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Digital Health and the Two-Canoe Problem

By DAN O’NEILL

Digital Health and the Two-Canoe Problem

As healthcare gradually tilts from volume to value, physicians and hospitals fear the instability of straddling “two canoes.” Value-based contracts demand very different business practices and clinical habits from those which maximize fee-for-service revenue, but with most income still anchored on volume, providers often cannot afford a wholesale pivot towards cost-conscious care.  That financial pressure shapes investment and procurement budgets, creating a downstream version of the two-canoe problem for digital health products geared toward outcomes or efficiency. Value-based care is still the much smaller canoe, so buyers de-prioritize these tools, or expect slim returns on such investment.  That, in turn, creates an odd disconnect.  Frustrated clinicians struggle to implement new care models while wrestling with outdated technology and processes built to capture codes and boost fee-for-service revenue. Meanwhile, products focused on cost-effectiveness and quality face unexpectedly weak demand and protracted sales cycles.  That can short-circuit further investment and ultimately slow the transition to value.

To skirt these shoals, most successful innovators have clustered around three primary strategies.  Each aims to establish a foothold in a predominantly fee-for-service ecosystem, while building technology and services suited for value-based care, as the latter expands.  A better understanding of these models – and how they address different payment incentives – could help clinicians shape implementation priorities within their organizations, and guide new ventures trying to craft a viable commercial strategy.

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‘Immigrants’ Bring Patient Engagement Energy

An Irish software expert who’d been helping companies sell on eBay walks into a room with a Slovenian inventor who’d built a world-class company in the “accelerator beam diagnostics market.” (Don’t ask.) What they share is not just foreign birth, but “immigration” to health care from other fields. Both have come to the MedCity Invest conference in Chicago seeking funding for start-ups focused on patient engagement. They’re not alone in their “immigrant” status, and their experience holds some important lessons.

Eamonn Costello, chief executive officer of patientMpower, works out of a rehabbed brick building in Dublin next to the famed Guinness brewery at St. James Gate. An electronic engineer who’s worked at companies like Tellabs, Costello became interested in healthcare in 2012 when his father was in and out of the hospital with pancreatic cancer. What struck him was the lack of any monitoring on how patients fared between doctor appointments or hospitalizations.

When in 2014 a friend working in healthcare approached him, they looked at building an app for different illnesses.Continue reading…

Health in 2 point 00 — Episode 12

Jessica DaMassa asks me about the AMA & digital snake oil, Israel investing in Digital Health, and the budget impact on CSRs & Obamacare in today’s edition of Health in 2 point 00 — Matthew Holt

Health in 2 point 00, Episode 6

This edition of Health in 2 point 00 comes from HIMSS. This one was done just off the show floor, but don’t worry–tomorrow we’ll be back to doing it outside a bar! So here goes! Jessica DaMassa asks me as many questions as she can squeeze in about health & technology in just 2 minutes–Matthew Holt

A Mystery Mission in LA: Aetna, Apple, and a Vision of Digital Health’s Future, Part 1

It was an invitation too intriguing to refuse: fly to LA to participate in a “top-secret mission” related to digital health. Instructions? Bring workout clothes. Don’t disclose your location. “We can’t say much. Just enough for you to quickly pack your bags, fly to California and participate in an exclusive Apple Watch from Aetna event – all expenses paid.” Generally, I’d file this type of message in the junk mail folder, but knowing that Apple takes secrecy seriously, I did some background sleuthing and decided it looked legit.

The mystery unfolded last week as I stepped into a black car at LAX with a secretive driver who joked that I and his other two passengers (who had received similar invites) would have to cover our faces as we drove through town. (Yikes!) When we arrived at a hip “concept” hotel I felt more at ease, and relaxed into enjoying the so-called mission with a glass of wine and some discussion of trends in the digital health industry. Over the course of a couple of days I was fortunate to join a group of new (and some old) friends to exchange ideas, take a challenging hike to the peak of Runyon Canyon Park, interact with Apple and Aetna execs, try out some new technologies, and get a glimpse of what both Aetna and Apple are envisioning for the future of digital health. I was assigned to one of several teams named after famous movies (in keeping with the Tinseltown theme) a personalized agenda, and some critical tools for the modern adventurer, including a bandana, water bottles, a phone charger, and, naturally, a selfie stick.

For about a year Aetna has used the Apple watch as part of an integrated wellness program available to its 50 thousand employees and those of several partner organizations it insures, such as Hartford HealthCare, which was represented among the participants in the mystery mission. Both companies are poised to expand the program.Continue reading…

Struggling to Get Customers, Revenue and Traction in the Digital Health Market?

Imagine the peace of mind and confidence you will feel if you had a quick, proven process to take your solution or concept from its current state to one that generates sustainable revenue, hoards of customers and value to the healthcare ecosystem.

Elena Lipson has been working with organizations and entrepreneurs in the digital health community for more than 15 years to help them successfully bring new products and services to market, identify and engage new customers and partners, and grow their market share.

For the first time, she is offering a free webinar training to the Health 2.0 community to share the three steps you need to create a blueprint for your digital health solution that will get you customers, accelerate your path to revenue, and help you go to market quickly even if:Continue reading…

Elation’s Kyna Fong on a new type of EMR company

There’s so much happening in the Health 2.0 world of new technology in health that it’s hard to keep up. AI, VR, AR, Blockchain–and they’re just the buzzwords keeping the VCs happy. So this year I’ve decided to try to interview more interesting new companies to keep you in the know. We’ll see how long that resolution lasts but first up is Kyna Fong, CEO of ElationHealth. Yes, she left a Stanford tenure-track professorship to start an EMR company, and no, she doesn’t sound crazy! This is an in-depth interview including a decent length demo, and it hints at how companies like hers might solve the conundrum of EMRs being necessary but impossible to use.

So what does Trump mean for new health tech?

Matthew-Holt-colorI’m a pundit who like everyone else was surprised by Trump’s victory in the (profoundly undemocratic and hopefully-to-be-abolished-soon) electoral college, and everything I say here is prefaced by the fact that there was very little discussion of healthcare specifics by Trump. So there’s no certainty about what will happen–to state the obvious about his administration!

What we do know is that Trump said he’d repeal & replace the ACA and the House has voted to repeal it many times (but the Senate has only once & Obama has always vetoed that repeal). A full and formal repeal requires 60 votes in the Senate which it won’t get with the Democrats holding 48. Note that the Democrats needed 60 votes to to forestall a Republican filibuster in order to pass the ACA in 2010. That 60 vote total is a very rare state of events which existed for only only one year–from Jan 2009 until Scott Brown won Ted Kennedy’s old seat in Jan 2010 and one we likely won’t see again for many years.

But this doesn’t does not mean things will continue as usual for two reasons. Congress can change the budget with the Republican 52 seat Senate majority, and the Administration can change regulations and stop enforcing them. So we have to assume that the new Administration and its allies(?) on the Hill will roll back the expansion of Medicaid which was responsible for most of the reduction in the uninsured (even if it didn’t happen in every state). They’ll also reduce or eliminate the subsidies which enable about 10m people to buy insurance using the exchanges. Both of those were in the repeal bill Obama vetoed, although in the bill the process was delayed for 2 years.

This of course may not happen or may be replaced by something equivalent because many of the people who voted for Trump (the rural, white, lower-income voters) fall into the category of those helped by the law, and in a few of his remarks he’s also said that he’ll be taking care of them. Even this week Senator Wicker (R-Mississippi) said that they weren’t going to take away 20 million people’s insurance. In Kentucky which went from a Democratic to Republican governor 2 years ago, the new administration ended their local exchange (from 2017), but in fact not much consequential happened as people were sent to the Federal exchange. If there are changes to the exchanges and the individual mandate or they’re both abolished, there’ll be lots of commotion but it won’t be completely system changing.

My day job at Health 2.0 involves running a conference and innovation program based on a community of companies using SMAC technologies to change health care services and delivery–either by starting new types of health care services or selling those technologies to the current incumbents. So I’m acutely interested in what happens next, albeit somewhat biased about my preferences!

Overall I think that (unlike many other areas of American life) health care technology won’t be that greatly affected. Continue reading…

(Even) More Disruption, Please !!

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There are two questions I hear all the time from digital health care entrepreneurs: 1) How can I gain initial market traction? 2) How do I grow my client base?

Health care is an incredibly tough market to sell into. Even if you have a highly-differentiated solution with proven value, the barriers to access and scalability are extremely high.

For entrepreneurs trying to break in, the problem is two-fold.  First, the majority of providers are focused on patient care – getting on their radar is difficult. Second, even if an entrepreneur does gain buy-in and proves value to a single provider or group, it’s difficult to build upon that success. 

Negotiate Strategic Partnerships

The first lesson to get ahead: Learn how to spot a valuable partnership and negotiate a good deal—whether with an accelerator, incubator, or VC.

There are 87 accelerators (and counting) dedicated to jumpstarting the most promising health care startups in the country, and each is as differentiated as the companies they nurture. These accelerators vary in how structured their programs are, as well as the threshold of capital they invest.  Timeframes differ, the amount of equity required varies, the level of mentorship fluctuates, and the quality of contacts/potential clients runs the gamut. Despite the differences, the objective is the same: to help propel entrepreneurs into health care.

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Health 2.0 Quarterly: What’s New in Q2?

Every quarter, Health 2.0 releases a summary set of data that explains where industry funding is going, which product segments are growing fastest, and where new company formation is happening. Health 2.0’s precision and clarity when it comes to market segmentation and product information make this quarterly release the cream of the freebie crop.

The major news this quarter is that funding has slowed compared to this time last year, notwithstanding a significant bump from Allscripts’ $200M investment in NantHealth on the last day of the month. Yet, we’re still seeing growth in the Health 2.0 Source Database — both in number of products and companies. We also highlight the release of the Apple Watch, the growing momentum around FHIR, some key moves in the data analytics space, and the success of the latest Health 2.0 IPOs. For more, flip through below.

Kim Krueger is a Research Analyst at Health 2.0

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