By Merrill Goozner

Spending on health care is slowing down – a much-needed development since the nation’s long-term deficit problem is largely tied to projections that spending on Medicare and Medicaid will remain out of control.

But slowdowns have happened before, and there’s no guarantee that this one will last. The Supreme Court in the next few weeks could rule the entire health care reform law unconstitutional, which would be a blow to cost-control efforts since at least some of the recent slowdown is being attributed to delivery system changes sparked by the law.

During the mid-1990s, in the wake of the Clinton administration’s failed health care reform effort, an insurance industry that perceived it had a public mandate to take radical steps to hold down costs switched millions of Americans into health maintenance organizations. They succeeded in holding down costs for a while, but the effort collapsed when patients rebelled against the industry’s ham-handed tactics in denying needed care.

In the 1980s, another period when health care costs were growing faster than the economy as a whole, Medicare switched hospitals to a new payment system known as “diagnostic related groups.” Instead of getting paid a fee for every service or product, hospitals received a set payment for an entire procedure – an appendectomy, for instance, or a heart transplant.

Continue reading…

By Joseph Kvedar, MD

We’re spending a lot of time at the Center for Connected Health (CCH) these days thinking about and experimenting with algorithms.  It’s part of our general interest in micro-segmenting the population and creating unique, engaging health messaging for each individual that will keep them on the path to better health.  Healthrageous is working fast and furious on this as well.  Of course, we’re not the only ones.  A number of other labs and firms are on the same journey.  The vision is compelling.

However, today when you get health related messages from your insurer or another source, they are typically public health focused.  Stop smoking!  Get your mammogram! Get your flu shot!  These three messages illustrate the challenge. I’ve been the recipient of all of them recently.  I’ve never smoked, clearly do not need a mammogram and was vaccinated for influenza in early October.

I always thought our friends on the consumer web side were doing better.  The first time you experience Amazon’s or Netflix’s recommendation engines, they tend to raise eyebrows.  Over time, the experience is less salient.  And let’s face it, it’s got to be easier to guess which type of movie I might want to watch or a book that might interest me than to predict what a really engaging health-related message might be.

At CCH we’re in the middle of an interesting trial funded by the McKesson Foundation, where we collect three types of data (a measure of readiness to change, ongoing activity data and location data) and use an algorithm to generate motivational messages based on these variables.  It’s ongoing now, so I don’t know how it will turn out, but we’re excited about the possibilities. Still, it’s only three variables and only one (activity level) is continuous. My instinct is that we have a long journey ahead of us.

Continue reading…

By KIM KRUEGER & MATTHEW HOLT

Kim Krueger is a Research Analyst at Health 2.0 where Matthew Holt is Co-Founder and Co-Chairman.

For evidence of the global Health 2.0 movement, look no further than Health 2.0’s favorite Finnish startup, currently working mostly out of London with plans for expansion into the US. Meet Nelli Lähteenmäki, the Co-Founder and CEO of Fifth Corner (formerly Health Puzzle), makers of the YOU app.

Like many others, Lähteenmäki and her team are working on the tough nut of behavior change in the form of an app that nudges users towards better health with small, incremental steps. The idea is to bridge intention and action, says Lähteenmäki. The Health 2.0 team had a chance to pilot the YOU app in a six-week challenge this past fall, and rather enjoyed tallying healthful tasks like taking the stairs or eating greens for a chance to beat out colleagues. Of course, the Health 2.0 challenge had an equally big stick to go with the carrot of winning, but that’s neither here nor there.

Since then, Fifth Corner has made some big changes, including shifting from an employer-facing business model to a direct to consumer model. It’s a bold pivot at a time when no one has really succeeded with the direct to consumer model in digital health, but Fifth Corner has some strong votes of confidence with new seed funding from London-based venture firm Wellington Partners, and the addition of celebrity chef and healthy food guru Jamie Oliver to the team.

Have a look below to hear more from Lähteenmäki on Fifth Corner’s partnership with Jamie Oliver, how the team will leverage Oliver beyond marketing, and future plans for growth. You can also get a closer look at the stripped down, direct to consumer YOU app here.

Kim Krueger is a Research Analyst at Health 2.0 where Matthew Holt is Co-Founder and Co-Chairman.

By David Shaywitz, MD

Friday’s WSJ features a brutally – I mean brutally — frank article about the dismal state of biotech financing.  There are few revelations (certainly not for those readers of this column who I know follow the space closely), and unfortunately, few patches of sunlight.   This clip from Play It Again, Sam pretty much captures the tone.

The crisis in financing is having a chilling effect on biomedical innovation.  As discussed in my last column, the main problem in our industry is that the sheer cost of drug development has become almost prohibitively expensive, effectively pricing almost everyone but the largest companies out of the market.

While my Forbes colleague Matt Herper suggests this could represent a disruptive opportunity for ultra-lean start-ups, I don’t think this is true in practice.  For a start-up or small company, figuring out how to run trials in an extremely capital-efficient way isn’t a competitive advantage, it’s table stakes – it’s what gives you a shot on goal, or maybe two.  Given the intrinsically high likelihood of failure, long-term survival requires the ability to advance a portfolio of products through clinical development, something that typically only fairly large companies can afford to do.

The broader challenge is how can you achieve disruptive innovation in a highly-regulated industry?

One approach is to avoid regulation – this is one of the reasons so many digital health companies are pursuing consumer health – they hope to avoid the regulatory morass that has so dampened progress in the medical products industry.  As I’ve noted before, it will be interesting to see how this works out – I’ve see a lot of cutsie apps out there, but not much that seems likely to deliver measurable improvements in patient health (i.e. improvements that would be meet the sort of standards both demanded by drug regulators and expected by physicians).

Continue reading…