The Journal’s story claims that former employees told it Outcome had effectively overcharged some pharmaceutical companies by billing them for ads placed on more video screens than it actually had installed in doctors’ offices.
According to the Journal, the company put three employees on paid leave, including Ashik Desai, a former head of business growth and analytics, “while concerns that have been raised about his conduct are reviewed” by former U.S. Attorney Dan Webb, chairman of Winston & Strawn. Desai, who went to Northwestern University with founders Rishi Shah and Shradha Agarwal, was a rising young star who headed sales. He did not return a call for comment.
“I have been given carte blanche with no limits to investigate the issues and to find out exactly what the facts and evidence are around each of those issues and to eventually make a final report to management about my findings, whatever they are,” Webb said in a statement. They want me to get to the bottom of this as fast as I can.”
The Journal noted that its “review found nothing to demonstrate top executives’ involvement in the alleged misleading of advertisers.”
In a statement to customers released today, Shah wrote: “Integrity is the foundational value at Outcome Health—that has always been our commitment. “We have taken many actions to elevate the standards of reporting and transparency in our nascent industry.” The company also released a detailed public statement, embedded below.
Regarding the substance of the allegations, the company’s public statement notes they involved events that occurred between 2014 and 2016. “The company strongly denies having a practice of misreporting campaign information to customers,” it states. “When we have a shortfall in media delivery, we strive to identify the issue as quickly as possible and address it with our client through ‘make-goods’ or ‘bonus media’ provisions, such as extending a campaign or increasing the number of doctors’ offices we reach for that campaign.”
Outcome—previously known as ContextMedia—rode the wave of digital advertising, allowing pharmaceutical companies to hyper-target patients, with explosive growth, doubling annually to more than $100 million last year. In May, the company raised more than $500 million from A-list investors, including Goldman Sachs, Google parent Alphabet and Chicago-based Pritzker Group Venture Capital in a deal that valued the company at more than $5 billion.
The company announced it was moving to a much bigger headquarters, taking more than five times its current space, at 515 N. State St. Three weeks ago, in a press conference with Mayor Rahm Emanuel, the company founders announced ambitious plans to add 2,000 jobs in the next five years. But within a few days, Outcome announced its first layoffs from both Chicago and New York offices. It wouldn’t verify the number but said that it was still growing and already had hired more employees in the third quarter than it was letting go.
The company’s business works like this: Outcome installs TV screens in doctors’ waiting rooms and exam rooms, where it provides wallboards and tablets. Pharmaceutical companies pay Outcome to have their ads run alongside educational health-related content distributed by Outcome over those screens. Instead of advertising a kidney drug to an entire audience of people watching a football game, only some of whom might be potential customers, a pharmaceutical maker could advertise to a captive audience in an endocrinologist’s office.
The key to Outcome’s success was its claim that it could demonstrate to pharmaceutical companies exactly how much the advertising increased sales of particular drugs because the companies could easily track the changes in prescription volumes of particular doctors.
Outcome also said it hired McKinsey & Co. and adopted unspecified recommendations made by the consulting firm.
Internal controls aside, Outcome is being hobbled by the achilles heel of digital advertising — proof that ads are running where publishers say they are.
The company said in its statement: “We have adopted the most rigorous campaign audit standards in the industry to verify contract delivery. Moreover, every client now has the option of having (media auditor) BPA Worldwide verify their campaign’s delivery as a term in its contract.”