Mark Newman, the CEO of Nomi Health, has never worked in health care, except he is on the board of a national pharmacy, which stands to benefit if hydroxchloroquine is approved as a treatment for COVID-19. And now, the 37-year-old tech entrepreneur, with a little help from Iowa native and star of the TV show “Punk’d” Ashton Kutcher, is leading the COVID-19 testing in Utah, Iowa and Nebraska.
It’s an outrageous reality, but nothing is unlikely in a world upended by pandemic — where the president claims that drinking bleach will help cure us of disease (it won’t), and the Health and Human Services Department employed a man whose most recent job was breeding labradoodles to lead their day-to-day COVID-19 response.
A theory called the Dunning-Kruger effect, first written about in 1999 by social psychologists David Dunning and Justin Kruger, describes when people who are experts in a field believe they can be experts in another field.
In a recent interview, Dunning said the effect seemed to be in full force in our coronavirus era.
“A little knowledge is a dangerous thing. Or it can be when our little knowledge comes from outside the field,” he warned.
But as Newman explained in an interview, “If the current system were working we wouldn’t be needed.”
But it’s not working, so here we are.
How this all began
A successful tech CEO and investor, in 2019 Newman started Nomi Health. On his LinkedIn page, Newman explains, that Nomi Health doesn’t “accept that the middlemen in health care across insurance, billing, collections, pharmacy, EOBs and all the rest of the waste deserve the 40% of health care spending they take every year and are coming up with a new approach.” Their goal: become a middleman to streamline the billing process.
The company planned to launch in 2021. Then, the global pandemic hit.
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Newman was confident that Nomi Health’s original goal of streamlining the billing process health care was scalable for solving a global pandemic. For him, the answer was simple, “We can’t solve this problem without testing,” he said in an interview, “so, I found some tests by going direct to the supplier.”
He partnered with friends, the CEOs of two other tech start-ups located in Utah’s Silicon Slope — Qualtrics and Domo. Qualtrics is an online survey software company, whose CEO is Ryan Smith, a close friend of Ashton Kutcher’s. The two men have been spotted at a Utah Jazz game together and last March, Kutcher spoke at the Qualtrics X4 Summit where he warned that freedom of speech was under attack and that the wealth gap is just an illusion created by “insta-culture.” In a silver suit, the Iowa native paced the stage and announced, “The real breakthrough is breaking through yourself.” His PR rep did not reply when I asked how much he was paid for that speech. But she did clarify that Kutcher’s venture capital investment firm is not currently investing in any of the companies involved in the pandemic response.
The other company contracting with Nomi Health is Domo — a marketing analytics company that is headed by Josh James. Last year, both Bloomberg and the LA Times criticized James for using his company like a personal piggy bank — leasing the company his own private jet at a rate of $3,276 per flight hour and contracting with his brother’s restaurant for $600,000 for catering services. In 2018, James had to apologize for comments that his employees said alienated women and people of color. At the time, A Domo spokesperson told Business Insider, “Anyone who knows Josh knows he cares deeply about creating a workplace where the best talent — regardless of their gender, race, religion, sexual orientation, age, or any other factor, feels welcome.”
Newman’s own history is also complicated. Newman started his first company HireVue at 20 after graduating early with a BA in International Business from Westminster College in Salt Lake City, Utah. He applied for a job at Goldman Sachs but didn’t even get an interview.
So, in 2004 Newman founded HireVue a company that uses video interviewing software and artificial intelligence to match employers with candidates. In a 2014 interview on the Growth Everywhere podcast, Newman talked about how he lived in his parent’s home, raising money for his company six times because four of those times his company ran out of money. He explained how once a semi-truck crashed into the company’s data center and they lost their servers and there was no back up.
For 13 years, he worked on HireVue, building it into a powerful platform used by Hilton, Unilever and yes, Goldman Sachs. But for some of the people on the hiring end, the experience has been disempowering. People looking for jobs who were forced to use the HireVue software reported that the experience was demoralizing and “creepy” and riddled with potential bias. HireVue’s official response to a Washington Post investigation was that the AI platform is less biased than humans.
Newman left the firm in 2017. In November of 2019, The Electronic Privacy Information Center filed an official complaint with the FTC, asking for an investigation into HireVue for its “deceptive” and “discriminatory” hiring practices. “HireVue’s intrusive collection and secret analysis of biometric data thus causes substantial privacy harms to job candidates.”
Newman said he had no comment about the complaint.
Together, the three men set out to find COVID-19 tests and personal protective equipment.
Co-Diagnostics, is a Utah-based company that manufactures malaria tests. Newman said he knew “those guys” so he called them up and asked if they had tests for COVID-19. They did and they had been shipping their tests all over the world, just not in the U.S., so Newman asked for 100,000 and said he’d be in touch for more.
Boom, tests acquired.
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That left the problem of personal protective equipment, but he knew where to find some. Utahns are preppers, he explained. Newman isn’t a member of he Church of Jesus Christ of Latter-day Saints, but he’s lived in Utah since the age of 10. The Church of Jesus Christ of Latter-day Saints counsels members to be prepared for emergencies, so many Utahns have stockpiles of food and PPE. So they put out a call, that wents something like: “‘Listen, this is based on three premises of Utah. First, we’re all preppers. Second, we’re all hoarders. And third, we are the best in the world at Eagle Scout projects.’ So, everyone that has all this stuff, you don’t need it, other people do. So look in your filing cabinets, look in your labs, look in you schools, look in your offices, and look in your houses. We’ll send people to come pick it up. We’ll even buy it back from you at your cost,” said Newman laughing. Piles of PPE came pouring in. That PPE wasn’t for their first round of testing. Newman explained, “We aggregated needs of community organizations, the State and other stakeholders and matched them up with donors. For instance, we bought back 5,000 pairs of gloves from a store at cost plus 5 percent and donated them to the Utah County Health Department because our first responders were out. Tyvex suits for another organization. Gallons of soap for the community clinics. For our testing, everything was purchased.”
To purchase PPE for their testing initiative, the group found PPE by going direct to the source, contacting suppliers across the globe, mostly from China. Domo CEO Josh James flew the PPE into Utah by chartering a large intercontinental jet from Delta.
Newman called some tech start-ups and asked to use their parking lots and boom, tests sites ready.
On March 31, Nomi Health signed a $5 million deal with Utah and launched TestUtah.com on April 2. The next day the Co-Diagnostics COVID-19 tests received Emergency Use Authorization (EUA) by the FDA.
Here’s how it works: you log onto the testing website and fill out a questionnaire, if you qualify for COVID-19 testing you pick a time slot and a testing location. When you show up, you are swabbed and promised a test result in the next couple of days.
What Nomi does is provide the tests, testing equipment, assessment tools and PPE. The states provide the rest.
The drive-thru testing sites are all powered by health care workers from local hospitals and clinics. But the people who come for testing aren’t exactly patients. Newman calls them “clients.” When I asked who would carry the liability for a poorly administered test, Newman explained that in Utah they hadn’t yet run into that problem. And the governor’s office did not respond to questions about liability.
As of April 21, TestUtah.com had processed 89,022 health assessments and 12,542 tests.
On April 21, Gov. Kim Reynolds announced that the state of Iowa was Nomi Health’s next partner. She signed a $26 million dollar contract with the company without considering other vendors. It was Ashton Kutcher who alerted her to the idea, she explained. She called him to ask him to help film a public service announcement to encourage Iowans to stay at home. Reynolds is only one of 12 governors who have refused to issue a stay-at-home order. And seven of those states have at least one city with a shelter-at-home order, Iowa has none. But, as the virus spread throughout the state with outbreaks at food processing plants and long-term care facilities, Reynolds was quick to contact Kutcher to ask him for help.
Kutcher has attempted to help Iowa in the past. After the historic Iowa floods of 2008, Kutcher had the idea to start a nonprofit to help Iowans. Six years later, he partnered with former Hawkeye football star Dallas Clark to make that idea a reality. But even after a widely publicized concert headlined by Blake Shelton in 2015 and a Metallica concert in 2017, the nonprofit ended up paying twice as much in executive compensation to Kyle McCann, a former Hawkeye football player, than it did to actual charities. The fund was shut down in 2019 after a story I wrote revealed the discrepancy. Kutcher’s PR rep said he was no longer involved with the fund.
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Now, Kutcher is trying to help again. He explained in a statement that when Reynolds contacted him about the PSA he alerted her to what was being done in Utah. “When the federal government is playing hunger games with the states during a pandemic, we have to get creative,” Kutcher said.
And that creativity was a public-private partnership with a company with no experience in health care, but a lot of ideas about it.
Newman admits the testing process has some issues to work out. When I asked how people without access to the internet or non-English speakers can take the assessment, which is only available online and only in English, Newman said, they were working on it and hope to have a phone version of the test available soon.
And then there is the matter of hydroxychloroquine. Both Iowa and Utah’s assessments ask about potential allergies to the anti-malarial drugs hydroxychloroquine and chloroquine, which have been touted by the president as a potential treatment for COVID-19. A recent University of Virginia study found no benefits in using the drug. And a study in Brazil had to be discontinued after participants experienced heart problems. The National Institutes of Health issued guidelines saying there was not enough evidence to recommend for or against the treatment and advised against using hydroxychloroquine due to potential side effects.
In the contract between Nomi Health and the state of Iowa, there is a line item stating, “If individuals in the pool test positive and are in high-risk category consider medication treatment (e.g. Hydroxychloroquine or Chloroquine) administered by the Health Department in order to keep hospital bed load low.”
And there is the conflict of interest. An investigation by the Salt Lake Tribune discovered that Newman is on the board of Meds in Motion, a company that sells hydroxychloroquine. The state of Utah has contracted with Meds in Motion for an $800,000 supply of the drug.
When I asked Newman about the question on the assessment, he said at the time the assessment was made that hydroxychloroquine was one of the few drugs being considered as a treatment for COVID-19. He admitted that since that assessment was made, the recommendations have changed and is considering taking the hydroxychloroquine question off the assessments.In response to the conflict of interest, Newman stated, “Meds in Motion has no contracts with the state of Iowa and is not included in this program.” In a second interview conversation, Newman admitted he didn’t consider the possible implications of his membership on the board of Meds in Motion. “Everything was moving so fast,” explained Newman. “I am on the board of a lot of medical companies so I can get experience in health care. We’ve had to scale up very quickly.”
When I asked if he would step down from the board, he said he’d consider it if his position became too much of an issue.
In response to questions about the potential conflict, Pat Garrett, Reynolds’ spokesperson, explained through email that the state of Iowa has not purchased hydroxychloroquine, and “there’s currently no plans to use hydroxychloroquine.”
But of course, there are also the data privacy concerns.
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At the request of the Salt Lake Tribune, Jorge Contreras, a University of Utah professor who specializes in intellectual property law, reviewed the Utah and Iowa contracts. He wrote in an email, “That data could ultimately be far more valuable than the money the state is paying to implement these programs. If I were the state, I might have insisted that Nomi use and disclose this collected data only as expressly permitted by the state, that the state share in any revenue that Nomi makes from exploiting this data and, most importantly, that all such forms of data exploitation are publicly disclosed.”
I asked Newman whether the data was safe. He pointed out that the contracts in both states require Nomi and its contractors to abide by HIPPA laws. But HIPPA only protects an individual’s identifiable data, what about data in the aggregate, which isn’t included in HIPPA’s purview? He said that neither Nomi nor its partners has any intention of selling the data and that the data is owned by the states.
And finally, there is the issue of the testing. A negative test in the morning doesn’t preclude a positive test in the evening, and then what? What do we do with all these test? That, said, Newman is up to the states.
The state plans to begin testing for antibodies to COVID-19, also known as serology testing, at two locations in Coralville and one in Ames, once the supplies and tests are available. Preliminary data shows that recovering (becoming asymptomatic) doesn’t necessarily provide immunity, or that immunity, if it exists, doesn’t last very long. So, while the promised 540,000 tests could be good for Iowa this isn’t a solution.
And is the project scalable? In Utah According to the CEO of Silicon Slopes, Test Utah has conducted no more than 3,945 tests per day and the goal in Iowa is 3,000 tests per day. Newman is confident his program can deliver the promised results.
“Look,” he explained, “The team inside the state here is fantastic. Operational wise, how they think about things, how they think about systems, we’ve been very impressed. There will be hiccups, yes, but so far, we had I think something like 121.000 people in Iowa have already taken the assessment.”
Newman is a convincing salesman. He throws around buzzwords like “optimizing” and “market-based,” he’s charming. He and his wife just had their third child and spoke to me while juggling deliveries and family. He has an absolute confidence in himself and his initiative. It’s easy to see why he was able to raise money for his start-ups. But his confidence with data doesn’t always belie the facts. When I asked why the assessment didn’t ask about another potential drug cure Remdesivir, he said chloroquine was Remdesivir with such confidence I believed him. Only later, when I looked it up, did I realize he was wrong. They are very different drugs. When asked about this, he had an explanation. They were the same because they were being considered as treatments. That’s what he meant.
But the difference between a startup and a pandemic is that in a startup, if something fails people only lose their jobs. In a pandemic, people die. They are already dying. Newman says he knows this is serious, “We appreciate the responsibility embedded in the challenge we’ve taken on, and it’s one we do not take lightly. My focus is identifying critical societal needs and assembling the brightest minds together to tackle key issues head on.”
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According to a 2011 Startup Genome Project study, up to 70 percent of start-ups scale up too early and 90 percent of start-ups fail. And now, Iowa, Utah and Nebraska wait to see if we will be one of them.
In the meantime, on April 24, a day before the Test Iowa testing has actually begun, Gov. Reynolds announced a plan to open up Iowa.
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