Category: Health

There’s a bit of a debate in the venture capital community about what matters more to digital health investors in today’s fundraising environment — growth or profitability. Some investors say profitability is king right now, but Cathy Gao, a partner at Sapphire Ventures, thinks the conversation is a lot more nuanced.

“Compared to 2021, when it was really about growth at all costs, there’s definitely a level of renewed focus on profitability,” Gao said Tuesday during an interview at the ViVE conference in Los Angeles. “People are still putting a premium on growth — they would rather have higher growth than higher profitability. Now that being said, the edge cases have all fallen off, meaning if you’re a company that is growing but deeply unprofitable, investors are going to penalize you for that.”

To Gao, the growth versus profitability conversation is “really interesting” in the context of digital health investing for two reasons. 

The first is that many digital health companies have a significant service component either on the delivery side or the implementation side. Those service components can hurt margins, especially when a startup is onboarding a lot of new customers during a heavy growth period, Gao noted.

“Because of the heavy services component, profitability or efficiency metrics might actually look worse when a company is growing faster. So that’s something that investors have to really understand and parse through and balance,” she explained.

The other reason Gao thinks the growth versus profitability conversation is compelling is because digital health startups’ growth often looks “really lumpy.” Instead of a smooth growth curve, the line often looks more like stair steps, she pointed out.

This is because it’s not uncommon for a startup to land a huge contract that drives its average annual return (ARR) up and then fall into a static state for a while. Even though sales cycles are compressing, they can still be quite lengthy, Gao remarked.

“There’s been a lot of debate on whether or not traditional healthcare IT companies fit the model for venture capital. Venture capitalists were all trained to look for a J curve — that hockey stick growth that people talk about, which you often see in fast-growing SaaS companies. But digital health is a different ballgame,” she declared.

Gao said that one could argue that selling to a health system is similar to selling to any large enterprise company because it takes a lot of time. But from what she’s observed, the decision-making process at most health systems is incredibly involved, often spanning multiple committees. 

Oftentimes, a digital health startup will conduct an initial pilot and then there will be a subsequent launch based on certain milestones — all that kind of muddles what investors can see from just purely looking at the numbers, Gao explained.

“There’s a lot of nuance to healthcare software investing. I think investors saw what happened to some of the companies that went public in 2020 and 2021 in the healthcare world — and these public companies don’t look great right now.  A lot of the reason for some of that bad performance is that the unit economics didn’t work and they couldn’t figure it out. I think investors think about that as a cautionary tale,” she stated.

Startups don’t necessarily need to have their profitability metrics completely fleshed out in order to secure venture capital funding, but having no plan for how to reach profitability will stand out as a red flag to investors, Gao declared.

Picture: Feodora Chiosea, Getty Images

The promise of therapies that activate and redirect T cells to attack tumors has been stymied by lack of efficacy or unacceptable toxicity. Such therapies have also had a hard time treating solid tumors. Janux Therapeutics’ technology is designed to overcome those limitations. Interim Phase 1 data for two programs are lending validation to the biotech’s approach.

The results are early and more testing is needed. But one analyst says the data so far indicate that Janux’s lead program has blockbuster potential. Shares of Janux more than doubled at the market open Tuesday. The biotech’s share price continued its climb throughout the day before closing at $49.75, a 229% increase over Monday’s closing price. The company is now using the rise in stock price as an opportunity to raise about $175 million through a stock offering.

Janux’s drugs belong to a class of therapies called T cell engagers. With one part that binds to a target on a T cell and another part that binds to a target on a tumor, the therapy brings the two cells together so the immune cell can kill the cancer cell. One challenge for T cell engagers is that toxicity develops when these systemically circulating therapies hit targets that are also found on healthy tissue.

San Diego-based Janux calls its platform Tumor Activated T Cell Engager, or TRACTr. This technology designs a T cell engager with a “mask” that inhibits activation of the immune cell in healthy tissue. These masks stay in place with peptide linkers removable only by enzymes found at the site of a tumor. Each therapy also includes a component that extends its half-life.

Janux therapy JANX007 is in development for metastatic castration-resistant prostate cancer. In updated Phase 1a results reported late Monday for the prostate cancer therapy, as of Feb. 12 cutoff date, 14 of the 18 participants who received the starting dose of 0.1 mg achieved PSA30 declines, which means at least a 30% decline in blood levels of the prostate specific antigen (PSA) that is elevated in men with prostate cancer. At a starting step dose of 0.2 mg, all six subjects achieved PSA declines of 30% and five of six achieved 50% declines.

The higher dose 0.2 mg drove a deeper and more durable response, including one patient who achieved 90% decline in PSA. This response was achieved without compromising safety. T cell engagers can spark a complication called cytokine release syndrome. Janux said no cases of this complication higher than Grade 2 were observed in the Phase 1a trial.

William Blair analyst Matt Phipps acknowledged the small number of patients in the study. But in a research note, he said the Janux therapy’s level of activity is “clearly significant and above relevant benchmarks in such heavily pretreated patients.” He added that tests of how the drug moves throughout the body detected the cleaved half-life extension domain but did not detect the active T cell engager in the periphery, a finding that has been consistent across treatment groups.

“We believe this is a key data point validating the TRACTr platform and the ability to achieve cleavage of the molecule across patients,” Phipps said.

The results increase this program’s chances of success, Phipps added. If it’s approved, the firm estimates peak sales could reach $1.5 billion in patients whose metastatic prostate cancer does not respond to chemotherapy. If JANX007 can move into earlier lines of treatment, this therapy offers multi-blockbuster potential, he said.

Janux also reported preliminary data for JANX0008, which is being tested in heavily pretreated patients whose solid tumors express high levels of a protein called EGFR. This Phase 1a study includes patients with colorectal cancer, squamous cell carcinoma of the head and neck, non-small cell lung cancer (NSCLC), and renal cell carcinoma.

As of Feb. 12, Janux said 11 participants across all four tumor types have been enrolled. In one patient whose NSCLC was treated with JANX0008, Janux reported a confirmed partial response with 100% reduction of the target lung lesion and elimination of liver metastasis. No cytokine release syndrome or treatment related adverse effects were reported. In addition, one patient with renal cell carcinoma experienced a 12% reduction in size of a large cancerous mass as well as significant clinical benefit. This patient experienced cytokine release syndrome classified as Grade 1.

Janux is continuing dose optimization of the prostate cancer therapy, which is expected to have its next data update in the second half of this year. Dose escalation and optimization is also continuing for the test of the solid tumor therapy.

Public domain image via the National Cancer Institute

As a nurse practitioner dual certified in primary care and behavioral health, Amy Edgar recognized that the medical community often tends to separate primary care and mental health.

In 2014, she later went on to build Blackbird Health, a youth mental health company that aims to fix this issue. It announced last week that it raised $17 million in Series A funding.

“We wanted to be a one-stop shop, which is when you walk in the door, we do everything that we can to understand what’s going on. And then you should be able to have access to the service providers to address whatever we find,” Edgar said during an interview at ViVE in Los Angeles on Tuesday. She is the chief clinical officer of the company.

Pittsburgh, Pennsylvania Blackbird Health offers virtual and in-person care for kids and young adults battling social, developmental and school-related challenges. It focuses on finding the root cause of symptoms and specializes in a range of conditions, including anxiety, depression, ADHD, speech challenges, autism and more. Patients start with an intake meeting and screening, followed by an evaluation process to understand patients’ strengths and challenges. Patients then receive a diagnosis and personalized treatment plan and are assigned to a care team. The company’s services include behavioral therapy, individual and family counseling and speech therapy. It operates in Pennsylvania and Virginia and is in network with insurers.

The $17 million Series A funding round was led by Define Ventures and included participation from Frist Cressey Ventures and GreyMatter. In total, the startup has raised nearly $23 million.

Define Ventures chose to invest in Blackbird Health because of its personalized care that identifies the root cause of symptoms.

“Blackbird Health epitomizes the future of mental healthcare – a future defined by innovation and a dedication to significant cost reductions and superior outcomes – and I see tremendous opportunity for its personalized, technology-driven solutions and steadfast focus on understanding the underlying drivers of mental health,” said Chirag Shah, partner at Define Ventures, in a statement. “Our investment in Blackbird stems from a longstanding belief that the most successful models in pediatric mental health must be fundamentally focused on high-quality care. Blackbird exemplifies this better than any other organization we have seen.”

With the financing, Blackbird Health is focused on growing its service delivery and care. It is also investing in tech enablement.

“We’re really looking at patient experience and the efficiencies that we can get out of technology,” Edgar said.

Ultimately, the company is focused on making care more holistic rather than segmented.

“We live in a world that is reductionistic,” Edgar declared. “It’s about, how do I break this thing apart and understand this part over here? The problem that we’re solving is really the opposite: How do we take this whole and understand this whole and then identify strengths and weaknesses to help support their development?”

Other mental health startups that support youth include Brightline and Charlie Health.

Photo: SIphotography, Getty Images

Fecal microbiota transplants (FMTs) have played an important role in fighting disease. Because they consist of many complex bacterial strains, FMTs offer an optimal ecosystem to successfully engraft and impart therapeutic value upon the host. Technically, they’ve been in use since 700 BC (!) and in 1978, FMTs were broadly recognized as effective at treating a disease with known cause: Clostridium difficile infections. In some cases, FMTs proved more effective than antibiotics in keeping Clostridium difficile, a common cause of diarrhea, in check. In cancer immunotherapy, FMTs can help produce better prognoses for patients who previously failed to respond to immune checkpoint inhibitors.

FMT variability, development and delivery drawbacks can’t be ignored.

We’ve learned a lot from FMTs, however as a therapeutic, there are clear drawbacks. First, pathogens can exist even in healthy fecal samples, and with those pathogens passed on to patients, safety risks arise. Second, FMTs are notoriously difficult to scale commercially and highly variable. Every individual harbors a constellation of bacterial strains within their gut microbiome – a constellation that’s constantly shifting in absolute constituents and overall relative abundance – so a single bowel movement can only treat a few patients at one time, making it impossible to run a large clinical study that tests the same drug product material across an entire cohort. Because of this limitation, pharmaceutical companies have tried to pool fecal samples from multiple donors to meet clinical development demands, but it’s not possible to manufacture that same drug product again once a clinical response has been identified.

Because FMTs are uncontrolled from batch-to-batch and trial-to-trial, another drawback to this therapeutic is its development process. Complex fecal material products have been successfully developed for treating C diff, but that’s because the species important for treating C diff are abundant in nearly all healthy human fecal materials. This hasn’t been the case in developing FMTs for treatment beyond C diff. FMTs have shown promise, but they largely produce variable results, and efforts to further develop them highlight the need to be able to capture bacterial diversity from unique fecal donors, and manufacture that material for FDA-approved therapeutic trials and commercial success.

There’s also the issue of FMT delivery. Colonoscopies are the dominant format, although frozen oral capsules can also be tested clinically. The invasiveness of colonoscopic FMT delivery limits patients to a single dose, making repeat and maintenance dosing unrealistic. And while the oral frozen capsule FMT is more easily administered, it still suffers from a lack of large amounts of consistent starting material, making repeat dosing impossible. In addition to the dosing limitations, FMT products have a relatively short shelf-life, again making it difficult to run large controlled studies with the same FMT material across an entire cohort.

Next-generation LBPs can unlock the power of the gut microbiome.

To advance microbiome-based therapeutics, we need to continue to capture the bacterial complexity of FMTs, but do so with a process that’s scalable and reproducible, and able to meet the demands of clinical development and ultimately patient treatment. Moreover, to effectively fight disease, we need to be able to leverage the gut microbiome as a druggable organ, which requires overcoming two long-standing challenges:

1. Understanding the microbiome: What are all the bacterial strains that are in a single gut? Where are those strains located? And what response are those strains eliciting from their host cells? Using traditional molecular techniques to decipher all of this falls short.
2. Designing and developing microbiome therapies with different mechanisms of action: Relying on the presence of a single bug or two isn’t enough. We need complete, complex ecosystems because we know that microbes – just like humans! – are incredibly social and stronger together.

The good news is, the answer to both of these challenges may lie within next-generation live biotherapeutic products (LBPs). By acting in a synergistic and complementary manner to existing therapies, LBPs provide a safe method for targeting underlying disease processes, but through different pathways and with greater efficacy. As living microbes, LBPs can improve treatment outcomes for microbiome-addressable conditions, including solid organ cancer, inflammatory bowel disease, auto-immune conditions and metabolic disorders. What’s more, if devoid of pathogens, LBPs are incredibly safe and consistent from batch-to-batch, with the ability to scale-up to meet clinical development needs and eventual patient demand.

Most importantly, LBPs can help us unlock the power of the gut microbiome. The majority of high morbidity/mortality LBP-addressable indications are gut microbiome-centric, and significant value can be unlocked by learning how to formulate, dose and measure the PK/PD of human gut LBPs.

Controlling LBP dosing, measurement and host responses will be key to clinical success.

The FMT era has been productive, but now it’s time to rally together as an industry to accelerate next-generation LBP drug discovery, development and FDA approval. To do so, we must be able to control and eventually standardize the dosing of the LBP drug material in question, the measurement of that drug material (PK) and the host response (PD) – and do so with the same precision of antibody or small molecule drug development. Funding will continue to be constrained until the LBP field has a breakthrough, so we must prioritize creating value via small clinical studies that don’t require massive financial resources, but demonstrate the unique capabilities of LBP therapeutics.

Ultimately, focusing on complex gut consortia so we can learn how to formulate, dose and measure the engagement of an LBP in this organ will be key. Indications where we can run safety, dosing, PK/PD studies in the intended patient population will be critical to LBP clinical success, and indications where early clinical response is meaningful will create value faster and pave the way for funding late-stage registrational studies. Giants in our industry that pioneered this therapeutic modality have already paved a path forward for us… let’s seize the timely opportunity to deliver on the clinical promise of LBPs!

Public domain image of C. diff bacteria by the CDC

An experimental Viking Therapeutics obesity drug that hits the same targets as a commercialized Eli Lilly medication has clinical data showing it led to an average 13.1% weight loss after 13 weeks of treatment, results that indicate it could compete favorably with the pharmaceutical giant’s product and others on the market.

There was no plateau to the weight loss in the mid-stage study, suggesting that patients could lose even more weight with more time, Viking said Tuesday. The San Diego-based biotech plans to meet with the FDA to discuss the next steps for the drug, VK2735. Investors welcomed the news as shares of the biotech opened Tuesday at $69.77 apiece, up more than 81% from Monday’s closing price.

VK2735 is part of a growing class of drugs that work by mimicking hormones in the gut to spark a range of metabolic effects. Novo Nordisk’s Wegovy targets and activates the GLP-1 receptor. The Viking drug is an agonist of both the GLP-1 and GIP receptors. The preliminary results reported Tuesday are from a placebo-controlled Phase 2 clinical trial that tested four doses of the Viking drug, administered as a once-weekly injection. The study enrolled 176 adults who are obese or overweight with at least one weight-related co-existing condition. The main goal was to measure the percent change in body weight after 13 weeks.

Viking said the statistically significant weight loss was observed for all doses starting at week one and continuing throughout the course of the 13-week study. Furthermore, up to 88% of participants in the treatment groups achieved 10% or greater weight loss compared with just 4% of those in the placebo arm.

The Viking drug was safe and well tolerated. Most of the treatment-related adverse effects were gastrointestinal, which is consistent with these types of drugs. Viking said most of those effects were classified as mild or moderate, though one patient experienced a severe adverse event of dehydration characterized as related to the study drug. Of the 23 patients who discontinued treatment, 18 were in the treatment groups and five were from the placebo arm.

Acknowledging all of the caveats of cross-trial comparisons, William Blair analyst Andy Hsieh said in a research note that the magnitude of placebo-adjusted weight loss at VK2735’s highest dose offers best-in-class potential compared to approved and investigational drugs with Phase 2 data. William Blair’s previous position was that the Viking drug could be clinically equivalent to Lilly’s tirzepatide, marketed as Zepbound for weight management. Now the firm believes VK2745 could offer better efficacy. That potential would be best realized at a large pharmaceutical company.

“Ultimately, we believe that the value of VK2735 will be maximized in the hands of a big pharma, which could best navigate the rebate/discount-driven reimbursement landscape,” Hsieh said.

Leerink Partners analyst Thomas Smith said in a research note that the 13.1% weight loss achieved with VK2735 compares favorably with competing drugs that activate the GLP-1 and GIP receptors, including Lilly’s Zepbound. That drug led to less than 10% absolute weight loss at all doses at the 13-week mark of its Phase 3 clinical trial. Viking’s drug will still need to show its results can be replicated in a larger a Phase 3 test. However, the greater than 13% placebo-adjusted weight reduction from VK2735 in Phase 2 exceeds the bar for success set by both Viking management and investors, Smith said.

Viking CEO Brian Lian said in a prepared statement that the company plans to advance VK2735 further into clinical development later this year. The company is also developing an oral formulation of the obesity drug. A Phase 1 test of oral VK2735 is on track to report data later this quarter, Lian said.

Photo: Peter Dazeley, Getty Images

As the role of AI in healthcare settings continues to evolve and generate debate, stakeholders from all around the industry are wondering what 2024 will bring.

Here are seven trends to watch this year:

1. EHR integration & collaboration

The idea of “co-pilot” tools are already gaining steam, with tech giant Microsoft joining forces with Epic to expand MyChart’s capabilities. Speaking at an event last August, Epic CEO Judy Faulkner foretold an AI tool that “will listen to the discussion” between clinicians and patients and streamline a variety of existing processes.

Industry stakeholders are watching these technologies with great interest. What use cases of Generative AI will Epic prioritize? What industry partnerships will form around the new tools?

2. Imaging as a litmus test

One healthcare space to watch is radiology, which might serve as a bellwether for industry adoption of larger multi-modal models ― those that blend text and images. Historically, radiology has been a litmus test for advances in medical technology. Machine learning and AI are no exceptions.

“Computer vision” is also buzzy. They have cameras in the OR so instead of scrub techs having to enter every step of a procedure in the EMR, the computer vision knows what and when and documents it automatically.

3. Flexibility with data

Its applications for radiology notwithstanding, the use of synthetic data has stirred some controversy. In general, synthetic data can mask bias and lacks the randomization inherent to real-life samples. For that reason, many reject AI-generated data as a poor substitute for the real thing.

At the same time, established healthcare companies need to remain flexible to stay relevant while remaining rooted in their core strengths. The industry is notoriously slow to change, and the use of generative AI is no exception. Whether linked to actual clinical encounters or not, generative AI has the potential to benefit patients and clinicians in ways we can’t imagine today.

4. AI and the prior authorization rule

The Centers for Medicare & Medicaid Services announced a new rule (CMS 4201-F) going into effect in 2026 that will require insurers to hasten their time to decisions.

There is ambiguity in the policy. Whether or not it inspires future policy changes will be revealed in time. Regardless of your position, the Prior Authorization rule highlights the ongoing need for shared, objective determination of medical necessity and data transparency ― both areas in which AI can play a valuable role.

5. Avoiding volatility

The pace of releases and advances in the generative AI space is hard to keep up with. Even organizations who are adept at keeping pace are learning it takes time to effectively implement any new AI initiative. Regulations on the use of AI are evolving concurrently ― more quickly in Europe than the U.S. ― and any early adopters must be mindful of this as well.

Those looking to invest in AI and adapt it to their organizations would be wise to go with tested, proven applications to avoid volatility. That will be essential to maximizing operational and financial ROI.

6. Think three steps ahead

Healthtech firms using AI need to be thinking three steps ahead at all times. The ripple effects of AI tools are inviting unforeseen consequences to the detriment of some very large stakeholders.

Take ChatGPT. The New York Times recently filed a lawsuit against tech giant Microsoft, complaining ChatGPT (in which Microsoft is the largest investor) is reappropriating the Times’ intellectual property to compose articles that compete against it. If a healthtech firms builds its own product on the backbone of an OpenAI product like ChatGPT, will clinical data be usable within its framework?

Concerns over data security and governance, technical maturity (particularly around generative AI tools), and preventing biases are better addressed sooner than later.

7. More resilient cybersecurity

Cloud-based security can improve the resilience of a healthcare organization’s cybersecurity response. If a ransomware attack happens, an organization can respond much faster in the cloud than with on-premises infrastructure, and will have a better chance of accessing protected backups.

The renewed need for cybersecurity vigilance isn’t unique to healthtech firms operating in the AI space, but their concerns are unique ― and growing. One recent report, the Google Cloud Cybersecurity Forecast 2024, warned that generative AI and large language models (LLMs) will be utilized in various cyber attacks such as phishing, SMS, and other social engineering operations with the purpose of making content and material (such as voice and video) appear more legitimate.

Photo: rudall30, Getty Images

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A new company announced its launch on Monday at the ViVE conference in Los Angeles — one that seeks to bridge the gap between traditional healthcare and wellness. 

The startup, named Vale Health, is a health and wellness marketplace platform backed by a consortium of 16 health systems. 

“Sixteen big health systems have come together to effectively form a consortium to support Vale and take us to market. For those health systems, we help them extend their trusted reputation and hard-earned healthcare brand into the more common parts of health and wellness that people experience every day,” CEO Bill Furlong said in an interview.

The health and wellness space is becoming “increasingly important” to consumers, he noted. This space encompasses things that people typically don’t seek medical attention for, such as getting better sleep, maintaining a healthy weight, alleviating muscle pain or solving digestive issues. People usually don’t go to the doctor to improve these things, but they can still have a major impact on a person’s wellbeing, Furlong remarked.

Vale’s marketplace platform aims to help health systems increase patient engagement by connecting people with various products and services related to these types of issues, he explained. 

Furlong pointed out that the health and wellness market is getting more and more crowded with solutions. Vale’s marketplace is designed to help consumers cut through that noise.

“There are some super responsible, reliable and great-performing solutions in the space. But as consumers, everyone knows that the buyer has to be selective and be careful. And we know that there are some solutions that aren’t going to be as effective — so people need a resource for making good decisions more easily. That’s what we aspire to do for the consumer,” Furlong said.

When consumers use the platform, Vale guides them to an assessment so it can learn more about their health concerns. This helps Vale direct users to personalized product and service recommendations, Furlong noted.

Say a user wants to improve their sleep. People’s sleep problems can take on a lot of different shapes — for example, they could be someone who struggles with anxiety spirals before bed, a night shift worker who can’t seem to sleep while it’s light out, or a person who lives on a busy city street that stays noisy throughout all hours. That is important information that can play a role in whether a product will be effective or not, Furlong explained. 

That information enables Vale to determine which sleep products it should bring to a user’s attention. Sleep products currently available on the marketplace include weighted blankets, noise machines, anti-allergen bedding, humidifiers, nasal strips, supplements and essential oils.

“We do the heavy lifting of going through lots of the products that are available in the space and select the ones that are really worthy of the patient’s consideration,” Furlong declared.

The Froedtert & the Medical College of Wisconsin health network is the first of Vale’s 16 founding health systems partners to go live with the platform.

Picture: fizkes, Getty Images

Highmark Health is working with Epic and Google Cloud to help advance the coordination between payers and providers, the companies announced Monday at ViVE in Los Angeles.

Pittsburgh, Pennsylvania-based Highmark Health has about 7 million members, of which more than half are attributed to an Epic provider. The company also has a 14-hospital provider system called Allegheny Health Network.

Through the partnership, Epic’s Payer Platform (which helps payers and providers collaborate) is being integrated with Highmark’s claims data on Google Cloud. Google Cloud’s data analytics technologies will be able to provide insights to provider partner organizations that use Epic, as well as Highmark health plan staff and Highmark members. This will help providers understand patients’ health better, such as their conditions, health plan benefits, insurance claims, acute events and in- and out-of-network visits. Providers will also have a better idea of what’s covered by patients’ health plans.

“We curate the data and make it personalized so that the doctors now are getting more real-time actionable information. … The provider has the clinical data. We have the claims data. We now put them both on this Google Cloud Platform. Now, the fragmented data is all in one place,” said Dr. Tony Farah, executive vice president, chief medical and clinical transformation officer at Highmark Health, in an interview.

The collaboration will also streamline administrative tasks like prior authorization, a practice used by health plans to determine if they will cover a medical service (though many providers say it creates dangerous delays in patient care). In addition, health systems will be able to automate the process for notifying a health plan about patient events, such as emergency department visits.

This collaboration between Highmark Health, Epic and Google Cloud comes at a time when healthcare data is siloed.

“We have over 700 billion data points or bits around our members and as an industry, healthcare is data rich and insight poor,” said David Holmberg, president and CEO of Highmark Health, in an interview. “This is starting to give us insights. 

“What we’re looking for are insights that increase adoption rates by patients and members for the services that are available to them. [We’re also looking for] increasing the scale of the picture and how fine the picture is in terms of clarity for the clinician so that they have a better picture of who you are and what’s going on with you.”

The new collaboration will go into effect in the third quarter of 2024. Highmark Health anticipates saving $2.7 million annually by working with Epic and Google Cloud.

Photo: LeoWolfert, Getty Images

There have been 48 updates since Optum’s Change Healthcare first identified a malicious attack on its systems from a suspected nation-state on Feb 21, an attack that hat has crippled its ability to process payments.

Most of the recent updates reiterate that they are “experiencing a cybersecurity issue” and express confidence that “Optum, UnitedHealthcare and UnitedHealth Group systems have not been affected by this issue.” But these updates are not satisfying one customer: Tampa General Hospital CEO John Couris. The nonprofit hospital uses Change Healthcare as a clearing house to get claims processed and paid by payers.

While being ever sympathetic to Change’s plight having been a victim of a cyber-attack of its own, though much smaller in scope, Couris said he actually went up to Optum CEO Amar Desai in the speaker room at the ViVE conference in Los Angeles on Monday to get some details.

“So I said to him, ‘Listen, my heart goes out to you because you didn’t ask for this. You didn’t do something wrong…. So I asked him, I said, ‘So when do you think we’ll be back up?’ And his answer to me was, ‘We’ll have an update in two days.’ So I don’t think he knows. I’m a CEO too. I get it. He’s not going to say something for the sake of just saying it. He wants to understand really what’s going on. I can appreciate that. But after a couple of more days, he’s going to have to come out. They’re going to have to come out with real definitive answers because the whole industry is affected by this. The government, pharmacy, health systems. It’s a big deal.”

The breach has impacted business operations for all military pharmacies across the world, as well as some retail pharmacies across the U.S, according to an earlier story from MedCity News.

“I can’t speak for United, but it sounds like [Change Healthcare] has been compromised,” Couris speculated. “These actors got all the way to the brain of their system, captured it and has encrypted it and is ransoming it.”

He noted that he believes Change Healthcare is not going to pay the ransom because there are no guarantees that the people behind the attack would dutifully release the hold on the system. Nor is there any assurance that they wouldn’t drop some malicious code in there that becomes a problem a few months later.

“I don’t think they’re going to pay anything,” said the CEO of Tampa General Hospital, a nonprofit system with 1,040 beds, referring to Change Healthcare’s stance toward the bad actors. “They’re going to rebuild their systems.”

Which means it will take time and could create a cash crunch for the hospital.

“What we used them for is they are a clearing house for claims. So all of our claims would go to them, they’d adjudicate and then they’d send it to the payer. Well, we can’t do that right now. So it will probably, probably — we’re looking at it now — probably impact cash flow. So we have to eat into our daily cash on hand. That’s a problem.”

Given that so much time has elapsed and the systems are not back online made Couris think of switching vendors, but that’s not possible, he said.

“To switch clearing houses would take several months and be incredibly disruptive,” he said. “So we need to hang with Optum. We need to hang with them and let him get through this. This could take two or three or four weeks and claims will be paid. They’re just hung up right now. And so it’s an impact on day’s cash on hand, and pivoting to another company doesn’t make much sense.”

Even if they decided to switch vendors, Couris said he wouldn’t know who to go to.

“… Even the people that we would go to actually indirectly uses [Change Healthcare] as well in some respects,” Couris declared, although he noted that some recently-acquired hospitals of Tampa General Hospital don’t use Change Healthcare.

But he was unable to name the vendor that they use instead. What Couris is convinced is that this attack was no ordinary attack.

Photo: anyaberkut, Getty Images