Healthcare wearables level up with new moves from Apple and Alphabet

Announcements that Apple has partnered with Aetna health insurance on a new app leveraging data from its Apple Watch and reports that Verily — one of the health-focused subsidiaries of Google‘s parent company — Alphabet, is developing a shoe that can detect weight and movement, indicate increasing momentum around using data from wearables for clinical health applications and […]

Announcements that Apple has partnered with Aetna health insurance on a new app leveraging data from its Apple Watch and reports that Verily — one of the health-focused subsidiaries of Google‘s parent company — Alphabet, is developing a shoe that can detect weight and movement, indicate increasing momentum around using data from wearables for clinical health applications and treatments.

For venture capital investors, the movea from Apple and Alphabet to show new applications for wearable devices is a step in the right direction — and something that’s been long overdue.

“As a healthcare provider, we talk a lot about the important of preventative medicine, but the US healthcare system doesn’t have the right incentives in place to pay for it,” writes Cameron Sepah, an entrepreneur in residence at Trinity Ventures. “Since large employers largely pay for health care (outside of Medicaid and Medicare), they usually aren’t incentivized to pay for prevention, since employees don’t stay long enough for them to incur the long-term costs of health behaviors. So most startups in this space end up becoming an expendable wellness perk for companies. However, if an insurer like Aetna keeps its members long enough, there’s better alignment for disseminating this app.”

Sepah sees broader implications for the tie ups between health insurers and the tech companies making all sorts of devices to detect and diagnose conditions.

“Most patients relationship with their insurer is just getting paper bills/notifications in the mail, with terrible customer satisfaction (NPS) across the board,” Sepah wrote in an email. “But when there’s a way to build a closer relationship through a device that sits on your wrist, it opens possibilities to partner with other health tech startups that can notify patients when they are having mental health issues before they even recognize it (e.g. Mindstrong); or when they should get treatment for hypertension or sleep apnea (e.g. Cardiogram); or leverage their data into a digital chronic disease treatment program (e.g. Omada Health).”

Aetna isn’t the first insurer to tie Apple Watch data to their policies. In September 2018, John Hancock launched the Vitality program, which also gave users discounts on the latest Apple Watch if they linked it with John Hancock’s app. The company also gave out rewards if users changed their behavior around diet and exercise.

In a study conducted by Rand Europe of 400,000 people in the U.S., the U.K., and South Africa, research showed that users who wore an Apple Watch and participated in the Vitality benefits program averaged a 34 percent increase in physical activity compared to patients without the Apple Watch. It equated to roughly 5 extra days of working out per month.

“[It will] be interesting to see how CVS/Apple deal unfolds. Personalized health guidance based on a combination of individual medical records and real time wearable data is a huge and worthy goal,” wrote Greg Yap, a partner at the venture capital firm, Menlo Ventures . But, Yap wrote,I’m skeptical their first generation app will have enough data or training to deliver value to a broad population, but we’re likely to see some anecdotal benefits, and I find that worthwhile.”

Meanwhile the types of devices that record consumer health information are proliferating — thanks in no small part to Verily.

With the company reportedly working to co-develop shoes with sensors that monitor users’ movement and weight, according to CNBC, Verily is expanding its portfolio of connected devices for health monitoring and management. The company already has a watch that monitors certain patient data — including an FDA approved electrocardiogram — and is developing technologies to track diabetes-related eye disease in patients alongside smart lenses for cataract recovery.

It’s part of a broader push from technology companies to tie themselves closer to consumer health as they look to seize a part of the nearly $3 trillion healthcare industry.

If more data can be collected from wearable devices (or consumer behavior) and then monitored in a consistent fashion, tech companies ideally could suggest interventions faster and provide lower cost treatments to help avoid the need for urgent or emergency care.

These “top of the funnel” communications and monitoring services from tech companies could conceivably divert users and future healthcare patients into an alternative system that is potentially lower-cost with more of a focus on outcomes than on the volume of care and number of treatments prescribed.

Not all physicians are convinced that the use of persistent monitoring will result in better care. Dr. John Ioannidis, a celebrated professor from Stanford University, is skeptical about the utility of monitoring without a better understanding of what the data actually reveals.

“Information is good for you provided you know what it means. For much of that information we have no clue what it means. We have absolutely no idea what to do with it other than creating more anxiety,” Dr. Ioannidis said

The goal is to provide personalized guidance where machine learning can be used to identify problems and come up in concert with established therapeutic practices, according to investors who back life sciences starups.

“I think startups like Omada, Livongo, Lark, Vida, Virta, and others, can work and are already working on this overall vision of combining real time and personal historical data to deliver personalized guidance. But to be successful, startups need to be more narrowly focused and deliver improved outcomes and financial benefits right away,” according to Yap.

 

Will tech companies change the way we manage our health?

As of late 2018, the top 10 tech companies in the U.S. spent $4.7 billion on healthcare acquisitions since 2012. What are their intentions? And what are the ramifications for the health industry?

As of September 2018, the top 10 tech companies in the U.S. had spent a total of $4.7 billion on healthcare acquisitions since 2012. The number of healthcare deals undertaken by those companies has consistently risen year-on-year. It all points to an increasing interest from technology companies in U.S. healthcare, which raises many questions as to what their intentions are, and what the ramifications will be for the health industry. 

It also begs the question as to why healthcare has become the latest target of U.S. tech giants. On the surface, they don’t seem like natural bedfellows. One is agile and quick, the other slow moving and pensive; one obsessed with looking forward, the other struggling to keep up with its past. 

And yet, it’s true. Apple, IBM, Microsoft, Samsung and Uber have all flirted with healthcare in recent years, from data-collecting health apps and devices to a digital cab-hailing service for medical patients. Two of the most intriguing companies to make movements around healthcare recently, though, are Amazon and Alphabet. Both of them seem to have health insurance, in particular, set in their sights.

A is for: Alphabet, Amazon or Apple

Alphabet is currently the most active investor among large tech companies in U.S. healthcare, according to CB Insights. Via Verily, an Alphabet subsidiary that focuses on using technology to better understand health, and DeepMind, another Alphabet acquisition that deals in artificial intelligence solutions, the tech giant has been exploring how to use AI to tackle disease by using data generation, detection and positive lifestyle modifications. Alphabet has also made substantial investments in Oscar, Clover and Collective Health — companies that all have their eye on disrupting the health insurance sector. 

Meanwhile, Amazon raised eyebrows by making its biggest move into healthcare last summer, when it acquired the internet pharmacy startup PillPack. Then, in October 2018, it filed a patent for its Alexa voice assistant to detect colds and coughs. Furthermore, the e-commerce business has been working on an internal project named Hera, which involves using data from electronic medical records (EMRs) to identify incorrect misdiagnoses. And in January of last year, Amazon announced a partnership with Berkshire Hathaway and JP Morgan for an employer health initiative — a thinly veiled tactic to better understand health insurance by using workers as beta-testers with an eye toward expanding into a public market further down the line.

Apple isn’t standing by quietly, either. It was recently announced that they’ve been working with Aetna since 2016 to provide incentives for healthy behavior to their customers through personalized exercise and health tips.

While all three are making strides in the healthcare industry, health insurance, in particular, seems like it may to be a major part of their long-term strategy for Alphabet and Amazon.

Can the tech giants cross the moat?

This isn’t the first time tech-savvy businesses have sized up the U..S healthcare and health insurance industries. They’ve been viewed as sitting ducks for disruption for many years. Unsurprisingly so, too. With their analogue systems, complex strata of silos and out-of-date technology, anyone would think they were primed and ready for digital disruption — that new technologies could help these out-of-date, yet highly lucrative industries, become more streamlined, efficient and customer-centric.

That’s what Better — a mobile experience for healthcare — thought when it was launched in 2013 by Health Hero co-founder and Rock Health mentor, Geoffrey Clapp. The startup struggled from day one with investments and the seemingly monumental task of applying a simple solution to a plethora of problems. Better admitted defeat just two years after it launched.

 “We were doing concierge services across all disease states, across anatomic states like a knee surgery or a stroke, and at the same time doing bundled payment services and multiple, different payment structures,” Clapp said in 2016, when looking back at Better. “People may love the product, but they want it to address whatever problem theirs might be. And we talked ourselves into thinking we would have verticals.” 

Health insurance is just as difficult a sector to disrupt as other areas of the U.S. healthcare industry, but is less appealing to startups due to the large resources companies need to have before they even enter the market.

Despite their size, capital and ingenuity, making inroads into the healthcare industry won’t be easy for tech companies.

An interesting case study over the past few years has been Oscar Health (which, incidentally, received $375 million in investment from Alphabet last year). Launched in 2012 under the proviso of using technology and customer experience insight to simplify health insurance, Oscar is often seen as the poster-boy of startups disrupting health insurance. However, its journey has been anything but smooth and, despite significant investment, its future is anything but clear. 

The company has struggled to compete in the market for individual healthcare, as well as assembling the necessary network of doctors and hospitals. And while Oscar recorded its first profitable quarter in its now seven-year lifespan in 2018, it has a history of hemorrhaging money, including more than $200 million in losses in 2016. If Oscar is the success story of startups disrupting U.S. health insurance, then it’s a stark reminder as to how much of an uphill battle that is.

Of course, Amazon and Alphabet don’t have to worry about losing money in their long-term game plan for health insurance. But they still have to overcome the long list of regulations and pragmatisms that can’t simply be overcome by throwing money at the problem. They won’t automatically succeed on account of their size and resources, as Google learned when it closed the doors of Google Health in 2012, citing that the service “is not having the broad impact that we hoped it would.”

It seems that Alphabet, Amazon et al. have learned from their mistakes, the mistakes of their peers and those of startups like Better. Alphabet isn’t diving in head-first this time around. Instead, it’s tackling specific diseases, partnering with hospitals and applying its vast know-how in AI to combat real problems that affect millions of Americans. And Amazon — via its partnership with Berkshire Hathaway and JP Morgan — is taking the time to better understand the market it hopes to disrupt by taking a close look at its problems on a micro scale.

Grow or die

If the U.S. health insurance industry is indeed so difficult to conquer, it begs the question as to why tech companies are taking another swing at it. The simple answer is revenue.

The U.S. health insurance net premiums recorded by life/health insurers in 2017 totaled $594.9 billion. That’s more than three times Amazon’s 2017 revenue ($178 billion) and more than times that of Alphabet’s ($111 billion).

There’s more to it.

When a business’ annual revenue exceeds $100 billion, it’s sufficiently difficult to find new avenues of meaningful growth. This is problematic for companies like Alphabet and Amazon. Growth and scale are vital for them. Without them, the vultures begin to circle, believing that they’re losing their grip on their ecosystems — and with that, stock prices take a hit. 

We’ve already seen the tech giants mitigate this risk by successfully expanding into other verticals in recent years. Whether it’s grocery delivery services, voice assistants or self-driving cars, tech businesses are constantly looking to expand their empires to fresh verticals. Healthcare is simply the next industry to be re-conquered.

Roadblocks along the way

Despite their size, capital and ingenuity, making inroads into the healthcare industry won’t be easy for tech companies, no matter how carefully they approach it. While they may seem to be old hands when it comes to disrupting industries, healthcare and health insurance are different beasts entirely. 

For a start, there’s regulation. In order to sell and distribute drugs, there are complex and expensive hoops to be jumped through, overseen by regulatory bodies, including the FDA and the DEA. 

There’s always been a question mark over how these companies use the vast swathes of data available to them.

Then there’s data and privacy. Tech giants may believe that technology gives them an upper-hand over the industry’s long-standing incumbents, but tech solutions require access to data that’s also regulated by strict privacy laws — a major barrier to be overcome for those looking to enter specifically into health insurance. 

And on top of all of that, the tech companies looking to take on the health insurance would have to navigate the state-based insurance regulatory system. What works in Utah, which is generally regarded as a more lenient state when it come to insurance regulation, may not work in California, which is seen as one of the strictest states.

Privacy, data and universal healthcare

While there may be challenges facing new businesses in becoming major players in the health insurance industry, it would take a brave person to bet against them. If they were to succeed, some of the ramifications might not be appealing to everyone. 

For a start, there’s always been a question mark over how these companies use the vast swathes of data available to them. Tech companies have been rocked in recent years by the public turning against them over how their data is used to turn a profit. But what if that data was used to calculate a customer’s insurance premium? It’s feasible that a user’s premium could go down if data shows they live a healthy lifestyle; for instance, they purchase healthy foods, have a gym a membership and track regular workouts through a device. 

On the other hand, inactive users shown to buy unhealthy foods and products could see their premiums go up over time. 

It’s a genuine concern according to Peter Swire, a privacy expert at the Scheller College of Business at Georgia Tech and the White House coordinator for the Health Insurance Portability and Accountability Act privacy rule under President Clinton. “As far as I can tell, the Amazon website could use its information about the customer to inform its health insurance affiliate about the customer,” Swire says in an interview with Vice. “In other words, I’m not aware of rules that stop data from outside the healthcare system from being used by the health insurance company.” 

Tangent: Will tech companies push against a single-payer or universal healthcare system?

I’ll pause a moment to put on my tinfoil hat.

As recently as 2017, Aetna CEO Mark Bertolini stated he’d be open to discussing a single-payer system, “Single-payer, I think we should have that debate as a nation.”

Single-payer or Medicare-for-all are both in the sights of progressive Democrats in Washington. Those fighting for a single-payer health system in the model of countries like the U.K. and Canada are already up against powerful lobbying groups from pharmaceutical and insurance industries. Game theory may tell us that adding the richest companies in the world to that group would surely push the idea of universal healthcare in the U.S. further away from reality.

This is a big, “what if” scenario that plagues me as we consider a future where the tech companies begin to create their own insurance solutions. They definitely would not want the government to come in and replace private insurance.

Let’s remove the tinfoil hat and we can return to the less conspiracy theory-themed conversation.

Better than the status quo

Of course, there’s no evidence to suggest that Amazon, Google or any other tech giant interested in exploring health insurance might use data against its users or lobby against universal healthcare. In fact, if there’s one thing these businesses know, it’s the importance of pleasing as many people as possible. They’re aware, often from personal experience, how damaging negative publicity can be — not just to a particular product or service, but to the whole business. Following nefarious money-making initiatives could destroy any hope of disrupting the health insurance industry before they’ve even begun.

We could imagine that tech companies would approach their solution with their special sauce.

Amazon may bring extreme efficiency, no frills and incredibly fast logistics to their offering. Google or an Alphabet company may come from an AI and predictive approach, wherein every person would have a health assistant backed by a field of specialists. Alphabet machines and kiosks you could drop into for a quick health check. Apple would bring their polished retail experience and love of control to create a vertical solution like what we see from Kaiser Permanente. They’d work to ensure the quality of the experience. Each company would, effectively, serve a different type of consumer.

If they decide to show their hand and go head-to-head with the health insurance industry’s current incumbents, they may do so by positioning themselves as the benevolent alternative that works for everyone in the system and is ultimately better, less expensive and more efficient. According to a 2017 McKinsey study, very few insurers are providing what the American people want from their providers, namely convenience, more incorporated technology, tools that promote health and wellness and greater value for the money. 

These are areas where technologists often excel: providing high levels of customer care, improving services and driving down cost, and doing so by incorporating cutting-edge technology. If they can do that with health insurance, then they may well be within a shot of finally delivering on technology’s promise to disrupt an out-of-date industry. 

Growth is the lifeblood of these companies, and the health vertical that is ripe for disruption is, coincidentally, vital to our survival. It’s going to be a fascinating battle when it plays out to see whether, like Uber’s cowboy start, tech companies can leapfrog regulation and force the hand of the legislatures with the help of consumer demand.

California moves toward healthcare for more, not yet healthcare for all

It was way easier for candidate Gavin Newsom to endorse single-payer healthcare coverage for everyone than it is now for Gov. Newsom to deliver it.

It was way easier for candidate Gavin Newsom to endorse single-payer healthcare coverage for everyone than it is now for Gov. Newsom to deliver it.

Yet hardcore advocates say they’re pleased with the moves he’s made thus far — even if it may take years to come to fruition.

“This is a governor that is operating from a compass of action,” said Stephanie Roberson, government relations director for the politically powerful California Nurses Association, which hasn’t exactly been known for its patience on the issue.

Newsom has taken two tacks. He’s asking the Trump administration to let the state create its own single-payer system offering coverage to all Californians — a move almost everyone regards as a very longshot. And he’s also pushing specific ideas to expand healthcare coverage to hundreds of thousands of still-uninsured Californians — a move that seems much more do-able.

During his campaign, Newsom promised the nurses he would make it happen. But the state can’t do it alone. That’s why he sent a letter to the federal government right out of the gate, asking the administration and Congress to set up an “innovation waiver” to allow California to create its own single-payer system.

Experts say there is little chance the Trump administration will give the state the go-ahead on this.

“He’s making a statement and sometimes making statements is important — even if there’s little chance of making progress in the immediate future,” said Gerald Kominski, senior fellow at the UCLA Center for Health Policy Research. “It’s a way of drawing a line in the sand.”

It’s also a way to stave off criticism from advocates, said Jesus Ramirez-Valles, director of the Health Equity Institute at San Francisco State University. “He can say ‘I tried it’ and there is no risk on him. If he doesn’t do what he promised, then he is risking opposition.”

Federal permission would also require Congress to support a new waiver system — one that would allow the state to redirect funds that usually go to the federal government, such as Medicare income taxes, to a state funding authority that would manage and pay for a single-payer healthcare system, Kominski said. Current waiver systems do not allow for this type of financial management by the state. Other states have used existing waiver programs for permission to set prices or to implement additional requirements, but not to collect federal money.

“You have to ask for the money,” said Roberson of the nurses union. “We are not going to sit on our hands and hope something is going to happen. This strengthens the governor’s commitment to Medicare for all.”

Meantime, Newsom is tackling the block of 3 million uninsured California residents by chipping away at the edges — proposing spending to help struggling middle-income families buy health insurance, and providing state coverage to some undocumented young adults.

He’ll need approval from the Legislature, now a supermajority of Democrats, many of whom have supported similar ideas in recent years.

Two intertwined proposals in his budget would offer hundreds of thousands of middle-income families additional state subsidies to buy health insurance, and require every Californian to obtain health coverage or pay a tax penalty.

This “state mandate” would replace the controversial federal mandate — a central component of the Affordable Care Act, or Obamacare — that the Trump administration recently canceled. A few other blue states were quicker to create a replacement state mandate, but California’s progressive lawmakers were wary of penalizing people who failed to buy health insurance unless the state also cushioned the blow by offering people more subsidies to lower the costs.

Newsom also proposes to use $260 million in state funds to extend Medi-Cal, the government health program for people who can’t afford insurance, to low-income undocumented immigrants ages 18 to 26.

It’s a classic “Resistance State” action for Newsom, as California tries to counteract the Trump administration’s federal moves to undermine Obamacare. Last year a joint UCLA and UC Berkeley study found that the uninsured rate in California would rise to nearly 13 percent by 2023 if nothing is done at the state level to prevent it.

Since the Affordable Care Act, known as Obamacare, was enacted, California’s uninsured rate has dropped from about 17 percent to roughly 7 percent. Roughly half of those 3 million remaining uninsured are undocumented immigrant adults who don’t qualify for assistance.

If Newsom’s plan is approved, California would offer additional subsidies to families that earn between 250 and 400 percent of the federal poverty level and already receive some federal help. The state would also start offering state-sponsored subsidies to households that earn between 400 and 600 percent of the federal poverty level, up to $150,600 for a family of four, who currently do not qualify for any assistance. Families that earn above 400 percent of the federal poverty level make up 23 percent of the state’s uninsured, according to data from the UCLA AskCHISprogram.

The federal poverty level for 2019 is set at earnings of $12,140 for one person and $25,100 for a family of four.

The budget does not include cost estimates for the additional subsidies, but Newsom intends to pay for the expansion by having the state collect penalties from Californians who forego insurance. His budget proposal estimates that the mandate penalty could raise about $500 million a year, similar to what about 600,000 Californians paid to the federal government when it had a mandate and collected its own penalties.

Peter Lee, who directs the state health insurance exchange Covered California, praised Newsom’s proposals during a recent board meeting.

“Not only does his initiative propose an individual penalty show courage,” he said, “it shows some thoughtfulness about the challenges that middle-class Americans face.”

Enrollment for Covered California, which recently ended, was down 15 percent over last year. Lee said the elimination of the federal penalty is partly to blame.

A draft affordability report Covered California is preparing for the Legislature concludes that if Newsom’s two proposals — expanded subsidies and a mandate — are adopted, enrollment could rise by nearly 650,000 people.

Funding the subsidies with penalties is, of course, a bit of a Catch 22: The more successful California is in getting people to obtain healthcare, the smaller the penalty fund to pay for the subsidies that help fund that care.

“You’re accomplishing your goal, but you’re taking away revenue,” Kominski said. “This is the kind of problem we should be happy to have.”

The conundrum is reminiscent of the state’s tobacco tax, which was intended to deter people from smoking. Success has meant a drop in the amount of money the tax brings in.

Despite what many see as dismal prospects for single-payer in California so long as the Trump administration can quash the state’s waiver request, the California Nurses Association is undaunted. They’re working on a soon-to-be-introduced single-payer bill, more detailed than the version that died in 2017. That one carried a $400 billion price tag, more than three times the state’s annual budget, but lacked support from then-Gov. Jerry Brown and was scant on details. The new version, nurses union rep Roberson said, will be specific about how single-payer would work and how it would be paid for.

“We’re not eradicating providers, we are not seeking to dismantle hospitals,” she said. “The fundamental structure of healthcare delivery will stay in place; what we are changing is how healthcare is financed.”

And if the Trump administration rejects the waiver request? Roberson sees other paths to a state single-payer system, including petitioning the Centers for Medicare and Medicaid, or trying to set up a system under Affordable Care Act provisions.

If the nurses union and other single-payer advocates end up pursuing those other avenues, the question becomes whether Newsom will as well.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Bowtie raises $30M to bring the digital insurance model to Hong Kong

The digital revolution has spawned ‘challenger’ banks that operate entirely online, with no high street presence. That phenomenon has taken off in Europe — particularly the UK — but over in Hong Kong, one of the world’s key financial hubs, the digital-only push is coming to the insurance industry. Bowtie, a Hong Kong-based digital insurer, just […]

The digital revolution has spawned ‘challenger’ banks that operate entirely online, with no high street presence. That phenomenon has taken off in Europe — particularly the UK — but over in Hong Kong, one of the world’s key financial hubs, the digital-only push is coming to the insurance industry.

Bowtie, a Hong Kong-based digital insurer, just announced a double milestone today: the company has become the first online-only operator to earn a license in the country while it has also revealed it has raised a HK$234 million ($30 million) Series A funding round.

Founded just over one year ago, Bowtie plans to offer a range of health-focused insurance products to Hong Kong consumers. It’ll launch in the first half of 2019 however, per the ‘virtual’ insurer license issued by Hong Kong’s Insurance Authority (IA), it will not maintain any physical presence for consumers. That’s in stark contrast to the traditional industry, but the idea is to pass on cost benefits to consumers, provide strong offline customer service and offer a more transparent experience.

That vision already has some hefty weight behind it. Sun Life, the $20 billion global insurance giant, is one investor in that Series A round via its Hong Kong business unit. The other backer in the deal is Hong Kong X Technology Fund, a two-year-old program backed by the likes of Tencent founder Pony Ma and Sequoia China chief Neil Shen.

In an interview with TechCrunch, Bowtie co-founder and co-CEO Michael Chan stressed that his company will operate independently of Sun Life Hong Kong.

“We definitely like the value alignment,” he explained. “They have been very gracious and trusting, giving us a lot of management control.”

Chan clarified that there will be no sharing of customers or customer data. He painted a picture of a business — Sun Life — that’s curious about the potential of digital-only services and keen to see what a startup — Bowtie — can do with a leaner and more agile model. However, Chan was unable to confirm the size of Sun Life’s investment, and whether it owns a majority of the startup.

“We believe in Bowtie’s vision and commitment to enhancing the customer experience. Our investment complements our business, while enabling new distribution modes through the latest technology and digital innovations,” said Fabien Jeudy, CEO of Sun Life Hong Kong, in a press statement.

Indeed, there could be the potential for collaboration in the future, particularly since Sun Life has a strong presence in Asia Pacific, where its businesses span Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam and Malaysia.

“If this business model makes sense, we could potentially collaborate on expansions,” said Chan, who spent nearly a decade with the likes of EY and PwC in the U.S. before returning to Hong Kong in 2015.

The Bowtie team at its office in Hong Kong

That’s looking a little far into the future for a company that has only just received the regulatory green light. When pushed on a potential expansion strategy, such as possible markets and entry times, Chan said there’s currently no information to share.

“It’s really very much a one step at a time approach,” Chan told TechCrunch. “Everything has to run smoothly” before the company considers moving outside of Hong Kong. Although he did acknowledge that “most of the growth” from the global insurance industry is happening in Asia.

Chan and fellow co-CEO and co-founder Fred Ngan met working in the U.S. and, after both returning to their country of birth, they visualized the potential for a disruptive online play whilst working in consulting and other companies, Chan said. The IA’s ‘fast track’ for virtual insurers was that spark. Announced in September 2017, the program quickly attracted over 40 applicants — including global firms — and Chan said that, while there were teething issues around accommodating online-only businesses, the process was rapid and as thorough as the awarding of a traditional license.

“Bowtie is all about delivering convenience through technology. Our market research shows Hong Kong consumers would love to be able to sign up for health insurance and submit a claim online, but the insurance industry has essentially operated the same way when it first began 300 years ago,” Chan said in a prepared statement.

Unlike others in the tech space across Asia, Bowtie doesn’t plan to locate its development team in other parts of the world, despite the challenge of hiring tech teams in Hong Kong.

“That’s fine for more established or mature models, but with the level of commitment we’ve given the regulator and our customers, I think that it’s best we are all here,” Chan said in an interview. “I truly believe there is good talent in Hong Kong.”

Where it has needed to, Chan said the company has hired from overseas, including Silicon Valley.

Certainly, the ongoing privacy snafus from U.S. tech companies and the polarizing politics mean that markets like Hong Kong have never been in a stronger position to lure new hires from Silicon Valley, New York, London and other Western hubs. Meanwhile, its insurance industry hires have from come from firms such as AIA, AXA, Chubb, Manulife, Prudential and Sun Life.

Insurance startup Bright Health raises $200M at ~$950M valuation

Bright Health, another startup seeking to disrupt an antiquated industry, has raised $440 million since 2016.

A flurry of digital-first insurers are betting they can surpass industry incumbents with a little help from technology and a lot of help from venture capitalists.

The latest to land a massive check is Bright Health, a Minneapolis-headquartered provider of affordable individual, family and Medicare Advantage healthcare plans in Alabama, ArizonaColoradoNew York CityOhio and Tennessee. The company, founded by the former chief executive officer of UnitedHealthcare Bob Sheehy; Kyle Rolfing, the former CEO of UnitedHealth-acquired Definity Health; and Tom Valdivia, another former Definity Health executive, has brought in a $200 million Series C.

The funding values Bright Health at $950 million, according to PitchBook — more than double the $400 million valuation it garnered with its $160 million Series B in June 2017. Sheehy, Bright Health’s CEO, declined to comment on the valuation. New investors Declaration Partners and Meritech Capital participated in the round, with backing from Bessemer Venture Partners, Greycroft, NEA, Redpoint Ventures and others. Bright Health has raised a total of $440 million since early 2016.

VCs have deployed significantly more capital to the insurance technology (insurtech) space in recent years. Startups in the industry, long-known for a serious dearth of innovation, have raked in nearly $3 billion in private capital this year. U.S.-based insurtech startups have raised $2 billion in 2018, a record year for the sector and more than double last year’s total.

Deal count, meanwhile, is swelling. In 2016, there were 72 deals conducted in the space, followed by 86 in 2017 and 94 so far this year, again, according to PitchBook’s data.

Oscar Health, the health insurance provider led by Josh Kushner, is responsible for about 25 percent of the capital invested in U.S. insurtech startups this year. The company has raised a total of $540 million across two notable deals in 2018. The first saw Oscar pulling in $165 million at a $3 billion valuation and the second, announced in August, had Alphabet investing a whopping $375 million. Devoted Health, a Waltham, Mass.-based Medicare Advantage startup, followed up with a massive round of its own. The company nabbed $300 million and announced that it would begin enrolling members to its Medicare Advantage plan in eight Florida counties. Devoted is led by Todd Park, the co-founder of Athenahealth and Castlight Health.

Bright Health co-founders Bob Sheehy, CEO; Tom Valdivia, chief medical officer; and Kyle Rolfing, president

VC’s interest in insurtech isn’t limited to healthcare.

Hippo, which sells home insurance plans at lower premiums, officially launched in 2017 and has brought in $109 million to date. Earlier this month the company announced a $70 million Series C funding round led by Felicis Ventures and Lennar Corporation. Lemonade, which is similarly an insurer focused on homeowners, raised $120 million in a SoftBank-led round late last year. And Root Insurance, an app-based car insurance company founded in 2015, itself raised a $100 million Series D led by Tiger Global Management in August. The financing valued the company at $1 billion.

Together, these companies have raised well over $1 billion this year alone. Why? Because building a health insurance platform is incredibly cash-intensive and particularly difficult given the breadth of incumbents like Aetna or UnitedHealth. Sheehy, considering his 20-year tenure at UnitedHealthcare, may be especially well-positioned to disrupt the industry.

The opportunity here for investors and startups alike is huge; the health insurance market alone is forecasted to be worth more than $1 trillion by 2023. Companies that can leverage technology to create consumer-friendly, efficient and, most importantly, reasonably priced insurance options stand to win big.

As for Bright Health, the company plans to use its $200 million infusion to rapidly expand into new markets, planning to triple its geographic footprint in 2019.

“Bright Health has continued to execute at a fast pace towards our goal of disrupting the old health care model that places insurers at odds with providers,” Sheehy said in a statement. “[Its] current high re-enrollment rate shows that consumers are ready for this improved healthcare experience – especially when it is priced competitively.”

Hackers stole income, immigration and tax data in Healthcare.gov breach, government confirms

Hackers siphoned off thousands of Healthcare.gov applications by breaking into the accounts of brokers and agents tasked with helping customers sign up for healthcare plans. The Centers for Medicare and Medicaid Services (CMS) said in a post buried on its website that found that the hackers obtained “inappropriate access” to a number of broker and agent […]

Hackers siphoned off thousands of Healthcare.gov applications by breaking into the accounts of brokers and agents tasked with helping customers sign up for healthcare plans.

The Centers for Medicare and Medicaid Services (CMS) said in a post buried on its website that found that the hackers obtained “inappropriate access” to a number of broker and agent accounts, which “engaged in excessive searching” of the government’s healthcare marketplace systems.

CMS didn’t say how the attackers gained access to the accounts, but said it shut off the affected accounts “immediately.”

In a letter sent to affected customers this week (and buried on the Healthcare.gov website), CMS disclosed that sensitive personal data — including partial Social Security numbers, immigration status and some tax information — may have been taken.

According to the letter, the data included:

  • Name, date of birth, address, sex, and the last four digits of the Social Security number (SSN), if SSN was provided on the application;
  • Other information provided on the application, including expected income, tax filing status, family relationships, whether the applicant is a citizen or an immigrant, immigration document types and numbers, employer name, whether the applicant was pregnant, and whether the applicant already had health insurance;
  • Information provided by other federal agencies and data sources to confirm the information provided on the application, and whether the Marketplace asked the applicant for documents or explanations;
  • The results of the application, including whether the applicant was eligible to enroll in a qualified health plan (QHP), and if eligible, the tax credit amount; and
  • If the applicant enrolled, the name of the insurance plan, the premium, and dates of coverage.

But the government said that no bank account information — including credit card numbers, or diagnostic and treatment information was taken.

“Breaches that include personally identifiable information are always dangerous because they can lead to identity theft,” Andrew Blaich, Head of Device Intelligence at Lookout. “Not only can the attacker steal the identity of anyone in the breach, but they can also use this information to appear credible when crafting mobile spear-phishing messages against their targets.”

“This is especially true if the data that was leaked is accurate, as health information, family relationships and insurance information can make it extremely easy for an attacker to steal the identity of anyone affected by the breach,” he said.

President Obama’s healthcare law, the Affordable Care Act — known as “Obamacare” — allows Americans to obtain health insurance if they are not already covered. In order to sign up for healthcare plans, customers have to submit sensitive data. Some 11.8 million people signed up for coverage for 2018.

CMS previously said that the breach affected 75,000 individuals, but a person familiar with the investigation said that the number is expected to change. The stolen files also included data on children.

A spokesperson said CMS is expected to give an update early next week at the latest.

Healthcare.gov’s enrollment period is set to close on December 15.

Recent departures hint at turmoil at Quartet Health, a mental health startup backed by GV

Quartet Health, a startup backed with nearly $100 million from GV, Oak HC/FT and more, has quietly lost its COO, CPO and replaced its CEO this month.

Backed with nearly $87 million in venture capital funding from GV, Oak HC/FT and F-Prime Capital, Quartet Health was founded in 2014 by Arun Gupta, Steve Shulman and David Wennberg to improve access to behavioral healthcare. Its mission: “enable every person in our society to thrive by building a collaborative behavioral and physical health ecosystem.”

Recent shakeups within the New York-based company’s c-suite and a perusal of its Glassdoor profile suggest Quartet’s culture is not fully in line with its own philosophy.  

In the last few weeks, chief product officer Rajesh Midha has left the company and president and chief operating officer David Liu is on his way out, TechCrunch has learned and confirmed with Quartet. Founding chief executive officer Arun Gupta, meanwhile, has stepped into the executive chairman role, relinquishing responsibility of the company’s day-to-day operations to former chief science officer David Wennberg, who’s taken over as CEO.

“I’m focusing on our external growth,” Gupta told TechCrunch on Friday. “David has really stepped up as CEO.”

Gupta and Wennberg said Liu’s role was no longer needed because Wennberg had assumed his responsibilities. Liu will formally exit the company at the end of the month. As for its product chief, the pair say Midha had “transitioned out” of the role and that an unnamed internal candidate was tapped to replace him.

When asked whether other employees had left in recent weeks,  Wennberg provided the following indeterminate statement: “We are always having people coming in. I don’t think we’ve had any unusual turnover. We’re hiring and people’s roles change and that’s just part of growth.”

Quartet, which provides a platform that allows providers to collaborate on treatment plans, currently has 150 employees, according to its executives.

In a LinkedIn status update published this week — after TechCrunch’s initial inquiries — Gupta announced his transition to executive chairman:

“Still full-time, though focused largely on our opportunity to further evangelize our mission, [I will] drive the change we want to see in this world, and expand our reach … I have tremendous confidence in David’s ability to lead our many talented Quartetians to deliver this next phase.”

Several former employees seemed less than pleased with Gupta’s performance, writing in a number of Glassdoor reviews that he was “abominable,” “kind of a monster” and “by far the worst executive.”

When asked for comment on those reviews, Gupta and Wennberg shrugged it off: “Glassdoor is Glassdoor.” They agreed its important to pay attention to but impossible to vet.

Gupta began his career as a management consultant at McKinsey and served as a consultant to The World Bank before joining Palantir, Peter Thiel’s data-mining company, as an advisor in 2014. Wennberg, for his part, was the CEO of The High Value Healthcare Collaborative, a consortium of 15 healthcare delivery systems, before co-founding Quartet.

In January, Quartet raised a $40 million Series C to expand throughout the U.S. F-Prime Capital and Polaris Partners led the round, with participation from GV and Oak HC/FT. The financing valued the company at $300 million, according to PitchBook.

As part of the funding, Quartet announced it was adding three new directors to its board: F-Prime’s executive partner Carl Byers; Ken Goulet, an executive vice president at health insurance provider Anthem; and former Rackspace CEO and BuildGroup co-founder Lanham Napier. Other outside board members include Oak HC/FT’s managing partner Annie Lamont, GV partner Krishna Yeshwant, Polaris managing partner Brian Chee and former U.S. Congressman Patrick Kennedy.

Quartet previously raised a $40 million Series B in April 2016 led by GV. The investment marked the venture capital investment arm of Google’s first in a mental health startup. Before that, the startup brought in a $7 million Series A led by Oak HC/FT’s managing partner Annie Lamont.

For now, Quartet remains committed to growth.

“We learn from what we are doing and we continue to learn,” Wennberg said. “That is part of growth. It’s hard and you just keep working and growing because we have a huge mission.”

Airbnb wants to give its hosts equity in its business

Airbnb wants to give the homeowners who power its service the opportunity to own a piece of its business. That’s why, as Axios reports, the $31-billion-valued company has written to the SEC to ask if its rules around security ownership can be revised. Specifically, Airbnb is seeking a change to the SEC’s Rule 701 — which […]

Airbnb wants to give the homeowners who power its service the opportunity to own a piece of its business. That’s why, as Axios reports, the $31-billion-valued company has written to the SEC to ask if its rules around security ownership can be revised.

Specifically, Airbnb is seeking a change to the SEC’s Rule 701 — which governs ownership of equity in companies — to allow a new kind of shareholder class for workers who participate in gig economy companies and their services. Uber, for one, has met with the SEC to propose a similar allowance but Airbnb’s argument is laid out in a letter that you can read here (thanks to Axios.)

“As a sharing economy marketplace, Airbnb succeeds when these hosts succeed,” the company wrote in one passage. “We believe that enabling private companies to grant hosts and other sharing economy participants equity in the company from an earlier stage would further align incentives between such companies and their sharing economy participants to the benefit of both.”

Airbnb is said to be planning to go public potentially as soon as next year.

While it isn’t clear how earning equity might work for an Airbnb host — or an Uber or Lyft driver, for that matter — further amendment of rules would be required. Currently, SEC regulations require that any private company with over 2,000 shareholders or 500 or more who are not U.S. accredited investors, must be registered.

That’s clearly a problem for Airbnb which has grown to more than five million listings since its foundation in 2008. It remains to be seen how many of those homeowners could own equity even were the rules amended to allow it. More generally, though, gig economy startups won’t pursue the equity options for contractors if doing so then triggers mandatory SEC reporting whilst they are private entities.

Then there are additional complications for businesses that have expanded outside of the U.S. market. Most of Airbnb’s are located overseas — the service claims to offer lodgings across some 81,000 cities in over 190 countries — which makes handing out U.S-based equity tricky.

Still, Airbnb’s public acknowledgment of its hosts and the crucial role they play is a positive part of that relationship. That’s something rare, for sure.

Most of the discussion around the role between marketplace provider and gig economy worker has been negative, with Uber in particular keen to distinguish between contractor and company staff.

While this modern take on working gives those who choose it a degree of flexibility like never before, they are left without the standard perks of being a conventional employee, such as paid vacation, benefits, overtime, health insurance and more. A slew of startups have sprouted to help cover some of those gaps, but their solutions all come at a cost to the worker, many of whom are already financially stretched.

Whole Foods workers seek to unionize, says Amazon is ‘exploiting our dedication’

A group of workers at Whole Foods Market is leading an effort to establish a union for the Amazon-owned company’s 85,000+ workforce. In a letter addressed to Whole Foods employees, the group — members of Whole Foods’ cross-regional committee — wrote that they are “concerned about the direction” of Whole Foods in an Amazon era. […]

A group of workers at Whole Foods Market is leading an effort to establish a union for the Amazon-owned company’s 85,000+ workforce.

In a letter addressed to Whole Foods employees, the group — members of Whole Foods’ cross-regional committee — wrote that they are “concerned about the direction” of Whole Foods in an Amazon era. The letter outlines several demands, including a $15 minimum wage for all employees, 401k matching, paid maternity leave, lower health insurance deductibles and more.

“We cannot let Amazon remake the entire North American retail landscape without embracing the full value of its team members. The success of Amazon and [Whole Foods] should not come at the cost of exploiting our dedication and threatening our economic stability,” they wrote.

The grocery store chain was acquired by Amazon one year ago in a $13.7 billion deal that sent shock waves through the e-commerce and brick-and-mortar retail industries. In that 12-month period, the e-commerce giant has implemented changes to the grocery chain’s nearly 500 stores. Amazon Echos have become part of the inventory in some locations and Amazon lockers have shown up to facilitate Amazon.com pick-ups and returns, for example.

The letter, which calls out both Jeff Bezos and Whole Foods’ CEO John Mackey directly, says there will “continue to be layoffs in 2019 and beyond as Amazon aims to aggressively trim our labor force before it expands with new technology and labor models.”

Since the Amazon acquisition, several hundred Whole Foods workers have been laid-off as Amazon infuses “Whole Foods with its efficient, data-driven ethos,” per The Wall Street Journal. Shoppers, however, have saved millions as a result of the shake-up.

In a statement provided to TechCrunch, a representative of Whole Foods said they respect the “individual rights of [their] team members.”

“[We] have an open-door policy that encourages team members to bring their comments, questions and concerns directly to their team leaders,” they said. “We believe this direct connection is the most effective way to understand and respond to the needs of our workforce and creates an atmosphere that fosters open communication and empowerment. We offer competitive wages and benefits and are committed to the growth and success of our team members.”

Amazon provided a virtually identical statement, adding that they encourage anyone concerned about employee treatment to take a tour of one of their fulfillment centers.

Here’s the full letter, obtained by New Food Economy.

 

The lobbying is fast and furious as gig companies seek relief from pro-labor Supreme Court ruling

For four years, Edhuar Arellano has left his house at 7 a.m. on weekdays to drive customers around the Bay Area for Lyft and Uber. Most days, he doesn’t get home to Santa Clara until 11 p.m. On weekends, he delivers pizzas to make ends meet.

For four years, Edhuar Arellano has left his house at 7 a.m. on weekdays to drive customers around the Bay Area for Lyft and Uber . Most days, he doesn’t get home to Santa Clara until 11 p.m. On weekends, he delivers pizzas to make ends meet.

Like a lot of drivers plugging in to ride-hailing apps for work, he likes the flexibility the gig economy has offered. But given the choice, Arellano says he wishes he could just become an employee. That would get him paid vacation, benefits, overtime, his own health insurance and perhaps more say over his working conditions.

“We need to accept whatever they want,” said the 55-year-old father of two grown children. “I can’t control anything.”

That quandary is behind a ferocious battle quietly playing out in the state Capitol in the final days of the legislative session, which ends August 31. Lobbyists for ridesharing companies and the California Chamber of Commerce are scrambling to delay until next year (and the next governor’s administration) a far-reaching California Supreme Court decision that could grant Arellano’s wish — and, businesses fear, undermine the entire gig economy.

The April ruling, involving the nationwide delivery company Dynamex Operations West Inc. and its contract drivers, established a new test for enforcement of California wage laws, and made it much harder for companies in California to claim that independent contractors are not actually employees.

Though the ruling only applies to California, the state’s labor force is so huge that it has already had national impact. Shortly after the decision, U.S. Senator Bernie Sanders of Vermont introduced a bill to make a version of California’s new rule the federal standard, a move that only added urgency to employers’ calls for state lawmakers to hit the pause button on implementing the ruling.

“Businesses are very concerned. The key is who’s going to be sued here in the near future,” said Allan Zaremberg, president of the California Chamber, which represents 50,000 businesses.

They should be, says labor leader Caitlin Vega, who has been similarly lobbying Capitol Democrats to refrain from meddling and let the Supreme Court decision move forward.

“Companies have made so much money already at the expense of workers,” Vega, the legislative director of the California Labor Federation, said Tuesday during a harried break between Capitol meetings. “We really see the Dynamex decision as core to rebuilding the middle class.”

State and federal labor laws give employees a wide range of worker protections, from overtime pay and minimum wages to the right to unionize. But those rights don’t extend to independent contractors, whose ranks have grown dramatically in the gig economy.

Apps such as Uber, TaskRabbit and DoorDash, which match customers and services online and in real time, have given workers an unprecedented ability to freelance but they also have blurred traditional employer-employee relationships and, labor advocates say, invited exploitation.

Some 2 million people, from Lyft drivers to construction workers, consider themselves independent contractors in California. In 2017, according to the Bureau of Labor Statistics, about one in 14 workers was an independent contractor nationally.

If state lawmakers don’t rewrite the law or stall its implementation for a few months, as businesses want — which the Legislature can legally do, though the clock is ticking — the Dynamex decision will subject businesses in California to a standard that is tougher than the federal government’s or most states’.

Known as the “ABC test,” the standard requires companies to prove that people working for them as independent contractors are:

  • A) Free from the company’s control when they’re on the job;
  • B) Doing work that falls outside the company’s normal business;
  • C) And operating an independent business or trade beyond the job for which they were hired.

That’s a high bar for the many companies whose bottom lines have depended on large numbers of contractors to deliver a particular service. According to the business lobby, in the months since the Dynamex decision, law firms have received 1,200 demands for arbitration and 17 class action lawsuits.

Last month, business leaders sent a letter to members of Gov. Jerry Brown’s administration, warning that the new test would “decimate businesses,” and urging the governor and Legislature to suspend and then limit the court’s ruling to only workers involved in the Dynamex case. The letter also asked that the decision not apply to other contractors for the next two years.

Not all those contractors are in tech, Chamber head Zaremberg points out. Emergency room doctors and accountants, for example, could also be impacted. Emergency hospitals and trauma centers contract their doctors through medical groups, and doctors generally work at a combination of hospitals and community clinics.

Photo: shapecharge / iStock / Getty Images Plus

Dr. Aimee Mullen, president of the California chapter of American College of Emergency Physicians, confirms that ER docs are among those uncertain about their contractor status.

“A lot of our members use that model. It’s choice. They like flexibility. They like working at multiple hospitals,” Mullen said.

The California Labor Federation’s Vega contends that, disruptive though it may be, the Dynamex ruling is the right one, particularly on worker exploitation. The core group affected tends to be low-income and immigrant workers, she said.

“The Dynamex decision was a victory for working people — truck drivers who are cheated out of wages, warehouse workers forced to risk their health and gig economy workers who want to be treated with dignity and respect,” Vega wrote in a Sacramento Bee op-ed.

Some workers see room for hybrid solutions. Edward Escobar, a San Francisco ride-hail driver of four years and founder of the Alliance for Independent Workers, a group formed by drivers three years ago, says he has seen a big decrease in how much these companies compensate drivers without a commensurate increase in control over working conditions.

Escobar believes gig companies are trying to have it both ways, and should give their workers either true independence or full employment. His proposal: Let workers choose their own classification, with wage and benefit protection for those who choose to be employees, and more control for contractors over which rides to take and what prices to set.

“These tech titans have been taking advantage of these gray areas,” Escobar said.

Assembly Speaker Anthony Rendon, a Paramount Democrat, said earlier this month that while the Legislature is eager to delve into workforce issues, leaders do not have adequate time to act on it before the session ends next week.

“The Dynamex​ decision strikes at the core of what the future of work looks like in our society,” Rendon said in a statement. “From the decline of union membership to court rulings like the Janus decision, we’ve seen the continual erosion of workers’ rights. If the Legislature is to take action, we must do so thoughtfully with that in mind. That will not happen in the last three weeks of the legislative session.”

Nor are the stakes likely to be lowered for workers like Arellano.

“If I don’t work, I have no money,” said the Lyft and Uber driver. “Everything is so expensive in Santa Clara and the Bay Area.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.