Why wireless health matters
Robert B. McCray, Chairman & CEO
The Wireless-Life Sciences Alliance convenes its 6th annual WLSA Convergence Summit in San Diego this week. In 2005 WLSA was the first organization to focus exclusively on the convergence of communications technology and healthcare, based on the founders’ belief that at this intersection we would find solutions for some of healthcare’s most difficult problems. We have remained true to that mission and have sharpened our message – there are not two points of convergence but three. The potential of wireless health will be realized in the effective blending of three bodies of learning: high technology; life sciences; and human factors. The last point is critical – end users (including consumers, patients and clinicians) will ultimately determine the successes and failures in wireless health.
There is also a fourth factor in the creation of any convergence sector such as internet commerce, mobile data or digital music. The fourth factor is the ecosystem of innovators, executives, investors, clinicians (for healthcare) and policy makers who are creating the sector. WLSA’s purpose is to bring those groups together for quality conversations that will shape the sector and accelerate useful innovation.
The following discussion is based on my letter to the participants in the 2011 WSLA Convergence Summit and is intended to level set the discussion about why wireless health is important, to provoke conversation, and undoubtedly to set up myself up for some predictive failures.
What is Wrong with Healthcare and What Does Wireless Health Have to Offer? Societies have no choice but to change their healthcare systems in the face of exploding demand caused by aging and chronic disease. The U.S. healthcare system is already failing millions of it citizens. Wireless health offers the opportunity to satisfy this demand, thus improving life and creating shareholder value. Nonetheless, it is apparent that some institutions and professions will resist the demand for more personalized and efficient access to care. In the face of competition and digital information, however, they will ultimately be unable to resist disruptive change any better than the automobile, music or retail industries. Wireless health is powerful because it creates transparency in healthcare through measurable outcomes, and transparency creates accountability.
Year Two. Last year, I opined that 2010 would be considered “year one” of the wireless health sector, that is, the inflection point in creating a mature sector after successive “years zero.” We are still early – if this were the internet commerce sector we would be in 1995 when it was not clear what shape that sector would take. While we do not yet know who will be the Amazon or eBay of wireless health, certainly the core concepts have been identified and the hard work of building these companies has commenced.
What are the signs of progress? Here are three noteworthy events affecting the WSLA community that have occurred since last year’s Convergence Summit:
- In November 2010, Dr. Leslie Saxon of USC published the results of a study of long term outcomes of over 194,000 patients after ICD and CRT implantation, comparing remote device follow-up with in-clinic follow-up. The conclusion: survival rate materially improves if the device is connected through a home based monitor to a healthcare data center. (Circulation 122 (2010): 2359-2367. Abstract available at http://circ.ahajournals.org/cgi/content/abstract/122/23/2359)
- In December 2010, the Middle Eastern operator and 2010 Summit participant Mobily rolled out an mHealth platform in conjunction with Ericsson and a major hospital in Saudi Arabia (Mobily launches the first mHealth solutions in the Kingdom) and in February 2011 Mobily deployed the service of a WLSA members and 2010 presenter, Great Connection, to deliver sonograms to the phones of expecting parents (Mobily launches Mobile Baby Service).
- In February 2011, Epocrates (www.epocrates.com) completed its IPO as “EPOC” and has traded in a typically volatile range but is up 10% as of April 25th. Epocrates was an invited presenter in the 2009 WLSA Investors Meeting.
Conclusions and Observations. These news items are just three examples of progress in the sector. There are many others and much relevant activity is conducted in private. Looking at developments in the field as a whole, and considering the global economic and social environment in which we exist, I offer the following conclusions and observations:
- If a device or service can be connected, it should be (under penalty of malpractice, obsolescence and/or customer dissatisfaction). How else will you be able to answer questions about how your product works in the field or why someone should buy it? If you do not take this approach and your competitor does, how will you sell against connectivity? This is why we have Merlin, CareLink and Latitude even though St. Jude, Medtronic and Boston Scientific created these wireless services without extra reimbursement.
- In the developing world, increases in chronic disease and demand for access to health services rival or exceed our challenges in the developed world. U.S. life sciences companies should look for markets in the entire world and not just in the dwindling populations of rich and well insured in the U.S. and Europe. Five billion cell phone users constitute the largest distribution channel ever created in the world. How are you going to use it?
- Epocrates was founded on the principal that clinicians needed on-the-fly access to accurate and up to date information via mobile devices and it has grown to establish a platform serving a majority of U.S. practitioners with several important services. It has achieved business success and its investors and founders will be rewarded. Whether Epocrates will extend this platform to the rest of the world or leave that opportunity to others remains to be seen.
- Heuristic diagnosis is moving towards free. Access to medical knowledge, including personal genomics, is being distributed directly to consumers. So far, these trends have primarily influenced a motivated minority of consumers and especially the healthy wealthy, but over time they will shift power and responsibility to patients who will have to manage more healthcare decisions for themselves and their families. Digital music ultimately reshaped the music industry. Wireless health will have a similar impact in healthcare.
- In societies with limited access to healthcare and limited spending, wireless health delivers access to knowledge and care. In the U.S., it is disruptive and resisted. Why? Partially because the U.S. spends too much and gets too small a return compared with the rest of the world There is resistance to change because it is economically, culturally and legally disruptive. Consider the combined effects of the following:
- Professional licensure is well intended but state licensure and corporate practice restrictions shield physicians from competition.
- The FDA operates on a laudable principle that safety and efficacy must be demonstrated, but this standard should be relaxed if the new device or service is offering a monitoring of dark space where current services leave patients unmonitored.
- The fee for service system has created an environment where innovation depends on reimbursement which, in conjunction with device regulation, tends to freeze the innovation and impede its improvement.
- Notwithstanding these sources of inertia, the immutable forces of population aging, rising rates of chronic disease, and the effects of global competition, mean that (1) individuals will have increasing personal responsibility for coordinating their own and their family’s care and (2) access to fully insured care will continue to decrease. These trends turn “patients” into “consumers” and “caregivers” who demand better products and services than the healthcare industry is accustomed to delivering.
- Fortunately, we have the technology tools to tackle these problems:
- Nearly ubiquitous wireless connectivity to the world’s population. Cell phones are a mobile and personal permanent address.
- Data storage, analytics and search capabilities that are declining in cost faster than the declining cost of content creation.
- Secure cloud based access to information via the Internet.
- Embedded wireless technology which enables wearable devices.
- Inexpensive whole genome sequencing and rapidly advancing esoteric diagnostic services, with results reported in a digital format to enable data sharing and analysis.
The Future of Healthcare. What will we do with these tools? What is the future of the healthcare industry in the United States, the world’s most expensive healthcare market?
- Will it follow the trajectory of the music industry, which was controlled by a small number of companies until digital music and the Internet made access to music free, enabled free global distribution for artists, and transformed how music lovers spend their money.
- Will it follow the course of the auto industry which tried to maintain a market for low tech low quality cars, lost its status to international companies and now has downsized, created competitive products and is regaining market share.
- Unfortunately, elements of the U.S. healthcare industry may have more in common with the financial industry, especially its lack of transparency, high cost and government support.
In a sense, the U.S. has run the largest clinical effectiveness study in history with the Medicare program: approximately 50,000,000 patients have participated over 30 years. The U.S. is ranked last among 19 industrialized nations with respect to preventable deaths, despite outspending these nations as much as twofold (Commonwealth Fund, 2008). The purpose of Medicare is to operate an effective health insurance program for the aged – notwithstanding clear evidence of its failure relative to the world, elements of the professions, key institutions, and consumers (as voters) resist thoughtful efforts at Medicare’s improvement. Fortunately, this problem has the attention of policy makers, entrepreneurs and some globally significant companies.
How fast will the U.S. change? How do businesses thrive and investors earn a return in the face of uncertainty? There is no guide book for this situation, but with healthcare being the largest component of the U.S. economy and with the development of middle class healthcare markets in Asia, it is certainly an area that is replete with opportunity. I suggest the following considerations for governments, businesses, entrepreneurs and mission oriented organizations:
- Look internationally – devices, services and applications can be delivered to the global billions and not just the rich and well insured. Demand will accelerate in the U.S. when consumers (voters) realize they are on the outside looking in, but you need not wait for this development.
- Do not overlook the self pay markets. They are increasing in size and if you can address the rest of the world with affordable products you will find a U.S. market as well.
- Deliver satisfaction – consumers, patients and institutions derive more satisfaction from paying for the correct therapy than for a diagnostic process. Create solutions that lower the cost of diagnosis and deliver personalized and effective therapy.
- Be transparent – just as internet commerce has made consumers into their own supply chain manager, access to healthcare knowledge will make the pricing of services more competitive. This shopping service itself has value and serves policy interests by increasing the health knowledge of consumers.
- Leverage specialists’ knowledge – direct access to specialists will decline, making them more valuable and more expensive. Integrate their knowledge into systems that support large numbers of patients.
- Recognize the changed role for hospitals with “virtual walls” – hospitals in the U.S. will be increasingly dependent on government programs as the employer-sponsored market declines but they may be increasingly important as organizers of outpatient care. The elimination of reimbursement in 2012 for certain readmissions is forcing this change.
- Focus on management, the balance sheet and integration – strong healthcare systems are in a powerful position to organize regional healthcare to be more efficient and effective and therefore have an opportunity to win in a competitive market.
- Prepare for shifting markets and global competition – markets for diagnosis, monitoring and therapy will increasingly cross political and geographical boundaries due to the influence of knowledgeable institutional and consumer purchasers.
- Expand the market by delivering better value – lower the effective cost of healthcare and demand will increase to utilize the excess capacity. Organizations that first establish the reputation for doing so should be able to command the loyalty and business success of a Southwest Airlines or Walmart while serving a fundamental social need.
The WLSA community of members and meeting participants continuously explore the topics outlined above and many others. I look forward to our continuing conversations on line and in person.
Robert B. McCray
Co-Founder, President and CEO
Wireless-Life Sciences Alliance