Doctor and patient by Shutterstock.com
Tuesday's Consumer Health and Wellness Summit in San Francisco, chaired by VC Lisa "Venture Valkyrie" Suennen, brought together an unusually wide range of participants and stakeholders, from payors like Aetna and United Health to consumer goods companies like Pepsico and Nike to investors like Sequoia Capital and Interwest to emerging digital health companies like MC10, Curious, and Zipongo to consumer organizations like the AARP and Consumer Reports.
Rather than comprehensively review the entire day, here's a brief summary of key points, followed by a longer discussion of the Sequoia presentation.
- There's often limited alignment between a patient's real-life, heartfelt goals, and the goals as distilled in a traditional medical model (Dr. Charlotte Yeh of the AARP made this point especially effectively). Most patients want to be happy, connected, engaged in their lives, dancing at a daughter's wedding. They're generally less passionate about their A1c levels.
- Most companies view their wellness programs as a means to employee retention, rather than a vehicle to reduce costs. The most important objective, from the point of view of the company that's paying for them, is keeping employees happy and engaged.
- Financial incentives - either rewards, such as paying for adherence, or punishments, such as penalizing for failure to use a wellness offering, are a disturbingly effective way to drive behavior change, but the resultant change isn't durable, and lasts only as long as the financial incentives persist.
- When designing healthcare offerings, it's essential to remember that, as Aetna's Amanda Goltz put it, "the consumer isn't always someone like you."
- It may be prohibitively difficult, a speaker said, to expect to both fix healthcare and make a lot of money - the pace of change is just too slow (someone described the healthcare system as a "calcified hairball"). The consensus (but not universal) view seemed to be that while the healthcare system may require disruption, entrenched interests will continue to effectively resist most change.
- One change we are likely to see is pharmacies positioning themselves as your new neighborhood provider; as SVP Dr. Jay Rosan persuasively demonstrated, this is clearly the Walgreens vision.
- There's such a thing as too much information. Dr. John Santa of Consumer Reports noted that too many choices can be bad for healthcare consumers, for example, while MC10 VP Amar Kendale highlighted a key goal of their wearable technology is to distill an abundance of information into an output that is simple and useful. Finally, anesthesiologist Dr. Adam Schlifke noted that a key challenge of incorporating data from consumer gadgets in a medical context is the need to present the data in a useful or actionable way, rather than in a fashion that just creates more work for harried physicians.
- There are some serious attempts to use consumer product approaches to impact "medical" outcomes in a measurable way - Omada Health (which I've written about here) and Asthmapolis were two examples cited. There's also the possibility that the user engagement achieved by elegantly designed gadgets like the Jawbone Up (the example cited by BD strategist Andrew Rosenthal) could potentially be leveraged for health; VC Michelle Snyder cited examples from Epocrates, where imaginative segmentation approaches were used to identify potential physician champions. Similar approaches could be imagined for driving adoption of emerging digital health technologies. I suspect digital health initiatives at academic medical centers (like the MGH/MIT CATCH [disclosure: I'm a co-founder] and UCSF's CDHI) could also help identify and empower such vanguard providers.
Perhaps the most strategically interesting - and unflinchingly direct - presentation of the day was by Todd Cozzens, a Healthcare Partner at Sequoia Capital. Cozzens joined the venture firm just last year; prior to that, he was CEO of health IT firm PICIS, which was acquired in July 2010 by United Health.
The arresting thesis: healthcare reform is unlikely to reduce overall cost of care, just move costs around. He noted patient access and empowerment will become increasingly important.
Cozzens presented four criteria for his healthcare investing:
- Does this offering solve a relevant problem (relevant meaning there is someone who will pay for it)?
- How big can this be?
- Are we sure this isn't too disruptive for healthcare (similar to "calcified hairball" concern described above)?
- Can this offering work in both a future fee-for-value world as well as in our current fee-for-service world (a world which is likely to remain dominant, Cozzens asserts, for at least the next 15-20 years)? He notes that while ACOs are much-discussed, they remain a very small part of the overall pie.
He views the most important healthcare consumers pain points as: cost (due to likely increased out-of-pocket expenses; he also notes that at the moment, consumers, financially, may not have enough skin in the game); access (he cited surveys reporting 90% of patient satisfaction involves access); and general health and wellness (he thinks about 40% of a patient's health is potentially modifiable by changing behavior).
Cozzens offered this fairly comprehensive summary of the opportunity space in consumer health:
|Large consumer growth areas||Who Pays||Pace of Adoption|
|Pers health data mgmt.||Patient||Slow|
|Gamification of prevention||Employer||Fast|
Not included here are big data/analytic plays, such as data warehouse Health Catalyst, a Sequoia portfolio company that just announced a major deal with Partners Healthcare in Boston. (Notably, this offering essentially sits on top of an [Epic, in this case] EMR, an area of opportunity discussed here; Recon Strategy's Tory Wolff and I offer an in-depth view of digital health opportunities and challenges here.)
As technology drivers, Cozzens cited the usual suspects: reduced cost of sequencing, ubiquity of mobile, power of computers/data, miniaturization of sensors. He warned that to really move the healthcare needle, you ultimately have to impact the patients who are the sickest - not easy to do. He also suggested targeting payors and employers right now, rather than providers (who he feels are still reeling from recent changes) or patients (who as a whole haven't demonstrated much willingness to pay for health, as noted above).
Most of the digital health entrepreneurs I've seen coming out of Rock Health and other accelerators seem to have reached similar conclusions on their own, and typically target payors and (especially) employers. I suspect there may also be unrecognized opportunities involving providers (e.g. ChenMed, Iora Health) and pharma (especially as the industry struggles to capture the value of incremental improvements).
Finally, and perhaps most interesting, Cozzens suggested that a key future opportunity will be the intelligent aggregation of existing apps and gadgets into a more comprehensive and impactful offering.
It's far too early to know if Sequoia's investments will pay off, but it's informative to learn how one of the Valley's most distinguished venture firms is thinking about this exciting and emerging space. While the ground covered is familiar, the framework seems useful.
The cynicism Cozzens expresses about both the impact of health care reform (anticipating no reduction in overall costs) and the speed of healthcare change (asserting ACO dominance not imminent) may be the most important takeaways of all.