International CES

January 7-10, 2014; Las Vegas, NV; Day #3 Highlights – Draft

Executive Highlights

We’re now back from Las Vegas, Nevada and the International CES, where 150,000 industry professionals (!) and 3,200 exhibitors gathered this year to discuss all things consumer electronics (for context, ADA 2013 had 17,737 attendees and 150 exhibitors). CES’ two-day Digital Health Summit finished up late last week, and we’ve included our highlights below.

Dexcom had a very newsworthy second day at the summit, headlined by CEO Mr. Terry Gregg and VP of Global Access Dr. Claudia Graham on “How Digital Health Saved My Life.” While neither shared significant new news on the company’s pipeline or priorities, it was valuable to hear Dexcom’s patient-focused goal: “to take some of the mystery out of diabetes.” In the day’s concluding Every Day Health Awards for Innovation, Dexcom’s G4 Platinum won the “Emerging Technology” category, beating out Navity (driver safety technology for medically impaired older drivers) and SenseGiz (detects crashes). This continues to support our belief that CGM is reaching a tipping point (see our Reflections on 2013 + 2014 piece for more on this theme) and will become increasingly mainstream in the coming years.

A great morning panel on the digital health ecosystem gathered several impressive panelists – Margaret Anderson (Executive Director, Faster Cures), Dr. Yan Chow (Director, Innovation and Advanced Technology, Kaiser Permanente), Dr. James Mault (Chief Medical Officer, Qualcomm Life), and Dr. Travis Stork (Co-Host, The Doctors/MD Live). The smart discussion touched on everything from healthcare reform to the role of the doctor to startups to patient engagement. See below for some brilliant quotable quotes from the discussion.

On the commercial side, we appreciated Mr. Wainwright Fishburn’s (Partner, Cooley LLP) discussion of business models in digital health. Most valuable were his stats on all the investing going into this area ($1.9 billion in 2013, up 39% from 2012), including three companies that raised over $150 million in 2013 (Proteus, Castlight Health, and ZocDoc). Mr. Fishburn also highlighted the most impactful trends he believes are coming, including prescribable apps (he specifically called out WellDoc).

Today’s report has quotable quotes from two of the day’s other interesting panels: “Your Trainer is Your Boss” and “Track-a-holism: A Disorder Worth Having.” Immediately below, you will find some of the key themes we observed throughout CES 2014: the explosion in activity monitors; how to sustain engagement over time; the line between consumer-oriented health technologies and FDA approved medical devices; business models and investing in digital health; data overload and provider liability; and passive data collection with invisible sensors.

As our third trip to CES in three years drew to a close, our feeling is that, with some notable exceptions, the digital health field for diabetes has not moved quite as quickly as many had hoped. Some of the most exciting players are Dexcom, Omada Health, Telcare, and WellDoc, though we expect hope to see several other new (e.g., iHealth Lab, YOFiMeter) and established companies (e.g., LifeScan, Medtronic) to enter the arena in a bigger way in the coming years. BGM and pumps are ripe areas for innovation in connectivity and analytics, though we hope to see much more happen in type 2 diabetes as well. In most cases, where the business models will succeed and profitability will come in is still anyone’s guess.

In case you missed it, you can find out Day #1 coverage here: Dexcom Share iPhone app and marketing in the exhibit hall; Glucovation looking to build calibration free, sub-10% MARD CGM with smartphone integration; Medtronic's Dr. John Mastrototaro on “invisible” sensors.

  1. A clear theme of CES 2014 was the explosion in activity monitors of all types – our question is how this trend will impact diabetes. The dream of many is passive activity data collection that informs diabetes management and therapeutic changes. However, a number of obstacles remain: 1) most activity monitors are still priced quite expensively for most of the market ($100+); 2) patients don’t like carrying more devices, which are expensive to lose and may not be fashionable; 3) current monitoring devices collect data, but do not turn it into actionable insights; and 4) few apps talk to each other in useful ways, let alone integrate with diabetes data. While this consumer market is becoming more mainstream, we would not be surprised to see the number of companies thin out over the years (simply given the sheer volume we saw in the exhibit hall). It was clear to us that Fitbit received the most attention out of any activity tracking company at CES; its products are now sold in 20,000 retail stores.
    1. It will also be interesting to see the impact of the new M7 chip Apple just launched. This has the potential to move passive health monitoring into the cell phone already in consumers’ pockets. It is possible that activity trackers could disappear entirely into phones over time…
  2. Panelists repeatedly wondered, “How do you sustain engagement over time in digital health?” Answers were typically of the same flavor: “You must try a lot of things!” That includes using devices, competitions, incentives, and making things social. We appreciated Mr. Derek Newell’s (CEO, Jiff) answer on the afternoon corporate wellness panel: “What do you engage in? Entertaining experiences. We don’t watch the same show every week. There are new episodes and new experiences to keep people engaged over time. One experience wears itself out.” The need for entertaining/novel experiences is particularly critical in diabetes, where disengagement is easy – high and low blood sugars are often “invisible,” hard work does not ensure success (i.e., “I did everything right and things still went wrong!”), and self-management can get boring (checking one’s feet is not the most exciting thing). To this end, we hope to see diabetes technology engage patients through novel experiences, personalized messaging, and dynamic feedback.
  3. Our trip to the exhibit hall reminded us of the fuzzy line between consumer-oriented health technologies and FDA approved medical devices. This theme was very clearly illustrated in our visit to the ANT+ booth, where we encountered the Glucovation CGM (see our Day #1 coverage). The key question is where the FDA will draw the line on this technology for a weight loss/diabetes prevention/sports indication vs. a medical device. Could a minimally invasive CGM fall into a similar category as a heart rate monitor, assuming patients without diabetes were using it to get “more information” about their body? Of course, the non-medical consumer approach has much lower barriers to commercialization. However, does it endanger patients with diabetes who might use it for medical purposes? Conversely, we wonder if Dexcom has the potential to commercialize CGM for the health/fitness space – while the pricing model is totally different, we wonder if many athletes and quantified self adherents would be interested.
  4. The business side of digital health is still an unanswered question – how are investors, VCs, and companies going to make a profit? Mr. Wainwright Fishburn (Partner, Cooley LLP) highlighted that digital health funding surpassed $1.9 billion in 2013, growing 39% over the previous year and more than doubling since 2011. His talk highlighted 16 companies that raised over $50 million in 2013, including three companies that raised over $150 million (Proteus, Castlight Health, and ZocDoc). However, he did not discuss his talk’s provocative title, “Breakthrough Business Models in Digital Health,” perhaps because there are few prime examples. It remains to be seen if the hype for some parts of this field will translate into profitable, sustainable business models over time. Diabetes companies Telcare and WellDoc have used reimbursement coding and coverage models while initially targeting employers and large payers to date, and we imagine more companies will go this route in the future. We’re certainly very excited about Proteus since it has such high potential to impact adherence. But the consumer-facing approach is a harder sell, in part because price sensitivity is higher.
  5. As we’ve heard in the past, data overload and provider liability are still major concerns. Several panelists were adamant that despite the benefits of seamless data upload to the cloud and real-time remote monitoring, doctors do not want all this digital health data constantly streamed to them. Instead, healthcare must strive for algorithms and smart analytics that manage whole populations and single out patients who need help. An open question is whether providers will be held liable when severe events go undetected in the deluge of data. As we understand it, it was this very problem – raw streams of patient data – that urged WellDoc co-founder and CMO Dr. Suzanne Clough to provide the impetus to create WellDoc. That theme was also carried through to the company’s new BlueStar product, which is focused on providing concise, analyzed data in a decision support report that fits into clinical work flow rather than disrupting it.
  6. The future is passive data collection with invisible sensors. Given the low rates of device downloading and the fraction of patients on CGM, we would agree there is much room to improve in the area of passive data collection. Panelists emphasized how medical devices need to fit into everyday life, go to smartphones, and work with existing technology. We think CGM is very much moving forward in this direction (e.g., Dexcom Share/Gen 5, Medtronic’s Connected Care), though it will be also key to get the hassle factor down through better backend data analytics.

 

Day #2 Highlights

Digital Health Summit

How Digital Health Saved My Life

In this fast-paced, wide-ranging session, several patients discussed and demonstrated the digital technologies that have saved their lives. We were elated to see CGM included alongside innovations like an exoskeleton that helped an amputee walk across the stage (what a compelling demonstration this was). This session was also a reminder of how “life saving” means many different things, including better quality of life. Dexcom CEO Mr. Terry Gregg interviewed Dexcom’s VP of Global Access and type 1 patient Dr. Claudia Graham.

Dr. Claudia Graham: Terry and I used to work at a company together. We sold the company, he retired, and then eventually went to work at Dexcom. I retired as well. One day he called me up and said, “Claudia, I want you to try CGM.” I have type 1 diabetes and have been in the technology game the entire time. I drove down to San Diego and tried the device. And I was so floored, and it worked. It was simple, accurate, and reliable. No one wants to be hooked up to CGM. But I found a device that was so simple and user friendly that I trusted it. That was five years ago. I have committed myself to increasing access to this product because it is so life saving.

We get letters from patients who say, “Why did I wait so long before I went on this? Why didn’t I ask my doctor sooner?” It is lifesaving. Insulin dependent diabetes is not an emergency every now and then. It’s every day. If kids take a couple units off, it could kill them. I wear this device 24/7. It’s the only device I insist on wearing at all times.

Mr. Terry Gregg: Our pursuit as a company is to take some of the mystery out of diabetes – it's a conundrum. It’s not just the food or exercise – there are stressors too. Our goal as a company is to simplify it so patients can stay between the lines. We port this information continuously to a handheld receiver. In the next generation, which is in our booth, you’ll see the product pending before the FDA: Dexcom Share. You take the receiver that Claudia has and plug it into a module. Using low energy Bluetooth, the data is ported to an adjacent phone, and that phone can send the data through push notifications to up to five followers (e.g., individuals that care about the person with diabetes). The simplest form is the child at school – if the parents are at work, they can be reading what the child’s glucose level is along with trends and alarms.

All of this is available through the digital health explosion. We’ll see a convergence of healthcare into utilities that we use every day. It won’t be too long before we port directly to the phone. There are regulatory challenges with the FDA, as we are a class III medical device. But I think the FDA is moving as quickly as it can. Our goal is to simplify – people with diabetes have multiple gadgets. They do get equipment fatigue. There are no holidays. Every day, Claudia has to do multiple transactions to stay alive.

All you must do is pick up the newspaper. We are at the epidemic stage with diabetes – almost 30 million people in the US. One out of every three children born in the US will develop diabetes sometime in their lifetime. There are 382 million people globally with diabetes, with over half a billion expected by 2035. I cannot stand up here and tell you when the cure is going to happen. We are in 20 artificial pancreas projects as a company to close the loop and make diabetes less mysterious. Until that time comes, we are developing these tools to make diabetes more user friendly for patients.

Dr. Graham: It’s a really simple patient-inserted device. The sensor goes under the skin and is the size of two human hairs. The sensor has a transmitter and communicates to a receiver every five minutes. I want to stay between 70 and 150 mg/dl. If I go outside the range, it alarms me. If I don’t detect a low blood glucose, it wakes me up at night. If I go high, I take more insulin. Having that information allows for success. It really is a life saving technology.

 

Dexcom’s G4 Platinum Wins the Everyday Health Award for Emerging Technology

The Everyday Health Awards for Innovation capped off the two-day Digital Health Summit. Submissions in different categories were judged based on four criteria: innovation, impact, implementation, and individuality. Notably, the Dexcom G4 Platinum won the award for Emerging Technology, beating out Navity (driver safety technology for medically impaired and older drivers) and SenseGiz STAR (wearable device that automatically detects falls/crashes). Said the moderator upon presenting Dexcom CEO Mr. Terry Gregg with the glass trophy, “The device is so cool I wish I had diabetes!” The “Patient Diagnostics” category winner was the SmartWatch (remote detection device for patients prone to convulsions and seizures), though we were glad to see Telcare’s BGM as one of three finalists. Other category winners were the Scanadu Scout (vital signs monitor) and the smart monitoring shirt by Cityzen Sciences.

  • A panel of expert judges selected three finalists in each category –Dexcom and Telcare’s categories had over 30 submissions each (though some overlapped between the two categories). Dexcom Share was a separate submission from the G4 Platinum, though it was not selected as a finalist – as we understand it, the contest required that devices had been approved by the FDA (Share is still under FDA review; it was submitted in July 2013). The winners were chosen via a 30% audience vote/70% expert judge vote.

 

The Digital Health Manifesto

This excellent morning panel touched on several areas of the health ecosystem, including startups, patient engagement/empowerment, the role of the physician, the payer perspective, healthcare reform, and more. Below, we’ve enclosed some of the most insightful quotes.

  • “One of the top areas of focus for startups is analytics. I think that’s going to be a huge area to develop in. Data is not information… Another area concerns the penalty for 30-day readmissions – that’s top of mind for many hospitals. Any solution that addresses that is going to get interest from hospitals.” – Dr. Yan Chow (Director, Innovation and Advanced Technology, Kaiser Permanente)
  • “I think healthcare investing has changed in a pretty profound way. In the past, it was about therapies, and therapies are about the FDA. That’s become more difficult, which is why money has drained away.” – Mr. Todd Hixon (Managing Partner, New Atlantic Ventures)
  • When people feel empowered, they become motivated. Healthcare is not something you do to a patient. It’s something you do with a patient. I call it being the CEO of your own health. – Dr. Travis Stork (Co-host, The Doctors; Chairman of Medical Advisory Board, MDLIVE)
  • FDA is having a heck of a time trying to keep up with technology. This creates a lot of uncertainty that’s pushing startups to go to the health/wellness space instead of the medical space.” – Dr. Yan Chow (Director, Innovation and Advanced Technology, Kaiser Permanente)
  • In medical school, we were taught to be a finger wagger. You should do this, you ought to do this. We need to recruit non-health people to become deputies in the health fight. The health people have never been able to figure out how to get people fresh fruits. It’s so frustrating to watch people die.” – Dr. Reed Tuckson (Managing Director, Tuckson Health Connections)
  • “Look at medication adherence, which is a huge problem in healthcare. Up to 80% of people don’t take their medications the way the doctor said. At least 55 factors have been associated with it, and most are irrational; most cannot be easily addressed by education. Even if the doctor yells at the patient, that only improves compliance 20%. People are looking to gamification and incentivization.” – Dr. Yan Chow (Director, Innovation and Advanced Technology, Kaiser Permanente)
  • “What’s the minimum viable product that generates the greatest value proposition for whatever target end user – that’s where they’ll be willing to pay for it.” – Dr. James Mault (Chief Medical Officer, Qualcomm Life)
  • “You have to have evidence. Medical care is a science-based entity. Generating the evidence at the speed of innovation is challenging. We’ll leave that as an unanswered question.” – Dr. Reed Tuckson (Managing Director, Tuckson Health Connections)
  • “What do you think about the next 20 years. Is the doctor really necessary? Can IBM’s Watson do the diagnosis? Can robots do the surgery?” – Audience question
  • “You should never replace the patient-physician relationship. A good physician not only treats the patient and physical symptoms, but the physician is a partner in health. [Digital health innovations] are going to make that relationship stronger.” – Dr. Travis Stork (Co-host, The Doctors; Chairman of Medical Advisory Board, MDLIVE)
  • “Our colleague Leonard Kish called patient engagement the blockbuster drug of the century. The more activated a patient is, the lower the cost to the healthcare system. Patients are not all created equal. Someone with diabetes in Alabama is completely different from someone with diabetes in Mississippi. It’s like a sweater – family dynamics, how you eat – it’s all woven together.” – Margaret Anderson (Executive Director, Faster Cures)
  •  “The whole point of healthcare reform is to look at healthcare as a holistic system. Most of healthcare should be outside the system. You’re trying to incentivize patients to change and be more empowered. In the past, the average length of time someone would be with a healthcare system was two to three years. What incentive is there to work on preventive health? In Kaiser, patients stay with us on average for 17 years. We’ve always been interested in preventive health.” – Dr. Yan Chow (Director, Innovation and Advanced Technology, Kaiser Permanente)
  •  “In technology, we’re finally moving from synchronous communication to an asynchronous model – one nurse can manage and monitor 1,000 patients in one day. But only with applying triage – a rules logic to monitor the patient population. ‘What I want to see are the 30 patients that have a problem today.’ Now you move from episodic care – once every six months – to continuous care.” – Dr. James Mault (Chief Medical Officer, Qualcomm Life)

 

Keynote: Breakthrough Business Models in Digital Health

Wainwright Fishburn (Partner, Cooley LLP)

Contrary to the talk’s title, Mr. Wainwright Fishburn did not discuss business models in digital health, which was very disappointing. However, it was fascinating to hear him discuss the “unprecedented” investment in the sector – indeed, digital health funding surpassed $1.9 billion in 2013, growing 39% over the previous year and more than doubling since 2011. The biggest fundraisers in 2013 were Proteus (ingestible sensor for medication tracking), Castlight Health (healthcare platform for employers), and ZocDoc (online medical care scheduling) – each raised over $150 million. The $100-150 million range included 23andMe (genetic testing), Practice Fusion (web-based EHRs), Evolent Health (helping healthcare system move to value-based care), Care.com (online caregiver directory), and PatientSafe (mobile patient care). The slide also displayed companies that raised $50-100 million: Airstrip (patient data accessible via mobile devices), Audax Health (online gaming, content, and community), One Medical Group (new model for primary care), Fitbit (activity monitors), Best Doctors (online case review with top doctors), Teladoc (24/7 online access to board certified physicians), Sotera Wireless (vital signs monitoring), and Watermark Medical (home-based testing for sleep breathing disorders). Mr. Fishburn highlighted the six “key verticals” investors look at in digital health: wellness/fitness, chronic disease, transitional care, aging in place, clinical trials, and telemedicine. Mr. Fishburn’s talk concluded with a view on the three momentous near-term changes/companies he is excited about: 1) Humetrix (mobile access to personal health records); 2) digital apps as prescriptions (“a fundamental breakthrough – he highlighted WellDoc); and 3) onboard, implanted sensors that are always on.  

 

Track-A-Holism A Disorder Worth Having?

Ms. Leslie Ziegler (part of the founding team at Rock Health) moderated this interesting panel on self-tracking, data, and quantified health. Panelists weighed in on device design, applications to healthcare (vs. just wellness), sharing of data, and payer perspectives. Below, we’ve enclosed some of our favorite comments.

  • “Thinking about aesthetics and fashion first – there’s something to be said for that. People want a high degree of individualization. There are only a couple colors of iPhones, but there are thousands of cases. People want to express themselves with devices. Watches are not as much about telling time as they are an accessory.” – Robert Rhinehart (CEO, Soylent)
  • “Sometimes color is good enough, but plastic and rubber are not for everybody.” – Kristian Tarnhed (Product Planner, Sony Ericsson Mobile Communications)
  • Sleep is an underrated element of healthcare.” – Dr. Daniel Kraft (Faculty Chair, Singularity University; Founder, Bioniq Health)
  • “Now instead of paying out of pocket, $100-200 for a device, payers will start to cover it. Look at Omada Health – it’s not just a sensor, it’s a community. They’ve taken prediabetics and put them in a social construct with a connected scale. They’ve taken an old model and put a new spin on it.” – Dr. Daniel Kraft (Faculty Chair, Singularity University; Founder, Bioniq Health)
  • “I use digital health in my personal life and business. In fact, I used time trackers to track how much quantifying I’m doing every day. With all this quantifying, we want to move from quantifying to optimizing ourselves. What will it take to get to that point?” – Audience Question
  • “I think the biggest obstacle is monitoring eating. The calories taken in and the quality – right now, you have to track it manually.” – Mr. Jin Lee (Chief Technology Officer, Salutron)
  • “Look at the potential of something like Watson – the upside is so high. What incentives could we offer people to share data? For instance, health insurance premiums would be lower if you were doing a lot of healthy behaviors and were willing to share data.” – Mr. Robert Rhinehart (CEO, Soylent)
  • “We’re in the quantified self 1.0 era right now. We will eventually get to patches, connection in cars and the home, and a movement way beyond wearable. Imagine having a GPS for healthcare. You car has lots of sensors, but you only learn about a problem when the check engine light goes on.” – Dr. Daniel Kraft (Faculty Chair, Singularity University; Founder, Bioniq Health)

 

Your Trainer is Your Boss

This panel addressed the hot topic of workplace wellness, starting with moderator Ms. Kristin Van Busum’s (Manager, Health and Advisory Services, RAND Corporation) summary of a pertinent RAND survey (“A Review of the US Workplace Wellness Market”). She characterized the results as “discouraging” – though about 50% of employers are trying to promote wellness in the workplace, less than 20% of employees are actually participating in such programs. Most notably, the study found that cost savings were neutral, which “went against a lot of the hype that was out there.” With that backdrop, this panel highlighted best practices in workplace wellness from several experts in the field. Below, we’ve enclosed some of our favorite quotes from the panel.

  • “With most corporate wellness programs, you go and get blood taken. That blood is sent to a third party, and some company you don’t know is going to call you and tell you the results. That’s an awful human experience, but clinically, it’s the right thing to do. You have to create human experiences that are wonderful. It’s not about user interface; it’s experiences. If you give people real-time feedback on their behavior, it’s effective. The old model was you get stuck, you talk to a nurse, and then a year later you see a nurse again. We need real-time feedback. It’s a dramatically different human experience.” – Mr. Derek Newell (CEO, Jiff)
  • “We’ve been working with payers, and we were offering a free device to a subset of their employee population. It was part of a broader program that they were piloting. The first couple employees we reached out to said “no.” People said, “I don’t want my employer to have access to that level data about my life.” This is someone (your employer) who already has your medical record information. It was an interesting problem that we weren’t necessarily prepared for.” – Ms. Christine Robins (General Manager, BodyMedia; VP of Business Development, Health and Wellness, Jawbone)
  • What do you engage in? Entertaining experiences. We don’t watch the same show every week. There are new episodes and new experiences to keep people engaged over time. One experience wears itself out.” – Mr. Derek Newell (CEO, Jiff)
  • “How does SC Johnson recruit? They use their wellness program as a recruitment tool for engineers. These are 20 year-olds, fresh out of university. They are going to Racine, Wisconsin. Every employee pays $100 a year; and you don’t get hired if you don’t participate.” – Mr. Paul Lockington (Global sales Manager, Dynastream Innovations/ANT+)
  • “Not everyone is created equal. Jawbone builds really nice stuff. You have to have solutions that mirror or match. We have a device for the everyday person. It’s low cost and not much money to replace. You’ve got to think about the holistic experience and meet the employee or customer where they are. You need options – otherwise you won’t engage everyone.” – Mr. Chris Boyce (CEO, Virgin Pulse)

 

--by Adam Brown and Kelly Close