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The Healthcare Investor

Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Health Diagnostics Laboratory Agrees to Pay $47 Million to Settle Claims

Posted in Healthcare Services Investing

Health Diagnostics Laboratory (HDL) of Richmond, Va., has agreed to pay $47 million to resolve allegations it violated the False Claims Act by compensating physicians for ordering tests, according to a U.S. Department of Justice news release.

Laboratory Singulex of Alameda, Calif., has also agreed to pay $1.5 million to resolve similar allegations.

As alleged in the lawsuits, physicians were induced to refer patients to HDL, Singulex and a third laboratory for blood tests by paying them processing and handling fees of between $10 and $17 per referral and routinely waiving patient co-pays and deductibles.

Physicians allegedly referred patients to these labs for medically unnecessary tests, which were then billed to federal healthcare programs.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.ย The law is intended to ensure a physician’s medical judgment is based on the best interests of patients and not compromised by improper incentives.

HDL and several other labs have been under investigation by the Office of Inspector General and DOJ for many months, as we previously reported.

We have discussed regulatory issues with investing in clinical laboratories in the past, and will continue to cover this topic in future blog posts and a Law360 column.

Healthcare & Life Sciences Private Equity Deal Tracker: Livongo Health Secures $20 Million in Financing

Posted in Healthcare Services Investing

Livongo Health has announced it has secured $20 million in series B funding.

Livongo, with offices in Chicago and Mountain View, Calif., is a developer of chronic disease management tools, including a cloud-enabled glucose meter.

Participating investors included Kleiner Perkins Caufield & Byers, DFJ and previous investor General Catalyst.

Livongo indicated the funding will go toward further developing the company’s chronic disease management ecosystem and accelerating the adoption of the company’s digital diabetes management program, Livongo for Diabetes, among self-insured employers, healthcare providers and payers.

Lux Capital Raises $350 Million Fund to Back Startup Healthcare and Technology Companies

Posted in Healthcare Services Investing

Lux Capital has announced it has closed a new $350 million fund that will invest in early-stage science and technology ventures.

Lux Capital, with offices in New York and Menlo Park, Calif., invests in counter-conventional, seed and early stage science and technology ventures. It was co-founded by Peter Hebert, Robert Paull and Josh Wolfe in 2000.

The new fund โ€” Lux Ventures IV โ€” brings the firm’s total capital under management to $700 million.

Among Lux Capital’s current healthcare investments include Kala Pharmaceuticals, clinical stage pharmaceutical company focused on treatments for ocular diseases; 3Scan, which develops 3D brain scans and digital organ reconstruction; and Aptible, a cloud-based platform designed to automate HIPAA compliance.

Tenet and USPI to Form Ambulatory Surgery Joint Venture

Posted in Healthcare Services Investing

Tenet Healthcare Corp. has announced it has signed a definitive agreement with United Surgical Partners International (USPI) to combine their short-stay surgery and imaging center assets into a new joint venture.

Tenet will initially own 50.1% of the joint venture, which will be the largest provider of ambulatory surgery in the United States. Private equity investor Welsh Carson and the other existing investors in USPI will initially own the remaining 49.9%.

Tenet will have the ability to acquire USPI over the next five years.

The joint venture, which will maintain the USPI brand, will have ownership interests in 244 ambulatory surgery centers, 16 short-stay surgical hospitals and 20 imaging centers in 29 states.

In a separate transaction, Tenet entered into an agreement to acquire Aspen Healthcare from Welsh Carson. Aspen operates nine private hospitals and clinics in the U.K. USPI owned Aspen until a restructuring of the USPI group in 2012, which resulted in Aspen becoming an independent company majority owned by Welsh Carson.

Healthcare & Life Sciences Private Equity Deal Tracker: OrthoSensor Secures $19 Million in Financing

Posted in Healthcare Services Investing

OrthoSensor has announced it has raised $19 million in a private placement of series C preferred stock.

OrthoSensor, based in Dania Beach, FL, is a developer of intelligent orthopedic devices and data services.

Participating in the financing round were Bridger Healthcare and The Tullis Growth Fund.

OrthoSensor indicated the funding would be used to support the commercialization of VERASENSE, the company’s disposable, sensor-assisted, total knee replacement device, as well as to expand product development.

Healthcare & Life Sciences Private Equity Deal Tracker: Cardiac Dimensions Secures $43 Million in Financing

Posted in Healthcare Services Investing

Cardiac Dimensions has announced the completion of a $43 million round of equity financing.

Cardiac Dimensions, based in Kirkland, Wash., develops minimally invasive treatment modalities to address heart failure and related cardiovascular conditions.

The funding round included investments from Life Sciences Partners, Aperture Venture Partners, Lumira Capital, M.H. Carnegie & Co. and Arboretum Ventures.

In a news release, Cardiac Dimensions indicated the proceeds of the round will be used to support the company’s REDUCE FMR clinical trial. REDUCE FMR is blinded, randomized clinical trial of a percutaneous mitral repair device in patients with functional mitral regurgitation (FMR).

Healthcare & Life Sciences Private Equity Deal Tracker: Daktari Diagnostics Secures $15.5 Million in Financing

Posted in Healthcare Services Investing

Daktari Diagnostics has announced it has closed a $15.5 million series D round of funding.

Daktari, headquartered in Cambridge, Mass., is a developer of portable diagnostic products.

The funding round was led by new investors Eastern Capital Limited and the Merck Global Health Innovation Fund. Existing investors Norwich Ventures and Partners Innovation Fund also participated.

Daktari’s CEO indicated the company’s near-term goal is to create a menu of tests for major infectious diseases that can run on the Daktari CD4 diagnostic platform in 15-30 minutes.

Behavioral Health And Other Rumblings From JPMorgan 2015

Posted in Healthcare Services Investing

Below is a link to view the latest entry from the monthly Law360 that we publish relating to healthcare private equity investments. This column was written by Geoff C. Cockrell, Amber McGraw Walsh and Richard S. Grant, McGuireWoods LLP.

We recently returned from our annual trip to San Francisco in conjunction with the JPMorgan Healthcare Conference. We and several thousand of our colleagues gathered for jam-packed days of meetings and, of course, a few after-meeting receptions, which have become de rigueur for the conference. After conversations with numerous health care private equity funds, lenders, investment bankers and companies, we can report on a number of recurring themes in the world of health care investment.

View the Law360 column “Behavioral Health And Other Rumblings From JPMorgan 2015.”

What King v. Burwell Could Mean for Insurers

Posted in Healthcare Services Investing

Most investors have likely heard about the King v. Burwell case, which addresses whether language in the Affordable Care Act allows the government to provide healthcare insurance subsidies to people across the country or only in those states with their own insurance marketplaces.

It will be argued before the U.S. Supreme Court on March 4.

In future posts we will describe more fully what the resolution of the case means for investors, but in the meantime, an interesting post from The Commonwealth Fund Blog provides insight as to what the case could mean for insurers.

View the post here.

4 Questions Providers Should Consider When Preparing or Responding to an Investigation

Posted in Healthcare Services Investing

BDO Consulting has published an interesting infographic we think healthcare investors may be interested in.

The infographic focuses on “navigating e-discovery in the healthcare datasphere.” It provides four questions providers (as well as legal counsel) should consider when preparing for or responding to an investigation.

The questions are as follows:

  1. Is your e-discovery process HIPAA-compliant?
  2. How digital is your data?
  3. Do you have a handle on your unstructured data?
  4. Will your structured data maintain its form in collection and review?

To view the infographic and read about why each of these questions is important, click here.