Every breakthrough in cancer treatment brings hope, but it also comes with a staggering price, raising a critical question: how do we balance groundbreaking advances with the financial reality that could limit access for many patients?
Developing new cancer medications involves extensive research, clinical trials, and regulatory approvals; a lengthy process that requires substantial financial investment. Within clinical trials, this includes maintaining stringent safety protocols and managing a variety of adverse events, from mild reactions requiring little to no care to extremely severe events with hefty hospital stays and life-saving medical intervention. Take Cytokine Release Syndrome (CRS), for example. CRS is a common adverse event associated with chimeric antigen receptor (CAR) T cell therapy and other immunotherapies that presents across this spectrum with flu-like symptoms in mild cases of CRS to organ damage, and even death, in severe cases. The median cost of treating CRS following cancer-target immunotherapy is over half a million dollars in the United States. Tackling that large price tag – in addition to another $500,000 for CAR-T cell therapies – and reducing associated risks are necessary to break down barriers to care for many patients – especially those who are uninsured or with limited resources hindering the ability to travel, miss work, or secure a caregiver.
Unlocking Cost Efficiency in Clinical Trials with Digital Health Technologies
Integration of digital health technologies (DHTs) including telehealth, wearables such as smart watches, remote patient monitoring, and mobile applications in oncology care and clinical trials has shown immense value in improving patient outcomes, despite the slow uptake within the field. General benefits during clinical trials are captured through:
Reducing clinical visits and shortening trial length – Remote patient monitoring and virtual consultations minimize the need for physical visits, accelerating trial timelines.
Enhancing recruitment, diversity, and participant completion – Targeted outreach supported by big data analytics and machine learning algorithms helps to effectively identify and engage with eligible candidates, leading to faster recruitment and lower dropout rates. Digital technologies also overcome traditional barriers to participation, such as location, transportation, language barriers, and information access. for a broader representation of patient demographics and more generalized findings and improved healthcare equity.
Increasing availability of evidentiary and safety requirements – Continuous data collection and monitoring in the setting most comfortable to patients – extending beyond clinical walls. This provides a pool of data to support clinical endpoints and enhances patient safety by enabling early detection of adverse events.
While the exact cost of these digital interventions varies by study, there is significant evidence that cost-saving measures are emerging.
You digital health fans remember that halcyon time. In 2019 a few digital health companies went public, and then somehow got conflated in the pandemic meme stock boom, with the harbinger event being the August 2020 sale of Livongo to Teladoc that valued it at $19bn and early in 2021 rather more, as Teladoc itself got to a market cap of $44bn in February 2021
Venture money poured into digital health as a fin de siecle for the ZIRP, that had been going for a decade, combined with the idea that Covid meant we would never leave our houses. The vaccine that became generally available at the start of the Biden Administration in 2021 put paid to the idea that telehealth was the majority of the future of care delivery.
Nonetheless between mid 2021 and early 2022 Jess DaMassa and I were reporting on VC funding in a show called Health in 2 Point 00 (later Health Tech Deals) and every week there were several deals for $100m and up going into new health tech companies.
Things don’t look so pretty now. Even while venture money was flooding into digital health, those public companies, as exemplified by Teladoc, started to see their stock price fall. While it was actually a good year for the stock market overall, in 2021 the digital health sector fell by around 60%. It kept going down. 2022 was worse and although one or two individual companies have recovered (Hi Oscar!), nearly two years later the market cap of the entire sector remains in the toilet.
Of the list that I’ve been following for years there’s only 11 broadly defined digital health companies with a market cap of more than $1 billion–that is only 11 public unicorns
What’s worse is that only one company on that list is decently profitable, and that’s Doximity. It made over $170m profit on revenue of less than $500m last year and trades at 10 x revenue. But Doximity always was profitable, going way back to 2014 (long before its IPO), and although it’s doing cool stuff with AI and telehealth, it’s basically an advertising platform for pharma.
There is no such thing as a profitable public digital health company in the mainstream of care delivery or even insurance–unless of course you count Optum. Which means there’s almost certainly no profitable VC-backed private company either.
Which leads me to this month. You remember those huge rounds that Jess & I used to report on and make fun of? They’re back.
I get it. The stock market is hot and all those pension funds are trying to put their winnings from Nvidia somewhere. VC looks a reasonable bet and there have been a few tech IPOs. If you squint really hard, as STAT’s Mario Aguilar did, you can pretend that Waystar & Tempus are health tech IPOs, although a payments/RCM company and a diagnostics company which are both losing a ton of money wouldn’t give me confidence as an investor.
But the amounts being thrown around must give anyone pause. Let’s take a few examples from the last month. Now these aren’t a knock on these companies, which I’m sure are doing great work, but let’s look at the math.
Digital front door chatbot K-Health raised at a $900m valuation. This round was a $50m top-up but it has raised nearly $400m. It says it’ll be profitable in 2025, and has Elevance as its biggest client. Harmonycares is a housecall medical group, presumably pursuing the strategy that Signify and others followed. It raised $200m, so presumably has a $500m+ valuation–Centene bought an earlier version of the company for $200m a decade ago and sold it to some investors two years back. Headway is a mental health provider network that uses tools to get providers on their system and markets them to insurers. It raised $200m at a reported $2.3bn valuation.
You can look at that list of public companies, including ones taken private like Sharecare, and see that there are lots of telehealth chatbots, medical groups and mental health companies on the list. Any of which probably have similar technology buried inside them. I’m sure if you shook Sharecare hard enough all those technologies would fall out given the number of companies it acquired over its decade plus of expansion.
But let’s take mental health.
Amwell acquired a mental health company called Silvercloud, and a chatbot called Conversa. Its market cap is bouncing around between $250m & $350m and it has more than that in cash–which means the company itself is worth nothing! The VCs who put money into K-Health and Headway could literally could have bought Amwell for about what they invested for a fraction of those companies. Is Headway doing more than the $250m a year in revenue Amwell is putting up? Headway’s value is nearly 6 x the value of Talkspace which is bringing in about $150m a year in revenue. And if you consider BetterHelp to be 50% of Teladoc — which it roughly is — Headway is 3 x the value of BetterHelp which is doing $1bn a year in revenue. Is there any chance that Headway is doing close to those numbers? Maybe somone who saw the latest pitch deck can let me know, but I highly doubt it.
Now of course these new investments could be creating new technology or new business models which the previous generation of digital health companies couldn’t figure out. They might also have figured out how to grow profitably–although as far as I know Doximity stands alone as a profitable company that took VC funding it never needed and never used.
But isn’t it more likely that they are in the market competing with the public companies and those private companies that got funding in 2020-22, have similar pitches, similar tech and are similarly losing money?
I am a long time proponent of digital health and really hope that technology can change the sclerotic health care sector. I want all these companies to do well and change the world. Maybe those VCs investing in those mega rounds are more sensible than they were in 2022. But given the state of the digital health sector on the current stock market–which is otherwise at all time highs–I just don’t know what the exit can be, and it pains me to say it.
A decent amount of time in recent weeks has been spent hashing out the conflict over data. Who can access it? Who can use it for what? What do the new AI tools and analytics capabilities allow us to do? Of course the idea is that this is all about using data to improve patient care. Anyone who is anybody, from John Halamka at the Mayo Clinic down to the two guys with a dog in a garage building clinical workflows on ChatGPT, thinks they can improve the patient experience and improve outcomes at lower cost using AI.
But if we look at the recent changes to patient care, especially those brought on by digital health companies founded over the past decade and a half, the answer isn’t so clear. Several of those companies, whether they are trying to reinvent primary care (Oak, Iora, One Medical) or change the nature of diabetes care (Livongo, Vida, Virta et al) have now had decent numbers of users, and their impact is starting to be assessed.
There’s becoming a cottage industry of organizations looking at these interventions. Of course the companies concerned have their own studies, In some cases, several years worth. Their logic always goes something like “XY% of patients used our solution, most of them like it, and after they use it hospital admissions and ER visits go down, and clinical metrics get better”. But organizations like the Validation Institute, ICER, RAND and more recently the Peterson Health Technology Institute, have declared themselves neutral arbiters, and started conducting studies or meta-analyses of their own. (FD: I was for a brief period on the advisory board of the Validation Institute). In general the answers are that digital health solutions ain’t all they’re cracked up to be.
There is of course a longer history here. Since the 1970s policy wonks have been trying to figure out if new technologies in health care were cost effective. The discipline is called health technology assessment and even has its own journal and society, at a meeting of which in 1996 I gave a keynote about the impact of the internet on health care. I finished my talk by telling them that the internet would have little impact on health care and was mostly used for downloading clips of color videos and that I was going to show them one. I think the audience was relieved when I pulled up a video of Alan Shearer scoring for England against the Netherlands in Euro 96 rather than certain other videos the Internet was used for then (and now)!
But the point is that, particularly in the US, assessment of the cost effectiveness of new tech in health care has been a sideline. So much so that when the Congressional Office of Technology Assessment was closed by Gingrich’s Republicans in 1995, barely anyone noticed. In general, we’ve done clinical trials that were supposed to show if drugs worked, but we have never really bothered figuring out if they worked any better than drugs we already had, or if they were worth the vast increase in costs that tended to come with them. That doesn’t seem to be stopping Ozempic making Denmark rich.
Likewise, new surgical procedures get introduced and trialed long before anyone figures out if systematically we should be doing them or not. My favorite tale here is of general surgeon Eddie Jo Riddick who discovered some French surgeons doing laparoscopic gallbladder removal in the 1980s, and imported it to the US. He traveled around the country charging a pretty penny to teach other surgeons how to do it (and how to bill more for it than the standard open surgery technique). It’s not like there was some big NIH funded study behind this. Instead an entrepreneurial surgeon changed an entire very common procedure in under five years. The end of the story was that Riddick made so much money teaching surgeons how to do the “lap chole” that he retired and became a country & western singer.
Similarly in his very entertaining video, Eric Bricker points out that we do more than double the amount of imaging than is common in European countries. Back in 2008 Shannon Brownlee spent a good bit of her great book Overtreated explaining how the rate of imaging skyrocketed while there was no improvement in our diagnosis or outcomes rates. Shannon by the way declared defeat and also got out of health care, although she’s a potter not a country singer.
You can look at virtually any aspect of health care and find ineffective uses of technology that don’t appear to be cost effective, and yet they are widespread and paid for.
So why are the knives out for digital health specifically?
As you read this I am winging my way to Tokyo to be at the Health Tech Sum Japan 2023, which means no THCB Gang. So to tide you over I am letting you imagine you’re listening to me there, but here! Adam Turinas, a fellow expat Brit (and Chelsea fan) had me on his podcast, The HealthTech Marketing Show this week. Half an hour of whether Digital Health is Dead and what that means–Matthew Holt
Join ZS’s Ahmed Albaiti with me, Matthew Holt, author and founder of The Health Care Blog, as we discuss the considerations and approaches that policy experts, regulators, clinical leaders and the venture capitalist community can take to affect a future for connected health technologies.
As the digital health world continues to expand, more and more people are turning to apps to manage everything from diabetes and obesity to depression and anxiety. People rely on these apps for their physical and mental health, so it’s crucial that product developers ensure a safe, effective, and engaging experience for them. Healthcare experts agree.
A team of researchers and health system leaders recently introduced a new framework called “Evidence DEFINED” for evaluating digital health products. This framework offers hospitals, payers, and trade organizations a precise set of guidelines to assess the validity and safety of a digital health product. It also gives digital health companies good benchmarks to work from.
As digital health companies create new products in the space, they should keep specific points in mind — from user experience design to considerations for data privacy. While clinical outcomes will always reign supreme, the framework suggests that patient experience, provider experience, product design, and cost effectiveness can’t be discounted.
Here are a few critical considerations that product delivery teams should plan for when creating digital health apps.
Clear navigation
First things first: a user won’t use an app that’s hard to navigate. To help people stick to their health goals, developers need to create apps that are intuitive and easy-to-use. When a user logs onto an app, they want to find the content they need immediately and be guided through the experience step by step.
A lot of different people use health apps, and not all of them are tech-savvy. Health apps need to be accessible to all demographics, including people of various ages who speak different languages. It’s also important to remember that digital health apps can be used across multiple platforms, so the navigation should remain clear when switching between devices.
While navigation might seem like a no-brainer, it’s often overlooked when designing for digital health.
Sonia Millsom is the relatively new CEO at Oxeon, which became the dominant executive search (headhunter) firm in digital health over the past decade or so. The company was built by Trevor Price and team. Sonia discussed the transition to her leadership, the other things Oxeon does (venture studio, relationship to TownHall Ventures), and the state of the employment market in digital health. TL:DR on that, it’s slowed but they are doing a lot of work and still growing.–Matthew Holt
Sonia Milsom is the relatively new CEO at Oxeon, which became the dominant executive search (headhunter) firm in digital health over the past decade or so. The company was built by Trevor Price and team. Sonia discussed the transition, the other things Oxeon does (venture studio, relationship to TownHall Ventures), and the state of the employment market in digital health. TL:DR on that, it’s slowed but they are doing a lot of work and still growing. Matthew Holt
“If last year was EUPHORIA…‘We made it! Digital health is relevant!’ This year, it’s a little more panic. More, ‘Are we okay???’” SVB Securities’ Senior Managing Director Stephanie Davis says that she’s been getting asked for a lot of advice this year, so we jump on the bandwagon. Should digital health and health tech be worried? What about exits? What areas of health innovation are still hot? Which are not? And, what the heck is “creative destruction” and why is it her favorite buzz phrase from HLTH 2022?
Stephanie answers all our questions, reassures us of the healthcare market’s resiliency, and offers up some high-level perspective on which “wallet” (payer, pharma, or provider) startups will want to align with to weather the short-term.
Our rural health care system has suffered badly during the COVID-19 pandemic. It entered the pandemic with severe structural weaknesses, including magnified health disparities and inequities, lower rates of vaccination in the general population, and high risk of rural hospital closures. Beginning with these challenges, rural providers have been harder hit by the pandemic than just about any other health care sector.
Juxtaposed against this struggle is the optimism for digital health – one of the few bright spots of the pandemic. We have witnessed a veritable digital health revolution – record capital infusions of $37.9 billion to digital health companies in 2021, a proliferation of digital health companies (11,000 by some estimates), a wave of healthtech IPOs (29), and an unprecedented talent migration of Silicon Valley programmers, technologists, and engineers into health care. With this investment and talent boom comes staggering growth in new digital health tools. From telemedicine to remote diagnostics to the delivery of medications directly to a patient’s home, it seems that for every health care access need there is a digital solution.
