The NHS, a hot bed for AI health innovation

Much is talked about health care distribution channels such as payers here in the US. Yet just across the atlantic, there is a payer that is just as important especially when it comes to testing new AI ideas – the UK National Health Service (NHS).

According to the Guardian, the NHS was born in 1948. On that day, doctors, nurses, pharmacists, opticians, dentists and hospitals came together for the first time as one giant UK-wide organization.

That UK wide organization has health data records for an estimated 66 million people and it’s all standardised data – not fragmented, no interoperability issues and it’s longitudinal – going back decades. As a single payer, every one’s record is linked to a unique identifier across practices, hospitals and providers for each visit, drug prescribed, procedures and clinical notes.

This makes the data so useful to large technology companies for AI inventions especially those that are focused on predicting disease.

Here is a list of tech companies working with the NHS.

Alphabet’s DeepMind is the first to develop a product based on NHS data. In 2016 it launched a phone app, Streams, that now have been proven to detect early signs of kidney failure in patients. The app continually pulls together medical information and sends alerts to doctors if the results suggest a patient could develop acute kidney injury.

Ama­zon’s voice as­sistant Alexa will pro­vide users in the UK with med­ical in­for­ma­tion about their symptoms. Un­der the NHS part­ner­ship, which started in June this year, Alexa will au­to­mat­i­cally search medical information web­sites for rel­e­vant in­for­ma­tion when probed about com­mon ill­nesses.

Babylon Health, a UK company was recently in the news for raising $550M, on a $2B valuation, one of the largest single raise ever for a digital health company.

That raise happened off progress made on NHS data. The company originally built an AI chatbot that checks symptoms of NHS patients and then refers serious issues to a doctor. To meet the demand of the chatbot, it found a workaround creating it’s own doctors practice called GP at Hand, paid for by the NHS, which offers telemedicine among other services.

There are other US technology companies exploring work with the NHS even with the challenges of the politics around privatization and issues of patient consent.

The organization which spends approximately $150B a year is so valuable to the US that it may be on the negotiable table for a US-UK trade deal after Brexit.

Digital Health IPOs in 2019

Livongo and Health Catalyst made the public markets late last month, showcasing how the market in terms of VC and customer acquisition for B2B healthcare and the wider tech industry will likely adapt.

On the surface both companies may look like healthcare companies but on further observation, they are first, technology companies. This Wall Street Journal article shows how these companies convinced investors of the opportunity in healthcare and the opportunity costs involved in a very large market. While the sales cycle is very long, and there are regulatory burdens and requirements to meet such as when dealing with patients data, the opportunity clearly outweigh the costs. 

It’s surprising that the two companies are the first startups in healthcare tech since 2016 that entered the public markets (Side note: Change Healthcare starting trading in June although a spinout of public company Mckesson). Not particularly surprising for Health Catalyst since they deal with data and AI, a scalable SaaS proposition. Livongo on the other hand, was a dark horse. It’s not so obvious from a layman (especially classic VC types) what the company does. Wall Street journal calls it ‘hardware and software for chronic disease management’. Although that description is somewhat correct, hardware is certainly not a main feature in their pitch deck. The hardware part ie wearables is not so appealing to investors because that involves inventory, manufacturing, in many cases FDA approval and millions of dollars to build such operations that doesn’t contribute to immediate top line growth. 

On looking at Livongo’s board (flanked by insurer and major customer such as Humana), it becomes clear that the public markets is where they will thrive further and raise well needed growth capital. Yet, there were several other companies that could have gotten to the public markets much faster. In this health tech arms race, there are companies in mature verticals such as telemedicine that have raised hundreds of millions of dollars and are still not public. American Well and MD Live are great examples of this trend. Although Teladoc, their competitor went public in 2015. Even in the most mature vertical in digital health (electronic health records software market), market leader Epic is still not public, although competitor Cerner went public in 1986 and athenahealth in 2007 (then acquired and re-privatized in 2018) .

Examples of Integrated B2B Marketing in Digital Health

Digital health investments continues to grow. Funding reached an impressive $8.1B in 2018, an increase of 42% from 2017 according to a Rock Health year end report with average deal size at $21.9M.

While that is the case, what is particularly interesting is the new wave of partnerships involving traditional health care incumbents and digital health disruptors across the entire B2B2C health ecosystem.  This makes sense considering the time to market for digital health disruptors (new entrants) to launch, go to market and prove clinical validation. However it’s not always new entrants looking to tap into a large customer base (ie access to Insurance members), sometimes it is the opposite – incumbents (particularly Big Pharma) looking to tap into digital health subscribers and a formidable new marketing channel.

Below are three examples of such partnerships which essentially are integrated product marketing plays designed to tap into large consumer segments.

  1. Castlight Health (Digital Health Disruptor) and Anthem Blue Cross Blue Shield (Insurer).  
    • According to this press release, Castlight Health and Anthem developed Engage which is an information portal for insurance members. First and foremost, it offers access to information on all of the doctors and hospitals  in a member’s network. In the offering is online guidance and support on health  care questions, after-hours health care support and advice on out of pocket costs for lab tests, procedures and prescription drugs. Engage launched in 2018 to Anthem’s ASO accounts (self insured large accounts) and already has over 20 large employers on the platform.
  2. American Well (Digital Health Disruptor) and Philips (Medical Devices)
    • Philips is leveraging American Well’s expertise in telehealth to offer consults to it’s product users. According to this press release, the relationship now in progress starts with offering the telehealth consults directly on Philips Avent uGrow parenting app which provides parents advice on monitoring their baby’s development for more than 12 million subscribers. Available on both ios and and android devices, a key feature of the partnership with Philips uGrow is letting parents share data  and receive personalized advice from/to healthcare professionals such as a pediatrician via American Well online or via mobile phone, 24 hours a day, 7 days a week.
  3. 23andMe (Biotech Disruptor) and GlaxoSmithKline (Pharma)
    • Genetics-testing company 23andMe partnered with pharma company GlaxoSmithKline (GSK) to use subscribers DNA data to develop medical treatments according to this press releaseUnder the deal, GSK and 23andMe enters into a four-year collaboration under which GSK will become 23andMe’s exclusive collaborator for drug target discovery programs. The companies will use 23andMe’s database of more than 5 million customer genetics data to explore drug discovery and targets for development.

Telemedicine is still underutilized says Harvard JAMA Study

A recent study led by researchers at Harvard Medical School analyzed claims data from Optum plan data over the last few years, concluding that telemedicine adoption has still yet to take off  – in rural areas. The tip here is the assumption that telemedicine was designed to administer care in hard to reach rural areas.

While there are more state mandates that require coverage of telemedicine as a care option, it is important to note that patients do understand that there is a mix such as  primary care, urgent care and acute care options. This is especially true for consumers who live in urban areas.

So what can be the reason for low adoption in rural areas. Perhaps it has to do with comparing degree of trust in urban vs rural areas. Rural patients may prefer in person interactions as more trusting and may not be as comfortable with relaying private medical information over video.

Much more importantly, is that perhaps consumers are not even aware of the services. Sometimes poor adoption can be improved by better technology integrations – enabling consumers to access such services where they already access other services whether in person or technology bases. This bring telemedicine partnerships in mind such as American Well with Philips, Teladoc with CVS Minute Clinics, MDLive with Walgreens. Although time will tell if the above integrations are the most effective ones for the targeted population.

 

 

$240B revenues for United Health in 2019

UnitedHealth Group said revenues will hit between $243 billion and $245 billion in 2019. Year-to-date, profits are up 29 percent to $8.9 billion when compared to the first nine months of 2017. Excerpt pulled from the this Becker Hospital Review article.

That’s the magnitude of the health care industry for payers. And the payer pie will only get larger as consolidation such as recent – Aetna/CVS continues.

 

Nokia divests Withings, it’s Health business

Nokia is selling its Withings digital health business back to the original founder. Withings famous for its connected health devices such as WiFi enabled body scales, fitness trackers and baby monitors has only been part of Nokia for 2 years. According to the Verge, Withings products weren’t making enough money for Nokia in its short time under their watch. Just last year, the company announced a write-down of $164 million on the assets.

It is not clear the fate of Withings going forward especially in a very competitive and low margin B2C/hardware business. One indicator to watch for this sector is share price. Fitbit, a market leader is trading at about $6 a share and Jawbone just went out of business.

P&G acquires Merck’s consumer health business

In a continued trend, pharmaceutical companies are offloading their low margin consumer health divisions to focus on high risk, high reward prescription drug discovery business. German based Merck found a partner in Cincinnati headquartered P&G to sell it’s consumer health business, which features OTC products such as Neurobion, Femibion, Nasivin, Bion3, Seven Sea for muscle, joint, back pain and mobility. Products we don’t hear much about, because they are primarily sold in Europe, South America and APAC.

The acquisition will strengthen P&G’s consumer health business, where health currently makes up 1 out of every 8 products in sales, complementing brands such as Vicks, Pepto-Bismol, Crest and Oral-B.

It was less than 10 years ago since P&G divested it’s prescription drug discovery business. With this acquisition, it aims to dominate in retail consumer health by expanding scale, portfolio and category.