This week MobiHealthNews hosted its very first webinar of 2014, which appropriately focused on 2014 Digital Health Trends. The event brought in more than 1,400 registered attendees who helped lead the discussion during the Q&A that followed our two presentations. Check out a recording of the complimentary webinar on-demand right here.
Let's back up: Was 2012 a pivotal year for digital health?
As we move further away from the very early days of mobile and digital health, it is beginning to look like 2012 was a pivotal year. After reviewing our series of MobiHealthNews quarterly reports, it seems like up until 2012 most of the activity in digital health was conceptual. Most of the discussion was about potential. At some point during 2012 the discussion began to get "real". It wasn't just about actual experimentation, it was real product rollouts. Not just pilots, but first customer wins, too. Health reform initiatives were well underway or set to go live soon. The time to talk was over. Longtime digital health watchers could debate this exact timing quite a bit, but I think 2012 was a year of transition for mobile and digital health. It's easier to see now than it was then.
Here are just a few data points to begin to back this thesis up.
At the end of last year MobiHealthNews spent considerable time aggregating investment data about nearly 300 digital health startups with patient-facing product offerings. We analyzed the data set a number of ways, but one was to break down investment dollars by year. As the graph below shows -- with $939 million -- 2012 was the peak year for investment dollars. Both 2011 and 2013 were fairly sizable with around $800 million each year, but 2013 brought in slightly less investment dollars than 2011.
There are lots of ways to poke holes in this data. This is just for patient-facing companies and it does not include genomics companies. It doesn't include the hundreds of EHR-focused companies or those medical startups working on tools exclusively for physician use on patients. Still, the patient-facing funding data we collected is hard to reconcile with claims that overall digital health funding is growing by leaps and bounds year-over-year.
Another smaller data set points to there being something special about 2012 for digital health. A recent report by Chilmark Research, called Benchmark Report 2013: Payer Adoption of Emerging Consumer Tech, found that health insurance companies in the US launched more iPhone apps in 2012 than they did in 2013 -- there's actually a steep drop off. They launched more apps in 2011 than in 2013, too.
Chilmark Research: Benchmark Report 2013: Payer Adoption of Emerging Consumer Tech – Payers Continue their Pursuit of the Digital Consumer
Payers are also increasingly partnering with biometric device companies, which the firm described as the "latest fad" for payers pursuing consumer technologies. Many companies working in digital health today are courting payers as one of their key customer groups. The indication that payers might be moving away from a “build it” mindset to a “buy it” mindset is a sign of maturation in the industry. There is a little more evidence that at least a few big payers are of that mind -- take Humana's acquisition of Healthrageous and UnitedHealth's expected Audax Health buy. More on that below.
Acquisitions from 2013, expected M&A in 2014
Healthrageous.
Digital health's biggest year yet for acquisitions was 2013, with 17 that MobiHealthNews tracked. And 2014 is shaping up to be in the same vein, with two acquisitions already in the first month, and a rumor of one more big one: United Health's potential acquisition of Audax Health.
The two on-the-record acquisitions so far this year are both provider-facing companies acquiring other provider-facing companies: Hospital mobile communications vendor Vocera bought alarm management company mVisum and patient engagement platform BioScape Digital bought medication management system PictureRx. The provider-facing end of digital health was actually a hotbed of acquisitions in 2013, too, although those deals were somewhat overshadowed by bigger, splashier consumer deals. WebMD's purchase of Avado, Merck GHI's purchase of a controlling interest in Physician's Interactive, and Health Element's purchase of WellnessFX were all in the provider space, as were Epocrates (bought by athenahealth), 100plus (acquired by Practice Fusion), Jardogs (bought by Allscripts), Cardiocom (bought by Medtronic), and HealthyCircles (bought by Qualcomm Life).
These acquisitions show that provider-focused startups are getting bigger and starting to cement their strategies as they buy up one another, often to fill a void or expand their existing offerings.
Of course, the other big trend in acquisitions was consumer fitness and nutrition apps being bought up by bigger players: Jawbone's three acquisitions, UnderArmour's MapMyFitness buy, Health Reviser buying Fitpal, and higi's acquisition of Earndit all fell under the consumer wellness umbrella. This rash of acquisitions demonstrates, more than anything, increasing confidence in the longevity an the strength of the consumer fitness and wellness space.
Almost all the digital health acquisitions of 2013 fit into one of those two brackets. In 2014, though, we're expecting to see movement from one more sector: insurers buying corporate wellness platforms. As mentioned in the recent MobiHealthNews webinar, Humana's purchase of Healthrageous was to shore up its own flailing in-house offering, HumanaVitality. And if the rumored purchase of Audax Health by United Healthcare is true, it's likely along the same lines. What this shows is that payers are seeing enough quality players in the market that they'd rather buy digital health technology than build it.
One more 2013 deal that almost fits in this category is WellTok's purchase of IncentOne, although WellTok is a corporate wellness provider, not a payor. It's one to keep an eye on, though. Just recently IBM selected WellTok to be its flagship partner for consumer-facing integrations of its much-talked-about Watson AI.
Aetna has been arguably ahead of the game when it comes to digital health acquisitions, as the company bought iTriage-maker Healthagen way back in 2011. Since then, their strategy has been very much one of leveraging existing technology rather than creating it in-house, just not with outright acquisitions. Instead, Aetna's CarePass platform allows them to offer a wide variety of wellness apps to Aetna members through APIs, in a data sharing deal that's mutually agreeable, as it gets app vendors more users as well. At mHealth Summit, Aetna partnered with Johnson & Johnson to introduce the first medication adherence offering on CarePass: J&J's Care4Today.
Cigna has a curation approach similar to CarePass, called the GoYou Marketplace. GoYou, which was created in partnership with SocialWellth, will be an online and mobile platform that Cigna customers can sign into via their MyCigna or Facebook account. From there they will be able to download apps recommended to them based on their Cigna profile, some of which will be marked with an “mWellth certification.” Users can also rate apps and share them with friends on the network. Finally, the apps on the system will integrate through open APIs, allowing them to share data with GoYou, which will also include a points-based incentive program.Vice President of Consumer Health Engagement Joan Kennedy summed up the strategy pretty well at the launch event at Health 2.0 last fall.
“We could build a Cigna app for how to pay your medical bills, choose your doctor, pick a health plan,” she said. “But, strategically, we decided what we really want to do is capitalize on and harness the 40,000 apps that are already out there, but help consumers understand what are really the best apps.”
Aetna is also incubating digital health companies in-house in its Healthagen branch, including InvolveCare, Medicity, WellMatch, and PracticeIQ. Overall, both Aetna and Cigna are showing us that acquisitions are just one way for a payer to secure digital health offerings for its members. We'll look forward to seeing how their strategy plays out.
Cigna's acquisitions, meanwhile, have not been digital health companies so far, but rather focused on senior care: The company bought HealthSpring in late 2012 and Alegis Care last September. Cigna is also in an interesting place if United buys Audax, as it has already partnered with (and invested in) Audax Health and its members are currently enrolled in the beta for Audax's Zensey platform.
In all likelihood, 2014 will bring many more provider-centric acquisitions and more consumer wellness startup acquisitions. But the deals we'll be watching most closely will be the health insurance companies, looking to buy their way into more robust employee-focused digital health and fitness offerings.
Find a foothold in care coordination or face irrelevancy in 2015
Dr. Jordan Shlain on-stage at the mHealth Summit (image source: mHealth Summit team)
These next two years will be important ones for progress in patient engagement and care coordination -- two of the biggest buzzwords from 2013.
As accountable care models roll out to healthcare providers around the country and Meaningful Use requirements begin to mandate providers to start including some relatively minor patient engagement tools as part of their EHR, there has never been a better time for digital health startups to get plugged into the healthcare system.
While digital fitness companies like Fitbit and BodyMedia (before it was acquired by Jawbone), have already found inroads into healthcare via partnerships and pilots with innovative providers and payers, they are the exception. Most digital wellness offerings today remain decidedly disconnected from the larger healthcare system. Unless we are congestive heart patients, historically physicians have almost never been interested in tracking our daily weigh-ins from connected weight scales. However, as healthcare systems begin to take on risk to manage an entire population of patients, their interest in lifestyle tracking devices, connected biometric devices, and other patient engagement tools is set to ramp up.
An increasing number of digital health startups are also focusing on helping to collect and analyze the patient data generated between the office visits. Making insights from that data actionable for physicians and other members of the care team is one key to making population health management tools work, but there has never been a better time for digital health startups creating patient tools to partner up and work on that issue.
If you know of a digital health company that isn't thinking along those lines -- and doesn't consider itself a fitness or wellness company first and foremost -- expect them to face irrelevancy some time in 2015.
2014: Fitness sensor commoditization and medical sensors' increasing sophistication
The fitness tracker space came out of the big Consumer Electronics Show (CES) in Las Vegas this year looking more saturated than ever. That's hardly news any more, and in fact we tackled it in a previous Friday issue just a few weeks ago. But when it comes to 2014 trends for that market, Validic CEO Ryan Beckland, who presented at the MobiHealthNews 2014 Digital Health Trends webinar, doesn't think the overcrowding alone will be the top story this year.
"While we have on the one hand increasing commoditization on the most basic level of fitness tracking, we also have increasing sophistication of activity tracking," he said. "So we're commoditizing the low end, but the high end is innovating really quickly."
The commoditization of basic tracking isn't just limited to the explosion of new devices evidenced at CES. We can also see it in the integration of basic fitness tracking capabilities into other devices.
"Most people have heard about the M7 chip," Beckland said. "It is an always-on constant monitoring of your basic activity level and your movement. It operates independently from Apple's main A7 processor, and it's going to be installed on all devices from the iPhone 5 forward. ... What that means is the basic level of activity tracking and communication will no longer be required [to be] a separate device. It will be integrated into the phone itself. And we expect to see a lot of other phone manufacturers sort of following suit with Apple."
With fitness tracking in our phones, our headphones (like the Valencell iriver ON), and in very likely in our forthcoming smartwatches and smartglasses, companies that want to sell a dedicated device need to pursue increasing sophistication. Beckland dropped a few examples from his experience at Validic.
He highlighted the Basis Band and the Amiigo bracelet as two approaches that increase the sophistication of tracking by adding additional data points. In Basis's case, it's a slew of additional biometric sensors. By monitoring heart rate, perspiration, and skin temperature in addition to motion tracking, Basis is able to return insights about caloric burn, stress, and sleep that are deeper than many other devices. Amiigo adds its datapoint by actually adding a second sensor elsewhere on the body. By having both a shoe clip and a bracelet, the company says it's device can more accurately determine what sort of exercise the user is doing. We should expect to see innovations and iterations like this continue into 2014, with those that prove effective and popular being picked up by other companies, and eventually even becoming part of the commoditized space.
Employers looking for a corporate wellness service have slightly different needs than consumers, and many companies are looking there to innovate too. Beckland highlighted a feature of the Garmin Vivoki, a corporate wellness tracker unveiled at CES. Rather than requiring its employees to sync the devices at home, the Vivoki can reportedly sync automatically with sensors installed at work. Certainly a lot of consumer fitness trackers are eyeing the corporate space, even as corporate wellness companies launch their own trackers. We saw Virgin Pulse's new Max device debut at CES as well, also sporting features designed for the workplace -- the ability to challenge someone else to a fitness contest by tapping devices together. Finally, though not a dedicated device, Endomondo's recent announcement of an expansion into corporate wellness also points to the attractiveness of that space for activity trackers looking to stand out.
This same trend -- commoditization on the low end, increasing sophistication on the high end -- can be seen to a lesser degree with more clinically focused consumer devices. Diabetes technology, like smartphone connected glucometers, is a good example, with innovative tech like Socrates' noninvasive glucose monitor, WellDoc's reimbursable coaching platform BlueStar, and Glooko's multidevice software platform approach all looking to rise to the top of an increasingly crowded field.
"While consumer devices proliferate particularly in fitness and activity tracking, we also have a very robust movement toward clinical devices," Beckland said. "I think 2014 and 2015 are going to be very exciting on the clinical side."
Privacy issues will be a growing concern for digital health
The growing number of wellness apps and devices on the market has opened up more questions about privacy and security of health data that these apps and devices are collecting. In 2013, international events sparked the conversation about privacy of our personal information online. And while it didn't make major headlines, digital health companies were also scrutinized on how well they kept user information private in apps and devices. The Privacy Rights Clearinghouse found 39 percent of free health and fitness apps and 30 percent of paid apps sent information to someone not disclosed by the developer in the app or the app’s privacy policy. The percentage of apps that encrypted data was even lower.
So far, 2014 has already revealed new data on patients' attitudes towards the privacy of their health information as well as new approaches companies are taking to follow HIPAA guidelines.
A recent PatientsLikeMe's survey conducted in partnership with the Institute of Medicine, found that in a survey of 2,125 adults with health conditions, 94 percent of adults would be willing to share their health information on social media if it helps doctors improve care even though a majority of those surveyed also understood the data could also be used negatively. Sally Okun, a co-author on the paper and PatientsLikeMe’s Vice President of Advocacy, Policy and Patient Safety told MobiHealthNews that the survey was slightly biased because all participants in the survey were already members of PatientsLikeMe and therefore were already open to the idea of sharing data publicly. Because of the group's demographic, Okun actually expected the results to be even higher than 94 percent.
Some digital health companies have already launched apps in 2014 that aim to avoid issue of HIPAA in their apps completely. iDoc24, maker of First Derm, and First Opinion have launched apps that don't require any type of sign-in system so that all information that users enter into the app is anonymous.
“We have some really great attorneys that have helped create some frameworks that we can operate within that can keep us completely legal,” First Opinion CEO McKay Thomas told MobiHealthNews in a recent interview. “One of them is this anonymous issue. The thing is it actually works on a lot of levels. It’s not just because of HIPAA — it’s actually because everyone is talking about how we need more encryption, but I think we need to be taking a step back and looking at business models. And we need to say: ‘Do we actually need all the pieces of information that we are requiring?’ We have startups saying ‘Now we’re going to take your medical records and we’re going to look at your kids’ medical records’ without actually thinking about if we want that.”
During MobiHealthNews' Digital Trends of 2014 webinar, Validic CEO Ryan Beckland said that while his company's platform is HIPAA compliant, these privacy issues are difficult ones, and companies will employ different strategies to mitigate them.
"I think it's challenging for most app and device makers to deal with HIPAA [or] getting FDA listed," Beckland said. "It's just a really onerous process. Our experience is most apps, most devices will avoid that to whatever degree is possible for them and I think that's the right attitude. ...I wouldn't be surprised if there are a couple 'wrist slappings' over the next five or seven years."
If a presentation by Pepper Hamilton lawyers earlier this month was any indication, startups who do not comply with privacy and security regulations may be getting more than just a "slap on the wrist". The FDA recently finished up the draft guidance for cybersecurity in medical devices, which includes a requirement for companies to complete a risk analysis before they can get FDA clearance. The lawyers also presented the concept of “privacy by design” or “security by design”, which suggests that the best way to guard against privacy and security concerns is to think about them at the very beginning of the development process and build in safeguards along the way.
While these concerns would only be applicable to medical devices, if Beckland's prediction that fitness trackers will be more present in a clinical setting in 2014 and 2015 is accurate, wellness app and device companies may have to more seriously consider privacy concerns too.
Where is digital pharma?
Every year MobiHealthNews expects more digital health progress from pharma, and each year we find little. Sure, Merck's investment arm has made some considerable investments in companies like WellDoc and Physicians Interactive. Yes, Johnson & Johnson's innovation group Janssen has had a number of impressive initiatives over the years. On the technology front, there have been countless iterations of some kind of smart pillbox launched in the past five years, and Proteus Digital Health continues to raise money for its ingestible sensor and vital sign monitoring patch system. More than any other pharma-related activity, the rise of digital health-enabled clinical trials has bubbled up as the first real deployment. Pfizer and its partner Exco InTouch have led the pack on this front, but there are a growing number of startups helping pharma companies realize the increasingly digital clinical trial.
