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Iora Health – Update …$75 million Series D (moving toward 65+?)

Here is an update on Iora Health ….. the Cambridge, Mass innovator in Health Care supporting primary care services in 34 US locations. I first began tracking them when I was tracking Turntable in Ls Vegas, which is one of their sites.

Few points:

1. I see no big announcements about closings….interesting (there are rumors the Harken Health and Turntable will cease their partnership with Iora)
2. They just raised $75 million in a Series D financing ….. really interesting. The lead investor was the Singapore State fund Temasek … also interesting (big dogs). Apparently all existing investors stayed in the Series D – a good sign. Series C was $48 million, and the dollars before that (in A and B) were $13 million, I think. So that means that they have now raised $146 million…..that is a ton of money for a venture backed company! This tells me that they are telling investors what I believe to be true….that Year 1 hurts because the subscriber base in building but years 2 and onward can be profitable……but I have found no docs that say this.
3. They say they have 34 “primary care practices”…..looked at their backup for this. Here is what they (seem to) have:

18 sites are Medicare only Advantage Plans for 65+ only —— 16 sites partnering with Humana and 2 partnering with Tufts. So Humana is their big partner, but only to support their Medicare advantage plan for seniors.

1 corporate site for Hartford Health Care employees only

3 “fund” sites —— one for cooks and one for carpenters and one in Queens for “Grameen members”…..must be a credit union for each trade maybe?

6 sites with Harken/United Health ….. but very interesting that they are not listed on their official website…. they just take about 6 sites in ATL.

1 community site – Turntable in Las Vegas

2 pilot sites

31 sites total

4. My guess: the Series D raise of $75 million is going to be dedicated to Medicare Advantage plan expansion, through Humana, Tufts, and a few others. My hunch is that they do not see how to make the community model work…moreover, they see the ramp up as being needlessly painful. My hunch is that the Medicare Advantage model is profitable in Year 1, which investors would love! My hunch is that they have figured out to make these site smaller, more manageable, more care flow positive from the start, and that they are ultimately most profitable sites. Humana and other big dogs probably see them as a way to keep health care costs down……..while maintaining or improving senior outcomes. Anyone else have a guess or facts on this????

See my notes below:

===========NOTES on IORA Health ==========
October 16, 2016

US-based Iora Health has closed a $75-million Series D financing in a round led by Singapore state fund Temasek Holdings. Other investors who participated in the round include Iora Health’s existing institutional investors .406 Ventures, Flare Capital Partners, F-Prime Capital, GE Ventures, Khosla Ventures, Polaris Partners, and Rice Management Company. “We are honored to have Temasek join Iora on our journey to transform healthcare,” said Rushika Fernandopulle, MD, MPP, co-founder and CEO of Iora Health. “Temasek’s investment in Iora will accelerate our vision of fixing health care delivery which is one of the largest business and social problems, not just in the US, but globally.

Iora Health has built a different kind of health system that delivers high impact, relationship based care. With 34 primary care practices in 11 US markets, Iora serves diverse populations with an increasing focus on the most under-served and complex patients — including people aged 65 years and older on Medicare. Iora’s innovative model delivers an exceptional patient experience, with coordinated care that drives better clinical outcomes and significantly lower costs than the traditional healthcare system. Iora will use the new capital to drive further expansion and efficiencies in the model

Read more at: http://www.dealstreetasia.com/stories/55411-55411/

================

Iora Health lands $28M from GE Ventures, Khosla Ventures and others
Jan 26, 2015, 9:58am EST Revised Date/Time Publish Updated Jan 26, 2015, 2:06pm EST
Iora Health, a Cambridge startup aiming to “reinvent primary care” with a novel model for payment and delivery of care, said Monday that it raised $28 million in Series C funding from new investors including Foundation Medical Partners, Rice Management Co., GE Ventures and Khosla Ventures.

Existing investors included Boston’s .406 Ventures, Fidelity Biosciences and Boston-based Polaris Partners. Iora Health will use the additional financing to fund rapid expansion to continue delivering transformative health care, according to the company. The company has raised $48.2 million in total and plans to double its current workforce of 140.
Iora Health has developed a different health care operating system that starts with primary care, driving patient experience, engagement and clinical outcomes, while reducing overall health care costs, according to the company.
“We’re humbled by the great interest in our Series C financing and we are honored to have such a great group of new investors join our current ones.,” said Rushika Fernandopulle, co-founder and CEO of Iora Health, in a statement. “In the last four years, Iora Health has grown from a start up with an idea of how to improve health care to serving and improving the lives of thousands of patients across the U.S. We are excited to grow with this round to continue to deliver on our mission to restore humanity to health care.”

Iora Health currently manages eleven primary care practices across the U.S. for distinct patient populations including employee groups, Medicare Advantage patients and union members and their families. Iora sponsors include the Culinary Health Fund, Dartmouth College, the Freelancers Union, Grameen PrimaCare, Humana, King Arthur Flour, Lahey Health, the New England Carpenters Benefits Fund and Turntable Health.
The company, founded in 2011, last raised a $13 million round of funding two years ago from existing investors including Zappos CEO Tony Hsieh.

================== IORA Practices from their website =====

Source: http://www.iorahealth.com/practices/list-of-offices/

SPONSOR: CULINARY HEALTH FUND (serves workers who participate)
Las Vegas, NV 89104
SPONSOR: DARTMOUTH COLLEGE (Dartmouth Health Connect is a primary care practice in Hanover)
Hanover, NH 03755

SPONSOR: GRAMEEN PRIMACARE (for Grameen Members)
Queens, NY 11372

SPONSOR: HARTFORD HEALTHCARE (employees and family members)
Hartford, CT 06106

SPONSOR: Harken Health and United Health Care
Metro Atlanta (6)

SPONSOR: NEW ENGLAND CARPENTERS BENEFITS FUNDS
Dorchester, MA 02125

SPONSOR: TUFTS HEALTH PLAN (for 65+ members of Preferred HMO plans)
2 LOCATIONS
Medford, MA 02155
Hyde Park, MA, 02136

SPONSOR: HUMANA (All seem to support only Humana Medicare Advantage Plan)
16 LOCATIONS

Aurora, CO 80012
Littleton CO 80123
Arvada, CO 80003
Glendale, CO 80246
Lakewood, CO 80214

Federal Way WA 98003
Shoreline, WA 98133
Seattle, WA 98144
Renton, WA 98057
Tucson, AZ 85712 (2)
Mesa AZ 85206 (2)
Glendale, AZ 85302
Phoenix, AZ 85032 (2)

SPONSOR: TURNTABLE HEALTH
Las Vegas, NV 89101

Pilot Program Renaissance Health
Arlington, MA

PIlot Program Intensive Outpatient Care
Program Partner: The Boeing Company

“Direct Primary Care”

Its pretty clear that a coalition of “direct primary care” providers is pushing Congress to recognize subscription services as a service reimbursable under Medicare.

I believe they are differentiating themselves from “concierge” care, for political reasons. The coalition says concierge care is $2000-$5000, instead of under $2000. One of the main advocates for direct primary care says that it does not seek third party reimbursement, while concierge services might.

“The Primary Care Enhancement Act of 2016” has been brought to the Ways and Means Committee, where is was referred in September, 2016 to the Health Sub-Committee.

Sponsor: Rep. Paulsen, Erik [R-MN-3] (Introduced 09/13/2016)
Committees: House – Ways and Means
Latest Action: 09/19/2016 Referred to the Subcommittee on Health. (All Actions)

===============
Direct primary care could get a big boost next year. Under the federal health care law, these practices will be able to operate in state-based health insurance exchanges. However, insurers on exchanges must offer a basic benefits package that includes hospital, drug and other coverage, so direct primary care practices will likely team up with other health plans.
If you’re considering a direct primary care practice, get a list of provided services and talk with a physician in the practice. Also, some practices that are similar to concierge care may accept insurance but charge a monthly fee for extra services. For options in your area, visit the Web site of the Direct Primary Care Coalition (www.dpcare.org).

======================
The Primary Care Enhancement Act of 2016  proposes to amend the tax code so consumers can use their health savings accounts (HSAs) to pay physicians in direct primary care (DPC), bypassing insurance. H.R. 6015 would also enable Medicare enrollees to pay for direct primary care using Medicare funds, rather than pay out of pocket.

======================
http://www.dpcare.org

Senators Bill Cassidy, MD (R-LA) and Maria Cantwell (D-WA) have introduced bipartisan legislation which clarifies that DPC is a medical service for the purposes of the tax code regarding Health Savings Accounts. The bill also creates a new payment pathway for DPC as an alternative payment model (APM) in Medicare. “Co-sponsors are important. They show Senate leaders that there is widespread support for the legislation,” said Sen. Cassidy when he addressed the DPCC Fly-in Sept. 24. We need your help today to ensure that S.1989 moves forward.  Please contact your Senators and urge them to co-sponsor the Primary Care Enhancement Act today.

On the Move in the States with DPC
16 States Move to Clear Regulatory Hurdles for DPC 
Legislation  defines DPC outside of Insurance.
 
As of June, 2016, 16 states have adopted Direct Primary Care legislation which defines DPC as a medical service outside the scope of state insurance regulation. 
 
The DPCC has developed model legislation to help guide legislators and their staffs on the best way to accomplish  this important reform. Click here to see the model bill.
States With DPC Laws:

• Washington – 48-150 RCW
• Utah – UT 31A-4-106.5
• Oregon – ORS 735.500
• West Virginia – WV-16-2J-1
• Arizona – AZ 20-123
• Louisiana – LA Act 867
• Michigan – PA-0522-14
• Mississippi – SB 2687
• Idaho – SB 1062
• Oklahoma – SB 560
• Missouri – HB 769
• Kansas – HB 2225
• Texas – HB 1945
• Nebraska – Leg. Bill 817
• Tennessee – SB 2443
• Wyoming – SF0049

Current as of June, 2016

=============
Direct Primary Care is an innovative alternative payment model in primary care model embraced by patients, physicians, employers, payers and policymakers across the United States.The defining element of DPC is an enduring and trusting relationship between a patient and his or her primary care provider. In DPC unwanted fee-for-service incentives are replaced with a simple flat monthly fee. This empowers the doctor-patient relationship and is the key to achieving superior health outcomes, lower costs and an enhanced patient experience.
=============
http://medicaleconomics.modernmedicine.com/medical-economics/news/bill-could-allow-health-saving-account-use-dpc

Direct primary care physicians charge patients a monthly fee for care and access to a package of services rather than by fee-for-service or insurance. The subscription model can grant patients increased access to doctors, discounted drugs and laboratory services. 
According to Meigs, the proposed law will allow people with high deductible plans to use their HSA to pay for primary care, given that people with high deductible insurance plans can use their insurance for catastrophic coverage and hospitalizations, and cost-effectively tap their HSAs for primary care.  

============

Direct primary care and concierge medicine: They’re not the same

Direct primary care and concierge medicine: They’re not the same
SAMIR QAMAR, MD | PHYSICIAN | AUGUST 24, 2014
Samir Qamar
Direct primary care (DPC) and concierge medicine are rapidly growing models of primary care. Though the terms are used interchangeably, both are not the same. Such liberal use of terms, many times by even those within the industry, confuses those who are attempting to understand how these primary care models operate. As former concierge physician for the Pebble Beach Resorts, and subsequent founder of one of the nation’s largest direct primary care companies, I have attempted to differentiate the two based on extensive personal knowledge and experience.

First, concierge medicine. Born in the mid 1990s, this practice design was first created by wealthy individuals who were willing to “bypass” the woes of the current fee-for-service system by paying a subscription to access select primary care physicians. This access consists of same-day appointments, round-the-clock cell phone coverage, email and telemedicine service, and sometimes, as in my previous practice, house calls. Although some high-end practices charge as much as $30,000 a month, most charge an average monthly fee of $200.
In return, to allow such unrestricted access, physicians limit their patient panels to several hundred patients at most, a significant drop from the typical 2,500-plus panel size most doctors are used to. Many concierge doctors also bill insurance or Medicare for actual medical visits, as the monthly “access fee” is only for “non-covered” services. This results in two subscriptions paid by patients — the concierge medicine fee, and the insurance premium. Importantly, a few concierge practices do not bill insurance for medical visits, as the monthly fees cover both access and primary care visits.
Direct primary care started in the mid 2000s, and was created as an insurance-free model to serve a new patient population: the uninsured. In DPC, patients, and now their employers, are also charged a monthly fee, but the fee can be as low as $50 per month and there is typically no third-party payer involvement. Consumers pay physician entities directly (hence, direct primary care), and because the insurance “middle man” is removed from the equation, all the overhead associated with claims, coding, claim refiling, write-offs, billing staff, and claims-centric EMR systems disappears.

Patient panels can be as high as 1,500 patients per doctor, and there is typically no physician cell phone access or house call service. Similar to higher-priced concierge practices, DPC practices also allow for longer patient visits and telemedicine. The most important characteristic of DPC practices, however, is that insurance claims are not filed for medical visits.

Direct primary care’s definition, therefore, is any primary care practice model that is directly reimbursed by the consumer for both access and primary medical care, and which does not accept or bill third party payers.
Confusion arises from similarities that exist in both models, such as decreased patient panels, monthly subscriptions, and longer visits. There is added confusion when a DPC physician offers house calls or email access, typical of concierge practices. Confusion is maximized when a physician is by definition practicing direct primary care, yet calls the practice a “concierge practice.” Similarly, a concierge practice may decide to abstain from participating in third party payer systems, and thus would also be a DPC practice.
The distinction is important because direct primary care is explicitly mentioned in the Affordable Care Act, while concierge medicine is not. Several state laws have also recognized direct primary care as medical practice models, and non-insurance entities. In addition, the term “concierge medicine” causes visceral reactions in select social and medical circles, drawing criticism such as elitism and exacerbation of physician shortage.
Adslot’s refresh function: googletag.pubads().refresh([gptadslots[1]])

In summary, not all direct primary care practices are concierge practices, and not all concierge practices are direct primary care practices. The terms are not synonymous, and even the basic fundamentals of either model do not overlap. The key to differentiation is whether or not a third party payer is involved. If not, then the model is a direct pay, or direct primary care model, no matter what the fees.
Samir Qamar is CEO, MedLion and president, MedWand. He can be reached on Twitter @Samir_Qamar.

NantHealth NantWorks 2016 Update

Dr. Patrick Soon-Shiong, CEO of NantWorks, the holding company of NantHealth, announced today the IPO of NantHealth:
WSJ 5/24/2016 article on NantHealth
MedCity News Article
The IPO, if successful, will value the company at $2 billion.

So … a few items:

The IPO had been expected last year, but Soon-Shiong told MedCity News in January that he put off the move until NantHealth completed its acquisition of payer-provider communications platform NaviNet.

Here are seven interesting tidbits we found in NantHealth’s S-1 registration statement.

1. The Culver City, California-based company filed for an IPO worth as much as $92 million. That’s actually relative pocket change, given that Allscripts Healthcare Solutions invested $200 million in NantHealth last year, and that NantHealth has been valued at $2 billion. (However, the S-1 lists net tangible book value at $239.4 million as of Dec. 31, which means total tangible assets minus liabilities.)

2. The government of Kuwait owns at least 10 percent of NantHealth, via two holding companies. The Kuwait Investment Authority had put $250 million into NantHealth in 2014.

3. NantHealth has named its knowledge, provider and payer platform CLINICS, for Comprehensive Learning Integrated NantHealth Intelligent Clinical System.

“CLINICS is designed to address many of the key challenges healthcare constituents face by enabling them to acquire and store genomic and proteomic data, combine diagnostic inputs with phenotypic and cost data, analyze datasets, securely deliver that data to providers in a clinical setting to aid selection of the appropriate treatments, monitor patient biometric data and progression on a real-time basis, and demonstrate improved patient outcomes and costs.”

Latest on well-being convenience

I just had a great experience at a CVS Minute Clinic, which I documented here:

JCR Experience with CVS Minute Clinic

It’s been awhile since I revised this mega-trend, so here is an update.

So CVS has been busy. They changed their name to CVS Health, threw tobacco out of their store, and set out to create 900 “Minute Clinics”. These were intended to provide consumers with highly convenient access to nurse practitioners who were armed with the latest in diagnostic tools and online diagnostic protocols.

The latest? CVS now has 800 Minute Clinics in 28 states plus DC.

Walgreens now has 400 clinics. Their press recently has raised questions about whether they are rethinking their corporate strategy.
 
Seattle-based Arivale arrived on the scene in 2015, announcing their intention to revolutionize this space by brings LABS to the foreground, especially through genomics. What caught my eye then was the background of the CEO, Clayton Lewis, who was in genomics from the beginning with Genentech, and Lee Hood, who is a thought-leader in the area.
 
The latest? Well, the update on Arivale is this: they did indeed raise $40 million, and they now have a year’s experience with their “pioneers”. The pioneers are individuals who opted into this intensive longitudinal tracking. The pioneers were offered well-being coaches as well. There originally were 170 pioneers, and there now are over 1,000.

Learnings:

1. the Company says that well-being coaches are a winner. People like them and they say they really help keep them on track.  
2. They are finding that it is difficult (impossible) to keep people focused on long-term risks.
3. They are finding that “experiences” – avoiding bad experiences and promoting good “experiences” is proving useful as a way to motive the pioneers.
 
References:
I wrote about my own vision for this subject here, in 2014:

JCR 2014 Predictions
 

 I wrote about Walgreens here:
2011 post on Walmart with Updates

I Wrote about Arivale here:
2015 post on Arivale

….and here are the two co-founders, on stage in March, 2016:
Lee Hood and Clayton Lewis
 
… an astute 2016 synopsis of what Arivale has learned is here:
 
2016 synopsis of Arivale learnings
 
…and a March 2016 article provides an update, including the acquisition of the Institute for System Biology:
March 2016 Article on Arivale

A good summary on Walgreens and CVS overall is here:

Walgreens and CVS Summary

 

CVS Minute Clinic

I have written before about the trend toward convenience well-being centers (like convenience stores but for all things health and wellness-related). Every big box – most especially Walmart, CVS, and Walgreens – wants their store to be the convenience store for well-being. See all posts tagged BeWell or Well-Being.

There is a retail component – and CVS is an example of best practice. And there is a back-end component. Iona Heath and Arivale are examples there of best practice.

In any event….

Yesterday, with my daughter insisting I had pink eye, I decided to check out the CVS Minute Clinic in my neighborhood. I had a great experience.

There was the usual “set-up/registration” time. It was acceptable and on-line – at a kiosk outside the clinic rooms themselves. Took me about 10 minutes to tell them about me. At the end of registration, they asked online whether I wanted to be in line to see a clinician. I said yes.

There was no wait! Amazing. Not sure how this could be – but true.

The clinician was a “nurse practitioner”. That worried me until I watched her work with all her online and in-clinic diagnostic tools. She gave me a viral pink eye test – negative. So all that was left was the possibility of bacterial pink eye. For this possibility, I needed to take seven days of drops.

How to get the drops? She offered to provide a prescription at the store. I said “yes, please”, and she literally called the pharmacy next to her, and said ‘Josh, I need 7 days of drops in five minutes. Can you handle that. Josh said yes, and I was on my way – so simple!

So here is what I also loved. She took all vitals, she checked my ears and eyes with a laser light (or whatever it is called), she even checked my eyesight! But I am sure she would not have done all these things if I had said I was busy.

So what’s up with this trend? Here’s one mom’s take:

One Mom’s Take on CVC Minute Clinics

I left convinced that a good nurse practitioner could handle 95% of my medical needs – saving the tough stuff for my primary care physician.

References:

Here is my July 11, 2015 blog post about CVS Minute Clinics – printed here in its entirety:

This update about CVS is from today’s NYT:

Strategic Summary:

CVS is placing a very big bet, and my guess is it is right:

That the future consumer of health care in the US will:
– rarely have a primary care physician
– have “high deductible” insurance (so they will be very tough buyers)
– demand services closer to home (convenience is a premium)
– demand services with great frequency of visits (shorter waits, no hassle)
– value convenient treatment for routine illnesses, basic screenings and vaccinations.

So these consumers still need a “front end” to the health care system that allows them to get what they need, when they need it – when it is routine. They also want to crisis services, and other backend services – arranged when the need arises. They think CVS is the answer to those consumers. They want to be the one-stop shop for those consumers.

Their push to retail clinics can be seen in their 900 MinuteClinics and plan to have 1500 by 2017. A typical CVS clinic staffed by nurse practitioners sees 35 to 40 patients a day; those patients pay $79 to $99 for minor illnesses and injuries, and most insurance plans are accepted. Analysts estimate each clinic typically brings in $500,000 a year..

And … just a few months ago …they bought all of Target’s 1900 pharmacy locations. Assuming that some of these become clinics, there could there be even more retail clinics in the future.

So they want to be the one-stop-shop for a consumer’s health, with a front end that is both behind the counter (traditional pharmacy) and in-front-of-the-counter (the store with lotions and magazines and diagnostic equipment etc).

On the back end, they want to best prices for everything that is health-oriented. They also are partnering with Rush University in Chicago to make sure that more-critical needs are serviced properly.

Highlights:

– The Company started in 1963 as Consumer Value Stores (Lowell, Massachusetts)
– CVS under CEO Larry Merlo (who came to CVS when they acquired People’s Drug) has moved aggressively to rebrand the company as a health company. This move began in 2004, when they bought Eckerd Drug.
– They now have 7800 stores, and 900 “MinuteClinics” within their stores …. and plan to have 1500 soon.
– “Its MinuteClinics diagnose and treat patients, and its pharmacies dispense medicine to more than two million prescriptions a day. It negotiates the price of medicines and helps 65 million people navigate drug coverage under their insurance plans.”

Last year, the company changed its name from CVS Caremark to CVS Health.

Acquisitions history is:

2004: The shift toward health care started in 2004, when CVS acquired Eckerd Stores and Eckerd Health Services, giving CVS a foothold in administering drug benefits to employees of big corporations and government agencies.

2006: CVS acquired MinuteClinic, a pioneering in-store health clinic chain that was offering treatment for routine illnesses, basic screenings and vaccinations.

2007: $21 billion merger between CVS and Caremark, which gave birth to the country’s leading pharmacy benefits manager.

2012: CVS struck a deal with the medical products distributor Cardinal Health to form the country’s largest generic drug sourcing operation.

2012: $2.1 billion acquisition of Coram, a business that allows CVS to dispatch technicians to patients’ homes to administer pharmaceuticals through needles and catheters.

2015: In May, it paid $12.7 billion to acquire Omnicare, which distributes prescription drugs to nursing homes and assisted-living operations.

2015: In June, CVS announced it would buy Target’s pharmacy and clinic businesses for $1.9 billion and left open the possibility of pursuing further deals. Once the Target deal closes, CVS will operate about 9,600 retail stores, or about one out of seven retail pharmacies, according to Pembroke Consulting.

= = = = = = = = = =
Article begins here:

How CVS Quit Smoking and Grew Into a Health Care Giant

Michael Gaffney’s throat was scratchy for days, and lemon tea was not helping. So he dropped into a MinuteClinic above a CVS store in Midtown Manhattan on a lunch break. Within minutes, a nurse practitioner tested him for strep throat (negative), suggested lozenges and a regimen (ample fluids, no spicy food), collected a co-payment ($25 cash) and sent him on his way.

“That was quick,” said Mr. Gaffney, 26, an account executive for Indeed.com, who, like millions of Americans, does not have a primary care physician, even though he is covered by health insurance. He has been meaning to find a doctor since moving to New York last year, but his sore throat did not seem serious enough to warrant what was sure to be a time-consuming search and a long wait for an appointment.

The CVS MinuteClinic, on the other hand, was just blocks away from his office. “I waited longer for my bagel this morning,” he said.

With 7,800 retail stores and a presence in almost every state, CVS Health has enormous reach. And while shoppers might think of CVS as a place to pick up toothpaste, Band-Aids or lipstick, it is also the country’s biggest operator of health clinics, the largest dispenser of prescription drugs and the second-largest pharmacy benefits manager. With close to $140 billion in revenue last year — about 97 percent of that from prescription drugs or pharmacy services — CVS is arguably the country’s biggest health care company, bigger than the drug makers and wholesalers, and bigger than the insurers.

Even before the Affordable Care Act created millions of newly insured customers in the almost $3 trillion health care industry, CVS saw that there were more profits to be made handling prescription drugs than selling diapers. But while its transformation from drugstore to health care company began a decade ago, CVS has more recently taken on a new advocacy role, that of a public enemy of cigarettes.

Last year, CVS became the first major pharmacy chain to stop selling tobacco, a business that brought in $2 billion a year. And on Tuesday, CVS said that it would resign from the United States Chamber of Commerce after revelations that the chamber and its foreign affiliates were engaged in a global lobbying campaign against antismoking laws.

Its stand against smoking has allowed CVS to make alliances with health care providers and rebrand itself fully as a health care company. But with smoking rates on a steady decline, and cigarettes sales slumping, CVS also saw that future profits lie not with Big Tobacco but in health and wellness.

Taking the high road for health has its challenges. For one thing, it means new competitors in a rapidly changing industry. And, for a major retailer with tens of thousands of products on its shelves, it leads to an uncomfortable question: If we cannot sell cigarettes, what does that mean for potato chips?

Road to Growth

The Consumer Value Store started as a scrappy discount health and beauty outlet in Lowell, Mass., in 1963. Four years later, the small chain opened its first in-store pharmacies, and those became the core of the company — and its growth — for years. Larry Merlo, the chief executive, is a pharmacist by training and came into the company when it bought People’s Drug, a drugstore chain based in a suburb of Washington.

In a phone interview, Mr. Merlo spoke mostly in corporate platitudes, but when the conversation turned to the subject of pharmacists, he spoke passionately about pharmacists’ role in delivering health care.

“Hypertension, diabetes, osteoporosis,” he said. “It’s the same story — people don’t take their medication as prescribed.”

Pharmacists, who see patients more frequently than doctors do, can make sure patients stay on their drug regimens, he said, keeping them out of the hospital and saving the health care system billions of dollars down the road.

“I think back to my own personal experience,” he said. “Sometimes, it’s as simple as answering questions to get people to stay on their prescription therapies.”

Mr. Merlo said the company stood out in the breadth of products and services it offered: Its MinuteClinics diagnose and treat patients, and its pharmacies dispense medicine to more than two million prescriptions a day. It negotiates the price of medicines and helps 65 million people navigate drug coverage under their insurance plans.

The shift toward health care started in 2004, when CVS acquired Eckerd Stores and Eckerd Health Services, giving CVS a foothold in administering drug benefits to employees of big corporations and government agencies. Two years later, CVS acquired MinuteClinic, a pioneering in-store health clinic chain that was offering treatment for routine illnesses, basic screenings and vaccinations. CVS also expanded its very profitable specialty pharmacy business, which focuses on expensive drugs to treat complex or rare diseases like cancer or H.I.V.

Then in 2007 came the $21 billion merger between CVS and Caremark, which gave birth to the country’s leading pharmacy benefits manager. Three years ago, CVS struck a deal with the medical products distributor Cardinal Health to form the country’s largest generic drug sourcing operation. It followed up with a $2.1 billion acquisition of Coram, a business that allows CVS to dispatch technicians to patients’ homes to administer pharmaceuticals through needles and catheters.

The acquisitions keep coming. In May, it paid $12.7 billion to acquire Omnicare, which distributes prescription drugs to nursing homes and assisted-living operations. Just weeks later, CVS announced it would buy Target’s pharmacy and clinic businesses for $1.9 billion and left open the possibility of pursuing further deals. Once the Target deal closes, CVS will operate about 9,600 retail stores, or about one out of seven retail pharmacies, according to Pembroke Consulting. Last year, the company changed its name from CVS Caremark to CVS Health.

The growth of CVS comes at a time when the way Americans get access to and pay for health care is evolving quickly. Surveys show that many of the estimated 30 million people who gained insurance coverage last year under health care reform do not have a primary health care physician or do not use one. Many, too, opted for high-deductible health plans and are expected to become picky with the dollars they spend, and less tolerant of the opaque pricing that is still the industry’s norm. And consumers in general are starting to demand more convenient, on-demand access to health care, closer to home.

In that fast-changing world, CVS’s strategy is to be a one-stop shop for health care.

“Say you have diabetes, and you go into a pharmacy to get your insulin, how great is it if, in the same aisle, there’s a cookbook for people with diabetes?” said Ceci Connolly, managing director of PwC’s Health Research Institute. “And maybe there’s some foods that are already approved for you, and a place to check your feet, and a clinician to check your eyes,” she said.

“Consumers are saying: I want all of that at a place near my house that’s open on Saturdays, when it’s convenient for me. I want that place to post prices. It’s in CVS’s interest to pull in more and more pieces of that puzzle.”

A typical CVS clinic staffed by nurse practitioners sees 35 to 40 patients a day; those patients pay $79 to $99 for minor illnesses and injuries, and most insurance plans are accepted. Analysts estimate each clinic typically brings in $500,000 a year, representing just a fraction of CVS’s revenue. Still, the clinics are an important part of the company’s health care proposition.

Other retailers are also getting into the business. The number of retail clinic sites grew to 1,800 locations nationwide in 2014 from 200 in 2006, though they still represent just 2 percent of primary care encounters in the United States, according to a report published this year by Manatt Health, a health advisory practice, and the Robert Wood Johnson Foundation. But CVS is by far the leader. Walmart, which charges just $40 a visit, has fewer than 100 clinics, compared with the more than 900 in CVS’s portfolio. Walgreens, the second-largest, has half as many clinics as CVS. And CVS plans to add more, reaching 1,500 by 2017, the company has said.

Whether these clinics provide the best kind of care is a question sometimes raised by doctors in more traditional practices, like Robert Wergin, president of the American Academy of Family Physicians and a doctor in Milford, Neb.

“These retail clinics, they’re run by competent folks, and they probably have some role to play,” he said. “But you’re being seen at a clinic next to the frozen food section by a stranger. And if you go back for a follow-up, you’re going to get seen by someone else.”

For employers and insurers, however, the clinics offer a way to reduce costs for noncritical conditions. A study by researchers at the RAND Corporation estimated that more than a quarter of emergency room visits could be handled at retail clinics and urgent care centers, creating savings of $4.4 billion a year.

Reducing health care spending, however, may turn out to be complicated.

“You might imagine that they keep people out of E.R., so that’s one way you could save money,” said Martin Gaynor, professor of economics and public policy at Heinz College, Carnegie Mellon University. “On the other hand, just because they’re more convenient, people might go and obtain care in circumstances where they otherwise would not have sought care.”

CVS might have more sway reducing health care costs in its role as a middleman between drug companies and patients with drug benefits. The company is expected to start shifting the balance between end users on one hand, and drug manufacturers and wholesalers on the other.

CVS and other large dispensing pharmacies — Walgreens, Express Scripts, Rite Aid and Walmart — made up about 64 percent of prescription-dispensing revenue in the United States in 2014, according to Pembroke Consulting. That year, CVS was also the leading provider of specialty drugs in North America, with $20.5 billion in revenue, representing 26 percent of the total market.

“Scale is a big factor in pharmacy,” said Joseph Agnese, senior equity analyst at S&P Capital IQ. “There’s a lot of pricing pressure from drug manufacturers and one way for retailers can come back at them is to become larger, and become a more significant purchaser of drugs.”

Dr. Gaynor of Carnegie Mellon said, however, that cost reduction varied greatly by type of drug. “If there’s a drug that is very important for CVS to carry, and there are no alternatives, they aren’t going to have a lot of negotiating power,” Dr. Gaynor said. “But of course, the bigger CVS gets, the more they can move product, the more important it becomes.”

The company’s size also creates significant competition issues, says David A. Balto, an antitrust lawyer and former policy director at the Federal Trade Commission who often represents independent pharmacies. CVS’s ownership of Caremark could restrict consumers’ access to rival pharmacies, he said, and CVS’s acquisition of Omnicare, already a dominant player in long-term care, could reduce competition in that industry.

“There are tremendous concerns when you see someone becoming so terrifically large,” Mr. Balto said. “The acquisitions might conceivably be efficient, but whether those efficiencies are passed on to consumers really depends on the level of competition in the market.”

Quitting Cigarettes

Helena B. Foulkes, who leads CVS’s retail business, swept past the sales counter at a newly renovated CVS in downtown Manhattan. Where cigarette packs once lined up in neat rows, now there were nicotine gum and patches to help smokers quit. (There are no e-cigarettes either, much to the chagrin of that industry, which had hoped CVS would embrace its products as a lower-risk alternative.)

Ms. Foulkes, who lost her mother to lung disease, leads the retail business, which is starting to change to fit the company’s health care bent better.

The move to forgo $2 billion in annual tobacco sales has bolstered CVS’s health care bona fides. The White House lauded CVS’s move. “Thanks @CVS_Extra, now we can all breathe a little easier,” Michelle Obama wrote in a Twitter post. The praise seemed to give Mr. Merlo a jolt of confidence. At a TEDx talk this year in Winston-Salem, N.C., he declared: “CVS kicks butts across the U.S.”

“When we exited the tobacco category, it was the most important decision we’d made as a company,” Ms. Foulkes said. “That decision really became a symbol both internally and externally for the fact that we’re a health care company.”

It also made economic sense. Adult smoking rates have dropped to 18 percent in 2014, from 43 percent in 1965, according to the Centers for Disease Control, and experts predict that rate to dip below 10 percent in the next decade. Ditching cigarettes allows CVS to trade a small — less than 2 percent of revenue — and shrinking part of its business for an instant enhancement of its credentials in the faster-growing health and wellness space.

In October, CVS announced that its Caremark arm would require some of its customers to make higher co-payments for prescriptions filled at pharmacies that still sold tobacco products — in effect driving more traffic to the now tobacco-free CVS pharmacies. While that move encourages pharmacies to quit selling tobacco, it also raised the ire of an antitrust law research firm, which called the announcement “a smokescreen” that masks higher costs for those who fill prescriptions at competing pharmacies.

“CVS’s use of its market power to bludgeon consumers and rivals into ending tobacco sales is not a legitimate form of competition,” the American Antitrust Institute said in a statement. It has urged the Federal Trade Commission to investigate.

In general, CVS’s new anti-tobacco stance has helped it forge affiliations with regional hospitals. Before CVS went tobacco-free, negotiations with local health systems were awkward, Mr. Merlo said during a recent analyst conference call.

“That question would always come up — ‘You guys sell tobacco products, don’t you?’ — and that literally sucks all the energy out of the room,” Mr. Merlo said. But since the company stopped selling tobacco, he said, “We’ve been able to accelerate partnerships with leading health systems across the country.”

A new partnership with Rush University Medical Center in Chicago will involve patient referrals and shared electronic health records. Anthony Perry, vice president for ambulatory care and population health at Rush, said that traditional health care providers and companies like CVS could be natural allies.

“Take people with high blood pressure. That’s the type of thing you manage steadily over time, and you work on things like diet and exercise, and lifestyle changes, and if those things don’t work, you get into the world of medications,” he said. “What we asked was: If we’re going to do a series of visits with somebody, might they be able to do some of that closer to home?”

The flip side, he said, is that CVS can refer people with more serious ailments, but no primary care doctor, to Rush. “So CVS can now say: You need to see a primary care doctor, and we can connect you.”

The anti-tobacco stand has had other effects. Notably, the company has had to start thinking about other unhealthy items on its shelves. If it is a company that promotes health, can it also sell sugary sodas and candy bars?

The downtown Manhattan store where Ms. Foulkes walked the aisles is one of 500 locations that CVS is remodeling to emphasize healthy fare.

“I was in Long Island the day after the tobacco announcement, and I ran into a store manager who said: ‘I’m so proud of the company,’ ” she recalled. “But he also said, ‘I’m hearing customers now saying, why don’t you have healthier food?’ ”

“Customers quickly made the leap. They expected more from us,” she said.

Ms. Foulkes pointed to a prominent snack corner at the front of the store.

“What you’ll see in our stores are brands that convey healthy without being overly edgy. It’s Chobani yogurt, it’s Kind bars, it’s lots of proteins and nuts,” she said. “Health for the masses.”

At this point, there are no plans to stop selling high-fat or high-sugar snacks, still a big part of CVS stores’ sales. But they might be harder to spot.

When asked where the Oreos were, she smiled. “You’ll find them, but you’ll have to look for them.”

NantHealth Update

Allscripts invests $200M in Soon-Shiong’s NantHealth in software integration deal (updated)
By NEIL VERSEL
Post a comment / 61 Shares / Jun 30, 2015 at 1:33 PM
Patrick Soon-Shiong
Dr. Patrick Soon-Shiong
Electronic health records vendor Allscripts Healthcare Solutions has bought a 10 percent equity stake in NantHealth, the health IT arm of Dr. Patrick Soon-Shiong’s empire, for $200 million, while another Soon-Shiong company has bought $100 million worth of stock in Allscripts.

The deal, announced Tuesday, extends a partnership first disclosed in March, in which the two companies agreed to share technology in developing more personalized cancer treatments.

Chicago-based Allscripts paid cash for its 10 percent stake in NantHealth, the two companies said. Soon-Shiong bought into Allscripts via his personal investment vehicle, NantCapital, part of his burgeoning NantWorks conglomeration.

The Los Angeles Times reported that the cross-investment, which values Culver City, Calif.-based NantHealth at $2 billion, closer to a planned initial public offering later this year. “We feel we have one or two transactions to accomplish, then we will initiate the public offering that we anticipate will happen probably within this year,” Soon-Shiong reportedly told the Times.

NantHealth and Allscripts said that they would jointly integrate their software via application provider interfaces, including placing dashboards to NantHealth databases and analytics engines into Allscripts EHRs. For example, NantHealth will make its Eviti cancer-specific clinical decision support technology available through Allscripts front ends, NantHealth President Robert Watson said in an interview with MedCity News.

The two companies also plan on developing several specific pieces of technology: an ontology and industry standard for cross-clinical usage of a NantHealth-developed test known as GPS Cancer (GPS stands for genomic-proteomic sequencing); invitations for GPS Cancer sequencing delivered to specific patients through Allscripts’ FollowMyHealth portal; and a new product for accountable care organizations that promotes semantic interoperability.

“We believe that our GPS Cancer test should become a standard of care,” Watson said. It takes the kind of access to hospitals and cancer centers that Allscripts has to make it happen, Watson explained.

The test is more comprehensive than others on the market, Watson said, in that it takes into account the full genome and full exome, not just a small subset of pairs.

In a press release, Allscripts President and CEO Paul Black said:

“We’re taking an important step forward in our strategic partnership that fully aligns our resources and furthers Allscripts’ strategy to invest in new technologies that can revolutionize service to hospitals and physicians. Under the leadership of Dr. Soon-Shiong, NantHealth is pioneering extraordinarily innovative, personalized healthcare solutions that will empower more efficient and effective clinical decisions. We’re confident that our joint efforts will help Allscripts lead the way in our vision of delivering open, integrated and precision-based medical solutions to physicians and patients

============== Prior Blog Post =======

NantHealth Update
Remember Dr. Patrick Soon-Shiong and NantHealth?

He is the LA billionaire I met in 2013. I was saying “watch him make his next move” in 2013 when he came to Coke and showed a vision of how he wanted to revolutionize health care. I drove in a car with him to see if he could use some of his genomic knowledge to help my friend John Farrell live (it was too late but he really tried hard and I came to respect him as a physician and oncologist).

His vision them was for a revolution in health care based on breathtaking new genomic understandings, including how genes changed over time, combined with revolutionary new home appliances that would record cloud-based data relevant to your personal health, e.g. a scale that recorded weight and pill bottles that recorded compliance with medications.

In any event ….

Take a look at his investors – – – $320 million so far, from elite players:

I’m reminded of what Dr. Patrick Soon-Shiong is doing with NantHealth, which is a lot more opaque other than the approximate $320M of private equity money invested to date by Sovereign Wealth Fund, Kuwait Investment Authority, Verizon, Celgene, Blackberry, and Blackstone.

Future Watch: Home Electricity Power Shaping

Like the quantified self movement (my Nike Fuel Band and my Apple Watch), and like the quantified car movement (my Tesla and my Ford Escape Titanium), I am ready for the quantified home movement.

I have a specific interest – but it falls under the general class of the “smart home” or the “internet of things”. For the latest on these trends, check out:
Business Insider on Smart Home

Specifically, I am ready for “power shaping”. Here is how it will work:

The subject is: can you take greater control of the power you consume in your home? Can you shape it to who you are and what you need?

For example:

– If I leave home for a week, can I turn the water heater down to lukewarm, and turn it back up a hour before I project I will arrive back into the home?

– If I leave home for an evening, can I turn the lights off except for three that I choose, and then turn the lights back on when my smart phone detects that I am a mile from the house?

– if peak power pricing starts at 4 and ends at 7, can I turn off my draw from the grid and turn on my draw from the PowerWall battery in my garage? And can that then trigger a recharge of the PowerWall when prices are cheapest, between midnight and 6 am?

– if the US Weather Service predicts, three days before, that the sun will be bright and hot from 9 am to 6 pm, can I plan to use solar power to the maximum? I choose to draw all of my electricity from solar during that time period, and then to add any left over to recharge my PowerWall (or sell back to the grid). In fact, I will set s goal for myself that I will be 100% solar 50 days this year, 70%+ solar 100 days, and 50%+ solar 150 days – without any inconvenience to myself or my family. Also, my goal is to be 100% “off peak draw” (only draw from the grid during off peak periods) 300 days this year.

– my goal is to reduce electricity draw by 30% and cost by 40% (by shaping my draw to off peak). This saves $1000 per year.

Process is entirely driven by default choices. The most basic default is “keep on keeping on”.

But there are other defaults – that I can buy or download.

For example, my power consumption can be driven by “expert user algorithms” that others say are awesome. I take advantage of what some geek has figured out about electricity usage.

Then, I “opt in” over time, and I learn about algorithmic capabilities, assets that I own (like solar panels), and needs that I have.

Apps are evolving to support this future. Take “COMFY”, for example.This is from NYT:

A couple of computer scientists have developed a smartphone app that proposes to solve that problem by making people the thermostats. Users can tell the app, called Comfy, whether they are hot, cold or just right. Over time, it learns trends and preferences and tells the air-conditioning system when and where to throttle up or throttle back the cooling. So far it’s used in a dozen buildings, including some of Google’s offices and some government-owned buildings, for a total of three million square feet. The developers claim Comfy-equipped buildings realize savings of up to 25 percent in cooling costs.
“We have a lot of data that people are most comfortable if they have some measure of control,” said Gwelen Paliaga, a building systems engineer in Arcata, Calif., and chairman of a committee that develops standards for human thermal comfort for the American Society of Heating, Refrigerating and Air Conditioning Engineers, or Ashrae.

Amazon’s Echo

See NYT article below on Amazon’s Echo (and note comparisons to other voice command systems, such as Siri, Google Now, and Cortana:

“If it moves nimbly, keeping ahead of Apple and Google, Amazon could transform the Echo into a something like a residential hub, the one device to control pretty much everything attached to your home.”

Functionality at the moment is:

– telling you the weather
– playing music you ask for
– adding stuff to your shopping list
– reordering items you frequently buy from Amazon
– giving you a heads-up about your nearing calendar appointments
– setting a kitchen timer
– answering the most basic of search queries

Amazon Echo, a.k.a. Alexa, Is a Personal Aide in Need of Schooling
By FARHAD MANJOOJUNE 24, 2015

The Amazon Echo, a wireless speaker and artificially intelligent personal assistant, can tell you the weather, play music and reorder items you frequently buy from Amazon, among other things.

THIS week, I asked a friend for help: “Alexa, can you write this review for me?”
“What’s your question?” Alexa responded.
“Can you write this review for me?”
“Review is spelled R-E-V-I-E-W.”
“Thanks,” I said. “That about sums it up.”

O.K., so Alexa isn’t perfect; far from it, in fact. If there is one glaring flaw in the Amazon Echo — the tiny wireless speaker and artificially intelligent personal assistant, a machine that one always addresses with the honorific “Alexa,” as if she’s some kind of digital monarch — it is that she is quite stupid.

If Alexa were a human assistant, you’d fire her, if not have her committed. “Sorry, I didn’t understand the question I heard” is her favorite response, though honestly she really doesn’t sound very sorry. She’ll resort to that line whether you ask her questions answered by a simple Google search (“How much does a cup of flour weigh?”) or something more complicated (“Alexa, what was that Martin Scorsese movie with Joe Pesci and Robert De Niro?”).

Other times, she is mind-numbingly literal. One night during the N.B.A. playoffs, I asked, “Alexa, what’s the score of the basketball game?” She proceeded to give me a two-minute, 18-part definition of the word “score” that included “a seduction culminating in sexual intercourse.” Not exactly what I was going for.

And yet, after spending three weeks testing the Echo, I really kind of love Alexa. She is just smart enough to be useful. And she keeps getting smarter. This week, after a long invitation-only preview period, Amazon began selling the Echo to the public. At $179.99, Alexa is more expensive than I’d like. (Subscribers to Amazon’s $99-a-year Prime subscription service could buy the Echo for only $100 during the preview.) But if you’re the type who enjoys taking chances on early, halfway useful tech novelties, the Echo is a fun thing to try.

And if you’re anything like me, after a week with the Echo, you may feel the device begin to change how you think about home tech. It will not seem far-fetched to expect that one day soon, you’ll have an all-knowing, all-seeing talking assistant to control your lights, thermostat, entertainment system and just about anything else at home. In Alexa, Amazon has created the perfect interface to control your home; if it adds some more intelligence, it would be quite handy.

The Echo is a stout, plain-looking cylinder, about the height of a toaster, that you can park just about anywhere you have Wi-Fi access, though it seems most useful in the kitchen. It comes with a remote control that you don’t really need, because after a quick initial setup using your smartphone, you can control pretty much everything the Echo does with your voice. (The remote does have a microphone that allows you to speak to the Echo from far away.) From there, the Echo is terrifically easy to use — say “Alexa” and ask your question.

At the moment, there are only a handful of uses for the Echo. She’s great at telling you the weather, adding stuff to your shopping list, reordering items you frequently buy from Amazon, giving you a heads-up about your nearing calendar appointments, and answering the most basic of search queries.

She is pretty good at playing music, though her main source is Amazon Prime Music, a streaming service that is included with a Prime membership. Prime Music’s selection is dreadfully limited, though, and at the moment, the Echo can’t connect to many other streaming services. Thankfully, with a few quick voice commands, Alexa can connect to your phone like any other Bluetooth speaker. That way, she can take control of music you play from most apps, including streaming apps like Spotify. You can’t call out for specific songs this way, but you can say “Alexa, pause” or “Alexa, next” and she’ll control the tunes playing from your phone.

The Echo is also a very good kitchen timer. Put your cookies in the oven; yell out, “Alexa, set timer for 12 minutes”; and she’s off. It’s far easier than fumbling with buttons on the microwave, especially when you have your hands full.

But wait a minute — can’t you do pretty much all this on your phone, your smartwatch or many other devices? Yes, you can, but Alexa is right there. She’s always plugged in. She’s always listening, and she’s fast. It’s surprising how much of a difference a few milliseconds make in maintaining the illusion of intelligence in our machines. Because Alexa is far quicker to spring into action than Siri, Apple’s digital personal assistant, especially Siri on the Apple Watch, I found her to be much more pleasant to use, even if she is frequently wrong.

Amazon says that it plans to constantly improve the Echo. During the preview period, it added a host of new features, including the ability to control some smart-home devices, built-in integration with the Pandora streaming service, and traffic information for your morning commute. I’m hoping Amazon creates an open system — what developers call an API — for the Echo, which will allow a wide variety of online services and apps to connect to the device. If it moves nimbly, keeping ahead of Apple and Google, Amazon could transform the Echo into a something like a residential hub, the one device to control pretty much everything attached to your home.

At the moment, that dream is far off. But dumb as she sometimes sounds, Alexa may be just smart enough to make it happen.