mHealth, eHealth, Mobile Health, Connected Health: Not Fads, Not Going Away

Smartphones can be addictive. The convenience of obtaining information and maintaining social connections is a powerful benefit for just about everyone. Health-related smartphone apps have the potential to use that addictive property to inform and improve the health of smartphone owners.

Close to 60% of all adults in the U.S. use a smartphone. The proportion approaches 100% in well-educated, affluent, young-to-middle-aged, or urban/suburban demographic groups. Using “diffusion of innovation” terms, smartphone adoption has penetrated past the Early Majority and is deep into the Late Majority. That’s more than enough for a startup to base its technology platform on.

There are more than 40,000 smartphone apps focused on mobile health, growing each day. Many savvy entrepreneurs have identified mobile health as a Next Big Thing and are trying to stake out their territory during this “wild West” phase of the mobile health market.

According to an executive at Qualcomm, the exponential growth in mobile or connected health is being driven by two factors. The user experiences are getting better all the time and there is real opportunity for cost control at the provider level. App usage is growing even among clinicians: 34% of clinicians reports using apps to monitor data from medical devices now, up significantly from the 27% who reported doing so in 2012.

Of course, things like user interfaces and app features can make a huge difference in adoption and patient satisfaction. One recent study of diabetes patients showed that patients with passive monitoring and reporting apps on their smartphones to manage glucose levels had better adherence to their glucose management plans and also had better health outcomes than patients who used apps requiring manual intervention.

According to a Brookings Institution study, remote monitoring technologies could save $197 billion in the U.S. over the next 25 years. And adoption is spreading rapidly. For example, 45% of physicians report using mobile apps for data collection at the bedside compared to 30% in 2012. More than 70% of providers use mobile devices to access patient Electronic Medical Records (EMRs). Physicians are eager adopters of mobile devices with more than 66% reporting use of tablets in their professional practices.

Joseph Kvedar, MD in an article on The Health Care Blog, writes:

Mobile health offers us many transformational opportunities.  We can use smart phones as a data upload/home hub device.  We can use them as a device to engage the consumer around health content.  We can use them to display health-related information at  just the right moment in just the right context.  We can use the cameras to capture relevant health information (e.g., home test results).  We can use them to message you in the moment with contextually relevant, motivating messages.

Add to the list that we can harness the addictive properties of these devices to, perhaps, make health addictive.

Takeaways: The market opportunity for mobile health is here and now. Devices, sensors, networks, software, and connectivity have never been better, cheaper, or easier to access. Patients and providers have adopted mobile technologies in huge numbers. Yes, there is plenty of competition but there are rewards for any startup or company that can identify a market niche, develop a solution, and deploy a product that meets user expectations while maintaining a long term strategy of reducing costs and improving clinical outcomes.

Read more:

Why mHealth is not a fad but is here to stay (infographic) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Could Mobile Health Become Addictive? | The Health Care Blog.

The Perils of eHealth | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Robotic Surgery: Too Much, Too Soon? | medscape.com

With a market capitalization of more than $15 billion, Intuitive Surgical is a major player in the medical device industry. It is also the only source in the world for robotic-assisted surgery products. An evolving controversy is whether the patient benefit from a robot-assisted procedure is equal or greater than the additional cost to the healthcare system.

Robot

In recent articles, the editors at Medscape (a physician-oriented professional website owned by WebMD) have raised the issue of whether robotic-assisted surgery is being adopted too fast and being promoted too aggressively.

 

Some facts:

  • The number of procedures performed worldwide with Intuitive Surgical’s da Vinci Surgical System increased 25% from 2011 to 2012, to 450,000. 
  • The da Vinci Surgical System has been installed at more than 2,000 hospitals around the world at a cost per installation of $1.5-2.2 million plus annual service fees of about $160,000.
  • Intuitive Surgical has about 2,400 employees and had 2012 revenues of $2.18 billion, $908k per employee. That’s getting close to the almost mythical $1 million per employee revenue level and in the same neighborhood as Google ($931k).
  • The price for proprietary disposable instruments for the da Vinci System is $600-1,000. Each procedure uses 3-8 instruments.
  • A recent analysis reported that da Vinci surgeries add costs of 20% per procedure on average. The incremental costs are currently absorbed by hospitals because reimbursement rates are set by procedure, not surgical technique or technology. It is not yet clear if the extra costs will eventually be reimbursed by insurers.
  • Earlier this year, the president of the American Congress of Obstetrics and Gynecology (ACOG), issued a statement recommending against using robotic devices in routine gynecologic procedures – perhaps motivated by a 2013 JAMA study reporting that the percentage of robotically assisted hysterectomies increased from 0.5% in 2007 to 9.5% in 2010. Studies have shown that use of robotics has no clear clinical benefit over laparoscopy (the gold standard). Additionally, costs for robotically assisted hysterectomy were reported in the JAMA study to be $2189 more per case than for laparoscopic hysterectomy.
  • Some hospitals appear to be hyping and/or aggressively marketing their robotic capabilities. Investigators reported In a 2011 study that 41% of hospital websites promoted their robotic surgery capabilities and that clinical superiority was claimed on 86% of these sites, while none mentioned risks.
  • Just as with any new technology, there is a learning curve when adopting robotic-assisted surgery technology. During the learning curve, risks are higher.

Some opinions:

  • Intuitive Surgical has done a brilliant job in developing and marketing its da Vinci System, perhaps too good. The company shipped its first commercial system in 2000 and has averaged 25% annual growth ever since. The low-hanging fruit may be gone.
  • Whether deliberate or accidental, Intuitive has created the perception among the public that robotic-assisted surgery is “better” than alternative approaches. This creates demand for the procedures and indirectly, demand for Intuitive’s products.
  • There are few, if any, randomized clinical studies demonstrating a significant clinical benefit of robotic-assisted surgery over the gold standard technique, either open surgery or laparoscopic surgery. There are a few studies indicating limited advantages in outcomes in very specialized indications and a few others that show perioperative benefits such as reduced need for transfusion.
  • Some hospitals have irresponsibly hyped the benefits of robotic-assisted surgery to patients. Perhaps this is in response to competition and perhaps partly to attract patients in order to justify the large investments in robotic equipment and training.
  • Some surgeons are aggressively adopting the new technology even where there is no clinical advantage or indication. Perhaps they fear losing the revenue stream from patients or the patient stream from referring physicians.
  • The winds of change (healthcare reform in Obamacare, negative publicity about complications and costs) are starting to blow. Intuitive’s share price is down more than 34% from its peak value reached in February 2013.

Takeaways: There is a fine line between aggressive promotion and hype. In this case, the urgency and greed triggered by the “robotic gold rush” may have caused the hype line to be crossed by more than one party. Few healthcare companies conduct randomized clinical trials unless required by regulatory bodies or customers. Given the changes occurring in healthcare today, it is prudent to include outcomes and clinical studies in your commercialization plans. If your technology or product is radically different from the gold standard, you must seriously consider learning curve effects as part of market adoption. Basic training, advanced training, certification, proctoring, and partnering with professional organizations are all options when introducing new technologies.

Read more: Robotic Surgery: Too Much, Too Soon?.

A Twenty-Year Snapshot of the Health of the American People | JAMA

Fascinating glimpse into the state of our health in the U.S. and how it changed over a period of twenty years from 1990-2010.

This is a “glass half-full/glass half-empty” story. If you are in the healthcare industry, it seems that there is going to be a limitless supply of patients with chronic medical conditions for the foreseeable future. On the other hand, if you are a typical American or if you have some responsibility for public health, there is much to be concerned about. We’re spending more than ever and more than everyone else on healthcare. Although the overall health of our nation’s citizens is improving, it’s not improving as much as other wealthy countries (which are spending far, far less on healthcare).

A few examples from the abstract:

  • Ischemic heart disease, lung cancer, stroke, chronic obstructive pulmonary disease, and road injury were the most prevalent lethal conditions in terms of sheer numbers and were responsible for the most years of life lost (YLL) due to premature mortality.
  • Alzheimer’s disease, drug use disorders, chronic kidney disease, kidney cancer, and falls are increasing in incidence rates most rapidly on an age-adjusted basis.
  • Low back pain, major depressive disorder, other musculoskeletal disorders, neck pain, and anxiety disorders represented the conditions with the largest number of years lived with disability (YLD) in 2010.
  • While we are living longer, we’re living with disabilities. As the US population has aged, years lived with disability are growing faster than years of life lost overall.
  • Our lifestyle choices are disabling and killing us. Poor diet, tobacco smoking, high body mass index, high blood pressure, high fasting plasma glucose (pre-diabetes), physical inactivity, and alcohol use were the leading risk factors in disability and premature death combined.
  • Chronic disease and chronic disability now account for close to half of the US health burden.
  • We’re losing ground to our peer countries:

Among 34 OECD [Organisation for Economic Co-operation and Development] countries between 1990 and 2010, the US rank for the age-standardized death rate changed from 18th to 27th, for the age-standardized YLL rate from 23rd to 28th, for the age-standardized YLD rate from 5th to 6th, for life expectancy at birth from 20th to 27th, and for [healthy life expectancy] HALE from 14th to 26th.

No matter what you may think of Obamacare, single payer healthcare, or market-based solutions, these facts clearly show that we as a nation are not getting any “bang for our healthcare buck.” I don’t think that anyone believes we can spend our way out of this dilemma.

Takeaways: There is more data available than ever before to analyze health trends. There is an enormous interest in new technologies and methodologies that can improve a patient’s health without increasing costs. There are any number of clinical conditions upon which a startup could focus and have a significant effect on our healthcare system. Disease prevention and lifestyle modification look to be areas of focus and rapid growth. As you develop your latest medical device or as you plan your medtech startup, keep the big picture in mind. Show that your device or technology will not only work better than alternatives but that it will demonstrably improve patient health and save money.

Read more: JAMA Network | JAMA | The State of US Health, 1990-2010:  Burden of Diseases, Injuries, and Risk Factors.

Obamacare is Changing Market Access | MDDI Medical Device and Diagnostic Industry News

Access to the healthcare market is changing for medical device companies, particularly for startups with new technologies and no track record. It’s not clear to me if Obamacare is really the driver or if it’s the larger initiative of “healthcare reform” that’s causing providers and payers to make changes in the way they do business.

In any event, providers such as hospitals have become more demanding of new products and new companies. They want to see evidence of clinical efficacy as well as evidence of economic efficacy (outcomes) before they agree to purchase or in some cases, trial the products. Importantly, payers – private insurers and Medicare – are slowing, reducing, or even denying reimbursement for new products and procedures. The outcomes data is being called comparative effectiveness research. Most current data supplied by industry has been deemed insufficient. Evidence of the increased demand for data is the current emphasis on and support of healthcare IT applications by government entities as well as payers.

The authors of this article argue that responsibility for market access must be broadened to become an integral part of the commercialization process like regulatory clearance and that it should be applied to a broad cross-section of the organization and also throughout the product life cycle. This is a major change in the way that most companies conduct product development and commercialization. It will require executive management involvement and changes to strategic goals and plans to implement and sustain such a change.

For example, it is in the best interests of the organization to create and provide “strong evidence of clinical differentiation.” Not only will the evidence make it easier to get agreement from providers and payers, it also provides a degree of protection against premature commoditization. It’s equally important to lobby government officials, either directly or through a trade group. Finally the organization must be sure to protect itself by retroactively addressing products already in the market, as a demand for data could come at any time and cause significant disruptions to manufacturing, sales, materials management, etc.

Takeaways: Startup CEOs and medical device product managers, project managers, and program managers must incorporate comparative effectiveness research for both clinical efficacy and economic effectiveness into their strategic plans, product development plans, and go-to-market plans. Without outcomes data to demonstrate economic and clinical value (ECV), the risk of a failure at product launch because there are no willing buyers for your product is very high. This can kill a company or a career.

Read more: Obamacare is Changing Market Access | MDDI Medical Device and Diagnostic Industry News

3 Surprising Ways to Instantly Improve Your Public Speaking Skills | Portent

We all do public speaking. Some of us do it willingly, some unwillingly. Some people like public speaking although if surveys are accurate, most of us dread it more than death or root canals.

If you are a startup CEO, making presentations is a huge part of your life. The same goes for people in roles such as product manager, marketing manager, director of marketing or sales, etc. Communicating information and making persuasive arguments are a vitally important part of your job, perhaps the most important part.

Here are three tips for more effective public speaking from the referenced article:

  • Don’t prowl the stage. Don’t hide behind a lectern, either. Map your spots for various points in the presentation and rehearse them along with the pitch.
  • Vary your voice speed. It makes you more interesting.
  • Realize that people process information in different ways. Design your presentation and adapt your style to accommodate the “why people,” the “what people,” the “how people,” and the “what-if?” people.

Here are a few “bonus tips” from the article:

  • Have one, concise, clear call to action at the end of your presentation. Tell people exactly what you want them to do.
  • No meta comments (“The projector cut off my slide.”). Keep them to yourself as they break the narrative and cause the audience to lose focus.
  • Edit your content beforehand. Your audience does not need to hear (and they won’t remember) everything about your topic.
  • Stop using PowerPoint as a crutch. The audience knows how to read. You add zero value by reading bullet points off a slide. My favorite quote from the article:

“Frank Sinatra once said “if you need anything more than a microphone and a spotlight, you’re an amateur.””

Takeaways: Public speaking and presentation skills are vitally important for just about any business professional. These simple tips and small accomodations can make you a more effective public speaker. Remember that your presentation is about your audience, not you.

Read more: 3 Surprising Ways to Instantly Improve Your Public Speaking Skills – Portent.

How a cotton candy machine gave this NSF-funded, Indiana-based wound-healing startup its first big idea | MedCity News

If you’re interested in startups, here is a story about how one current medical device startup formed. There’s probably not a typical path for startups to follow but many do form to address one issue and ultimately become something very different.

The trendy term for this in Silicon Valley these days is “pivoting.” That’s when you fail at one thing and then figure out something else to do using your existing assets. It also goes by the phrase, “fail fast, fail cheap, and fail often.” Of course, if all you do is fail, you will never get anywhere! The methodology requires that you learn from each mistake and apply what was learned to the next project. You do need to show traction and progress before your investors and stakeholders run out of patience.

The startup in the article, Medtric, envisioned a fibrous wound dressing spun on site in a process similar to how cotton candy is formed. They failed, perhaps because they focused on a process instead of the problem. They learned from their mistake, however, and developed a nanotechnology-based dressing in their second attempt. That product along with a third seem to have tangible clinical benefits. It also helps that the products are simple and relatively inexpensive. Those attributes help attract investors. The company has received extensive grant funding and angel funding and is planning to commercialize its products in the next year.

Takeaways: Ideas for new products can come from anywhere, even cotton candy machines. What’s more important is to have a deep understanding of the problem you want to solve and the benefits your solution provides. Simplicity in explanation of your concept, plan, product, and technology makes it easier for investors and stakeholders to understand and buy into your story. Pivoting is an expected part of the innovation and commercialization process. It is always good to have a backup plan just in case your primary strategy fails.

Read more: How a cotton candy machine gave this NSF-funded, Indiana-based wound-healing startup its first big idea | MedCity News.

Fraunhofer iPad app guides liver surgery through augmented reality | engadget.com

Here is an excellent example of the innovative use of commercially available computer technology, in this case an iPad tablet, to address a clinical problem.

The problem is that surgeons performing liver surgery to resect a tumor must identify and then avoid the extensive vascular structure in the liver when removing the tumor. They must also be sure to leave sufficient liver tissue and blood vessels for the liver to function properly after surgery or the patient will die. Currently, surgeons either memorize the patient’s vascular structure after studying 3D CT scan images or they bring printouts into the operating room or they show the images on large computer monitors.

The first option for referencing the imaging information runs the risk of the surgeon forgetting an important detail or remembering something incorrectly (it happens). The second and third options’ risks are that the surgeon must repeatedly look away from the surgical field to get the structural information that will guide his/her excision. These “lookaways” prolong the procedure, cause the surgeon to lose his/her orientation, and can even cause damage if an instrument is moved during the period of inattention.

Fraunhofer, a German research institute that develops and licenses advanced technology, created a simple iPad app that allows the 3D CT images to be brought very close to the surgical field. The iPad is placed in a sterile sleeve so it can be manipulated directly by the surgeon or assistant. That would be plenty valuable if it was all that the app did. But (as the late night infomercials say) wait, there’s more!

The app uses the iPad camera to capture a live view of the surgical field and the patient’s liver. It then superimposes the vasculature from the 3D CT imaging study on the live image from the camera. That’s the augmented reality part. The app also enables the surgeon to measure the length of a blood vessel by marking it on screen and to “erase” excised blood vessels from the display. The app can also estimate the blood flow through the remaining vessels, helping the surgeon to determine if the remaining tissue will be viable.

The researchers plan to use the app next in pancreatic surgery, another organ that requires painstaking precision and relies heavily on preoperative imaging.

This app could be further improved, in my opinion, by adapting a head-worn, see-through display with a built-in camera. The surgeon would remain focused on the task and the 3D imaging would be superimposed on his field of vision. There would be no need for the awkward manipulation of a tablet on or near the surgical field. The other members of the surgical team could have their own headsets with the surgeon’s view displayed. Of course, there are no commercially available products in this category quite yet, although Google Glass is a promising candidate.

Takeaways: This is a great example of innovation in medicine by adapting the familiar (physicians are heavy adopters of iPhones and iPads) to a serious clinical problem through the development of an easy to use software app. The lesson for entrepreneurs and startup CEOs (again) is to leverage the billions of dollars of investments made by others in consumer technology and then to add value by 1. understanding the clinical problem and 2. developing a unique solution with the leveraged technology. It’s a fast, relatively inexpensive path to the market.

Read more: Fraunhofer iPad app guides liver surgery through augmented reality.

Medical Device Design Transfer to a Contract Manufacturer | MDDI Medical Device and Diagnostic Industry

It is increasingly possible to set up a medical device startup as a “virtual” company. With the ubiquity of high speed internet connections and inexpensive, even free, web conferencing applications along with cloud-based file sharing sites, savvy entrepreneurs focused on commercializing quickly and with minimum expense can use outsourced services, contractors and consultants for just about everything.

There are contract design houses, contract clinical research organizations, “rent-a-CFO” firms, freelance sites for graphic designers and all sorts of marketing experts, manufacturer’s representative sales organizations, outsourced customer service and support organizations, logistics companies to warehouse and distribute your products, websites that will display your product and process customer orders, and (the subject of this article) contract manufacturing organizations (CMO).

This article from MDDI explains in detail how to design in anticipation of using a contract manufacturing organization. The logic and elements should be easily understood by anyone with ISO9000 experience, as the process is to “plan the work and work the plan.” The first step is to create a Design Transfer Toolbox. In the toolbox are a number of specifications, documents, and plans. From the article:

  • User requirements specification (URS). What must the process do?
  • Sequence of events (SOE) chart. When will each assembly step occur?
  • Functional requirements specification (FRS). How will the process operate? How will the functionality be tested?
  • Design specification (DS). How will the configuration of the process with detailed drawings and databases be defined?
  • Trace matrix. How is each design requirement tested and verified? This directly relates each requirement to test functionality.
  • Process failure modes and effects analysis (pFMEA). How will the CMO prove it has built the right product in the right way? Input document is the product design failure mode and effects analysis (dFMEA).

It’s important to understand that this is a collaborative process between the medical device company and the CMO. The various specifications and processes must be detailed and agreed to by both parties before a contract is signed and work commences. The consequences of not following rigorous documentation and not having copious communications will be delays, quality problems, and regulatory infractions. On the other hand, investing time and effort before doing the design transfer can result in a high quality, cost-competitive manufacturing process and a successful long-term relationship between the medical device company and the CMO.

Takeaways: Not only are virtual medical device companies possible, there are high quality, reasonably priced companies and individuals operating as contractors, consultants, and freelancers that are eager for your business. If you are a medical device startup CEO with an urgent need to get to market, you should consider outsourcing areas outside of your core competencies. You will save money and time.

Read more: Elements of Effective Device Design Transfer to a Contract Manufacturer | MDDI Medical Device and Diagnostic Industry News

This startup wants to help you save on medical bills by taking control of your health | GeekWire

Health 2.0“, also known as digital health – focusing on improving people’s health through a constantly evolving mix of web or mobile device apps and educational software and websites, social media, personal health records, and various forms of connected sensors – is growing and attracting much attention, from entrepreneurs, investors, the media, and public health officials.

The basic idea is that people can take charge of and improve their own health – and reduce their healthcare expenses – if they have data about what’s going on with their bodies and some basic information about what to do about it. Sometimes the data is shared with a healthcare provider.

The organization Health 2.0 estimates that there are 2540 companies in the Health 2.0 segment as of June 2013. A majority of the companies, 1465, are consumer-focused while the next largest category, professional facing, has 643 participants. There are 203 companies involved with patient-provider communications and 229 companies working on data and analytics. I’m sure the overall count increases every day.

Why is Health 2.0 such a hot segment in healthcare? For one thing, the barriers to entry are lower than in other segments like medical devices or biotech. Many of the apps are unregulated or require a 510(k) marketing clearance at most. The cost to develop and deploy an app is a fraction of what it costs to commercialize a Class II medical device.

How do these companies plan to make money? That, as the (updated) saying goes, is the $64 million question. Many of the apps and web services are free. Some use the familiar freemium model where a basic version is provided free of charge and the fully-featured version is sold for a few dollars or so. What’s lacking is a recurring revenue model, or is it?

Just as Google and other companies with large user bases do, many Health 2.0 companies aggregate and sell the data generated by their apps. It’s appropriately anonymized but it’s probably worth much more in terms of lifetime revenue per user (LRPU) than the nominal charge paid by the consumer. Plenty of researchers and marketers in Big Pharma and insurance companies as well as government would love to have large data sets with behavioral data from a target population from one of their drugs, pipeline or on the market.

The company referenced in the article, Health123, was started by ex-Microsoft and Seattle tech veterans. They plan to approach employers with the prospect of reducing their health insurance expenses by improving employee health through deployment and use of their app. It’s another revenue model. It also raises serious privacy concerns as seen in a lively discussion in the article comments.

It’s tempting to think that your company could be the one to demonstrate positive outcomes. It seems to me that there is much anticipation regarding effective health apps that can improve public health and/or “bend the cost curve” as the healthcare policy wonks like to say. Looks like there are a couple of thousand startups that are in agreement.

Takeaways: Health 2.0 presents many opportunities for medical device and healthcare IT entrepreneurs. Even hardware companies can get in on the action via development and integration of all sorts of physiologic sensors. This could turn into a “land grab” where small and nimble startups do all of the innovation and are then snapped up for outlandish valuations by big medical device and healthcare IT companies who can’t afford to miss the market opportunity.

Read more: This startup wants to help you save on medical bills by taking control of your health – GeekWire.

Crowdfunding for Medical Devices

The notion of crowdfunding early stage medical device development is spreading. By now everyone is familiar with Kickstarter and the many examples of companies that have successfully raised funds by appealing to large numbers of “average Joe/Jill” supporters. There are more than a few copycats now that Kickstarter has been successful. Most, however, do not encourage or permit crowdfunding of medical devices.

http://blogs-images.forbes.com/85broads/files/2012/03/crowdfunding-photo.jpg
Image from Forbes.com

There is obviously a funding gap for many early stage medical device companies. Venture capitalists have abandoned the early market except for blue chip prospects. Angel investors have become extremely risk-averse in my opinion and have functionally replaced VCs (although not the big VC investments of 10-15 years ago). Between federal budget sequestration and increased competition, grants from NIH, CDC, NSF, and DoD have dried up and take too long to be a reliable source of funds for most startups.

As usual, savvy entrepreneurs to the rescue! Here are a few specialized sites that are crowdfunding medical device startups:

  • Medstartr “Patients, Doctors, and Companies Funding Healthcare Innovation.”
  • Poliwogg “Put Your Money Where Your Passion Is”
  • indiegogo “The world’s funding platform. Fund what matters to you.
  • b-a-medfounder “A uniquely positioned crowdfunding platform dedicated to medical device invention and innovation projects.”
  • healthfundr “Accelerate health innovation. Invest in the companies shaping the future of health.
  • microryza “FOLLOW & FUND SCIENTIFIC RESEARCH

Many of these sites and organizations are new and do not have a track record. Most are focused on investors who want to put in a small amount of capital. Perhaps they are angel investment neophytes who are just starting out or maybe they prefer to make lots of small investments. Who knows? Others seem to focus on “donors” who are essentially giving a gift to the company, again, for very personal reasons. In any event, all of the crowdfunding sites seem like resources to investigate for early stage startups looking for that first $100k or so of seed funding.

It will be interesting to see how these services develop. As many of you know, early stage investors can get diluted down to almost nothing in terms of equity very quickly. And although medical devices cost only a fraction of what a biotech drug might cost to develop, it still requires a minimum of a few million dollars in capital to get a Class II device to market. If that funding is stretched out over a few rounds, the early stage investors almost certainly won’t get much, if any, return on their investments.

It remains to be seen if a relatively obscure and small niche like medical device development can attract sufficiently large numbers of investors. It’s also a big unknown if the proliferation of crowdfunding sites prevents any of them from reaching a critical mass of investors.

There are caveats in using these services, of course. Just as investors perform due diligence on you and your startup, so must you conduct your own diligence on the crowdfunders. Keep in mind also that these are for-profit businesses, not charities. They will take a percentage of the funds you raise. One popular crowdfunding model takes a percentage if you raise your target amount and a larger percentage if you fail to achieve your fundraising goal. I suppose that’s intended to be an incentive for you to work hard to promote your offer.

There is also some uncertainty about how these sites screen for accredited investors and avoid the laws against general solicitation. I’m certainly not well-versed in these matters but I’ve been keeping up with recent new regulations issued by the SEC on a blog written by a Seattle attorney, William Carleton. Read it here: Counselor @ Law.

There is also an older, more established online funding presence at AngelList.

Takeaways: Crowdfunding is a relatively new funding option for medical device startup CEOs and CFOs to consider. Add this option to your fundraising toolbox. Keep in mind that these investors may be less financially sophisticated and less experienced than the typical angel investors you are accustomed to dealing with. Some of these investors may be making decisions based on emotion. I strongly recommend consulting an attorney before signing up with any of these services and at least getting a thorough review of the service’s terms and conditions.

Read more: Inventor launches crowdfunding hub for medical devices – FierceMedicalDevices.

How Doctors Think About New Technologies | The Health Care Blog

Valuable insights into the mind of a physician – written by Leslie Kernisan, MD, a physician! Let’s face it, most of the time when we’re talking with doctors, we’re trying to get feedback about our product or idea or we’re trying to sell our product or idea. That doesn’t leave a lot of time to ask about how doctors think about new technologies or what their decision-making processes/criteria are for new technologies.

Here are a couple of observations from the blog post:

  • Vague, disorganized, or poorly designed websites drive visitors away, especially busy physicians.
  • Doctors prefer to consume information offline as mentioned in this blog post.
  • Don’t expect a busy clinician to call or email for more information. The information you provide must be sufficient the first time around.

And here are her questions about the new technology:

  • Does it solve a clinical problem she is experiencing?
  • What evidence exists that the technology will solve a problem, improve outcomes, or improve patient health?
  • How does it compare to the gold standard in terms of method, outcomes, complications, etc.?
  • How exactly does it work – be general and specific here. The physician may want to know how your technology works but they must know how it works in the context of the other devices and systems they use daily.
  • How easy is it to use? What’s the learning curve? Can you show a video of the device in use? Can you provide sample screens of a software application including drop-down menus?
  • How easy would it be to try the technology? Does it require significant financial investment, integration, or time investment, i.e., training, learning curve cases. Who bears the risk if the trial is unsuccessful?
  • Is it cost-effective? Show some financial examples and compare with popular alternatives.
  • What are the benefits to the patient and to the physician? Don’t just focus on features.
  • Who is the “ideal” patient for your technology? What about fit for the patients at the extremes of complexity, both simple and hopelessly complicated? Will it work for them?

And here are some suggestions from the doctor about how to optimize your company/product website to make it easier to use and navigate and also to get the information to the user:

  • Create a page or section for clinicians. Don’t exclude the general public but use proper medical, scientific, and technical terminology and keep the marketing-speak to a minimum.
  • Consider having more than one “how it works” section. Some people like a general explanation while others prefer detail. Also, provide the information in multiple formats. Some prefer print, others pictures and diagrams, and others like to watch video.
  • Offer downloadable brochures in PDF format, again in different levels of complexity.
  • Provide evidence of efficacy. This is especially important for physicians considering the trial of a new technology. If it’s insufficient, they will let you know. If it’s inaccessible, however, you may never know why they refused your offer.
  • Be sure to compare your product against the gold standard or traditional clinical practice along whatever dimensions are important to users. Either think like the user or ask them what data they would like to see in order to make a decision.
  • Offer a free trial or some equivalent risk mitigation. Do not expect the doctor to bear all of the risk in evaluating your product. They won’t.
  • Identify your benefits and advantages vs. the competition. Don’t exaggerate – your product does not need to be better in every category to be considered for a trial.

Takeaways: If you are a startup CEO or medical device product manager, make sure the information you are providing is tailored to your target customer. Keep in mind that evaluation is part of the sales process. Your goal is to get to the next stage in the process, evaluation/trial. You do not need to win the sale at this point. Prematurely trying to close a sale often kills it. Finally, think in terms of the big picture when providing information for evaluation. Put yourself in the place of the doctor and/or patient and ask yourself what information you need to make a decision. Consider the other systems and processes that your device or technology must integrate with. And above all, be fair about allocating the risk when asking doctors for evaluations and trials.

Read more: How Doctors Think About New Technologies | The Health Care Blog.

Henry Ford, Innovation, and That “Faster Horse” Quote | Harvard Business Review

OK, so Henry Ford never actually said, “If I had asked people what they wanted, they would have said faster horses.” But he might have thought it, and he definitely managed that way.

http://s1.cdn.autoevolution.com/images/news/legacy-of-the-ford-model-t-100-years-after-thumb-1380_2.jpg

“Henry Ford’s genius lay not in inventing the assembly line, interchangeable parts, or the automobile (he didn’t invent any of them). Instead, his initial advantage came from his creation of a virtuous circle that underpinned his vision for the first durable mass-market automobile. He adapted the moving assembly line process for the manufacture of automobiles, which allowed him to manufacture, market and sell the Model T at a significantly lower price than his competition, enabling the creation of a new and rapidly growing market.

But in doing so, Henry Ford froze the design of the Model T. Freezing the design of the Model T catalyzed the speed of this virtuous circle, allowing him to better refine the moving assembly line process, which in turn allowed him to cut costs further, lower prices even further, and drive the growth of Ford Motor Company from 10,000 cars manufactured in 1908 to 472,350 cars in 1915 to 933,720 cars in 1920.”

Unfortunately for Ford, his company was out-disrupted by Alfred P. Sloan and General Motors, which introduced a dizzying array of innovations in the ensuing years, dooming Ford to decades of second place in the race for automotive market share.

I worked for a time in marketing at General Motors. We experienced the same frustration in focus groups. People are great at asking for incremental innovations and improvements, particularly if they are experiencing a problem and if they are asked, “what do you want?” But ask them what they want in personal transportation in ten years and you either get blank stares or Jetsons flying car suggestions.

It’s the same in medicine. Performing market research with actual healthcare professionals is necessary but not sufficient. They are immersed in the day-to-day drama of healing patients and dealing with monstrous bureaucracies. It doesn’t leave much time or energy for dreaming. You can find lots of small problems to solve by spending time with healthcare workers and asking lots of questions but you need a visionary founder or a visionary physician to imagine big innovations.

Medical device entrepreneurs have to walk a fine line. On one hand, they need to establish a solution for an unmet need and show that they can grow their market in a credible way. Unfortunately, that’s a bit too conservative an approach to satisfy most investors and stakeholders. On the other hand, they can “swing for the fences” and try to commercialize a disruptive idea. That strategy usually leads to feedback that they are taking too big a risk. Either way, funding is difficult and it may be tough to recruit employees and board members.

Sometimes it’s a matter of credibility. If this is your first startup or if you have a string of less-than-successful startups, maybe you can start by playing “small ball” – to use a baseball term. Get a few wins and show the world that you can plan and execute, then bring out your Big Idea. Of course, if you have a track record of success, you can probably successfully pitch investors and attract early employees without much difficulty.

For startup CEOs, it’s a good time to reflect on why you started the company. Was it to change the world or just to make a few bucks? Perhaps your strategy should reflect your passion.

Takeaways: Do perform market research, early and often as you work to establish your startup and idea. Don’t expect perfect market validation for your disruptive idea. Consider an incremental approach if you aren’t getting traction with customers, investors, or stakeholders. Establish relationships with the visionaries in your market segment.

Read more: Henry Ford, Innovation, and That “Faster Horse” Quote – Patrick Vlaskovits – Harvard Business Review.

You Can Now Find Out What Your Doctor Is Writing Down In That File | Fast Company

This is a follow-up in a way to yesterday’s post about interoperability in healthcare IT applications. It turns out that a team of researchers has developed and deployed software called Open Notes that allows patients to see their medical records and review their doctors’ visit notes. In a trial completed in 2012 of 14,000 patients at several leading medical centers, including Harborview in Seattle, study organizers reported that the results exceeded expectations:

Patients with OpenNotes reported better care, while doctors experienced little additional work. Of the patients with access to OpenNotes, almost all opened their records, more than 60% reported they took medications more regularly and 77% said they felt more in control of their care. By the end, every single doctor opted to continue with the program, along with 99% of the patients in the program.

This is the kind of innovation that costs almost nothing to implement and has the potential to have large positive effects on healthcare costs and patient health. Last month, the organization reported that the U.S. Veterans Administration (VA) joined as a full partner and is offering OpenNotes to its >1 million patients.

My knowledge of the VA is that they are heavily data and outcomes-oriented. I’m sure they will be doing analysis to determine the actual effect on costs and patient benefits. As they are a closed system and highly computerized, they have the ability to conduct relatively fast studies with high statistical significance.

The Open Notes projects is run by Tom Delbanco, MD and Jan Walker, RN, MBA. Both are on the faculty at Harvard Medical School and Beth Israel Deaconess Medical Center. They have been working on Open Notes since 2008 and have received funding from the Robert Wood Johnson Foundation, among others.

Now we need someone to take on the problem of corporate data silos in healthcare IT.

Takeaways: Even small ideas can have large effects. A side benefit is that small ideas are easier to explain. If you are having trouble finding angel or VC investors for your startup, consider “venture philanthropy.” There are many foundations that might consider a grant if it even tangentially helps achieve one of their goals. Not sure if you have a valid business model? This team charged ahead with grant funding and now has powerful evidence that they might have a solution to a very big healthcare problem.

Read more: You Can Now Find Out What Your Doctor Is Writing Down In That File | Co.Exist: World changing ideas and innovation.

Healthcare’s interoperability problem isn’t about technology | MedCity News

So the crux of this problem is that hospitals/institutions/clinicians think they “own” patient data. If we in America ever want to achieve the significant potential savings that could be realized through application of various forms of information technology to the healthcare system, the mindset will have to change. The patient owns his/her patient data.

Big Data, the catchphrase to indicate that every click on the Internet is captured, aggregated, and analyzed, is already in wide use by all sorts of consumer companies, large and small. It works – to reduce costs, to fine tune marketing messages, and to enable highly specific targeting of a company’s best prospects. It works because – except for “walled gardens” like Facebook – the data generated by Internet users is freely available for anyone to use.

There is no reason to think that Big Data won’t work equally well in healthcare. The problem is that healthcare data resides in an enormous number of well-insulated silos. Very few of the silos share anything, even sometimes within an institution.

Consider a patient with several doctors – a primary care physician, a cardiologist, and an endocrinologist. It’s very possible that the three doctors cannot access their patient’s records from their colleagues without special requests and permissions. Sure, they may get test results and written summaries of procedures but the minutiae where much actionable data is hidden is kept locked up in proprietary systems.

Consider a healthcare IT startup that needs (anonymized) patient data to validate its offering and to demonstrate its claimed benefits. It must cut deals with a number of providers to access the data. This takes time and costs money, two things not in abundance at most startups. And yet investors and customers demand proof of beneficial economic outcomes before investing or buying. A classic catch-22 situation.

Yet another example is a medical software startup (now defunct) where I once worked. They developed a terrific 3D image viewer that could run on low-end PCs, tablets, and laptops. At the time, 3D image viewing and manipulation was limited to high end workstations costing tens of thousands of dollars. The company had to negotiate deals with every hospital’s PACS administrator and vendor (there were many) and then write specific software to access the PACS servers. This was not a sustainable business model and the company went broke.

The CEO of HIMSS (Healthcare Information and Management Systems Society) acknowledges the problem. He doesn’t have a ready solution, however but he admits that part of the problem is the way our system reimburses providers for tests and procedures and not for health improvements. He does hint that Medicare will be changing its reimbursement structure over time and that private insurers are sure to follow.

Takeaways: The two buzzwords in this segment are interoperability and portability. It seems to me that an industry standard could be written enabling two-way access to any appropriately anonymized data. In addition, electronic medical records need standards so that users wanting to switch to a different vendor are not held hostage by high switching costs caused by the need to remap data fields, etc. In the modern day Gold Rush of companies looking to make fortunes in healthcare IT, perhaps there is another Levi’s looking to profit by selling shovels and overalls to the miners.

Read more: Healthcare’s interoperability problem isn’t about technology: A Q&A with HIMSS CEO | MedCity News.

Verizon gets its first FDA clearance for remote monitoring tool for chronic conditions | MedCity News

It’s big news when one of the world’s largest telecommunications companies obtains a 510(k) marketing clearance for a mobile health application. Verizon is developing a cloud-based Converged Health Management software application. The device collects data from in-home monitoring devices such as blood pressure monitors, pulse oximeters, etc. and is perhaps planned to feed into a patient’s electronic medical record. The application seems to be primarily intended for clinicians to access and monitor patient data but patients can view their own data as well.

Verizon partnered with a small Canadian company, IDEAL Life, which will provide the remote devices. Apparently, Verizon will provide the wireless network, application(s), and cloud storage.

Other telecom companies have pursued this mobile health market, which is projected to be worth close to $300 million by 2019. AT&T, Qualcomm, and Sprint have invested in the space. AT&T is partnered with Intuitive Health for their market entry.

All of these companies see the low-hanging fruit: managing chronic medical conditions can reduce costs and improve health while providing a hefty return on investment to any company that can establish a significant market presence. The strategic benefits to the telecommunications companies include locking customers to their networks and garnering high margin data traffic just as the consumer mobile telecom market is starting to commoditize.

Takeaways: Partnering with a gigantic multinational can be terrifying but if you can tolerate the risk, leveraging their massive assets can scale up your technology or solution quickly and with minimal investment on your part. Perhaps you can even avoid angel or venture investment. If you are a startup CEO or product manager developing mobile health technology, make sure you contact every obvious and non-obvious (Intel, Qualcomm) target partner. The telecom companies need medical device expertise and technology. They have the infrastructure and cash to build an end-to-end solution.

Read more: Verizon gets its first FDA clearance for remote monitoring tool for chronic conditions | MedCity News.

The Healthcare IT Applications of Google Glass | MedCity News

Once everyone gets over the hyped privacy invasion and “OMG, you look like Geordi La Forge from Star Trek!” reactions, I’m expecting Google Glass to be incredibly useful in vertical markets like healthcare and applications like accessing real-time patient data and information.

Image of Geordi La Forge from Wikipedia http://upload.wikimedia.org/wikipedia/en/thumb/0/04/GeordiLaForge.jpg/250px-GeordiLaForge.jpg

The author of this article, Dr. John D. Halamka, is Chief Information Officer of Beth Israel Deaconess Medical Center, Chairman of the New England Healthcare Exchange Network (NEHEN), Co-Chair of the HIT Standards Committee, a full Professor at Harvard Medical School, and a practicing Emergency Physician.

His ideas for Google Glass:

  1.  Nurses can use it to assure they are dispensing the right dose of the correct medication to patients. I’ve seen some clunky bar code products that are in active use. This would be a big improvement.
  2. Doctors can use it to document every patient encounter using real time audio and video. The patient could be sent a link to the recording to help reinforce the interaction!
  3. Emergency physicians could access a Patient Dashboard with real-time vital statistics, personal information from an EMR, and lab and imaging test results. The doctor need never look away from the patient. Dr. Halamka reports he is planning to pilot such an application at his hospital soon.
  4. Visual display of a decision support algorithm for nurses, physicians, and emergency workers. No need to rely on your faulty memory when you can ask Google what’s next.
  5. Display of alerts and reminders during the work day. OK, this is one we all do already with our smart phones but imagine a busy clinician who doesn’t have time or can’t break sterility to check his/her phone. All possible with Google Glass and voice commands.

Takeaways: There are plenty of problems remaining to be solved in healthcare. Many of them could be the nexus of a new startup. Often the clinicians just tolerate the problems because they don’t know what to do about them. Developing relationships with tech-savvy and tech-friendly clinicians has the potential to identify the problems and perhaps initiate a rewarding collaboration. Additionally, you can leverage the massive investment that Google (and soon, others) are making in this technology by developing vertical applications while they are still focused on consumer apps.

Read more:The Healthcare IT Applications of Google Glass | MedCity News.

Should President Bush Have Taken Drugs Instead of Undergoing Stent Surgery? | MDDI Medical Device and Diagnostic Industry News

What a timely topic – and a perfect example for a patient. No matter what you think of George W. Bush, it’s clear that he prides himself on being in great physical shape. I’m sure he was quite shocked when his cardiologist told him he had blockage in one of his coronary arteries.

What happened after that is a microcosm of what’s right and what’s wrong with our healthcare system.

Of course, ex-Presidents, along with ex-congressmen and women (> 5 years government service) get the best healthcare our government can offer. In fact, Congress recently exempted itself from the provisions of the Affordable Care Act. President Bush gets government medical care for life.

From thee Congressional Research Service:

Health Benefits
No statutes explicitly govern the payment of health benefits for former Presidents. Generally, however, former federal employees must be enrolled in the Federal Employees Health Benefits program for five years to qualify for health benefits (5 U.S.C. §8905(a)). GSA, historically, has interpreted similar service requirements for a former President to qualify as a federal annuitant (defined in 5 U.S.C. §8901(3)). Presidential terms are four years. Jimmy Carter served a single presidential term, and, therefore, does not qualify for federally funded health benefits. Although George H.W. Bush served only one term as President, he is entitled to federal health benefits because of his extensive federal
service in other positions, including Director of Central Intelligence and Ambassador to the United Nations. While former President George H.W. Bush is eligible for federal health benefits, he opts not to receive them.52 Since former President Clinton served two presidential terms and receives a monthly pension, GSA’s position is that he qualifies for federal health benefits. George W. Bush is eligible for and receives federal health benefits.

Now President Bush had no symptoms of angina and was definitely not in heart failure or having an acute heart attack – all indications for stenting. No, his cardiologist decided to stent prophylactically.

Dr. Steven Nissen, a well-respected and world-renowned cardiologist, had this to say:

“It’s one of the reasons we spend so much on health care and we don’t get a lot for it. In this circumstance, the stent doesn’t prolong life, it doesn’t prevent heart attacks and it’s hard to make a patient who has no symptoms feel better.”

So a member of the elite, perhaps even one of the 1%, has the best medical coverage available. He no doubt has access to the best physicians. He goes to a hospital that is equipped with all of the latest technology. He gets some sort of high tech imaging of his coronary arteries even though he had no symptoms. Our innovative medical device industry has developed the stent, an amazing device that can save lives and relieve symptoms. Our pharmaceutical industry has developed equally amazing drugs that can also save lives and relieve symptoms. In President Bush’s case, his cardiologist decided to employ immediate treatment via stenting rather than long term medical therapy.

As far as I know there has been no definitive randomized clinical study establishing an advantage of (expensive) interventional treatments such as stenting vs. (relatively inexpensive) medical therapy.

So why did President Bush get a stent instead of medical therapy? Who knows – but it’s fairly representative of the way our healthcare system works. People with excellent medical insurance get the best medical care (bordering on unnecessary?) because the physicians and hospitals get adequately reimbursed. Some physicians like the instant gratification of interventional therapy and perhaps the extra income that goes along with it. The rest of us with high copays and deductibles probably end up with the drugs. If we are asymptomatic, we don’t even get the imaging study.

Repeat this scenario thousands of times per day and it starts to become clear why the U.S. spends more than twice as much in percentage of GDP on healthcare as any other developed country and why our national health is no better than average compared with all countries of the world.

Takeaways: PR (press relations) is a two-edged sword. The media love stories like this, however, it exposes the subject and perhaps the company placing the story to criticism, warranted or unwarranted. Savvy startup CEOs and medical device marketing managers should consider the upside and the downside of every story considered for pitching to the press.

Read more: Should President Bush Have Taken Drugs Instead of Undergoing Stent Surgery? | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Wireless Power For Medical Devices | MDDI Medical Device and Diagnostic Industry News

A breakthrough in wireless power delivery invented by physicists at MIT and being commercialized by their startup, Witricity, has the potential to dramatically change the medical device and healthcare industries.

The new technology, called highly resonant wireless power transfer, is more powerful and more efficient than current methods of wireless power delivery such as inductive coupling, used in devices like electric toothbrushes. The new technology can operate over “tens of centimeters” compared to a millimeter or two for the old and fussy inductive technology.

What does this mean? Think of electrically powered devices like ventricular assist devices, pacemakers, defibrillators, cochlear, and ophthalmic implants powered externally without wires or battery powered with easy and convenient recharging through the air. No need for skin contact or transdermal leads with high risk of infection (not to mention irritating to the patient and just not nice to look at).

As the article points out, implantable devices could be designed to be hermetically sealed with smooth surfaces, eliminating the potential for leaks in both directions. Cochlear implants could be powered via a wireless charger built into an eyeglass frame. And the ultimate modality for augmented reality (as well as dynamic vision correction), smart contact lenses or intraocular lenses, could be powered in the same manner. Take that, Google Glass!

The article goes on to identify other beneficial uses of wireless power delivery in the healthcare environment. Power surgical tools could lose their electrical cord as could carts of medical equipment, reducing clutter, trip hazard, and infection risk.

I’m sure the same technology will ultimately make its way to consumer products. I’m envisioning an airport lounge where a gaggle of road warriors is clustered around a wireless charging station instead of fighting for a scarce electrical outlet. There are no doubt lots of other applications in vertical markets. The company is savvy to start with medical devices where margins are large, patient demand could drive adoption, and the benefits are quantifiable.

Witricity is already working with Thoratec, makers of an implantable ventricular assist device. While the technology itself may not be disruptive, adding it as a feature to existing product categories is a game changer. Wireless power delivery has the potential to energize (no pun intended) patients and physicians to demand the feature in their products.

Takeaways: Medical device product managers and design engineers as well as startup CEOs should be constantly on the lookout for feature-level innovations that can be added to their products. It’s even better if an exclusive can be negotiated for some period of time. Of course the risk to cost, schedule, and reliability must always be considered but in a crowded market segment where differentiation is tough to come by, a feature like wireless power delivery can provide real competitive advantage.

Read more: Wireless Power For Medical Devices | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

In Need of a New Hip, but Priced Out of the U.S. | NYTimes.com

There is much to be concerned about and even outraged over in this story but I can’t blame medical device companies for maximizing their profits in every way possible. That’s what businesses do.

First of all, Michael Shopenn, the subject of the story, was denied coverage for a hip replacement because it was caused by an old sports injury, making it the dreaded pre-existing condition. Aren’t all chronic conditions caused by something, even if we can’t identify the event or underlying pathology? Denying this sort of claim is good only for the insurance company’s bottom line.

The good news is that the Affordable Care Act aka Obamacare outlaws this abusive practice. Unfortunately, it comes 6 years too late to help Mr. Shopenn.

Second, the article reports that Mr. Shopenn used his contacts to finagle a hip implant “at cost”, $13,000, from Zimmer. There is no way that it costs Zimmer $13,000 to make an implant, even if you add on every conceivable indirect overhead expense. More likely, the implant costs a few hundred dollars, making a very tidy gross margin in the 90% range for Zimmer. The $13,000 “cost” is probably the list price to the hospital.

Of course, since Mr. Shopenn is now out of the cozy womb of managed care and contract pricing, he’s looking at the same huge markups that uninsured people encounter whenever they are injured or sick and are forced to make an emergency department visit. And yes, the law requires that no patient is turned away from the emergency department but they are required to sign contracts guaranteeing that they will pay back the hospital. Of course, the uninsured are not people with substantial assets. They are often living paycheck to paycheck and the ongoing debt payments drive them into bankruptcy.

The hospital reportedly quoted $65,000 for the hospital part of the surgery, excluding the cost of the implant and surgeons’ fees. Feeling any outrage yet?

Mr. Shopenn then decided to pursue the option of medical tourism, a phenomenon that has gained momentum in the past few years. Medical tourism has blossomed because of several factors. The Internet has made it possible for anyone to get lots of information about even obscure topics like medical tourism. Online communities enable people to compare notes and leave detailed reviews. Highly trained and competent healthcare professionals often train in the U.S., Europe and other technically and medically advanced countries. They then go home to their countries of origin and establish practices there. Many of those countries have government-regulated healthcare systems with rigid pricing, even for foreigners. Finally, many of the destination countries for medical tourism have a low cost of living, making the medical cost base low.

Much has been made in the media of medical tourism in places like India and Thailand. Mr. Shopeen decided the risk of his major procedure in a developing country was too great for him, so he chose to go to Belgium.

Belgium is not a country with a low cost of living but it does have an excellent medical facility infrastructure and many fine healthcare professionals, including orthopedic surgeons. I’ll quote the actual costs because they are so incredible:

“…he ultimately chose to have his hip replaced in 2007 at a private hospital outside Brussels for $13,660. That price included not only a hip joint, made by Warsaw-based Zimmer Holdings, but also all doctors’ fees, operating room charges, crutches, medicine, a hospital room for five days, a week in rehab and a round-trip ticket from America.”

I have no doubt that the same level of care in the U. S. would have cost him more than ten times as much at the “list prices” he was being quoted.

The New York Times article focuses on the pricing of the orthopedic implants, making the case that the handful of companies developing and selling the implants amounts to a cartel. That may be true, but it’s perfectly legal, just as any small group of manufacturers tends to drive up prices to maximize profits. Like gasoline refineries, for example. The problem is that no individual payer (except perhaps, Medicare) has enough unit volume purchases from a given manufacturer (= power to negotiate volume discounts) to affect prices. The implant companies are free to maximize profits in each market. They clearly do not make as much in Belgium on an implant as they do in the U. S. But they must be profitable there or they wouldn’t stay in the Belgian market.

The markups that U.S. hospitals charge are just as big an issue as the device pricing, perhaps even bigger. The system flourishes because insurance companies pay – and maintain their profitability by routinely imparting double digit price increases. Sure they negotiate down from the absurdly inflated “rack rates” but the prices are still much higher than in countries with single payer reimbursement systems and stricter government regulation. But we have better outcomes as a result of all of this money, right? Sadly, no. The U.S. is just average when it comes to medical outcomes, population health, longevity, infant mortality, and most other health metrics.

At 17.6% of our gross domestic product and still growing, healthcare expenses are out of control. There is no simple solution nor is there a single party to blame. We need only to look overseas to see that there are different and better ways of managing a healthcare system. Could Obamacare be the first step toward “bending the cost curve” in the U.S.? Check back in five or ten years. One thing is for sure. There are trillions of dollars at stake and there are very powerful factions that want to maintain the status quo.

Takeaways: A market like orthopedic implants is ripe for disruptive innovation. A brash startup, perhaps comprised of ex-employees of the cartel, could introduce a bare-bones (no pun intended) implant, price it well under the cartel’s prices, and still do very well financially. Sure there is a minefield of patents to maneuver through but it seems to me that this is exactly what entrepreneurs do.

Any takers?

Read more: In Need of a New Hip, but Priced Out of the U.S. – NYTimes.com.

The 4 types of buyers for your medical device (and you need a “yes” from all of them) | Medical Device Commercialization 101

Marketing and selling medical devices is complicated. They are highly regulated, competition is intense, and the stakes are high. There are a number of stakeholders and constituents who must say yes – or at least not say no – before you can sell your device.

If you are a startup CEO, medical device sales representative, product manager, or marketing manager, use this general list and description as a place to start to develop a plan. As you get more granular, i.e., at the hospital level, the buyer types and the purchasing process will become very specific. You need a plan to address the needs and overcome the objections of every one of the buyer types and often, more than one buyer in a given category. What I’ve learned in marketing medical devices is that only a few people can say yes to a medical device purchase but many can say no.

I’ve identified four categories of buyers. There are often multiple buyers within each category.

  1. User buyer
  2. Economic buyer
  3. Technical buyer
  4. Paying buyer

Let’s examine each category in more detail:

The user buyer is typically the physician or surgeon. A user buyer can also be a physician’s assistant, nurse, surgical technician or other healthcare professional – literally, anyone who might touch the product. The caveat here is to make sure you address all of the user buyers and satisfy their needs or at least neutralize their objections. I have seen large sales get derailed because a circulating nurse in the O.R. did not like a product’s packaging and was influential enough to use her veto power.

Physician user buyers may have less power than you think to influence a purchase. While they usually have some clout to request specific items for their likes/dislikes, economics and standardization are often invoked to deny requests from less influential doctors. And doctors, just like the rest of us, like to keep some influence in reserve for a time when they might really need it. Just another way of separating “must have” from “nice to have.”

The real challenge is in trying to convert an entire department or practice to a new product. Not only do you have to “sell” all of the user buyers but you have to convince a key decision-maker like a department head to use his/her authority to finalize the decision. This is an area where your marketing staff needs to craft highly specific comparison materials detailing the beneficial features, benefits, and advantages of your product/service. Your sales representative will need to use his/her relationships with all of these people and invest considerable time within the facility to keep the sale/conversion going.

You also need to carefully consider all user requirements before finalizing your product’s features and functions. The old cliche is that you sell the benefits, not the features, but this is an exception. If you omit or include the wrong feature, someone you will never meet may kill your product’s deployment at one or more sites. Market research is extremely important at this phase – well before product design commences.

The key is to identify a need among the user buyers, then establish a value for your product by emphasizing and quantifying your product’s unique benefits, and thus justify a premium price. Easier said than done.

The economic buyer can be a purchasing agent or executive, a department head with budgetary authority such as the O.R. Director (often a nurse) or head of the Emergency Department or ICU, an accountant or even the hospital’s CFO or CEO.

For capital items and capital leases and for purchases that affect a number of people, e.g., physicians, nurses, techs, a purchasing committee (may have a number of different names) often makes purchase decisions. It will be important to know who is on the committee and how to access the committee in order to supply information. At a tactical level, the sales representative or account manager for a given hospital or other site must map out the economic buyers. This requires real diplomacy and smooth interactions, as often the information is not given freely.

The trick with economic buyers is to spend as little time and effort with them as possible. The investment should be in creating demand from the user buyers and in giving the user buyers a business case to justify the purchase. You must avoid inadvertently having your product categorized as a commodity. In that case, your product will be viewed as interchangeable with other products and the (premature) negotiations over pricing will begin.

The technical buyer can be someone in the Biomedical Engineering Department if the facility is large enough to have that resource or it could be another technical person in a completely different area who performs biomedical engineering functions in his/her spare time. In rare cases, the technical buyer could be a healthcare professional such as a physician.

In any event, get your compliance engineer in touch with this person ASAP to determine if there are unusual or extraordinary requirements. Also make sure the biomedical engineer understands all of the features and functions of your device, including IEC 60601, UL, etc. If you have a software product or a physical product with software functions, you may need to get the blessing of the CIO, CTO, or other technology executive or one of their reports. Obviously, HIPAA compliance is a hot topic with everyone so it will be helpful to demonstrate compliance in advance.

The paying buyer is usually an insurance company or Medicare. For procedures that aren’t reimbursed such as elective plastic surgery, the paying buyer can be the patient or it can be the physician for minor products that are consumed or implanted as part of a procedure.

Making sure your device has the proper reimbursement codes is beyond the scope of this article but I strongly recommend engaging a reimbursement consultant and following their recommendations before completing your plan and long before planning your market launch. That step is critical for maximizing your revenue and proving to investors that you have a sound business model and know how you are going to make money.

Whether conducting primary market research to plan a launch and understand the purchasing process for your device or moving through the sales process at a target healthcare facility, always ask two questions to whomever you are selling: First, can you make the decision to purchase this product/service on your own? If the answer is no, ask who does have that authority and then target that person. If the answer is yes, then ask if the person has a budget with which to purchase the product/service. If the answer is no, they are no longer a serious prospect.

Takeaways: Use market research, competitive analysis, and field representative input to develop a plan to address all four of the medical device buyer types: user buyers, economic buyers, technical buyers, and payer buyers. Keep in mind that anyone could have veto power over your sale. Avoid commoditization of your product by emphasizing benefits over features and by relating benefits to value.

Four Signs That a Medtech Firm Needs To Reinvent Itself | MDDI Medical Device and Diagnostic Industry

As the cliche goes, hindsight is 20-20. I wish I had known these signs of internal rot at the start of my career but I’ve earned my scars from learning the very hard lessons about innovation, complacency, etc. along the way. And I’ve seen a surprising number of companies fail that were market leaders and darlings of Wall Street at one time.

The four signs as enumerated by Arundhati Parmar, Senior Editor at Medical Device and Diagnostics Industry, are:

  1. Lack of Product Differentiation
  2. Profit Model Under Pressure
  3. Market Disruptors On the Horizon
  4. Internal Infrastructure Deteriorating 

Let’s tackle these one at a time.

The medical device industry is all about innovation. Just as sharks must move to stay alive, so must medical device companies innovate to assure their survival. No one has claimed, as one former head of the U.S. Patent Office famously did in the 1800s, that there is nothing left to invent.

Medical technology is still rapidly evolving and having major positive effects on patient health. I have seen a radical shift, however, away from internal innovation in large companies during my medical device career. Nowadays it’s common for the large device companies to invest in and then acquire innovative startup medical device companies. For startups, it’s the only exit strategy that has worked since the IPO boom of the late 1990s. If you are in a major medical device company that has stopped innovating, ask yourself why you are still there when the real action is in the small companies and startups.

Declining margins are a fairly accurate indicator of a sick business. To maintain market share with noncompetitive products, the company resorts to massive discounting, creative financing, and sometimes illegal behavior such as loading the distribution channel with unsold product in order to meet quarterly goals. Often there are write-downs and write-offs of obsolete or unsaleable inventory. These tricks are usually hidden in the quarterly and annual financial reports that all publicly traded companies must file, but sometimes it almost takes a forensic accountant to sniff out the dirty laundry being hidden.

Disruptive innovations are by definition “hiding in plain sight.” Insiders at market leading device companies consider these insolent startups as jokes until it’s too late and the joke’s on them. Consider the classic example of the rapid shift to laparoscopic cholecystecomy in the early 1990s. Many of the traditional instrument companies stayed on the sidelines while first U.S. Surgical and later Ethicon Endosurgery made hundreds of millions of dollars with procedure-specific disposable instruments. In the present day, I marvel that Medtronic paid $800 million for Ardian prior to FDA approval but concede that the market for procedure-based treatment of hypertension is massive. But look out for Kona Medical, which may be about to disrupt the disrupter with a noninvasive ultrasound treatment vs. Ardian’s radio frequency catheter-based procedure. And who will acquire Kona???

Insiders can sense when the internal infrastructure of a company needs revitalization. Key people start to leave, there is more focus on cost–cutting and top-down management fad programs, and big-name management consultants show up to gather data and have lots of meetings with top executives. There is often a curious reluctance by management to make decisions to pursue new market opportunities, as if they are afraid to take risks. The absolute worst sign is when the company engages an investment bank to study “strategic options”. If you see these signs developing, have your resume and LinkedIn profile up to date and be on good terms with the management recruiters for your market segment because change is coming soon.

Takeaways: The warning signs of the impending decline of a medical device company are easily discerned by company insiders, often long before Wall Street analysts have a clue about what’s going wrong. If you are a large device company employee, keep your wits about you, don’t be lulled into complacency and be ready to jump ship before disaster strikes. If you are a startup CEO, make sure you understand the risk in being acquired for shares of large company stock. To use one last cliche, “cash is king.”

Read more: Four Signs That a Medtech Firm Needs To Reinvent Itself (slideshow) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Hello Doctor App Helps Patients Navigate Complex Medical Conditions | Forbes

The Hello Doctor app is very specifically targeted at patients with complex medical conditions (diabetes, cancer, heart disease, etc.) who must collect and manage their own medical records because they see multiple doctors. More often than not, the doctors either have their own EMR systems or are affiliated with different healthcare systems with EMR systems that don’t share easily.

I like that the company has narrowly defined its target market. That is where Google Health failed and Microsoft Health Vault has stumbled for several years – general purpose consumer-oriented personal records are too general.

The company has started with an iPad app but are promising Android and “other” versions soon. This is smart because of Apple’s emphasis on simplicity and limited options in user interfaces – helpful for the typically older patients with these types of conditions.

One great feature is that the app allows the patient to capture paper records with the iPad camera. The app then asks the patient for information so it can be properly categorized. This has the potential for major improvement by use of optical character recognition so that the hard copy data can be extracted and recorded.

One potential issue is that the app stores all of the patient data locally, on the iPad. If the device is lost, stolen, or broken, it appears that the patient’s medical records are gone as well. I realize that there are HIPAA compliance issues, but an automatic cloud-based backup would provide security and peace of mind.

The company claims not to be subject to HIPAA regulations although they say that they may be subject in the future as they add features. They don’t appear to fall under FDA regulations either. The app is at its basic level, a database for holding personal medical records.

It’s not clear to me how the company plans to make money. The app is free but it’s still in beta. Not sure if they plan to charge once it’s commercially released or if they plan to sell in-app ads. I hope they’re not going to try to charge physicians to access their system – that model has been tried and failed! They also imply that they plan to aggregate anonymous patient data in order to supply information about clinical trials and also to give users “tools to cope with their condition.” Pharmaceutical ads, perhaps?

Takeaways: As the old saying goes, “find a niche and fill it.” The problem Hello Doctor is addressing is an inconvenience more than a major issue in the vast world of healthcare. Keep in mind, however, that once patients have invested time and effort in collecting their medical records, they are unlikely to go away and are very likely to recommend the service to their friends and relatives. Stickiness is a good quality. Also, getting a beta product out into the market quickly and inexpensively allows you to conduct “live” market research and to tweak the product as necessary. You will also have great adoption data to impress prospective investors.

Read more: http://www.forbes.com/sites/johnnosta/2013/06/09/hello-doctor-helps-patients-navigate-complex-medical-conditions/