Digital health: what’s the business model?

image via svtechtalk.com

Connecting patients with each other, with clinicians and other providers, with insurers, and with healthcare companies via mobile apps on tablets and smartphones and on the web seems like a great idea. The unanswered question is can you make money doing it?

Articles have been written about how the Internet has enabled patients with chronic diseases and their families to connect with others with the same condition. The patients share stories about symptoms, treatment successes and failures, and try to support each other in what can be emotionally draining circumstances. That ability to connect with a vast community all over the country, perhaps even the world, was virtually impossible before the advent of the World Wide Web.

Other companies are trying to connect healthcare providers with their patients. Some are offering to connect patients with providers for online visits for a fee, effectively commoditizing the doctor-patient relationship.

Google famously shut its attempt at a personal health record site, Google Health, last year. Google Health required a lot of effort to use as it didn’t automatically connect with consumers’ Electronic Medical Records. That shortcoming left a small market of people who were OK with manually entering all of their health data. And that wasn’t a big enough user base for Google.

Healthcare companies, especially those with a B2C business model, are desperate to maintain relationships with consumers.

Providing apps and cloud storage can be costly. It’s not clear who will pay for the digital services.

Doctors and other providers have been incentivized into adopting EMR technology. It’s unlikely that they will invest in additional information technology for their patients.

It seems that consumers and patients love the free stuff. A few may be willing to pay for some services but many have grown to expect that someone else will foot the bill. And most non-healthcare smartphone and tablet apps are either free or at most a few dollars. That sets a low ceiling for any new health-related apps. It’s a tough way to grow a sizable healthcare or medical device company.

People have grown accustomed to paying almost nothing for their healthcare. Sure, there are co-pays and deductibles that have increased significantly in recent years but those are a small fraction of the cost of care. It will be a challenge to change this expectation for health-related apps and services.

In-app ads are probably not the way to go. If the ads are for healthcare-related items like prescription drugs, the patients will lose trust in the service. If the ads are specifically targeted to the patient’s medical condition, the service will be accused of spying on the patient.

Perhaps healthcare companies will regard the cost of developing and providing apps as a marketing expense.

It’s an interesting dilemma. Free apps and services will draw large numbers of users. But monetizing the app via ads turns off many people. Charging for the services drastically reduces the potential market. Absorbing the expense internally places the app/service on the list of things to be cut when the company’s overall business stagnates or declines.

Takeaways: There is enormous interest in apps and services for mobile health. If you are developing products or services in this space, be sure you know how you are going to make money. It’s not a market if you can’t monetize it.

The traditional medical device business model doesn’t seem to apply here. If you procure funding, develop a product, then show economic or health benefits, who do you sell to?

Perhaps partnering with noncompeting companies interested in the same population is a creative way around the problem. If you can deliver large numbers of consumers/patients via a sponsored app to a partner like a big pharmaceutical company, you may be able to avoid some of the pitfalls and objections.

It’s prudent to put a lot of effort now into developing a viable business model. After all, when you start pitching to investors, one of the first questions asked will be, “how do you plan to make money?”

Read more:

Will Any Health App Ever Really Succeed? | MIT Technology Review

Patients share tips online for managing diseases | SFGate.

Improving Patient Engagement Equal Parts Technology, Empathy | Computerworld

Patients Eager To Access Data Including Medical Imaging Through Online Portals (infographic) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

8 healthcare applications for Microsoft Kinect, 6 reasons not to pursue them

Microhttp://dri2.img.digitalrivercontent.net/Storefront/Company/msintl/images/English/en-INTL_Kinect_for_Windows_L6M-00001/en-INTL_L_Kinect_for_Windows_L6M-00001_mnco.jpgsoft’s Kinect is absolutely amazing technology. And Microsoft keeps improving it. Did you know that Kinect has multiple potential healthcare applications?

If you have an early teenage or “tween” kid, you probably have an Xbox gaming system. The Kinect sensor technology is perfect for all sorts of innovative interfaces for dance, exercise, and role-playing games.

The Kinect sensors and software have the ability to perform skeletal mapping on multiple people simultaneously, to detect 3D gestures and motions and facial and voice recognition. Kinect can even determine users’ heart rates! The device also has the ability to “see” in the dark with infrared camera technology.

The Microsoft Kinect is an amazing amalgam of sensor technology. I’m sure it has many useful and possibly disruptive applications in healthcare and other industries.

Here’s why you should not base your healthcare product or application on Microsoft’s Kinect:

  1. Single sourcing is risky for any startup business or new product development organization. You have no alternative way to duplicate  or replicate the Kinect functions if Kinect or its key functions are unavailable for any reason.
  2. Healthcare is not Microsoft’s core business – it could remove access at any time and/or de-emphasize it in any number of ways. In fact, Microsoft is in strategic transition right now and its long-time CEO, Steve Ballmer, announced recently that he will be retiring in 2014.
  3. You have no access to the device’s source code – access to that code might be necessary if you are developing an FDA Class II or Class III device.
  4. The Microsoft Kinect is based on a console or PC-centric world view. What about tablets and smartphones? Oh, and don’t expect to ever see an Android or iOS device with Kinect capability.
  5. Although Microsoft has made an SDK available for Kinect development on Windows operating systems, the installed base of 24 million Kinects is almost all in Xbox gaming systems. Microsoft is not interested in giving up valuable real estate on its premier gaming platform to comparatively low volume and low margin healthcare apps. If you develop a Kinect-dependent windows app, you will a). have to wait for an installed base to develop or b). take on the added risk of marketing Kinect hardware to create your own installed base.
  6. You will have little technical support from Microsoft simply because your business potential is small compared to their other ventures.

If those six reasons aren’t enough to give you pause, here are the healthcare market areas identified by MobiHealthNews that are particularly suited for Kinect-enabled applications.

  1. Fitness and Exergaming – games and exercises to get people off the couch and on their feet
  2. Physical Therapy  – conduct PT sessions, monitor recovery
  3. Surgery Support  – hands-free image manipulation
  4. Autism Screening and Therapy – not quite sure what the advantage is here. Perhaps some on the spectrum can’t relate as well to people?
  5. Virtual Visits and Virtual Nurses – automated nursing visits. I think this is a bad idea, as senior shut-ins crave human contact.
  6. Virtual Group Therapy – avatar-based online group talk sessions (I believe you can do this with Google Hangouts as well)
  7. Aging in Place and Fall Prevention – gait analysis and fall prediction
  8. Helping the Blind to Navigate and the Deaf to Communicate – using machine vision and text to speech

Takeaways: It’s incredibly risky to develop new technology that’s based on someone else’s proprietary technology. It’s even more risky if that proprietary technology is primarily focused on non-healthcare applications.

You should consider open source projects as an alternative. There are many open source projects all over the world. If it’s critically important to you, try organizing and starting an open source project to support your development work.

If you must use the proprietary technology, try to negotiate a development agreement that places key parts of the technology in escrow so it is still available to you in the event of a default to the agreement. This tactic doesn’t work with gigantic corporations like Microsoft but it may be effective with smaller partners.

Read more: Eight ways the Microsoft Kinect will change healthcare | mobihealthnews.

Wireless sensors are the missing link in mobile health applications

Scanadu Scout sensorWireless sensors are an evolving missing link and a gigantic opportunity in mobile health application development and commercialization.

Markets for mobile health are developing rapidly. Personal fitness, quantified self, chronic disease monitoring, elder health monitoring, infant monitoring, acute symptom diagnosis, physical therapy, and telemedicine are a few of the segments in mobile health.

We have fast networks that cover almost all of our population in the U. S. and most developed countries. Smartphones are powerful mobile computers with vast amounts of onboard computing power and storage. If the smartphone’s capabilities are insufficient, developers can access cloud-based storage, databases, and distributed computing that can scale to address any size problem.

Because all of this technology has been developed for mass consumer markets (and because of Moore’s law), it is inexpensive – orders of magnitude less costly than a few years ago.

So we have cheap, powerful, ubiquitous computing and connectivity mostly being used for social connectivity and YouTube video watching. This powerful computer network is also increasingly being used to improve healthcare diagnosis and delivery.

Still being developed are wireless sensors to take advantage of all of that computing power. There are a number of companies pursuing commercialization of sensors and apps to enable all sorts of mobile health capabilities and functions.

Some of the sensor technologies are wearable in clothing or on the skin, some are implantable, and others are ingestible. All use low power wireless communications technology such as Bluetooth Low Energy for continuous or periodic monitoring. The first generation of sensors, like Holter monitors, recorded data for a time period and were sent to a lab for processing so a report could be generated for a physician. The new generation of sensors records continuously and sends the data in real time where a physician or even the patient can access data that has been processed by a smart application.

Physicians are beginning to be able to monitor their patients with chronic diseases in real time. Individuals active in the “quantified self” movement have more personal data than ever with which to monitor and analyze themselves. Physicians can prescribe personal diagnostics to collect data in order to make a more accurate diagnosis.

For example, Given Imaging of Israel has developed a capsule that has video recording and radio transmission capabilities. The capsule is swallowed by the patient. It then records and transmits its journey through the patient’s digestive tract. The video is reviewed by the physician to determine a preliminary diagnosis and the need for more invasive interventions like surgery.

For the Star Trek fan, Scanadu is developing a crude “tricorder”  – a disk of sensors that is placed on the forehead to measure temperature, heart and respiration rate, blood pressure, and more. The Scanadu Scout is intended for consumers, not physicians.

According to Medical Device and Diagnostics Industry, Pathfinder Software, a mobile and wireless application developer, has created a clever infographic showing various sensors and the body functions they are intended to monitor.

The sensors shown on the infographic are a mere subset of what’s currently available and in development. For example, a startup in my home city of Redmond, Washington, Heapsylon has developed sensors for “smart socks” that can measure a variety of parameters related to running gait to improve athletic performance and prevent injury.

Takeaways: There are opportunities for novel sensors to monitor and measure all sorts of body functions and parameters. There are opportunities to develop applications that gather, process and interpret sensor data for consumers and for healthcare professionals. There are opportunities to analyze aggregated sensor data to assess population health and trends. Finally, there are opportunities to develop and deploy solutions that bring low cost healthcare to underserved populations.

Read more: How Innovations Using Sensors Can Disrupt Healthcare (infographic) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Mobile Health Innovations – Home Monitoring of the Elderly

What might have been science fiction a few years ago is science fact today – and one on the verge of market introduction. The Fraunhofer Institute in Germany has developed miniature sensors that continuously monitor the user’s health, communicate over a secure Bluetooth protocol to a mobile device such as a smartphone, and seamlessly transmit data to a cloud-based server.

Mobile health innovations such as this have the potential to save doctor visits, money, and lives.

The sensors can measure and monitor variables such as blood glucose, lactate, and cholesterol levels, biomarkers that may indicate presence of disease processes, and can also measure heart rate and blood oxygen level. The utility of transmitting all of the data to a cloud server is that a remote physician or family member can monitor the patient from a great distance in virtually real-time and also see trends as they develop.

Additionally, smart software could integrate the sensor data and provide diagnostic alarms for conditions like heart attack or insulin insufficiency. For people living alone and with loved ones thousands of miles away, sensors like these could literally be lifesavers.

These developments have the potential to keep elderly people independent longer and to improve the health of people working in remote locations for extended periods of time. Eventually, I expect scaled-down versions of these sensors to make their way into consumer electronics. Samsung is already marketing its S-Health suite as part of the unique software on its flagship Galaxy S4 smartphone.

I’m sure these mobile sensors will get more sophisticated over time. I also expect that clinical researchers will develop new and interesting ways to use the data for monitoring and diagnosis. From the article:

Fraunhofer FIT demonstrates the first system that integrates three different sensors in one platform. A nano potentiostat measures biochemical information in a patient’s assay, e.g. glucose, lactate or cholesterol levels. A fluorescence sensor is used to detect color-marked biomarkers. A SpO2 sensor monitors heart rate and arterial oxygen saturation. A smartphone app processes the data from the three sensors and transfers them to a server. For secure data communication, a Bluetooth connection with a specifically developed protocol is used.

Takeaways: This is a glimpse into the future of telemedicine. Fraunhofer does not commercialize or market products. They license their technologies to medical device companies and related entities. I would expect Fraunhofer to already be in licensing discussions for these technologies but you should contact Fraunhofer if you and your company are in the mobile health segment.

Read more: FIT press release, 12.9.2013 – Fraunhofer FIT.

FDA finally publishes final guidance for mobile medical apps | mobihealthnews

This has to be welcome news to any company competing in the mobile health market segment. Although the guidance is not binding in typical FDA fashion, it does remove some uncertainty about what the FDA considers mobile software that should fall under Class II (510k) device regulations.

Apparently, lobbying elected officials has some benefit. The story reports that the FDA promised to issue the guidance “in the current fiscal year” in congressional hearings last summer. We are in the last week of the fiscal year and true to the FDA’s word, the guidance is finally issued, two years after the draft guidance was issued.

As one might expect in a “land grab” environment, the absence of regulatory guidance has not been a barrier to market for a number of companies. There have been 100 510(k) marketing clearances issued for mobile medical applications in the past ten years, 40 of which occurred since the draft guidance was issued.

Some companies might have bigger concerns in that they are actively marketing apps that fall under the regulated category but have not obtained 510(k) clearance. Two acne treatment apps were removed from the Apple and Android app stores by the FTC recently.

The guidance treats mobile apps in four broad categories:

  1. Class II apps:

a. Apps that “are intended to be used as an accessory to a regulated medical device – for example, an application that allows a health care professional to make a specific diagnosis by viewing a medical image from a picture archiving and communication system (PACS) on a smartphone or a mobile tablet.”

b. Apps that “transform a mobile platform into a regulated medical device – for example, an application that turns a smartphone into an electrocardiography (ECG) machine to detect abnormal heart rhythms or determine if a patient is experiencing a heart attack.”

2.  Mobile Apps for which FDA intends to exercise “enforcement discretion” (meaning that FDA does not intend to enforce requirements under the FD&C Act).

From the Guidance:

FDA intends to exercise enforcement discretion for mobile apps that:

• Help patients (i.e., users) self-manage their disease or conditions without providing specific treatment or treatment suggestions
• Provide patients with simple tools to organize and track their health information
• Provide easy access to information related to patients’ health conditions or treatments
• Help patients document, show, or communicate potential medical conditions to health care providers
• Automate simple tasks for health care providers
• Enable patients or providers to interact with Personal Health Record (PHR) or Electronic Health Record (EHR) systems.

3.  Apps that are not medical devices and thus are unregulated: Apps that provide a means of monitoring and reporting health parameters and activities but that make no claimed benefit. Examples:

a. Mobile apps that are intended to provide access to electronic “copies” (e.g., e-books, audio books) of medical textbooks or other reference materials with generic text search capabilities. These are not devices because these apps are intended to be used as reference materials and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease by facilitating a health professional’s assessment of a specific patient, replacing the judgment of clinical personnel, or performing any clinical assessment.

b. Mobile apps that are intended for health care providers to use as educational tools for medical training or to reinforce training previously received. These may have more functionality than providing an electronic copy of text (e.g., videos, interactive diagrams), but are not devices because they are intended generally for user education and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease by facilitating a health professional’s assessment of a specific patient, replacing the judgment of clinical personnel, or performing any clinical assessment.

c. Mobile apps that are intended for general patient education and facilitate patient access to commonly used reference information. These apps can be patient-specific (i.e., filters information to patient-specific characteristics), but are intended for increased patient awareness, education, and empowerment, and ultimately support patient-centered health care. These are not devices because they are intended generally for patient education, and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease by aiding clinical decision-making (i.e., to facilitate a health professional’s assessment of a specific patient, replace the judgment of a health professional, or perform any clinical assessment).

d. Mobile apps that automate general office operations in a health care setting and are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease.

e. Mobile apps that are generic aids or general purpose products. These apps are not considered devices because they are not intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease.

Takeaways: While the FDA appears to move at a glacial pace in many instances, it eventually responds to market activity. Mobile health is a growing segment and should grow even faster in the coming years.

The trick to escaping regulation under the “enforcement discretion” provision is to avoid making diagnoses or recommendations for treatment. If your app/device interfaces with a class II device or provides diagnostic or therapeutic information or suggestions, you are going to need a 510(k).

 Read more:

FDA finally publishes final guidance for mobile medical apps | mobihealthnews.

Get the FDA Guidance here:

 http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM263366.pdf

Experts apparently agree: Fitness wearables are now a fashion statement | mobihealthnews

I was walking through the South Lake Union area of Seattle this morning and was struck by how many people had their trusty smartphone in their hands and were reading or interacting with it as they were walking. That was not the case as recently as ten years ago, perhaps even more recently.

So smartphones have become fashion accessories as well as constant companions . You can quickly tell the iPhone devotees from the Android “big screen” fans from the Windows Phone diehards who keep insisting that their phones’ technical specs are better. And it’s almost too easy to get into an argument about which company makes the “best” mobile operating system or phone.

Nike FuelBand

Here’s one of the Next Big Things in consumer technology: fitness wearables as fashion statement. The devices themselves are distinctive in appearance and they are fairly expensive. They monitor activity and exercise levels and provide useful information to the user.

For example, a device may count your footsteps (remember, 10,000 steps a day is The Goal!), measure the distance you run or bike, monitor your sleep patterns, keep track of the number of calories you ingest and expend, and generally automate and simplify tasks that were difficult if not impossible to perform before we all had these amazing devices at our fingertips every waking hour of our day.

Every device is different in its features and functions. The manufacturers take great care in developing the look and feel of the devices since each device is a walking advertisement for the product.

I have a hunch, however, that the people who least need fitness monitoring devices are the ones who use them the most. Of course, no one really needs these devices. But trendy people like to show off their trendy toys, like the Nike Fuelband, FitBit Flex, and Jawbone Up.

One development I’m waiting for is to see if ordinary people, overweight couch potatoes and the like, start wearing and using the same devices. Perhaps they will start by emulating their favorite celebrity and then discover the utility in these devices. Perhaps people will use the devices to monitor their health and improve their fitness.

As the devices get more sophisticated and adopted by more people, I hope the manufacturers will include more ways for people to monitor and improve their health. For example, I read an article In a recent edition of Runner’s World about sitting and why it’s one of the biggest health hazards most people do voluntarily. Not even elite runners are immune from the ill effects of being a couch potato when they are not running. Just think of how beneficial a sitting monitor app would be to our increasingly sedentary population!

I expect the next generation of fitness wearables to include Smart Watches that will have a limited ability to run apps and receive input from body sensors. When you see A-list celebrities sporting those and other devices on TV shows and movies, you’ll know the next big fad is being born.

Takeaways: Popular culture is infatuated with mobile technology. Mobile device adoption is well into the 90% range in a number of demographic segments. Fitness wearables could experience the same sort of growth and adoption, especially if led by celebrities. Apps and sensors for these devices could be good businesses in which to invest. Another huge benefit could be a positive effect on public health.

Read more: Experts apparently agree: Fitness wearables are now a fashion statement | mobihealthnews.

Give Us Our Damn Lab Results!! (etc.) | The Health Care Blog

Patients are empowering themselves. We are overwhelmingly using Internet sites like WebMD and social media to research and discuss symptoms, diseases, and treatments. We are purchasing and using digital health devices and software by the millions.

Now patients are starting to demand direct delivery of lab test results instead of waiting for that call from the doctor’s office that always seems to be delayed or worse, never made.

A little-known proposed regulation issued in 2011 by the Department of Health and Human Services would allow lab test providers to send test results directly to patients. While a final regulation has not been issued, perhaps due to the current political climate in Washington, the regulation is being welcomed by patient advocates and viewed with skepticism by some physicians.

As the article states,

Increasing the ability of patients to have direct access to all their medical information allows patients to more effectively manage their own health care and organize electronic copies of their own data – a major benefit of the health care system’s ongoing transition to digital records…Most broadly, this expanded access gives patients the ability to be as engaged as they choose in their own health and care.

Some unenlightened physicians are lamenting the perceived loss of control and cite the risks involved when patients have uninformed access to clinical data. Other doctors welcome the opportunity to stay in the loop while patients take more responsibility for their own healthcare and data.

Again, from the article:

… A 2009 study published in the Archive of Internal Medicine indicated that providers failed to notify patients (or document notification) of abnormal test results more than 7 percent of the time. The National Coordinator for Health IT recently put the figure at 20 percent.  This failure rate is dangerous, as it could lead to more medical errors and missed opportunities for valuable early treatment.

How can sending lab test results directly to patients be a bad thing if the doctor still receives a copy of the results and continues the practices of alerting patients to abnormal results while offering to interpret the data?

In another empowering development, some patients are now able to skip the dreaded visit image from geekwire.comto the primary care physician, the one where they wait, wait, and wait some more while being exposed to who knows what communicable diseases in the practice’s waiting room. People in the south Puget Sound region of Washington in the Franciscan Health System service area have the ability to have a virtual visit with a physician 24 hours a day, 7 days a week for a reasonable $35 fee (not paid by insurance). The consultation may result in a referral to a physical facility or prescribing of medications. How convenient!

From the article:

“In some cases, patients just want to know if they need to go to the emergency room,” said Dr. Ben Green of Franciscan Virtual Urgent Care. “In fact, most of the time our providers are able to keep them out of the emergency room and patients are quite happy about that.”

The virtual visit with a real doctor is conducted via Skype video teleconferencing or by plain old-fashioned telephone.

The telemedicine service is actually offered by Carena, a Seattle-based company, in partnership with Franciscan. Carena started offering the service in 2010 to private companies and is now expanding to healthcare systems.

Takeaways: Empowered patients and consumers represent an enormous opportunity for medical device and digital health companies. The pharmaceutical industry proved the viability and profitability of direct-to-consumer marketing in the 1990s.

As more patients are comfortable managing their own electronic health records and in keeping their records “in the cloud,” there will be increasing demand for apps, software, and web services to facilitate and secure those transactions and records. The market niche of people who self-monitor their health, fitness, and vital signs with digital health devices and apps will steadily increase as the devices and software get more capable and easier to use.

Read more:

Give Us Our Damn Lab Results!! | The Health Care Blog.

Feeling sick? Washington health system now offers virtual doctor appointments for $35 – GeekWire.