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As Apple and Google Swarm Healthcare, StartUp Health Shares Lessons

 |  By smace@healthleadersmedia.com  
   August 05, 2014

By one measure, the amount of money invested in healthcare startups in the first half of 2014 exceeds the total amount invested in all of 2013. The co-founder of StartUp Health talks about where innovation is headed.

While the healthcare industry struggles to meet its mandates and stay in business, players outside the traditional industry have not been idle.


Unity Stoakes

Google recently announced its Google X Baseline study to map the human body. In June, Apple launched its new Health app and HealthKit developer tool, to build an application platform for innovative mobile solutions. IBM promptly signed a deal with Apple to integrate its Watson analytics platform with Apple's technology. And Samsung announced it was investing $50 million to accelerate innovation in personal health.

By one measure, the amount of money invested in healthcare startups in the first half of 2014 exceeds the total amount invested in all of 2013.

To make sense of what some of these investments mean, and why they are happening now, I turned to StartUp Health, a global three-year "academy" for health and wellness startups. The 71 companies participating in StartUp Health have collectively raised $150 million in capital across seven countries. Nearly half (47%) of these companies were founded by physicians or practitioners.

I recently spoke with co-founder and president, Unity Stoakes, who is also a founding member of the Society for Participatory Medicine.

HLM: So what startup areas are hot now versus six months ago?

Stoakes: Big data and analytics is definitely still hot, but in different ways. We had a company, Aver Informatics, announce an $8.5 million round. They take bundled payments data and use that to find price efficiencies in the marketplace, on behalf of payers and employers. Everything related to sensors is gaining a lot of traction.

There's been the story of how those have impacted the consumer landscape. But now you're seeing them integrated into hospitals as an example.


So you take our company IntelligentM, where they're tracking how providers or clinicians or healthcare workers are washing their hands. Not just 'did they move by the sink?' but did the correct motion happen for 15 seconds? …Did they wash their hands when they entered the room, when they left the room, when they went by the syringe, when they left the syringe?

So using sensors in very interesting ways. The price of sensors has come down so much. They're getting smaller, so they're being integrated into everything, and the data's now being connected to things in very interesting ways, and now you mix that with the big data and analytics platforms, they're able to analyze this data in more interesting ways.

HLM: What's your opinion of the head-mounted display area and how real that is? There's been some high coverage in the press of places like Beth Israel Deaconness and places like that. There seems to be a lot of grassroots interest in Google Glass, but do you think it's the right time to be building entire companies around that platform, given that it's so new?

Stoakes: We're really in the first inning of the innovation cycle in terms of those types of technologies. You have to start there. They're very rudimentary. A lot of the details around privacy, for example, haven't been figured out.

There are applications of those types of technologies that will proliferate much more quickly than other areas, so for example, surgeons adopting something like Google Glass and using it as an instrument during surgery might be a lot more relevant than some futuristic concept where every nurse is wearing one and it's got the patient record on it and things like that.

There's going to be very tangible, practical use cases where we'll start to see traction, and then over the years, as the technology gets better, as it gets more affordable, as it gets more useful, we'll see those types of tools used in many exciting ways.

HLM: I write about health information exchange, and issues such as patient ID and master-patient index technology. Do you see startups bringing interesting things to the table right now to help providers with those knotty problems?

Stoakes: Yeah. One of the core concepts around what we're doing at StartUp Health is that there's going to be this army of entrepreneurs and innovators that are going to be the ones rebuilding the solutions for all of those types of issues in the marketplace.

The big challenge we have now is really bridging the gap where the entrepreneurial ecosystem understands the marketplace needs, understands the true problems that the industry has, so they can start to build these new solutions, rather than just build something that looks cool or seems like a good idea.

HLM: There was a revolt in Georgia recently. All the doctors gave the CEO of a regional medical center a vote of no confidence, because their EHR implementation was bungled. It was a Cerner implementation. They voted him off the island. He is out. What is the opportunity for a whole reimagining of the EHR itself, due to so many botched implementations of them, and they're so heavyweight, so ancient in their pedigree?

Stoakes: There really is an opportunity for a leapfrog effect in that. We as consumers have come to expect a certain ease of use. We're used to our iPhones or our Androids. We're used to our Nest devices now. We're used to things just working in simple ways [and delivering a] beautiful design and user experience.

The truth is, providers and doctors and nurses expect the same thing, too.

So when they're in their day-to-day lives doing their job, and the tools during their work day don't work as elegantly as what they're using as a consumer, that's a problem. But it's also an opportunity, so I believe these challenges are going to be resolved pretty quickly over the next few years, by a leapfrog effect.

HLM: It seems the incumbent EHR vendors have thrown up all these opportunity roadblocks, of the meaningful use program, certification – this thing that does a thousand different things, probably none of them well. It's a roadblock to new entrants. We're either going to have a revolt, like those doctors in Georgia, or something's going to change so that new entrants can get to the playing field and the opportunity.

Stoakes: We saw this in the software industry years ago, where there would be bloated software, where there would be very complicated computers, and then over time, consumer-friendly PCs came to be, or consumer-friendly software, or Web-based tools came to be.

It takes time, but one of the good things we're seeing happen is, design and user experience is becoming as important as the actual engineering of these new solutions. Healthcare is a unique opportunity in many ways.

The safety issues, the diligence that's required to create solutions, but also the regulatory environment, as well as the established industry is so key to the solution here. The music industry or the travel industry can sort of go around entire aspects of the industry. In healthcare, much more of a collaborative approach is required, so that the innovation works with regulation, and works with the established industry.

They really need to work together in unison in order to be effective. Whereas in other industries, you can bypass completely. That being said, I still believe there's an opportunity, and I believe the entrepreneurs are going to be the ones that end up solving these big challenges that industry has today.

Next week: The conclusion of our conversation, including what a global "academy" for healthcare startups does, the role Apple and other new entrants will play, as well as more about centers of innovation within healthcare providers themselves.

Scott Mace is the former senior technology editor for HealthLeaders Media. He is now the senior editor, custom content at H3.Group.

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