Zak Holdsworth is VP of Business Development for WellnessFX in San Francisco, a venture-backed consumer health company focused on empowering individuals to understand and improve their health.

Our ability to access increasingly granular and detailed health data is growing rapidly. Digital health innovators, then, must answer the question: is this data simply interesting, or is it also going to positively change behaviors in a persistent way? My hypothesis – with proper design, it can.

I have observed a number of attempts at addressing this specific problem, and I have come to the conclusion that there are a handful of important factors to consider when building a digital health product.

Passive Data
People do not want to interrupt their lives more than they absolutely need to. Data collection needs to be passive.

Companies like Fitbit, Jawbone, Nike, Basis, and Withings have achieved this by allowing users to simply drop a simple form factor device in their pocket or step on a scale when they wake up, and a basic set of data is wirelessly pushed to the cloud. Mobile apps like Moves passively track your activity throughout the day and connect these activities and movements with location-based data, also collected passively.

The next generation of devices will take this idea of passivity even further.  These devices will be embedded in our environment and our bodies. mc10 is pushing the envelope by fabricating flexible electronics that can fit onto a non-rigid form factor, including the body, and Sano Intelligence is developing a biometric sensing skin patch. Eventually these kinds of sensors will be integrated into our lives in a truly passive way our bed, chair, cars, toilet, clothes, and bodies will be transmitting data without any input on our behalf.

This next generation of products will require little or no effort on the part of the user who ends up constantly observing themselves, and this brings increased consciousness and awareness. The fascinating thing here is that through this observation alone, behaviors tend to change.

Intrinsic Motivation
Although behavior change tends to be observable in a statistically significant way when individuals track themselves, these new behaviors generally do not persist over extended periods of time. Keeping individuals motivated to continue making the right kinds of decisions in the short term, that will impact their health in the long term, is critical – it is also difficult. It turns out that building things that keep people engaged in their health long term (years or decades vs a few months) is really hard.

Although extrinsic motivation (giving people rewards, praise, badges, etc) is a powerful tool for achieving short term goals and for helping reinforce the right kinds of behaviors, its overuse can ultimately lead to overjustification, or a decrease in a person’s natural motivation to perform a task or behave in a certain way. A well-understood area of game design, it is often the first thing teams look to when trying to change health related habits and behaviors. Although important, the key to successfully facilitating behavior change is not extrinsic motivation, it is intrinsic motivation, motivation driven by enjoyment of exhibiting a certain behavior in and of itself, rather than relying on any external pressure.

I am not a behavior change expert (here are a few you should follow), however I believe that companies that purely focus on the low hanging fruit of behavior change (extrinsic motivation + ‘gamification’) will not succeed in improving health outcomes in the long term. My recommendation is that, teams should, at a minimum, understand the difference between extrinsic & intrinsic motivation and strive towards the ultimate goal of building a product that is optimized towards the latter.

Stage Dependent Action
So once you have worked out how to make people adopt new behaviors that persist through time, what is it that you should tell them? It is not enough to just passively measure and intrinsically motivate someone to form new habits, if the new habit is not optimal for that individual – if you are simply measuring steps, people will walk more… unfortunately they also may do less weight lifting because this specific metric is not ‘rewarded’.

Although there are some basic things that can be achieved simply by summarizing peoples data in nice charts and graphs and some logic can be driven by algorithms, my belief is that there is an effective intermediate step that relies on, and involves other people. Though we generally disagree on what perfect health is, conditional on understanding an existing state, defining a better state tends to be more realistic – unfortunately computers are currently not great at this.

Companies like Sessions focus on building the technologies to scale this human intervention and claim much higher engagement and effectiveness (80% compliance with plans). Communities built on human interaction like Lift and Fitocracy are examples of  companies where people are positively rewarded for their behavior and learn through the shared knowledge of the community, whether it be expert or otherwise.

At WellnessFX, we connect our members with nutrition and lifestyle coaches who tend to understand specifically what recommendations are going to be most effective for the individual dependent on their stage within this journey (“lets just start by eating less bread and taking some fish oil” vs “I want you to go fully paleo next week”). My hypothesis, the personal relationship our members form with these experts teaches skills that increase self-efficacy, the recommendations themselves are aligned with what is realistic for that individual so they are achievable, and the biometric data visualizations tend to provide the short term extrinsic motivation in the form of a feedback driven goal. As a result, we are able to systematically improve the health outcomes of our member base.

Digital health innovators who are going to prove successful are those who provide realistic and stage dependent recommendations/education that provide incremental improvements to the individuals existing state; reinforce and enhance this individual’s want or desire to change and adopt these new behaviors at an intrinsic level; and provide feedback loops that do not require (much, or) any active management from the users perspective.

Do you hear that? It’s the sound of the government making it rain with $1B in health innovation grants for innovators like you. Learn more and apply this summer for your share of free money. We’ll be at HealthBeat this week if you want to talk about your application.

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Funding

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By Mollie McDowell

Beginning in 2014, the U.S. will implement the most far-reaching Affordable Care Act provisions. At our latest Skillshare class (see slides below), Malay Gandhi broke down some of its major themes and features; describing the move from a treatment-centered model toward more preventive care and ultimately paying providers for health outcomes—not just health procedures.

• Despite gaining a larger customer base through mandated insurance coverage, the power shifts away from insurance companies who may no longer selectively choose customers, profit without limit, or cut off benefits by placing “maximum limits” on plans.

• Beginning in 2014, customers should be able to easily compare healthcare plans, (which must provide a certain level of coverage), are guaranteed eligibility, and will have more responsibility for their healthcare choices.

The Affordable Care Act upends entrenched business models of healthcare and fosters opportunities for new visionaries to enter and re-shape the system. With fixed payments for providing services to a population, hospitals and providers are incentivized to invest in prevention, efficiency and minimization of unnecessary procedures and administration. Insurers, now capped on margin, must also find ways to be more efficient. And employers will be forced to sort through the economics of being the primary source of coverage for most Americans. How are some companies embracing and taking advantage of these changes?

• Benefitter works with employers to help them navigate healthcare reform.

• Clinicast develops data analytics and workflow tools to help at-risk healthcare organizations improve outcomes and lower costs.

• Eligible provides consumers with up-to-date insurance coverage information for specific procedures—helping companies comply with a new Affordable Care Act provision for simplifying the administration of healthcare.

• Wellframe helps track high risk patients and prevent unnecessary and expensive hospital readmissions.

Shami Feinglass

April 29th was the annual gala dinner for The Society for Women’s Health Research (SWHR), highlighting innovations that incorporate informatics or mobile health technology to advance women’s health.  These technological advances encourage women to manage their own health and empower them to communicate more effectively and efficiently with their healthcare providers to improve their quality of life.  With Surgeon General Regina Benjamin present, Mia Markey, PhD,  The University of Texas at Austin,  was recognized for her work in informatics to develop decision support systems for clinical decision making in women’s health, including breast reconstruction post cancer surgery.

Highlights of the evening were the announcement several exciting new programs: the first is a 100K challenge for Alzheimer’s research, the Geoffrey Beene Neurodiscovery challenge. Sponsored by The Geoffrey Beene Foundation, this program is the first open-source challenge to target male/female differences in cognitive decline.  The second program highlighted was Fatigues to Fabulous ( F2F). Shockingly, the fastest growing segment of homeless are women from military service. Created to ease military women back into civilian life, F2F helps these returning patriots navigate the health system  and trains them in the necessary job skills to succeed at home.

The next SWHR event is: What a Difference an X makes: The state of Women’s Health Research, July 18-19 in DC.  SWHR is a non-profit organization based in Washington, DC, widely recognized as the thought leader in promoting research on sex based biological differences in disease, and is dedicated to transforming women’s health through science, advocacy, and education.

Shami Feinglass is the Vice President of Global Medical and Regulatory Affairs at Zimmer.

Interested in women and health? Learn more about Rock Health’s XX in Health initiative and upcoming XX in Health retreat.

Healthcare costs are soaring – the US spent ~$2.7 trillion on healthcare in 2011, and it costs over $1 billion to bring a novel drug to market. Yet digital health companies can innovate faster and demonstrate their proof of concept with comparatively little money, which is creating new and exciting opportunities for healthcare entrepreneurs.

I recently sat down with Abhas Gupta, MD a partner at Mohr Davidow Ventures to discuss the opportunity for digital health, changes in medicine, and his advice for entrepreneurs. (Mohr Davidow Ventures is a Limited Partner in the Rock Health Fund).

Here are a few highlights, and the full interview is after the jump:

• Digital health companies – in the eyes of a venture capital investor, are characterized as software-driven, capital-efficient, quick to fail, and able to scale. Investors look for passionate, strategic thinkers when evaluating potential investments.
• The single biggest change in the US healthcare market is the shift in business models from a fee-for-service system to an at-risk system. Simply put, doctors are paid today for the number of lab tests or procedures they perform irrespective of patient need or outcomes. In the future, physicians and healthcare systems will be accountable for managing the health of patients with a fixed sum of money (capitation); therefore, healthcare organizations will bear the financial risk. The most attractive digital health opportunity today is to enable physicians and case managers to identify, track, and manage their potential high-cost patients and prioritize cost-effective interventions thus reducing the level of financial risk.
• Gupta’s advice for first time entrepreneurs is to find a niche where you can directly take on soaring health care costs, familiarize yourself with venture math (the mentality of a VC investor) before pitching, and think about the right investor fit for your venture when you raise money.

What triggered your interest in digital health?
Abhas Gupta, MD:  After my undergraduate training in computer science and computational biology, I spent a few years in biotech and then pursued an MD/PhD program. I later left academia for a boutique healthcare consulting firm and eventually came out West looking to join a therapeutics-focused startup. Very serendipitously, I got in touch with MDV, which was trying to better understand the digital health landscape. Through my research, I quickly realized that digital health could be completely game-changing.

Omada Health is a great example: they developed an online diabetes prevention program with $800k of seed funding, and the outcomes they have achieved through their online-based intervention are equivalent to Astellas’ obesity drug, Belviq, which took some $600M to develop. With digital health companies, you know within the first millions of funding if this is going to work, rather than spending hundreds of millions of dollars going through phase I and II [of clinical development] only to find a drug that fails in phase III. The difference is dramatic when you look at time to market, regulatory risk and product safety risk for digital health compared to traditional healthcare product companies.

“With digital health companies, you know within the first millions of funding if this is going to work, rather than spending hundreds of millions…[on] a drug that fails in phase III…”

How do you compare your various experiences in medical school, strategy consulting, and venture capital?
I view medical school as the content acquisition period. Med school is like a fire hose, where your goal is to remember an immense amount of clinical information and be able to retrieve it on demand in the future. On a personal level, I began to realize that medicine was not a good fit. I enjoy thinking about multidisciplinary problems, like applying techniques from different fields to solve a challenge, and to me, medicine was very antithetical to that type of thinking. Medicine is about honing a skill to the point where you don’t have to think and where you respond the same way every single time you are presented with that case. Once I made that realization, I knew it was time for me to move on to something else.

Then it was on to consulting, which although you’re a step removed from the companies you serve, consulting can be very valuable to see what’s happening at a bird’s eye view across companies and to understand fundamentals of business. One of the best things you learn in consulting is how to structure a problem and solve it in a very logical manner. That’s a skill people may learn over decades in their careers, but in consulting, you can get pretty good at it in a matter of years.

Venture investing, however, is incredible. I love what I do–I get to combine the knowledge base I gained in medical school and the approach to thinking about problems and opportunities and apply all that to seek out opportunities and support companies as they scale from 2 to 2000 people.

How do you define digital health? What characterizes a company or product as digital health?
There are a lot of different definitions out there. What’s most salient for us at MDV is what it means from a venture perspective. The profile of a company we consider as digital health is fundamentally software driven, capital efficient, quick to fail (meaning they are not going to take $30M before we realize the FDA won’t approve the product), and able to scale quickly.

The boundaries between different terms become artificial at some point. There is a lot of overlap between digital health and health IT. Personally, I encourage the use of digital health because it brings some of the energy and excitement that exists in a nascent field that may not exist in traditional health IT.

What are the biggest trends that are shaping digital health today? How will digital health be different in 3-5 years?
Without a doubt, the biggest trend in healthcare is the shift from fee-for-service to at-risk organizations. We are talking about fundamentally altering the business model of a $3 trillion industry. This transformation, which will happen in the next 5-10 years, will create massive opportunities for entrepreneurs.

All of the software technology that we think about today in healthcare is not designed for an at-risk world; it’s designed for a fee-for-service world. A lot of the organizations that are taking on this risk are not using technology in a way that helps them be better and more profitable businesses, but rather, they are shifting to the at-risk model as more of an accounting measure.

At MDV, we want to invest in organizations that embrance this fundamental trend: we want to invest in organizations that are willing to take on risk and the technologies that help them do that. That can mean better population management tools and better risk characterization tools.

More generally, how will the routine practice of medicine be different in 3-5 years?
Unlike a fee-for-service world, the emphasis 
in an at-risk world shifts from specialist care and end of life care to primary care. More importantly, at the primary care level, the key stakeholder is no longer the physician but really the case manager. The way that healthcare is managed is not on an individual level but on a population level. Those are pretty dramatic changes in the logistics of medicine and better technologies are needed to facilitate that change.

I don’t anticipate major changes in the clinical guidelines or use of prescription medications, but rather, I expect the practice of medicine to shift toward addressing and monitoring higher cost individuals. Physicians may adjust the level of attention they pay to specific, high-cost conditions.

Another element of this is that students graduating from medical school with significant debt are drawn toward specialties where they think they can earn double what a primary care physician (PCP) makes. There is already an oversaturation of specialists and under-representations of PCPs. These innovative technologies are designed to further reduce demand for specialists which is going to exacerbate the specialist problem. Moreover, I think savvy PCPs who get the importance of population health are likely to garner salaries that are three to five-fold what they are today.

What would you consider if you were jumping into this field as an entrepreneur?
One school of thought suggests entrepreneurs should pursue problems that they are familiar with. The idea is “look at the world around you, figure out where you see pain, and build a solution for that problem.” That is certainly one way to think about it.

But if I were an entrepreneur today, I would think strategically and ask myself: what is the low hanging fruit? What are the challenges that I can pursue or that not enough people are pursuing so that I’ll have an edge or that there won’t be a lot of competition? Healthcare is absolutely ready for the picking: it’s a completely bloated industry and because significant business model changes are taking place, there are tremendous opportunities. The vast majority of healthcare stakeholders are not clued into these major changes that are taking place, so if I were an entrepreneur, I would look to understand the trends and jump with both feet.

 What’s the winning recipe for a digital health company today?
Figure out what the biggest cost issues are – it’s all about costs now. From there, think about what you can do to change those cost areas. Ask yourself, how can I apply technology or service innovation or my unique edge to reducing those costs? Then come up with a scalable way to do that in healthcare – that’s the winning recipe.

You’ve met a lot of tech entrepreneurs. What do you wish first time entrepreneurs knew? What is advice would you offer founders to avoid some common pitfalls?
We have backed plenty of first time entrepreneurs and I think what is consistent across all of them is that they demonstrate good strategic thinking, that they are focused on the issues that are important for the stage of their comapny, that they know this is a game of understanding risks, prioritizing risks, and taking risks off the table, one after another. That sort of thoughtful mentality is a quality present in all of the first time and serial entrepreneurs that we back.

Here are two more pieces of advice:

1. Have a sense of what is the right investor fit for your company. For example, we (MDV) have a $700 million fund. In order for us to return the fund, we have to believe that every company we invest in has the potential for a billion dollar exit. If someone comes to us with company that doesn’t reduce costs or where the market opportunity is $50 million, it’s very hard for us to justify making an investment. As a result, we cannot move forward with an investment and entrepreneurs sometimes get upset about that. Entrepreneurs who understand this venture math, for better or worse, are likely to be more effective in their fundraising.

2. Think about how much money and when you should take on. Growth rates and exit potential are two important factors when considering venture capital versus other funding sources (i.e., debt, growth equity). In addition, knowing the milestones that directly impact your valuation, and when you can achieve them, are also important considerations. Again, going through the exercise of placing yourself in an investors shoes can be very helpful in targeting the right partners for your company.

Abhas Gupta joined Mohr Davidow in 2011 and focuses on digital health, education, and predictive analytics. 

Last week, Rock Health and Wharton hosted the first Digital Health CEO Summit, bringing together dozens of CEOs to discuss critical issues in the space. Check out photos here.  

Headlines

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Funding

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Once celebrated as the next big thing in the healthcare world, electronic medical records (EMRs) have a long way to go in terms of physician satisfaction, according to survey data from AmericanEHR Partners released in March at HIMSS 2013.

The findings are based on 4,279 responses to multiple surveys between March 2010 and December 2012 about physician satisfaction with EMRs.  Of physicians who participated, 70% are in practices of 10 or fewer doctors and the majority intend to participate in the Meaningful Use program.  According to the study, physician disillusionment with EMR systems is growing rapidly:

• 20% of physicians are very dissatisfied with their EMR overall

• The portion of physicians who are very dissatisfied with their EMR’s ability to improve patient care doubled from 10% in 2010 to 20% in 2012.

At least some of the blame from the clinical community is directed at EMR vendors.  The lines of the refrain go something like this: “the EMR vendor rushed the implementation at the site”, or “the vendor provided insufficient training for clinicians”, or “the vendor neglected usability and user experience”, or “the new system requires so much extra time to do anything.”   Dr. Justin Graham, Chief Medical Information Officer at NorthBay Health System in Fairfield, California reports once hearing a physician comment that “with a new EMR, you can now do tasks in 30 minutes that you never had to do before!”

Chang M. Seo, Technical Lead at Kaiser Permanente who is involved in managing EMRs explains some of the growing pains with EMR adoption: “The underlying assumption is that switching to something new is better than the old way”, while “some doctors are having a hard time utilizing new EMR systems to their benefits, especially more experienced physicians.”

To further unpack what could be driving the decline in satisfaction seen in these surveys, I offer a few additional theories:

• Maximizing user satisfaction was never the primary objective: More often than not, EMRs are implemented for business reasons like reducing costs or increasing reimbursement through improved documentation. Dr. Graham explains, “physician satisfaction [is] often an afterthought during design.”  Not surprising then that user satisfaction will be low.

• Sticky EMRs, or the “good enough” issue: EMRs are technically complicated and implementation is inherently disruptive.  Graham suggests that “although customers want better products, the barrier to switching is huge, and so the EMR vendors have very little incentive to make large changes in their platforms when they are doing “good enough”.”  Hospital and office administrators are understandably reluctant to rip-and-replace old systems. Users who expect improvements (like upgrades pushed to a smartphone operating system) grow increasingly annoyed at the static nature of the systems.

• Government mandates shift composition of users: In the pre-Meaningful Use era, innovative physicians used electronic medical records that were custom-made for the institution or were optimized for niche areas like Emergency Department information systems.  These early adopters were prone to have a more optimistic outlook on their novel computer systems.  In contrast, users who joined the pool of surveyed physicians more recently may be reluctant users, reacting to the carrot-and-stick that is Meaningful Use.  As slow adopters, they are predisposed to be more critical of the tools.

This points to a giant opportunity: as electronic medical records cross from lightly used by early adopters to heavy use by mainstream physicians, products that have deep functionality and quickly implement improvements will win more physician satisfaction. Gaining physician buy-in early in the EMR process and listening to their requests and desires would go a long way toward addressing this lack of satisfaction.  Dr. Shirie Leng, an anesthesiologist at Beth Israel Deaconess Medical Center in Boston recently blogged about her wish list for EMRs, which includes:

• User-focused features like streamlined user log-ins, dashboards to centralize relevant patient data on a single tab or page, voice recognition and voice-to-text features, and ability to use wireless devices like iPads

• In addition to UI/UX elements, physicians and caregivers alike would be happier with a universal system or at least compatible systems across institutions which enable families and physicians to access data – like test results, prescriptions, and prior procedures – that are locked away in disconnected systems.

• A way to reduce the burden of documentation and data entry that falls on physicians and more so on nurses.

Here’s to hoping that one day we move to a post-EMR world where various IT systems and digital tools play nice together and where data is more easily accessed, transferred, stored, and analyzed.  Hopefully one day sooner, we’ll see big improvements in EMR technology and clinician satisfaction.

Data

Data originally shared at AmericanEHR Partners presentation at Healthcare Information and Management Systems Society 2013 Annual Conference & Exhibition; cited here from a March 18, 2013 article in AMedNews.com.