Digital Health: Show Me the Money? Evidence? Door?

This week I had the good fortune to return to Dublin, Ireland and see many of my international colleagues and friends who are associated in one way or another with HealthXL, the digital health intelligence platform and expert community, and Health Beacon, a very cool medication adherence company focused on specialty pharma.  Health Beacon hosted an event for their clients and colleagues in the pharma industry and asked me to give a brief summary of the current state of the digital health field.  Here’s what I came up with, plus a bit more:

It’s a very interesting time in the field of “digital health,” or as I like to call it, in the field where technology meets health.  This is the first year in many that we have had some significant financial milestones that were validated by someone other than venture capitalists – in particular, we have had 4 IPOs in the field in the last couple of months – Livongo, Health Catalyst, Change Healthcare and Phreesia – which suggests that the rest of the  world is also convinced that technology is finally coming to the aid of those of us who dwell in healthcare land.  Yes, venture investment seems to still be rising, but that is a bit of an echo chamber as we in the field all validate each other’s decisions in a giant circle.  It is really only through the public market and through customer adoption that we can see whether we are patting ourselves on the back for good reason.

The jury is still a bit out on this.  Each of these IPOs, with the exception of Health Catalyst, has been slow out of the gate.  While companies like Pinterest and Beyond Meat have defied gravity since their IPOs, the healthcare class has been flat to down.  Health Catalyst is up and performing well, but not in the same way that Beyond Meat is.  Not sure what the takeaway is except maybe people like food more than analytics.

Granted, a few months does not a judgement make, but it’s interesting to see the difference in how healthcare companies are viewed by the market as compared to their tech and consumer brethren.  Clearly there is an opportunity in digital health (ok, ok, I’m just lazy so going to use that term to save time even though I hate it), as every single major tech company is piling in with gusto, hiring top notch healthcare people and spending a fortune.  Amazon’s PillPack is doing direct-to-consumer advertising on TV.  Apple is turning a watch into a diagnostics device.  Even Facebook has hired a well-respected healthcare leader to build this part of their business.  Lyft and Uber are all in.  Who knows who’s next?  You really cannot turn around without seeing healthcare everywhere these days.

Digital health is interesting because it has become a catalyst for industry collaboration and convergence.  Once upon a time, pharma people never spoke to healthtech people who never spoke to medtech people who never spoke to health services people.  Today it is like a giant stew with everyone beginning to recognize that they need each other to optimize care for people and profits for shareholders.  I think that what’s most interesting is that the recent IPOs and other company successes are demonstrating that without a doubt, services are essential to efficacy, adoption and scale. I was getting so tired of hearing the story that everything had to be SaaS only, no services, so it could scale.  Well, my friends, nothing scales if no one buys it, regardless what the profit margin.  And most things in healthcare need services to enable them to transition from nice to necessary.  Trust me.  I’m not a doctor.

We are also now in a phase where everybody is talking about “evidence” and its importance.  This is really coming more from the tech side.  The pharma folks have known this for a long time, as have the medtech mavens.  If you can’t demonstrate some sort of value (better clinical outcome, lower cost, improved convenience/experience), you can’t get paid.  The growing retort to any entrepreneur’s, “Show me the money!” must be the customer’s “Show me the evidence it works!”  About time, actually.  AI and Blockchain and VR and “data plays” and apps and digital therapeutics and algorithms and all that stuff are swell, but if they don’t make things better for patients, providers and payers, it should be, “Show me the door.”

And hot on the heels of evidence is an emerging demand for proof of trustworthiness.  With the myriad of data breaches and the perception that patients’ data is being used for profits that may never accrue in any way to the aforementioned patients, people in the field are getting tired of feeling like a crop to be harvested – so much chaff to the wheat of their data.  The proof equation is becoming more complicated and is now some cocktail of better outcome, better value for cost and trustworthy/responsible/ethical.  Frankly, why shouldn’t it be?

This data issue is a big one because much of the data we are using to drive decisions isn’t that great.  I have written about this before (ad nauseum, some might say), but today was reminded of the old garbage in, garbage out adage reading about what’s going on at uBiome, where their sample set to advise adult humans was derived from a blend of adult humans, babies and pets.  I can assure you that my chihuahua’s microbiome is not a good proxy for mine – other than being short and loving each other and loving bacon, we have little else in common.

But as we get the data more error-free, more accurate, more relevant, more comprehensive and more trustworthy, we will have tremendous opportunity to get diagnosis and treatment right in a way we do not now.  Our so-called “evidence-based medicine” will actually live up to its name.  It is the great opportunity we have in front of us if we are responsible about how we introduce it.  We cannot rush.  We cannot get halfway there and declare victory.  And in the meantime, we must recognize that there isn’t that much evidence that digital health is yet positively impacting the quality, affordability or convenience of healthcare.  There is a rising tide of proof but it has been derived mostly from small experiments.  But we are on our way and those who wish to prosper from it must be patient.  Consider those new public stocks a long hold.

An interesting sign:  Germany (the country) has adopted a law, effective next year, that its statutory health insurers MUST pay for digital health apps that are prescribed by physicians (provided that these health apps demonstrate within one year that they improve patient care) and that pharmacies and hospitals who serve these people MUST connect to the national telematics infrastructure to share data in a secure but free-flowing way.  The German government is also strengthening incentives to use telemedicine and video visits.  Interesting to see this level of progress.

The underlying dirty little secret, of course, is that until we actually change the incentives so patients, payers and providers want at least some of the same things, no amount of technology is going to “fix” the system in Germany in America or anywhere where it is dysfunctional.  Aren’t you tired of hearing people say that their digital health whatchamacalit is going to fix healthcare?  I used to say at conferences that when anyone says “big data” everyone had to take a shot of tequila.  I think my new drinking phrase is “fix healthcare.”  Look for me on the floor of every conference for the rest of the year, given how often people are saying this phrase.  Bottoms up!

The great unknown is this:  for pharma, medtech, services companies, will the adoption of technology increase your revenue or just keep you from shrinking as fast?  Will it save money in operations or just stop costs from rising as quickly?  Will tech’s adoption increase market share for those who do it well or just keep them in the game – essentially representing the price of admission?  These answers are not yet known and may not be for some time.  But my informal poll at the HealthXL meeting this week suggests that those corporations investing in digital health think that the technology will be more of the ante than the revenue multiplier.  It will be interesting to see how this game plays out.