Brainstorm Health: Obamacare Insurer Payments, OptiNose IPO, Spark Gene Therapy
Happy Friday, Dailies. I thought I’d use this space today to highlight some great recent reporting by a couple of other dailies—you know, those things we used to call newspapers.
Rolfe Winkler at the Wall Street Journal had a front-page eye-opener yesterday on Outcome Health, a 10-year-old Chicago firm, helmed by Rishi Shah, that puts ads on screens in medical offices.
That’s right, Outcome Health has little to do with med-tech; rather, it’s an electronic billboard company that has found a key niche in the healthcare realm. Still, despite that seemingly prosaic business model, Outcome has become a celebrity in the unicorn set in recent years, managing to raise more than $500 million—on a head-shaking $5.5 billion valuation—from smart-money investors at Goldman Sachs and Alphabet among other places. And Shah has become a celeb as well. Indeed, Fortune picked the 31-year-old CEO (along with 32-year-old Outcome president Shradha Agarwal) for our annual “40 Under 40” list this year.
But the Journal reports that all is not what it seems at the company. Citing internal documents and other data provided by Outcome employees, Winkler asserts that the firm “provided inflated data” to gauge how those in-office advertisements actually performed. The company also “created documents that inaccurately verified that ads ran on certain doctors’ screens and manipulated third-party analyses showing the effectiveness of the ads,” Winkler writes.
The Journal says it “found nothing to demonstrate top executives’ involvement in the alleged misleading of advertisers.” After the report, Outcome’s management put some employees on paid leave, and Shah and Agarwal told the Journal in an email: “Of course, we have had growing pains as we scaled from 4,000 to 40,000 doctors’ offices—every high-growth company does. That is why we have taken many steps to implement best practices.”
The New York Times, meanwhile, offered another impressive bit of reporting yesterday—but of a different sort. Margot Sanger-Katz’s explainer, “What We Know About Trump’s Twin Blows to Obamacare,” is the kind of journalism that doesn’t get anywhere near the credit it deserves. Sanger-Katz lays out eight questions that are on a lot of folks’ minds after President Trump’s latest efforts to undercut the Affordable Care Act—an executive order Thursday morning, followed by an announcement last evening that the government would stop making certain ACA-related payments to insurers—and answers them.
Her reporting is solid; her explanations, straightforward and clear. For anyone who’s curious about where things stand with Obamacare, this is a great first read.
In an era when newspapers are under attack by forces both political and economic, these two stories affirm why we still need them.
More news below.
|Clifton Leaf, Editor in Chief, FORTUNE|
FDA panel gives unanimous recommendation for Spark's blindness gene therapy. In a 16-0 vote, an expert panel that advises the Food and Drug Administration recommended the agency approve Spark Therapeutics' Luxturna, an experimental treatment for rare form of inherited blindness. If the FDA follows the recommendation—and it usually does—this would become the first-ever approved U.S. therapy that repairs or replaces a defective gene (patients would only need to be treated once). Patients who supported the product's approval recounted stories of being able to see friends, family, and the world itself for the first time. (Reuters)
OptiNose the latest to join string of biotech IPOs. OptiNose, the firm behind nasal and throat spray technology it says can better deliver drugs, is the latest biotech to go public—and it's having quite the debut. Shares surged more than 20% shortly after the opening bell Friday as it aims for a more than $100 million IPO. (MarketWatch)
THE BIG PICTURE
Trump administration's decision to end Obamacare insurer subsidies raises specter of market chaos. As Cliff points out in his essay, the Trump administration dropped a bombshell on Obamacare markets Thursday night, announcing that it will halt payments made to insurance companies that help pay for poorer Americans' out-of-pocket medical costs. Margot Sanger-Katz's reporting in the New York Times covers a lot of the important questions; one thing worth keeping an eye on (besides whether or not Republicans and Democrats can strike a deal to restore the payments by taking that authority away from Trump) is, which insurers planned for the end of the subsidies following the president's multiple threats against them. These companies will be relatively shielded from any major immediate impact. The ones who didn't? Get ready for some legal challenges and potential market exits.
Amazon Studios Executive Roy Price on Leave Over Sexual Harassment Claims, by The Associated Press
This State Wants to Offer Universal Benefits to Gig Workers, by Monica Stonier
How to Help Victims of California's 22 Fires, by Kirsten Korosec
World Mental Health Day: By the Numbers, by Natasha Bach
|Produced by Sy Mukherjee|
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