Is digital health's investment hype growing faster than adoption?
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January 12, 2016 12:00 AM

Is digital health's investment hype growing faster than adoption?

Beth Kutscher
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    Money is flowing into the digital health space faster than ever before, but innovators and healthcare providers are moving at different speeds when it comes to adoption of new technologies.

    One physician during a Q&A session at a panel discussion on the technology this week had this to say: “It seems like a lot of entrepreneurs want to sell the sweat off my back."

    Many of the latest technologies depend on giving people real-time access to their doctors, or sending endless flows of data from wearable monitoring devices. Not everyone is convinced the devices are improving care.

    What healthcare needs, agreed panelist Tom Rodgers, managing director at McKesson Ventures, is a new position—call it a data-ist, or a data specialist—with the responsibility of filtering through patient-generated data.

    It's the sort of idea that McKesson Ventures is looking to invest in but doesn't seem to exist.

    “My ideal company is a mix of Silicon Valley ambition and understanding of technology with a Nashville or Atlanta or Minnesota understanding of why healthcare is hard,” he said.

    A number of health systems have set up their own venture arms to invest in new technologies and help them demonstrate proof of concept. San Francisco-based Dignity Health, about 35-miles north of Silicon Valley, has piloted a number of these new technologies.

    “I think workflow is the biggest misunderstood item coming into a relationship with a provider,” said Sanjay Shah, Dignity's director of strategic innovation. Shah was another panelist at the event, which was sponsored by law firm DLA Piper and held in conjunction with the JP Morgan Healthcare Conference in San Francisco.

    Venture funding in healthcare reached $4.5 billion in 2015, according to venture fund Rock Health, swelling from just $1.1 billion in 2011. The Affordable Care Act has acted as a major catalyst, particularly as it ushered in an era of consumerism.

    At JP Morgan, presenting companies were eager to showcase new technology partnerships and investments. Independence Blue Cross, the Philadelphia-based insurer, announced that it will begin covering NantHealth's GPS Cancera, a whole genome sequencing diagnostic, for certain members with cancer.

    “We are confident … that it will be so successful that it will evolve across the country,” said Independence CEO Dan Hilferty. “We don't see ourselves as a healthcare company; we see ourselves as an innovation company.”

    But healthcare still moves at a glacial pace. “Money is expected to flow into healthcare IT faster than the pace of change,” said Rodgers of McKesson Ventures.

    When consulting firm EY did a study on telemedicine in healthcare, it found that while most providers have adopted telemedicine tools, only 24% said their telemedicine programs were centrally managed across the organizations with standardized policies and protocols.

    “People aren't thinking of this in transformational terms,” said Bill Fera, principal at EY. “They're being reactive. There are more people doing complicated digital health than actually have a strategic plan around digital health.”

    Part of the issue, he added, is spending fatigue on technology as many providers come off huge electronic health record implementations and the transition to the ICD-10 billing system.

    “I don't think there's an appetite to spend on transformational innovation,” Fera said. “There's not necessarily the value that they had hoped to see, especially around analytics.”

    Health systems have been willing to pilot new technologies, but the challenge is finding the ones that actually have staying power.

    “I do think there's a real role for discipline for looking at where new entrants affect healthcare in a positive way, and which are just the bright, shiny objects,” said Dr. Nick Turkal, CEO of Milwaukee-based Aurora Health Care.

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