Insight: Digital Health Specialists In Conversation
Geoff Dobson and Toby Ernberg in conversation on Digital Health
Coulter Pulse: Digital Health has been a headline grabber over the past year, but does the interest seem to be waning? Or is this the calm before the storm?
Geoff: Digital Health is genuinely an area of extraordinary creativity and there will be significant breakthroughs. So far there has been more substantial venture funding available in the US and considerably less in the UK and Europe, mirroring the pattern of investment in the Biotech sector over the past 20 years or so. What excites and piques the interest is that there have been so many digital start-ups, but as yet there hasn’t been a British or UK blockbuster success. My belief, however, is that we will see plenty of successes sooner rather than later.
Toby: As you say, much of the activity has been spearheaded in the US and there are three areas predominating. In consumer health wearables to measure and record are piggy-backing the current obsession with fitness and well-being. The myriad of apps available are all vying to make money somehow. After the initial excitement these are however, often short lived as people tend to tire of them or simply can’t be bothered to charge yet another device. Then where the value is more obvious there are the diagnostics and patient management solutions for chronic conditions. Here software and hardware may connect patients and their doctors to obviate the need for face to face meeting or perhaps medical devices with a digital interface may measure, monitor and record vital signs. For these applications it is easier to quantify the savings that can be made and the impact on the cost of healthcare is of course a key driver for Digital Health. A third area revolves around the use of all the data that is generated and some contentious questions around how this is handled. How and where is this data stored? Where is this data going? How can money be made by the owners of the data?
I think it is still early days and the medical and IT world are slowly learning how to work together!
Coulter Pulse: So what would you say are the “hottest prospect” areas?
Geoff: Digital Health is now bringing together two highly innovative though contrasting areas of expertise and while it’s difficult to predict exactly who the winners will be, in 5 years’ time our children will say, “Wasn’t it always like this?”
Medical devices which connect to patient data systems are probably the hottest prospects at the moment. And advances in “Big Data” analytics may be even bigger. Data will be utilised to great effect in so many different fields – just one example will be in advancing genomics analysis. Then in the longer term and what may be something of a slow burner, are advances in patient related software for healthcare systems. Electronic patient records promises to be very big, but is a very complex area. More likely to see early success are advances in patient appointment management and healthcare cost reimbursement. Another really “hot” area is how Clinical Research Organisations are using digital health applications in clinical trials.
Part of the problem is that Digital Health, Mobile or e-Health has a very broad definition. We can be talking of a medical device with IT or a software technology with a medical application. And as Life Science and IT come together with their very different understandings and expectations, the key issue remains how to make money. This is after all why they are in business.
Delivery of services through telemedicine where patients talk to a medic online, via a video link or by text may be very appealing to the patient but who is paying for the development work? If it’s about the delivery of a therapy, is it reimbursable? Will medical insurance cover this or who will pay? And if the product is still in the development stage, complexity remains around who will pay which part. Healthcare systems are for the most part non-profit making organisations, whereas Life Science companies and medics expect to be paid.
Success will come when there is a clear B2B relationship and two parties have come together to find mutual benefit. It is very hard to find ways to make money directly through patients who buy an app. Once they have paid up front, they are reluctant to pay further charges. A fraction of a penny is all they will countenance.
Toby: Telemedicine is indeed taking off and Sweden has been active in developing such systems in more remote northern areas where the distances to the nearest medical centres are great and it is generally a challenge to attract medical practitioners to staff these. This has been quite successful and much appreciated by the local population, especially by those who are less mobile. Such concepts could easily be applied in many parts of the world, and perhaps most efficiently in the remote areas of the developing world where access to medical services and medicine remains a huge issue.
A good B2B example is demonstrated by CROs who run clinical trials on behalf of big Pharma or smaller Biotech firms. Some of the bigger CROs have been working with software companies to explore how they can utilise patient data gathering information through cloud enabled technology. This is an area showing real signs of providing a revenue opportunity, with its potential for reducing costs within a clinical trial by increasing the reliability of clinical data. A problem in clinical trials is the reliance on patients administering the process and reporting results, with the inevitable room for error. Voluntary trials are very expensive and so automating the process with all the control this affords, makes for a very saleable concept.
Geoff: Some wearables are being developed for use in the treatment of chronic health conditions – the simplest example is a blood pressure monitor or heart rate monitor. More advanced technologies include medical devices which not only perform clinical functions, but also monitor vital signs or an aspect of the medical procedure. Examples here include pumps for insulin or for extracting unwanted fluids, where data gathered can go straight to the physician, patient and/or company data centre for analysis and in order to manage patients’ ongoing treatment. The potential cost efficiencies reflect a real value benefit.
http://www.coulterpartners.com/search-specialism-in-medical-technology/ See case studies 2 and 3 found here for more on these applications.
Toby: These sorts of technology are proving invaluable in helping an ageing population to stay at home for longer. With cloud enabled monitoring systems detecting and alerting medics to any changes or needs for their patients these applications represent a breakthrough in economic savings and quality of life improvements. Ironically, these same people are those who tend to be more reluctant to make use of technology and often sceptical about sharing data.
Coulter Pulse: What about investors? How much is this market attracting?
Geoff: There is no shortage of investment interest in Digital Health, but investors are determined to put their funds into the things that they think are the most likely winners. 100s of millions of dollars are being invested in the US and we are now seeing some substantial investment rounds in Europe too – one example being a recent £40 million investment round for a digital health application by a major US Investor supporting a new business in Europe..
What has most often proved a barrier though is that IT people live in a world where “first to market” is what drives design and performance. Their goal is to get the smartest technology, the easiest to use software to the market first. But this model won’t work for healthcare and a fundamental flaw in the relationship is this failure to understand each other. The IT world struggles to recognise the need for regulatory scrutiny – to understand that if you develop an intervention into a clinical trial or patient’s treatment, this would be subject to a regulatory approval.
Wearables for fitness and well-being involve consumers’ voluntarily engaging with the technology and this is of course a different story. The already active and fitness-committed sustain this market, supported by much media focus. These wearables can require clinical oversight and endorsement, but are not subject to the scrutiny of full regulatory approval in the way that a medical device would. The key difference is between “lifestyle” wearables and therapeutic interventions.
Toby: What I have noticed attending conferences dedicated to digital health is that, unlike the more traditional life sciences segments, digital solution providers seek financing through more innovative pathways, often using angel investors and also, perhaps for the more consumer focused products, crowdfunding.
Coulter Pulse: How does the IT world integrate with the Life Science world in Digital Health? Do they make good partners?
Geoff: There is a significant disparity between the ideal and the reality when it comes to bringing these two worlds together. For a start there is a surprising shortage even today of decision makers who are truly digitally savvy at senior levels – maybe even some who are IT illiterate at the very top of organisations. So part of the challenge is to find people who are digitally aware.
Then there is the enduring issue of systems integration when it comes to innovations in this field. Healthcare companies have invested in a particular IT platform and so often it is unwieldy to adapt the software or difficult to introduce new systems. Incompatibility problems can cost millions and this is a major deterrent for CROs or other partners who want to benefit from digital advances.
Toby: Doctors too are still very much paper based despite a great deal of talk about implanting chips with essential health data! The ability to digitally transfer key data to the emergency services to accelerate their response times is still something of a pipedream. In Switzerland we carry health insurance cards which are chipped but this is of course much more about facilitating payment than providing emergency service efficiencies.
The conference circuit buzzes with potential ground breaking technologies that are just around the corner. In addition to automatic data transfer to the emergency services including immediate information on organ donors in case of a fatality (Switzerland lags very far behind here compared to neighbouring countries), there are dermatological diagnostic applications, mental health therapies via a device, cholesterol and insulin monitoring products to name but a few – all aimed at skipping a step and speeding up treatment or diagnosis and making savings in the process. Who is going to win the race in terms of smartphone compatibility and bring their product to market first?
Geoff: We have seen some great examples where partnering has brought fruit. IESO is a digital healthcare company in the field of cognitive behaviour therapy via digital means. Clinical trials have demonstrated that not only is this online therapy as effective as face to face therapy but recovery rates are also faster.
Neuroscience technology company, Cambridge Cognition has developed tests to measure neuro-degeneration and provides cognitive assessment software for clinical trials – assessment solutions to improve the understanding, diagnosis and treatment of neurological and psychiatric disorders. They can test if a product is improving cognitive health recovery, if it is preventative, if there are biomarkers to indicate who is likely to decline most rapidly and so on.
An increasing challenge is being posed by the “worried well” – well educated healthy people in the 45 – 55 age bracket who worry they are unwell. They turn up in large numbers at GP surgeries and are a huge drain on resources, with their fears of hereditary conditions and self-diagnoses. Cambridge Cognition has developed a system being trialled by family doctors where the practitioner can administer a 10 minute test and results are almost immediate. This mass screening technology is very effective in reducing the additional strain on resources generated by the “worried well”.
This example highlights the complexity of how money moves around healthcare systems. A company like Cambridge Cognition develops the technology, investors take a gamble on it and then the company will try to sell the platform in different ways to different customers. Selling to private health companies, they can express the value as processing more patients to make more money. Public health organisations by contrast want to know the application is more efficacious, so that they can save money.
Toby – The “worried well” and self-diagnosis is a concern in Switzerland and other countries, contributing, in part, to the spiralling costs of healthcare. With so much information available on the world-wide-web patients typically present themselves at their GP with their own set diagnosis as well as the medication they wish to have prescribed. In Switzerland healthcare is completely private and people pay a mandatory minimum monthly premium for a basic level of cover. Many companies compete for this money, offering complementary add on services (natural medicine/therapy) if you are a good risk.
Stakeholders are all working to reduce costs and the government, for instance, offers incentive schemes: if you wear a fitbit device you can then pay less, albeit a rather symbolic discount but at least a way forward. An on-going issue is that people make the necessary health insurance calculations and will happily go for all sorts of additional medical tests once they have passed their self-risk payment level. This is contributing to the increasing costs of healthcare, but is also seen as an abuse by those who very rarely visit the doctor and feel it is an injustice to be paying for others. In parallel, a number of private clinical groups have developed in the market where financially focused owners will encourage doctors to increase the billing per patient to increase profitability and pay for the expensive equipment. As a direct reaction, several insurance companies have developed patient filter hotlines to screen non-essential medical cases as a way to save resources and limit unnecessary visits to specialists. One can envisage that such hotlines will gradually go digital and patients will go through a symptom checker application prior to consulting.
Geoff: It’s also useful to explore how digital technology influences the behaviours of different groups. We have talked about how patients behave and how digital devices or software can help make their lives easier and gather data to help manage their treatment at the same time. We have touched on how digital technology can reduce costs by reducing the number of interventions needed or make the interventions more timely or relevant.
A third and very important question is how these digital applications affect the physicians’ behaviour and so make a difference. The way doctors and nurses use technology at the moment is often no more sophisticated than tapping away on an electronic typewriter would be, to record everything. The more a digital system can use face recognition, scanning technology, photography etc., the quicker and smarter the system becomes. Lumeon is a digital healthcare company which has developed systems geared to reducing the time the medic spends interacting with a computer so that they can spend more time treating patients and delivering medical services.
Toby: We should also not ignore the huge benefits mobile telecommunications and digitalisation have created within the public health sector in developing areas of the world. Parts of Africa remain heavily affected by preventable diseases such as malaria and Novartis “SMS for Life” initiative was an early example of how very simply partnerships and use of technology has vastly helped reduce medical stock-outs, increase access to medicines and reduce the number of unnecessary deaths to this disease. The trend will most certainly develop very rapidly on a continent which leap-frogged over fixed line communication into mobile technology; we will no doubt see a similar leap when it comes to access to treatment.
Coulter Pulse: So is digital health the latest fad, or something that is here to stay?
Geoff: This is a new frontier of innovation and nobody quite knows where the biggest wins will be. Having worked closely with some of the pioneers in this area, we have learned a great deal about overcoming obstacles through engaging the right talent and leadership. We understand the challenges faced by early stage businesses and these remain largely the same for Digital Health start-ups. In essence, how do we find the brightest and the best to take such innovations forward? Where do we find the right combination of commercial leadership, scientific expertise and technological acumen to make this a success story?
Toby: In parallel with the burgeoning world of Nutraceuticals, a different regulatory landscape comes into play which isn’t in synch with the much faster paced IT world. Patients require us to slow the pace and deliver the best possible solution for them. Whether faced with IT edging into Pharma or Pharma edging into IT, Coulter Partners is in pole position to partner on leadership, using the knowledge and expertise we are gaining in this space.