Tag: "health IT"

Zombies Stalk the Health Care Landscape!

Accenture, the management consulting firm, has concluded that the flood of venture capital into digital health startups is not only maturing, it has created a race of zombies that will be bought up on the cheap by established players. In language not usually employed by the elite ranks of sober-minded management consultants:Zombies

Accenture predicts that more than half of digital health start-ups funded between 2008 and 2013 are not likely to survive longer than 20 months. Some healthcare companies will look to buy these “zombie start-ups” to drive growth by infusing top talent, fueling innovation and bolstering existing solutions.

While digital health and healthcare IT start-up funding is accelerating, the reality is that few start-ups will stand out. Even fewer will survive. Of the nearly 900 digital health start-ups that Accenture studied, 51 percent are zombie start-ups, at risk to die. These are companies that each received less than $50 million in total funding between 2008 and 2013 and have not received funding in 20 months or more.

Elementary, My Dear Watson: IBM Enters Medical Image Storage

Doctors Examining X-Rays ca. 1980s-1990s(A version of this Health Alert was published by Forbes.)

IBM has suffered declining revenues for 13 consecutive quarters. Although (like many U.S. companies) it attributes its poor results to the strong dollar, its once-praised pivot from hardware to software has put in into some crowded and stagnant markets. Nevertheless, it remains a company with great ambitions, largely built around Watson, the supercomputer which famously beat human beings on the game show Jeopardy! In 2011.

IBM has always hoped Watson would transform health care. It launched Watson Health as a strategic business unit in April, since which it has announced three small but significant acquisitions. Last week, IBM announced the friendly takeover of Merge Healthcare for $1 billion.

Blurring Boundaries Between Biotech, Digital Health, Patient Care Show Need For Regulatory Reform

HSA(A version of this Health Alert was published by Forbes on July 29, 2015.)

When was the last time a billionaire entrepreneur en route to New York to raise a couple of hundred million dollars for biotech company stopped in Washington, DC to spend the afternoon in a panel discussion advocating the need for fundamental reform of the Food and Drug Administration?

Patrick Soon-Shiong, MD, founder of the NantWorks group pf companies, did just that on Monday afternoon. At the event, the Bipartisan Policy Center launched a report on advancing medical innovation in America. Written by a team led by former U.S. Senate Majority Leader Bill Frist, MD, and former Representative Bart Gordon, the report seeks support for a number of steps to reform regulatory processes and reduce the cost of medical innovation.

Regulating Genomic Research: Top-Down or Bottom-Up?

iStock_000012644846Small(A version of this Health Alert was published by Forbes on July 27, 2015.)

The next frontier in information technology is genomic sequencing, which will create the biggest of big data resources by 2025, according to experts in the field. It has been 15 years since President Clinton announced the first sequencing of the human genome; and it is now clear that researchers’ ability to free the unimaginable wealth of information locked inside our genomes is bumping up against constraints imposed largely by the federal government.

Goldman Sachs: $32.4 Billion Digital Health Market; Savings “Indefinitely Large”

GS LogoGoldman Sachs analysts, covering medical technology, life sciences, capital goods, and healthcare supply chain and services, to produce a research report on the potential for the “Internet of Things” to disrupt health care.

The conclusion: The total addressable market is $32.4 billion, and the savings resulting from digitizing health care are “indefinitely large” (see Exhibit 2).

GS2

Rock Health: $2.1 Billion in Digital Health Funding Q2

Rock LogoRock Health has published its account of 2015 Q2 funding of digital health ventures. According to Rock Health, funding so far this year is keeping pace with 2014.

What is especially interesting about Rock Health’s report is that it compares venture funding of digital health to other areas and concludes that digital health is growing at a significantly faster rate than other areas, especially biotech and medical devices.Rock

Digital Health Market is Maturing

StartUp LogoStartUp Health has published its analysis of 2015 Q2 digital health funding. Covering a somewhat broader portfolio than Mercom Capital does, StartUp Health reports $1.7 billion in new funding.

By far the biggest deal discussed in the report was Zenefits’ $500 million raise. Zenefits, I get. The deal I don’t get is Oscar, which comes a distant second with $145 million raised. Oscar is the only health insurer in America that actually wants to enter Obamacare’s exchanges. What are they thinking? I can’t figure it out, but Goldman Sachs is an investor, and it’s not a good idea to bet against Goldman Sachs.StartUp IPO

The report also notes that there have been some significant IPO’s in digital health, providing liquidity and some transparency in valuations.

Telehealth Has Best Funding Quarter Ever

MercomVenture funding of health IT deals in 2015 Q2 amounted to $1.2 billion in 138 global deals, according to Mercom Capital Group. This was smaller than 2014 Q2, which saw $1.7 billion raised in 159 deals.

However, telehealth and mobile health continue to blow the doors off. Two of the top four deals were $50 million each for Doctor on Demand and MDLIVE. (Mercom Capital also reports public equity financings, but I do not believe this Q2 report includes the successful IPO of Teladoc, which went public on July 1.)

Although I cannot claim to have studied every deal, it appears that the ones which raised the most money are focused on the employer-based market. If the technologies they deploy really do engage employees to lower health costs, that is good news. What would also be beneficial is these tools being deployed in the individual market. Perhaps that will come as the space becomes more competitive.

Obama’s Former Health IT Czar Raises $35 Million for New Venture

FMBow-tied and charismatic, Dr. Farzad Mostashari, who led the Office of the National Coordinator of Health IT (ONC) from April 2009 to October 2013, has raised a total of $35 million from leading venture capitalists for his new business, Aledade. Aledade’s senior management includes veterans of athenaHealth and Practice Fusion, both firms which I admire for their entrepreneurship and relative (although not perfect) independence from government.

Like those firms, Aledade will provide its Electronic Health Records to independently practicing physicians. Aledade claims its uniqueness lies in an EHR that will ensure doctors’ win the Accountable Care Organization game. At NCPA, we think that ACOs are unlikely to succeed. Nevertheless, if anyone can pull this off, Dr. Mostashari and his team have got a pretty good edge (in my humble opinion).

Electronic Health Records: Physicians, Hospitals “Literally Terrified” of Next Stage

In a hearing on Meaningful Use Stage 3, interoperability and patient access to data, Sen. Lamar Alexander (R-Tenn.) cut right to the heart of the problem.

“To put it bluntly, physicians and hospitals have said to me that they are literally terrified of the next implementation stage … because of the complexity and because of the fines that will be levied,” he said. (Katie Dvorak, FierceHealthIT, June 10, 2015)

Well, okay, but let us recall that these doctors and hospitals were happy to take the almost $30 billion of taxpayers’ money the government handed them to install the Electronic Health Records subject to these regulations