This past week I served as co-chair of the second annual Mobile Healthcare Industry Summit in London. Fresh off a red-eye flight into London Tuesday morning, I joined Qualcomm’s Vice President of Healthcare Don Jones on-stage to conduct a one-on-one interview for the more than 100 attendees present. Jones outlined a number of strategies for mobile health startups, batted away a number of oft-cited challenges for the mobile health industry and offered an insider's perspective into how the key stakeholders of wireless health view the opportunities today.
BD: This morning's discussion is focused on whether 2010 is "The year of mobile health". Don, you and I were talking earlier: "Mobile health" is not a term that Qualcomm uses. Why is that?
DJ: Well, we use the term "wireless health" for a couple of reasons. One, is that we sell wireless technologies. So, it’s rather direct from that perspective. But the other thing I like to say is that "not all mobile health is wireless" and "not all wireless health is mobile". A lot of the opportunities that we see using cellular technology actually don’t require that the end-user device actually be mobile itself. So, if you think about all the different kinds of radio technologies that are involved in our industry—ultra low power radios, WiFi, personal body area network technologies, and then moving up through to the wireless wide area radio technologies—there’s just a lot of different technologies in that arena and when you look at the use cases there may or may not be a mobility issue. The mobility issue may be, for example, "How do we ship a product into somebody’s home?" That may be the mobile part. And once it’s in the home it may no longer be mobile.
BDD: The semantic issue is one we run into all the time. It can be confusing. I think your explanation is helpful.
Don, you joined Qualcomm at the end of 2002 and shortly thereafter was when Qualcomm inked a deal with CardioNet, which is still, to my knowledge, the only true pure-play wireless health public company out there today. That deal was back in 2003. Then, in 2005 you helped co-found the Wireless Life Sciences Alliance. That was about five years ago. Early last year, about a year and a half ago, you were integral to the founding of the West Wireless Health Institute in San Diego, in the US. Those are each big milestones from the past seven years. Getting back to this discussion as to whether 2010 is the year of wireless health, I'm curious: What’s really changed in the last 1.5 years, five years, seven years -- take your pick of the time frame. Any clear trend?
DJ: What was absolutely key in the last year and a half was that the mobile operator community began to raise their hands and ask: How do we play? Frankly, that wasn't happening much earlier than that. There certainly were pilot examples involving mobile operators around the world, but operators weren't saying: "We can make a difference in this space." "We can make a business in this space." It's clear now that operators (as we saw in an earlier presentation by Thierry Zylberbery from Orange) are going to form part of a new distribution channel for some of the important developments in the healthcare. It's an important distribution channel and one that brings economies of scale and devices.
It’s also something that the medical device industry is only barely beginning to wake up to -- the fact that there is a whole new distribution channel open to them and one that has appropriate scale attached to it.
BD: The presentation given earlier by Orange was very impressive, and from my experience anyway, not the type of approach I have seen from US mobile operators. Is it fair to say that mobile operators outside the US have made more strides than those in the States?
DJ: I think that operators around the world have historically struggled with what role they should play in the healthcare value chain. Some of the carriers don’t want to miss the next big opportunity. They don’t want to miss being the AppStore for healthcare. But they don’t know exactly where they fit in the healthcare space. One area where I think they may fit: We’re seeing some operators move into healthcare by operating PAC systems (picture archival communications systems) for hospital and health systems. These operators are in a good position to disrupt the current model. We’re now starting to see virtual or cloud based systems for picture distribution. It’s a classic model and it fits very naturally with the telco infrastructure. They can allow a hospital to afford purchasing a service on an ASP model as opposed to spending millions and millions of dollars in hardware costs. So, that’s an interesting angle from an operator perspective that can scale very large. Then, all of the sudden physicians and other health care professionals will be able to get the images they need on the devices they want. Whether that’s to a desktop or to a proprietary display system or to an iPad or a smartphone. Those all become possible. Even across an entire region -- an entire country. So that’s a very interesting big dollar play where operators could move up on the value chain quite nicely.
BD: So, that’s a service aimed at healthcare professionals. The presenter from Orange posited that the sweet spot for mobile health moving forward might be chronic disease management -- or personal health management in general. Would you agree with that?
DJ: Yes, but I’ll back up. [The PACS example] is an enterprise-based service, but that’s the starting point—it actually becomes part of the health management services as you start making images available to all users in the system. So that health management space is kind of a fuzzy area that sits in the middle and as you lay the infrastructure and put the health IT back end systems in place, then begin to add value in that health management piece in the middle. So, I would agree that the value is going to sit in the middle. It’s going to prove to be successful for those that can speak to the needs of the consumer and the end-users, but also speak into or integrate with the health IT systems. It's a perfect place for telcos.
BD: Let's switch gears. You meet with a lot of startups: Do you see any gaps out there? Any opportunities being ignored?
DJ: Well, I think what happens in health care and in the mHealth space specifically is that many times an entrepreneur comes up with an idea and says "I think I can apply connectivity to this idea" and launches it into a business. I think there are a couple of gaps that exist. One is an analysis of "Can I bend the cost curve?". The really good ideas have to have a positive answer to that question. They have an answer that says: If I do this, I can bend the cost curve. When we see projects that come along or ideas that come along that are really just "me too" plays -- meaning that you’re going to do something that’s already been done, but connected and it's probably not going to save any money. We’re not very enthusiastic about it. I don’t think the healthcare system is going to be very enthusiastic about it. So, first question: "Can I bend the cost curve?"
The second question to answer: Is there a place in the care pattern that the patient goes through where you can insert the new solution and actually have a touch point with the consumer or patient. Is there a practical place where you can insert your solution into and still bend the curve? Some solutions or some medical conditions don’t have particularly good insertion points and others have very, very good insertion points.
I’ll give you an example. Personal Emergency Response Services (PERS)—at least in some countries—happen to have a very good insertion point at the time of hospital discharge. At that point a nurse or a discharge planner can inform a patient that if they are going home today, they may need a PERS (personal emergency response service). At that point the patient is receptive. The caregivers are receptive, too. The family members are receptive. That’s a good insertion point. But if you don’t have a point like that in the chain, well, you may have a problem.
BD: And to that point Qualcomm in the past year re-launched the LifeComm brand as a PERS service.
DJ: We did. We did it with Hughes Telematics. So we’re essentially building personal emergency response on top of automotive emergency response services. A lot of the backend infrastructure is the same. We happen to believe that personal emergency response is actually a core function that can fit behind any number of medical devices. It’s particularly a telco function. It allows you to add value in a way that you might not have otherwise imagined. For example, you might have a monitoring solution that is monitoring someone’s electrocardiograms and you may be struggling with how to add value to this and actually charge the healthcare system or get a consumer to pay. You may be struggling with a value proposition with a few dollars, a few pounds, a few euros. If you add PERS as another feature of the monitoring device, then you may have created a solution that may now have $20, $30 or $40 of value for the end consumer. That’s because of the existing industry—the PERS industry—has already set a value proposition. So we’re a big believer that you can combine services to create values and sometimes pay for them in that regard. An implant monitor that’s monitoring a pacemaker or a defibrillator could easily be justified by adding a PERS as an addition component. All of the sudden, the manufacturer, instead of having to worry about how to pay for -- say $20 worth of connectivity per month -- now has the opportunity to actually provide a service on top of the monitoring component, which has real value to the consumer. They may actually be able to ask the consumer to pay for part of that service.
BD: The business model session is coming up later today, but since you mentioned it -- how are the payers coming along during this "The Year of Mobile Health" -- how interested are self-insured employers in the US and/or private insurance companies there and elsewhere reacting to mobile health?
DJ: So, from a payer perspective, or the "at-risk party" perspective, they are also at the table this year for the first time. And here’s what they are asking for: How do I have a relationship one-on-one with the end user? Most insurers have never had that kind of relationship. They’ve had a payment relationship with the provider community but never with the patient. We’re now seeing major global insurers -- insurers that are doing business in the US, Europe and other parts of the world, come and start to hold discussions on how they use technology to create relationships with the end-user, to communicate and create touch-points with the end-user. And I’m aware of a number of products that will launch in 2011 that are actually insurer-sponsored, payer-sponsored that are made to create that direct relationship between the end-user and the payer itself. That’s going to be here. They want that connectivity.
BD: In just the past few months, I’ve seen superficial smartphone applications in the US from private insurance companies. Very simple, find-a-doctor type services. That’s just the beginning?
DJ: Absolutely. That’s going to happen here in Europe, too. Several of the insurance carriers that sell in the supplemental or private insurance market are right now pursuing application solutions that have direct connectivity between the isuree and the insurance company.
BD: We have just a few minutes left for a couple more questions. As we discussed, you meet with many startups in wireless health. Is there one company that you discovered for the first time during the past 12 months that stands out?
DJ: Well, there are two. One that is just launching in the States is called Vitality. Vitality is going to bring forth a model in drug compliance. Essentially they have created a very simple system of a pill bottle — Well, I need to make a distinction between the two different markets. In the US we distribute pills through our pharmacies in bulk, not through a blister pack. This is a bulk distribution model. The pill bottle comes with a special cap and it also comes with a night light. The instructions for the consumer are as follows: Plug the nightlight into your bathroom or kitchen. Now your pill bottles are connected on the Internet. The pill bottle will blink when it’s time to take your pill. If you don’t take them, it will chirp. If you still don’t open it up, the system will call your cell phone and remind you.
But the real driver, the really interesting thing behind these pill bottles is their "re-order button", which is on the inside of the cap. So the consumer, as they are pouring their last pills out, says to themselves: "Guess I need some more". Literally, all they have to do is push the re-order button and more pills are on the way. So, that’s a transaction story. That’s the Amazon Kindle model applied to healthcare. That’s where the real value is. In the US market, the senior market, which is 40 million over 65 years old, the consumer uses more than $4,500 worth of medication a year. If you, as a telco operator, can become a part of that transaction cycle and manage those transactions, there’s huge dollars involved here. We are personal believers in something called personal supply chain management or essentially putting the re-order button for consumables, medication and disposables in healthcare on the product. Independent of the clinical reasons, independent of the therapy reasons, we are a big believer that the re-order button should be on the razor blade handle for the razors. It can be fairly disruptive to the whole distribution channel.
The other example and they are here today is a company called Great Connection. Great Connection is out of Sweden and developed a way of tapping into the ultrasound machines in physician’s offices and hospitals. Essentially, they allow the patient—more often than not, a woman who’s pregnant—to leave the doctor’s office with the fetal ultrasound on her smartphone before she’s really off the table. It’s very simple to install. You can remotely install to the ultrasound machine. The steps that the physician or technician needs to undertake is literally just inputting the cellphone number on the DICOM screen. This is an MMS system. It’s a classic telco model. It’s distributing big image files, but it allows all kinds of kinds of different business models. New moms are going to Tweet and share these images on Facebook as one part of the model. But as another part of the model, it creates a virtual PACS system. It collects all these images and allows them to be virtually stored and shared in ways that are important to the healthcare system. So, simultaneously it’s a consumer model and an enterprise model. So, very interesting. Very high interest from the telcos. Extremely high interest from the ultrasound machine manufacturers as well. I think if you think through how the consumers like to be able to gain access to their own images, fetal ultrasound are obviously a very emotional area and you can see how this might extend into mammography and other areas of images as well over time.
BD: See, I’ve heard of both those companies -- was hoping you might tell me about one I hadn’t heard about before! Also, I’ve heard you talk about that razor re-order button a few times. Just out of curiosity, is that actually happening, or still just a concept?
DJ: Well, Vitality is launching their reorder button. So, that is actually happening. The technology is inexpensive enough and cheap enough that we could actually see Schick or Gillette use that type of re-order system for their higher-end razor blades. It’s there as a concept. We happen to be focused on the healthcare market, but it’s certainly do-able from a technology perspective.
BD: Ok, fair enough. So, final question. Challenges for mobile health. The ones most often mentioned are: Hype, the prevalence of hype in the industry could be a danger. The idea that mobile health having "no clear business model" is sometimes associated with a perceived lack of investment in the space. And finally: Murky regulatory environment. That may depend on the market, but it is certainly true in the US and some other places. Which of those challenges do you think is the biggest threat? Any other challenges?
DJ: I’ll answer with a modification. I think the biggest threat is a little bit of ignorance about viable business models among those trying to come up with mHealth solutions. I think there are plenty of viable business models. I’ve seen many that are perfectly acceptable. The challenge is not to develop one business model, because there are many business models. You saw that in addressing the different constituencies of the consumer market vs. the professional market vs. the enterprise market where health management sits in the middle. There are many models. In order to make these business models successful in this industry we have to have the wireless industry—the telcos and the operators—understand the healthcare industry, and the healthcare industry, understand the wireless industry. What’s murky right now is that the two industries are just beginning to understand each others languages, capabilities and feature sets. As a result we see some ideas come forward that are ill-conceived. That’s where the frustration comes from is that they are mismatches.
I think when we see matches, they come together very naturally. CardioNet is a great example: Almost half a million people served. It became a public company because it was a good match. I think we’re going to see more good matches. From an investment perspective, I’m not at all disappointed with the investment side. You have dedicated funds coming to the market: The West Wireless Health Institute launched a $100 million investment fund. (Ed Note: WWHI has not launched an investment fund - we have heard mentions of a future plan, but nothing has been launched. The $100m figure is the approximate amount invested in WWHI itself, to date.) Qualcomm has been after the investment space as have other global 1000 companies. A number of the big name venture funds has been active. I think it’s just going to be hard to measure sometimes: What is mHealth? I think there will be a lot of blurring. I think that at the end of the day a lot of what we talk about is really just applying connectivity to existing models. It may be difficult to track the different revenue streams that are driven by the healthcare applications. So, I'm not at all worried about how the investment cycle is coming along.
Look at a company like Carefusion which is almost a $4.5 billion company with almost all of its products wireless. Most of them, though, are wireless in the WiFi world. They are not wireless in the cellular world. But why is that important to this industry? It becomes important as cost pressures drive people out of the hospital and into home settings. It’s the very products used in the hospitals that will be sent home with them. And they will use cellular based gateways to communicate. Why will they use cellular based gateways as oppose to WiFi based gateways? It’s for the following reason: You can’t count on people having broadband, can’t count on people having a wireless router with wireless coverage to the room where they will be using your device. Can’t count on them putting your medical device on their network and going through the security steps necessary to set it up -- and repairing the steps when they break. In order to ensure an easy to deploy -- out of the box -- "it just works" experience, cellular is being looked at by most of the medical device companies we see. This is literally a drop-ship kind of arrangement. You can have an out of the box experience with instructions that simply say: "Just plug it in and it works".
We’ve dealt with many companies that have pulled out their land line connectivity or pulled out their WiFi connectivity because it just didn’t work in a non-consumer product environment. When you have a consumer product, consumers are motivated to work and make sure that they get it on to their network. Even then there are a lot of failures. You’ve all had the experience dealing with your own at-home routers. But in the healthcare space, when you hand something to somebody, it has to work out of the box. You can’t ask them to be their own IT integrator.
BD: Thanks, Don. I'm afraid we're out of time.
