Category: CIOX

What You Should Know:

– Amazon today announced the launch of Amazon HealthLake,
a new HIPAA-eligible service enables healthcare organizations to store, tag,
index, standardize, query, and apply machine learning to analyze data at
petabyte scale in the cloud.

– Cerner, Ciox Health, Konica Minolta Precision Medicine,
and Orion Health among customers using Amazon HealthLake.

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Today at AWS re:Invent, Amazon
Web Services, Inc. (AWS), an Amazon.com company today announced Amazon HealthLake, a
HIPAA-eligible service for healthcare and life sciences organizations. Current
Amazon HealthLake customers include Cerner, Ciox Health, Konica Minolta
Precision Medicine, and Orion Health.

Health data is frequently incomplete and inconsistent, and is often unstructured, with the information contained in clinical notes, laboratory reports, insurance claims, medical images, recorded conversations, and time-series data (for example, heart ECG or brain EEG traces) across disparate formats and systems. Every healthcare provider, payer, and life sciences company is trying to solve the problem of structuring the data because if they do, they can make better patient support decisions, design better clinical trials, and operate more efficiently.

Store, transform, query, and analyze health data in
minutes

Amazon HealthLake aggregates an organization’s complete data across various silos and disparate formats into a centralized AWS data lake and automatically normalizes this information using machine learning. The service identifies each piece of clinical information, tags, and indexes events in a timeline view with standardized labels so it can be easily searched, and structures all of the data into the Fast Healthcare Interoperability Resources (FHIR) industry-standard format for a complete view of the health of individual patients and entire populations.

Benefits for Healthcare Organizations

As a result, Amazon HealthLake makes it easier for customers to query, perform analytics, and run machine learning to derive meaningful value from the newly normalized data. Organizations such as healthcare systems, pharmaceutical companies, clinical researchers, health insurers, and more can use Amazon HealthLake to help spot trends and anomalies in health data so they can make much more precise predictions about the progression of the disease, the efficacy of clinical trials, the accuracy of insurance premiums, and many other applications.

How It Works

Amazon HealthLake offers medical providers, health insurers,
and pharmaceutical companies a service that brings together and makes sense of
all their patient data, so healthcare organizations can make more precise
predictions about the health of patients and populations. The new
HIPAA-eligible service enables organizations to store, tag, index, standardize,
query, and apply machine learning to analyze data at petabyte scale in the
cloud.

Amazon HealthLake allows organizations to easily copy health
data from on-premises systems to a secure data lake in the cloud and normalize
every patient record across disparate formats automatically. Upon ingestion,
Amazon HealthLake uses machine learning trained to understand medical
terminology to identify and tag each piece of clinical information, index
events into a timeline view, and enrich the data with standardized labels
(e.g., medications, conditions, diagnoses, procedures, etc.) so all this
information can be easily searched.

For example, organizations can quickly and accurately find
answers to their questions like, “How has the use of cholesterol-lowering
medications helped our patients with high blood pressure last year?” To do this,
customers can create a list of patients by selecting “High Cholesterol” from a
standard list of medical conditions, “Oral Drugs” from a menu of treatments,
and blood pressure values from the “Blood Pressure” structured field – and then
they can further refine the list by choosing attributes like time frame,
gender, and age. Because Amazon HealthLake also automatically structures all of
a healthcare organization’s data into the FHIR industry format, the information
can be easily and securely shared between health systems and with third-party
applications, enabling providers to collaborate more effectively and allowing
patients unfettered access to their medical information.

“There has been an explosion of digitized health data in recent years with the advent of electronic medical records, but organizations are telling us that unlocking the value from this information using technology like machine learning is still challenging and riddled with barriers,” said Swami Sivasubramanian, Vice President of Amazon Machine Learning for AWS. “With Amazon HealthLake, healthcare organizations can reduce the time it takes to transform health data in the cloud from weeks to minutes so that it can be analyzed securely, even at petabyte scale. This completely reinvents what’s possible with healthcare and brings us that much closer to everyone’s goal of providing patients with more personalized and predictive treatment for individuals and across entire populations.”

What You Should Know:  

– CommonWell Health Alliance enables payer access with the addition of a new service provider, DataFile Exchange to support the operational services specific to the Payment and Health Care Operations use case.

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CommonWell
Health Alliance today announced it is extending its interoperability
services to enable additional use cases beyond treatment and patient access,
starting with Payment and Health Care Operations data requests.

Data File Exchange Background

To support this effort, CommonWell has added a new service
provider, DataFile Exchange, to support the operational services specific to
the Payment and Health Care Operations use case. Together, DataFile Exchange
and Change Healthcare, the technology service provider for CommonWell, will
facilitate the automated exchange of data requests from a broader set of users,
including payers, record locator vendors and other qualified entities.

Why It Matters

Despite strides made in electronic clinical data exchange, existing payments and operations processes providing access to protected health information (PHI) remain archaic, predominantly manual, expensive, error-prone, and time consuming. The additional functionality provided by the new use case aims to end these outmoded processes, improve the quality of care, and drive efficiency across the health care continuum.

DataFile Exchange was founded by Janine Akers, an industry leader in the exchange of PHI. DataFile Exchange will work closely with CommonWell, its members, and Change Healthcare, which continues to act as the CommonWell technology service provider and data broker for the CommonWell network––in addition to building the functionality needed to support Payment and Health Care Operations data requests.

“Improving data exchange of Payment and Health Care Operations is critical, particularly as we look at ways to help our health care system do more with less time and resources,” said Janine Akers, founder and CEO of DataFile Exchange. “DataFile Exchange has broad industry experience with handling PHI, so it’s only natural for us to shift our focus to automating the exchange of PHI. We’re well-positioned to partner with CommonWell in its effort to help patients, providers and payers benefit from these next-level interoperability services.”

Four CommonWell Service Adopters who provide record
retrieval services––Change
Healthcare, Ciox, Inovalon and Moxe Health––currently are participating in
a pilot to refine the use case, with the goal of making CommonWell services for
Payment and Health Care Operations purposes generally available for these underserved
areas in the coming few months.

Today, the CommonWell network enables the federated exchange
of patient information across more than 17,000 provider sites representing 100
million individuals on its nationwide network alone. Combined with its CommonWell
ConnectorTM and collaboration connections like the Carequality Framework,
connected provider sites can exchange data with more than 50,000 clinics,
hospitals, specialty centers and more. To date, more than 790 million health
documents have been exchanged across the CommonWell network.

– Healthcare Growth Partners’ (HGP) summary of Health IT/digital health mergers & acquisition (M&A) activity, and public company performance during the month of July 2020.

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While a pandemic ravages the country, technology valuations are soaring.  The Nasdaq hit an all-time high during the month of July, sailing through the 10,000 mark to post YTD gains of nearly 20%, representing a 56% increase off the low water mark on March 23.  More notably, the Nasdaq has outperformed the S&P 500 (including the lift the S&P has received from FANMAG stocks – Facebook, Amazon, Netflix, Microsoft, Apple, Google) by nearly 20% YTD. 

At HGP, we focus on private company transactions, but there is a close connection between public company and private company valuations.  While the intuitive reaction is to feel that companies should be discounted due to COVID’s business disruption and associated economic hardships facing the country, the data and the markets tell a different story.

While technology is undoubtedly hot right now given the thesis that adoption and value will increase during these virtual times, the other more important factor lifting public markets is interest rates.  According to July 19 research from Goldman Sachs,

“Importantly, it is the very low level of interest rates that justifies current valuations. The S&P 500 is within 4% of the all-time high it reached on February 19th, yet since that time the level of S&P 500 earnings expected in 2021 has been pushed forward to 2022. The decline in interest rates bridges that gap.”

Additionally, Goldman Sachs analysts also estimate that equities will deliver an annual return of 6% over the next 10-years, lower than the long-term return of 8%.  Future value has been priced into present value, and returns are diminished because the relative return over interest rates is what ultimately matters, not the absolute return.  In short, equity valuations are high because interest rates are low. 

What happens in public equities usually finds its way into private equity.  To note, multiple large private health IT companies including WellSky, QGenda, and Edifecs, have achieved 20x+ EBITDA transactions based on this same phenomenon.  From the perspective of HGP, this should also translate to higher valuations for private companies at the lower end of the market.  As investors across all asset classes experience reduced returns requirements due to low interest rates, present values increase across both investment and M&A transactions. 

As with everything in the COVID environment, it is difficult to make predictions with certainty.  Because the stimulus has caused US debt as a percentage of GDP to explode, there is an extremely strong motivation to keep long-term interest rates low.  For this reason, we believe interest rates will remain low for the foreseeable future.  Time will tell whether this is sustainable, but early indications are positive.

Noteworthy News Headlines

• A $10.2 million “sole source” contract to run a centralized Covid-19 database for the Trump administration drew sharp criticism from congressional Democrats, who demanded that the federal Centers for Disease Control and Prevention be reinstated as the primary repository of coronavirus data. The contract drew scant public attention when it was awarded in April to TeleTracking Technologies, a Pittsburgh company whose core business is helping hospitals manage the flow of patients. But it drew scrutiny after the administration ordered hospitals, beginning on Wednesday, to report coronavirus information, including bed availability, to the new database, housed at the Department of Health and Human Services in Washington, instead of to the C.D.C.
• With the CDC sidelines, some states lose access to timely COVID-19 hospital data. Just as the number of people hospitalized for COVID-19 approaches new highs in some parts of the country, hospital data in Kansas and Missouri is suddenly incomplete or missing. Earlier this week, the Trump administration directed hospitals to change how they report data to the federal government and how that data will be made available. Missouri Hospital Association spokesperson Dave Dillon called the move “a major disruption.”
• Hospital giant ACA makes $822 million profit off CARES Act stimulus money. HCA’s biggest profit driver and boost to surviving the pandemic and the influx of Covid-19 patients in the second quarter came from the federal government. In HCA’s second quarter, the government stimulus passed by Congress and signed into law by President Donald Trump turned into a windfall as of the end of the second quarter. 
• Hims Inc, a U.S. online provider of mens’ healthcare and consumer products ranging from hair loss treatments to Viagra, is exploring going public through a merger with a blank-check acquisition company that could value it at more than $1 billion, according to people familiar with the matter.
• HIMSS pushes back 2021 conference to August. HIMSS canceled its 2020 global health conference in March just days before it was slated to start due to concerns about COVID-19. HIMSS officials are planning a press conference Friday to offer more details about the HIMSS21 conference.

Noteworthy Transactions

Noteworthy M&A transactions during the month include:

• Workflow optimization software vendor HealthFinch was acquired by Health Catalyst for $40mm.
• Sarnova completed simultaneous acquisition and merger of R1 EMS and Digitech.
• Payment integrity vendor The Burgess Group acquired by HealthEdge Software.
• Ciox acquired biomedical NLP vendor, Medal, to support its clinical data research initiatives.
• Allscripts divests EPSi to Roper for $365mm, equaling 7.5x and 18.5x TTM revenue and EBITDA, respectively.

Noteworthy Buyout transactions during the month include:

• HealthEZ, a vendor of TPA plans, was acquired by Abry Partners.
• As part of a broader wave of blank check go-public transactions, MultiPlan will join the public markets as part of Churchill Capital Corp III.
• Also as part of a wave of private equity club deals, WellSky partially recapped with TPG and Leonard Greenin a rumored $3B transaction valuing the company at 20x EBITDA.
• Edifecs partnered with TA Associates and Francisco Partners in another club deal valuing the company at a rumored $1.4B (excluding $400mm earnout) at over 8x revenue and 18x EBITDA.
• Madison Dearborn announced a $410mm take private of insurance technology vendor Benefytt.
• Nuvem Health, a provider of pharmacy claims software, was acquired by Parthenon Capital.

Noteworthy Investments during the month include:

• Doctor on Demand, a telemedicine vendor, raised $75mm led by General Atlantic.
• Truepill, an on-demand pharmacy, raised $25mm from investors including Optum Ventures.
• VillageMD, a primary care provider, took a $275mm investment from Walgreens and others.
• Medly Pharmacy, an online pharmacy, received a $100mm investment led by Volition and Greycroft.
• Forcura, a vendor of post-acute software, received a growth investment from Accel-KKR.
• Preventice, a developer of mobile health applications, received a $137mm Series B with a host of strategic investors.
• Ro (fka Roman), a cloud consumer pharmacy, received a $200mm investment valuing the company at $1.5B.
• Sema4, a big data genomics company, raised $121mm led by BlackRock valuing the company at $1B.
• Heal, a physician house call company, raised $100mm from Humana.
• Tempo, developer of smart at-home fitness platforms, raised $60mm.

Public Company Performance

HGP tracks stock indices for publicly traded health IT companies within four different sectors – Health IT, Payers, Healthcare Services, and Health IT & Payer Services. Notably, primary care provider Oak Street Health filed for an IPO, offering 15.6 million shares at a target price of $21/ share. The chart below summarizes the performance of these sectors compared to the S&P 500 for the month of July:

The following table includes summary statistics on the four sectors tracked by HGP for July 2020:

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About Healthcare Growth Partners (HGP)

Healthcare Growth Partners (HGP) is a Houston, TX-based Investment Banking & Strategic Advisory firm exclusively focused on the transformational Health IT market. The firm provides  Sell-Side Advisory, Buy-Side Advisory, Capital Advisory, and Pre-Transaction Growth Strategy services, functioning as the exclusive investment banking advisor to over 100 health IT transactions representing over $2 billion in value since 2007.

What You Should Know:

– Ciox Health has acquired Medal, Inc., a biomedical
Natural Language Processing (biomed-NLP) technology company.

– The acquisition will lead Ciox to better and more
quickly enable real-world data in support of research that advances patient
care.

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Ciox
Health, a leading health technology company, today announced its acquisition
of San Francisco-based biomedical Natural Language Processing (biomed-NLP)
technology company, Medal, Inc., a leader
in the application of AI techniques to the interrogation of unstructured
medical record data. The acquisition accelerates capabilities to enable
real-world data (RWD) in support of research that advances patient care.

The Real-World Data Advantage

As more pharmaceutical and research organizations look to real-world data to accelerate clinical research, reliable identification, and interpretation of phenotypic data from deep inside medical records are becoming paramount. The most relevant information resides in the unstructured data: the surgical reports, pathology reports, imaging reports, discharge summaries, and other clinician-scribed narrative text. Medal’s software helps identify, contextualize, and interpret narrative-based medical notes, leading to the creation of research-grade data sets at scale. The company’s approach to biomed-NLP and deep learning AI is guided and informed by consensus from clinical expert reviewers across therapeutic areas.

“More than 100 million medical records are retrieved and reviewed by Ciox each year from the vast majority of U.S. providers, presenting an unprecedented opportunity to actually bring a true longitudinal perspective to clinical investigation. Ciox works at the first and last mile of U.S. healthcare data,” says Andy McMurry, Ph.D., Chief Science Officer of Medal. “Using Medal AI, Ciox will reduce human expert time and increase the utility of patient data to support biomedical discovery and clinical trials research across many disease areas, including COVID-19. Combining vast biomedical knowledge sources with clinically trained Artificial Intelligence enabling human experts, we are reinventing real-world data for clinical investigation.”

Acquisition Benefits for Ciox Health

This acquisition is the third major recent announcement from
Ciox’s growing Real World Data business, following two prior announcements of
strategic collaborations with LabCorp and Merck. As health data remains
fragmented throughout the U.S. healthcare ecosystem, Ciox is attracting
interest in its RWD division from medical research organizations and other
partners. This additional feature of the Ciox DataFit Platform through the
acquisition of Medal will enable faster and more consistent translational
research. 

Why It Matters

“We’re proud to bolster the Ciox Real World Data offering with Medal’s technology and team,” says Pete McCabe, CEO, Ciox. “The team and the biomed-NLP product, combined with Ciox’s technology-enabled ability to create longitudinal records across EHRs and provider systems, remove the friction related to medical records-based clinical research.  We will consistently supply consented, HIPAA-compliant, de-identified, research-grade RWD for complex clinical use cases to commercial researchers in pharma and biotech, as well as government sponsored researchers. The need is particularly highlighted in the COVID-19 research questions being asked by agencies like the FDA, CDC and NIH.”