Investment, AI, and the Future of Healthcare

AI technologies are already transforming healthcare and impacting patient outcomes. There’s no question that everything from diagnostic methodologies to pharmaceutical development to health record management and even treatment strategy is being touched by advancements in machine learning and augmented/artificial intelligence applications.

It seems a day doesn’t go by without a new computational wonder or bold digital health promise atop the healthcare headlines. Dual areas of interesting AI impact include:

Physician Support — In accordance with Vinod Khosla’s belief that major technological transformation in medicine is on the horizon, AI has produced great strides in diagnostic capability. And applications of the technology also show great potential to help release physicians from crushing clerical burdens through augmented record keeping and data management. One project under development aims to streamline notetaking and generate higher quality clinical data using progressively optimized speech recognition and AI-interpreted commands. Such work indicates that Health2047 advisor Norman Winarsky is prescient in forecasting that soon “AI assistants will provide real-time and ongoing support and recommendations to the physician for diagnosis and treatment, as well as administrative support…all at scales impossible to digest via human effort alone.”

Patient Empowerment — In addition to highly publicized developments in consumer wearable products that feature AI-powered personal health-monitoring applications, AI may help stem the rising tide of chronic disease management. A study in the Journal of Medical Internet Research found that AI “has the potential to enable the creation and delivery of better management services to deal with chronic diseases,” noting in particular that “artificial intelligence methods are being progressively established as suitable for use in clinical daily practice, as well as for the self-management of diabetes. Consequently, these methods provide powerful tools for improving patients’ quality of life.”

And all this activity is driving an increasingly dynamic market in the sector. Frost & Sullivan estimates that AI’s use in healthcare IT (HIT) is will top $1.7 billion by the end of 2019. Acumen Research recently reported that the market for AI in healthcare is expected to reach over $8 billion by 2026 and grow at CAGR 49.7% during the forecast 2019–2026 period. And Accenture predicts that key clinical health AI applications can potentially create $150 billion dollars in annual savings for the U.S. healthcare economy alone within the next decade.

It is, indeed, an exciting time for both technological and medical transformation. But what is often underplayed is the necessity of sustainable commercial infrastructure and strategic investment to support the widespread adoption and diffusion of these advances across the healthcare sector.

For example, billionaire Blackstone cofounder Steve Schwarzman recently made admirable and enormous horizontal investments in educational support for humanities and AI ethics with donations to MIT and Oxford University. But it occurs to me that these generous donations, while interesting and noble, are not actionable. And while big tech companies like Google and Microsoft are developing incredible AI technologies with myriad potential healthcare applications, their expertise lies in horizonal solutions.

Time and again, broad horizontal solutions fail when attempts are made to establish business units to penetrate vertical industry sectors. Unlike water, innovations such as AI technology do not naturally flow downward and fill in the gaping voids. This is particularly true in the slow moving, highly regulated, necessarily human constrained, and uniquely sensitive healthcare industry — which is cause for concern about all those billions of investment dollars projected to flow though the AI healthcare economy in the near future.

We at G5 Partners, as advisors to Health2047, on the other hand, begin from the unique healthcare vertical point of view. We’re laser-focused on a mission to harness the power of technology for the aggressive advancement of American healthcare, and everything we pursue must be actionable, scalable, commercializable, and demonstrate measurable progress toward achieving that goal.

The investment strategies and funding collaborations that will underpin this kind of purpose-built application of AI for broad healthcare impact require as much development and deliberation as do the technologies being implemented, and must weigh barriers to adoption, feasible market entry points, and the identification of synergies between partners to bridge the divide between what exists and what is possible.

Mapping Healthcare’s Digital Destiny

G5 Partners’ Doug Given attended the Imec Technology Forum in Antwerp last quarter, where visionaries from around the world discussed the future of technology and how innovation is best brought to market in application domains such as health.

Viewing through the prism of Health2047’s mission to meet healthcare transformation challenges and opportunities, Doug was struck by several concepts circulating at the forum:

  • Information security will get worse (for next 3–5 years) before it gets better. Conference consensus indicated profligate first-generation IoT deployments have ushered in true crises, as they have supplied seemingly unlimited attack points. Further, there is a costly and breathtakingly large impact aligned directly to digital health breaches, with stolen records valued at $100 PHR (and rising). Advocacy for much more stringent IoT manufacture and deployment standards, as well as greater use of personal keys, two-factor authentication, and multi-level security protocols leveraging identifiers such as location tracking were among ameliorating techniques discussed.
  • Neuromorphic computing and AI present the biggest potential frontiers, and speakers discussed how such technologies are giving birth to entirely new architectures and interfaces that will revolutionize human thinking, outcomes, and actions. Hardware and software interplay, issues of latency, bandwidth, wireless and network evolution…all play a part in these new architectures, as do algorithmic innovation. There exists a future solution space stemming from smart semiconductors, which can weave knowledge gold out of data lead, actuating quantum computers (viable by 2025), unhackable security, neuromorphic characteristics, and digital-physical interfaces. Interesting use cases included the development of machine learning training sets that have enabled real-time, nine-language translation capabilities, and AR/VR status video examples that showed remarkable progress in display, camera, and signal processing producing dramatically improved immersive image quality of content.
  • The need for a Digital Geneva Convention may be imminent to constrain government surveillance of citizens, who are increasingly being hacked by nation states in peacetime (consider what the NSA mantra: “collect all, know all, exploit all” means for individuals in the digital age). Big data means bigger breaches and bigger risks to privacy; balancing the needs and rights of individuals, technology companies, governments, and law enforcement requires rethinking architecture and embracing more secure building blocks, particularly in regard to health information, as well as establishing robust auditing of all information access capabilities.

You can read more of Doug’s takeaways from the Imec Technology Forum on Health2047’s blog here.

Big Health, Small Data

G5 Partners’ Doug Given shares his thoughts on simplifying healthcare through the lens of small data on Health2047’s blog. Health2047 is an integrated innovation company whose mission is to develop, guide, and harvest disruptive ideas that enhance—at the system level—the practice of healthcare.

We all know it: Technology hasn’t made the impact in healthcare that everyone was expecting. The McKinsey Global Institute’s May 2017 update on innovations in digitization, analytics, artificial intelligence, and automation noted that the healthcare sector had not achieved the digitalization benefits outlined in its 2011 big data research. In fact, healthcare “had captured less than 30 percent of the potential value highlighted previously.”

It’s a conundrum: We find incredibly sophisticated technology being used for diagnostics and treatment, but at the same time, less than 20% of payments to healthcare providers are done digitally, and it’s still virtually impossible for people to share their health records across providers.

We’ve been approaching digitalization in healthcare from the wrong vantage.

For example, Microsoft has 168,000 enterprise customers in healthcare and a huge sales force, yet scaling its HealthVault personal health record platform floundered—as did Google Health’s personalized health information centralization service. Both companies misjudged HIE business models, underestimated the weight of healthcare technology’s myriad ingrained standards and moved forward before solving for key legacy information stuck in an analog quagmire.

Instead of looking at simplifying healthcare through the lens of “big data”—as so many technology companies do—we need to be looking to achieve “big health” through the lens of small data.

You can read more of Doug’s thoughts on precision medicine in his latest post on the Health2047 site here.

Personalized Medicine and Patient-Centric Care in the Century of Biology

G5P’s managing partner, Doug Given, will be moderating a panel, “The Promise and Perils of Precision Medicine,” at the upcoming Medical World Americas conference to spur discussion about the many challenges the healthcare industry faces in bringing real-world precision medicine to fruition. Here are a few of the topics Doug tends to discuss with the group beforehand:

  • Collaboration at Scale: The NIH says precision medicine is a shift from a “one-size-fits-all” approach to a new form of customized care. But good medical practice has always been customized to the patient. So what this really means is that the convergence of new developments in science/tech and medicine will enable the health community to provide more precise care based on genetics and a holistic view of a person’s health, lifestyle, and environment. How can this be done effectively and at scale? The first hurdle to be cleared involves bridging the gap between the medical community and technology innovators, eliminating those distinct silos, educating physicians in advanced medical genetics, incorporating the physician’s perspective in development and innovation cycles, and cultivating active patient engagement. That’s no small task.
  • The Financials: With skeptics noting that current federal funding models are insufficient to accomplish outlined goals, how can we achieve a more sustainable funding structure and market-sensible approach to the development of precision medicine? I believe it will happen through cross-industry and public-private collaborations to optimize market-ready solutions, movement toward valued-based healthcare measurements and reimbursement models, enhancing workflow for care providers, applying realistic time horizon expectations to allow change, and turning our attention to chronic disease care.
  • Making Sense of the Data: How can we ensure that the massive amounts of clinically relevant information can be securely and productively translated to the singular physician-patient relationship? This question naturally ties to the need to develop decision-support tools that relay actionable, high-quality, and accessible information, at the point of care in time and place, as well as educational efforts for physicians. The choreography of current scientific depth and expertise is raising standards of living, accelerating longevity, and making overall positive contributions in human capital. We may never be a prophet in our own land, but the affirmative contributions into the planet’s human capital bank have our future looking good.

You can read more of Doug’s thoughts on precision medicine in his latest post on the Health2047 site here.

 

Transforming Healthcare Through Technology

As mentioned back in January, after a national CEO search the AMA invited G5P managing partner Doug Given to serve as Health2047’s CEO. Passionate about this amazing opportunity, Doug accepted the AMA’s offer.

Doug remains active on the G5P board, but the rest of the G5P team will serve G5P client needs until Doug returns to the firm in an operational capacity sometime in 2018. However, if you’re curious as to what Doug is creating at Health2047, here’s an excerpt from a U.S. News and World Report’s article on the launch:

The firm reflects the AMA’s desire to take an active role in reshaping a health care system buffeted by converging market forces, such as the push to exploit new technology, drive down costs, improve quality, promote transparency and heighten accountability for the outcomes of care.

From doctors’ offices to retail clinics to operating suites, these pressures are inescapable, says Dr. James Madara, CEO of the AMA and chairman of Health2047. The challenge: “How do we make physicians’ practices sustainable in this new environment?”

Health2047 seeks to combine AMA’s medical expertise with Silicon Valley technology and business know-how to develop solutions to the problems that “burden physicians and detract from patient care,” he says.

Supplying the business savvy is CEO Dr. Douglass Given, a physician-scientist-entrepreneur with broad expertise in health care, venture capital and drug development. His resume includes stints running Vivaldi Biosciences, Inc., a biotech firm reinventing the flu vaccine. He has also played roles in traditional pharmaceutical companies, public health and academic medicine.

Given believes that doctors’ insights should play a pivotal role in health care’s evolution. “You think about the $3 trillion-plus health marketplace, with less than a million practicing physicians – think of the leverage they have,” Given says. “We need to leverage and unlock the insights of the AMA, and do that through partnerships with leading commercial enterprises that for one reason or another haven’t been able to penetrate health care.”

You can follow more news about Health2047 here.

A Physician’s Perspective on Solving EHR Integration & Interoperability

G5 Partners’ Dr. Doug Given was featured in this two-part Q&A series with HIT Consultant’s senior editor Erica Garvin on how to solve for integrated innovation and EHR interoperability. Below is an excerpt:

As physicians, we aim to re-architect the system through thoughtful design, attention to user experience and security; we know we can do better. The healthcare provider today is living in a new world of social and mobile technology where patients and physicians alike are trying to adapt.

Technology integration and interoperability is variable in many organizations and limited by the capabilities of the technology, data collection and the IT skills on hand. As we shift toward focusing on outcomes and measurable factors, it is important to allow patient access to personal EHRs. As physicians, we are excited by empowering patients with actionable information. We want the same thing. We all want technology to intelligently innovate itself out of the way of the doctor-patient relationship…

…In healthcare, false information can be a life or death issue. The complex requirements of security, integrity and reliability require breakthroughs of the highest magnitude. The challenge with positively identifying patient records and the interaction with those records is a clear security, integrity and portability hurdle. New capabilities and systems that securely handle collection in a way that is designed to track, ensure validity and accuracy of each piece of data are required.

For example, as we use new methods of data collection, such as mobile devices, how the environment or medical team knows that data and device were actually with Patient A and the the data and information have not been spoofed or tampered with is a complex question to answer technologically. We see the opportunity in healthcare as an opportunity to lead in the data integrity, integration and security space related to the IoT and wearable devices…

The original series was published on HIT Consultant. You can read Part One here and Part Two here.

Food for Thought

G5 Partners’ Doug Given shares his thoughts on a better way to foster healthcare innovation on Health2047’s blog. Health2047 is an integrated innovation company whose mission is to develop, guide, and harvest disruptive ideas that enhance—at the system level—the practice of healthcare.

Energy and Persistence Conquer All Things

— Benjamin Franklin

Welcome to the G5 Partners (G5P) website. We are an advisory services, corporate development, and venture investment firm specializing in the healthcare arena. G5P was founded to address intractable challenges in health and healthcare by assembling and deploying advisory expertise strategically. To execute on our vision, we have formed a network of high-performing expert advisors in distinct vertical disciplines; we decisively assemble exactly the right team on a per-project and/or problem basis.
Drawing from experience in the healthcare industry, venture capital, board service, and advisory postings to establish this network, we have been gratified by the reciprocal interest expressed by prominent leaders in domains adjacent to our core competencies. Working together, we are designing solutions and approaches to problems that will deliver a better future for healthcare. Effective collaboration is at the heart of the G5 model: teams of best-in-class professionals accomplishing things together that none of us could do alone.

Over the past 18 months, one of G5 Partners’ key assignments was to assist the American Medical Association (AMA) in formulating a vision for its future and fostering a means to accelerate innovation and achieve greater impact in select focus areas for the health of the nation. G5P did an audit of the innovation ecosystem of the AMA, made a proposal on how it could have greater impact, and formed an integrated innovation company—Health2047—whose sustainable business model is designed to finance and attract startup capital and finance to execute on the highest-priority healthcare problems.

By creating new and important linkages between the physician community and the AMA’s content and regulatory experts with leading commercial enterprises, emerging growth companies, and individual entrepreneurial teams, Health2047 intends to transform the way that individuals receive—and physicians deliver—care.
Bridging the view of problems and solutions as seen from the AMA’s perspective, given its central position in American medicine, and the technologically transformative view of problems and solutions perceived by Silicon Valley innovators will be key to realizing that future.

After a national CEO search, the AMA invited G5P managing partner Doug Given to serve as Health2047’s CEO. (Try as they might, they simply could not replicate Doug’s unique skills and experience set.) Passionate about this amazing opportunity, Doug accepted the AMA’s offer Q3’15.

Doug will remain active on the G5P board, but the rest of the G5P team will serve G5P client needs until Doug returns to the firm in an operational capacity.

Digital Health: Emerging States

On a recent walk about to get up to speed in the rapidly changing field of digital health, we biopsied the latest thinking by many of the most engaged minds in order to develop a strategic map of promising innovation and investment entry opportunities. Our stops included: Qualcomm Digital Health Summit, the Samsung Developers Conference, Singularity University’s exponential health leaders, Johns Hopkins Bloomberg School of Public Health mHealth program, JPMorgan Life Sciences Meeting, Rock Health, Citrix Accelerator, Leavitt Partners and AMA Summit on Digital Health, the Digital Health Track of BIO 2015, MIT Hack@Medicine event, UCSF Digital Health Summer Summit, IMEC Technology Partners and CEO conference, and the Data Sciences program at the Jet Propulsion Lab at CalTech. And you think YOUR feet are tired!

We met with management of leading entrepreneurial companies including LinkedIn, Welldoc, Teledoc, Doctor on Demand, Doximity, Health Engine and FitBit; leading health IT investors in our ecosystem at numerous venture capital firms; key management and board members at Merck, JNJ, Lilly, Novartis; health insurer Aetna; medtechs from BD and BSX; execs at providers Mayo Clinic, Geisinger Health, JHU, Stanford, The Methodist Hospital, USC, Kaiser Permanente; and Milken Institute Foundation.

So that you don’t have to retrace our steps, we’ll share some highlights here.

Digital Medicine vs. Digital Health: Yes, Virginia, there is a difference. In fact, there’s a significant distinction between Digital Medicine and Digital Health. Digital Medicine requires an evidence base and is data-driven. Doctors engage, use and prescribe these tools to improve health outcomes, to pursue value-based reimbursement and to gain the benefits of stickiness and retention for their patients/consumers. And what happens when we aggregate data and get a glimpse into never-seen-before information? We arrive at insights that address the triple aim of better care, lower cost, and higher quality, in pursuit of better value. That, in a nutshell, is Digital Medicine. Digital Health is, well, everything else.

Capital Flows: Digital Health is coming of age. Starting with capital flows, 1H 2015 venture dollar flows were summarized by PWC Money Tree, NVCA, Thomson Reuters and Rock Health. In 2014, venture firms in Digital Health invested $4.3B, and that flow continues apace in 2015. In fact, 9% of all venture capital invested in 2014 poured into Digital Health. (FYI, that’s more than the previous three years combined). Investment returns are beginning in the sector as the J curve is reached and sizable IPO exits (five in 2014 and five so far in 2015) have materialized, among them Fitbit and Teledoc. It’s interesting how Fitbit won in only five years, reaching $1B in revenue, an operating profit, and an installed base of >20 million by taking a narrow fitness focus, addressing the fit and the worried well. While one-dimensional, when its qualitative trend data is combined with smart phone data, EHRs, and more, a powerful network effect is realized. Fitbit’s opportunity now is to figure out how to engage next; hiring a Chief Medical Officer isn’t a bad idea. In telemedicine, Teledoc floated its IPO and reached a valuation of >$1B. When investing, the only return that counts is the one you realize. Well, these firms are rewarding investors with returns and the market with innovation and value.

Deal Flow: We heard from established venture firms active in the sector that they are seeing two or more digital health startups/week (and some 600 each in the past 18 months). In some ways, it’s a massive failure of the market. IMS reported that they count 16,000 apps addressing healthcare, depending on how you define healthcare, and >1000 wearables. That poses two big challenges: 1) how does one sort the useful from the frivolous; and 2) how do we get the useful ones to the right people?

Design: Jawbone designer Yves Behar emphasized that when the design doesn’t force users to change habits or workflow, the product can create efficiency, adoption and delight, and unlock pent-up latent demand (i.e., new categories of explosively growing markets). At MIT Hack@Med, we learned about powerful design and ideation methods to explore patient and consumer engagement. Many now appreciate that design using behavioral economics incentives can make a significant contribution to improved health outcomes. A popular use case with data to support it is pre-diabetes and the management of diabetic patients.

Stay tuned in the coming months for more, centered on teams, business models and curating. In the meantime, we’ll leave you with our overall observation that the promise of Digital Medicine is starting to become reality. Some great minds out there are finding new ways to equip doctors and enhance the patient-doctor-provider-community relationship.

Spurring Innovation in Value-Based Health Care

The health care industry is undergoing a fundamental shift by moving from fee-based to value-based care. As we explained in our most recent blog post, the focus of value-based care is not on volume, but on the quality of services provided — and ultimately, better health outcomes. And it cannot come soon enough.

In January, we saw UnitedHealth’s move from fee-based to value-based payments to the tune of $43B+; now Anthem is making a $40 billion commitment to increase value-based payments to medical care providers. But, for every health care giant making a positive change, there are hundreds sticking their heads in the sand. It might surprise you to know that the U.S. currently spends 17.9% of its GDP on healthcare — more than any other country in the world— yet underperforms relative to other countries when it comes to health outcomes, access, efficiency, and equity. Fee-based medicine is no panacea.

Now, it’s not necessarily about spending less. There is a case to be made for paying an even greater percentage of U.S. GDP to health care. Better investment in the health and well-being of our nation’s population should lead to longer, more productive lives, which could accelerate overall GDP growth: a win-win scenario. But it’s not just about investment. We will need to do a number of things differently to really embrace and promote value-based medicine.

To spur health care innovation in the U.S., we must take a systematic approach to the problem. Let’s cover four steps of the process:

Step 1 — Go wherever the best people are. Design is a people business, and this interdisciplinary field applies to health care as well. The best people work in high-density innovation ecosystems, actively experiment, and are consistent risk takers. Most work in proximity to venture capital, which offers multiple benefits: access to hands-on assistance and networking; local competitive strategy experts; and multiple firms that are leaders in strategic partnering. Six of the top 10 innovative firms are located in the Bay Area and two are in New York City; given the high-density ecosystems where they work, they readily acquire innovation that internal R&D departments may miss. As a result, innovation can rapidly reach scale and make the leap from output to outcome.

Step 2 — Use design principles to build prototypes of disruptive products and services. Design thinking is a formal method for practical, creative resolution of problems and creation of solutions, with the intent of an improved future result. It is a form of solution-based, or solution-focused thinking that begins with a goal (a better future situation) instead of solving a specific problem. We would do well to employ design thinking to accelerate innovation in value-based medicine.

Step 3 — Understand the physician, patient, family, and community relationship and then optimize the customer experience for usability, desirability, and satisfaction. In other words, create solutions that are empathetic to the needs of both doctors and patients.

Step 4 — Move quickly from research to product development. Develop revenue and scale rapidly, while committing to shorter innovation cycle times.

Step 5 — Rinse and repeat.

Now, Let’s walk in an institutional investor’s shoes for a moment. Due diligence isn’t practiced one investment opportunity at a time. Constant surveillance of companies and awareness of emerging trends is necessary to achieving the best deal flow. Of course, dealmakers place a lot of bets, so it’s important to ensure that many bets “fail fast” so they can concentrate their resources on the emerging winners. More often than not, those winners are the ones that innovate better and tie their solutions to what turn out to be really large markets and investment returns. Deciding which winners to “double down” on requires a quantitative, objective, hard-nosed project assessment, not a qualitative, subjective project assessment. There is no room for resource gaps, irreparable weakness, or a structural inability to achieve/maintain market leadership. This is investment, not gambling, so innovators must manage forward each design prototype through the gauntlet of a milestone driven, progressive risk reduction product development plan, to eventual liquidity or stop. Achieving optimal returns on investment portfolios require stepping away from ideas that fail to meet projections or critical milestones.

We, for one, embrace Google’s 10X thinking: it’s easier to make something 10X better than 10% better. This approach inspires creative thinking and reaching beyond status quo assumptions. 10X solutions are far more likely to attract risk and growth capital, revolutionize markets, and create entirely new product categories that can scale. And this is exactly the type of thinking we need to bring measurable disruption at the system level to health care delivery in the U.S.

Let’s get started putting more value in value-based medicine.