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2 Guys From Utah Co-Founded a Healthcare-Solutions Company. Within a Year, They Were Managing Covid Testing for 3 States

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October 14, 2020 9 min read

The coronavirus wrought havoc on the East and West coasts before it found its way to more interior parts of the country. But before long, swaths of more rural and Midwestern America were battling outbreaks and were desperate not to fall behind on testing and tracing. 

At the same time, a barely year-old healthcare-solutions startup out of Orem, called Nomi Health was leveraging its engineering tech to streamline administrative processes between employees/patients and providers. But it became clear pretty quickly to both Utah state leadership and Nomi upper management that their fates would be intertwined. 

Nomi Health co-founders Mark Newman (l) and Joshua Walker

Image credit: Nomi Health

Before long, Nomi was formally contracted by Utah to, per its website’s own FAQs, ensure “that every step of the testing process functions seamlessly — from tents to tests to tech.” Soon, Nebraska and Iowa followed suit, and virtually overnight, Nomi was juggling its original raison d’être with an urgent mandate to coordinate efforts that could save thousands of lives and help prevent further spread of a global public-health crisis.

On a recent afternoon, just over a week before President Trump himself contracted the virus, co-founder and CEO Mark Newman and co-founder and COO Joshua Walker phoned in from Utah to explain how their state government came calling, whether they ever panicked about their mission and purpose and how close they think we are to a functioning vaccine that will be distributed far and wide.

Related: How to Pivot Your Product to Fight Covid-19

So firstly, the chicken-or-egg question: Did you guys approach state leadership suggesting your company could help the Covid-testing effort, or did they come to you?

Mark Newman: Utah County has 30 percent of the [state] population, but at that point had less than 1 percent of the testing. This was in mid-March. Because all the major healthcare systems were based in Salt Lake County. Unfortunately, there’s always healthcare deserts. And if you talk to the health department, they didn’t think there was Covid in the county, even though it’s a commuter country. The second phase was when the announcements were coming out about testing centers in grocery-store parking lots. Well, a whole bunch of retailers said they didn’t want a bunch of sick people walking into their stores. 

And second, our office overlooked a big grocery store here, and the parking lot was jammed full of people trying to stock their shelves before everything shut down. Naturally, because of our , we’re like: What it really is is that the providers don’t have a business model for it, and the supposed payers — the insurance companies — don’t want to pay for it. So that’s the first problem. The second part was that they said, “We can’t go and buy the stuff.” That’s because most people just went and bought stuff from the same old suppliers. We called a diagnostic company here in Utah who was doing Covid testing in Europe. And where everyone was saying no tests, they had two million of them. And we’re like, “This is silly. Why don’t you use them in your own state?” And they’re like, “No one’s called.” Wow. OK. Well, we’re calling. Put us down for 50,000 and let’s get going.

The third part of it was our backgrounds were building high-volume assessment processes. We knew it wasn’t just about being great diagnostic testers; it was actually about throughput and flow. No one thought we could do it, frankly. Within a couple of weeks, we launched everything, and then we talked with the governor’s office and they said, “Can you keep doing this?” This is really a story of raising our hand, showing up and saying, “Yeah, we can do this.”

Is it worrisome that it was ultimately up to the private sector to blaze the trail here?

Joshua Walker: State governments and federal governments aren’t necessarily designed to be nimble and quick. That’s the nature of their model, for longterm stability. And we found in our region, it’s actually the powerful combination of the private sector and the public sector coming together to bring their unique skillset that allowed for quick and nimble movement, where we as a private organization on the commercial side of the market could mobilize very quickly. We could spin up things. We could design things. Our contractual frameworks are set up to be able to move very quickly, where their models of state governance were just not set up to be that in this time.

Some aspects of your model lent themselves to this transition, but others probably not so much. How did you compensate for that?

Walker: It really comes down to a couple of things. One being, approaching the problem space with a new perspective. What allowed us to be so quick is that we were uninjured and encumbered by the traditional approach to how one might apply what had already been existing in the market to address this. We brought together a team with a wide range of skillsets from lots of different industries, so then it was really just about execution. We pulled together an end-to-end testing solution for a state in a handful of weeks. A robust solution doesn’t come without being highly aligned internally around where time and energy and resources are spent.

I’m going to guess that with the contracts you’ve gotten from these states, you probably hit some of your revenue milestones quicker than you had anticipated. If so, how do you know where to move the goalposts to next and how to allocate your resources?

Walker: One thing that I that has been powerful is we didn’t just deploy our original solution for the state of Utah and say, “Hey, there you go. Good luck. Hope it works well for you.” We’ve stayed as a partner with the states and our customers around the shifting landscape. In March, as Mark mentioned, we had grocery stores shutting down and people were being asked to stay at home. That was one environment. You had super-scarce resources when it came to PPE and nasal swabs and tests and machinery. Now there are more tests available, but it’s about throughput and speed of response. It’s how you get schools back going. How do you get people back to work? 

Newman: We’re going to be dead-set focused on constantly moving and reducing people’s healthcare costs broadly. We are going to serve self-funded organizations so employers, states and communities will have our direct-healthcare claim-payment platform that replaces large insurance carriers. We’re going to continue to have Nomi public-health services be a portion of our business because it’s a case study of what we’re doing right. So it’s definitely adjusted our targets. If you would have asked us at the beginning of 2020 [if we would] be doing a couple of percentage points of all Covid testing in America, across multiple States, we would have been like: First, what’s Covid? And second, you know, probably not.

Related: Do You Have Covid-19? New Apple Site, iOS App Help Assess Symptoms

I get that it feels like there’s no limit to the potential of Nomi’s model, but is there a realistic max capacity for how much more testing you can take on?

Newman: We’re very deliberate around how we bring on our projects. There are certain pieces that scale better than others. Digital platform scales really well, hiring people a bit slower. We won’t take on things we won’t deliver on. The nice part about this phase of the pandemic, if there is such a thing, is that we’ve all recognized it’s not a sprint — it’s a fast-running marathon. We can be really deliberate around planning and strategy with our customers to take on new ones and new programs, as well as support the ones we have.

This has all been a kind of stress test. Has it at least quickly brought to light parts of your workflow that were going to prove inefficient eventually?

Walker: How little sleep you can get and still function. [Laughs] I have a 5-month-old, so how little energy Josh can function on. We would never have experienced this in our lives unless we went through the last six months.

Newman: We both have young kids and spouses of ours who were able to support us while Mark and I were heads-down trying to drive this solution and help our state and states across the nation.

Walker: The other part is we both built companies before. The strategic planning process for our programs were: Deliver day in and day out, always put points on the board, always make sure, we over-delivered to make sure our customers were served the best way they possibly could be.

Newman: Any mountain that gets put in front of you, you sprint over it. You just punch through it. 

The big question: Does your accomplishment underscore the fact that, with widespread coordination, we can possibly get a vaccine distributed across the nation without too many obstacles?

Newman: Definitely. There are so many parallel dynamics. 

Walker: I feel like there is hope. There’s going to be a lot of creativity, and I believe there’s a healthy intolerance of the status quo as it relates to mobilizing and moving on immunization and vaccination rollouts, so I’m optimistic.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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