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  • Digitizing Healthcare Supply Chain is Essential for Value-Based Care-The HSB Blog 1/10/22

    Our Take: Digitizing the healthcare supply chain can bring significant gains in cost-effectiveness for healthcare organizations enhancing their ability to optimize operations while lowering the costs and improving the quality of care in real-time. While a great deal of attention has been focused on digitizing healthcare’s front-end (ex: the patient experience), digital transformation extends into the supply chain as well. In fact, digitizing the supply chain may is a good way for organizations to gain experience and insight into developing digital skills (such as artificial intelligence) before applying them to clinical areas. Key Takeaways: Digitalization increases supply chain networks visibility, enables strategic relationships planning, and uncovers opportunities for establishing new relationships. Prior to the pandemic, 80–90% of active pharmaceutical ingredients for certain drugs were produced almost exclusively in China or India. According to the Institute for Supply Management (ISM), 59-83% of organizations reported an increase in lead times for acquiring supplies since the onset of the pandemic. 88% of healthcare executives identified AI as a critical technology for supply chains in the next three years. The Problem: So far, the healthcare industry has been receptive to digitalization and technological innovations to address complex health problems concerning healthcare access, health equity, and health literacy. Adoption of digitalization within the supply chain will be crucial to success as the industry moves away from fee-for-service reimbursement systems to value-based care, given the need to optimize service delivery, minimize costs and reduce variability in unit costs. At the beginning of the COVID-19 pandemic, the challenges of limited supplies of vaccines, PPE and other medicines exposed the gaps in the healthcare supply chain globally. Healthcare providers and organizations had to reimagine the role of technology and digital solutions in providing and delivering healthcare services. Along with the need to keep patients out of physical facilities, COVID made administrators and policymakers aware of the need to rapidly scale and deliver care where necessary in all fields of healthcare, and not just direct patient care. Supply chain disruptions and its impact on the pandemic response shows the need for adopting deploying innovative digital and technological solutions that strengthen and stabilize the healthcare supply chain. Digitalization of the healthcare industry’s supply chain could change the competitive landscape by reducing costs substantially and turning these skills into a competitive differentiator. The Backdrop: Healthcare organizations’ entire ecosystem is interconnected with the health care industry’s supply chain. In order to optimize cost, minimize errors and foster patient centric care, healthcare organizations are establishing digital supply networks. Digital supply networks have helped the healthcare industry to reduce organization-wide cost through innovative ways of managing resources. By reducing unnecessary variation, digital supply networks reduce the likelihood of poorer outcomes caused by error and variability. The dividends of digitized supply networks include things such as minimized errors, reduced wait times and need for rescheduled appointments all of which could contribute to higher patient satisfaction as well. For instance, hospitals’ investment in electronic inventory tracking allows for automating the inventory replacement process for flagging used or expired inventory supplies as opposed to the costly and time-consuming alternatives of eyeballing or counting. This not only helps manage costs but ensures that supplies will be available for certain types of patient procedures. In addition, with the continued spread of COVID and it’s numerous variants, the manufacturing sector has seen additional stress on the value chains and the need to strengthen them to respond to customer demand. Digital manufacturing technologies such as automation, AI and IoT became a major opportunity for manufacturers to explore. Digitalization is expected to increase the productivity of the manufacturing industry as the prolonged COVID pandemic continues to increase manufacturing costs and shrink the production workforce. According to the Institute for Supply Management (ISM), 59-83% of organizations reported increased lead times in acquiring supplies since the onset of the pandemic. According to “COVID-19 and the health care supply chain: impacts and lessons learned” from the Council of Supply Chain Management Professionals, the pressures experienced during the pandemic impacted testing capability, care coordination, and supply rationing. The United States overdependence on offshore manufacturing of several essential health care items made the pandemic response more challenging. The U.S. struggled to procure enough face shields and masks when countries shut down manufacturing and enforced export bans. For instance, the U.S had a shortage of face masks and a large number of drugs because China manufactured 80% of all face masks and 80–90% of active pharmaceutical ingredients (APIs) are produced in China or India. To address supply chain disruptions, 88% of healthcare executives identified AI as a critical technology for supply chains in the next three years. AI-backed control towers can help an organization gain dynamic visibility across the network, improve predictions on demand changes and disruptions, support inventory management and decision-making to improve patient care. The Implications: With the increased digitalization of the healthcare systems’ supply chain, supply chain cost will reduce and improve provider economics in the face of lower reimbursement levels. An analysis in the International Journal of Environmental Research and Public Health entitled, “Relationships among Healthcare Digitalization, Social Capital, and Supply Chain Performance in the Healthcare Manufacturing Industry” identifies that digitalization has a positive effect on the formation of social capital (ex: networks between groups or individuals that facilitate co-operation within or among groups helping societies to function effectively). Social capital formation within the supply chain would allow efficient delivery of required resources/services that add value to the healthcare manufacturing industry. This added value would improve the performance of healthcare manufacturers and increase visibility of supply chain networks. Digitalization also increases the visibility of supply chain networks by enabling effective planning of strategic relationships and uncovering opportunities for establishing new relationships. Despite the benefits of digitalization, healthcare manufacturing strategic relationships are crucial, as supply chain networks and production processes influence the intended use of output. For example, during the pandemic, the added benefits of AI-enabled supply chains became apparent as they allow real-time, end-to-end visibility, elevated planning and automation, intelligent forecasting, demand sensing and foster a collaborative ecosystem. These services are not only essential for securing timely and accurate information they help in managing the flow of products and services and can also aid in healthcare informatics and predictive analytics. For example, a more digitized healthcare supply chain enlightened by AI might have led to more timely and effective insights about the source and spread of COVID. In order for healthcare companies to establish a supply chain network based on digital manufacturing technology, they need to establish cross-functional teams drawing heavily on patient facing agents such as doctors or nurses to determine the most efficient and effective ways to design and track order flow patterns (doctors and nurses are crucial to identifying real-world bottlenecks and infamous for creating informal solutions). While digitization has the potential of fostering efficient supply chain connectivity and timely resource management, it must be implemented with an eye towards helping improve, not adversely impact, clinical workflows. Related Readings: How Digital Health Care Can Give Providers an Edge. Building a Digital Supply Chain Relationships Among Healthcare Digitalization, Social Capital, and Supply Chain Performance in the Healthcare Manufacturing Industry COVID-19 and the Health Care Supply Chain: Impacts and Lessons Learned Data-Driven Decision-Making: Reinventing Healthcare Supply Chains for the Digital Age

  • Scouting Report-Suki.AI:Helping Reduce Burnout with Clinical Voice Assistants

    The Driver: Suki.AI is a digital voice-based clinical assistant that uses AI technology to help doctors and healthcare workers with administrative tasks like generating accurate notes. Recently, it raised $55M from March Capital, Philips Ventures, Venrock, Flare Capital, Breyer Capital and inHealth Ventures. Some of the funders are leading figures in technology, healthcare and finance, including the Gaingels Group, Pankaj Patel (ex-chief development officer of Cisco), Andrew Deutsch, M.D., (CEO of RIMA Radiology) and Russell Farscht (former managing director of The Carlyle Group). The San Francisco-based company plans to use its funding to expand its user base through partnerships with health systems and medical groups while increasing employee growth and development. Suki will also add new features that streamline documentation, coding and other administrative tasks for physicians. Key Takeaways: According to Research and Markets’ projection, the global market for healthcare virtual assistants will grow from $1.1 billion in 2021 to $6 billion by 2026. A 2017 Annals of Family Medicine study found that doctors spend almost two hours on tasks related to EHRs for every hour spent on direct patient care. According to a 2019 Medscape survey, 60% of healthcare providers felt that “too many bureaucratic tasks” cause burnout. Suki has lowered physicians’ average time per note by 76%. The Story: CEO and founder of Suki, Punit Singh, a former product manager at Google and ex-CPO at Flip-kart, is not a stranger to creating new products using technology. He got the inspiration for Suki from his experience as a project manager for Google in India, where he helped launch the Google News Archive project. “My stint in India taught me the value of entrepreneurship. One is I wanted to learn and grow from a different perspective and the journey is very different from when you build things from scratch, with nothing except an idea, and build it from there. I also wanted to leverage some of the advantages I had, and more importantly, I wanted to build something that had clear value to society,” he adds. While shadowing doctors and physicians, Singh noticed doctors did not have any technology that reduced their administrative workload, which eventually led to physician burnout. “The doctors are overworked and there are few doctors for a large number of patients. There is no technology, and for every one hour of clinical work they are doing two hours of administrative work,” says Singh. Suki’s app addresses this gap by using natural language processing to transcribe notes. Doctors create clinical notes using the SOAP (subjective, objective, assessment, and plan) method. “Subjective” refers to what the doctor hears from the patient, while “objective” is what they observe. Assessment is what they assess and Plan refers to the next steps. First, Suki writes a clinical note which the doctor can access using a command. Following which, the doctor tells Suki to create a note for a patient. The Suki.Al app then creates the note by using information from the patients’ electronic medical record to populate the note. Apart from note-taking, the app equally allows doctors to insert patients’ notes, which are collated in the overall EMR. By generating detailed clinical documentation, Suki’s technology has reduced physicians’ average time per note by 76% and decreased claim denial rates by about 19% according to the company. Detailed clinical documentation is important for health systems, medical groups’ revenue and also supports hierarchical condition category (HCC) coding integrity required for reimbursement in payment models. While, initially, the app worked as a basic note-taking platform, it now provides other services, including writing diagnostic information, problem-based charting and adding coding information. Doctors can subscribe to the $200 pay-per-month plan on either Windows, iOS, or Android apps and can use the app either on the phone or desktop computer. Currently, Suki, which follows the SaaS (software as a service) model, is used in about 85 healthcare sites in the U.S and also works with EHR companies such as Epic, Cerner, and Athenahealth. The Differentiators: While Suki is not a pioneer in making voice-activated devices that take notes for doctors. Companies like Saykara, Robin Healthcare and Vocera have similar technology. However, Suki is different because it does not have any physical hardware. “We are the only pure software company in this space,” Singh says. That allows it to keep price points low. A human medical scribe can cost between $60,000 and $80,000 per year, while Suki costs an average of $200 each month. This strategy is unique." The software-only design makes transcribing more seamless for doctors because it eliminates the need for setting up a device and also accommodates their need to move around a facility. It is equally cost-effective as healthcare facilities can save money they would otherwise spend on hiring medical scribes which can be quite expensive. The Big Picture: As physicians rise through professional ranks, their workloads follow suit, leading to burnout. The increased workload prevents doctors from spending more time engaging and communicating with patients could influence doctor-patient relationships adversely. A healthy patient-doctor relationship positively affects patients' outcomes. Suki aims to help doctors focus on and engage more with their patients by reducing the time spent on note-taking and other tedious and repetitive tasks. Innovations like Suki that help reduce physician burnout are significant and needed considering the number of physicians that are leaving or thinking of leaving medical practice because of the high administrative burden as well as added stress and trauma experienced during the pandemic. Even without the impact on burnout due to COVID, according to the Association of American Medical Colleges, the U.S. is projected to have a massive shortage of physicians in primary and specialty care by 2034. Although critics have voiced privacy concerns about Suki’s public partnerships with Google Cloud and the Ascension health around Suki software’s ability to listen in on patients’ private non-clinical conversations, the company contends this is not an issue. CEO Singh explains that the software doesn’t passively listen like Alexa, and only begins transcribing notes when the doctor asks for it to do that. He also claims that the software is fully HIPAA-compliant, though engineers at the company do use “insights from the users to train Suki.” AI voice assistance like Suki could help doctors channel countless hours that would have been spent on administrative work focusing on the work they love, caring for the patient. This will help ensure patients receive the quality time and service they deserve. Suki Secures $55M for Voice-Enabled Clinical Assistants to Relieve Physician Burnout, Voice-Based Clinical Assistant Suki Picks up $55M to Fuel Tech Development, Expand Health System Partnerships

  • Our Take - Top 10 Posts for 2021

    How Telehealth Addressing the Opioid Epidemic Telehealth connects geographically dispersed patients to providers and is a promising approach for expanding access and treatment to people with opioid use disorders. Healthcare Startups Mistakes & Lessons Learned While every startup has its own unique set of opportunities and challenges, many tend to repeat a common set of mistakes that can be looked at in a five-part framework: founding, strategy/vision, funding, execution, scaling or growth. Platforms in Healthcare-Series Building a successful platform business requires an understanding of successful platform strategies, long-term minded investors, a strong team with the ability to work and collaborate across platforms to deliver superior products and execution, and a well thought out roadmap that empowers a clear understanding of how the platform will deliver more efficient workflows. Does AI Always Optimize Healthcare Establishing consistent and flexible frameworks for AI regulation is also key because adaptive AI could drive changes in treatment protocols as models and prediction algorithms become more precise. Coordinating these efforts, not just simply pursuing them, will be a demanding task. Augmented & Virtual Reality Can Finally Impact Healthcare Access and Outcomes Previously, AR, VR, and spatial computing have been used in healthcare on a limited basis, but the broad rollout of 5G communications bandwidth and technologies will allow providers to integrate these technologies more broadly into the delivery network. Big Tech & Retail Disruptors Continue to Run Into Same Challenges in Healthcare The varied nature of healthcare data, the intricate nature of data privacy and security rules such as HIPAA and CCPA, and the often complicated relationships between patients, providers, and payers can make navigating the space difficult at best. Data from Digital Tools is Crucial to Success of Risk-Based Contracting From Implications Para: Digital health solutions will play a vital role in transitioning to a value-based care model, by providing better data and analytics for cost-containment, patient risk management, reducing variation in clinical workflows, and improving patient outcomes at a lower cost. Enhancing Telemedicine Can Close Infant Mortality Gap For many years, the United States has lagged behind other high-income countries in infant mortality statistics due to poor access to prenatal care, chronic disease, and cost barriers to healthcare access, particularly in under-resourced communities. RPM Could Be the Key to Reducing Disparities in Maternal and Infant Care The sustainability of remote patient monitoring for maternal and prenatal care will depend to a large extent on the continuity of policies adopted during the public health emergency which increased use and the amount of reimbursement for remote care. Untangling the Intricate World of Digital Health Regulation For startups to remain compliant they must learn how to navigate the complex web of regulation and guidance and create a system for staying on top of any updates from the appropriate agencies.

  • Scouting Report-Top 10 Posts for 2021

    Ciitizen Acquired By Invitae: Empowering Patients To Take Charge of Their Care Ciitizen Acquired By Invitae: Empowering Patients To Take Charge of Their Care Services like Ciitizen’s can centralize a patients' complete medical history and improve a practitioner’s ability to view a patient holistically, hopefully resulting in improved diagnosis, treatment, and outcomes. TytoCare Remote Medical Examination Device Maker Raises $50M Scouting Report-TytoCare Remote Medical Examination Device Maker Raises $50M TytoCare is hoping to change the way people perceive healthcare to one focused on wellness and preventive care all the while taking advantage of the shift in the way people acquire healthcare as a result of COVID. Oxygen: AI-Based, End-to-End, Virtual-First Primary Care Oxygen: AI-Based, End-to-End, Virtual-First Primary Care “Virtual-first” will …allow EHRs and other systems to incorporate the appropriate data and analytics so they can be analyzed and applied within clinical practice and workflows. Caresyntax: AI-Based, Real-World Evidence to Improve Surgical Outcomes & Reduce Risk Scouting Report-Caresyntax:AI-Based,Real-World Evidence to Improve Surgical Outcomes & Reduce Risk Caresyntax’s technology allows hospitals to better optimize the use of the surgical suite and help them “achieve increased workflow efficiency, patient safety, and surgical performance.” Wheel: Moving Virtual Primary Care Forward Wheel: Moving Virtual Primary Care Forward [Wheel] is also helping non-traditional players like retailers, pharmacies, and employee benefit programs create their own virtual care programs under their own brand. Redox Raises $45M in Series D to Grow Data Integration Platform Scouting Report-Redox Raises $45M in Series D to Grow Data Integration Platform Redox’s cloud-based platform simplifies integration and scaling for software developers looking to build applications for healthcare providers. DexCare Software for Same Day Care Coordination & Management Raises $20M DexCare Software for Same Day Care Coordination & Management Raises $20M DexCare, an AI-powered platform that manages and schedules patient care, promises to support the increased patients’ consumption for healthcare to match the novel demand for ambulatory and telehealth services simultaneously. Caremerge: Improving Collaboration & Care in Senior Living w/Clinical Engagement Software Caremerge:Improving Collaboration & Care in Senior Living w/Clinical Engagement Software Caremerge helps healthcare providers improve accuracy in data collecting, develop a better longitudinal care record and ensure better care delivery and diagnostics. Clearing: Addressing Non-Addictive Pain Management Clearing: Addressing Non-Addictive Pain Management [Clearing’s solution] should reduce barriers in accessing pain management treatment plans for people of color and women and result in improved care at lower costs. Bastion Health: A Reproductive and Prostate Care App for Men Scouting Report-Bastion Health: A Reproductive and Prostate Care App for Men By creating a safe space for men to get discreet reproductive healthcare services, Bastion Health helps address men’s ability to monitor their health and hesitancy in seeking healthcare.

  • Platforms in Heatlhcare Pt. 3-Healthcare Specific Challenges & Opportunities-The HSB Blog 12/13/21

    This is the 3rd in a series of articles on Platforms in Healthcare (please see our previous two pieces here: Platforms In Healthcare-Pt, 1 Platforms Explained-The HSB Blog 11/29/21 & Platforms In Healthcare-Pt. 2 What It Takes to Build A Successful Platform Bus.-The HSB Blog 12/6/21) for more background on technology platforms and the characterics of successful platforms. Please note that the list of potential sectors where platforms could make sense in healthcare, nor the examples given are meant to be exhaustive. Our Take: The U.S healthcare system could achieve the Triple Aim of improving patients’ experience, reducing cost, and improving population health by applying elements of a successful platform strategy in healthcare​​. Healthcare platforms have the potential of addressing care coordination issues in healthcare and support the transition to value-based care. However, addressing unique healthcare industry challenges like limited data standardization and system compatibility is crucial for establishing maturity and achieving network effects. Building a successful platform business requires an understanding of successful platform strategies, long-term minded investors, a strong team with the ability to work and collaborate across platforms to deliver superior products and execution, and a well thought out roadmap that empowers a clear understanding of how the platform will deliver more efficient workflows. Key Takeaways: Administrative spending accounts for about one-quarter of the total cost of care delivery in the U.S. according to McKinsey. According to a study in Health Affairs, an estimated $191 billion to $286 billion, or 5% to 8% of total US costs could be saved if interventions to reduce waste were implemented and were successfully. A study by McKinsey found that ,it may be possible to save at least $250 billion annually in health care spending (perhaps more) by reducing/eliminating waste in health care then redirecting these funds elsewhere. The Problem: The platform business model has helped startups in different industries to achieve success with high valuations and returns on investment. Creating successful platform companies is extremely challenging, especially early on in their development, as it requires attracting users and customers that can generate enough value to attract even more users and begin the process of generating network effects. This initial hurdle is referred to as the “cold start” problem. The “cold start” problem is worth understanding because network effects, which refers to increasing product or service value relative to the increase in the size of the customer or user base, is the force that underlies platform companies gaining competitive advantage (ex: as social media platforms attract more users the value of being on the same network as friends and family grow dramatically, often leading to exponential growth for the network). However, those looking to build platforms in the healthcare industry must be aware of unique barriers that could delay the development of network effects and they need to be prepared to deal with the challenges they present. Some of these barriers include the fragmentation of healthcare software products, the intricate web of healthcare data privacy and security governance regulations, and the extremely risk-averse (some might say hyper-cautious) purchasing behavior in healthcare information technology. For example, one of the major elements behind this risk-averse purchasing behavior in healthcare IT procurement departments is what is known as software lifecycle management. Software lifecycle management is the process whereby upgrades or entirely new installations of software products are initially tested, installed in systems, and updated for future versions. Due to the complex web of healthcare data security and privacy laws (HIPAA, HITECH, GDPR, CCPA, etc.) healthcare IT, departments are extremely concerned about the potential that any new installation or upgrade could lead to a security weakness or cause instability in a particular organization’s infrastructure. Despite this healthcare IT investment and software procurement require expansion to better evaluate the risk for cybersecurity, software update release cycles, and software integration with existing systems in an organization. In part, this is a reflection of healthcare organizations’ investment priorities. For example, healthcare consistently ranks as one of the lowest industries in terms of the percent of overall budgets spent on IT, relative to other industries. So if the industry is serious about creating a more patient-centered experience with new technology and in the process speeding the adoption/development of new solutions this will have to change. For example, they will need to commit more resources (either personnel or equipment,) to mitigating risks through software testing and auditing potential security vulnerabilities in order to increase the pace of software update release cycles. For platform businesses, this implies that they will have to take a number of steps to help ensure and demonstrate the data integrity, cybersecurity, and privacy precautions they will take with any data encountered from any client’s system. These include: 1) Being able to specify and limit the number of data elements it will need to interact with as part of a client’s IT system; 2) Being able to explain and document the lifecycle of any data once it leaves an organization’s system; 3) Being transparent about security testing and procedures for any software and updates; and, 4) Focusing on the ability to integrate with existing installed software and hardware and being able to demonstrate that path. For healthcare IT organizations, managing software issues like frequent software updates, avoiding critical system failures and data breaches, is crucial for patient safety, preventing harm caused by medical errors, and improving the quality of clinical care. For example, system failures in healthcare settings can cause issues as broad as making medication errors in an intensive care unit to having the wrong data collected from ambulatory services and sent to the billing department. For the healthcare system to embrace platforms and for them to achieve their potential, the reliability of platforms is essential. While many people may point to other industries such as finance as examples of where platforms have been embraced more rapidly and successfully than healthcare, integrity, and security are critical in the healthcare industry as any error literally could mean the difference between life and death. Background: Translating the elements of successful platform companies into a healthcare platform could be challenging due to barriers that are unique to the healthcare industry cited above and the interactions between payers, providers, and patients. Examples of such interactions include the payment for completed medical procedures, referrals of patients to out-of-network specialists for specific procedures as well as patients increasing expectations of higher-quality, more integrated service delivery from both providers and payers (ex: the consumerization of healthcare). As noted in the first two articles in this series, platforms have certain unique characteristics and inherently require certain factors and elements to achieve success (please see: Platforms In Healthcare-Pt, 1 Platforms Explained-The HSB Blog 11/29/21 & Platforms In Healthcare-Pt. 2 What It Takes to Build A Successful Platform Bus.-The HSB Blog 12/6/21). Nevertheless, we feel platforms hold great potential in the healthcare industry, particularly around the areas of system integration and health data interoperability, two areas that have long plagued the fragmented healthcare industry. While the Centers for Medicare and Medicaid Services has recently established and enacted policies to foster improved data integration and interoperability between insurance companies and provider systems (through such vehicles as FHIR and HL7), to improve claims processing and patients’ access to health data, these remain in their infancy and much work remains to be done. Other opportunities for integrating platforms in healthcare include; Improving the transferability of patient health data to support care coordination, Reducing the administrative costs associated with paying for medical care to reduce overbilling, Improving cost accounting to support the transition from fee-for-service to value-based care. Implications: In the U.S, curbing the rising healthcare cost while delivering quality care has long been a difficult and intransigent issue to solve. Healthcare innovators and new startups are interested in addressing these issues by fundamentally changing the way patients access care and pay for medical services. Along the same line, they have been working to enable providers to deliver quality healthcare services that improve health outcomes. Healthcare platforms could be an abundant source of solutions that help reduce cost and deliver quality healthcare by increasing the efficiency of interactions between stakeholders. For instance, the consumerization of the healthcare system in the U.S aims to improve the patient experience via better customer service, improved access to care, and lower costs (ex: Cured, Medisafe). Propelled by the accelerated pace of digital adoption during COVID, most healthcare platform companies are exploring ways to leverage virtual care to improve patients’ experience by making care more accessible, either virtually, in-office, or in their homes. Platforms in healthcare could also be used to improve the healthcare applications infrastructure. Companies that build products used by healthcare software developers simplify product development or integration into systems by providing templates for common use-cases, such as APIs, data queries, and standard data formats used. Platforms that support software developers will develop a competitive advantage by reducing the costs for developing healthcare applications especially as the developer community grows and economics of scale take effect (ex: Redox, Zus Health). While, many large incumbent technology companies have developed “out-of-the-box” solutions that are compliant with current healthcare data standards, for many of the reasons cited above it is important that platform companies focus specifically on building infrastructure for healthcare systems. While the existing standards for healthcare data are evolving as the existing conversation for data interoperability continues, it appears additional solutions will be needed to bridge this gap. Improving the coordination of provider-to-provider interactions also seems like a fruitful area for the application of platform technology (ex: Caremerge, ConsejoSano). This is particularly important for specialty care and post-acute process, and very important in the care of high-risk populations, such as patients with chronic disease and multiple health conditions. For example, referrals of patients to different care settings, such as when they transition from an acute-care hospital to a post-acute facility can lead to a lack of consistency in care and coordination between providers. In addition, referrals from primary care providers to out-of-network specialists often lead to patients leaving that organization’s network of providers (so-called “patient leakage”) leading to large revenue losses for many providers. This is due to the fact that many primary care providers never follow on referrals and many patients never even make an initial contact with the specialist that they were referred to. For example, according to Fibroblast it can reduce nearly one-fifth of a system’s revenue per year and some systems can lose as much as half a billion dollars per year in business that goes out of network. Platforms could enhance provider referrals especially when providers could help coordinate the referrals and fill in any holes in specialty care via the addition of a virtual practice or telehealth. Network effects on provider-provider platforms could reduce costs related to specialist care, create a competitive advantage, and promote improved continuity of care for managing complex health conditions. Moreover, another area that is ripe for the application of platforms is in enabling the access and portability of consumer records across systems, providers, and payers (ex: Health Gorilla, Validic). As noted above, the move towards healthcare consumerization is well underway and as a result, consumers are going to expect the same ease of access, transfer, and portability of their own personal health records as they do in data in other areas of their life. Consumers have become used to getting data of many kinds, when and where they want it, on whatever device they want it. Healthcare information exchanges and healthcare platforms that enable better sharing of patient data for patients and providers will increase patient satisfaction, coordination of care, adherence, and potentially aid in the detection and treatment of disease. These types of data repositories could empower better analytics, population health management and even have applications in clinical research (ex: trial recruitment from disease databases, the building of digital twins for genomic research). However, it will be doubly important that healthcare platforms pursuing these areas take significant and visible precautions to ensure the cybersecurity and privacy of patients’ data for them to succeed. Ultimately, healthcare platform companies have many market opportunities to pursue. By enabling more efficient workflows, platforms will contribute to the transition to value-based healthcare and consumerization of healthcare. Platforms for healthcare infrastructure will provide more efficient developer resources to build healthcare software applications. Health systems will equally benefit from health platforms interventions focused on achieving the Triple Aim of improving health outcomes, reducing cost, and improving patient experience. Related Reading: Waste in the US Health Care System Administrative Simplification: How to Save a Quarter-Trillion Dollars in US Healthcare Radical Interoperability in Healthcare: Measuring the Impacts on Care, Cost, and Growth

  • Scouting Report-Bringing Physical Therapy to the Where The Patients Are

    The Driver: Recently, Kala Health raised $75M in Series C funding with plans to use the funding towards a partnership with Luna On-Demand Physical Therapy. They also plan to make their solution available to more patients through employers and health plans in the US and expand into national reimbursement systems in Europe. Investors in the round include Optum Ventures, Idinvest, 3VC, Balderton Capital, Heartcore Capital, Symphony Ventures, and A Round Capital. Kaia Health, a digital therapeutics company for musculoskeletal (MSK) care, is collaborating with Luna to offer Kaia Health members in-person physical therapy in addition to virtual therapy sessions. Kaia’s digital health platform uses computer vision technology to help members track exercise through their smartphone. Kala members have the option of scheduling physical therapy appointments or video visits with physical therapists. Key Takeaways: Kaia's app was featured in a randomized control trail published in Nature, entitled "App-based multidisciplinary back pain treatment versus combined physiotherapy plus online education: a randomized controlled trial" One in five American adults experiences chronic pain, costing nearly $300 billion annually in lost productivity. According to the World Health Organization, about1.71 billion people have musculoskeletal conditions worldwide. Kaia Health is the largest musculoskeletal (MSK) care platform worldwide with over 500K users across the globe. The Story: Konstatin Mehl and Manuel Thurner, established Kaia Health in response to their personal struggles with chronic pain conditions. This inspired the desire to develop an innovative solution that would eliminate the obstacles that prevent patients from getting effective and cost-efficient treatment in a timely manner. On many occasions, people who suffer from chronic pain resort to prescription drugs and only get referred for high-quality treatment when it is too late. Late treatments eventually lead to higher costs and avoidable invasive treatments like orthopedic surgery (for MSK) or lung transplantations for chronic obstructive pulmonary diseases (COPD). The co-founder’s vision for Kaia Health is to enable patients to achieve cost-effective and sustainable treatment interventions promptly. Kaia Health’s app offers evidence-based pain management exercises that include daily movement exercises, relaxation exercises, and knowledge modules that patients can use at their convenience. Kaia also has a personalized daily training program that uses AI technology and a front-facing camera of the smartphone to aid the user in properly executing the modeled exercise routine. The technology has an audio feedback feature that tells users whether they are doing the exercises correctly and how adjustments they can make. “Kaia Health uses Motion Coach technology that delivers results without having to rely on cumbersome sensors or expensive hardware. Motion coach features real-time, automated exercise feedback and objective function assessment. It uses a strong basis of clinical evidence including one of the largest randomized control trials of its kind, great traction in multiple markets, and a team of motivated and dedicated followers which the company refers to as “Kaianeers.” Currently, Kaia’s Motion Coach technology uses computer vision technology to help patients track their exercises through a smartphone, works with most iOS and Android devices, even without an internet connection, but can only track 2D motion. Kaia is working towards developing a 3D musculoskeletal model. Furthermore, the app’s algorithm uses the patient's input and feedback in creating personalized training plans that match the user's condition and physical aptitude. Users have the option of adjusting the challenge level, the length and the number of rounds of the exercises. Funding for Kaia Health’s services is available through most employer-based health plans. Its partnership with Luna has expanded its patient offerings to include in-person physical therapy by licensed therapists. Patients are not required to have prescriptions before they can begin accessing therapy services. After scheduling and getting matched with a therapist the patients work with the same therapist for every session. In between sessions, the patient’s therapist can prescribe exercises or treatment regimens and answer any questions through the Luna app. Luna accepts most forms of health insurance, including Medicare however, they also offer a self-pay option that costs $125 per visit. The Differentiators: Kaia Health is one of the few self-service digital therapeutics companies that have a clinically validated MSK digital pain therapy. In addition to offering online services, Kaia through its partnership with Luna will now offer its users an in-person service option or both. According to both companies, this will allow patients to see the same therapist at each appointment, which the companies believe will improve continuity of care between Kaia’s digital offerings and in-person care. Furthermore, unlike its competitors, Kaia’s computer vision technology is a software-only approach and doesn’t require any additional sensors or hardware for patients to be able to use the system. Kaia Health also offers round-the-clock therapy on the app with an option for Luna’s licensed therapists to provide at-home care outside traditional business hours (from 6:30 AM-9:30 PM). Consequently, patients don't have to wait for availability or long hours in doctors’ offices. The Big Picture: Kaia Health and Luna’s collaboration increases access to care by making both online and in-person therapeutic care available to patients thereby increasing its appeal to a broader potential user base. For example, by providing users with both remote and in-person options it helps accommodate the needs of the elderly or disabled who may have gone through orthopedic trauma and may not be able to access in-person care as often as they would like or need to for optimal recovery. Digital physical therapy, either by itself or in combination with in-person physical therapy could also reduce the cost of care through early pain detection and eliminate the need for expensive medications and invasive procedures due to conditions that have deteriorated or gone untreated. By having therapists come to the patient Kaia facilitates a wide range of treatment options (in office, virtual and in-home) and makes receiving physical therapy easy and accessible as well as aiding in transitions of care. For example, prior to the collaboration, when a patient received virtual therapy and needed extra care requiring in-person therapy the patient would need to find a doctor unconnected to the Kaia network and potentially unfamiliar with the app. Now with the collaboration, they can just switch to Luna’s services while remaining on the Kaia health app. Kaia Health & Luna may also help patients to save thousands of dollars on unnecessary medication and invasive surgeries by engaging them in their MSK treatment journey earlier, possibly aiding in the detection of pain points early on and thereby saving money on additional medications and treatments. Also, through continuous therapy from the privacy of their home or workplace, patients may be able to avoid invasive surgery. By using a holistic evidence-based approach Kaia can potentially save patients time, money, and unnecessary pain. Kaia Health Adds In-Person Physical Therapy Through Partnership, PharmaShots Interview: Kaia Health's Konstantin Mehl Shares Insight on the Funding to Transform the Treatment for MSK and COPD

  • Platforms In Healthcare-Pt. 2 What It Takes to Build A Successful Platform Bus.-The HSB Blog 12/6/21

    Our Take: As an increasing number of companies attempt to transition from a product to a platform business model or sometimes combine elements of both, now more than ever it is critical for companies to understand the elements that make up a successful platform business and what can be learned from them. While several of the world’s most valuable companies are dominant online platforms that have successfully created digital communities and market spaces for people to interact and transact, it is far from an easy feat to create. Moreover, McKinsey predicted in its report, “Winning in Digital Ecosystems” that digital platforms will mediate over 30% of global economic activity by the year 2025 but noted only 3% of established companies have adopted an effective platform strategy. As the platform economy continues reshaping the global economy, companies are contemplating the viability of leveraging the platform business model to their industry’s advantage, making it essential to understand the foundations of such models. Key Takeaways: Between 1992 and 2015, 209 platform organizations failed, with an average survival rate of about 5 years. According to McKinsey, digital platforms will mediate over 30% of global economic activity by 2025 yet only 3% of established companies have adopted an effective platform strategy. Forbes Insights survey (2017) reported that 31% of organizations in North America and Western Europe have adopted platform thinking. Anaconda, an open-source platform of 27M Python data scientists, has seen a total of approximately 10 billion downloads of its software library packages as of Spring 2021. The Problem: As noted in “The Power of Platforms” by Deloitte, traditional supply/demand distribution approaches are based on what are called “push-based approaches” whereby producers “simply made an efficient batch size of what they sold and foisted it onto the marketplace. This of course meant investing effort into anticipating what the customer demand might be, using that to create a sales forecast, and then procuring the right resources and people to produce the appropriate quantity of goods.” By contrast, platform-based approaches to supply/demand facilitate and empower so-called “pull-based approaches” whereby producers “reorient operations such that nothing happens until actual demand signals are received from real buyers.” However, companies in diverse sectors are adopting the platform business model to tap into its pull-based approach and profitability without adopting the competitive strategies that make platform companies successful. Some existing companies, aiming to either grow or even survive, focus more on replicating platform success and less on the power dynamics and risks associated with platform markets. However, success is not easy, according to a report entitled “The Evolution of the Global Digital Platform Economy: 1971-2021”, over 200 platform organizations failed between 1995 and 2015, with an average survival rate of only about 5 years. As the authors note “a platform often requires underwriting one side of the market to encourage the other side to participate. But knowing which side should get charged and which side should get subsidized may be the single most important strategic decision for a platform”, hence managers attempting to build platforms can “misprice” one side of the platform when underwriting the market. In addition, the authors also conclude that although several reasons account for some companies’ inability to leverage the platform model effectively, the wide knowledge gap is the most prominent reason. Many company managers do not understand how platforms operate and compete because it differs from the traditional supply-driven market. In addition, having an experienced platform leader does not guarantee a platform company’s success, especially if the company applies ineffective strategies or limits access to the platform. For example, in the 1980s, Steve Jobs struggled with creating a platform that was open enough for connecting Apple customers to the company’s software producers. Google Health, despite having an experienced platform leader, failed because it focused on healthcare consumers instead of healthcare providers (please see the Our Take blog “Lessons Learned: Big Tech Stumbles in Healthcare Again, Google Health Closing-The HSB Blog 8/30/21” for more detail). Ultimately, for platform businesses, determining which side of the market to emphasize is a crucial element of success. Unlike supply-side markets where external forces are considered threatening, understanding when to either include or remove ecosystem value is fundamental to platform strategy. The Backdrop: In 2017 Forbes conducted a survey showing that 31% of organizations have adopted what is called “platform thinking”. As noted by Erich Joachimsthaler in “What is Platform Thinking”, the concept of “platform thinking changes how we connect with consumers or customers.” Business functions like “marketing, communications, and selling [become] about connection – engagement and interaction, and creating a gravitational force that pulls consumers in, and that empowers them.” In an MIT Sloan Management Review article entitled “How to win at the Platform Game” the authors highlight three strategic elements that are pivotal for platform businesses: Business models built around subscription-based software as a service. Models built around marketplaces that connect many buyers and sellers. Combining a and b with data and machine learning models. For example, Amazon, which is perhaps the most successful platform company in the world and one of the world’s largest cloud services providers, has aggregated users from multiple industries (sometimes supplying the cloud infrastructure for competitors in parts of its business), has a straightforward cloud infrastructure, and many credible use cases. Amazon started by generating high value with an online bookstore and gradually expanded to other adjacent markets or markets with similar competitive dynamics where it felt it could create an advantage. According to the Harvard Business Review article entitled “Pipelines, Platforms and the New Rules of Strategy'' most successful platforms start with a high value generating single interaction before moving to adjacent types of interactions. This explains Amazon’s moves to integrate itself into every value chain by owning its customer interactions, amassing large amounts of data, and managing users' experience. The article also notes that network effects are central to the execution of every successful platform. A more robust network enhances supply and demand matches, leading to richer data that leads to improved matching (please see, Platforms In Healthcare-Part 1. Platforms Explained-The HSB Blog 11/29/21 for more on network effects). For example, in 2007, Apple was generally not considered a threatening player in the cell phone manufacturing market compared to the major cell phone manufacturers at the time (ex: Samsung, Nokia, and Motorola), even though it had innovative designs and new capabilities. The company’s fortunes changed in the cell phone market when Apple began to think of the iPhone as a connector rather than solely as a mobile communications product. By adopting this approach, Apple built a platform business that generated 92% of global profits by 2015. Conversely, a study of more than 250 failed platform companies found that the most prominent reasons for failure generally fell into 4 categories: 1) poor timing,2) dismissing the competition prematurely, 3) absence of trust between users and partners, and 4) mispricing on the wrong side of the market. Implications: A Deloitte Insights article on “Digital Platform as a growth lever” outlined fundamental questions that leaders must consider when transitioning to a platform business model. These questions include: Does the business align with a platform-based business model? Are there enough influence points on the platform to connect disparate parties? Are transitioning or new businesses able to develop a trust-based relationship with other partners on the platform? Does the business have the capabilities to build and sustain a platform? Apart from evaluating the viability of the platform business model with an existing or new business, companies also need to balance decision making with strategy formulation, process, and technology. The most important decision is determining the customer type. For a healthcare digital platform, the consumers include both patients and providers because often gaining provider/clinician buy-in can be crucial for gaining patients’ trust. Apart from platform offerings themselves, the supporting capabilities associated with the platform should not be underestimated and should be given due consideration. Healthcare organizations that intend to build healthcare platforms need to consider and envision the added benefits that the platforms can potentially provide to both customers and partners and their value proposition. Another noteworthy point is that while many corporate leaders believe platform models are only applicable for business-to-consumer models (B2C), platforms are increasingly more useful for business-to-business models (B2B). According to Laure Claire Reillier, a former senior executive at eBay Euro and author of “Platform Strategy: How to Unlock the Power of Communities and Networks to Grow Your Business”, the business-to-business model is currently showing the most activity. Incorporating both models within the healthcare platform could mean better-targeted services at lower costs. While a great deal of focus has been on B2C platforms there is great potential for B2B platforms in software development, provider asset management, and service optimization. Building a successful healthcare platform requires patient centricity, powerful analytic capabilities to read and interpret data meaningfully, and seamless data management. The evolution of information technology has reduced the cost of computing power storage and communication and made platform building and scaling cheaper and more straightforward. In addition, continued efforts in B2C healthcare platforms could allow for better communication, care coordination, and outcomes for patients. Developing effective healthcare platforms holds a promise of taking the stress off providers and expanding the range of services offered to facilitate improved patient care. When used properly, healthcare platforms foster an improved doctor-patient relationship due to much-needed improvements in the level of communication, convenience, and responsiveness. As noted, both B2B and B2C platforms present the healthcare industry with opportunities to either grow services or make them more efficient as they look to address the increasingly complex health and healthcare problems of diverse populations. Related Reading: Digital Platform as a Growth Lever The Platform Economy Pipelines, Platforms, and the New Rules of Strategy The Evolution of the Global Digital Platform Economy: 1971–2021 How to Win at the Platform Game

  • Scouting Report-AppliedVR: Tackling Pain & Anxiety...Virtually!

    The Driver: AppliedVR recently raised $36 million from F-Prime Capital, JAZZ Venture Partners, Sway Ventures, and SVB Ventures bringing the company’s total funding to $71 million. The L.A.-based company plans to use the investment to conduct more clinical trials, launch EaseVRx’s in the market, and expand to other areas. AppliedVR uses virtual reality technology for managing chronic pain, acute postoperative pain, and anxiety. The company’s technology consists of a virtual reality headset with visual and audio programs that deliver cognitive behavioral therapy for treating pain conditions. To date, AppliedVR has conducted clinical trials on over 60,000 patients in 240 hospitals and 1,500 patient homes to help patients ease acute pain either during or after surgery. Key Takeaways: According to Modor Intelligence, the pain management market was valued at approximately $65B in 2020, and is expected to grow to $87B in 2026, a 4.85% CAGR. 66% of the patients who watched VR programs reported at least a 30% reduction in pain Chronic pain affects nearly one-third of Americans and has a total cost about $635 billion each year According to the CDC, on average, 115 Americans die daily from opioid overdoses. The Story: According to CEO and founder, Matthew Stout, AppliedVR was originally created as a tool to facilitate a better understanding of human decision-making by LRW at a top market research firm. After meeting with top VR researchers, Stoudt gained a better understanding of the role of virtual reality in helping people deal with their behaviors, emotions, and decisions. His realization of VR’s potential as a powerful cognitive tool gave rise to the idea of deploying it in dealing with anxiety, chronic pain, and depression. AppliedVR is useful for alleviating all manner of pains, from labor pains during childbirth to the discomfort experienced by patients undergoing cancer treatment. Using the company’s technology, virtual reality creates a 3D environment using a combination of advanced software, hardware, and design. Users can interact with the environments displayed in the VR headsets and engage with different visuals, sounds, and even sensations. The AppliedVR set comes with a Samsung smartphone, a Samsung VR device powered by Oculus, a headset, cables, and instructions. The VR content consists of a set of pre-installed medical apps, games, and animations, so once the user turns on the headset, they can start to use the system immediately. The smartphone’s use is limited to checking out the VR app on the phone or accessing Wi-Fi. Research has shown that people who use VR therapy have decreased levels of pain activity in the five regions of the brain associated with pain. The company notes that Dr. Brennan M. Spiegel and his research team at the Cedars-Sinai Medical Center have worked with AppliedVR for years and treated hundreds of patients with VR therapy. A study conducted by Dr. Brennan’s team to assess pain levels using VR found that the use of VR on hospitalized patients significantly reduces pain compared to a control distraction condition. Furthermore, an experiment in an article entitled “Virtual Reality for Management of Patients in Hospitalized Patients: Results of a Controlled Trial”, concluded that patients had a 13% drop in pain scores of 100 patients that watched a 15-minute nature video with mountains, running streams, and soothing music in the background. AppliedVR treats chronic pain by ​​capturing the mind’s attention and blocking pain signals from reaching the brain. The tactile and sensory feedback produced by AppliedVR’s system signals the patient’s neurotransmitter mechanisms that reduce pain. AppliedVR is currently working with Medicaid, Medicare, and other insurance networks for reimbursement, but they are yet to set any pricing plans. The Differentiators: Similar companies like Vicarious Surgical have FDA breakthrough status just like AppliedVR’s technology. However, Applied VR’s EaseVRx product is the first and only FDA-approved at-home virtual reality pain treatment used to treat chronic lower back pain and fibromyalgia and sets AppliedVR apart from comparable organizations. The FDA gave EaseVRx a “breakthrough device designation” for treating fibromyalgia and chronic lower back pain. The breakthrough device designation speeds up the development and review of new medical devices. In developing EaseVRx, AppliedVR conducted an important clinical study of 179 participants with chronic lower back pain that helped it to get FDA approval. Half of the participants were given an EaseVRx headset to watch immersive 3-D programs daily for 8 weeks and the other half were given headsets to watch routine nature scenes as a placebo. At the end of treatment, 66% of the patients who watched VR programs reported at least a 30% reduction in pain, compared to 41% of the patients in the placebo group. The Big Picture: Chronic pain and chronic pain management have long been an issue in the U.S. For example, according to Modor Intelligence, “the pain management market was valued at approximately $65B 2020, and it is expected to grow to $87B in 2026, with a CAGR of 4.85% over the forecast period. In addition, in the US, the misuse of prescription pain medication has led to an opioid overdose crisis. According to the Center for Disease Control and Prevention, the annual economic burden of prescription opioid misuse in the United States alone is approximately $78.5 billion. The estimated amount includes healthcare costs, addiction treatment, criminal justice involvement, and lost productivity. AppliedVR’s technology offers an alternative to chronic pain management while eliminating the need for prescription pain medication and instances of misuse. Apart from AVR’s potential in averting the opioid overdose crisis caused by pain prescription misuse, it is also more cost-effective. According to a Journal of Managed Care & Specialty Pharmacy study, the total cost of prescribed pain medication in the US is $17.8 billion. It also eliminates the need for costly and painful surgeries because VR therapy is a non-invasive treatment. In terms of inclusiveness, AppliedVR is user-friendly for people with disabilities because it is a hands-free device. Consequently, a wider range of patients, especially patients with limited mobility, can utilize and benefit from AppliedVR therapy. Notwithstanding the benefits of AppliedVR, there is still room for improvement. In the EaseVRx clinical trial, about 20% of participants reported discomfort with the headset and nearly 10% reported motion sickness and nausea. While these are common side effects from using VR headsets, it is worth addressing to improve the user’s experience. AppliedVR might help several people manage their chronic pain and anxiety with the proper training, price adjustments, and improved technology. AppliedVR Raises $36M, Pursues FDA Clearance of First Digital Therapeutic, AppliedVR scores $36M for Virtual Reality Pain Management. AppliedVR’s EaseVRx scores FDA De Novo Clearance for Treating Chronic Lower Back Pain

  • Platforms In Healthcare-Part 1. Platforms Explained-The HSB Blog 11/29/21

    Our Take: The digital health industry is increasingly moving to platform solutions, with many different healthcare solutions likely to start converging into platform products, leading to more innovation and overall improvement of healthcare industries. While companies that buy and sell healthcare technology products both stand to benefit from this trend by having an integrated, more comprehensive set of tools available to solve their business needs, it is even more important for these platform developers to consider the many constraints that the market dynamics of the healthcare industry creates for new entrants. Key Takeaways: According to SaaS consulting company Formotus, surveys suggest that the price range for developing an enterprise mobile app is generally in the range of $100,000 to $500,000. The IQVIA Digital Health Trends reports notes there are currently over 350K health-related mobile applications available to consumers with more than 90K added in 2020 alone. According to Zus Health there are 4000 companies building heatlhcare registration apps alone. The average employer benefits plan has 18 stand alone health and wellness apps as part of its benefits offerings. The Problem: Exciting market opportunities exist in narrow market segments that have high customer demand and low competition. Peter Thiel, a well-known investor and serial entrepreneur, recommends startups to focus their efforts on areas that can come up with innovations that are significantly better than existing solutions. This is due in part to the fact that incumbents often fear changing the status quo or embracing innovation since it entails fear and risks of the unknown in processes such as operations and purchasing behavior both of which have helped them to develop a competitive advantage. Nevertheless as strategists such as Thiel and Clayton Christensen have recommended, to be significantly better, there needs to be a drastic improvement in reducing cost, increasing value, and/or the quality of the user experience. For industries that are associated with complex problems, including healthcare, education, government services, successful companies have often targeted reducing the cost and complexity of reaching the market for their customers. There are large market opportunities to improve the value and quality of products in these industries. Although the healthcare industry has large market opportunities, it is highly regulated with legal and regulatory requirements that could constrain companies with innovative solutions. New entrants need to recognize and prepare for these constraints during product development. For example, new medical software often can produce diagnostic results faster and more accurately than existing diagnostic methods, however, generally, it will still need to go through rigorous testing with regulatory authorities such as the FDA for patient safety and clinical effectiveness before it will be able to be sold into the marketplace. For industries that are fragmented such as healthcare, there are typically fewer opportunities to form long-lasting competitive advantages due to competitive pressures from new entrants, changing needs from customers, and cost pressures from suppliers. Platform companies can help overcome some of the competitive and regulatory issues that constrain innovation and provide a way to increase user value through network effects. Network effects describe how an additional user added to the platform will increase the economic value of the platform in a self-reinforcing loop causing more people to be added to the platform. An example of this is social media platforms, where having only one user on the platform would bring negligible value, but by contrast, enticing a larger number of users to join the platform initially will generate additional content that will keep users engaged, retained, and cause them to suggest their friends and associates join the platform thereby repeating the cycle. Viral user growth and user-generated content in social media platforms attract advertisers because of high user engagement and attention in the application to view advertisements. Companies develop a competitive advantage by reducing costs for customer acquisition (by leveraging existing users as referral sources) and creating high switching costs to prevent users from using alternative substitutes (ex: when the vast majority of one’s friends are on a particular social network). Initially, these products often require stable cash flow generation and long-term investment as early-stage platform products need to develop enough value on their early versions to retain and grow their user base to create and leverage network effects. For healthcare technology and enterprise software products, it is important to consider how risk-aversion must be overcome for companies to purchase a new innovative product. Developing platforms in digital health can help emerging companies in healthcare overcome existing barriers in areas such as systems integration, data security, and interoperability by effectively creating a roadmap for product developers to follow. The Backdrop: Platform models can be divided into two different categories, value exchange platforms, and innovation ecosystem platforms. Value exchange platforms encompass platforms like those in the so-called sharing economy, such as Uber and Airbnb, and other multi-sided marketplaces, such as Etsy and Angi. Innovation ecosystem platforms encompass developer tools for building infrastructures, such as Stripe and Amazon Web Services, and app stores, such as the Apple App Store and the Microsoft Store. The platform models that will be covered in this will be focused on the innovation ecosystem category. Platforms that fall in the innovation ecosystem category are critical to the advancement of the underlying infrastructure for an industry. For example, Stripe started with creating code to simplify payment processing for developers. Stripe then expanded their platform to encompass multiple areas of financial technology to make management of e-commerce and payments from new startups to public companies. Building upon these successes, the company now states its mission is to build the economic infrastructure for the internet. Building tools that lay the foundation for a new approach to industry infrastructure and supports developers will enable more product development, which will result in more innovation and a more mature ecosystem with better solutions. Similarly, a non-software example would be how the development of user-friendly 3D rendering software and inexpensive 3D printers contributed to a growth in rapid prototyping and DIY movement for so-called “makers” that support the use of open-source software in creating new devices electronics, robotics, 3-D printing, App stores that have a large market share with hardware devices are the Apple App Store, Google Play Store, Microsoft Store, and Amazon App Store. App store platform models allow software companies to control the distribution of third-party applications and digital content for hardware devices. For example, the Apple App Store’s revenue model has two main revenue streams, revenue from developers to publish their mobile applications on the app store, and commissions from developers when users purchase apps, and make in-app purchases. Platforms that can sustain their network effects can create what is referred to as a “flywheel effect” where growth compounds on previous growth eventually leading to extremely large and continuous gains in scale. This flywheel effect is what makes competitive advantages more resilient as initial first-mover advantages can contribute to lower costs from economics of scale in purchasing and operations, more revenue from exponential gains in customers and low customer acquisition costs, with more efficient distribution channels. Implications: Understanding customers and regulatory requirements are important considerations for organizations that are building platform companies in heavily regulated industries like healthcare, as healthcare providers (ex: hospitals and physicians) are subject to legislation such as HIPAA, HITECH, the 21st Century Cures Act, Anti-Kickback, and Stark Laws as well as numerous other regulations around the privacy and security of personal health information (PHI). These regulations for data privacy, security, and compliance can limit the ability of new entrants to gain traction in the industry by increasing the difficulty of developing products. The complexity of understanding the requirements rewards industry veterans that are able to develop solutions that can work within the existing regulatory framework. When compared to more consumer-focused retail and media, the differences in user dynamics and data privacy add an additional layer of complexity for building platform products in regulated industries. Regulated industries tend to have long sales cycles with risk-averse purchasing behavior. New startups require long-term investment horizons and sufficient financial capital to have enough resources to test products with customers and learn how to integrate their solutions into existing business processes. In healthcare given the many regulations around data privacy and security, data access and data storage can often be fragmented with different types of data residing in different systems in the organization. For example, in healthcare, there is structured and unstructured data that includes handwriting from doctors’ notes, lab results, images from radiology reports, and claims processing, which makes it difficult to create broad end-to-end solutions that would encompass a patient’s entire longitudinal record. End-to-end functionality is also hard to accomplish on a larger scale throughout an organization, even if it is able to be accomplished on a smaller scale since data if often siloed within departments. Interoperability is a barrier limiting how data from multiple systems can be integrated together for analysis. As noted earlier, healthcare data interoperability solutions being developed by companies such as Validic and Redox can provide the foundation for additional healthcare applications and solutions to be built on. Another characteristic of complex user dynamics is the lack of standardization in workflows. Custom technological solutions are expensive due to the complexity of system integration and limited standardized compliance requirements for interoperability. Building platforms for software engineers will reduce the cost of custom solutions and support more healthcare innovation. Zus Health and Health Gorilla are two of the multiple companies working on platform products for developers to reduce the cost associated with customization for healthcare applications. There is a large opportunity for the growth of platforms in healthcare if sufficient platform products that build critical infrastructure can reduce costs for innovating and delivering value to customers. This opportunity is similar to how enterprise cloud computing led to the reduction in infrastructure costs for server management and web hosting, which in turn led to more innovation. There are many reasons to remain optimistic about the future value of healthcare platform companies in improving healthcare delivery when the barriers to innovation can be overcome. Related Reading: The Art Of Pitching A Platform Business In Healthcare Why 'Ecosystems' Will Be the 2020 Leading Health Care Buzzword The Power of Data Network Effects

  • Scouting Report-ShiftMed: Addressing the Current and Impending Nursing Shortage

    The Driver: ShiftMed recently raised $45 million in funding from Panoramic Ventures, HealthWorx, Blue Heron Capital, Motley Fool Ventures, and 3TS Capital Partners. ShiftMed is a startup mobile health company that connects medical providers with health care workers. Since its establishment in 2021, ShiftMed’s goal is to connect hospitals, assisted living providers, home-based care agencies, and nursing facilities with nurses looking for available shifts. Due to the current shortage of nurses across the country, the app has been a useful tool to connect doctors with nurses and other home-based healthcare workers. While the Virginia-based company started in 10 markets it has now increased to 56 markets across the United States. Key Takeaways: The U.S. Bureau of Labor Statistics projects the need for 1.1 million new RNs by 2022 for expansion and replacement of retirees, and to avoid a nursing shortage. In 2021, ShiftMed has hired more than 10,000 nurses so far with a combined time of more than 1 million hours caring for patients. More than 3,600 U.S. health care workers perished in the first year of the pandemic, according to a study by The Guardian and KHN. The Annual State of Nursing Report showed that almost 50% of US nurses are considering leaving their jobs over the next two years. The Story: In 2014, Todd Walrath had founded HomeCare.com which is a mobile platform that connects care providers to families seeking at-home care services. This later inspired Walrath to start ShiftMed in 2018. Both companies deal with shortages of healthcare workers and earning livable wages. These issues have made it nearly impossible for healthcare facilities to provide quality care for patients. The COVID-19 pandemic has only exacerbated these issues. Most nurses have left their jobs due to burnout, safety concerns, and the fact that they are not treated well. This leaves many vacant positions in hospitals and other health facilities. ShiftMed works to connect providers with nurses to fill those vacancies. ShiftMed allows Nurses (CNAs, LPNS, and RNs) to use their smartphones to control their entire work schedule. This includes selecting shifts, rate of pay, managing credentials, and getting paid right after their shift. The app enables families, hospitals, assisted living providers, home-based care agencies, and nursing facilities to reach the maximum amount of staffing while simultaneously giving healthcare professionals an opportunity to make their own schedule with shifts at the time and location of their choosing. ShiftMed has a national database of nurses across 700 locations in the US with more than 6 million nurses. There are more than 60,000 fully credentialed nurses available everyday to cover shifts at healthcare facilities. The Differentiators: In addition to offering more flexible scheduling, ShiftMed also offers unique payment models that allow nurses to receive their paychecks earlier, giving them added financial independence. For example, ShiftMed offers what are known as Next Day Pay and Guaranteed Shifts. With Next Day Pay, nurses can receive their paycheck the next day instead of waiting until the end of the week. In addition, healthcare workers can work a shift and receive 50% of their gross earnings within 24 hours of their withdrawal request and ShiftMed will even transfer these payments directly to their bank account for free. Through Guaranteed Shifts, nurses will still be paid for the entirety of their shift even if that shift has been canceled by the healthcare facility. By allowing nurses to pick up shifts at different hospitals, ShiftMed gives nurses the freedom to explore different locations and see which facility and/or organization may be the best fit for them. If a nurse likes a certain location, they can choose to pick up shifts at that location repeatedly which also allows patients to have consistent care with a familiar face. ShiftMed offers flexibility with nurses choosing their own schedules which typically is not found with dedicated nursing shifts at a single facility. The Big Picture: The rise of the COVID pandemic led to dramatic surges in infections across the U.S., spikes in hospital utilization, and long hours for overworked nursing and clinical staff. All of this led to a significant increase in burnout among overworked nurses leading to a shortage of nurses and other front-line staff in hospitals. This was compounded during COVID by the lack of PPE and nurses feeling unsafe and unappreciated from the constant pressure and anxiety of having to work in difficult conditions. For example, Michelle Thomas, a registered nurse, and manager of the emergency department at a hospital in Tucson, Arizona, resigned three weeks after reaching her breaking point. As noted in a recent article from NPR entitled, “Hospitals Face A Shortage Of Nurses As COVID Cases Soar”, “There was never a time that we could just kind of take a breath, I hit that point ... I can't do this anymore. I'm so just tapped out." After experiencing less than ideal working conditions and going through emotional turmoil, Thomas, like many other nurses, decided to leave her job. The burden of COVID has only contributed to what already was moving toward a nationwide shortage of nurses in America. Services like ShiftMed that work to connect hospitals, clinics, at-home agencies with nurses looking for both part-time and full-time shifts make the system more flexible. In addition, while staffing services like ShiftMed will not alleviate shortages when the entire healthcare system is overtaxed, when there are sporadic or geographic shortages, services like ShiftMed can help allocate nursing resources to where they are most in demand. Moreover, the convenience of being able to work as much or as little as you want, whenever you want will likely entice nurses who have retired or whose other responsibilities may prevent them from returning to work full time, and it has the potential to alleviate some of the nursing shortage. Nurse Staffing Platform ShiftMed Raises $45M to Fill Provider Needs on-Demand, Meet The Disruptors: Todd Walrath Of ShiftMed On The Three Things You Need To Shake Up Your Industry