Medicine in the information age
The Institute of Medicine found that 30 percent of U.S. health care spending in 2009 was waste. That’s $765 billion. And skyrocketing costs have ballooned at a rate that’s more than triple that of wages over the past decade.
Many believe information technology is health care’s last hope for reducing waste and capping costs. With more than a trillion dollars worth of fruit hanging from branches of all heights, health care most definitely has the tech world’s full attention, and there are a host of federal financial incentives set to go into effect soon.
Amid this landscape, it’s no surprise Colorado is home to a notable and growing cluster of health care IT companies. Some provide tools to the masses to help manage their own care, some are aimed squarely at health care professionals, and others still look to bridge the often unwieldy gap between the two.
“Ultimately, information has been underutilized in health care,” says Evan Marks, vice president of informatics and strategy at Denver-based HealthGrades. “It’s been used by pharma and device manufacturers, but in terms of the broad application of informatics, health care has really lagged.”
Marks says the reticence of the industry to adopt new technologies led to numerous mandates and incentives in the Affordable Care Act (ACA). “Efficiency in other businesses is really rewarded, but in health care, the sloppier your business was, the more money you made. With the ACA, a lot of the disincentives have changed. Hospitals are no longer rewarded for bad behavior.”
According to Marks, the health care industry needs to self-assess with the tools afforded by modern IT. “Just like every other business, whether they’re an assembly line or a bank.”
HealthGrades has been doing just that since 1998. With about 200 of its 600 Denver-based employees, the formerly publicly traded company was taken private in 2010, but its core business remains the same: to offer consumers information on practitioners and hospitals.
The company evaluates health care providers on 35 procedures and practice areas from hip replacement to neurosurgery and delivers the results to the public via HealthGrades.com and BetterMedicine.com.
Marks says the company helps cut costs by allowing for analytics-based targeted marketing campaigns, rather than billboards and direct mail. “When those campaigns are ill-informed, the costs associated with producing materials and reaching a largely inappropriate audience are high,” he says.
More importantly, the rankings help guide patients to hospitals where outcomes are best, lending to lower incidence of mortality and malpractice. Patients can have up to 10 times higher mortality rates at the lowest-ranked facilities.
“Consumers can evaluate hospitals based on positive outcomes,” Marks says. “These outcomes are typically associated with lower costs.”
Traditionally, this information has been unavailable, but not anymore. Still, the public has a learning curve to climb. Using outcome-based data “is not how people typically choose their doctors,” says Marks. “Consumers haven’t been trained; that’s part of our mission.”
And likewise it is part of WellTok’s mission. The Denver-based company has about 50 employees after closing on $18.7 million in Series B funding in April.
“WellTok is at this very interesting intersection between health care and the cutting edge of social media and technology,” said former VP of Communications and Marketing Brad Samson. “The big problem with health care is getting people to engage with their own health.”
Samson says the ACA assumes people want to be engaged, but he doesn’t think that’s necessarily the case. “A lot of the things the government is doing are ‘step two’ engagement levels,” he explains. “It’s ignoring the reality that there are a lot of people sitting on the couch ignoring their health.”
WellTok is starting with a “step one” engagement model. “What motivates people?” says Samson. “It comes down to very traditional kinds of appeal: fear, greed, hunger.”
To this end, WellTok incentivizes people to actively participate in various health care programs or take specific actions with free pedometers and financial rewards. “You get them in the door with greed,” says Samson. “Every activity in CafeWell earns you coins and then every month your coins are tallied up into entries for a gift card.”
But social rewards quickly supplant financial ones – such as walking competitions. “People get very motivated by having this new social circle,” says Samson.
Indeed individuals have grown accustomed to receiving financial rewards for completing health risk assessments (HRA), but social rewards can be effective as well. “We had one client program that got 25 or 30 percent of members (completing an HRA) who were just as happy,” says Samson. “It’s a complete change of how we look at things.”
Feedback has included comments such as, “Thanks for getting this fat, old man out of his armchair,” says Samson. “People see it as a lifeline. That’s where these technologies are making a difference – changing behaviors people have today.”
Founded in 2008 by Peter Hudson and Wayne Guerra, both medical doctors, iTriage is also trying to help consumers make better health care decisions. The 100-employee company was acquired by Aetna in 2011 and its app has been downloaded more than 8 million times, garnering testimonials from users who credit it with saving their lives.
Guerra says unnecessary care adds up to more than $100 billion annually. “When a lower-cost option is available, our users are selecting emergency departments 40 percent less. That’s huge,” he says.
A beta release of iTriage Trends went live Sept. 27, allowing site visitors to click on a map and see the top medical conditions searched in the vicinity.
Hudson – who received the Entrepreneur of the Year Award from the Colorado Technology Association Sept. 10 at the APEX 2013 Conference awards dinner – says the big trinity of health care is payers, providers and patients. “If you don’t have that third party – the patient – involved, you’re not going to succeed,” he says. “There’s a lot of things that need to occur, but having an engaged, informed population is really important.”
Beyond an active, engaged public, doctors must change their ways, and companies like Aventura are attempting to help. The Denver-based company’s genesis stemmed from an initiative in 2008 to virtualize clinicians’ desktops at Denver Health, and it spun off as an independent company in 2009.
“The desktop is the last frontier for virtualization,” says CEO and president John Gobron. The 32-employee Aventura, which closed on $4.3 million in new funding in September, aims to solve this problem. “We can deliver a virtual desktop to a clinician anywhere.”
The status quo involves nurses and paper notepads. “When their pad gets full, they go to their nursing station and input vitals and other data,” says Gobron. “It’s as inefficient as it gets.”
Doctors represent a different problem. “Doctors are so mobile,” he adds. “They’re on three floors. Connecting the physical world to the virtual world is a big challenge.”
Gobron cites To Err is Human, a book published by the Institute of Medicine, that estimates 80,000 annual deaths due to errors, often related to bad handwriting. “It’s the equivalent of a jumbo jet crashing every day,” says Gobron. “We help prevent that.”
The ACA mandates adoption of electronic health records (EHRs) via fines and financial incentives. Though roughly half of paper records have been digitized to date, doctors’ adoption-rate has lagged, says Gobron, and data is often not shared between facilities.
“Clinical health care is so complex,” says Gobron. “There are only so many things you can put in a drop-down box. We cannot hardcode workflow.
“The entire health care system benefits from EHRs, except the doctors who have to spend less time in front of patients and more time in front of computers. That’s where companies like Aventura can step in.”
Aventura’s “awareness computing” platform helps with EHR implementation as well as improved security and mobility for iPad-loving practitioners.
“Hospitals are getting pinched,” says Gobron. Since nurses are typically a hospital’s top expenditure, Aventura’s ability to improve nursing efficiency is one answer.
But clinical productivity gains can only go so far, he adds. “Outcomes are better and costs are lower when … we get people to take care of their own selves.”
In other parts of the world, this is understood.
“In Japan, a physician is paid by your lifetime health care costs,” says Gobron. “They talk to you about your holistic well-being.”
In the U.S., adds Gobron, “We’re headed over the health care equivalent of the fiscal cliff. With an aging population, we have to get better. That’s where technology comes in.”
TriZetto is the big dog on the local health care IT block with about 900 of 3,800 employees worldwide at its Greenwood Village headquarters, newly opened in April 2013. It’s also the biggest such dog in the world.
“We are by far the largest health insurance IT company,” says Dan Spirek, chief strategy and marketing officer. About 180 million patients use their turnkey solutions for payers and providers. “We pay more claims than anybody,” says Spirek.
From this lofty perspective, Spirek says the industry is a different animal than most. “Health care is the only industry where you can consume services and leave without paying for them,” he says. “It’s dine and dash at a restaurant.”
Spirek argues such a system is inherently fiscally unstable, especially if you take into account the dominance of faxes and notepads. “It’s analogous to what banking looked like 30, 40 years ago,” he says. “The people in health care want to do it their way and that’s an impediment across the board.”
He adds that technology has the potential “to reduce the cost of care but also improve the quality.” He touts the new health care exchanges stemming from the ACA as allowing patients “to act like adults and choose their own health care rather than their employers.”
With all the activity in health care IT, the mile-high city has emerged as a hotbed for like-minded startups.
Denver-based Presm is “a next-generation patient portal,” says co-founder Kevin Fredrick. “We integrate with existing clinical software – medical records, scheduling systems – and serve as connective tissue between people who need information.”
Fredrick says the three-employee Presm is gunning for federal certification before launching in “the near future” to benefit from the coming boom in spending thanks to ACA incentives to modernize health care IT.
“The irony to me is parts of health care are very sophisticated when it comes to technology – imaging systems, for example – but when it comes to basic uses of technology, health care is way behind. The fax is still the most popular communication method for a lot of doctors. Companies like Presm are trying to change that.”
Denver-based CirrusMD is bringing health communication into the 21st century with HIPAA-compliant text and video-chat technology. The model calls for doctors to resell it to patients for $40 a month and it can be a huge time-saver for both patient and provider.
“It pays for itself,” says CEO Andrew Altorfer. “It captures a substantial amount of margin back into the system and also gives the doctor an incentive.”
Technology has the potential to cure medical inefficiency and misguided allocation of resources, he adds. “One of the biggest costs boils down to inefficiencies, whether it’s paper inefficiencies or handwritten notes. Who wants faxes at this point in time? Statistics show doctors spend roughly half of their time with administrative tasks and they are an expensive commodity. Their highest and best use is getting in front of patients and that’s what they want to do.”
Altorfer says the fee-for-service model is broken. “The patient has to go in for a visit for the doctor to get compensated,” he explains. “That adds inefficiency to the system.” Fee for access offers a streamlined alternative.
CMO Mike Biselli describes the Denver-based startup as an online marketplace for medical devices that cuts out the middleman. “There’s no reason we can’t create a direct connection between buyer and seller,” he says.
Biselli says MedPassage is seeking a $750,000 bridge round and working with several pilot customers. “This is a huge beast we’re dealing with,” he says.
“On a broad level, we’re starting to see health care listen to the voices of the startup community,” adds Biselli. “We didn’t see that a few years ago.”