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Tag: Startups

TECHNOLOGY: Wireless vulnerability

According to AIS’ Business News wireless networks can create major HIPAA vulnerabilities.  This seems obvious but if the network is not secure and doesn’t require authentication, anyone within range can get on the network and with a tiny amount of knowledge get into other computers on the network.  Of course that’s a huge security vulnerability. That’s well known. 

Let me give you an example not in health care but very close to a home I know well–mine.  I have wireless LAN in my office on the ground floor. To get onto my network you need to know an authentication code, so it’s very secure.  But upstairs in my house, while my LAN doesn’t go up through the floor, I can pick up no less than 4 other networks in my apartment building, for which you do not need an authentication code to get on.  Last night I was watching the baseball and (I guess illegally) using one of those networks to post on my blog.  I then shut off Explorer and email and was working on a word document (while Oakland decided that it was time for a Red Sox/Cubs world series). I then got a call from my neighbor.   My computer was still active on his wireless LAN, he had found it on his network and had found out who I was by poking around in my files, called me up and asked to get off his network!  So as an amateur "wardriver" my computer was vulnerable too.

So given the number of people who like me use other people’s LANs in an unregistered/illegal way, how many clinicians are exposing patient information without knowing it?

TECHNOLOGY: Health tech spending grows

Gartner says healthcare IT spending is going to $41 billion next year and will be $46 billion in 2005. This sounds like a very big number to me. Back when I was looking at this intently in the late 1990s, estimates of healthcare IT spending varied from $4 bn to over $2O billion. Of course it all depends what you mean by health care and what you mean by IT spending.  The $4bn number probably only really means software and some hardware for the provider sector–and is equivalent to the revenues for the top 100 health care software companies. The bigger number probably includes communication technology as well as hardware and all software for all health care companies including the pharma market.

In any event the reasons given for the increase are HIPAA concerns, increased pressure for CPOE and the move to wireless.  That’s clearly all true, and given the reduction in IT spending in other industries, it’s good news for the health care IT industry.  It’s hard to parse out the data for those HC software companies as the two biggest, SMS and HBOC are part of Siemens and McKesson respectively.  McKesson’s information unit (the old HBOC) only had a 4% year on year increase last quarter. However, another big player, Meditech,  does post its numbers in its Annual report, which show a big revenue increase from $216 million the dark days of 2000 to $256 million last year–more than a 10% annual growth rate.

TECHNOLOGY: New tools for e-detailing

The crush of detail reps all trying to break into the physician office has been causing headaches for some time.  Not only for the poor office staff but also for their pharma company CFOs.  Although Pfizer’s success in the past decade has been based mainly on expanding its field sales force, the truth is that detail reps rarely get more than one or two actual presentations in to doctors per day.  Most of their time is spent sitting in the waiting room, and hence the need to deliver cookies, tickets to sporting events, dinners and other bribes knowledge-enhancing opportunities to physicians. Now that PhRMA and the AMA have "agreed" to new guidelines restricting what a detail rep can give to a doc, the physician’s incentive to see the rep has declined even further.  Meanwhile eDetailing may provide some answer to getting the message out. (For much more information on the eDetailing market see here) Manhattan Research reported recently that (some fraction of) 49% of doctors were likely to use eDetailing. (Note: I don’t have the full numbers, so I’m extrapolating somewhat vaguely here).

The problem has been getting some technology that’s easy and convenient in front of the docs. Companies like iPhysiciannet and RxCentric have taken a high bandwidth approach, including sometimes actually putting IDSN lines and computers in physicians offices. But they have often required an actual appointment time, which is a pain in the rear and an actual cost for a busy doc. And, of course, it’s pretty expensive.

On interesting new approach for eDetailing is a tool called Av-Mail. This allows a pharma co to send an email to a doc.  At a time and place of their choosing, physicians can click on a link on the email, and view a relatively short combined powerpoint/voice-over presentation.  Click here to see what it’s like. Something like this might be a reasonable answer to getting in front of docs at very a low cost.  How effective it is in increasing script writing I don’t know, but I suspect it’s not as much fun as a free trip to Hawaii.

Health care IT spend up sharply

iHealthbeat (reg rqd) put me onto this Information week article which says that health care organizations report that their spending on IT has gone from 2.7% of revenues to 3.3% in the past year. That’s a pretty big jump of over 20%.  Several of the interviewees in the article say their spending has gone up by more than 30%.  This includes some huge IDNs like Caregroups in Boston, and Sutter in California.  Although they’re not quoted in the article, a similar huge effort is underway at Kaiser. For many years it’s been trotted out by consultants like me that healthcare only spends 1-2% of its revenues on IT whereas financial service companies spend 5-10%.  So the question becomes, is this jump just brought upon by fear of HIPAA or is there a real transformation going on?

The NHS: IT in a mess?

Ok, that’s a cheap shot title which I only used because "En Aithch Ess" rhymes with Mess.  The UK’s NHS is trying to pull off what we in American healthcare can only dream about —  a full computerization of the system with electronic medical records for everyone. When I looked into computerization of medical records in the UK about 6 years ago, they were already well ahead of the US, with some 50% of GPs (who account for 80% of all UK doctors) using computers in the exam room, and 25% using only computers and no paper charts. (Anecdotal evidence from New Zealand and the Netherlands suggests that those countries are even further ahead).  The reason for this leap forward in the UK was direct government funding for technology under John Major’s government in the mid-1990s.  Lack of funding is one of the main reasons for the slow rate of physician computerization in the US.

So before long before it started getting in trouble about what it knew when about Iraq, the Blair government made some very, very ambitious plans for the entire automation of the health care system in the UK. Jane Sarasohn Kahn, who is the mainstay of iHealthbeat’s opinion columns (and a wonderful person to boot) used to live in the UK and has written about the enormity of the scope of the plan.  The plan, by the way, included increasing spending on IT for the NHS from around $1.5 billion to $3.7 billion (2.3Bn GBP).

However, it appears that some of the contracting has been a little tricky, particularly the demand by the NHS that vendors take liability for data input mistakes made by system users.  Last week Lockheed, that well known health care IT firm (!), pulled out of bidding for the project.  The NHS’ attempt to go fast and do something very bold is in stark contrast to most other IT implementations in health care, which tend to take an inclusive softly-softly approach.  Perhaps the only comparable one in the US is Kaiser Permanente’s attempt to move to electronic medical records.  That has been characterized by infighting between the regions, continual vendor churn and much wasted effort and money. But Kaiser is well ahead of other American provider systems in what it’s trying to do–getting to the Holy Grail of electronic patient records. It’s not unreasonable to expect the same in the UK, although the potential for a disaster, like IRS’ long  computer modernization train wreck, does exist.

For much more on the NHS project as a whole see here.

Stents: on the forefront of combining drugs and devices

Often those of us who’ve concentrated on IT, health delivery and pharmaceuticals forget the huge amounts spend on medical devices.  Some of those medical devices are very expensive and in some the technological arms race is faster and has as much impact as that in the pharmaceutical approval war.  The battle over coronary stents–tiny tubes that keep blood vessels open after angioplasty– has become bigger and bigger over the past few years. This is notwithstanding the opinion of a Canadian health services researcher I met a few years back who’s research "proved" that they had no real incremental value over straight angioplasty. But then we never cared about health services research or Canadians!

The latest development in stents is coating them with drugs to prevent scar tissue building up around them and necessitating more surgery. J&J’s market leading Cypher stent has it and as does Boston Scientific’s new market entry Taxus (selling in Europe and looking likely to be approved later this year for the US). The news that Taxus’ approval was in the offing led Boston Scientific’s share price to jump even after a big rise already this year.

The stent market has been an ongoing battle, as this Businessweek article shows, for many years, and now is a $5 billion worldwide market–split usually between J&J, Boston Scientific and Guidant.  Who gains and loses the lead in market share changes over the years depending on who has the latest gizmo, and who’s sales staff impresses the surgeons the most. But the combination of drugs and devices is a trend that is going to have staying power.

Nano-medicine, socialized medicine and innovation.

Robert Mittman’s technology series in iHealthbeat covers Nano-technology in health care.  Meanwhile, Tim Oren responded to my saying that I find it strange that "sensible business people vigorously defend their right to be gouged by the current health care system and call anything else socialized medicine"  by writing:

"You might find me more sympathetic than you suspect on the problems, if not on the solutions. We’ve got an incentive system for medical R&D that encourages the development of diagnostics over therapeutics, and palliatives for chronic diseases of the well-off over actual cures for anything. We balance the majority of the global costs of that R&D on the backs of American employers and employees. We’re headed pell-mell to a future in which genomic/proteomic diagnostics will be able to tell us risk factors and disease onsets down to the individual level, destroying the traditional notion of insurance as a pool of unknown risks, long before there are genetic or other therapies to do anything about the problems. We’ve got a growing medical infrastructure capable of extending lives at enormous expense and often with dubious benefit to the patients; and growing expectations that all will have access to those capabilities, even as the less skilled and educated are unable to contribute enough to the society to fund that ‘social minimum.’

I’m just firmly convinced that single-anything is the wrong way out. Putting a government bureaucracy in sole control of either side is a problem – a way to stifle the innovation that might get us out of this mess eventually. Some of the hybrid public/private proposals kicked around over the last decade are at least worth the discussion – maybe some social minimum level publicly funded, privately administered, with a layer of private insurance and medical capabilities on top of it, that everyone would understand is ‘on your own dime’. Yup, a two tier system, but we’re there de facto anyway"

Now I agree with virtually everything in Tim’s analysis of the system’s problems but thus far "innovation" in medical care have just given us more costs down the road–as everyone gets sick and dies eventually.  (Notwithstanding the fact that many of these innovations obviously improve quality of life and save individual lives, even if many of them don’t stand up to rational cost-benefit analysis). Which is why I believe that we should put all the costs under one central line item and have a real debate about what we should spend and how. (I also know that we won’t have that debate, despite the urging of Humphrey Taylor at Harris, because it necessitates use of the term rationing!).

But what if there is a huge change going on?  What if medical care became a real productivity enhancer and added to rather than subtracted from social capital–the way education does now?   A pipe dream?  Well probably, but if you read the nanotechnology article, this paragraph jumps out:

"Robert Freitas, the author of Nanomedicine, has designed (but not yet built) red and white blood cells and platelets–nanorobotic devices called Respirocytes–that will work 100-1,000 times better than natural cells. So for instance, you could sprint at full speed for 15 minutes. While this might make us all run like Carl Lewis, it would also enable extremely efficient removal of bacteria from the bloodstream. Imagine having one injection cure your flu within an hour. Freitas thinks that respirocytes are about 20 years away. Not much beyond that, perhaps another 20 years, is chromosome replacement therapy. Imagine taking several strands of DNA pairs from your body, matching the good ones, eliminating defects, and then manufacturing 4 trillion copies of that genome (you have about 4 trillion cells in your body). Put each into a nanorobot that would travel to each one of your cells and change the chromosome. With some other twists, the nanorobot would permanently rejuvenate you; no more aging."

That may just be science fiction, but if medicine really could cure disease and aging, then it would add tremendously to our social capital–because we wouldn’t have the long expensive periods of sickness that are associated with disease and old age.  (How we’d die under this scenario is another question).  Worth a thought, even if it’s far, far off.

ePrescribing, PDAs and all that

I’m slowly getting back into the story around the "ePrescribing/PDA/last mile to the doctors office" issue.  I’ll be writing more about this later, but I’ve been talking around with some people in the know. From my conversations I smell a slow take off in something that wasn’t a big deal when I was a hard core researcher into physician computing-use in 1999 & 2000. 

The last real numbers that I’ve seen are about a year and a half old.  Manhattan Research, in some non-public data from 2002 suggests that 40% of doctors had a PDA, and some 75% of those used them for reference, while some 20% of those with a PDA used them for other work activities beyond reference–which presumably includes a lot of ePrescribing.  I’ve back of the envelope triangulated those numbers with ePocrates’ claim that 250,000 doctors have downloaded their drug reference manual for PDAs and that 25% of US doctors use it as their prime drug information source (over the Physicians Desk Reference, etc).  (The full ePocrates study is here although the group was selected form current ePocrates users by the look of it!).  Assuming that ePocrates is doing a little double-counting in who’s downloaded their app, from combining the numbers you end with roughly 200,000 docs out of roughly 500,000 in practice with PDAs. Of those roughly 150,000 are using them for reference and of those about 30-40,000 are doing something more than that.

Now remember that was early 2002 data, and we are dealing with a growing market. The 2000 data from the Harris study I designed was that ~3% of docs (or 15,000) were using handhelds for ePrescribing, while ~9% (or 45-50,000) were using a computer for ePrescribing (presumably mostly in hospitals).  Harris’ early 2002 data collected in their Vital Signs study for BCG  asking slightly different questions said that about 16% of physicians were using ePrescribing and 21% were likely to in the next 18 months. So if three-quarters of those ePrescribers are using computers (probably mostly in a hospital) it still leaves 25-30,000 using PDAs for ePrescribing in early 2002. So a total guess-timate is that by now we are probably close to 75% above  that number–perhaps 45-50,000 using a PDA for ePrescribing?  (Anyone with more recent numbers, please let me know–I’ll be discreet!!)

Now there are lots of "yeahbuts" here, including that the computer use of ePrescribing in the practice may be mostly for refills and mostly handled by the nurse or clerk, and we don’t have much information about share of script volume written electronically. In other words are docs using it only when they visit the hospital? For that matter in the average doc’s mind, does "writing an electronic Rx" really mean just telling a nurse to type the order in the CPOE system.  Plus it’s very likely that the group using PDAs is skewed heavily towards younger and hospital-based doctors (i.e. residents and maybe attendings at teaching hospitals), who not coincidentally have been in the engine of the CPOE train, and are probably of less interest for pharma companies and health plans. But it does appear that the carriages behind the PDA engine are filling up, and that some technophobic docs are at least thinking about leaving the caboose.

For more about PDA use by clinicians, take a look at this article in Healthcare Data Management, which is long on issues but short on numbers.

WebMD – An old nugget gives indigestion

WebMD was and remains the most remarkable company of the eHealth era.  It was remarkable for the incredible feeding frenzy it set off in the eHealth world when Healtheon bought the then privately held WebMD in 1999, making Jeff Arnold a very rich young man, and getting Jim Clark out of the business of competing with Microsoft (who were about to come after Healtheon using WebMD as a vehicle).  The original concept of the end-to-end eHealth company that could do all the varied gazillions of transactions in health care by putting them all into the Internet "cloud" was a very seductive concept.  However, as the bubble grew larger and larger, the decision to jump start the process by buying traditional health care IT companies like Medical Manager and Envoy (using the absurdly inflated stock of 1999 values) proved too tempting. Here’s a list of some of the companies they bought.

As soon as the acquisition spree took place, the old idea (catalogued by Michael Lewis who’s now off writing about baseball) of creating a "New, New" company was dead.  Furthermore, all the internal machinations ended up costing way too much in organizational terms.  When I was at i-Beacon we negotiated with 5 separate sets of WebMD/Healtheon employees to sell them a version of our consumer health record. It was a clusterf**k every time. This may be sour grapes but WebMD never got it together on those negotiations and instead 18 months later (after we were out of business) they ended paying $18m in 2002 cash for Wellmed and their health record.  Nothing wrong with Wellmed’s but they could have had ours (or all of us) for much less in Yr2000 stock, methinks, and it would have been a tremendous product well before they paid to get Wellmed. (Wellmed had raised about $40m in Venture capital in 2000, and its investors were lucky to get some of their money back, given what happened to most eHealth companies).

WebMD meanwhile ended up being  "reverse" taken-over by Marty Wygod of Medco fame — he was the one who’d originally bought Medical Manager.  By the time he started running the show for real in 2001, Wygod essentially stripped it down to the three parts of claims processing (Envoy, MedEAmerica & Kinetra), medical software (Medical Manager) and consumer and doctor online (WebMD, Medscape, Wellmed & everything else).  The first two parts made money, the last one never has (well it eked out a small profit last year but it lost $75m the year before). (WebMD also has a medical plastics business via Wygod’s old plastics company Synetics which it’s never got rid of). Revenue size-wise WebMD at Year end 2002 looks like this:
a) Transactions $466m
b) Medical software & services $275m
c) Portals $80m
d) Plastics $120m

Meanwhile the PE ratio–as of two days ago–is around 23 whereas those of other diversified medical technology and services companies like Cardinal Health (CAH) are closer to 18. So the web technology spin is still helping WebMD’s stock price even if it hasn’t really been helping transform health care the way we were promised by Jim Clark back in 1997.

The recent news is that something was fishy in the accounting at Medical Manager before Synetics bought it.  Medical Manager itself was a merger of several regional medical office software companies, and had to restate its earnings (and nearly went under) in 1999.  So yesterday (Sept 4) the FBI went into raid mode, and trading in WebMD stock was halted, opening today about 15% lower.

Is the raid and subpoenas a fuss about nothing, as the company says?  More than likely as it’s about old news. But a serious restatement of earnings for just that sector of the business could be a big drag on the stock, and if it’s PE was at parity with Cardinal’s, the stock price should be closer to 8 rather than 10. This of course all serves to take WebMD even further away from being the dominant health care company technology of the 21st century that never was.  And boy do we need one (or two or three….).

Online detailing & prescribing: taking off at last?

In the midst of the e-health boom, there were a huge raft of companies hoping to profit from e-prescribing and e-detailing, and there were some very odd business plans about how to pay doctors to receive these "e-details".  Well some recent research seems to be indicating that this is starting to take off. Manhattan Research’s ePhysician service (the old CyberDialogue) reports that 50% of doctors seeing more than 50 patients a week and writing more than 50 Rx a week, use or want to use e-detailing, eCME, a PDA or online Rx information–in other words are ripe for e-detailing and interested in e-prescribing.  Jupiter reports that of those doctors who use the Internet at least once a week for work (which is most of them) 58% have taken part in at least one e-Detailing session.  And of course 85% said that they’d use it more if they got paid to use it. In a related data byte, Harris Interactive reported back in April that by the end of 2002 16%  of doctors were using online prescribing and another 21% plan to use it within 18 months.

So the argument I was making back in 1998 and 1999 seems to be coming to pass–the use of information tools by doctors is starting in this country (even if it lags behind those rates of adoption abroad).  There’s now a sizable minority using more than just a pen. Partly in response to that Pharma companies are now getting very interested in e-detailing, mostly because they want to cut the costs of sending the nice detail people out to hassle the doctors.  So perhaps those odd business plans weren’t so odd.

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