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Our data-driven predictions on what could happen in healthcare in 2018
2018 Digital Health Trends
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W I T H I N 2 4 H O U R S
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@cbinsights@nikillinit
#cbihealth2018
J O I N T H E C O N V E R S A T I O N O N T W I T T E R
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W H O W E A R E
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Nikhil KrishnanA B O U T T H E A N A L Y S T
Nikhil Krishnan is a senior analyst at CB Insights, where he produces data-driven analysis and research reports on trends in digital health, ag tech, and construction. He sends the weekly Digital Health Insights newsletter to 30K+ members. His research has been featured in The Economist, New York Times, Wall Street Journal, and more.
Prior to joining CB Insights, Nikhil worked at Uber, the Small Business Administration, and Relationship Science.
Most popular analyses by Nikhil:
Oscar Health Insurance Strategy Teardown
Apple In Healthcare
@nikillinit | nkrishnan@cbinsights.com
Senior Analyst
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Contents
1 3
2 1
2 7
3 5
4 9
5 5
Increased M&A of digital health companies
Health giants get into each other’s business lines
Tech giants push further into healthcare
Virtual trials increase in frequency
Lab testing incumbents see challenges
Medicaid becomes a focus area
6 4
7 1
7 8
8 5
9 6
Medical research into smartphone and internet usage on mental health
More companies will target the intersection of sleep and healthcare
Increasing use of light in diagnostics and therapeutics
New patient financing options
Blockchain hype continues to be just that
13
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Increased M&A of digital health companies
14
Digital health M&A has been declining
Digital health first exits, 2013 - 2017
Digital health M&A
Digital health M&A has been on the decline as a result of increasing available private capital, high valuations, and hesitance from existing healthcare incumbents.
15
Corporates are bringing money to the US
Wall Street Journal
16
J&J chief Gorsky bullish on tax reform, plans $16B in repatriated overseas cash
January 10th, 2018
We’re already seeing money being spent
1717
Digital health companies could provide complementary areas of expertise to
different corporates
Some possible areas of interest…
18
Pharma corporates can use digital health to reach consumers directly + find AI expertise
Possible acquisition areas:
• Companies like Recursion Pharmaceuticals and Atomwise could be attractive targets for their AI + biology expertise.
• As pharma moves into services, digital therapeutics could offer complementary services (Omada Health, Pear Therapeutics, etc.)
• Asynchronous telemedicine companies can use services and direct-to-consumer distribution for off patent, low risk products.
19
Medical devices corporates can find UX and software expertise
Possible acquisition areas:
• Wearables companies which can provide consumer and user experience expertise (Jawbone, Owlet Baby Care, etc.)
• Companies that sell devices to improve the efficiency of doctors (Augmedix, Simplifeye, etc.)
• AI-enabled medical devices (Alivecor, Bigfoot, etc.)
20
Tech giants can find companies knowledgeable in healthcare analytics + data sources
Possible acquisition areas:
• AI-enabled medical devices (Alivecor, Bigfoot, etc.)
• EMRs or APIs that sit between providers, labs, and consumers (Kareo, Health Gorilla, etc.)
• Existing players that have established their own distribution and relationships for a tech company to use as a jumping off point (Express Scripts, PillPack, etc.)
21
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Health giants get into each other’s business lines
22Health Care Cost Institute
Consolidation = price increases?
Despite utilization going down, prices continue to go up across the board. While there are several factors that could contribute to this, a leading one is the number of pseudo-monopolies created through consolidation, allowing giants to price higher.
Prices keep going up
23
Walgreens Said to Tweak Rite Aid Deal to Gain U.S. Approval
September 18th, 2017
You can only consolidate so far
24
Entrance of tech giants is forcing existing incumbents to bundle services together
VS.
2525
“I think there are 3 things triggering [the CVS-Aetna acquisition]. One of them is Amazon, not quite explicit yet what they’re
planning on doing but whatever it is it’s scaring CVS.”
John Rowe,
Aetna Ex-CEO
CNBC
T H E A M A Z O N E F F E C T
26
Large line-crossing initiatives will force others to respond
Large acquisitionsCo-branding + partnerships New business lines
$69B Acquisition
$4.9B Acquisition
Joint Individual Health Plan
Joint MedicareAdvantage Plan
Hospital Groups Creating Company to Make Cheap Generic Drugs
January 18th, 2018
27
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Tech giants push further into health
28
Media attention on tech giants in healthcare is increasing
29
Tech companies are coming to healthcare
As software becomes a point of differentiation in healthcare, tech giants have an advantage with expertise in the area as well as direct relationships with consumers.
CB Insights
Tech giants are investing in healthcare2012 – 2017 YTD (5/18/2017)
30
Former FDA Commissioner joins Verily and more digital health hires
May 18th, 2017
Talent With Health Expertise Is Going To Tech
31
Tech companies are working with regulators
32
More health patents are being filed
Patent: Turning your phone into a monitoring device
Patent: Automated abdominojugular reflux test
Patent: Wireless heart rate detection
Patent: Nutritional information/diet monitoring for augmented reality
33
Executives are talking most about Amazon
3434
“We should all be acting like Amazon is getting into our business, because frankly we have to create a crisis to
think about how to be more effective and efficient”
Alex Gorsky, Johnson & Johnson CEO
35
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Virtual trials increase in frequency
3636
Step 1: Get pharma and biotech
companies comfortable with mobile studies
37
ResearchKit is demonstrating the benefits of mobile studies
• Enrollment is much larger, faster, and less expensive to acquire participants
• No overhead means no significant increased cost with scale
• Environmental data is captured as well as data during an episode (e.g. seizure)
3838
“To get 10,000 people enrolled in a medical study normally, it would
take a year and 50 medical centers around the country”
B E F O R E …
Alan Yeung MD, Medical Director at Stanford Cardiovascular health
3939
Apple enrolls 11,000 people in a heart study in one day
More than 48K are participating in MyHeart Counts today
N O W …
40
How Purdue Pharma Hopes To Use The Apple ResearchKit
May 1st, 2016
Drug Companies Are Testing ResearchKit
41
23andMe conducts at-home studies…
4242
“23andMe’s research platform is currently the world’s largest consented, re-contactable database for genetic
research. This data will lead to a better understanding of the biological mechanisms of disease, and accelerate the discovery of novel treatments through human genetics.”
Fortune
…and is making its own drugs
4343
Step 2: Demonstrate benefits of
site-less trials
4444
Site-less Trials: Uses mobile tools, continuous remote monitoring,
and telemedicine to recruit patients, distribute supplies, monitor their reactions, follow their
progress, and analyze the results
45
Physical sites are expensive for trials
Department of Health and Human Services
46
Science37 delivers end-to-end fully virtual clinical trials using telemedicine, mobile, and remote workers
Select Investors
Lux Capital, Sanofi-Genzyme Bioventures, Redmile Group, dRx Capital
C O M P A N I E S E N A B L I N G V I R T U A L C L I N I C A L T R I A L S
Funding
$66.5M
S I M I L A R C O M P A N I E S
$5.83M $130K$3.94M
47
First site-less trial completed, more to come?
“AOBiome Therapeutics Reports Positive Efficacy Results from Phase 2b Clinical Trial of Ammonia Oxidizing Bacteria (AOB) for the Treatment of Acne VulgarisThe Phase 2b study was jointly conducted with Science 37, a clinical research company, that has pioneered a ‘site-less’ clinical trial model with its proprietary mobile technology, the Network Oriented Research Assistant (NORA®) used in the trial to capture real-time data from patients at their homes.”
PR Newswire
48
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Lab testing incumbents see challenges
4949
Lab testing saw
$53Bof industry revenue in 2017
IBISworld
50
November 22nd, 2017
Medicare will cut payments for clinical
lab tests by $670M next year
Medicare reimbursement changes are starting to pressure the industry
51
LabCorp has started investing outside of testing, Quest Diagnostics has been focused on consolidation
Lab testing companies diversify?
Feeling the pressure from lowered reimbursements, lab diagnostics companies like Quest Diagnostics and LabCorp might look to private markets for other business lines. LabCorp has increased investment activity into other businesses in the last year, Quest has focused on acquiring labs.
5252
…as a small start-up plan, Clover had little negotiating power with giant lab companies. So Clover started pushing back on the
claims, telling the labs that it lacked sufficient proof that the tests were medically necessary. The startup outlined a list of items that it needed within 30 days before paying these bills. Rather
than adhering to Clover's demands, the labs turned around and billed the patients – Clover's elderly members.
CNBC
Could insurers get into labs?
53
Athelas develops instant, at-home blood diagnostics for oncology care.
Select Investors
Sequoia Capital, Initialized Capital
S T A R T U P S A R E B R I N G I N G S I N G L E F U N C T I O N T E S T S D I R E C T L Y T O C O N S U M E R S
Funding
$4.08M
O T H E R S I N G L E T E S T S
$5.5M
(Metabolism)
$1.64M
(STD testing)
54
There are more test to bring home still
55
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Medicaid becomes a focus area
5656
Medicaid covers 68M Americans
Medicaid.gov
57
It’s a big part of the budgetTotal State Budget Including Federal Assistance, FY 2015
MacPac
28.2%
19.5%10.1%
42.2%
Medicaid
Elementary AndSecondary Education
Higher Education
All other
58
Proposed Louisiana health care cuts eliminate mental health, substance abuse, adult day care servicesMay 1st, 2016
When regulatory flux settles, states will have to figure out how to manage care with less
59
States are spending more
States are expecting their spend to grow faster due to an increasing number of people enrolling in the aged and disabled groups, high cost prescription drugs, and provider rate increases.
Kaiser Family Foundation
-4.0%
3.2%
6.8%
10.5%
3.5%
3.9%
5.2%
2.3%1.5%
5.3%
13.2%
3.9%
2.7%1.5%
2012 2013 2014 2015 2016 2017 2018Projected
Medicaid Enrollment
Total Medicaid Spending
Medicaid spending is outpacing enrollment2012 – 2018 projected
60
Chronic disease and mental health are interrelated and unmet for Medicaid members
have below fair mental health
have >1 chronic condition
people have mental health/chronic conditions such as comorbidities
of total Medicaid dollars goes to 20% of Medicaid enrollees with behavioral health conditions
Kaiser Family Foundation
26%
48%
38.6M
48%
61
Non-medical issues need to be addressed for the Medicaid population
• Housing issues
• Food insecurity
• Violence (domestic abuse and otherwise)
• Transportation
• Healthcare system complexity
62
Companies are addressing specific issues such as……transportation …enrollment and benefits
explanation… engagement and follow-ups
63
Or they’re taking a holistic approachCompanies are working within high Medicaid concentration communities
Total Raised: $20.8M Total Raised: $9.72M
64
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Medical research into smartphone and internet usage on mental health
6565
Nomophobia: Fear of being without access to a
working cell phone
66
High screen time is starting to be linked to depression and suicide
SagePub
67
Social media sentiment is turningSean Parker, Facebook ex-president
“I don't know if I really understood the consequences of what I was saying, because [of] the unintended consequences of a network when it grows to a billion or 2 billion people and ... it literally changes your relationship with society, with each other," Parker said. "It probably interferes with productivity in weird ways. God only knows what it's doing to our children's brains.”
Marc Benioff, Salesforce CEO
"Here’s a product – cigarettes –they’re addictive, they’re not good for you, maybe there’s all kinds of different forces trying to get you to do certain things. There’s a lot of parallels [to social media].
I think that for sure, technology has addictive qualities that we have to address, and that product designers are working to make those products more addictive and we need to rein that back."
Chamath Palihapitiya, Early Facebook Employee
It literally is a point now where I think we have created tools that are ripping apart the social fabric of how society works. That is truly where we are.The short-term, dopamine-driven feedback loops that we have created are destroying how society works. No civil discourse, no cooperation, misinformation, mistruth.”
68
Investors are taking a stance
“There is a growing body of evidence that, for at least some of the most frequent young users, this may be having unintentional negative consequences…growing societal unease is at some point is likely to impact even Apple.”
-Open Letter From Jana Partners And CalstrsTo Apple Inc.
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
-Larry Fink’s Annual Letter To CEO’s
69
Onward is building a new approach to addiction recovery.
D I G I T A L A D D I C T I O N S T A R T U P S A R E C O M I N G U P
Funding
$2M
7070
“According to the research studies that Onward conducted for the past year, 1,400 self-identified pornography addicts and 2,500 screen over-
users showed some interesting results.
Roughly 89 percent of Onward’s users reduced their screen time and the amount of time they spent watching pornography and 51 percent of those surveyed stopped watching porn entirely. Meanwhile, screen time users saw a reduction in their social media usage that equated
to 75 fewer hours spent online per year.”
A P P S C A N F I G H T A P P S ?
71
2 0 1 8 D I G I T A L H E A L T H T R E N D S
More companies will target the intersection of sleep and healthcare
72
Why sleep is an attractive area
1. Can target health-conscious buyers + people pay premiums to improve sleep
2. Creates valuable datasets to understand sleep and health relationship
3. Another avenue to create direct-to-consumer relationships
ZZZzzz…
7373
Sleep apnea affects 25M+ People In The US
American Academy of Sleep Medicine
74
There’s more interest and studies being done to understand the role of sleep
36
5966 70
76
91
113
164
2010 2011 2012 2013 2014 2015 2016 2017
Number of journal articles with “Sleep” in the title
(via Nature)
75
Apple is looking into the sleep ecosystem
Acquisition of a sleep tracker Sleep tracking is built in to the personal health record
Studies building on Apple tools
The Apple Watch can accurately detect hypertension and sleep apnea, a new study suggests
November 13th 2017
76
Wearable makers are following suit
Fitbit Ionic smartwatch introduces blood oxygen sensor
August 28th, 2017
77
Different areas of sleep ecosystem are seeing developmentS L E E P A P N E A D E V I C E S S L E E P A S S I S T A N C E
S L E E P S E R V I C E S S L E E P C O N T E N T
78
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Increasing use of light in diagnostics and therapeutics
79
DermaSensor is designing a handheld sensor that will be able to evaluate skin for potential cancer in seconds using spectroscopy
S T A R T U P S U S I N G L I G H T F O R D I A G N O S T I C S
Funding
$4.5M
O T H E R S T A R T U P S
Otoscope Malaria detection
Allergen detection
80
New chips, hardware, and light applications can turn phones into diagnostics tools
81
Tech companies want to use light to improve monitoring using hardware you’re around
Patent: Uses a camera, an ambient light sensor, and a proximity sensor to monitor different biomarkers
Patent: Uses optical sensors and light projections to determine the functionality of different organs, starting with cardiovascular health
82
Improving phone cameras + UV light + faster processers = mobile fluorescence microscopes
Fluorescence Detection: By combining disease markers with antibodies and shine different wavelengths of light and look under a microscope to see if cells are affected. This is useful for disease diagnostics, like malaria (below).
Nature, CDC
8383
“We describe here a compact smartphone-based fluorescence detector for mHealth. A key element to achieving high sensitivity using low sensitivity phone cameras is a capillary
array, which increases sensitivity by 100×. The capillary array was combined with a white LED illumination system to enable wide spectra fluorescent excitation in the range of 450-
740 nm…Moreover, the capillary array required a sample volume of less than 10 μl, which is an order of magnitude less than the 100 μl required for the plate reader. As fluorescence detection is widely used in sensitive biomedical assays, the approach described here
has the potential to increase mHealth clinical utility, especially for telemedicine and for resource-poor settings in global health applications.”
NCBI
Using smartphones in fluorescence detection is useful in low resource settings
84
Neolight is a medical device company that develops phototherapy beds to cure jaundice in pre-term and full term babies.
P H O T O T H E R A P Y : U S I N G L I G H T A S A T R E A T M E N T
Funding
$3.48M
P H O T O T H E R A P Y S T A R T U P S
Skin Conditions Neurological disorders
85
2 0 1 8 D I G I T A L H E A L T H T R E N D S
New patient financing options
86
High deductible plans are becoming popular, making consumers “shoppers”Share of workers with $1000+ annual deductible for single coverage
Kaiser/HRET Employer-Sponsored Health Benefits Survey
31%34%
38%41%
45%
51%
2011 2012 2013 2014 2015 2016
87
Paying for care is becoming difficult for people
Kaiser Family Foundation
63%58%
27% 37%
10%5%
2015 2017
Don’t know/Refuse To Answer
Difficult To Pay
Easy To Pay69%
64%
24% 31%
7% 5%
2015 2017
57%50%
34%43%
9% 7%
2015 2017
Monthly Health Insurance Copays Deductibles
88
They’re postponing care due to inability to pay% of respondents or immediate family that have done the following due to costs in the last 12 months
Kaiser Family Foundation
12%
16%
21%
23%
27%
29%
32%
Had problems getting mental health care
Cut pills in half or skipped doses of medicine
Not filled a prescription for medicine
Skipped a recommended medical treatment or test
Put off or postponed getting care
Relied on home remedies/OTC drugs instead of seeing a doctor
Skipped dental care or checkups
8989
Companies are focusing on ways to make it easier to pay for healthcare
90
Like…insurance for insurance…?
91
Flexible healthcare lines of creditCompanies are helping with high-upfront payments via debt and credit lines
92
A healthcare company that originally started in patient and doctor matching + booking, recently released an HSA
Select Investors
Accel Partners, CRV, Highland Capital Management, Aspect Ventures
N E W C R O P O F H S A C O M P A N I E S
Funding
$44.4M
O T H E R H S A C O M P A N I E S
$10.2M$4.32M
93
Blockchain startups hope to turn patient data into money
94
Blockchain startups hope to turn healthy behaviors into money
95
Sempre Health's behavior-based, dynamic pricing solution uses claims and EMR data to predict the optimal price for the right patient at the right time.
Select Investors
Social Capital, Alchemist Accelerator
Funding
$2.54M
P E R S O N A L I Z E D P A Y M E N T C O M I N G T O H E A L T H C A R E ?
96
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Blockchain hype continues to be just that
97
Blockchain in theory addresses problems acutely faced in healthcare
• Data governance + interoperability
• Authenticity of goods and fraud management
• Faster + rules-based authorizations and adjudications
98
ICO funding is taking off, an easy way to get lots of money for an early stage project
CB Insights, TokenData
99
Media is looking closer at how blockchain can impact healthcare
CB Insights
100
We’re starting to see healthcare ICOS
101
Across different parts of healthcareI D E N T I T Y + P R I O R A U T H O R I Z A T I O N
S U P P L Y C H A I N T R A C K I N GD E C E N T R A L I Z E D E M R S
T E L E M E D I C I N E / S E C O N D O P I N I O N S
102
Gem Partners With Philips for Blockchain Healthcare Initiative
April 16th, 2016
Corporates Are Slowly Piloting Systems
103
Massive price swings demonstrate volatility in the space
104104
Lack of regulation, eager investors, and the promise of new technology
has made this area attractive for new companies
But there are virtually no products, users, or success stories yet
105105
The SEC is devoting a significant portion of its resources to the ICO market. Through statements, reports and enforcement actions the SEC has made it clear that federal securities laws apply regardless of whether the offered security—a purposefully broad and flexible term—is labeled a “coin” or “utility token” rather
than a stock, bond or investment contract. Market participants, including lawyers, trading venues and financial services firms, should be aware that we
are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections.
Wall Street Journal
The crackdown on bad actors is coming
106
Questions?Twitter: @nikillinit
nkrishnan@cbinsights.com
107
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Nikhil Krishnan
nkrishnan@cbinsights.com
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