Mobile Health Industry Poised for Tremendous Growth
The stakeholders in the ecosystem for mHealth are mobile operators, manufacturers of metabolic measurement devices (wearables), doctors, software developers, insurance companies and patients. Currently, a majority of mobile technology is simply delivering information (Vitals, WEBMD, Epocrates), but that will change in the next five years dramatically when the majority segment of the market will be focused on reducing the cost of healthcare and engaging patient participation in healthcare. Many of these web and mobile-based applications use intelligently designed algorithms to effectively transform them into point-of-care diagnostic tools. While point-of-care diagnostic tools are not new, the power of embedding them into smartphone apps as well as global cellular communications brings healthcare to virtually everyone. McKesson is a major provider of healthcare information technology & consulting services, and the company predicts the mHealth applications and device market companies that can reduce healthcare costs (by improving health outcomes) will grow five times between 2015 and 2020.
The power of computing with the availability of almost universal communications is going to disrupt the healthcare industry as never before, and it is creating exciting opportunities for startup companies with great ideas. While the big players (Cerner, Apple, Athena Health, Jawbone, Omron) are all working on new offerings, many new small players are offering strong competition. In the mid-Atlantic region, these spunky startups like Sense Health, IntelliSanté and Vita Vantage are innovating great solutions in the marketplace. The mHealth industry is in its infancy but not for long.
While venture capital funding for digital health doubled from 2013 to 2014, VCs have been shifting their portfolio investments to later-stage companies (with a 50% increase over the prior year) so startup mHealth companies have had to rely on self-funding or angel funds. The only exceptions to this are VC funding of “dream team” entrepreneurs with prior mega success stories. One of these is Lyra Health with a focus on coordinating better medical care for behavioral health patient populations. Others include Sentrian and CareSpeak, two VC-backed companies that are focused on population health monitoring. It should be noted these are west coast companies with funding coming from Silicon Valley. Incubators and accelerators, both publicly affiliated with universities and privately organized in the NY, NJ, PA and MA areas, are nurturing communities for entrepreneurs to start up and share ideas while gaining the benefit of successful mentor executives who serve as volunteer advisors. Companies usually pay a fee (rent) to join and may negotiate equity for ongoing services with a mentor after the program. They do not provide funding to companies, but they will help to perfect the “pitch” to angel groups for financing. In my experience as an advisor to clients, organized angel funds have not yet found their appetite for this space leaving family, friends and fools to fund startup mHealth ventures. It is very costly to build HIPAA-compliant applications that also require possible ONC or NCQA certifications for reimbursement eligibility. That can take a lot of fools. Or are these people the innovators and architects of a new healthcare system that uses data from engaged patients to monitor our health real-time, collaborate with care teams and provide real world evidence from large patient population analytics? I would like to think the later.
Full Disclosure: the author is a co-founder and Chairman of IntelliSanté Corp.
|Robert H. Hutchins, CPA, CVA, Partner