Three Key Investment Challenges At The Intersection Of Health And Technology

By now, we have it on good authority that healthcare is complicated. Apparently, many healthcurious tech investors have come to similar conclusions.  Healthcare investor Dr. Bijan SalehizadehIt seems that after several years of breathless hype, expectations have returned to earth (or lower) for many healthtech startups.

It’s easy to be impressed by the maturation of technology investors who have crossed over into healthcare over the last five years, as more seem to appreciate the need to demonstrate value in a robust clinical trial or economic study, and to figure out who’s actually incentivized to pay for their products. There is far more partnering between tech and healthcare investors, and the bravado of some of the earlier tech investor commentary has been muted by reality (as Salehizadeh anticipated in 2013). But there persists a belief in at least some of the tech world that if they just get it right for consumers, they might fundamentally change the healthcare dynamic itself. So far, there has been not much proof, and very little pudding.

Fearing the Regulatory Reaper

In 2014, legendary Silicon Valley investor Bill Gurley suggested on Twitter that he was contemplating healthcare, but concerned about “regulatory capture”–the idea that existing regulations favor incumbents to the point of making it prohibitively difficult for innovators to successfully enter the market. For instance, state licensure requirements have arguably slowed the adoption of telemedicine because they do not allow practice across state lines, thus making it harder to realize many of telemedicine’s efficiencies.

Further, the simpler path through the FDA, a 510K, is attainable only when launching a device that is comparable to something already in the market. The 510K allows for faster approvals for products that are substantially equivalent to that which came before, meaning that truly disruptive technologies are often subject to far more onerous, costly and lengthy approval processes.

Moreover, while software generally takes a shorter path through the FDA than most other healthcare products, it’s likely that as artificial intelligence and other technologies lead us in the direction of “alternatives to the physician,” as many aspire to achieve, the bar will become much higher if real clinical decisions are to be made through these systems.

In fact, many in tech felt that they could come to healthcare and somehow avoid the FDA altogether, assuming that by staying on the software side of the aisle, they could avoid some of the onerous compliance requirements that rarely exist in tech (especially on consumer-focused tech) but which add time and cost to market entry in healthcare.

D’oh! As it happens, the FDA has determined that while they won’t microregulate every health-related app, any software system that makes clinical determinations beyond simple recommendations is likely to require FDA oversight. And appropriately so.

Some Silicon Valley tech VCs were reportedly hopeful when it appeared that two libertarian members of their own ranks–Balaji Srinivasan, a board partner at Andreessen-Horowitz, and Jim O’Neill, an associate at Peter Thiel’s Mithril Capital–were under consideration for FDA Commissioner. However, the selection of the more traditional candidate, Dr. Scott Gottlieb (see here), muted the enthusiasm, as he (sensibly) seems more inclined to reform the FDA than to repeal it.

Hope In Change

Despite the challenges facing both health tech startups and some of the tech-focused VCs who back them, we are encouraged by several recent developments.

First, we are excited by a new breed of health company that seems to be emerging and showing some real promise, precisely because these startups are able to blend tech and services so effectively. Examples of this genre include: Omada Health*, Clover, Harken Health and Iora*–all of whom enjoy robust valuations.

We’re also encouraged by the dogged determination of some tech VCs, who seem determined to move forward in health. Andreessen-Horowitz, for instance, recently launched a healthcare fund, led by former Stanford computational biologist Vijay Pande, and shows no signs of abandoning its interest in the space. Gurley, for his part, cites at least two recent healthcare investments–Brighter, a dental company, and Solv, which seems to be a ZocDoc for urgent care, and to represent a space Gurley feels is especially promising (and accessible). Gurley notes Benchmark is “also the largest investor in OneMedical.” Google Ventures (GV) has gone all in on health tech investing (disclosure: GV is an investor in DNAnexus, where David is Chief Medical Officer), and even Apple, which once touted its plan to stay away from the FDA, has changed its tune.

The fundamental challenge of healthcare is that it tends to be a highly conservative business urgently in need of inspired disruption–the original and exciting thinking for which tech entrepreneurs are especially known. The hope is that there’s a way for tech innovators to leverage both their powerful tools and their creative mindset in a fashion that acknowledges the complexity of health and disease and the high stakes associated with potential solutions. Getting there will require a balancing act no less complex than healthcare itself.

What Country Spends The Most (And Least) On Health Care Per Person?

The United States spends the most on health care per person — $9,237 – according to two new papers published in the journal The Lancet.

Somalia spends the least – just $33 per person.

The data covering 184 countries was collected and analyzed by the Global Burden of Disease Health Financing Collaborator Network, a network of investigators from around the world with expertise in various aspects of health care. In between those two extremes, the spending is quite literally all over the map

The United States spends the most on health care per person — $9,237 – according to two new papers published in the journal The Lancet.

Somalia spends the least – just $33 per person.

The data covering 184 countries was collected and analyzed by the Global Burden of Disease Health Financing Collaborator Network, a network of investigators from around the world with expertise in various aspects of health care. In between those two extremes, the spending is quite literally all over the map. And the amount of spending doesn’t necessarily translate into better health care. For more insights, we spoke to Dr. Joseph Dieleman, assistant professor at the Institute for Health Metrics Evaluation at the University of Washington. He authored the two papers, one looking at health financing from 1995 to 2014, and the other estimating future health financing to 2040.

Obviously, wealthy countries spend more on health than do poor countries. Overall, where does the money come from?

There are three different stages as countries develop. Low-income countries spend the least on health, and the sources of that little bit of funding are international donors and people paying out of pocket. In middle-income countries, people still pay out of pocket, but the government has more capacity and is paying for some health care. And in high-income countries, the money comes mostly from government and private insurance.

What’s the impact on health care when people pay out of pocket?

When people are paying out of pocket, the poorest people will forgo treatment — or they’ll have treatment and be thrown into poverty because of medical costs. That’s mostly a problem for poor countries, though the U.S. stands out among high-income countries as having catastrophic medical expenditures that put people into poverty.

Do measures of health, like high life expectancy, improve as medical spending goes up?

Well, yes, but it’s a little hard to prove that higher spending causes better health outcomes. It’s easier to show that higher spending leads to more health services provided and more people covered for health services — and that’s what leads to better health. Generally, as health spending goes up, so do health outcomes. But there are so many outliers.

What outliers?

With development, health outcomes generally improve, but the U.S. is an anomaly. The U.S. and the U.K. are both high-income, highly developed countries. The U.K. spends less per person ($3,749) on health care than the U.S. ($9,237). Despite its high spending, the U.S. does not have the best health outcomes. [Life expectancy, for example, is 79.1 years in the U.S. and 80.9 years in the U.K. And while the U.S. spends more on health care than any country in the world, it ranks 12th in life expectancy among the 12 wealthiest industrialized countries, according to the Kaiser Family Foundation, a non-profit organization focusing on health issues.]

How bad are things in countries that spend very little, $100 a year or less per person, on health care?

Somalia spends the least, only $33 per person per year for health. That’s a really, really small number. And those resources don’t get equitably distributed across the country. If the country averages $33 a year, you know there are many people that get even less, if not zero in health spending. The poorest people won’t get any treatment.

We did our forecast through 2040, and what we find is that for the poorest countries, 2040 won’t likely be that different from today. In 2014, the lowest-income countries spent an average of $120 per person annually; in 2040, it goes up only to $195.

Which low- and middle-income countries are leading the way with innovative trends?

Globally, the movement toward universal health care has been powerful, especially among middle-income countries. You see a wide variety of reforms taking place. Nigeria, for example, is decentralizing the health-care system so spending decisions are made locally based on local needs. Thailand and Mexico stand out in making progress in moving toward universal coverage and insuring that the entire population has access to basic health care. Vietnam is also moving toward universal coverage. They spend only about $400 a person, but they’ve identified a manageable set of essential health care services and work to provide it for the whole population. Somalia and others can look to countries like that as examples for how to do more with less.

Susan Brink is a freelance writer who covers health and medicine. She is the author of The Fourth Trimester, and co-author of A Change of Heart.

HIPAA Challenges: Preventing and Preparing For IoT Attacks

Did you know that a printer or a surveillance camera can be used to attack your network or that of another company? That’s what happened on October 21, 2016, when a large number of Internet of Things (IoT) devices were used to direct bogus traffic at targeted servers belonging to Dyn, a major provider of domain name system services to other companies. The attack impacted several major websites, including Twitter, Pinterest, Reddit, GitHub, Etsy, Tumblr, Spotify, PayPal, Verizon, Comcast, and the PlayStation network.

HIPAA Challenges: Preventing and Preparing For IoT Attacks
By Chris Apgar, CISSP
For The Record
Vol. 29 No. 3 P. 8

Did you know that a printer or a surveillance camera can be used to attack your network or that of another company? That’s what happened on October 21, 2016, when a large number of Internet of Things (IoT) devices were used to direct bogus traffic at targeted servers belonging to Dyn, a major provider of domain name system services to other companies. The attack impacted several major websites, including Twitter, Pinterest, Reddit, GitHub, Etsy, Tumblr, Spotify, PayPal, Verizon, Comcast, and the PlayStation network.

How did it happen? Many of the devices used in business and clinical care settings connect to the internet and, thanks to advances in technology, have what is called embedded systems. Alan Grau, president of Icon Labs, wrote in IEEE Spectrum magazine, “For the most part, the gadgets that make up the Internet of Things are what we call embedded systems—that is, dedicated computers that perform specific functions within more complex systems. For instance, they might control the operation of a machine within a water-processing plant, manage the lighting of a smart home, or monitor an organ in the human body. Limiting the function means they can be small, fast, and efficient.”

Many of those embedded systems lack the security to block malicious attacks, leaving them vulnerable to situations similar to the Dyn incident last year.

In the world of getting products and gadgets to market as soon as possible, security often takes a back seat in the design of IoT devices and systems. This is true for a number of the new mobile apps, wearables, smart refrigerators, and other technologies. These days, there are numerous HIT companies, whether startups or existing vendors, vying for customers. Security by design is more of a concept than a reality.

Fortunately, that approach is changing as it becomes evident the risks are great. For example, investors have become reluctant to plop down money on a product knowing they may lose a princely sum should a security incident occur.

Where to Start
How can the problem be remedied? The first step is to assess the devices connected to the internet. This includes printers, security cameras, medical devices, biomedical equipment, and business systems. It may even include hospital power plants. It may not be possible to mitigate all of the risks these devices pose, but identifying them can help develop a recovery plan should something go wrong.

Newer devices that support software upgrades may be modified to add a firewall. Often, that entails asking the vendor for an upgrade. On older devices that don’t support software upgrades, such as power plan control systems and biomedical devices, it’s a matter of recognizing the risk. In any case, it will take some time for technology and the health care industry to address all of the risks associated with IoT.

No Phishing
The scams associated with the proverbial Nigerian prince asking for personal information to transfer a large sum of money out of the country are mostly in the past. Today’s attacks are much more sophisticated. One of the biggest forms of attack that lead to malicious software being installed on IoT devices is phishing, a process in which users are encouraged via e-mail to visit seemingly innocuous websites. A surprising number of staff click on malicious links that look legitimate.

Nevertheless, a substantial staff training effort can deter phishing expeditions. Such initiatives should include scheduling mock phishing attacks through vendors such as PhishMe.

It is believed the 2015 attack on health insurer Anthem involved sending what appeared to be legitimate e-mails to employees who were encouraged to click on the web address of WellPoint, Anthem’s former name. The malicious link was spelled “wel1point,” a bit of deception easily overlooked by recipients. The attack had nothing to do with an IoT device, but it nevertheless demonstrates the damage that can be caused by a phishing attack. Health care organizations won’t be able to prevent everyone from clicking on malicious links, but they can limit exposure through education and mock phishing exercises.

Know Your Devices
Some newer IoT devices come with built-in security such as encryption, password protection, biometric identification, and firewalls. As with any other transaction, health care organizations must vet their vendors before and after purchasing a product. For example, an organization with a longstanding relationship with a printer supplier should assume that those devices connected to the internet don’t pose a risk. Too often, security is not top of mind when initially contracting with a vendor for new devices nor is much thought given to the risks posed by previously purchased products.

It’s not necessary to conduct a lengthy vetting process or a complex vendor auditing process, but organizations must implement a robust risk management program and pay attention to the devices being acquired.

On November 15, 2016, the Department of Homeland Security (DHS) issued guidance on how to secure an IoT environment. Shortly thereafter, the National Institute of Standards and Technology (NIST) issued recommendations that complement the DHS document. For the nontechnical crowd, the DHS guidance is a bit more approachable but both sets of recommendations represent important starting points when it comes to addressing the risks associated with IoT devices.

The advice issued by the DHS and the NIST can help health care organizations strengthen their risk management programs, including assessing the up-front risks associated with implementing IoT devices.

Measures in Place
While attacks can’t always be prevented, failing to be prepared is inexcusable. Preparation should include having a list on hand—as part of the security incident response plan—of vendors that can assist when an attack occurs. For example, forensics vendors and those schooled in shutting down a distributed denial of service (DDoS) attack can be invaluable.

Besides having a good defense in place, health care organizations must implement fully tested (the time to test plans is before an attack occurs) security incident response, disaster recovery, and business continuity plans. In addition, staff must be trained on their duties in the event of an attack, especially members of the security incident response team. A quick response to an IoT attack helps mitigate the risk and potential harm.

An IoT attack can come in several forms, including a DDoS attack, such as was used in the Dyn incident; the disablement of a power plant; or illegal access to PHI.

Don’t ignore the value of encryption. If PHI is encrypted when it’s transmitted or stored in the EHR, it’s difficult for hackers to gain access. And encryption is often something within an organization’s control. It’s easy to encrypt mobile devices and portable media, and many EHRs have the capability to encrypt at-rest or stored data.

When conducting a periodic risk analysis, take notice of where PHI is stored and whether it should be encrypted. If the organization is pursuing EHR incentive dollars, it’s important to note examining the risk to stored PHI is mandated in meaningful use stage 2.

In the end, sound risk management, staff training, and incident response planning are key to preventing and responding to attacks associated with IoT devices. A risk management program is neither a one-time event nor static. Risks are constantly changing as new attack methods are being developed.

Staff training is too often overlooked. Staff who see the same dry PowerPoint training every year as part of their HIPAA refresher course will soon tune out. General training isn’t enough. Training needs to highlight phishing and other attack vectors that may have an adverse impact on the organization’s security.

Attacks will continue, and because measures to prevent IoT breaches are not a sure thing, health care organizations must develop and test plans that can be executed quickly. If critical systems fail, the incident response plan must tie directly into solid disaster recovery and business continuity plans.

— Chris Apgar, CISSP, is CEO and president of Apgar & Associates.

U.S. Health Care Wrestles With The ‘Pre-Existing Condition’

For most of his life, Carl Goulden had near perfect health. He and his wife, Wanda, say that changed 10 years ago. Carl remembers feeling, “a lot of pain in the back, tired, fatigue, yellow eyes — a lot of jaundice.”

Wanda, chimes in: “Yellow eyes, gray-like skin.” His liver wasn’t working, she explains. “It wasn’t filtering.”

Carl was diagnosed with hepatitis B. Now 65 and on Medicare, he had a flower shop in Littlestown, Pa., back then, so had been buying health insurance for his family on the market for small businesses and the self-employed.

For most of his life, Carl Goulden had near perfect health. He and his wife, Wanda, say that changed 10 years ago. Carl remembers feeling, “a lot of pain in the back, tired, fatigue, yellow eyes — a lot of jaundice.”

Wanda, chimes in: “Yellow eyes, gray-like skin.” His liver wasn’t working, she explains. “It wasn’t filtering.”

Carl was diagnosed with hepatitis B. Now 65 and on Medicare, he had a flower shop in Littlestown, Pa., back then, so had been buying health insurance for his family on the market for small businesses and the self-employed.

The medications to manage Carl’s hepatitis cost more than $10,000 a year — and if he ever needed a liver transplant, as some people with hepatitis eventually do, the further costs could be formidable. Thank goodness they had health insurance, the couple thought.

But then, Carl says, “the insurance renewals went way up.”

After a few years he could no longer afford to buy the coverage — more than $1,000 a month — and also maintain his business. So he dropped the health insurance.

“I was devastated,” he says, “because I didn’t know when my liver might fail.”

But that steep increase in his insurance rate was completely legal, says Pennsylvania insurance commissioner, Teresa Miller. And back then, before the Affordable Care Act became law, a patient like Carl Goulden might have had a very hard time buying another policy; he likely would have been turned down by other insurers because he now had what’s called a “pre-existing” medical condition.

A family like the Gouldens would “just have been out of luck,” Miller says.

Pennsylvania: The wild, wild West

Before the ACA, states had differing approaches to handling pre-existing conditions.

Pennsylvania was typical. Until the ACA mandated that insurers treat sick and healthy people equally, buying insurance was the wild, wild West.

Insurers couldn’t overtly kick people off a plan if they got sick, but they could find ways to charge them a lot more, even those whose chronic condition wasn’t all that serious — such as acne. For individuals looking to sign up in the first place, “an insurance company could simply decline to offer you insurance at all because of your pre-existing condition,” Miller says.

Insurers who did offer a policy to someone with a pre-existing medical condition might have done so with a catch — the plan could require a waiting period, or might exclude treatment for that condition.

“So, let’s say you had diabetes, for example,” Miller says. “You might have been able to get coverage for an unexpected health care need that arose, but you’d still be on your own for any treatment and management of your diabetes.”

From the perspective of the insurance company, these practices were intended to prevent the sick from signing up for a health plan only when they needed costly care.

Pennsylvania did try to partially solve this problem. It created a more scaled-back health plan, called Adult Basic, for those with lower incomes who didn’t have any coverage. Lots of people signed up, but the plans didn’t include coverage for mental health care, prescription drugs or more than two nights in a hospital. Even so, Miller says, the strategy proved too expensive for the state.

“That program was spending $13 million to $14 million a month when it was shut down,” she says.

High-risk pools

More than 30 other states dealt with pre-existing conditions by setting up what are called “high-risk pools,” a separate insurance plan for individuals who couldn’t get health coverage in the private market.

These plans could be real lifesavers for some people with conditions like cancer — which can cost tens if not hundreds of thousands of dollars to treat.

The experiences with high risk pools varied, but states faced lots of challenges, says John Bertko, an insurance actuary with the state of California. And the main problem was the high cost.

“The one in California, which I was associated with, limited annual services to no more than $75,000, and they had a waiting list. There was not enough money,” Bertko says. “The 20,000 people who got into it were the lucky ones. At one point in time, there were another 10,000 people on a waiting list.”

The pools also had catches; premiums were expensive, as were out-of-pocket costs. And plans often excluded the coverage of pre-existing conditions for six months to a year after the patient bought the policy.

New Jersey: Pre-existing conditions were covered, but with a catch

Around that same time, across the Delaware River, the state of New Jersey was trying something different.

“Insurers could not take health status into account,” says Joel Cantor, director of Rutgers University’s Center for State Health Policy who has been analyzing the New Jersey experience.

Before the ACA, New Jersey was one of just a handful of states that prohibited insurers from denying coverage to people with pre-existing conditions. Insurers also weren’t allowed to charge people a whole lot more for having a health issue, and the plans had to offer robust coverage of services.

There was a one-year waiting period for coverage of a pre-existing condition, but a larger issue became cost. The entire individual market in New Jersey became expensive for everyone, regardless of their health status, Cantor says. Because there was no mandate to have health insurance coverage, those who signed up tended to really need it, and healthy people did not enroll.

And so, “the prices went up and up,” he says. And the premiums and enrollment “went down and down.”

The state tried to address this in the early 2000s by introducing a “skinny” health plan, Cantor says.

“By that I mean very few benefits,” he explains. “It covered very, very limited services.”

The plan was affordable and really popular, especially among young and healthy people and about 100,000 people signed up. But if something did happen, or if a person had a chronic health need, lots of the costs shifted to the individual.

“It left people with huge financial exposure,” he says.

That’s, in part, why the ACA included a rule that insurance plans now have to offer good benefits and be available to everybody. In exchange, insurers have the mandate and subsidies — so that everybody will buy in.

Cantor says these experiences point to an ongoing dilemma in health care: A small portion of people consume a big chunk of health care costs. It’s hard to predict who among us will cost a lot — or when. So, the question becomes, what kind of care should insurance plans cover and who should shoulder that cost?

This story is part of a reporting partnership with NPR, WHYY’s health show The Pulse and Kaiser Health News.

Smart bandages to help doctors keep a closer eye on patients

Trials of sensor-packed bandages that are capable of monitoring wounds could start happening within the next 12 months.

The innovative development is being led by Swansea University’s Institute of Life Science that is working on packing the tracking tech inside of 3D printed bandages. Those sensors will be able to monitor the state of a wound and relay that information back to a doctor to help customise the treatment. All without having to make an appointment to actually see your doc.

Trials of sensor-packed bandages that are capable of monitoring wounds could start happening within the next 12 months.

The innovative development is being led by Swansea University’s Institute of Life Science that is working on packing the tracking tech inside of 3D printed bandages. Those sensors will be able to monitor the state of a wound and relay that information back to a doctor to help customise the treatment. All without having to make an appointment to actually see your doc.

Read this: How wearables will shape the hospital of the future

5G wireless data will ensure that information about the patient wound is sent to the doctor in real-time. “5G is an opportunity to produce resilient, robust bandwidth that is always there for the purpose of healthcare,’ said Professor Marc Clement, chairman of the Institute of Life Science.” That 5G integration will also help to provide information on patient location and even keep tabs on how active the smart bandage wearer is being.

Clement also revealed that the Welsh Wound Innovation Centre are helping with the development of the smart bandages and that trials would go through the Arch wellness and innovation project. The development of a 5G test hub in the city is also going to prove crucial in getting everything up and running.

This isn’t the first time we’ve heard about smart bandages of course. Last year, researchers at the University of Bath carried out trials on a dressing that changes colour to indicate whether a wound has been infected. Researchers at the Massachusetts Institute of Technology have also been working on bandages that can provide medicine to a wound to speed up the healing process.

While it seems that there’s still a lot needs to happen to make these smart bandages a reality, wearable tech is proving once again that’s it going to play a major part in bringing doctors and patients closer together to make sure you get the treatment you really need at the time when you really need it most.

Source: BBC

How Behavioral Economics Can Produce Better Health Care

I’m a physician at the end of more than a decade of training. I’ve dissected cadavers in anatomy lab. I’ve pored over tomes on the physiology of disease. I’ve treated thousands of patients with ailments as varied as hemorrhoids and cancer.