The Theranos Story, ch. 24: looking for the nadir in Walgreens’ lawsuit

November 17, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/11/jacobs-well-texas-woe1.jpg” thumb_width=”150″ /]When will we find the nadir of Theranos’ business practices? Between the excruciating details of the Walgreens lawsuit and the treatment of an employee who knew the truth in 2014 (part 2), the bottom, like Jacob’s Well in Texas at left, may be unfindable.

The first is what is revealed in the public version (filed 15 Nov) of the civil complaint filed with the US District Court, District of Delaware (PDF). While heavily redacted in parts of text and in the exhibits, it is damning if all true–and there is little available information that does not fit Walgreens‘ narrative, though this Editor was left wondering why red flags about Theranos didn’t flap ‘n’ fly at Walgreens much earlier, especially with a reported $140 million investment at stake.

The relationship began in January 2010. A March presentation by Theranos included some astonishing claims: the Theranos finger-stick blood draw lab analysis had been comprehensively validated by ten of the leading fifteen pharmaceutical companies over seven years; that bio-pharma companies, “prominent research institutions, and US and foreign government health and military organizations” had already used the technology; that Theranos was capable of launching it in retail stores by end of 2010. They also represented that they were positioned with FDA to introduce the technology outside of clinical studies. Johns Hopkins, contracted by Walgreens to validate their methodology, could only work with data provided by Theranos.

Did anyone at Walgreens think to check with said pharmas, researchers, government health and military organizations? There was time. The master agreement was not signed until 2012 and pilot stores opened in 2013.  (Pages 5-10, section 24 through 50). Interestingly, pages 11-12 which may deal with the labs, as well as many other parts, are heavily redacted.

In short, there is a gap of at least two years when Walgreens could have double-checked Theranos’ claims and methods, especially in the crucial period before pilot locations were opened. (To be fair, Theranos successfully maintained a veil of secrecy and a wall of PR smoke.) But the repercussions were huge.  It seems that Walgreens only woke up from the dream when the Wall Street Journal published its investigation another two years later in October 2015. In the immediate aftermath of the article, Walgreens learned that Theranos had abandoned the finger-stick draws…and that the head of the Newark CA lab was a full-time dermatologist onsite once a week (page 15).

After that point, the Theranos fan dance with Walgreens accelerates.

  • Theranos concealed the January and March 2016 CMS notices and subsequent reports on its labs to Walgreens until again the WSJ publicly revealed it (pages 17-18, 25). They also attempted to conceal the CMS rejection of the Plan of Correction for its labs (page 24).
  • Theranos accused Walgreens of breaching the agreement and confidentiality to the WSJ , and also cited delay in building out Wellness Centers–in February 2016 (pages 20-21)
  • Walgreens received nothing but evasions from Theranos including no notification of ‘tens of thousands’ voided results, including critical PT/INR coagulation results, until after the WSJ broke that bit of news on 18 May (page 26).

By 12 June 2016, the wheels were fully off (and the world was minding, indeed) and Walgreens called the breach of warranty. But even then, this was not until a final push–lawsuits were filed against both Theranos and Walgreens starting in late May.

One wonders how many reputations are on a stake (to mix two metaphors) at Walgreens Boots. Details in Ars Technica (which obtained the PDF and broke the story) and of course Neil Versel’s acerbic POV in MedCityNews. Hat tip to reader David Albert MD of AliveCor.

See here for the 23 previous TTA chapters in this Continuing Saga.

The Theranos Story, vol. 23: Walgreens drops the $140 million contract breach hammer

November 9, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/11/upside-down-duck.jpg” thumb_width=”150″ /]Walgreens Boots Alliance has finally sued Theranos in Delaware Federal Court in for breach of contract.  Walgreens is seeking $140 million, supposedly equivalent to their amount invested, according to sources cited in the Wall Street Journal article. Not many details are available, since Walgreens moved to seal the civil suit under their mutual non-disclosure agreement.

Allegations are flying, of course. Walgreens is officially mum, but according to the WSJ‘s ‘close to the matter’ sources, Walgreens claims that Theranos misled them about the state of their technology during their three-year partnership and even after the blood-draw centers were closed in June, which put their customers at risk. This sounds like the fraud and misrepresentation cited by Partner Fund Management, which moved in October to get its $96 million back like Lee Marvin as Walker in Point Blank. Earlier reports confirmed that patients did not learn for weeks or months, often not until forced to, that their Theranos test results were unreliable. There are reports that at least 10 patient lawsuits have been filed in Arizona and California.

(This Editor notes that their Theranos agita hasn’t soured Walgreens on funding health tech. They are a substantial investor in TytoCare, an all-in-one vital signs device with retail potential, and MedAvail, a kiosk dispenser for prescription and OTC medications)

Theranos has, no surprise, said a great deal, aggressively–the trademark of their legal supremo David Boies. They claim to be the aggrieved party: “Over the years, Walgreens consistently failed to meet its commitments to Theranos. Through its mishandling of our partnership and now this lawsuit, Walgreens has caused Theranos and its investors significant harm.” Theranos has exited the blood-testing business and is supposedly refocusing on developing technology to sell to outside labs. Also MedCityNews ‘coughs’, The Verge.  See here for the 22 previous TTA chapters.

The Theranos Story, ch. 22: the human cost of lab error (updated)

October 26, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/11/upside-down-duck.jpg” thumb_width=”150″ /]Save this one for the coffee or lunch break. What is the cost of a lab error on the human psyche? It can be mildly upsetting to you and your doctor, warning of a developing condition and some changes have to be made–or make for a very bad day/week/months. It can be falsely reassuring or simply confusing.

We know that in April, Theranos flunked a CMS review, and in May voided all test results from its proprietary Edison devices from 2014 and 2015, as well as some other tests it ran on conventional machines. The results were not only off, but way off, according to the WSJ. “Notes from the CMS inspection show that 834 out of 2,890 quality-control checks run on the Edison in October 2014, or 29%, exceeded the company’s threshold of two standard deviations from its average result. Standard deviation is a statistical measurement of variation. In addition, 80% of the 834 quality-control checks that raised a red flag under Theranos’s internal standards were more than three standard deviations from its average result, the inspection notes show.”

They also failed to notify patients for weeks or months, and often not until forced to. At least 10 lawsuits have been filed in Arizona and California. Some of the human stories of Theranos’ improbable lab results, which included tens of thousands of patients, with the cost of retesting, repeated doctor visits and agonizing suspense :

  • After five widely different Theranos blood coagulation tests in six weeks, a retired marketer living in Arizona and his doctor so distrusted the results that the latter recommended that he stop taking warfarin and switch to a milder medication. This patient found out only last Friday that Theranos had corrected a September 2015 test showing his blood taking more than six times longer than normal to clot. The other four tests showed the warfarin wasn’t thinning his blood enough. Contradictory results confusing both doctor and patient on treatment.
  • A thyroid cancer survivor got thyroxine results (T4) from three tests conducted in October 2014. The extremely high results could have indicated hyperthyroidism at the least, or a more serious condition. The results–false after retesting failed to confirm.
  • A breast cancer survivor had extremely high levels of estradiol, which could have been produced by a rare adrenal tumor that can secrete estradiol or an elevated risk of breast-cancer recurrence. Again, false results but found only after retesting.

The comments under the article are worth the long scroll. (They are running 98 percent in favor of Holmes for Prison 2017. Also there are a few shots at Walgreens’ role in legitimatizing Theranos by putting their centers in store; this embarrassing part of the story isn’t over, in this Editor’s opinion.) What is evident–fraud perpetrated on patients and doctors–and anyone who invested. David Boies, their legal supremo and board member, is gonna have a full docket between this and the various legal actions taken by the Alphabet Agencies.

Agony, Alarm and Anger for People Hurt by Theranos’s Botched Blood Tests. If the WSJ is paywalled, search under the headline text.

See here for the agony of TTA’s 21 previous Theranos chapters. We hope that John Carreyrou and the WSJ investigative team, which we’d assume includes Mr Weaver, this article’s author, are awarded the Pulitzer Prize.

The Theranos Story, ch. 21: the denouement of tears, fears and lawsuits

October 12, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/11/upside-down-duck.jpg” thumb_width=”150″ /]Finally, Theranos sinks its labs, Wellness Centers…and 340 employees. Since founder/CEO/controlling shareholder Elizabeth Holmes has been banned by CMS from running any labs for the next two years, shutting ’em down makes total sense in terms of saving her job. (Of course, if you are one of those fired employees in Arizona, California or Pennsylvania, it doesn’t. But hey, you may be worth more than Ms Holmes!) What she’s betting what is left of the company on is the miniLab, which hasn’t exactly come heartily out of the gate. It was Gimlet Eyed at the AACC annual meeting in Philadelphia, then shortly thereafter she withdrew from FDA review a Zika test using the miniLab due to lack of a patient-safety protocol approved by an institutional review board. (Tsk, tsk–Ed.)

Now the news of a lawsuit by a major investor will, in its process, reveal more of the Bubble That Was Theranos and possibly put the banana peel under the pivot. Investors sank over $800 million into the company, and one of them, Partner Fund Management, wants its $96 million back like Lee Marvin as Walker in Point Blank. According to the Wall Street Journal, which originally wielded the needle, the charges are that they and other funds were lured in by fraudulent claims and various misrepresentations of the Edison technology and its effectiveness–in other words, that they had labs and tests that actually worked. The SEC continues to investigate, including subpoenaing Partner and possibly other investors.  ABC News, Wall Street Journal (search on title ‘Major Investor Sues Theranos’ if you hit the paywall), Gizmodo 30 Aug, 11 Oct (a wonderfully Gimlety take by Eve Peyser), and a series of acid flashbacks in Forbes

See here for the 20 previous TTA chapters.

The Theranos Story, ch. 20: How Arizonans fell hard and let Theranos change health policy

September 15, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2015/11/upside-down-duck.jpg” thumb_width=”150″ /]The face is in the lake, and the yellow duck is upside down–augering in! A flatly-spinning Yak-52 no longer describes the glide path of Theranos, now at value 0. So as the dust settles, the Tales of When The Circus Came to Town are dusted off and published. Here Tim Steller, a writer and columnist with the Arizona Daily Star, reminisces on those dazzling Arizona days back in March 2015–18 short months ago–when Elizabeth Holmes swept into Phoenix in her bodyguarded SUV, trailing lobbyists and dropping names. The state legislature and Governor Doug Ducey, by this telling, were mere putty in her hands, star-struck into approving a bill permitting direct consumer ordering of lab tests, over the objections of the Arizona Medical Association and the questioning of the two doctors in the legislature. The Big Question–“does your blood-testing technology work?”–never was asked, and only two voted against the bill. At least Theranos only sought deregulation to facilitate its placement in Walgreens; Zenefits, another one-time Unicorn, gained employment incentives for its online HR-benefits brokerage, which were voided with recent layoffs. Tucson.com  See here for the 19 previous TTA chapters.

The Theranos Story, ch. 19: the dramatic denouement, including human tragedy

September 9, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]The deconstruction of Theranos continues, con il dramma, rounding back to those who touted it. There isn’t all that much new in Nick Bilton’s Vanity Fair article, but it adds context and color to this (literally) Bloody House of Smoke and Mirrors. (Ah, where’s Christopher Lee when you need him?–Ed.) There’s the usual Inside Baseball of closed-door meetings in ‘war rooms’, G150 jetting to awards, bodyguards, threatening lawyers, crisis managers, COO ‘enforcers’ (Sunny Balwani) and playing the Silicon Valley investor game (with Google Ventures taking a very smart pass). Where this gets unusual is the portrait of Elizabeth Holmes as an obsessive, secretive, blondined Steve Jobs knockoff from the age of 19, with a hot idea that never matched scientific reality from the start, but with a great line of ‘making the world a better place’ magnified by Silicon Valley’s incessant, We’re The Top And You’re Not narcissism.

Even Narcissus ultimately saw a fool in that pool. Played and tarred to a greater or lesser degree were: the only major SV VC lured in, Draper Fisher Jurvetson, and off-SV investors like mutual funds and private equity have lost it all; Fortune, Forbes, CNN plus much of the tech and financial press; and respected people lured to the board like Marine Gen. James Mattis, who had initiated the pilot program in DOD, Henry Kissinger and former Senator Bill Frist MD. Then the alphabet agencies marched in after the author: FDA, CMS, SEC and DOJ.

Oh yes, that Zika test announced in early August? Withdrawn at end of August. Ms Holmes is appealing her two year lab ban. But she still has absolute control of what’s left of the business. Business Insider

Finally, the lede in many articles is the suicide of British chief scientist Ian Gibbons and Ms Holmes reaction. Already ill with cancer, (more…)

The Theranos Story, ch. 18: Is the ‘miniLab’ the Real Edison, or The Great Oz 1.0?

August 3, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]Is the Great Oz Behind the Curtain? Updated for The Box and additional articles. Before a skeptical audience Monday afternoon at the American Association for Clinical Chemistry‘s (AACC) annual meeting in Philadelphia, Theranos‘ CEO Elizabeth Holmes, due to be banned from the industry by CMS for lab violations, unveiled a new lab technology. According to Ryan Cross in the MIT Technology Review, “Holmes claimed her company had developed a sophisticated “miniLab” capable of carrying out an array of tests, including detecting the Zika virus, from a finger prick of blood.” A cube-like box, developed in secrecy, she called it a “single platform” able to carry out a wide array (or several–depending on what quote you read!) of different test types using small volumes of blood (apparently finger sticks). The device will be small, portable and directly connected to the internet to centrally send and verify test results. Ms Holmes actually took questions from a three-person scientific panel. When asked if she would be sharing the device with other researchers, she said she was “working on it right now.” It is not, of course, FDA-approved or in production.

Updated for video and new articles (as of 8/19/16).

  • MedCityNews’ Stephanie Baum must have some OSS/CIA blood in her, because it appears she’s beaten everyone on the miniLab Box picture plus posting the Theranos presentation video, which went up via AACC’s YouTube site within hours of the presentation. Other commitments prevent me from an analysis of the hour until later, but gone is the black turtleneck, remaining is the talent for tap dancing around hard facts. The comments in the article and from elsewhere echo the profound skepticism and cynicism found in the MIT and WaPo articles. Yes, the ‘Sympathy for the Devil’ intro was dark humor, served up the way we like it!
  • Bloomberg interviews attendees (scientists, clinical directors, professors, doctors) who believe they were baited and switched. The bait was the justification for Edison performance. The switch was The Box–a new technology, untested, untried and not even peer reviewed–that simply crunched down multiple existing tests into one container.
  • (Updated 8/19) AACC’s published article was short and straight up. “(Dr Steven) Master told Holmes that her data “fell far short” of what he expected based on the wide menu that Theranos promised previously.” Plenty of promises from Ms Holmes at the end, but if CMS has their way, which is likely, Ms Holmes’ “I’ve made the decision to double down and stick by it no matter how hard the path” and to be involved with AACC in the future, will be more empty Theranos promises.

Also WaPo, TechCrunch and POLITICO Morning eHealth

Is Theranos–and Ms Holmes–too far ‘gone’ to be credible or funded? Will there even be a Theranos company to develop this? Will Ms Holmes remain in the business through successfully appealing her imminent ban? The only sensible conclusion is that we’ll believe the technology–and her–when we see it is properly and independently verified–and operated by a company with proper governance and controls.

Stay Tuned to See if The Fix Is In.

Thumb through the prior 17 chapters of the Theranos Story here. Hat tips to @EdifInstruments and Editor Chrys Meewella for the links (WaPo and MIT respectively).

The Theranos story, ch. 17: closing the barn door after the horse

July 26, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /] And it may work, though the horse is in the next county. Late last week, with American eyes elsewhere, Theranos announced that they hired two executives with regulatory responsibility–a chief compliance officer and an VP regulatory and quality–and formed a new board committee focused on same. The CCO is Dave Guggenheim, the former assistant general counsel for regulatory law at HIT/medical distribution giant McKesson. The VP, Daniel Wurtz, comes from a similar senior director position at biotech Thermo-Fisher Scientific.

The country maxim, ‘closing the barn door after the horse has bolted’, applies. In fact, the horse is in town and having a growler of beer at the local tavern. The Newark, California lab is shut and the principals, including the CEO Ms Holmes, are technically prohibited from operating a lab for at least two years (that means you, Ms Holmes) starting in a month. Messrs Guggenheim and Wurtz (or similar) should have been on board years ago. Even small companies in our field realize they HAVE to do this!

This also doesn’t affect the interesting interest that DOJ and SEC have in Theranos. [TTA 10 July]

However, this Editor will take the contrarian view that somehow, some way, the ‘fix’ is being worked out, if not in. Don’t make reservations for the fire sale quite yet. The ban on Ms Holmes won’t take place for another month, minimum. That gives time for David Boies, their legal supremo, and his firm to stall for more time, and time for some calls to ask favors from friends, of which he has many in this administration. More than likely, Boies on behalf of Theranos will appeal the CMS rulings to an administrative judge. Ms Holmes may take the hit, but may get a handsome payday to depart despite her reported control, if the investors can salvage something out of the company.

At HQ, they may be rehearsing saying ‘mea culpa, mea culpa, mea maxima culpa’ three times, kneeling deeply, in preparation to Going Forth And Sinning No More.

The Object Lessons taught by the Theranos Troubles, to us in healthcare tech, continue.

WSJ, Theranos Hires Compliance, Regulatory Executives  (more…)

The Theranos Story: now as a cartoon strip, not so ‘funny as a heart attack’ lawsuit

July 20, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]The absolutely funniest take that this Editor has seen is a funny paper–literally a (scroll down) cartoon strip that serializes the Theranos story. ‘The Rise and Fall of a Health Care Tech Unicorn’ lampoons CEO Holmes’ dropping out of Stanford, the Rube Goldberg-esque (=UK Heath Robinson) Edison Machine to the Wall Street Journal Exposé. $9 billion to $9. Depicted by Fiore for KQED San Francisco’s Future of You blog.

Unfortunately, for one now-plaintiff, Theranos isn’t funny at all. According to a lawsuit filed Monday in the US District Court in Arizona against both Theranos and Walgreens Boots Alliance, the patient’s doctor-ordered blood lipid and sugar levels came back normal. Based on these results, the doctor recommended remaining with ‘R.C.’s  medication regimen. Less than one month later, R.C. suffered a heart attack, requiring surgery to implant two stents in his arteries. The additional blood testing led his doctor to believe that the Theranos results were dangerously inaccurate. These were the same results which were voided in May [TTA 19 May]. This is the ninth lawsuit over Theranos’ testing.

The sanctions which will close Theranos’ labs and prohibit Ms Holmes from the lab testing business will take effect 5 September, according to Ars Technica. (Article includes PDF of the court filing)

More reflections on, significance of the Theranos quagmire (updated)

July 10, 2016 | by | 1 Comment
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]Theranos’ spin towards the Auger In continues. Truth or Consequences are apparent. So are setbacks.

Wired has put together a timeline of the key events in The 9 Events That Have Pretty Much Doomed Theranos, most of which our Readers in following our coverage (index here from 2013) are already familiar with. One interesting point is #7, which touches on another gift to the legal profession–the class action lawsuit. Eight lawsuits are already in process, and at least one names former partner Walgreens Boots.

SEC and DOJ’s interest. The SEC, limited in its action because Theranos got big without going public (see below for more), is likely seeking misrepresentation of technology to investors–as in, ‘it really didn’t work’. Penalties may include repayment or settlements to investors and barring principals from ever leading a public company. The DOJ will likely focus on consumer impact. Knowing that your blood tests are inaccurate but continuing to sell them violates all sorts of Federal health regulations, and can earn the principals orange mock turtlenecks and a long stay in a place with iron bars, pesky regulations and no choice of wardrobe. Sadly, Theranos’ legal counsel and board member David Boies won’t have a chance to unleash one of his favorite intimidation weapons, the libel lawsuit. Instead, he’ll be uncomfortably playing defense (but for how long?) Give the man a crying towel, and remind him to bill in advance. Wired (from April)

*Updated: Here’s the CMS letter, courtesy of the WSJ. (If John Carreyrou doesn’t receive a Pulitzer Prize, the fix is in!–Ed.)

The market demonstrated inefficiency in allowing companies like Theranos to get big without going public. You cannot short or sell the stock (a negative ‘opinion’) which demonstrates that investor-backed Unicorns represent ‘incomplete markets,’ according to Robert Shiller’s Efficient Markets Hypothesis. Of course, before going public, the SEC would have demanded disclosure–another reason why Theranos (and possibly other Unicorns) aren’t. Forbes.

‘Theranos has probably set back the tremendously promising field of microfluidics by a decade.’ An investor who was rooting for Theranos (but didn’t invest) recounts the dodgy behavior of entrepreneurs from eToys.com to Tesla. ‘Hype is what entrepreneurs do best’; fabbed-up PowerPoint decks are par for the course. “Sadly, the journey from charisma to coercion to lying is quick and often complete.” Ms Holmes, you have a lot of company. When Startups Put The Fab in Fabricate. (WSJ; if paywalled, PDF attached)

Where do we go from here? We’ll close with advice to startups in biotech and medical innovation: pace thyself, know thyself. What’s needed: an internal culture amenable to science–and external regulation–and knowing when to apply the brakes to prevent slamming into The Wall Marked Failure. (Mentioned is a useful tool called a pre-mortem) Wired

Theranos denouement: CMS closes lab, fine, 2-year ban on Holmes (breaking)

July 8, 2016 | by
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]Breaking News. Theranos has been slapped very soundly by the Centers for Medicare & Medicaid Services (CMS) for violations arising from operations at their Newark, California laboratory. The fine is not disclosed. CMS has revoked the lab’s certificate and also prohibits the owners and operators of the lab from operating a lab for at least two years. That means that Elizabeth Holmes, the CEO, her management and anyone immediately involved with the Newark lab is effectively out of a job.

As the Theranos press release was issued well after hours Thursday night US Eastern Time, there’s no mention of the board actually removing her, but that is another shoe that this Editor expects to drop sooner, not later. COO Sunny Balwani was removed in May [TTA 19 May] Who is not tainted who can actually run the company? Is there a capable person in the industry who wants to touch it? As has been revealed, Ms Holmes still controls the company [TTA 27 Apr].

The revocation will be in effect in 60 days, according to the Wall Street Journal*, but the Newark lab has been closed. There is no mention of the Palo Alto lab which was also under scrutiny [TTA 20 Apr].

The details appear to be lifted or nearly lifted from the CMS order, and are quoted directly from the Theranos release: (more…)

A weekend potpourri of health tech news: mergers, cyber-ransom, Obama as VC?

July 1, 2016 | by

As we approach what we in these less-than-United States think of as the quarter-mile of the summer (our Independence Day holiday), and while vacations and picnics are top of mind, there’s a lot of news from all over which this Editor will touch on, gently (well, maybe not so gently). Grab that hot dog and soda, and read on….

Split decision probable for US insurer mergers. The Aetna-Humana and Anthem-Cigna mergers will reduce the Big 5 to the Big 3, leading to much controversy on both the Federal and state levels. While state department of insurance opposition cannot scupper the deals, smaller states such as Missouri and the recent split decision from California on Aetna-Humana (the insurance commissioner said no, the managed care department said OK) plus the no on the smaller Anthem-Cigna merger are influential. There’s an already reluctant Department of Justice anti-trust division and a US Senate antitrust subcommittee heavily influenced by a liberal think tank’s (Center for American Progress) report back in March. Divestment may not solve all their problems. Doctors don’t like it. Anthem-Cigna have also had public disagreements concerning their merged future management and governance, but the betting line indicates they will be the sacrificial lamb anyway. Healthcare Dive today,  Healthcare Dive, CT Mirror, WSJ (may be paywalled) Editor’s prediction: an even tougher reimbursement road for most of RPM and other health tech as four companies will be in Musical Chairs-ville for years.

‘thedarkoverlord’ allegedly holding 9.3 million insurance records for cyber-ransom. 750 bitcoins, or about $485,000 is the reputed price in the DeepDotWeb report. Allegedly the names, DOBs and SSNs were lifted from a major insurance company in plain text. This appears to be in addition to 655,000 patient records from healthcare organizations in Georgia and the Midwest for sale for 151 – 607 bitcoins or $100,000 – $395,000. The hacker promises ‘we’re just getting started’ and recommends that these organizations ‘take the offer’. Leave the gun, take the cannoli.  HealthcareITNews  It makes the 4,300 record breach at Massachusetts General via the typical unauthorized access at a third party, once something noteworthy, look like small potatoes in comparison. HealthcareITNews  Further reading on hardening systems by focusing on removing admin rights, whitelisting and endpoint security. HealthcareDataManagement

Should VistA stay or go? It looks like this granddaddy of all EHRs used by the US Veterans Health Administration will be sunsetted around 2018, but even their undersecretary for health and their CIO seem to be ambivalent in last week’s Congressional hearings. According to POLITICO’s Morning eHealth newsletter, “The agency will be sticking with its homegrown software through 2018, at which point the VA will start creating a cloud-based platform that may include VistA elements at its core, an agency spokesman explained.” Supposedly even VA insiders are puzzled as to what that means, and some key Senators are losing patience. VistA covers 365 data centers, 130 separate VistA systems, and 834 custom installations, and is also the core of many foreign government systems and the private Medsphere OpenVista. 6/23 and 6/24

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2014/01/Overrun-by-Robots1-183×108.jpg” thumb_width=”150″ /]Dr Eric Topol grooves on ‘The Fourth Industrial Revolution’ of robotics and AI. (more…)

Unhappy endings? HealthSpot’s remains to Rite Aid, Theranos’ story to Hollywood

June 14, 2016 | by

HealthSpot Station’s assets to Rite Aid, minus the ‘froth’. On Monday, drug store chain Rite Aid won the US Bankruptcy Court in Columbus, Ohio’s mandated auction for the inventory, most assets and IP for its entry bid of $1.15 million. According to Columbus Business First (subscription only), a touted second bid by a central Ohio investor group was $1 million–and stayed right there with no second bid. This group had invested $650,000 before HealthSpot entered Chapter 7. A dark horse third bidder, which came in at the last minute, never put money on the line.

The Ohio business group leader, local assisted living facility owner Paul Gross, interestingly maintained his faith in the kiosk concept to Columbus Business First in an earlier interview, rapping the prior management for squandering approximately $47 million (more, given Xerox‘s never-disclosed investment) on office furniture, lavish executive salaries and misbegotten marketing (quoted in MedCityNews). 25 of the kiosks were in Rite Aid locations in Ohio and others with Cleveland Clinic, but there are 137 still ‘in the box’. Perhaps ‘misbegotten’ should be applied to the concept (kiosks too big, expensive) and not the marketing communications, which in this Editor’s professional judgment were strong and appealing, but ran into the ‘lipstick on a pig’ wall.

One wonders what Rite Aid, in the throes of its own difficult merger with Walgreen Boots Alliance, will do with the assets. TTA’s earlier stories on HealthSpot.

Theranos the Movie, starring Jennifer Lawrence. Co-starring Walgreens? ‘Hunger Games’ star Jennifer Lawrence has reportedly agreed to star in ‘The Big Short’ director Adam McKay’s adaptation of the story. (Fortune) Certainly there is a resemblance to CEO Elizabeth Holmes Frogeyed Sprite (‘Bugeyed’ to us Yanks–Ed.) crossed with Steve Jobs. Ms Lawrence has already played a young, aggressive, come-from-nada inventor of household gadgets in ‘Joy’. The Theranos story is appearing to be the ‘Joy’ story in reverse. Suggested title: ‘The Royal Scam’? (credit Steely Dan, circa 1974). ‘Less Than Zero’ (Bret Easton Ellis) is taken, now describing Ms Holmes’ net worth according to Forbes.

Mr McKay will be ripping from the headlines in progress, should the movie actually be made. (more…)

Nail in the coffin hammers home: Theranos voids, corrects 2 years of test results

May 19, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]Tens of thousands of lab results 2013-2015 voided, “corrections” sent. L’affaire Theranos continues, with the not-so-surprising action of Theranos to void all of its Edison machine testing results, from all labs, as well as many processed on conventional equipment during those years.

According to the Wall Street Journal, Theranos told CMS during its lab inspections that they ran 890,000 tests a year, so we are between 1.5 and 2 million tests being, at minimum, voided. The Edison was used for 12 out of 200 tests, at least initially, with conventional machines performing the rest.

The voiding was verified by John Carreyrou of the WSJ by cross-checking his sources with Phoenix-area medical practices (the Walgreens marketing area), which confirmed receiving corrected test reports. One doctor reported that many of the voided results were for calcium, estrogen and testosterone tests. Here is where it cuts to danger levels: “The doctor said one corrected report is for a patient she sent to the emergency room after receiving abnormally elevated test results from Theranos in late 2014. The corrected report from Theranos now shows normal values for those tests, according to the doctor.”

But how can you send corrected results, which would require a rerun, of samples at least a year and perhaps two years old? It’s not clear if this pertains to standard tests run on miscalibrated machines (see below on Siemens) or somehow Edison tests were re-evaluated.

This reads like a last ditch effort to stay out of the Alphabet Monster’s clutches (CMS, FDA, DOJ, SEC), or at least survive their squeeze. COO Sunny Balwani was bid adieu last week, along with the company adding three members with scientific expertise to one of its many boards. Of course, as we previously noted, these boards are Silicon Valley Sock Puppets. The one to watch is legal Attack Dog David Boies (to whom the First Amendment and a free press are so much tissue paper to be ripped) who also sits on the governing board–politically well wired and the kind of bully attorney you call in when you are facing Big Trouble and need Big Defense–or Offense.

Walgreens Boots–reportedly fit to be tied, because Theranos won’t disclose the extent of the corrections, and surely assessing its legal options. Siemens must be equally unhappy that its equipment was 1) miscalibrated by Theranos and 2) Theranos didn’t monitor test water purity; thus they have become inadvertently tainted.

One must wonder if founder Ms Holmes is considering the fit and finish of orange turtlenecks, or residency in a country with no US extradition treaty. For the company, the flat spin above is likely non-recoverable. Sadly, Clipper Theranos will crash down on other, far more honest innovative companies lined up on the runway. Wall Street Journal (if paywalled, copy and search on the headline); Forbes, Ars Technica. Our Theranos dossier here.

Is the clock at the funding pub pointing to ‘last call’? (Updated)

May 11, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2012/12/crystal-ball.jpg” thumb_width=”150″ /]And we were having such a good time! UPDATED Having ridden a few hype curves (in health tech and out–remember airline deregulation?) and with the bruises to prove it, this Editor believes that she can spot a Cracking Market at forty paces. The hands on the clock appear to be near closing time, even as we party on. After all, DTC telehealth is forecast to be $25 bn in the US by 2025 (GrandView Research), if we make it that far!

Where are the sharp noises coming from?

  • The continuing fail of unicorns like Theranos [TTA 4 May and prior], now resorting to bullying the Wall Street Journal and negotiating with the alphabet (SEC, DOJ, FDA, CMS…), and the troubles of Zenefits. 
  • Another notable unicorn, the doctor booking site ZocDoc, being called out at last on their customer churn, low margins, and high customer acquisition costs. (As well as an irritant to doctors and office managers) New York Business Journal
  • Extremely high and perhaps insane rounds of funding to young companies with a lot of competition or a questionable niche. Higi is an odd little kiosk + consumer engagement program located in primarily Rite Aid drugstores–odd enough to score $40 million in its first venture round. (Ed. note: I shop at Rite Aid–and have never seen one.)This is after the failure of HealthSpot Station, which burned through approximately $43 million through its entire short but showy life. The low-cost, largely exchange plan insurer Oscar Health raised $400 million this February  ($727 million total) while UnitedHealth and others are dropping money-losing plans in most states. Over 50 percent of exchange co-ops went out of business in 2015, leaving doctors, health systems and patients holding their baggage. Again, low margins, high cost and high customer acquisition costs.
  • We’ve previously noted that funders are seeking ‘validation in similarity’–that a few targeted niches are piling up funding, such as doctor appointment setting, sleep trackers and wellness engagement [TTA 30 Dec 15]
  • Tunstall’s continuing difficulty in a sale or additional financing, which influence the UK and EU markets.
  • NEW More patent fights with the aim of draining or knocking out competition. We’re presently seeing it with American Well litigating Teladoc over patent infringement starting last year, which is only now (March) reaching court. It didn’t stop Teladoc’s IPO, but it publicly revealed the cost: $5 million in previously unplanned lobbying and legal costs, which include their fight with the Texas Medical Board on practicing telemedicine–which is beneficial for the entire industry. (But I would not want to be the one in the legal department explaining this budget line.) Politico, scroll down. But these lawsuits have unintended consequences–just ask the no-longer-extant Bosch Healthcare about the price of losing one. (more…)

‘Silicon Valley Tech Press’ blamed in the Theranos buildup; WSJ threatened

May 4, 2016 | by

[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]A fascinating view from an ironic source. Vanity Fair’s short article tags the buildup of Theranos and its founder/CEO Elizabeth Holmes to a purposefully gullible Silicon Valley Tech Press and their moneymaking conferences. While not naming specific publications, it cites TechCrunch’s Disrupt as an early builder-upper of Ms Holmes (drawing blood onstage, how daring!). The operating thesis here is that the tech press vetted her with uncritical and fawning coverage, which led to profiles and shiny articles in the New York Times, the New Yorker and ….Vanity Fair, which also featured Ms Holmes at their 2015 New Establishment Summit. It’s a classic PR strategy to me, one that any skilled marketer has in their playbook (Ed.–it also works in reverse, having mainstream press vet a technology sold B2B), and one that evidently worked.

One would think that writers and editors with some biotech and science knowledge would raise more questions. The author, Nick Bilton, critically outlines the ‘Game of Access’ underpinning the tech press and blogger business model: you say nice things and play ball, you get a preview of the latest gadget or a sitdown with the CEO. If you don’t, you’re shut out. So writers don’t ask tough questions, probe hard enough, or tell the truth about where the facts are leading them, because if they do, there goes the access and the sponsorships, as well as your job. While the former doesn’t apply to your Editors, many of us who write also hope that we uncover a technology that benefits people, or is even revolutionary. We like a bracing story.

However, Mr Bilton, perhaps mindful of the cart he rode in on, doesn’t scoop an equal share of blame onto the ‘mainstream’ press. To this Editor’s mind, the Ken Auletta profile in the New Yorker should have been stopped by the New Yorker’s EIC and sent back to Mr Auletta with a blue-penciled “DIG DEEPER”. This excerpt is from the VF article:

Auletta acerbically noted that the technology behind Theranos was “treated as a state secret, and Holmes’s description of the process was comically vague.” She told him, for instance, that one process occurred when “a chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.”

Say wot? Sheer gobbledygook. For the WSJ investigative reporter John Carreyrou, who read this and eventually blew the lid off Theranos, this was caviar on toast too delicious to pass up. (Vanity Fair, on the other hand, was too busy making Ms Holmes one of its New Establishment, but investigative reporting has never been one of their strong points. Another reason why this article is an interesting read.)

A side note: Ms Holmes kept on refusing to disclose, even to VCs, the blood analysis process as a technology too secret to share, even with fellow researchers to get verification and validation. And that led to very few truly major VCs investing in the formerly $9 bn valued company, a point Mr Bilton relishes.

The final revelations in the article–truly the lead–should scare anyone who values a free press. They are the bullying tactics taken by Theranos’ legal team led by that new governing board member, David Boies, to intimidate both Mr Carreyrou and the WSJ from their investigative reporting. Mr Bilton’s source describes the team marching into the WSJ office in June, threatening legal action on the proprietary information Mr Carreyrou supposedly had (he did have internal documents). After repeatedly denying all requests for an interview with Ms Holmes, the WSJ went with the story in October, and the rest is history. Mr Boies now has his hands full elsewhere with other types of letters: CMS, SEC, DOJ and FDA. And Ms Holmes is no longer making herself available to the media, even to her former friends in the tech press. The Secret Culprit in the Theranos Mess