3600 people and I went to the mHealth Summit earlier this week in Washington, DC and, having spent the better part of 48 hours listening, I am still not sure what to make of this emerging healthcare sector.
Given the incredible energy and high attendance at the conference, it would be easy to get caught up in the hype that surrounds mobile health and it’s many potential uses. There were an enormous number of companies present and news of many new financings (e.g. HealthTap receiving $11.5 million from Mayfield, Mohr Davidow and others).
For those of you not yet familiar with the buzz word, mHealth is basically what you get when you cross healthcare with mobile phones. It is essentially the love child of Ma Bell, Hippocrates, Dr. Oz and Steve Jobs. For the true believers, and there are a lot of them, mHealth is the answer to the healthcare systems prayers. By bringing texting and Wifi and reams of personalized data to the fingertips of the masses, healthcare will right itself, costs will decrease and angels will sing. Can I get a Hallelujah?
The entrepreneurs in the mHealth space tend to be young and often new to healthcare, though of course there are the exceptions-those few old-timers who remember the days before iPhones were issued upon one’s birth. The young upstarts are full of energy and absolutely certain that their product or service will be the one to change the healthcare system for the better. God knows some of them will be right. Hanging around these people can be very energizing and they are surely of a different temperament than those who preside over the traditional healthcare IT companies. These entrepreneurs are looking at healthcare unfettered by the unhelpful customs and disincentives of the past. They are not weighted to the earth by how things have always been done in healthcare, but literally floating in the so-called clouds (ha ha, get it? a cloud joke) held aloft by fresh perspective. It can be refreshing as hell to hear their stories.
On the other hand, hanging around these guys can also make one drip with cynicism. As I walked the exhibit floor with my pal Margaret Laws from the California Health Care Foundation, I think we were both feeling somewhat schizophrenic.
The conference definitely had its share of wildly enthusiastic CEOs leading companies that had devised very compelling products to improve point of care diagnosis (Alivecor, CellScope), simplify healthy eating (Fooducate), improve public health (Asthmopolis) and engage consumers in all manner of activities to prevent and manage chronic disease (lots of companies). There was some seriously cool stuff to look at and one can easily envision how some of these products can make the world a better place.
On the other hand I kept looking over my shoulder for the Ghost of eHealth past. “Scrooge, er I mean Lisa,” the ghost would say,”let me take you back to the year 1999 when eHealth companies flooded the Internet, offering the promise of a much improved healthcare system only to leave behind the tattered corpse of Dr. Koop.com and the trail of a bazillion incinerated VC dollars and careers. Look upon them–the ones who thought they had it all figured out and were confident that, since everyone had Internet access, their products would become more ubiquitous overnight than that damned Lady Gaga!”
“Bah Humbug,” I would say, “Anything but that! Don’t make me look upon the shattered dreams of all of those companies that only aspired to be the Webvan of healthcare! I can’t bear it! And please, dear God, no Lady Gaga!”
The mHealth revolution definitely has some of the feel of the eHealth bubble of about ten years back. Companies are popping up left and right, many which are carbon copies of each other but with a twist (“we are the newest weight loss app but ours uses an entirely different font!”). There is a frothy financing market despite the overall healthcare venture capital downturn, with these nascent companies commanding valuations that have little to do with traditional metrics (” I have no revenue but my idea is so cool that I’ll settle for nothing less than $100 million in pre-money value and that’s only if you slap down a term sheet by midnight tonight!”). Healthcare IT is hot and mHealth is en fuego.
Lots of big companies were at the mHealth Summit trying to look hip and mHealthy. Kind of weird to see Verizon and ATT represent at a healthcare conference. A friend and healthcare luminary type with whom I was watching Verizon present said to me that, in fact, these companies are perfect for the healthcare market because they are good at overcharging and bad at customer service.
As I walked the exhibit floor the one question I asked of nearly everyone I talked to was, “Can you name 3 mHealth companies that have yet achieved $10 million in annual revenue?” Crickets. No one could name me even one, even if such a unicorn does exist. Self-interest alert: I do know one, which happens to be PatientSafe Solutions, a company in the Psilos portfolio with more than twice that in annual revenue. That doesn’t mean that the others won’t get there, however. There is no doubt in my mind that mHealth will become a major part of the healthcare system. The question is when.
The Ghost of eHealth Present, in the form of market analysis firm ABI Research, reports that the mHealth market is growing so fast that it will more than triple to $400 million by 2016. If you are an investor like me, and I’m sorry to use such a technical finance expression, that sucks. We are trying to build companies that we can sell for $400 million. If that is the size of the whole market 3-4 years from now, it’s hard to see it as a good investment today. On the other hand, you can’t help but see the evidence of why some of the mHealth products have the potential to make a profound difference in the lives of patients and providers. And it makes you want to get in on the action.
There is definitely a burgeoning mass of data from successful mHealth experiments showing it is possible to improve access to care and clinical quality while saving money. Unfortunately, little of that was presented at the conference, but one presentation by Bella Hwang from Weltel, demonstrated how an mHealth project serving HIV-infected patients in Kenya used regular text messaging to dramatically improve adherence to antiretroviral drug regimens (62% compliance vs 50% in the control group) and suppress the viral load (57% vs. 48% in the control group; the project is estimated to generate $10 million in net savings over 3 years and break-even in year 2). It was an impressive analysis. I have seen other equally compelling stories, although they are largely from small pilot studies and not from large real world deployments. However, the night is young and Scrooge has not yet been out with the Ghost of mHealth Yet To Come. Just think what Tiny Tim could do with an iPhone, a compelling fitness app and an unlimited data plan!
U.S. Secretary of Health and Human Services Kathleen Sebelius actually opened the conference with a speech in which she said that no healthcare sector has innovated as rapidly as mHealth and isn’t it amazing that there are over 12,000 apps related to health in the iTunes library. Amazing or scary? You be the judge. Anyway, Secretary Sebelius also said that the government is committed to supporting this sector because it is “the greatest technical breakthrough of our time to address the greatest problem of our time,” by which she meant the healthcare crisis. That might be a bit hyperbolic, but Dr. Eric Topol doesn’t think so. Topol, one of the world’s most renowned cardiologists and now Vice Chair of the West Wireless Institute, gave a very entertaining follow-up talk on the concept of Creative Destruction and how mHealth innovation can meaningfully change the field of medicine for the better. He hilariously demonstrated his hypothesis by using several mHealth products on himself while on stage, giving us a live ECG view of his own heart augmented by use of the conference hotel room free hand lotion since he forgot to bring his own ultrasound gel.
One of the biggest impediments to the widespread adoption of mHealth is reimbursement, but even some payers were on hand and squarely on the bandwagon. Dr Richard Migliori, Chief Healthcare Officer of the nation’s largest private payer, United HealthGroup said that mHealth has the most promise of any technology to create health system reform because it is a true means of connecting people to actionable information.
So in this, the holiday season, will I end up in the role of Scrooge, the mHealth pessimist or Bob Cratchit, the mHealth optimist? Tough call. I think I’m sticking with schizophrenia for the moment while I sit by the (mobile) phone waiting for a call from the Ghost of mHealth Present telling me which is the best app in the iTunes library for mental health. God bless us, everyone, who makes the leap into the mHealth rapids. I have no doubt it will be an interesting, awful, awesome ride.
ps–In a total non sequitur, the Qualcomm booth at the mHealth Summit featured Joe Thiesman signing autographs and promoting a company called Macaw. He is still so cool.
Note, this post also ran on December 8, 2011 in Healthcare IT News; here is the link.
Matthew Holt says
Good to see you have friends, even if they’re a tad cynical
Lisa Suennen says
Indeed…I only accept friends who are cynical. It ensures that I always appear upbeat by comparison!
Siva Subramanian says
Hi Lisa! Your blogs are indeed always informative and quite amusing (how on earth do you get such on-target comedic references? they are hilarious)
At the expo, could you get a feel for the rough percentage of mhealth startups that were targeting consumers vs physician practices vs hospitals?
Lisa Suennen says
Hi Siva, thanks! I don’t have any scientific way of knowing the answer to your question, but the sense I got was 75% consumer; 10% hospital, 15% physician or thereabouts.
Siva Subramanian says
Thanks for the breakdown Lisa. I feel that those numbers are telling about one of the problems in our nations healthcare today.
As much as I would love for the patient/consumer facing apps and businesses to take off… the place where innovation appears to be missing is on the provider side (and Yes! I applaud what PatientSafe is doing – as you know we are addressing similar challenges at CareinSync)
Why do I get the feeling that 75% of the mHealth entrepreneurs are trying to innovate where it is easier to build a product (not a business) rather than try to solve difficult problems for providers? (This is like searching for your lost diamond ring under the brightness of a lamp-post… but only because it is easier to search there, even though you know lost it elsewhere in the dark!)
And then there is the question of WHY solving problems for the providers (especially hospitals) is so tough. IMHO the big EMR vendors are one of the problems. (Please note that I am not saying EMRs are not needed, but that we need innovation in that space which is being limited by their closed nature and lack of incentives for them to be more open)
How can we break this barrier?
Dan Munro says
Sorry we missed you (we were in the Startup Pavilion with about 40 other early stage ventures).
There is definitely some “exuberance” to this market (I’ve been around long enough to see it too – way before mHealth), but I think it best to be supportive rather than critical of it. Many of the real early stage stuff is intentionally experimental – and we’re in dire need of new thinking – especially as it relates to engaging the consumer/patient (perhaps the hardest challenge in the whole healthcare equation). One great example is Massive Health ($2.5M Series Seed) – which calls their first app (The Eatery) an outright experiment.
In many ways, I think we need to consider early stage healthcare investing as a form of lobbying – but in this case we’re trying to influence innovation – not legislation. Seems to me that’s a better objective in the first place – and we’re all in!
Would be great if Psilos had a small seed fund earmarked for this 😉 I know it’s not the primary focus of Psilos – but it would be an awesome commitment to healthcare more broadly – and we really do need everyone all-in!
humble healthcare startup (with THE best font! ;-),
David Doherty says
Interesting article. I thought I’d help you with one of your questions:
“Can you name 3 mHealth companies that have yet achieved $10 million in annual revenues?”
I think for this you need to look back to the history of mobile networks. In the US and UK these actually started out as Pager networks. These devices were (and still are in many cases) firm favourites with healthcare professionals. Due to this there is a good argument that suggests that the build out of our mobile networks was funded by health care providers. Healthcare professionals were also typical early adopters of mobile phones (eg. the one I had back in 1995 was bought for use in an emergency out of hours role).
It’s quite fair to say that the demand and revenues that created the newest trillion dollar (per annum) industry was seed funded by the healthcare industry.
There are over 500 mobile network operators in existence today and each makes (a lot) more than £10 million/annum.
Access to Healthcare services are also key to the adoption of mobile by hundreds of millions of subscribers particularly members of society who are senior, disabled, live independently alone, etc. many of whom will admit that “being able to call for help in an emergency is the key reason that they bought/carry/use a mobile phone”.
I refer in more detail to existing mHealth success stories in this article which you may find interesting:
Looking to more advanced uses of mobile you should check out services such as the public 911 Emergency Services or the increasingly popular nurse call lines (eg. the >$200 million per annum nhsdirect.nhs.uk). These cost taxpayers billions to run and a rapidly increasing proportion of the calls to these originate from mobile phones.
Mobility not only increases the speed with which help can be requested improving response times, patient outcomes and saving lives but it can also aid in the delivery of live saving first aid. It also saves millions in more appropriate dispatching of emergency personnel and equipment and there are smart location based technologies that are already being put to good use helping free up lines and improve response effectiveness when there are large scale emergencies eg. rather than having thousands of calls reporting the same thing (such as a road traffic accident on a busy highway) there are up to date recorded messages being played to callers in the vicinity of the incident. Some service providers are already using basic caller ID to add more value to these services and although this is mostly to avoid hoax calls it is increasingly being used to identify patient needs more accurately (something that is now exploding in countries that have established EHR initiatives).
As we’ve all seen once again with the terrible scenario that unfolded this week at Virginia Tech the ability for mobiles to save lives and increase the efficiency and speed with which society can react to public health issues is extraordinary.
The world is a radically different place today than the “year 1999 when eHealth companies flooded the Internet” because Virginia Tech now has SMS alert functionality. In 1999 no one at Virginia Tech had SMS now everyone does.
John Lynn says
Very interesting perspectives on the market. I agree that it is a frothy market and there’s little doubt that many of the companies at mHealth will fail. Although, this isn’t anything unique to mHealth.
I think the real opportunities for the large exits that VCs want are going to come with a series of apps that combine with other healthcare services. Sure, a couple consumer health apps will emerge and do well, but the largest exists are going to be those that are able to engage the consumer and their healthcare providers in an interesting way that we didn’t think was possible or reasonable before.
Lisa Suennen says
Thanks John, I agree with you…these businesses are likely going to have to be ancillary to larger operations to be successful. Most appear to be products not companies at the moment. Thanks for reading.
Matt Wiggins says
Keep digging. You will find mobile companies working with large existing players to redesign from the inside out.
Your insights are correct, there is a lot of hype – but the brightest companies have not shown themselves yet, they are too busy building.
Fun to read your commentary. Thanks.
Lisa Suennen says
Thanks Matt. Will look forward to seeing the good ones that you send my way. Lisa
John Boden says
John Lynn has hit the nail on the head with his opinion that the successful companies will be those that gather and consolidate the products and services around the full spectrum of the consumer’s needs. When a customer, whether an individual or health provider, has a one stop solution they will quickly know where go. No one buys car parts to assemble themselves as a solution for their transportation needs, they buy the whole car.
To date consumers have only been offered parts, with each offering company touting the fact that their part is the best part available. Who cares how good the parts are, what customers wants is a full solution that will help provide more effective and efficient health care while working within their existing operational framework.
The VC world is missing the boat big time. Stop looking for a big enough parts maker and build the assembly plant needed to turn the parts into the health care automobile that will give the customers what they are looking for.
Stop looking at the trees and see the forest.
Kian Saneii says
Thanks for the great article! Funny, interesting and informative! As is always for you.
As a VC you’re well aware of the percentages of all the mHealth startups who will fail. That’s OK though — in the end even if 1 in 20 companies succeeds, then that alone changes everything.
The difference between mHealth vs eHealth is really about how much FURTHER in dire straights we are with our sickcare system. Consumers today are paying so much more out of pocket for inferior “care” that alternatives will start to be deployed. And while our system continues to be the single market “time has left behind” with respect to adoption of true internet and market-driven benefits, solutions outside the system will pave the way. As with anything else, addressing a compelling ROI — mitigating a BIG pain while dramatically reducing costs — will be a great opportunity for mHealth. So long as it’s done outside of our sickcare system, things will happen faster and better. Plus, global opportunities persist for these companies, where their cost structures are not dependent on our taxpayer subsidized, supplier-driven cost structures which are unacceptably high in most other countries and market, especially in developing countries.
Still, it’ll be very interesting, and telling to your point, to see which companies reach your $10 million mark … and more!
Thanks for the great read Lisa!
Lisa Suennen says
Thanks for the note, Kian. I hope you are one of the success stories. Lisa
Nari Kannan says
Many mHealth companies were a bit ahead of their time if they got started even two or three years ago. mHealth using texting in the absence of smart phone penetration has definite limitations but where it is useful, like in developing countries, it is very useful and convenient! But now smart phone penetration is at 25% and accelerating, no doubt in large part to maturation of platforms like iPhones. When you renew your contract and you can get even an older model iPhone 3gs for free, penetration happens and that’s in 2011! In 2012 this will only accelerate also due to the explosion of Android phones into the market! Standalone apps are useful but mHealth will explode only when the backends are ready. 25% of all US physicians are currently using EHRs and this will accelerate in 2012 and 2013. So to some extent, 2012 and 2013 will be defining years when the people who power the whole industry – medicare/medicaid/govt and health insurance companies start integrating the disparate pieces together and now you have the question “what’s in it for me?” question addressed for the people who pay the bills. Consumer focused apps may be feel-good but only when the mobile apps are integrated with the cloud backends of payers and providers will mhealth take off! And I have a strong sense it will in 2012 and 2013 since all the pieces seem to be falling in place, one by one!
George Margelis says
The problem remains that most mhealth companies are focused on solutions to non existent clinical problems. They are aimed at consumers and provide them information they can’t use, therefore the relevant apps get used for a short time and then forgotten. Until such time as they start offering clinical solutions that can effectively improve a patient’s health outcome they will remain interesting startups with no sustainable business model.
Charles Gross says
Nice to read something by a fellow “cynical optimist.” Though I may be even more cynical in that I decided not to go to the mHealth Summit for the exact reasons you so humorously highlighted. The real winners will, to use a phrase from one of your earlier blogs, “bootstrap” their way into visibility by demonstrating real outcomes for real patients, and for real payors.
David Lynn says
I think cautious optimism is how I feel about the mHealth industry. It will inevitably grow larger as time goes on, but the question is where and how will it grow? Every industry has its major success stories as well as its fair share of colossal failures. As more and more major companies enter the industry I think we will see the real success of mHealth. The tricky mix is that they will need the depth and experience of established companies with the ingenuity and willingness to take risks of new developers. The companies that can find that balance will prove to be very successful.