In search of a better mousetrap…EHR system, that is

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image via mddionline.com

There has been enormous emphasis in the past few years on getting physicians to adopt electronic health records (EHRs). The HITECH Act (Health Information Technology for Economic and Clinical Health Act) part of the American Recovery and Reinvestment Act of 2008, established financial incentives for medical practices and hospitals to adopt EHRs that met specific “meaningful use” criteria. According to a recent survey, physicians are dissatisfied with their EHRs and are looking to switch.

The HITECH Act was an early effort of the Obama administration to use information technology to begin to rein in out of control healthcare costs by using data to make more informed decisions.

The Department of Health and Human Services (HHS) announced recently it has exceeded its goal of 50% of doctor offices and 80% of eligible hospitals having electronic health records (EHRs) by the end of 2013.

There are thousands of EHR products from hundreds of vendors: 3721 EHR products for ambulatory care and 1282 EHR products for inpatient care listed on the HealthIT.gov website as certified EHR solutions. Many entered the field opportunistically when it became apparent that large numbers of physicians, medical practices, and hospitals would be purchasing EHRs in response to the HITECH Act incentives.

According to research conducted by EHR software reviewer Software Advice, it appears that many physicians are unhappy with their new EHR systems: 31.2%  of medical providers are replacing their EHRs today, compared to 21.0% in 2012. That’s a 48.6 percent increase. The main reason for replacement? More than 60% of physicians reported dissatisfaction with their current system. There are multiple reasons for their unhappiness: 26% said their EHR lacks key product features while 14% said it was too cumbersome to use and 12% said their current EHR was too costly.

Adopting a new EHR is a big investment in capital and resources. The switching costs are quite high because transitioning to a new system is complicated and time-consuming.

Takeaways: There remains a significant opportunity for an EHR developer to capture revenue and market share given the high levels of dissatisfaction with current solutions. Companies already in the market should reassess their offerings and work with customers to improve usability and user interfaces, to improve connectivity with other systems, and to provide the features that users need. Startups should try to differentiate their products in the same ways.

It all starts with understanding customer requirements.

Read more:

Why Physicians are Ditching Your EHR System | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

The Impact of the HITECH Act on EHR Implementations IndustryView | 2013.

HITECH Act – the Health Information Technology Act | Policy Researchers & Implementers | HealthIT.gov.

Hyping a digital health startup

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image via NY Times digital blog

HealthTap is a digital health app and website. It’s a useful way to get health and fitness information that is tailored to your interests. You can even get your specific questions answered by medical experts. I use it myself. In an effort to attract attention and even more users, however, HealthTap appears to have hyped or at least exaggerated its success.

HealthTap works by recruiting physicians (more than 50,000 participate) to answer questions posed by subscribers for free. The subscribers do not pay for the service. I’m not quite sure what their business model is, actually. The rationale for doctors to participate is that the physicians will be recognized (“thanked” in HealthTap parlance), their online reputation will be enhanced, and real life patients will come to them as a result.

After an interaction where a user asks a question and receives a response from a doctor, HealthTap asks the user to thank the doctor or HealthTap and prompts the user for more information. The extra information apparently includes responding with a click to a question like, “This answer saved my life.”

HealthTap keeps a record of all of the positive responses to the “saved my life” prompt and issued a press release when the tally got to 10,000. Nothing wrong with any of that, except there is no way to prove if the app/website/reply really did save a particular life.

As one physician commenter in the New York times article said, “after my third “This saved my life,” I investigated. It was for recommending antifungals for jock itch. Nice pat on the back, but lifesaving? Not!”

Although some of the the lifesaving claims may be legitimate, the touting of “10,000 lives saved so far” on HealthTap’s website seems vaguely desperate and hyped – not what I expect from a serious medical app.

HealthTap also provides a disclaimer on its website and app: “HealthTap does not provide medical advice, diagnosis or treatment.” The disclaimer is obviously there to avoid being treated as an FDA-regulated medical application. Of course, the FDA (and malpractice attorneys) will have the final say on that status. I don’t know how asking a specific medical question and having an answer provided by a physician avoids becoming medical advice.

HealthTap is competing with big players in the health information field. WebMD is the 800 pound gorilla and granddaddy of health information sites. I suppose the executives at HealthTap feel they have to be aggressive in order to create awareness and get users and doctors to take notice. Unfortunately, their real utility and service has been tainted by excessive marketing, in my opinion.

HealthTap appears to be a well-funded Silicon Valley startup. Its investors include luminaries like Eric Schmidt, Chairman of Google, Vinod Khosla, Esther Dyson, and more.

Postscript:  I removed the HealthTap app from my mobile phone because I thought the notifications it provided were too frequent and intrusive. I still receive an email every few days on the subjects I told HealthTap were important to me.

Takeaways: Yes, you need to be aggressive in marketing your startup. There is a lot of competition for mind share among similar startups all over the world, no matter how unique you believe your company/product/service to be.

No, you should not make up or exaggerate claims about your product. Perhaps it can be excused as puffery or marketing hype but healthcare companies are held to a higher standard than consumer products like beer or body wash.

Read more:

An App That Saved 10,000 Lives – NYTimes.com.

HealthTap.com

High tech medical device maker focuses on…China?

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image via axialexchange.com

High blood pressure is a significant societal health problem all over the world. Kona Medical is trying to address the huge hypertension population with a noninvasive ultrasound device that might eliminate the need to take daily blood pressure medication. In a somewhat unorthodox move, the company is focusing initially on China.

 

Last year, Medtronic acquired Ardian, another startup that is focused on the same clinical condition. Ardian, based in the San Francisco Bay Area, was purchased for $800 million.

From axialexchange.com:

The statistics for hypertension are stunning. 30% of US adults have hypertension (high blood pressure). Another 30% of Americans are pre-hypertensive. Less than half of those people with hypertension have their condition under control.  A fifth don’t know they have it. The annual price tag for direct medical expenses related to high blood pressure is $131 billion. This is driven in part by the 55 million doctor visits that are prompted by high blood pressure. High blood pressure is present in most first heart attacks (69%), first strokes (77%), and in people with congestive heart failure (74%). High blood pressure was listed as a primary or contributing cause of death for about 348,000 Americans in 2008.

Recent medical research has shown that ablation (destruction) of the nerves around the renal arteries can reduce blood pressure in patients with hypertension. A number of medical device companies are racing to commercialize products based on their proprietary technologies in order to take a lead in this evolving market.

Ardian uses radio frequency ablation delivered via catheter to the area of the renal arteries. Kona is using focused external ultrasound to deliver the therapeutic energy – they are calling it “surround sound.” In a superficial assessment, it appears that Kona has the edge since their technology is completely noninvasive while the Ardian technology could at best be described as minimally invasive.

Of course, what should really matter is which technology works best with the fewest side effect, not how the therapy is delivered. The “best” technology doesn’t always prevail in the medical device industry, however. Sometimes first to market gets and keeps the largest share while in other situations the best marketing prevails.

Kona has previously raised $40 million in venture capital earlier this year and in 2012.

Kona’s latest announcement, to use a new investment of $10 million to launch their product in China, is somewhat confusing. Yes, there are vast numbers of people in China and untold numbers with hypertension. Most, however, probably do not have the type of health insurance that would pay for a high tech solution. In its press release, the company said that their therapy has the promise of being delivered in an outpatient setting. Outpatient hypertension therapy clinics – now that’s a disruptive concept!

China is not a traditional launch market for new medical devices. The company says that the latest investment, from a fund with deep ties to China, will be used exclusively to address the many clinical, regulatory, and intellectual property issues unique to China as a medical device market for Kona’s new therapy.

It will be interesting to see if Kona can successfully launch their product into the Chinese market while simultaneously commercializing for the traditional U.S. or E.U. markets without losing focus or depleting key resources.

Takeaways: Most companies commercializing novel medical devices pick a launch market and stick with it. There are any number of reasons to launch in the U.S. first. Other companies pick the European Union countries and some look to large, less regulated countries in South America.

While many development and commercialization tasks are the same no matter which initial market is selected, there are important differences. It’s usually best to choose the first, second, and perhaps third initial markets so that the launch components are not uniquely different and the company can use scarce resources for other commercialization tasks.

 Read more: Kona Medical raises $10M to reduce high blood pressure for people in China – GeekWire.

Kona Medical

Prosthetic Hands May Soon Gain the Sense of Touch

Someday in the not too distant future, amputees with prosthetic hands may gain the sense of touch.
image via discovery.com

This research being conducted at the University of Chicago could be a major advance in robotics and prosthetic technology. Amputees today have no way to “feel” their prosthesis except to watch it as it moves. Someday in the not too distant future, amputees with prosthetic hands may gain the sense of touch.

Using monkeys, the researchers first identified specific areas of the brain that corresponded with their fingers. Then the scientists connected electronic strain gages in the prosthetic hand to those specific areas in the brain. Using software, the scientists were able to successfully identify a “contact event” at the prosthetic hand from the monkey’s brain and to create a sense of pressure.

An important next step would be to control the prosthetic hand with the brain and to be able to apply force with feedback so the brain can sense what and with how much force the hand is touching.

The research work was partially funded by the U.S. government’s Defense Advanced Research Projects Agency (DARPA). DARPA is well-known for sponsoring high risk, long term research activity. The wars in Iraq and Afghanistan have resulted in large numbers of U.S. military amputees, creating an ongoing and increasing need for improved prosthetic technologies.

Takeaways: There are non-obvious sources of funding early technology development work. DARPA is a great example but there are plenty of others. In the government, NIH, CDC, and NSF have ongoing research grant programs. There are other military programs as well, for example, TATRC. Yes, there is competition for these grant dollars so you need to make a strong case for the technology and the problems it solves. There is also the possibility that the researchers have no intention of commercializing their technology. In that case, it is possible for a company to license and commercialize the technology on its own.

        Read more: How to Give Prosthetic Hands Touch Sense : Discovery News.

Teeny Tiny Pacemaker Fits Inside the Heart | IEEE Spectrum

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image via IEEE Spectrum

This leadless pacemaker is incredible technology. Not only did the company, Nanostim, reduce the size of the pacemaker by about 90% but it eliminated the often troublesome leads that are required in traditional pacemakers.

 

 

The stealthy company, based in the San Francisco Bay Area, was recently acquired by St. Jude Medical for $123-200 million (depending on milestones).

The new pacemaker has received European regulatory clearance but not FDA approval yet although it has received an FDA Investigational Device Exemption (IDE). A pivotal clinical trial is expected to begin soon in the U.S. while sales will begin in selected European countries very soon.

The device, about as big as a AAA battery, is implanted directly into the interior of the right ventricle of the heart. Electrodes on the exterior of the pacemaker provide electrical stimulation to the heart muscle. The device is implanted via a catheter inserted in the femoral artery. Removal occurs via the same route, only in reverse. Battery life is 9-13 years. The device has wireless communication capability so it can be programmed remotely.

Given the negative publicity and adverse events involving pacemaker lead fractures over the past years, leadless pacemakers appear to be an idea whose time has arrived. Of course, the idea has occurred to more than one inventor.

Here’s Medtronic’s take on the concept:

http://www.qmed.com/files/ck_images/large_Medtronic_leadless%20pacemaker.jpgMedtronic’s product concept is much smaller than a penny. Medtronic announced the device three years ago and said it would take 3-5 years before beginning human implants. They also said that the product concept included the ability to be programmed via a smartphone application.

 

image via qmed.com

 

 

Critics have pointed out that the Nanostim product and Medtronic device concept provide only single chamber pacing and are not rate-responsive – the most basic form of pacemaker.

It seems to me that the Nanostim device is classic disruptive technology. It provides a single function compared to the elaborate features of traditional pacemakers. It’s probably priced at a fraction of the price of complex pacemakers. As with other disruptive technologies, competitors ignore new entrants with low cost/performance at their peril. Given sufficient demand, I’m sure clinicians and engineers will figure out ways to make these “simple” devices perform all the functions of their bigger, older “brothers”.

On the positive side, no surgery is needed for implantation – a big plus with patients. And there are no potentially problematic leads to route. Other benefits from the patient’s standpoint are no activity restrictions, no surgical “pocket” for potential infections and no telltale bulge of the device under the collarbone. This could be one of those disruptive technologies where patient demand changes market dynamics.

The implantable pacemaker/defibrillator market is large, with 4 million active implants and 700,000 new implants occurring each year worldwide.

Takeaways: A leadless pacemaker is an obvious innovation to anyone who has worked in the cardiac stimulation field. Nanostim took the concept and ran with it while Medtronic took its time with what might be a technically superior solution.

While achieving lasting market share is more important than being first to market, Nanostim may be able to achieve both. Because they negotiated a strategic partnership with St. Jude Medical while the device was still in development, the company gained access to substantial resources, enhanced its credibility, and was able to reduce risk for investors by showing a clear path to exit. Nanostim also pursued the faster CE marking before FDA approval so that it could start selling the device sooner.

Read more:

Teeny Tiny Pacemaker Fits Inside the Heart – IEEE Spectrum.

News Release | Investor Relations | St. Jude Medical.

Weighing the Benefits of Medtronic’s Leadless Pacemaker | Qmed.

Medical Device Startup Fundraising: 5 keys for your pitch

Woman presentingIf you are leading a medical device startup, fundraising is your top priority. Here are five key points that you must address in every pitch that you make, no matter if it’s for a grant, seed investment from friends and family, angel investment, venture capital funding, or strategic partnerships with multinational medical device companies.

From the article:

  • Be clear on what your product is, right up front
  • Articulate the important problem you are solving
  • Define your customers
  • Spell out how you will create value with the $$ you are raising
  • Instill confidence in you and your team

Another way to look at the pitch is to think of it in terms of risk reduction. Most experienced investors talk about three main areas of risk in startup investing:

  • Technical Risk
  • Market Risk
  • Execution Risk

Investors will not move forward with an opportunity unless they believe that these key risks have been addressed and are below their personal threshold. Of course, you will never know that threshold so you must work to convince the investor that you have mitigated the three risks to the maximum extent possible.

Technical risk is all about the product or solution. Does your product solve the customer’s problem? Have you built a working prototype? Do you have an animal model? Have you performed animal testing? Are there important technical issues yet to be resolved? Do you have any intellectual property protection? Have you conducted a freedom to operate analysis? Does your product or solution depend on products or IP owned by other companies? Have you conducted beta testing? What’s your regulatory classification and plan? Are there more products in the pipeline?

Market risk is about the customer(s). Have you identified the problem? Is the problem a large one? Is the market opportunity big enough to justify the investment? Who are the customers? Why will they buy from you? What’s the competition (and don’t make the rookie mistake of saying that there is no competition)? Do you have evidence of demand? Do you have testimonials or at least interest from Key Opinion Leader customers? How do you plan to distribute and sell your product? How does your product or solution fit in today’s environment of managed care, healthcare reform, and evidence-based medicine? What’s your reimbursement strategy and plan?

Execution risk is about you and your team’s ability to convince investors that you can use their money to execute your plan. Does your team have the talent and experience to successfully commercialize your product? Do you have experienced and knowledgeable advisors, both business and clinical? Do you have a credible business model? What are your key milestones? What’s your exit strategy? Do you have a detailed pro forma income statement, especially for the period up to launch and for the two years after launch? Will you execute it exactly as conceived? Of course not, but you should be confident in your plan and your ability to execute. You should also have detailed contingency plans for the inevitable crisis when things go awry. 

Takeaways: Like many things, being successful at medical device fundraising requires being a great salesperson. Whether it’s a surgeon or an investor you’re selling to, put yourself in the place of that person. Be sure to address the five key points with details, evidence, and background information: product, problem, customer, milestones, team. Also keep in mind the risk tolerance of the investor. Your ability to communicate mitigation of technical risk, market risk, and execution risk will determine your success in fundraising.

Read more: Medical Device Startups: 5 essentials for your pitch deck | MassDevice.

Costliest 1 Percent Of Patients Account For 21 Percent Of U.S. Health Spending | Kaiser Health News

http://mhealthwatch.com/wp-content/uploads/2013/05/Infographic-Inside-Healthcare-Spending-in-America-300x231.jpgA recent U.S. government study revealed 1% of patients in the U.S. are responsible for a whopping 21% of healthcare spending. Wow, talk about a “target-rich environment.” We’re all familiar with the 80/20 rule where, in a given population, 20% of the group is typically responsible for 80% of costs, resources consumed or produced, etc. This news takes the 80/20 concept to a new level.

According to Kaiser Health News, the federal Agency for Healthcare Research and Quality report also said that just 5% of patients are responsible for 50% of all healthcare costs. On the other side of the ledger, the healthiest 5% of the population accounts for just 2.8% of spending.

The story behind the horrifying numbers: people with progressive, sometimes multiple chronic diseases such as kidney failure, diabetes, and COPD account for huge costs to the healthcare system. The patients in these groups even have a name: “super utilizers.” A different, not so flattering name is used in ERs everywhere: “frequent fliers.” On average, each super utilizer cost the healthcare system $88,000 in 2010.

In addition to overusing hospital emergency departments for their care, Kaiser said super utilizers suffer from a phenomenon called “extreme uncoordinated care” whereby they go to multiple, unrelated hospitals, (and all too often to the hospitals’ expensive ERs) for their care rather than a single outpatient clinic. The hospitals have no easy way to access patient records from other institutions to determine coexistent conditions and treatments. So they take the most direct path. They treat the immediate symptoms and discharge the patient.

In the past, hospitals could get away with just treating the patients’ symptoms and sending them on their way. With the advent of the Affordable Care Act (ACA), however, the incentives to the hospital are changing. Instead of a flat fee for service, the ACA provides penalties for high readmission rates and incentives for lowering readmissions within 30 days of treatment. From the article: “Hospitals have traditionally made more money readmitting patients than trying to prevent them from bouncing back.”

The ACA creates accountable care organizations (ACOs), groups of doctors, hospitals and clinics. The ACOs pool resources to treat Medicare and Medicaid patients more effectively and share in the savings. The ACOs work by creating and using coordinated care plans. The plans and their case managers have broad authority to do whatever it takes to help patients. By helping patients under the new ACA rules, the case managers help the hospitals increase their profitability.

The extra assistance to patients enabled by the coordinated care plans can include accompanying them to doctors’ appointments, paying for cab fare, buying food or furniture, phone calls and home visits to follow-up on prescription medication compliance, and more. These often simple interventions can have a significant effect on super utilizers. It is to be hoped that there will be a beneficial effect to the U.S. healthcare system as a result.

Takeaways: Healthcare financing is being reformed. That means healthcare delivery reform is coming as well. Hospitals are businesses, whether for profit or nonprofit. If their business models are threatened, they will respond to incentives and penalties to change. For medical device companies trying to introduce new products into this rapidly changing environment, realize that the traditional sales methods may work for a while longer. Realize also that the changes will affect purchasing decisions and procurement methods.

 

Read more: Costliest 1 Percent Of Patients Account For 21 Percent Of U.S. Health Spending – Kaiser Health News.