The digital health diagnosis at JP Morgan Conference

The JP Morgan Health Conference was a great week in regards to meetings in the digital health and biotech ecosystem. As mentioned in Modern Healthcare, it’s the week where one can make enough contacts to hold over for a year! Well, that’s a bit of an exaggeration. It’s more like for the rest of the quarter. 

Spent some of mine at the adjacent Startup Health Festival, side events, corporate meetings and receptions. A two day festival, it was a great atmosphere – a mixture of startups at various stages, corporates, VCs and industry leaders. 

The theme was moonshot which is very timely and it was pretty clear. Google Health’s VP David Feinberg reinforced on the main stage that theme in a talk where he discussed the formation of Google Health, a trinity of Deepmind, Google Brain, Nest Home (health features). He spent some time talking about the positive relationship between creatinine and cardiac rehabilitation, partnering with the VA and correcting the misinformation around the Ascension Health project. 

Meanwhile in the connect lounge, I moved swiftly from each 20 minutes meeting (think musical chairs), from one founder/CEO to another with market traction from clinical products such as AI nursing assistants, diabetes prevention programs, remote monitoring and med device safety analytics. I soon realized how difficult it must be in a maturing digital health market for founders to show differentiation. 

There was a dearth of products targeting the operational side of healthcare (a dark horse) such as billing, claims and back end operations for payers and large health systems. On reflection, this made sense as the JP Morgan conference as a whole leans more pharma R&D drug discovery and biotech. As machine learning applications in health care solve pharma issues around clinical trials, personalized medicine and patient therapeutic interventions, the lines are beginning to blur with digital health and market access concerns. 

Google and Fitbit: A Data Play?

We learned not long ago that Google is acquiring Fitbit. It’s easy to see why.

Data and users may sound like the main consideration for this deal, but there is more at play. 

Hardware meets software

Over the last several years, Google has shown its appetite to increase hardware offerings. The idea is that consumers are attached to their gadgets and creating detailed transactions in such devices. Products such as Nest, Google Pixel (mobiles) show the promise of hardware for Google. Combined with Google Assistant software, it becomes clear how data from such devices can influence behavior or empower you with new information or new actions. 

Expanding hardware – wearables

It is no secret that Google plans on bolstering its presence in wearables – notably smart watches. According to the FT, the deal for Fitbit is an attempt by Google to catch up with the Apple Watch by buying a consumer wearables company. 

This allows the company to expand into the wearables category while feeding it algorithms from search and products that it’s famous for.

Healthcare Play

Yet, before the Fitbit acquisition, it wasn’t clear how this all aligns specifically to healthcare for Google especially considering public knowledge of the company’s laser focus on Google Cloud B2B offerings. 

Notwithstanding, moonshot research projects in diabetes and kidney disease prediction via Verily, it was still years out with a go to market product. 

With B2C in the company’s DNA, it was in dire need of a healthcare product already in the market. As such Fitbit fits the bill – a wearable product, direct to consumer, ability to integrate existing software ie Google Assistant, captive user base and an enterprise customer base that includes rich insurance payers and government entities who manage millions of consumers.

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 release. Under 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.

World Medical Innovation Forum: Insights on AI from healthcare leaders

Ziad Obermeyer MD, Assistant Professor, Harvard Medical School during First Look session

The World Medical Innovation Forum in Boston just wrapped after three days of insights on artificial intelligence in health care. While it didn’t disappoint in respect to buzzwords as is expected in AI conferences, it was the quality of the participants and their views on AI in health care workflows that made it notable. Here are twelve quotes directly from healthcare leaders.

On AI as a capability and adding immediate value

We realized having great medical devices is not enough, we need to connect them and make them interoperable. We operate on Adaptive Intelligence rather than Artificial Intelligence. Frans Van Houten. CEO, Philips

You will need to have capability to process structured (EHR) and unstructured (genomics) data, we can say we are more advanced in AI due to our work in oncology  – aiding in virtual recruiting in clinical trials. Amy Abernethy, MD, PhD. CMO/CSO, Flatiron Health

Knowing about the range of products being developed now, in 5 to 10 years time, there will not be a single decision made in healthcare and medicine not influenced by AI. John Kelly, PhD. SVP Cognitive Solutions and Research, IBM

30-45% of each provider’s day is wasted in non-care related activities, AI can improve healthcare and reduce burnout. Peter Durlach. SVP Health Care Division, Nuance

On data generation and interoperability

We need to remove any remaining friction between insurers and providers when it comes to sharing data, we need free flow of information. Patrick Conway, MD. CEO, BCBSNC

Some doctors don’t want to be paid electronically. They are still sending paper faxes.  Roy Beveridge, MD. CMO, Humana

Pharmaceutical companies are sitting on mountains of data on clinical trials. This data is still underutilized. Jackie Hunter, PhD. CEO, Benevolent AI

On data security, privacy and consent

When thinking of AI innovation, two considerations  – medical requirements on devices as well as consumer privacy and security. Jigar Kadakia. CISO, Partners HealthCare

Facebook says we got consent from you. But then you don’t really know you signed consent. Consent needs to be clear  – in healthcare. Noga Leviner. CEO, Picnic Health

On quality and trust of all these AI algorithms 

How are we going to address quality. How is that algorithm performing and how does that impact health outcomes? Seth Hain. Director, Analytics and Machine Learning, Epic

There’s a difference between Big data and AI. Big data has informed and enabled’. What has AI done in drug development? Dr Thomas Lynch. EVP, R&D Bristol Myers Squibb

Garbage in, Garbage out. We have to de-toxify the data. Carl Kraenzel. CISO, IBM Watson Health