Korn Ferry

Digital Health

Lawrence M. Fisher

A Doctor in Every Pocket and Purse

In a recent New Yorker cartoon, a harried health care administrator admonishes an incoming patient, “You can’t list your iPhone as your primary care physician.” LOL, right? But in the emerging world of digital health, that cartoon is no joke.

’Fess up. Last time you had an odd twinge in your side or an earache that wouldn’t go away, did you consult Dr. Google before phoning your flesh-and-blood physician? Then you are a consumer of digital health, or perhaps more aptly, a “prosumer,” to use futurist Alvin Toffler’s neologism for those who now routinely perform services that we used to leave to professionals. We used to pay Kodak to process our photos; now we do it ourselves on our laptops or smartphones. Increasingly, we do the same with our health care.

Countless entrepreneurs now claim to have the Uber of health care in their back pocket, to which one can only say, “Good luck with that.” But somewhere amid the hope and hype lurks a program that ultimately will do to health care what Uber has done to taxi service, Amazon has done to retail and Spotify has done to music. If digital health lives up to its promise, the next five to 10 years will change the way patients are diagnosed, what diseases are treated where, and perhaps even the definition of what it means to be a physician. Coupled with precision medicine, which is the tailoring of pharmaceuticals to genetic profiles, digital health should be more effective, more personal and less costly.

There are now more than 100,000 health apps for And-roid and iOS, but digital health encompasses far more than these bits of code that nudge you to eat less, exercise more and take your pills on time. Indeed, it can include everything from the Fitbit that counts your daily steps—or perhaps resides in a dresser drawer—to Foundation Medicine, which is using Big Data analytics to cross-reference cancer patients’ genetic profiles and pharmaceuticals intake with medical outcomes, all across the country in real time. Here’s a definition from the Story of Digital Health web site: Digital health is the convergence of the digital and genetics revolutions with health, health care, living and society.

Digital health is also the greatest gold rush the medical field has ever seen. Investors poured more than $6.5 billion into digital health in 2014, up from $2.9 billion in 2013 and $1.2 billion in 2010, according to StartUp Health Insights’ report “2014: The Year Digital Health Broke Out.” This year’s numbers will likely continue the trend, as no venture capital firm of any note now lacks a digital health group. Kleiner, Perkins, Caufield & Byers (KPCB), the veteran Silicon Valley firm that funded Genentech and Amazon, has half a dozen companies in a growing digital health portfolio that ranges from an Internet-connected thermometer to online dermatology.

Some of these start-ups will likely be game changers, but identifying the credible players in such a diverse group is difficult for payers, providers and investors alike, let alone for patients. “Separating the signal from the noise is a big part of my job,” said Lynne Chou, who heads KPCB’s digital health group. “You have to look at each one differently, as in what is the technological innovation, the business model and the DNA of the founding team? I also would put in timing, because health care is changing so rapidly.”

One indicator of the attention being paid to digital health is that StartUp Health, which invests in and advises digital health companies, announced its June 2011 launch from the White House, with President Obama and Vice President Biden in attendance. “Our pitch to them was we will transform health care by launching 1,000 companies,” said Unity Stoakes, a cofounder. “Today, we have a portfolio of 102 companies in 10 countries.”

Another measure of the growth of digital health is the rush of Silicon Valley and medical talent into the field. Every start-up worth its seed funding seems to have a cadre of Google, Apple and Facebook senior alumni on the one hand, and biopharma vets on the other. Lyra Health, a new company tackling behavioral health issues such as anxiety, depression and substance abuse, has both sides just in its founder, David Ebersman, the former chief financial officer of Genentech, who left to take the same position at Facebook, where he took the company public.

For decades, health care lagged behind nearly every other industry in its adoption of digital technology, but that changed with the infusion of $30 billion from the HITECH Act of 2009, or Health Information Technology for Economic and Clinical Health, a component of the Obama administration’s stimulus package. With that bolus of funding, hospitals and other large providers finally adopted the electronic medical record, or EMR, much to the benefit of a little-known, privately held company named Epic Systems, which now has about a 70 percent share of the market.

But digital health is about more than hospital enterprise systems and indeed reflects a sea change in how health care is performed and paid for. More than ever, patients have become consumers, shouldering a greater share of the cost but also demanding a greater role in their care.

“This is as much about the consumerization of health care as it is the digitalization of health care,” said Kim Kraemer, a branding consultant who works with digital health companies. “It’s being driven by well-informed patients who have found their voices and are demanding access to reimbursable, prevention-oriented care. They want real-time monitoring and responsiveness from their doctors, like for irregularities picked up on mobile heart monitors or scary high insulin levels. Providers and payers have had to adapt.”

An Ounce of Prevention

Here’s a scary statistic: Chronic disease now kills more people than infectious disease. Indeed, three out of four Americans will die prematurely from a disease that stems from their own lifestyle choices, habits or circumstances. This trend is most visible in the epidemic of obesity and the related surge in type 2 diabetes, an insidious disease that accounts for $500 billion in annual U.S. spending.

“The trends are just absolutely petrifying,” said Sean Duffy, cofounder and chief executive of Omada Health, which is developing digital therapeutics for the prevention of chronic disease. “Forty percent of adults will at some time in their lives find out they have type 2 diabetes. It’s a crisis of magnitude where it’s almost hard to understand how the numbers are so big.”

Duffy has an undergraduate degree in neuroscience, but spent the early years of his career at Google and IDEO, the legendary Silicon Valley design firm. Omada reflects the application of what his former employer calls “design thinking” to health care. Omada’s first product—or service, it’s actually a bit of both—is called Prevent, and it combines a full-time health coach, an online support group and an interactive curriculum that addresses the physical, social and psychological components of patients’ conditions. All digital health companies boast about their app’s easy user interface; Omada provides patients with an Internet-enabled digital bathroom scale, already synced to their online account, no setup required.

Prevent tackles high blood sugar, high blood pressure, high blood fats and obesity. Omada offers the program to employers and health plans with an attractive value proposition: They only pay if their employees or customers show measurable improvement.

“People are now living lives in front of their screens,” said Duffy. “If you want to build a lifestyle intervention program, you have to build there. It’s all incredibly dependent on peer-to-peer relationships, accountability to their peer group, to their health coach. If you are at risk for diabetes or heart disease, we mail you some equipment, match you to a group similar to you, pair you with a health coach, and we kick you off on a Sunday on a 16-week program that is all based on clinical study. Ideally you lose 5 percent or so of your body weight, and then we graduate you into a ‘Sustain’ program.”

Behavioral health is attractive to start-ups because the barrier to entry is relatively low; there is no requirement for clinical trials, as there is for new drugs or medical devices. But that also means many products are based more on hype and hope than data. “In the space we’re in, there’s a lot of noise, a lot of programs that may or may not produce outcomes,” said Duffy. “You can completely empathize with the medical benefits manager. What you have to do, first, is build a program that works, and then you have to publish the data. To date, we are one of very few digital health companies with that strategy.”

A Very Diversified Portfolio

Omada was funded by Andreessen Horowitz, the iconoclastic venture firm known for making a few big bets each year, and it seems to fit their slogan: Software Is Eating the World. But for a more inclusive view of the field, look at the portfolio of Kleiner Perkins, which has taken a more diversified approach. The firm’s investments show the sheer breadth of digital health.

Kinsa Inc.’s smart thermometer is an exercise in user-friendliness. It works orally, rectally or under the arm and delivers a reading in just 10 seconds. Connected to a smartphone, it transmits that reading to your primary care physician, along with your location, which is identified by the phone’s GPS, and major symptoms, which a user provides in response to a series of simple questions. As more consumers adopt the $29.95 device, Kinsa will be able to produce epidemiological data based on its users’ geography. It’s an Internet of Things play, with an online retail option, like rapid delivery of cold and flu supplies to a family with a sick child.

For patients with type 2 diabetes, Livongo Health offers a complete treatment platform that includes a dedicated wireless device for monitoring and transmitting glucose levels and other vital signs, cloud-based analysis and feedback, and a team of certified diabetes educators. Livongo “allows you to create settings and groups, for your caregiver but also for your family,” said Chou. “If your glucose is too low, it will send a message. At another level, diabetes specialists from Livongo will actually call you in that moment, and help you manage. Hopefully it doesn’t happen again and there is learning established.”

Telemedicine promises to replace the office visit, and its inherent delays and high costs, with cellular or online access to qualified experts. Spruce Health, another Kleiner portfolio company, is a telemedicine dermatology provider. “See a dermatologist right from your phone; no appointment necessary,” is Spruce’s pitch. The app is free, and so is the first “visit,” with each subsequent appointment for $40. This includes a 24-hour response from a dermatologist, diagnosis and personalized treatment plan, plus 30 days of post-visit messaging.

The outsized success of Epic in the electronic medical record market has made the company a high-profile target. Displacing such an entrenched player might seem as far-fetched as was superseding Microsoft Windows as the dominant operating system, but since that is actually happening with iOS and Android, why not try? Practice Fusion offers a cloud-based electronic health record, or EHR, which is becoming the preferred term, at an attractive price: free. Revenues come from pharmaceutical companies and other partners. For the time being, Practice Fusion is not targeting large hospitals, Epic’s primary turf, but disruptive technologies have a history of taking over markets from the low end and moving up.

“Practice Fusion is not in the same space as Epic,” said Chou. “Epic is in large systems, Practice Fusion is in ambulatory centers. The hospitals just spent a lot of money on Epic.”

The Digital Doctor

Though Epic has become the company doctors love to hate, its dominance stems from the simple reason that its systems work, said Robert Wachter, a professor at the University of California at San Francisco, and author of “The Digital Doctor” (McGraw Hill, 2015). Though Wachter’s book is a largely skeptical, and sometimes scathing, after looking at the impact of digital technology on health care, he said his research left him with a better impression of Epic.

“The app developers and Silicon Valley types almost disdain the EMR folks as old school; that’s wrong,” Wachter said. “People for the foreseeable future will still have their health record at their doctors, and Epic is the best system out there. At a time when the feds finally threw enough money on the table and everyone said ‘we might as well do it now,’ Epic was the best system, and it remains the best system today. That’s partly a matter of functionality, partly of breadth.”

Nevertheless, Wachter’s book treats electronic medical records as a kind of necessary evil: Necessary, because a paper-based industry could not meet the demands for higher quality, accountability and transparency—all at lower costs—that face health care; and evil, because digital technology has led to doctors who look at their screens more than their patients, e-mail consults with radiologists replacing shared perusal of X-rays, and endless beeps, buzzes and other alerts so frequent that staff simply ignore them. The centerpiece of “The Digital Doctor” is a detailed recounting of an incident in which a child was accidentally given a 38-fold overdose of a powerful antibiotic. The patient survived, but the need for systems with more human input is clear. It may take the union of Silicon Valley and the EMR to make that happen.

“The winner here will be the company that lays the ‘Golden Spike,’ ” Wachter said. “Once the world of Silicon Valley style, innovation and consumer-facing technology somehow links up to your health record, which will probably still live in your doctor’s office, then you will get all the analytical stuff beginning to be real. In an environment where health care institutions are under profound pressure to deliver better care at lower cost, you want people to work at the top of their ability. The only way that works is if everyone has digital tools and they all weave together.”

On the other side of the UCSF campus, the Center for Digital Health Innovation (CDHI) is working hard to make that vision real. Part incubator, part accelerator, the CDHI was formed to turn ideas into companies, whether those ideas originate at the university or elsewhere. CDHI is a separate entity from the medical school, but it receives more than $1 million in state support and after two years in operation is breaking even.

“We have sophisticated technology capabilities to do EHR integration, internal development and outside product development, and we can scale to a level of a single or a couple of institutions,” said Michael Blum, CDHI’s director. “We develop, we pilot, we prototype and we validate. Then we look for external partners to build them out to scale.”

To date, four start-ups have emerged from CDHI. CareWeb is an internal communications platform that uses Twitter- and Facebook-like tools to facilitate interchanges between doctors, nurses and patients. Tidepool is unusual first in that it is focused on diabetes type 1—most digital health companies address type 2, which has far greater numbers—and second because it is structured as a not-for-profit. Also not-for-profit is Health eHeart, a clinical trials platform using social media, mobile technology and novel real-time sensors to treat heart disease. Trinity Precision Team Care is a workflow application intended to aid multidisciplinary teams in clinical settings.

Big Data vs. the Big C

In 2014, Big Data/analytics received by far the most funding ($1.46 billion) and the largest number of deals (90) among digital health subsectors, according to StartUp Health. Of all the Big Data players, the most prominent is Foundation Medicine, whose founders and leadership team read like a Who’s Who of genomics and oncology. Roche, the Swiss pharmaceutical giant, paid $1 billion in January to acquire a majority stake in the company.

Foundation has two products so far, FoundationOne, which sequences more than 300 genes in a sample of a solid tumor, such as a lung or breast tumor, and FoundationOne Heme, for blood cancers such as leukemia. A particular mutation may indicate that a tumor would be vulnerable to attack by a particular drug. Foundation’s platform allows oncologists across the country—for now, and soon around the world—to compare their patients’ test samples to others with the same mutation and to reference how they responded to different cancer drugs. In the past, this kind of information has typically been shared informally, through e-mail or by physicians meeting with colleagues at conferences.

“Our goal is to become the gold standard for extracting relevant data from a patient’s tumor,” said Michael Pellini, Foundation’s chief executive. “If you send us a tissue sample, and there are tumor cells in there, you can count on our company to extract the relevant information from that tumor. Once we extract it, we recognize that just sending that information to the physician doesn’t mean he or she would know what to do with it. We also had to be leading-edge in developing a database and relevant tools, so that all the information is contextualized, so physicians know not only are they getting the information about their patient’s tumor, but if there is information anywhere in the world that is relevant, we are going to spoon-feed it to them,” he said. “That’s what digital health means for us.”

Health’s “Netscape Moment”

But digital health can mean many other things as well. Castlight Health was founded in 2008 to tackle the high cost of enterprise health care, now nearly $620 billion annually in the U.S. alone and growing 8 percent to 10 percent every year. Castlight’s products aim to make benefits more transparent, responsive and interactive. Kezzler AS, a privately held company based in Oslo, Norway, has developed a proprietary process for generating billions of unique encrypted codes; its first application is the prevention of counterfeit drugs, which cost pharmaceutical companies billions in lost revenues and result in countless deaths, either from untreated disease or the toxicity of their bogus ingredients. Mango Health’s founder, Jason Oberfest, came from the gaming industry and has used that background to develop an app to improve compliance, ensuring that patients take the medications they are prescribed. Many experts believe the first killer app for the Apple Watch will be in health.

“Very soon, the concept of ‘digital health’ will just become ‘health,’ ” said Unity Stoakes of StartUp Health. “It will be merged; it will be in every concept of health and health care. This transformation, which we are very early in, is reminiscent of 1994, when Netscape went public. Now think about how early Netscape was in the transformation of the Internet and media,” he said.

Just as Netscape (and the World Wide Web) changed the Internet from a cosseted tool of science and the defense industry into a public resource, digital health will open the field of medicine to a new cohort of care providers, consumer-oriented services and products that blur the line between patient and customer. So are you tracking your meds or your workouts on your smartphone? Signing into online patient forums to compare symptoms? Tracking your baby’s fever on the Web? Congratulations, you’re an early adopter of digital health.

Authors

  • Lawrence M. Fisher

    Contributor, Korn Ferry Institute

 

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