CVS is in talks with this value-based care primary care provider for primarily older adults in Medicare and Medicare Advantage plans. With 100 offices nationally, it’s not too small, not too large to combine with other operations. As a public company traded on the NYSE but puttering along in the $13-$22 per share range since the fall from a high of $30 in August, the news of CVS’ interest has boosted them above $28 and a market cap of just under $7 billion. Although Oak Street has previously maintained that they have no interest in a sale, it has never been profitable and is on track to lose $200 million this year. That is not a good look for CVS but they are working a strategy. Previously, CVS walked away from primary care group Cano Health [TTA 21 Oct 22]. Bloomberg News (paywalled) reported that CVS could pay $10 billion which would be over $40 a share. Healthcare Dive, Reuters

Carbon Health: CVS leads their Series D with a $100 million investment plus piloting Carbon Health operations in primary and urgent care clinics in their retail stores. However, the deal came at a price. Last week, prior to the investment announcement, Carbon announced that it would wind down lines of business in public health, remote patient monitoring, hardware, and chronic care programs, cutting 200 jobs in addition to a June cut of 250, at the time about 8% of their workforce. Carbon will now concentrate on their clinic core business. 100 are presently located across Arizona, Nevada, Colorado, Kansas, Florida, Massachusetts, and California (San Francisco, Bay Area, and San Jose).

In the last two years, Carbon raised $350 million and grew by acquiring four clinic chains. It diversified by buying Steady Health (chronic care management in diabetes) and Alertive Health (remote patient management)–both businesses they are departing. Reportedly last month they bought Inofab Health, an Istanbul-based digital health platform for patients with asthma, chronic obstructive pulmonary disorder, and cystic fibrosis. Crunchbase, FierceHealthcare, Mobihealthnews, SF BizJournal,

CVS is still working its Signify Health acquisition past the Department of Justice (DOJ) and the Federal Trade Commission (FTC). It went into a Second Request for information in late October under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which adds 30 days to the review timetable after the Second Request has been complied with. There is some competitive overlap between CVS and Signify in home health management and accountable care organization (ACO) operations, and some divestitures may be necessary. A closing in Q1 as planned seems optimistic. Acquiring Oak Street may complicate matters since their clinics operate as a Direct Contracting Entity (DCE, now ACO REACH). This present administration is not friendly towards healthcare consolidation of any type, especially with entities participating in Federal programs. (See UHG’s acquisition of Change Healthcare, with court approval being appealed by DOJ.) Reaching (so to speak) deep into CMS programs could be a red flag.

Walgreens’ VillageMD finalized their Summit Health acquisition for $8.9 billion yesterday (9 Jan) (updated). Now with 680 provider locations in 26 markets and 20,000 employees, the group adds to VillageMD’s primary care practices specialty practices in neurology, chiropractic, cardiology, orthopedics, and dermatology plus 150 City MD urgent care locations. 200 VillageMD locations are already adjacent to Walgreens locations. Walgreens Boots Alliance (WBA) and Evernorth, the health services business of Cigna, were the two investors. WBA raised full-year sales guidance from $133.5 billion to $137.5 billion. The current chair and former chief executive officer of Summit Health, Jeffrey Le Benger, MD, will be the interim president until VillageMD finds a permanent president reporting to VillageMD CEO Tim Barry. Release, RevCycleIntelligence, Forbes  At this point, Walgreens hasn’t moved forward with the rumored acquisition of ACO management services organization Evolent Health [TTA 1 Oct 22], which would be far more complex. 

Amazon is still awaiting Federal approval for One Medical as well as in multiple states (Oregon only the first; expect scrutiny). It is also closing Amazon Care and opening asynchronous non-face-to-face telehealth service Amazon Clinic.  Walmart continues on an internal strategy of opening Walmart Health clinics in underserved areas. Earlier in 2022, they announced the opening of more health ‘superstores’ in Florida, having established 20 in Arkansas, Illinois, and Georgia starting in 2019. Walmart’s approach to retailing health services and products, since getting serious about it in 2018, has wavered with multiple changes of strategy and executive departures [TTA 22 Nov 22]

News briefs, catchup edition: UnitedHealth/Change decision October?, CVS wins $8B Signify Health auction, Walgreens majority buy of CareCentrix, FTC requests more info on Amazon-One Medical

September 15, 2022 | by

Your Editor is semi-returned from Almost Two Weeks in Another Town, with a few more days to close out September (and summer into autumn) coming up. A lot of big news broke despite the usually slow Labor Day holiday week.

UnitedHealthcare Group/Change Healthcare Federal lawsuit to be decided in October–reports. The bench trial in the US District Court in Washington DC pitted the Department of Justice and state plaintiffs against UHG’s massive $13 billion acquisition of claims and EDI/data processing giant Change. It concluded 16 August with closing arguments presented 8 September. Dealreporter via Seeking Alpha reported that UHG and Change effectively countered DOJ’s antitrust objections to the acquisition. Change Healthcare had previously sold their claims editing business to TPG Capital to ease antitrust concerns.  Whether that will be enough in the current environment with greater sensitivities around healthcare consolidation remains to be seen. If approved, Change will be folded into OptumInsight. For a deeper dive into the issues, see TTA’s earlier reporting 3 August and 23 March.

CVS Health beat out other contenders with an $8 billion cash bid for Signify Health. It was a busy Labor Day for CVS as Signify’s board met and decided that day on CVS’ cash offer of $30.50 per share in their unusual auction. Amazon, UnitedHealth Group, and little-known Option Care Health were the other bidders. Signify is a strategic boost for CVS in becoming a major player in primary care, provider enablement, and home health as we’ve summarized here from CVS’ Q2 earnings call. Signify’s capabilities in in-home health delivery and provider services were cheaper to buy than to develop. Based on the weight given to it in the CVS release, Signify’s Caravan Health and their Medicare ACOs furnishing value-based care management services to 170 providers was a significant factor in the top price paid.

New Mountain Capital and their investors own 60% of Signify and will be exiting. Signify had in July announced their own exit from the costly and problematic Episodes of Care/BPCI business acquired with Remedy Partners back in 2019. This led to most of the over 480 staff layoffs announced last month. The sale is, as usual, pending regulatory approvals and isn’t expected to close until first half 2023. Kyle Armbrester, Signify’s CEO Kyle Armbrester will continue to lead the company as part of CVS Health. Healthcare Finance, FierceHealthcare

Rival Walgreens Boots Alliance completed their acquisition of a majority share of home care coordination platform CareCentrix. Walgreens’ final payment was $330 million for 55% of the company at an $800 million valuation. As noted previously, Walgreens ‘go big or go home’ strategy in primary care kicked off in 2020 with growing investments in VillageMD, culminating in last year’s $5.2 billion for 63% of the company. The plan is to co-locate Village Medical offices with 600 Walgreens locations by 2025 [TTA 14 Oct 2021]. CVS’ recent actions can be seen as a reaction to Walgreens’ aggressive moves. Healthcare Finance

Amazon now under FTC scrutiny for One Medical acquisition. If shutting down the much-publicized Amazon Care wasn’t quite enough last month, the Federal Trade Commission (FTC) will be reviewing Amazon’s $3.9 billion buy of One Medical. This was announced in a 1Life Healthcare (parent of One Medical) 8-K filing with the Securities and Exchange Commission (SEC). Both 1Life and Amazon received requests for additional information on 2 September, above and beyond the usual required Hart-Scott-Rodino Act (HSR) reports that will be reviewed by the FTC and DOJ. Effectively it extends the HSR waiting period by 30 days after One Medical and Amazon have substantially complied with the additional information ‘second request’.

The FTC isn’t winning popularity contests with Amazon’s legal department, as the agency is reviewing their acquisition of iRobot, maker of robot vacuum cleaners. Mobihealthnews

Breaking: Amazon Care shutting down after three years–what’s next? (updated)

August 25, 2022 | by

Amazon Care to cease operations after 31 December. Amazon Health Services is throwing in the towel on its primary care service for enterprise customers, after failing to make much headway with its mix of virtual care, in-home, and telehealth services. An internal email from Neil Lindsay, Amazon Health Services senior vice president, sent today (24 Aug) to employees but leaked to the press, stated that “This decision wasn’t made lightly and only became clear after many months of careful consideration. Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term.”

Employees who have been part of Amazon Care may have the opportunity to transfer to other parts of Health Services, according to the memo, or will be ‘supported’ in finding other roles within or outside the company. The total number of employees was not disclosed, but this Editor expects layoffs to be announced by the fall as Amazon Care winds down.

Amazon has been moving in a different direction with enterprises for some months. Reportedly the decision was made to ditch Amazon Care prior to agreeing to acquire One Medical, which was announced late in July. However, recently revealed negotiations actually started last February, with One Medical pitting Amazon against CVS until CVS dropped its bid effort [TTA 19 August]. 

As this Editor noted last month with the One Medical acquisition, “…for this Editor it is clear that Amazon with One Medical is buying itself into in-person and virtual primary care for the employer market, where it had limited success with its present largely virtual offering, and entreé with commercial plans and MA.” With One Medical, they will be acquiring an operation with 790,000 patients (including 40,000 at-risk, presumably Iora’s), 8,000 company clients, 125 physical offices in 21 US metros (including projected), and an established telehealth/telemedicine protocol. In other words, a ready-made provider and enterprise base to build on and sell into, for instance Amazon products like Pharmacy and PillPack.

Not addressed is what will be done, if anything, to transition current employer agreements for Amazon Care to One Medical.

It’s now a matter of whether HHS, DOJ, and FTC will agree to the buy or ask for additional divestitures. One conflict–Amazon Care–has just been removed. And this may clear the deck for other acquisitions, such as Signify Health [TTA 24 Aug], if Amazon wins the auction against CVS, UnitedHealth Group, and Option Care Health, though for a newcomer to healthcare Signify may very well be A Bridge Too Far.

What’s in play?

  • One Medical’s Iora Health and its high needs/high costs Medicare patient base. This has very much been held in the background, leading this Editor to think it will be sold to another health plan.
  • The status of the previous agreement with Crossover Health for 115,000 Amazon employees and dependents, delivered through their employer-based onsite clinics in 11 states in addition to concierge care [TTA 17 May]
  • Another previous agreement with Ginger for telemental health, only announced last week.

Amazon was touting Amazon Care as recently as earlier this year to shareholders. They had acquired employers outside Amazon such as Hilton, but not quickly enough. Expansion talk and the usual touting within the industry weren’t happening. There was an ‘air of mystery’ about what Amazon Care was doing, going back to the beginning.

Perhaps a major ‘tell’ was that Kristen Helton, general manager in charge of Amazon Care, was reported two weeks ago by Bloomberg News to be taking an “extended break to spend the summer with her family.” She had been in the GM position for three years after joining Amazon in 2015.

Count Amazon Care as one expensive learning course in the insanely costly University of Healthcare Delivery. This won’t be the first lesson, but Amazon can afford the tuition.

Geek Wire, FierceHealthcare, 

Friday short takes: was there a bidding war for One Medical? A concussion risk wearable tested. Get Well’s monkeypox digital care plan

August 19, 2022 | by

Amazon’s scoop-up of One Medical apparently was not all Skittles, Rainbows, and Unicorns. Large companies like Amazon, Walmart, Allscripts, and CVS are on the hunt to fill gaps in their portfolio and technologies, but only “healthy health tech companies at the right (discounted) price that fill in their tech gaps.” Of course, some of these companies have more chips on the table and in the safe than others.

We know from earlier reporting [TTA 7 July] that One Medical and CVS had some talks, but that One Medical spurned the offer. It did establish that One Medical was in play. Some digging by Heather Landi at FierceHealthcare, taking a walk through SEC documents according to a regulatory disclosure with the US Securities and Exchange Commission (SEC) filed 10 August, found that CVS (identified as Party A) and 1Life Healthcare, the parent of One Medical, started their acquisition talks in October 2021. 1Life was short on cash, getting shorter, needing to expand, and was having trouble raising the $300 million they estimated they needed. Starting this past February, 1Life management started to negotiate with Amazon. On 1 June, CVS offered $17 per share, boosting it by $1 the following day, but were informed by 1Life that there was another suitor. By 2 July, Amazon put $18 in an all-cash deal on the table. When news leaked via Bloomberg on 5 July that CVS was in discussions, CVS bowed out. By the end of July, 1Life and Amazon closed on the deal [TTA 27 July].

It came down to this–Amazon needed One Medical more than CVS. Watch for CVS and Walmart to make more provider/primary care moves by the time the snow flies this year. We’ve already noted that CVS inked a deal with Amwell a few days ago as their provider for Virtual Primary Care and that Walmart outright owns a telehealth provider, MeMD, though their overall strategy remains a bit murky.. CVS also has resources through Aetna that are integratable, such as provider networks.

And speaking of Amazon, they just inked a deal with Ginger to add telemental health as an option for Amazon Care. Healthcare Dive

In the US, we are very close to football–and concussion–season. Multiple concussions lead to CTE, which took a long time to recognize as a cause of premature dementia. A mHealth wearable has been tested to measure head kinematics–head movement–and detect sudden neck strain, such as whiplash. Current systems are embedded in helmets or the X-Patch, which uses accelerometers.  According to the report in AAAS’ EurekAlert!, Nelson Sepúlveda of Michigan State University and colleagues developed a novel patch sensor using a film layer of thermoplastic material, a ferroelectret nanogenerator or FENG. “This produces electrical energy when physically touched or pressure is applied. The electrical signal produced is proportional to the physical strain on the neck and can be used to estimate the acceleration and velocity of sudden neck movement, two important markers for predicting concussion.” For this test, a dummy was used. Nature Scientific Reports, mHealth Intelligence

Monkeypox, its transmissibility, and treatment have also percolated this summer.  Get Well Network, which we noted last month in a JAMA study used its GetWellLoop RPM and monitoring in a Covid-19 home treatment study, released a new monkeypox digital care management plan. It will permit monitoring of symptoms from home using RPM, help direct patients to higher levels of care if and when needed, and aids hospitals in managing mandatory regulatory requirements for reporting and tracking infectious diseases. LifeBridge Health in the Baltimore area began offering Get Well’s monkeypox symptom monitoring tool last month. Release

Week-end wrapup: CVS plans to expand primary care, home health; Cera Care raises £264M; Linus Health’s AI enabled dementia screener, Cognito’s cognitive therapy slows brain atrophy

August 5, 2022 | by

The sandal (it’s summer) drops at CVS Health in primary care–and maybe more. On their Q2 earnings call, CVS discussed that they are determined to enhance their services in three categories: primary care, provider enablement, and home health. The footwear that dropped was from CEO Karen Lynch: “We can’t be in the primary care without M&A” (sic). It was inevitable, given that rival Walgreens has a $5 billion deal with VillageMD for freestanding Village Medical clinics, Amazon with the pending One Medical buy–which it passed on only weeks prior [TTA 7 July], and Walmart picking along the edges with in-store clinics and telehealth. CVS’ criteria: strong management team, strong tech stack, strong scale, strong ability to build a pathway to profitability. (Certainly not an easy set of hurdles) CVS’ urgent care and in-store MinuteClinics have been doing well, with business up 12% to 2.8 million patient visits year to date. HISTalk, FierceHealthcare, Motley Fool transcript of earnings call

London-based Cera Care Ltd. raised £263.6 million ($320 million) in an equally split debt/equity round. Equity funding came from existing investor Kairos HQ, then the Vanderbilt University Endowment, Schroders Capital, Jane Street Capital, Yabeo Capital, Squarepoint Capital, Guinness Asset Management, Oltre Impact, 8090 Partners, and technology investor Robin Klein. Debt was not disclosed. The fresh financing will go towards expanding patient capacity in the UK plus Germany from the current 15,000 to 100,000.  Cera delivers in-home care, nursing, telehealth, and prescription delivery services using a digital platform and AI algorithms that use the data gathered to predict changes in patient status. TechCrunch, UKTechNews

Two developments from separate companies in the vital areas of improving dementia and Alzheimer’s diagnosis–and outcomes:

  • Linus Health has debuted its cognitive assessment and patient questionnaire platform for clinical use by primary care providers. The assessment tests for subtle changes in cognitive function, which in the preclinical phase will often go undetected. The concept is to push forward diagnosis and therapies to slow disease progression. It is based on an iPad and includes their DCTclock, an AI-enhanced version of the traditional paper-based Clock Drawing Test using a digital stylus or pen that can also spot symptoms of early-stage Parkinson’s. The evaluation including the DCTclock takes about 10 minutes. Release, FierceBiotech
  • Cognito Therapeutics is still in the investigational stage with its GammaSense headset which delivers sound and light therapy to cognitively impaired patients. The sensory stimulation evokes gamma oscillations in the brain that reduces neurodegeneration and brain atrophy. Their paper delivered last week at the Alzheimers Association conference tracked subjects who used the headset one hour per day for six months. The therapy reduced white matter shrinkage to about 0.4%, compared to a historical tracking of about 2%. An earlier study also showed slowdowns in the decline of memory and cognitive function. FierceBiotech

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

July 27, 2022 | by | 1 Comment

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

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

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

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

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

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

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

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

Thursday news roundup: IBM Watson Health sale closed, now Merative; OneMedical inviting buyers–maybe; worst healthcare data breaches rounded up

July 7, 2022 | by

It’s a post-Independence Day and early summer holiday relatively quiet week….

It’s Merative, not IBM Watson Health anymore. Francisco Partners‘ buy from IBM of Watson Health closed last Thursday (30 June) but didn’t make the news until after the holiday. The announcement of the new brand, Merative, was splashed on HLTH’s website today (not HIMSS) with the usual language about how their data connects and transforms health through pioneering “cloud, real-world data and industry-leading AI” through health systems, hospitals, health plans, life sciences, and government. Speaking of data points:

  • HQ now in Ann Arbor, MI
  • New CEO Gerry McCarthy from CEO of eSolutions, a former Francisco Partners portfolio company that exited to Waystar in October 2020
  • The former general manager, Paul Roma, will be a Senior Advisor to Francisco Partners
  • Merative will have six product families: Health Insights; MarketScan; Clinical Development; Social Program Management and Phytel; Micromedex, and Merge Imaging 
  • Other investors include True Wind Capital and Sixth Street

Since 2015, IBM had built up Watson Health through four acquisitions and over $4 billion in investment. They sold it for perhaps $1 billion to get it off their books. Once upon a time they were the leader, now they’re up against Oracle and a dozen other competitors like IQVIA that sell connectedness and ‘actionable insights’ across and in chunks of their business (example, life sciences). Given the track record of the controlling private equity partner, Merative needs to become profitable quickly. Merative will not be a long term investment for them. FierceHealthcare. Our prior coverage: 7 Jan, 22 Jan, 25 Feb (Who needs Watson Health?)

Also apparently up for sale to the right buyer is One Medical. The clinic group flirted with but ultimately sent packing CVS Health. One Medical offers concierge in-person and telehealth primary care in seven metros and has over 700,000 members. They bought Medicare value-based primary care provider group Iora Health a year ago [TTA 11 June] but since then their stock (trading under 1Life Healthcare) and valuation has cracked by 75%. Not mentioned in the Bloomberg article is whether Iora is included in the possible deal.

And for those who like their Hackermania on the Wild Side, there’s a massive list over at Wired that racks up the Greatest Hits. It’s only halfway through 2022, but the data breaching and ransomware perps have multiplied. From Russia/Ukraine to extortion gangs like Conti and Lapsus$ to cryptocurrency theft and China, the Old Reliable Healthcare continues to star. Our recent list is here but topping out the Wired list are Shields Health Care Group, Baptist Health System, Resolute Health Hospital, Kaiser Permanente, and Yuma Regional Medical Center. Also Becker’s.

News and deal roundup: OneMedical’s $2.1 bn for Iora, CareDx buys Transplant Hero, Mount Sinai’s Elementa Labs; UK news–NHSX/Babylon, Doro-Everon, Tunstall

June 11, 2021 | by

West Coast-based concierge medical provider One Medical goes ‘mass’ with Iora. One Medical, best known for serving the affluent well through a membership fee, direct pay, commercial insurance, and sponsored contracts with large employers like Google for primary care, announced plans to acquire Boston-based Iora Health. Iora’s primary care providers serve a different market, with primarily Medicare patients moved into full-risk value-based models such as Medicare Advantage plans and practices in shared savings arrangements such as Direct Contracting. The investor presentation here discloses the all-stock purchase with 26 percent of ownership going to current Iora shareholders. Iora for now will be run separately, which makes sense given the disparity in patient base. The major element in common? Primary care practices and ‘white-glove’ services. Healthcare Dive, FierceHealthcare

Consolidation in digital transplant care assistance. CareDx, which provides a wide variety of management services for organ transplant providers and recipients, is acquiring New York-based Transplant Hero. Transplant Hero is an app that reminds recipients to take their vital medications, and was founded by a transplant physician. Financial terms and integration going forward were not disclosed. Release, Mobihealthnews.

Mount Sinai Innovation Partners (MSIP) creates a new health tech incubator. Elementa Labs launched this week, specifically seeking pre-seed or seed-stage healthcare and biotech startups. Companies must also have a clear objective for working with Mount Sinai to develop a comprehensive development plan.The first startup on board is avoMD, a mobile-friendly point of care clinical decision support platform. Applications for the 12-week program close 30 September. FierceHealthcare

UK activity heats up with the late spring…

NHSX and NHS England are assessing Babylon Health’s triage app. According to an exclusive in Pulse (may require registration), a senior delegation from both visited University Hospitals Birmingham NHS Foundation Trust (UHB) last month to look at its use of the Babylon technology. However, NHSX has disclaimed any work towards a national program with Babylon as practices reopen throughout the UK.

DoroCare UK and Everon announced a partnership on products and services for social care, such as Everon’s Lyra, a cloud-based emergency call system, and Doro’s Eliza, a smartcare hub. Release

Tunstall announced the release of the Tunstall Service Platform (TSP) in the UK. It’s described as a connected care software platform supporting the Tunstall Alarm Receiving Centres coordinated by local authorities and social housing providers. It has four unique functions: PNC (call handling), service manager, fieldforce manager, and proactive services. It also will transition these systems from analogue to digital and will be operable in both. Release

Health tech bubble watch: Alphabet-backed One Medical reportedly prepping for 2020 IPO

October 9, 2019 | by

Another health tech company tests the IPO waters. One Medical, a primary care medical clinic group that digitizes the office experience by offering mobile apps with online scheduling, virtual consults, and same-day appointments–for an annual fee of $200 plus your insurance–is prepping for an IPO filing early next year. The sure sign is that it’s hired banks including J.P. Morgan and Morgan Stanley.

One Medical, backed by Alphabet, has 72 primary care practices in nine major US cities. It currently has a valuation of $1.5 to $2 bn based on private share sales and investment firm estimates. In 2008 it raised $220 million in a 2018 round led by The Carlyle Group for a total raise since 2007 of $408 million, backed by Alphabet’s GV venture arm and VC firm Benchmark. From an initial emphasis on individual enrollment and a ‘lite’ version of concierge medicine, it recently has concentrated on self-insured employers, corporate health plans, and service areas such as mental health and pediatrics. A big question for investors will be its valuation–tech or healthcare?

One Medical would join IPO brethren such as Health Catalyst, Livongo, Phreesia, and Change Healthcare, all of which had fairly strong openings and initial growth but have rollercoastered since then. Still, smaller IPOs such as Progyny, a company that manages fertility benefits for employees at large firms, have filed to IPO by the end of the year. Fierce Healthcare, CNBC, Business Insider

Rock Health: 1st Q funding deals up nearly 50%, approaches $1bn (US)

April 7, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/RockHealthChart1.001-1200×845.jpeg” thumb_width=”150″ /]Funding’s up, but the digital darlings have changed. The stock market and tech sector may have been uncertain kicking off 2016, but digital health wasn’t. Rock Health’s first report for 2016 exudes optimism. Compared to the same quarter in 2015, funding increased nearly 50 percent to $981.3 million, the highest amount since 2011. But the devil may be in the details:

  • Five deals accounted for 56 percent of the volume (in descending order: Flatiron Health (clinical intel for cancer care), Jawbone, HealthLine (consumer health info), Health Catalyst (data warehousing) and Higi, an odd little kiosk + consumer engagement program nationally placed in Rite Aid stores–odd enough to gain $40 million in its first venture round
  • Seed and Series A raises were still well over half–54 percent, over the 50 percent in 2015
  • Later stage deals (Series D and above) shrank to 13 percent in 2016 from 35 percent
  • Top categories also demonstrated the fickleness of funding favorites. Only two categories in the top six were carry-overs from 2015: wearables (driven by Jawbone) and consumer engagement. New favorites: analytics/big data, population health management, consumer health information and EHR/clinical workflow.
  • There were no venture-backed IPOs in the quarter, and public company performance was down (9 percent y/y)

The new picture favors what to do with the data–finding trends and putting them to use both consumer and clinical sides. And exits were popular as well: 187 was the Rock Health count, with fitness wear Asics‘ acquisition of the Runkeeper fitness wearable and provider One Medical acquiring the Rise app. Will the trend continue in 2nd quarter? Stay tuned….Rock Health Q1 Update

Unicorns to Series A–health tech funding gained in (perhaps) the nick of time

August 25, 2015 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/08/1107_unicorn_head_mask_inuse.jpg” thumb_width=”150″ /]Money, money everywhere–unicorns get the headlines, but the companies are still (largely) small

Up until early August, this Editor would have assumed that our Readers would look at this funding roundup as a bracing windup to a largely positive eight months and a veritable Corvette Summer for healthcare technology funding. We may have to give back the keys a little sooner than we imagined. Will the dropping market affect digital health as 2008-9 did–‘out of gas’ for years? Or will it barely affect our motoring onward? Despite the Dow Jones average hitting an 18 month low today, we hope it’s closer to the latter than the former. though the new and big entrant to digital health investing is the country most affected, China.

Our roundup of the August Action includes ZocDoc, Fitbit, Alphabet, PillPack, Owlet and more, along with a few comments:

**ZocDoc, a NYC-based online medical care appointment service that matches patients with doctors by location and schedule, had the most sensational round with last week’s Series D funding of $130 million, giving it a valuation of $1.8 bn. It took over a year after the filing (June 2014) and was led by two foreign funds (London-based Atomico and Edinburgh-based Baillie Gifford) with additional funding from Founders Fund, which previously participated in raises of $95 million.

Though it claims 60 percent coverage in the US  and ‘millions of users’ (numbers which have been quoted for some years), ZocDoc won’t disclose profitability nor volume–metrics that would be part of any IPO.

Direction? Points given for deciphering this windy statement (quoted from Mobihealthnews): (more…)