Three years ago, Sterling Lanier, a serial entrepreneur then running a successful market research firm, got a phone call from a medical researcher he knew at the University of California, San Francisco. The researcher wanted him to help with a pro bono project that involved gathering data on thousands of breast-cancer patients. The trick would be to find a good way to get patients to fill out tedious forms.
Nice guy that he is, Lanier agreed. The result, designed with a tech whiz named Boris Glants, was an iPad app that the two named Tonic. Tonic made it easy--almost fun--for patients to provide information about themselves and their health. Mission accomplished.
And that might have been that, except a few months later, Lanier got another call, this one from Georgetown University Medical Center in Washington, D.C. It turned out the UCSF researcher had shown off Tonic at a health care conference and stirred up some interest. It wasn't long before Lanier was fielding inquiries from the Mayo Clinic, UCLA Medical Center, Kaiser Permanente, and other leading health care providers. Lanier, it seemed, had stumbled onto his next venture.
It's a venture that promises to be his biggest hit yet. That's because Tonic provides a partial solution to one of the most vexing challenges in all of the multitrillion-dollar health care industry: How do you get patients to provide the information that health care providers desperately need, and rarely get, in order to improve care while cutting costs?In 2013 U.S. health care spending was $2.7 trillion. That's nearly a fifth of the country's gross domestic product.
The effort to solve that problem might well represent the fastest-growing market in health care right now. It's a race being driven by a sudden, ongoing, massive shift in the industry's economics--a shift that is mandated by Obamacare. And it is creating an enormous opportunity for entrepreneurs.
Though much of the attention paid to the Affordable Care Act has been focused on health insurance exchanges, the new law actually does something radical: It changes the underlying business model of all of health care. Until now, the model was simply that the more treatments doctors and hospitals provided, the more they got paid. Under Obamacare, the preferred model is value based--that is, hospitals get paid not to treat patients but to keep them healthy and avoid treatment.
When patients receive more treatment than deemed necessary for their situation, some or all of the extra costs will often come out of the providers' pockets, instead of generating more income. The results are expected to slash runaway health care spending, which now equals almost a fifth of America's GDP.
Because of this shift, health care organizations are willing to pony up for technology that helps curb the need for costly treatment. And this is fueling a new industry developing mobile health technology, or mHealth. At the heart of this boom is the recognition that the key to managing patient health is better information--and that the information is best acquired and accessed via the mobile devices that are now always at the fingertips of both patients and clinicians.
How big a difference could mHealth make in medical costs? One report by PricewaterhouseCoopers estimated that in Europe, mHealth technologies could help trim up to 35 percent off the cost of treating chronic medical conditions, a large driver of health care spending. In the U.S., that would equal about $700 billion in savings. And these cost cuts will become even more critical as Obamacare ushers up to 30 million uninsured people into the health care system by 2023.
Many large health care companies are already moving aggressively into mHealth, but startups are on track to produce the lion's share of the winning products and services. "It's the small companies that are coming up with the innovation," says Travis Good, a physician and influential blogger on health care technology. "And those companies are going to see tremendous growth over the next few years." In 2013, mHealth companies generated $6.2 billion in revenue, a figure that's expected to more than triple over the next five years, according to Dublin-based market research firm Research and Markets.
A slew of startups is already vying to get out in front of various segments of this exploding field. The ones that will succeed, according to Good and other experts, are those that best address pain points that have captured the health care industry's attention, particularly as the industry shifts under Obamacare.
Here's a tour of some of these major pain points, along with a look at a few of the startups that have a head start in the race to profitably provide relief.
Pain Point: Patients don't follow their prescriptions
Cost: Nearly $300 billion a year
Two years ago, Bob Shor got a scary introduction to one of health care's biggest problems when his father accidentally took a double dose of insulin, sending him rushing to the doctor. An Israeli entrepreneur, Shor discovered that the health care industry has long struggled in vain to find ways to get people to take the right meds at the right time--or to take them at all. The New England Healthcare Institute, a policy research think tank, has calculated that this so-called nonadherence is an issue for up to half of all patients, at an annual cost of nearly $300 billion in the U.S. alone.
Shor founded a company called MediSafe in 2012 to address the problem with an online service and mobile app that help patients track the timing and dosage of their meds. What's more, the company's software then gathers and analyzes data on large groups of patients, information that pharmaceutical and health care organizations badly need to evaluate medication effectiveness. "From Day One, I've been focused on that problem," says Shor.Americans projected to join the health insurance rolls by 2023, via Obamacare: 30 million.
It was a smart strategy. Any startup that can help health care providers gain more insight into patients' conditions or behaviors is going to at least get a look from even the best and biggest of hospital systems. So says Neil Wagle, medical director at Partners HealthCare, which operates Massachusetts General Hospital. Wagle, who is playing a key role in the famed Harvard-affiliated hospital's efforts to improve patient-reported outcomes, is excited about the results from initial studies of how apps can help. "We've been systematically missing some of the data that tells us what we most want to know about patients," he says. "If a company has something that can fill that gap, there's a good chance we'll want to take a look at it."
And it is health care providers, insurance providers, and the government--rather than consumers--that are ready to pay big bucks for these services. That's owing in large part to Obamacare's emphasis on value-based care that creates incentives for health care providers to keep patients healthy--and trim unnecessary costs.
The tricky part of reducing health care spending is that most of what affects a patient's need for treatment happens outside the hospital and doctor's office--diet and exercise, the onset of ominous symptoms, adherence to medication regimens, and much more. That means doctors need more and better information on what's happening to patients at all times so they can offer the right treatments and advice, and patients need support to stick with those treatments at home and elsewhere.
By helping patients hew to their prescribed treatments as well as by funneling data to doctors, MediSafe is hitting both sides of that equation. Though founded only a year ago, the company has already established partnerships with drug companies and is in talks with several hospitals and HMOs. "We're looking everywhere for early-stage, technology-based products and services that can help us know more about our patients and engage with them," says Molly Coye, chief innovation officer at UCLA Health, a $2.4 billion organization that operates several hospitals in California.
Health care organizations are so eager to get their hands on these technologies that many of them are starting up venture arms to fund promising startups, notes Orlando Portale, chief innovation officer at Palomar Health, a large San Diego-area hospital system. "A lot of heavy investment is already going into these new companies," he says. "Palomar, like others, is trying to lower the barrier to entry for startups and become an early adopter. If the technology works for us, we're willing to heavily promote it in the market."
Given the intense interest in drug adherence in particular, it's not surprising that MediSafe has plenty of competition. Other ventures that promise to help patients stick to their pill taking include GreatCall, which makes a reminder app; MedMinder and Vitality, both of which make "smart" pillboxes; and Proteus Digital Health, which makes tiny ingestible sensors that patients swallow with their meds to track pill consumption.
Pain Point: Patients don't give doctors enough information
Cost: $305 billion over the next seven years
When lanier was first approached by UCSF Medical Center to help with the breast-cancer research project, he was basically expected to convert a long questionnaire into an iPad app. But Lanier suspected there was a deeper, more universal problem underlying that simple job. So he enlisted a technique he had perfected as a professional market researcher: He took some people from the health care industry to a bar. "You'd be amazed at the wealth of information a $4 beer will get you," he says. "It will outdo a $10,000 research report every time."
When it comes to collecting patient information, Lanier quickly discovered that the health care industry has long bemoaned the fact that most people won't take the time to fill out a long form--and shoving that long form onto a mobile device doesn't fix the problem. Under Obamacare, the failure to get patients to provide data would be disastrous, given the law's emphasis on documenting patient health.
Lanier's solution, an electronic form that people would actually find fun to fill out, solves the problem of collecting the data. Every Tonic screen serves as a colorful, engaging invitation to provide a piece of information, be it your birthday or your weight. Animated balloons and other cartoons celebrate your every act of typing, while games, mazes, and videos entice you to stick with it.MHealth technologies could potentially lower the cost of treating chronic medical conditions by 35 percent, which accounts for the vast majority of health care spending.
And Lanier saw an opportunity to go even further with Tonic: having it figure out on the fly which questions were relevant on the basis of the answers to previous questions, and then immediately flag potential health problems. "The app could figure out which people on the medical team you need to see when, and alert them," he says. That meant patients could get to see exactly the clinician who might help keep them healthy--whether that's an orthopedist, a nutritionist, or a psychologist--while avoiding wasting appointment time with others.
That sort of efficiency is a big deal, given the nation's sky-high health care costs--costs that are likely to increase in the short term as the new wave of Obamacare-covered insurees hits the system. According to the Deloitte Center for Health Solutions, efficiency improvements of the kind that Tonic is offering should be able to cut $305 billion in health care costs by 2021.
Lanier doesn't have to sell big health care organizations on the potential payoff from getting patients to fill out forms. They've been eager for exactly what Lanier is offering. "We went to our traditional vendors and asked them to come up with something that would engage patients when giving us information," says Helen Kotchoubey, corporate director of information services at New York-Presbyterian Hospital. "But Tonic was the one that came up with something that was really different and interesting. This is all about patient engagement."
Thousands of patients at New York-Presbyterian, the Mayo Clinic, and several other hospitals have used Tonic to report their medical histories. The app has been shown to increase form completion rates by about 100 percent, according to Lanier. Boosting patient engagement through technology is seen as a critical task for health care, says Patricia Griffiths, a researcher at the Veterans Affairs Medical Center's Rehabilitation Research and Development Center for Visual and Neural Rehabilitation in Atlanta. Griffiths has worked to bring Tonic and other leading-edge technology into the VA's health care efforts. "This is the only way to deal with burgeoning demand for health care while improving quality, access, and cost," she says.
Pain Point: Unnecessary visits to the doctor
Cost: About $125 billion a year
Americans collectively make about one billion visits to the doctor each year. In many of these cases, doctors are lavishing in-person attention on patients who could be taken care of with a bit of information.
It's a problem that wastes some $125 billion a year. So points out Ron Gutman, founder of HealthTap, a Palo Alto, California-based startup that's trying to provide patients with those bits of information via their mobile phones. Through HealthTap's smartphone app and website, the company lets users pose health questions to a network of more than 50,000 physicians. "What we can do is create an electronic triage system that directs as many patients as possible away from expensive services into more cost-effective ones," Gutman says. "That really hits home with health care organizations."
Having doctors answer questions with a text message sounds like a simple enough app, but there's a reason why HealthTap is proving to be the first to pull it off in a big way. For one thing, doctors are terrified about the liability of tossing out advice to people they haven't personally examined who might later claim the advice was harmful. So Gutman negotiated a unique Lloyd's of London insurance policy that protects doctors on HealthTap's network from lawsuits stemming from their advice to users, provided at no cost to the doctors. In addition, each doctor's advice is voted on by other doctors, providing second opinions. Security is another major concern, and one that Gutman anticipated with his first hire: an information security pro. "We're more secure than any entity we work with," says Gutman, noting that all private HealthTap communications between patients and doctors are encrypted.Total mHealth revenue in 2013: $6.2 billion.
It's not just patients who benefit from the convenience of getting medical advice in their homes or offices, or even on the road, all without the cost to the system of an office visit. Physicians don't want to be limited to helping patients only from the confines of the exam room. "Many of our caregivers are mobile now," says New York-Presbyterian Hospital's Kotchoubey. "They want to take advantage of that mobility."
Though many older patients won't reach for their cell phones when they have a mysterious ache or a slight fever, notes physician and mHealth expert Good, younger patients will readily flock to services like HealthTap. "They've got the motivation and interest to adopt these tools," he says. "They're just waiting for health care providers to make them available." Already, Gutman is fielding a flood of requests from health care providers interested in exploring how they can enlist HealthTap to set up dedicated mobile services for their patients and physicians.
Pain Point: Missing critical warning signs
Cost: $36 billion over the next five years
Hospital patients are routinely kept wired to devices that monitor heart rate, respiration, blood pressure, and other vital signs. And dozens of other types of monitors might be wheeled to a patient's hospital bedside to look at things such as brain waves and blood chemistry. All this data gives clinicians a chance to spot problems early and take action to head off crises. But if the clinician wants to see the data readout in real time, vastly increasing the chances of performing a fast, effective intervention, he or she needs to be standing by the machine, staring at its screen. And, to state the obvious, the patient has to be in a hospital bed. All of which means doctors are almost never on top of their patients' critical data just when it may count most.
Tackling that gap is AirStrip Technologies in San Antonio. AirStrip is the leading player in the new mHealth subindustry of remote patient monitoring, which allows clinicians to get detailed, real-time readouts of monitors on their tablets or smartphones anywhere in or out of the hospital. This technology that allows doctors to remotely monitor the vital signs of hospital patients was "the first serious mHealth effort designed directly for physician use," says Portale of Palomar Health.Estimated mHealth annual revenue by 2018: $23.5 billion.
Portale ought to know, because he was behind the first major remote monitoring mHealth venture, developed in-house at Palomar in 2010 and later acquired by AirStrip to form part of the backbone of its technology platform. Since then, Portale has turned his entrepreneurial attention to the other end of the problem: freeing patients from having to be hardwired to machines to be monitored. To do that, Palomar has teamed up with electronic-chip giant Qualcomm to establish a tech incubator called Glassomics to foster the development of wearable computing in medicine. "Sensors could be embedded in smart watches, implantable chips, or clothing," says Portale. "They might detect changes in blood chemistry or in the heart's electrical pattern, predict the onset of a heart attack, and broadcast a warning to your physician's mobile device."
Nearly a billion people in the world have heart disease, diabetes, cancer, Alzheimer's, or another chronic disease, notes Portale. Heading off crises for even a fraction of these patients would not only save countless lives; it would cut down on the costly hospitalizations that account for a large chunk of health care spending. Until now, those hospitalizations have funneled revenue to hospitals and physicians, but under Obamacare, health care providers will eat some of those costs. "Health care organizations are incentivized now to reduce hospital readmissions, and that's why they're willing to spend heavily on technologies that will help them manage these patients," says Portale. Juniper Research estimates that mobile health monitoring technologies could save the medical industry $36 billion over the next five years. And within four years, Americans will be wearing some 170 million gadgets to keep an eye on their vital signs, projects ABI Research.
Eventually, these devices may be able to track a patient's emotional state, too. Just picking up on the fact that a patient may be depressed can represent an enormous potential savings, points out Wagle of Partners HealthCare. "Research has shown that the costs of treating chronic medical conditions are 40 percent higher in patients who are depressed," he says. "If I can monitor depression, I can see who might need to see a psychiatrist or get an adjustment to their medication."
Pain Point: Unhealthy diets, lack of exercise
Cost: Nearly $100 billion a year
In 2005, Mike lee and his wife wanted to lose some weight but couldn't find an easy way to track calories. So Lee built an app to do it. Today, Lee's San Francisco-based company, MyFitnessPal, has more than 40 million users, most of them through its mobile app. Collectively, MyFitnessPal users have lost more than 100 million pounds since 2005. The company earns revenue through mobile ads and through partnerships with health monitoring and fitness equipment manufacturers.
Smoking has long reigned as the leading preventable health-related killer. Now, however, obesity in the U.S. is poised to overtake cigarettes in deadliness, with one major recent study concluding that, on average, obesity robs people of a decade of life. Obesity is strongly linked to virtually all forms of chronic disease, particularly heart disease and diabetes. One study found that 70 pounds of excess weight increases one's lifetime medical costs by an average of up to $30,000, depending on race and gender. All told, obesity is responsible for nearly $100 billion per year in health care spending in the U.S.
Most Americans simply don't see doctors often or long enough for those visits to have a big impact on their eating behavior. But mobile technology can help close the gap. By prompting people to set reasonable goals, exercise, and count calories--and by offering encouragement from their social networks--mobile apps may prove to be the missing link between what doctors know we need to do and what we actually do in everyday life.
Unlike most other segments of the mHealth industry, weight-control apps tend to be marketed directly to consumers, either at very low cost, via an ad-supported model, or through partnerships with hardware product vendors. Besides MyFitnessPal, one of the front-runners in the weight-loss app market is Boston-based Lose It, which relies on a freemium model. But dozens of other startups--including SparkPeople, Noom Weight Loss Coach, and Calorie Counter Pro--are vying for the stream of new users turning to their mobile phones to help them shed pounds.
Though weight-loss apps represent a sweet spot in terms of health impact and lowering health care costs, they are just a part of a broader consumer health-app market. Research2Guidance calculates that the number of daily downloads of the 10 most popular mobile health apps is already approaching five million. But that may prove to be a mere trickle compared with the number of health apps that end up on consumers' phones in the coming years, as Obamacare continues to drive the health care industry to reach new levels of efficiency. New apps are needed to provide patients with more effective ways to find doctors, schedule appointments, gain access to personal medical records, and much more. Meanwhile, other phone-based technologies promise to let doctors perform many diagnoses and prescribe treatments remotely, and even to hand some of those tasks over to software altogether.
Those and many other nascent markets are up for grabs, providing an extraordinary opportunity for medically minded entrepreneurs. As Griffiths of the Veterans Affairs Medical Center put it: "This is not about a wave of the future. This is right now."