Recently, I’ve attended two events focused around use of IT in healthcare. Various terms are used – Digital health, mHealth, eHealth, connected health – for the purposes of this discussion I’ll use Digital health. For me, this was quite an eye-opener. What did I learn?
Firstly, a quick description. The two events were Digital Health Forum 2013 (DHF13), and Convergent Medical Technologies 2013, in and around London. Interestingly, these were both first time events. It’s always a bit daunting from an organizers perspective to launch a new conference. Will enough people come, will the attendees learn and actively participate, will they want to come again? In short, will it be a success? I’m glad to say, in my book, both were.
Convergent Medical Technologies did a great job of pulling in some very senior and experienced luminaries within the healthcare industry, including past and present CEOs of GE Healthcare and the CEO of the Medical Research Council. It was great to have their 30,000 ft view on where they thought innovation could come from and suggested initiatives that could help entrepreneurs on the ground building breakthrough companies. I dubbed it the “generals panel.”
Next was the “troops panel” (this is one I was invited onto). Comprising a VC, an entrepreneur, a social entrepreneur and me. Here, it was interesting to discuss how companies are getting innovations to market, what it means to be an entrepreneur (as many readers know, an area of personal fascination for me), be involved in the thick of it, and in the “trenches” of building medtech companies.
Healthcare IT (in all its forms), featured as a promising area for breakthrough technology. I suggested incremental changes can lead to game-changing innovation, particularly where lessons from one industry are applied to another.
DHF13 was a fascinating event. This was a much smaller, intimate affair – may be around 100 people in total. There was a welcome and strong attendance from both entrepreneurs and investors. This is where you can really get into the thick of building companies.
One of the keynote speakers in particular was inspiring: Stephen Oesterle, Senior VP for Medicine and Technology at Medtronic. Dr Oesterle was a practicing cardiologist for many years (including Harvard University Medical School). One of his key roles seems to be around evaluating technologies, trying to figure out where the next opportunities will come from in healthcare and hence what kinds of innovations will be worthwhile. He also advises the board.
What, then, are the benefits that Digital healthcare can bring?
1. The power to impact billions
Currently, around 1 billion people around the world have access to modern medicine. This is largely the western world, and well-heeled private payors in emerging markets. But what about the other 5 billion?
In his speech, Dr Oesterle highlighted the world’s largest hospital (by nos of beds). This is the West China Hospital of Medical Sciences in Chengdu, China which has some 8000 beds (and growing). He showed photographs from recent visits where the central reception area is full to the brim of newly arriving patients (it made Oxford Street, London on a busy summer’s Saturday look quiet). These patients have often have travelled far, sometimes for days, to see a doctor or specialist for an average of just one minute per consultation. What kind of outcome can that give?
No government in the world has the firepower to support continuing growth of largely centralized healthcare systems. At best it can provide sub-optimal care to the wider population.
In the medicine of the future, there will be much more emphasis to treat patients remotely, such as in rural clinics. Enabling tools through digital health will be the cornerstone to enabling this transition from centralized to localized healthcare. Examples include diagnostic tools for screening populations that require low end-user expertise.
These can communicate data back to specialist centers for evaluation and filtering so patients who need specialist hospital care are selected. In the meantime, remote access to facilities enables earlier detection of conditions (effectively a more preventative mindset), leading to a population that stays healthier for longer in its local setting.
This mindset works just as well in western medicine too. At the conference, one of the presenting companies, Alivecor, has developed an app which turns a smart-phone into a real-time cardiac event recorder, with data transmission to your cardiologist. As an ex-hospital doctor who spent several years working in ER, and short stints in cardiology and coronary care, I totally got the importance of this.
Most times when patients have some kind of cardiac event, they may report symptoms, then see their doctor or go to an emergency room. Unless it was critical and led to sustained heart damage (e.g. a myocardial infarction) the event has passed. When a spot heart trace is done (ECG or EKG – depending on your geography) at the clinic, nothing shows up. Other times, patients may have palpitations which pass, but are harbingers of greater underlying problems.
By using a real-time event recorder, patients can record and send data of the actual event. Previously, if a patient’s symptoms repeated and indicated a more serious diagnostic intervention, they might be instructed to wear a “24 hour tape.” This is where the patient has a portable ECG recording their heart pattern for a 24 hour period. It’s more likely to pick up an event than a spot reading, but still not guaranteed (just because you had angina or palpitations yesterday, doesn’t mean you’ll get them tomorrow).
2. Reigning in healthcare costs
In the USA, healthcare accounts for nearly 18% of GDP in 2011 (source: Worldbank) and this is predicted to grow to around 20% by 2017. Other countries don’t spend quite as much but it’s still a very heavy and growing burden on society. Such costs, if unchecked, will bankrupt businesses and countries.
Digital healthcare, through allowing more localized and patient-centric care, has the potential to lead to significant health economic benefits. The cost of implementation of care, per capita, could go down.
Imagine, for example, a diagnostic tool for emerging markets which enables earlier detection of cancer in a rural clinic setting, with data transfer to specialist sites where treatment decisions can be made. This cost reduction links in directly to the point above: providing healthcare to more people in a more localized way.
This use of localized care could just as well be applied to reduce costs in western markets. Another example from the conference was Endotronix. The company specializes in providing remote monitoring of patients with coronary heart failure. This data is then remotely sent to the specialist physician who can advise treatment changes to enhance care.
Cost reduction would largely be through reducing the hospitalization rate, as certain monitoring which would normally be performed in a hospital setting can be achieved remotely. (Though, one would need to account for the increased physician workload, and work out if this could actually be performed with current resources and manpower).
3. Capital efficiency and build real businesses
Digital health can enable greater capital efficiency in healthcare companies developing innovations. Following a business model more like the technology sector, use of engineering, IT and software solutions means some businesses could get to an approved and commercialized product, quicker and for less cash than other healthcare opportunities.
This point was highlighted by several of the VCs on one of the panels, and is particularly attractive given their increased risk aversion since the financial crisis. It also lends itself to creating sustainable businesses with growing revenues and eventually profits. This was music to my ears. Readers of this blog may be familiar with how I harp on about the importance of medtech and other healthcare development stage companies working to become real businesses as part of their plan (not just funded science projects).
Now, I’m not suggesting entrepreneurs and investors have turned on a dime and are no longer interested in exits. Of course they are – this is a central part to what they do. But building sustainable businesses and using capital efficiency greatly increases your options.
There will, of course, always be a requirement for higher-end, riskier development projects, e.g. new drugs, implantable medical devices (after all, you can’t make an implantable valve as an app). But digital could provide useful and complimentary technologies, at a fraction of the cost.
4. Enhancing the boring back-end of healthcare infrastructure
At most healthcare meetings, the excitement is around specific healthcare condition related technologies – as drugs, therapeutic devices or diagnostics. It’s easier to get attention when you’re the next potential cure for cancer. But too often, what gets less attention is the back-end technology that can be used to enhance and optimize healthcare delivery. Digital health plays a big part in this.
I’m glad to say one such opportunity was highlighted at DHF13. The company is myMedScore. The burden on patients for paying for healthcare is a particular challenge in the US. Unknowingly to me, there is also a big burden on doctors too – one anecdotal story highlighted was that a doctor was having to turn away patients without a strong financial background as he had to cover bad debts of 18%! That’s huge – almost 1 in 5 dollars being lost to bad payors. No other business would tolerate such a high loss off the top-line. It was almost enough to put the doctor out of business.
What myMedScore does is enable patients to build up a healthcare “credit score” which in turn enables a suitable payment plan ensuring that patients get treated, and their doctors get paid. It reaches down to the many less well-off or even poor parts of society that typically may have very limited healthcare provision. In terms of impact and business models, that’s no mean feat (see the book “Fortune at the Bottom of the Pyramid” by C.K. Prahalad).
It’s also free at the point of use for patients. This solution is only really relevant in largely privatized healthcare systems like the US. But two take homes – firstly, the US alone is a huge market ripe for overhaul and improvements in efficiency of payments. Secondly, it again goes to show how relatively simple digital solutions (by application, not necessarily by engineering) can potentially make big positive impacts in healthcare.
When I think about the points above, the reason Digital probably resonates with me is it satisfies two over-riding criteria I look for in any healthcare opportunity:
- Can it help patients?
- Can it be a business?
And the bigger the scale for both questions, the better. Of course you still have to look at each opportunity on its own merits. As with any new opportunities, there will be many also-rans among the stars. That’s fine – disruption needs a healthy recycling of entrepreneurs, ideas and capital to flourish.
It’s easy to get swept up in the excitement of a new sector or investing angle. As more people talk about it, digital will certainly have its fair share. It will never be a replacement for many of the healthcare technologies or products that already exist. But it is good to finally see the healthcare industry starting to adopt the know-how and expertise within the digital world to benefit patients around the world.
by Raman Minhas.
Thanks to the organizers of both meetings for inviting me to attend.