Castlight Health’s share price climbs dramatically after its Friday IPO, surging 149 percent from $16.00 to $38.90. The company was valued at $1.39 billion at the IPO price, placing it in the $3 billion plus range after Friday’s market close. The company had $13 million of total revenue last year and lost $62 million, reportedly placing its loftily priced IPO price (107 times revenue) as the highest multiple since the dot-com era. Still, the company’s underwriters left a lot of Castlight’s money on the table at pricing the shares so far below their first-day closing price. Nobody’s saying how much shares owned by the already-loaded founders are worth (Todd Park, CTO and co-founder of athenahealth; Bryan Roberts, PhD, chairman and co-founder of venture capital firm Venrock; and Giovanni Colella, MD, founder of RelayHealth.) They might want to sell their shares soon: studies show that shares of companies valued at this level of frothiness have historically had a three-year return of –92 percent.
From Krikey: “Re: ongoing column writers. There are some very perceptive and witty folks out there, just a challenge to find and encourage them to contribute. I have ideas, but hesitate to name names.” I enjoy the writings of Ed Marx, Darren Dworkin, Dr. Gregg, and others on the provider side who have an interesting perspective and an entertaining way of presenting it. I’m happy to entertain the possibility of adding to that roster, but with the added comment that lots of folks think it sounds great until they realize it’s an ongoing commitment.
From Orange Belt: “Re: hospital salaries. Why are you so down in paying high-performing executives what the market demands?” Because non-profit hospitals shouldn’t be a market – they are a charity for taking care of sick people and should pay comparably to other charitable organizations even though they are inexplicably forced to run like a big business instead. I’m pretty sure that while the talent pool might be different if a health system paid its CEO only $500K instead of several million dollars, that amount would still be sufficient to hire a committed and skilled candidate. Making excuses such as (a) “We have to pay too much because everybody else does”; (b) “We have to compete against the giant corporations our executives would be lured away to run given their vast experience in dealing with nurses and insurance companies in a non-consumer driven market”; and (c) “Our executives are worth every penny because we’ve made a fortune since they took charge” are just excuses to avoid admitting that running a hospital has become a lucrative profession rather than a selfless calling and has attracted leaders who would wander off in an instant if they were paid responsibly.
Quite a few readers reported their annual job compensation, breaking out into the categories above. New poll to your right: should patients have a greater role in the HIMSS conference?
Thanks to everyone who completed my reader survey. I’ve emailed $50 Amazon gift cards to three randomly selected winners (I use a random number generator to choose from the available Excel rows of responses). I will be reviewing the results carefully over the next several weeks and will report back, but the item above is the one I watch most carefully, in which 92 percent of respondents said that reading HIStalk helped them perform their job better in the past year.
Another DonorsChoose classroom update: Mrs. Pew’s Louisiana second graders are already enjoying the books you and I bought them four weeks ago using proceeds from the top HIStalk banner ads during the HIMSS conference. She reports, along with sending the photo above, “Your donation has helped make it possible for all students to be actively engaged in my classroom in one way or another. They are able to interact with one another, discuss the books they listen to, and learn new words. Thank you for your generous donation and for bringing such joy to my classroom.”
Listening: Dead Confederate, country-tinged hard rockers from Athens, GA.
March 19 (Wednesday), 1:00 p.m. ET. The Top Trends That Matter in 2014. Sponsored by Health Catalyst. Presenters: Bobbi Brown, VP and Paul Horstmeier, SVP, Health Catalyst. Fresh back from HIMSS14, learn about 26 trends that all healthcare executives ought to be tracking. Understand the impact of these trends, be able to summarize them to an executive audience, and learn how they will increase the need for healthcare data analytics.
Mobile open source healthcare network vendor Cytta and telehealth technology provider ViTel Net announce plans to merge some or all of their companies. Sounds like they suffer from either commitment issues or premature declaration.
As expected, formerly high-flying Accretive Health is notified by the New York Stock Exchange that its shares have been delisted because the company has not filed its revised 2012 annual report. Above is the five-year share price chart of AH vs. the DJIA. The company’s market capitalization is still at $790 million, but shares are down 75 percent from their July 2011 high. The company tangled to its eventual disadvantage with Minnesota’s attorney general in early 2012 over is aggressive collection practices for hospital patients, including strong-arming patients with no outstanding balances who were still in their ED treatment rooms. I explained my mixed feelings about the company’s practices at that time:
The question raised by the Accretive mess that nobody wants to ask or answer is this: how much collection effort is too much? If the model forces a hospital to operate as a business, is it fair that some customers get away without paying, quite a few of them perfectly capable but just unwilling to do so because it’s not exactly a pleasurable purchase? Or that they don’t pay because hospital list prices are absurd, with insurance companies getting huge discounts on the $4 aspirin that cash-paying patients are expected to pay at list price? Accretive probably went too far, but it’s a slippery slope. They are the symptom, not the problem. Imagine if a restaurant couldn’t turn away hungry but broke patients, has to serve them steak and lobster if that’s what they want, and has to welcome them back for meal after meal even though they’re capable but unwilling to pay. Is that fair to the other diners who will have to make up the difference?
Duke LifePoint Healthcare, a joint venture between Duke University (NC) and for-profit LifePoint Hospitals, will acquire Conemaugh Health System (PA) for $500 million, adding to its total of 60 hospitals and 29,000 employees. LifePoint, whose annual revenue is $3.68 billion, paid its CEO $9 million in 2012, with its other six officers making between $1.8 million and $3.4 million each.
Government and Politics
The VA Secretary Eric Shinseki says the VA will enter its VistA Evolution in the Department of Defense’s EHR procurement project, claiming that the upgraded system will be equal to the commercially sold EHR systems that the DoD seeks. The VA announced its interest in receiving bids for developing VistA Evolution in late January, allowing eight business days to receive responses. It requested $269 million for 2015 to develop it. I can’t decide if Shiseki is just yanking the DoD’s chain, calling DoD out publicly knowing they would rather use stone tablets and chisels than admit that the VA’s systems are better, or if he really thinks the DoD is open-minded and taxpayer-respectful enough to use what makes sense instead of what it can control with an iron hand and an army (pun intended) of government contractors. Hopefully he won’t trigger a DoD-led military healthcare junta.
At the same House Veterans Affairs Committee meeting, the American Legion scolded both agencies in written testimony, saying the agencies “squandered more than a billion dollars of taxpayer money and wasted years in an ultimately empty pursuit of a joint electronic medical record system that would have streamlined and simplified logistics between the two agencies …The warfighter turned veteran is the same patient and deserves a system that honors that person with continuous care and seamless transition between agencies. It is unforgivable that DoD and VA have spent the past several years infighting rather than actively developing a comprehensive solution that is in the best interest of the American service member.”
The Defense Health Agency expects to spend $1.5 billion in 2017-2019 to buy a new EHR, according to new budget documents. I’m guessing that line item didn’t come from the VA’s RFI response.
Innovation and Research
Patrick Soon-Shiong says on Larry King that like fellow billionaires Warren Buffet and Bill Gates, he has signed the Giving Pledge and will thus donate more than half of his wealth to charitable causes. He also announces his latest invention: a $300 hearing aid that can be tuned by smartphone, making hearing correction affordable for the 700 million people who need it. He used the same technology to develop the $100 Notes personalizable headset and will donate a hearing aid for each two headsets sold, hoping to give away one million hearing aids in the next five years.
Washington’s state medical commission files unprofessional conduct charges against the former physician head of Harborview Medical Center’s burn unit, finding that he testified about the value of using flame retardants in furniture without disclosing that he was being paid by the companies that produce the chemicals. Government scientists had concluded that the products are toxic and don’t work, leading the chemical companies to create a phony three-member consumer watchdog group to create public fear about fire danger and to pay experts for favorable testimony. The group was quietly shut down in 2012. The doctor is also accused of making up compelling patient stories and violating patient privacy laws by using a minor patient’s photo without permission.
Valley View Hospital (CO) notifies 5,400 patients that technicians found an encrypted, hidden server folder that contained their credit card, Social Security, and demographic information, adding that the information may have been used for identity theft. An unnamed virus collected and stored screen shots of online web pages that may have been sent outside the facility. The hospital says it has since improved its antivirus and firewall systems.
The Sacramento paper profiles Davis, CA-based Cedaron Medical, which offers software for cardiac care, rehab documentation, speech pathology, occupational therapy, and worker’s compensation evaluation. I’m fascinated that founders Malcolm and Karen Bond also started Bondolio, an award-winning olive oil business.
An editorial in BMJ says that doctors would provide better care if they knew that patients were recording their encounters, even suggesting that doctors record sessions themselves and offer patients a copy. It addressed a debate in England in which the UK General Medical Council eventually changed its position that such records would not be admissible in professional practice reviews. The article concludes that there’s no way to stop patients from recording their physician interaction, so the medical profession might as well figure out how to use that information to improve care.
Former Epic project manager Brian Stowe is sentenced to 38 years in prison for sexually assaulting six of his female Epic co-workers and a 17-year-old girl and filming the attacks. The victims were unaware of his activities until video from his computer surfaced years later, leading to the unproven possibility that he drugged them, that speculation bolstered by the fact that one his computer’s video folders was labeled “drug assaults.” One set of photos was apparently made during an Epic business trip. Stowe apologized, said he was “out of control,” and added, “The only part about getting caught that truly upsets me is that it’s caused the lives of all these people I love and care about to implode.” Stowe, who had pleaded guilty, faced a sentence of more than 400 years for 62 felonies, but that count was reduced to 27 felonies in a plea deal.
A former contract ED doctor working at Spectrum Health (MI) sues the hospital group, claiming it banned her from working there for making a Facebook comment. She thought she recognized a patient depicted in an ED nurse’s Facebook photo of a woman’s backside, so she added a comment, “OMG. Is that TB?” The doctor claims the hospital was unhappy that she was planning to consult with other EDs using materials she had developed, so they falsely claimed her comment was a HIPAA violation. She adds that a nurse was reprimanded rather than fired for leaving a comment, “I like big butts and I cannot lie.”