Healthtech Billionaire Rishi Shah's Startup Accused of Fudging Advertising Data

According to reports appearing on LittleIndia.com, some employees of Outcome Health, which delivers ads on screens in physician offices, falsified records and data on ad performance. The media site was propagating an original report it claims was by the Wall Street Journal.

Outcome Health is a Chicago-based Indian American startup, on the rise and in the investor spotlight. The startup has been accused of misleading pharmaceutical clients by exaggerating the reach and effectiveness of their ads.

The Wall Street Journal had initially reported that Outcome Health, a startup operating in the health and ad tech space delivers advertisements of pharmaceuticals directed at patients through devices like tablets and through screens placed in physician’s offices, “misled pharmaceutical companies by charging them for ad placements on more video screens than the startup had installed.”

According to the Wall Street Journal: “Some advertisers required Outcome [Health] to provide affidavits with screenshots showing their ads had run in doctors’ offices. Outcome employees sometimes grabbed a screenshot of an ad from their own computers, edited it to add a timestamp and doctor identification number to make them appear genuine….”

It is further reported by LittleIndia.com that the company has instructed three employees, including its chief growth officer Ashik Desai, to go on paid leave while the company conducts an internal investigation of this damaging PR nightmare of an incident.

A New York law firm, Harwood Feffer LLP, has announced that the firm will be looking into class action claims against Outcome Health for misleading their clients, the advertisers.

Outcome Health is referred to as one of Chicago’s “most celebrated startups”. The company is the offshoot of ContextMedia, which was founded in 2006 by the then students at Northwestern University, Rishi Shah and Shradha Agarwal. In May 2017, the company had raised half a billion dollars on a massive valuation of $5 billion, from large institutional investors like Goldman Sachs and Google’s parent company, Alphabet. Shah is known to own 80 percent of the company, which reportedly gives his stake a value of $3.6 billion. It coincidentally makes the entrepreneur one of the richest Indian in America; a laurel resonated by the Forbes 400 list released recently. In 2016, Outcome Health reported sales of $130 million.

According to LittleIndia.com, “Outcome’s professed mission is to ‘activate the best health outcome possible for every person in the world’ and provide ‘actionable health intelligence at the moment of care’. It claims to service 585 million patients and 230,000 health care professionals annually at 145,000 locations in its network.”

Outcome Health’s strategy to promote the brand has been to distribute free tablets and screens on which the educational content can be viewed right in the environs of physician’s office. The revenue model is all about running ads placed by pharmaceutical companies and presenting itself as the perfect substitute to static forms of advertising like posters, flyers and closed-circuit TV, which are standard mediums of marketing employed by the industry.

In its investigative exposé, the Wall Street Journal had further reported that employees from Outcome Health may have exaggerated number of screens, sometimes going as far as doubling this number. There is also reason to believe according to media reports that numbers like distributed number of screens were validated by survey numbers which were inflated and by using third party reports on ad effectiveness, which were also tampered with.

The media site says, Outcome Health has reportedly agreed to “compensate the overcharged companies with tens of millions of dollars of free replacement advertising and refunds.

In a statement to the newspaper, Shah attributed the problems to “growing pains as we scaled from 4,000 to 40,000 doctors’ offices.”

Recently the company came under scrutiny for firing 76 employees the same week it announced plans, at an event graced by Chicago Mayor Rahm Emanuel, to add 2,000 jobs and to relocate to a new 400,000 square foot office in Chicago.

Rishi Shah, founder and CEO of Outcome Health said in a statement on the company website, “Effective immediately, we will provide every customer the capability to include a 3rd party BPA Worldwide audit on every program we sell so they can fully verify all campaign delivery… We appreciate the hard work of our dedicated employees, and want to reiterate that adherence to our policies is not optional – anyone who violates them will be held accountable.”

Source : Businessworld