Digital Health is Underfunded

digital health is underfundedOverall venture capital funding made a sharp decline in the last two quarters amid worries (justifiable or not) of a bear market and a funding bubble in technology investments. In contrast to the tech market, however, digital health funding continues to grow at a record pace. According to Rock Health, $4.5B was invested in digital health in 2015 (an increase from $4.3B from 2014) and $981 million has already been invested in the first quarter of this year. It seems on pace to be another stellar year, which is remarkable considering what is going on in other sectors.

Many are skeptical about the investment potential of healthcare technology investments and have been wary to enter the market (perhaps especially so with all the negative media that companies like Theranos and Zenefits have attracted). Additionally, regulatory barriers and the longer timeline needed with healthcare innovations tend to scare potential investors away.  But anyone familiar with the sad state of technology in healthcare can see, even with the record-breaking investments thus far, that there continues to be an enormous untapped opportunity in healthcare–greater, I believe, than in any other sector.

Digital health is vastly underfunded.

Technology is taking over most of our personal and professional lives with indispensable apps, wearables, and other connected devices and software. At home, we have smart appliances, lighting, thermostats, security systems, media systems, and even smart cars. And we have Siri, Cortana, and Alexa doing our bidding. But in healthcare, we’re still in the Stone Ages in terms of technology. Communication via faxes, for example, is still common between hospitals and doctors offices. There are small glimmers of hope, such as patient portals, higher-functionality EMR systems, and telehealth services, but the fact is that we are still a far cry from the ideal vision for healthcare, which includes a seamless cloud-based network of devices and software that can track and record a vast spectrum of patient information, the ultimate goal being the use of computational technology to help prevent, predict, diagnose, and yes, even treat disease. Ultimately, collecting information on large populations of patients could have profound impact through public health measures that can prevent disease and thereby reduce healthcare costs. This can only be accomplished with a wide-spread network of software and devices, that includes electronic health records, wearables, devices based in the hospital, office, and at-home, and with telehealth capabilities. In addition, there are too few companies working to collect, store, manage, and interpret health data.

There is still a lot that needs to be done.

According to MarketResearch.com, the healthcare “internet of things” (IoT) is expected to reach $117B by the year 2020. The fact is, the full potential of digital health won’t be seen until every hospital and doctor’s office and home is connected via cloud-based devices and software and with the development of machine learning platforms that can make sense of the reams of health information.

It is a little challenging to think of all of this in the abstract, so here are a few examples of the potential of the healthcare IoT. Imagine that a spike in certain population health data (like temperature) is detected in a region of the country that alerts public health officials to early to a disease outbreak that can then be contained to prevent an epidemic. Imagine that a change in an individual’s biometric data alerts that person to seek medical care, detecting a life-threatening disease, like cancer, early and improving the chances of cure. Imagine chronic health conditions like diabetes are monitored routinely and continuously with real-time blood glucose levels, with immediate adjustment by doctors of insulin dosages, thereby preventing hospitalizations due to uncontrolled diabetes, and also preventing long-term diabetic complications, such as kidney disease.

These are only a few examples.  There are countless other opportunities in healthcare.

In addition to the opportunity to improve healthcare delivery, there is the opportunity to improve the quality of care through tools that provide greater communication and transparency of information with patients and improve care coordination between the providers of those patients. And by changing the focus of medical care to prevention and early diagnosis of disease, there is the opportunity to decrease the outrageous cost of healthcare as well, by decreasing the need for excessive medication, surgery, unnecessary visits, and hospitalizations. According to the Commonwealth Fund, in the US we spend an outsized proportion of our GDP on healthcare versus other countries. Other developed countries spend between 8.8%-11.6% to our 17% of GDP, related in part to better-connected health IT networks.

It’s hard to fathom how much digital health tech is needed to serve a US population of 318 million and a global population of 7 billion, but one thing is certain: the market is huge.  We should stay bullish on health tech investments now, and probably for a long while to come.

 

The Billionaire Doctor Who Plans to Cure Cancer

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Dr. Patrick Soon-Shiong (courtesy Wikimedia Commons)

Recently, I had the opportunity to speak to billionaire surgeon-inventor Dr. Patrick Soon-Shiong about his plans, both private and through the Cancer Moonshot 2020, to cure cancer.

Soon-Shiong, who made his fortune by founding and selling two pharmaceutical companies, has gathered a group of pharmaceutical companies, academic institutions, and insurers to spur cancer research and to attempt to make breakthrough gains by the year 2020. This effort dovetails with the Obama administration’s $1B plan to fund cancer research led by Vice President Joe Biden, whose son, Beau, recently died after a long struggle with brain cancer.

Soon-Shiong’s path to cancer research began while doing research for NASA that involved harnessing stem cells to make insulin. He stumbled upon a paper that reported that the binding of zinc to the blood protein albumin is what transposes it into pancreatic islet cells, enabling the production of insulin.  This discovery led to an “aha” moment.   “A light bulb went on. In fact you should feed the tumor, not stop the tumor.  And if you could take a nanoparticle of albumin and attach Taxol [a common cancer drug] at the core, then it [the tumor] would take up the albumin and kill itself, like rat poison.”  This revelation led to his creation of the cancer drug Abraxane, or albumin-bound paclitaxel (Taxol).  Abraxane is used currently in a wide variety of cancers, including breast, lung and pancreatic cancer. “To this day, oncologists don’t understand the mechanism of action of Abraxane,” he said,  “They think of it as another form of Taxol.”  According to Soon-Shiong, Abraxane works so well is because the binding to the blood protein albumin allows it to penetrate cancer tissues better.

Abraxane has had huge clinical and commercial success, but he says the path to getting there wasn’t easy.  Initially, after developing Abraxane, he approached large pharmaceutical companies but was unable to gain support despite showing that it had remarkable results in animal models.  He was forced to make the painful decision to leave a secure academic career to risk launching his own company.  His risk paid off.  He ultimately founded both APP Pharma and Abraxis BioScience to support his work.  In the end, APP Pharma was sold to Fresenius SE for $4.6B and Abraxis BioScience was sold to Celgene for $4.5B.  Then, in 2011, he founded NantWorks, a holding company with a portfolio of firms to pursue his diverse entrepreneurial interests.  One of these is NantHealth, a company that has developed a fully integrated digital health platform to collect and analyze genomics and proteomics data on cancer research patients.

Soon-Shiong, a bit of an heretic in the world of oncology, has ideas that veer from the traditional approach to cancer treatment.  One example is how he wants to harness patients’ natural immune abilities to treat their cancers.  “As we sit here speaking, we are creating 10,000 cancer cells a day.  And the natural killer cells in your body are monitoring it and killing it,” he said, “Cancer is a normal evolutionary process.  And guess how we’re trained as oncologists?  To give you the maximal tolerated dose of drugs to kill those natural killer cells that are protecting you, which makes no sense.  This is the dogma in oncology and even in drug development.”

He’d like to see drugs given at lower doses to cause what he calls “cytostress” instead of “cytotoxicity”.  The natural killer cells of our bodies look for cells that are under stress (by detecting distinct proteins and enzymes that are released) and then destroy those cells.  He suggests that chemotherapy should be administered at what he calls the “lowest effective dose” instead of the much higher “maximal therapeutic dose” typically given in clinical trials for cancer.  The lowest effective dose, he argues, won’t completely wipe out patients’ immune systems, and thereby allow patients’ natural killer cells to target “cytostressed” cancer cells.  He argues that this approach will revolutionize cancer treatment and lead to more cures and cites numerous personal anecdotes when this approach has worked for his patients.

Unfortunately, for the time being, he’s had a difficult time convincing oncologists and drug companies to move away from what he calls the “schizophrenic dichotomy” of treating with the maximal therapeutic dose that destroys natural immune function.

Another challenge to finding a cure for cancer, according to Soon-Shiong, is developing health IT systems to support cancer research.  “Cancer is really a rare disease,” he said, “Because of the molecular signature, because of the heterogeneity, no single institution will have enough data about any [single] cancer.  So you actually need to create a collaborative overarching global connected system.”  He continued, “The problem is now you have the other obstacle to the advance of medicine and the cure of cancer…it is going to be bombastic, dogmatic IT.”  In order to solve this problem, Soon-Shiong is collaborating with other health IT experts in the Commonwell Alliance to facilitate the development of the digital architecture needed to support the interoperability of electronic medical records.

His critics question the sheer breadth of the projects he’s begun under his NantWorks empire, but Soon-Shiong seems too consumed with making his ideas a reality to worry about critics.  At a time when one might expect him to retire, he seems to be only just beginning. “At this point in my career, it’s just:  let’s show that there are patients that are alive.  Let’s show we’ve created less suffering in cancer patients and then expand it globally.”

Featured Startup: Blondin Bioscience

blondinCancer treatment is a frustrating waiting game at the present time.  Patients with solid tumors often undergo brutal chemotherapy cycles for weeks to months before they can get an idea (through radiologic examination) of whether their therapy has been working to shrink their tumor.  At times, the studies show the therapy is working , but at other times, the studies may show that in fact, treatment may be failing, allowing the cancer to grow.  This delay in diagnosis in cancer treatment is what the life sciences startup Blondin Bioscience hopes to correct.

Blondin Bioscience is a company that is currently developing a point-of-care molecular diagnostic assay which they hope will disrupt the traditional current model of care for cancer patients.  Their test, which is called FACT (fluorescent analysis of cell-free telomeres), has the ability to detect a nucleic acid biomarker (telomeres) in the blood that is released from dying cancer cells.  Blondin Bioscience proposes that this test can be used as an adjunct to cancer treatment, allowing oncologists to monitor the effectiveness of chemotherapy treatment in real-time–days, not weeks or months–and thereby, be able to quickly direct treatments and improve outcomes for patients.  Additional benefits are the cheaper cost versus radiologic studies and cost savings from potentially avoiding ineffective treatments, as well as easier access, as this test could be made available in doctors’ offices versus having to make patients travel to centralized, larger hospitals and centers in order to have radiologic studies.  Patients would also know sooner whether their treatment is working, thereby decreasing the emotional toll of cancer treatment.

Blondin Bioscience is based in Birmingham, Alabama, and is lead by Chief Executive Officer Brad Spencer, and founders Dr. Katri Selander and Dr. Kevin Harris, who are both Assistant Professors of Medicine at the University of Alabama at Birmingham (UAB) and are members of the UAB Comprehensive Cancer Center.  Their leadership team also includes Director of Research Dr. Kate Hayden and Director of Operations Kathleen Hamrick.

Thus far, Blondin Bio has raised $750,000 from an NIH SBIR grant and has been studying their testing method in a clinical trial for prostate cancer, but hopes to scale in order to test other cancer types.

For more information, please visit their website here:  Blondin Bioscience.

 

How Jonathan Bush Plans to Build the Health Care Internet

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Jonathan Bush, the high profile CEO of athenahealth, has a grand vision of the future of health care and it involves building a “health care Internet.” In this world, primary care physicians are power brokers, connecting and referring patients to a cloud-based network of super-specialists that can care for patients regardless of their geographic proximity.

Primary care physicians will be able to find specialists anywhere in the country, even the world, with highly specific skills and knowledge for their most complex patients.

Patients will have the advantage of being cared for by doctors who have treated hundreds of patients just like them, instead of by doctors who may only see patients with their specific disorder a few times in their careers.

It sounds compelling, but in our currently disjointed system, it seems like a distant dream. Bush, in a keynote interview at the Digital Healthcare Summit in Boston, admits, “We’re sort of Star Wars 1 here in health care … So, ok, the market doesn’t work so well in health care, but what we want is a network.”

Moderator Brandon Hull challenged Bush a bit. At the conference, Bush shared a music video parody that ridiculed EMRs. Hull noted the video’s message that, “Doctors hate EMRs … The last I looked, you’re in the business of selling EMRs.” Bush agreed that what we currently have is far from what we want and pointed to the lack of a coordinated vision on the part of the government as a key factor.

He cited the rush to tie physicians and hospitals to electronic health record systems without supporting infrastructure as one of the reasons for the lack of interoperability. To get to his vision of a fully functioning software enterprise system, Bush recommends taking a hard look at our current situation. “With everything in life, the first thing that you want to do if you really want to live fully is to stare vividly and unflinchingly for a very long time at the awkward reality of your current situation and then you can look off to your right and see a beautiful world that you wish you were in.”

Considering the current tech challenges in health care, Bush takes a sympathetic stance on the plight of doctors. During the talk he shared the image of a painting that he takes inspiration from, called “The Doctor” by Sir Luke Fildes. In it, a pensive doctor sits at the bedside of an ill child. “This guy, to me, is on the edge of his humanity…” he shared. “And what I believe is that digital health represents the wicking away of the things … that don’t require this level of presence is the job of the cloud and is the job of technology.”

It’s a beautiful vision, but is it realistic or even attainable?

The brutal truth about health care today is that the pensive doctor now has a large computer screen between her and her ill patient. Bush admits that we’re far from the vision currently and admits that doctors’ documentation work has become “life-sapping.” His long-term vision, however, is to make this work automated and routinized, so that doctors can be more fully present for patients.

Bush notes with irony that currently 12 million faxes are sent between the IT systems of health care providers despite the overwhelming adoption of electronic health records throughout the health care system. Bush attributes the stimulus of the ACA with the wide but ineffective adoption of EMRs. Speaking of the stimulus, in his usual colorful manner, he said, “What did Keynes say? If you pay a 100 guys to dig a hole and another 100 to fill the hole, at least you get the ball rolling.” According to Bush, despite requiring the collection of meaningful use data, the government has built no infrastructure to actually receive and measure it. He went on to discuss how regulations just add additional complexity to the system, which when worked around, create “ridiculous absurdities” and additional bureaucratic drag.

Still, he feels there is plenty of room for innovation, which is reflected in the creation of athenahealth’s innovation arm, called MDP, or More Disruption Please. Through MDP, athenahealth provides investment and support to start-ups and entrepreneurs who share their connected health vision. “We think of health care as a few trillion dollar industry. It’s thousands of a couple of billion dollar markets, all masquerading as one thing … My thought with MDP is that what we need is thousands of companies with no cost of sale, no cost of implementation, that are very results oriented, maybe they almost morph between a vendor and a provider, and they kind of come together and focus on these thousands of industries and get a 10x return because you don’t have to put very much in and the cost of sale, of implementation, is so low because you have this backbone to plug into an app store, if you will, that you can start verticals.”

Besides improving care of individual patients with a powerful network of providers, Bush feels the health care Internet can also create a new opportunity to study diseases. Under our current system, it is difficult to get enough patients with certain diseases in one place in order to conduct a study with high enough power, but that could change with enhanced technology. He also sees an opportunity to better address population health, not just in those with chronic disease – which is a focus currently due to the high costs of care of these patients – but ultimately other groups of patients as well, and the ability to do this at scale.

One regulatory shift that Bush seems to favor is the emphasis on fee-for-value versus fee-for-service. He argues that risk-bearing creates a rich market with a large number of buyers and sellers, competitively innovating cheaper and better solutions. His hope, through MDP, is to help create this rich health care ecosystem. He asserts that it’s not athenahealth’s objective to build or be the storefront for all of these businesses, but rather to simply encourage their development.

This long-view of health care and investment in MDP places athenahealth ahead of the hundreds, if not thousands, of other EMR providers. It shouldn’t surprise anyone if someday the much-sought-after and elusive health care Internet is ultimately hosted on servers built by Jonathan Bush and athenahealth.

 

This article was originally published by Healthegy.

GV’s Approach to Healthcare Investing: An Interview with Dr. Krishna Yeshwant

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Please note:  This article was originally published on TechCrunch.com.

Healthcare investments — in particular, investments in digital health — are booming, and don’t seem to be slowing down. According to CB Insights, digital health funding hit nearly $5.8 billion in venture funding last year, surpassing the previous record of $4.3 billion in 2014.

One of the top venture firms, GV (previously known as Google Ventures), recently came out with their year in review, revealing that more than one-third of their investments are in the life sciences and healthcare. (They currently have $2.4 billion under management.) “I can think of no more important mission than to improve human health and global quality of life,” CEO Bill Maris said in a recent announcement.

One of the strengths of the GV life science and health investment team is having a diverse mix of PhDs and MDs as investors, including general partner Dr. Krishna Yeshwant. Yeshwant continues to practice internal medicine part-time at Brigham and Women’s Hospital in Boston, and credits that with helping to keep him in touch with the challenges facing healthcare.

I recently sat down with Yeshwant to talk about GV’s investment strategy.

Yeshwant started his career, interestingly, studying computer science at Stanford. From there, he helped found two tech companies, which were eventually acquired by Hewlett-Packard and Symantec. He could have successfully continued on his path in tech, but decided instead to go to medical school after his father became ill and needed a cardiac bypass. “I remember just being in the hospital thinking this is just messed up. There are so many areas for improvement,” he said.

He went on to pursue an MD-MBA at Harvard. During this time, he became involved in a lot of medical-device work, and even started a diagnostics company. This work eventually led him to work with Bill Maris at Google Ventures.

Thus far, one of GV’s largest investments has been with Flatiron Health, an oncology-focused technology company based in New York City. According to Yeshwant, the concept was developed by two former Google employees who received support from GV. “Flatiron is basically integrating EMR’s (electronic medical records) in the outpatient and hospital setting,“ said Yeshwant, “and it provides data back to physicians as well as aggregating data to aid with discovery and help with regulatory processes.”

Others have also recognized Flatiron’s enormous potential. Flatiron recently announced they received $175 million in Series C funding from Roche Pharmaceuticals. In addition to the funding, Roche plans to be a subscriber to Flatiron’s software platform. Their hope is to use the platform to identify and bring innovative treatments to market faster.

Yeshwant strongly believes in the need for more tech solutions in healthcare like Flatiron Health. “There’s a fundamental need for infrastructure. A single disease type of lung cancer is actually lots of diseases. Other more complex diseases are going to need more data sets, multisite trials, and we need to create infrastructure for that,” he said.

It’s hard to argue with him on that point. Massive amounts of biometric data are being collected in healthcare right now, but there aren’t nearly enough tools for storage, communication and analysis of that data. There’s a great deal of opportunity for healthcare startups that can specialize in data management and analysis.

Three such companies in which GV has invested in this space are Metabiota, which provides risk analytics to prevent and reduce epidemics; Zephyr Health, which uses global health data and machine learning to provide treatment insights to pharma and medical device companies; and DNAnexus, a company that helps companies store their genetic information.

“Once you’re in a world where you can scale up and down your computational analysis, you can ask lots of simultaneous questions of your aggregated data sets and that’s well suited to the cloud environment,” said Yeshwant. “We invest heavily in those spaces.”

Besides software-based companies, GV is investing in a diverse range of other types of companies in healthcare and the life sciences. One such area is the genomics space. Thus far, GV has made major investments in Editas, a CRISPR gene-editing company; 23andMe, which offers chromosomal analysis to consumers; and Foundation Medicine, a company that offers genomic analysis of various cancers.

Yeshwant also feels one of the biggest challenges (and opportunities) in healthcare is helping healthcare organizations shift from fee-for-service to fee-for-value. “That’s the direction we’re going,” he said. “How do we migrate big systems in that direction? That’s the fundamental question.”

GV therefore has made some significant investments in companies that are shaking up the traditional provider model, including the telemedicine company Doctor on Demand and the innovative primary care provider, One Medical Group. “Anything you can do to move healthcare from a high cost setting to a low cost setting is generally going to be successful in that model,” said Yeshwant. “Telemedicine is a good example of that. We have a company called Spruce Health which is essentially asynchronous care. Value based care is a big area for us.” (Spruce Health is a platform for dermatologic care.)

Yeshwant hinted that future projects may be in the areas of population health and chronic disease management, investment in companies that engage consumers directly and possibly even some work in women’s health. One thing’s for sure: We can expect more exciting things to come in 2016 and beyond for GV.

 

 

Innovation for All

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I was in an interesting discussion yesterday with some colleagues on Medstro (a social media site for doctors).  We were talking about the pace of innovation at academic medical centers, but the topic got me thinking more broadly about who is driving innovation in healthcare right now.  The short answer seems to be:  “everybody”.

Innovation happens wherever people are desperately trying to solve problems.  On a global level, we have organizations like the Gates Foundation pouring funding into research and innovation to help eradicate deadly diseases in underdeveloped countries.  On a national level, our legislators and President have brought about the Affordable Care Act in recent years in an effort to improve healthcare disparity, cost, and quality.  (I’m going to have to defer the final verdict on this for another blog post in the future…).  On the healthcare delivery side, in the life sciences, among employers and insurers, we see efforts to innovate and improve healthcare quality, access, and/or cost.  In private industry, we see the proliferation of healthcare tools–apps, wearables, and other devices.  And, lately I’ve heard about some of the most inspiring innovators:  patients.  Recently, I read a couple of stories about patients hacking their diabetes devices to better suit their needs and another story about patients’ families starting biotech companies to work on developing drugs for rare diseases that have been typically neglected by industry.

Healthcare is big business.  A recent study by Deloitte estimates aggregate US healthcare spending at $3.8 trillion dollars for 2013..!

So, the question is:  who should be working on innovations that improve healthcare?

Is it appropriate for our government to fund efforts (as they’ve done with the CMS Centers for Innovation) to develop new models of care?  Should it be left to insurers?  Employers?  Should improving healthcare be left to the experts, scientists and doctors at elite academic institutions?  What about private citizens with the deep pockets, like Bill and Melinda?  What about all the companies making those wearables?  Have any of these devices even been shown to be helpful?  Are people just wasting their time on all these devices and collecting all this useless data that will only drive their doctors nuts and cause them to just order more tests and drive up healthcare costs some more?  Is it appropriate for patients with their non-medical backgrounds to drive healthcare innovations?

Among doctors (and others), these are controversial topics.

I have my own opinion and it is this:  Everyone that identifies problems within healthcare (and feels inspired) should work on finding solutions.  I admit that this may not be a popular answer if your only goal is to reduce that $3.8 trillion bill.  But, I like to think that we can actually reduce healthcare spending…but the key is not to start with that as the primary goal in mind.  The primary goal should be to cure disease and to improve quality of life and longevity.  One never knows  where the next great revolutionary idea will come from (maybe from a kid in a garage jailbreaking his medical device)?  Maybe this idea will transform not just the health and wellbeing of individuals, but solve the healthcare financial crunch we’re in.  After all, if someone finds a way to solve the obesity epidemic, they will effectively decrease a host of other very expensive diseases, like diabetes, heart disease, and cancer.

What are your thoughts?  Should innovation in healthcare be democratized and open to all, public and private, expert or not?  Or should it be left to the realm of scientists and doctors, the experts in the field?