Healthegy Content Director Tom Salemi and Steve Krupa, CEO of the Psilos Group and host of the Breaking Health Podcast, break down the days events after the Digital Healthcare Innovation Summit in Boston. The pair offer their insights and comments on the day packed with intensive panels and interviews.
Stephen Krupa is an original Psilos partner, joining the firm at its inception in 1998, and currently serves as its Chief Executive Officer.
Tom Salemi: Hey everyone, this is Tom Salemi. I am the Content Director at Healthegy, and you are listening to the Breaking Health Podcast. We’re going to do something just a little bit different today. We are just two days removed from our Digital Healthcare Innovation Summit, held in Boston at the Mandarin Oriental Hotel. It was a great day. We had over 300 people in attendance. We actually sold the event out. And as I said at the conference, we set the bar really high. Our chairman, Robert Mittendorff and our advisory board put together an excellent agenda, and put the precisely right people on that stage. But we also had many, many great folks in the audience. So you will be able to access the content from that day, not only what happened on stage, but I was able to do some individual interviews with some selected folks off stage. So we’re going to bring you a flood of content from the Digital Healthcare Innovation Summit. So stay tuned for that. Look at the Digital Healthcare Summit website, digitalhealthcaresummit.com, rather, is the website. And you’ll be able to access videos from the day. To sort of warm things up or start things off a bit, though, Steve Krupa, the regular and much beloved host of the Breaking Health Podcast and I sat down at the end of the day and literally went through the agenda and talked about the high points and the takeaways. So I hope you enjoy this particular Breaking Health Podcast. It’s a great review of the day. If you were there, it’ll probably jar some things that you remembered or that you were hoping to remember. If you weren’t there, it’ll give you a sense of what we talked about, and hopefully entice you to come back and visit and revisit the day with our video content. So stay tuned for this Breaking Health Podcast/Post Game Wrap-up of the Digital Healthcare Innovation Summit.
TS: This is Tom Salemi. I’m here at the Digital Healthcare Summit, the tail end of the Summit. It’s been a whirlwind day and I’m here –
Steve Krupa: Good job, Tom. This has taken a long time.
TS: Very happy to have you by my side, Steve Krupa. Steve is CEO of the Psilos Group and host of the Breaking Health Podcast. And we’re going to do something a little different here today. We’re going to try to do a little post game discussion.
SK: Yeah, post game analysis.
TS: So it was a whirlwind day. Started in the morning as most of these do. And I thought Todd Cozzen’s interview with Larry Renfro was fascinating, just in the fact that it was – how big Optum is.
SK: You know, sometimes you see a company that big, and you’re wanting to go do a startup, and you’re just, what’s the point?
TS: You’re just staring –
SK: They’re just going to kill me. They’re going to kill me and I’m not even going to remember I was alive. I will say that that was a business, very large business, built on, I think he admitted, about 80 acquisitions. So really their style is to aggregate other people’s ideas. And so really, they become an exit mechanism for investors. But they do kind of scare you when they throw their numbers out there. Twenty-billion-dollar backlog – ten billion backlog, $20 billion pipeline in sales, second largest PVM. So they’re really built pretty monstrous.
TS: As a VC though, do you hear the acquisition strategy and you go, Hm, that’ll be a nice outcome someday, a nice exit someday for one of my investments?
SK: Yeah. I mean I think that the truth is that Optum is not, in any of these areas, most of these areas anyway that we talk about in this conference, they’re not a leader yet in any of these areas. It’s going to be new businesses for them. They’ll wait until some, one or two of these companies begin to really show they’ve got a lock on something like value based care, and then they’ll go in and they’ll make a deal. And then they’ll be able to plug it into the insurance entity and then they’ll become a much bigger business. So they’re looking at this conference as to where they’re going to be expanding their business over the next ten years, probably.
TS: And that’s a nice segue, and we don’t need to go down through the agenda, but the next item was the value based care panel.
TS: Great. You’ve talked to Steve Wiggins on the Podcast and Anita Pramoda.
SK: Nice lady.
TS: She’s so optimistic and it’s contagious. And actually, we talked to Justin Steinman as well. I mean this is something that’s – it’s here. I mean we can stop talking about all this stuff theoretically.
SK: Well, yeah. I mean I think it’s small, right?
SK: But the construct is there and the will is there. And really, as we learned in the interview with Wiggins on the Podcast, it’s an idea that’s been around for a long time. He’s been advocating this idea. Now we’ve got a technology overlay that can handle the work. And so this is really where most of the future is headed, trying to figure out how to create episodes of care, contain the cost, and improve the quality of the outcome. It might be fee for service inside of that cost containment bucket. You might still be writing checks to providers on a fee for service basis, but an entity is going to manage that process, and they’re going to use technology to do it. And the probability of that being successful is very high. I would make one point. The interesting thing is I remember when we were looking at Obamacare way back when, seven years ago, and we were talking about the accelerating cost of healthcare. Some of the economists that looked at those analyses said, No, technology is going to come in and dampen the cost curve in healthcare at some point. They didn’t really know how, when or why, but they assured us that it was going to happen. When you begin to look at ideas like value based care and bundled payments and so forth, you begin to realize that in fact technology is going to come in and reshape the way healthcare is delivered in a more cost effective way, and dampen that curve over time, as this becomes more accepted. So I’m very optimistic when I see this kind of stuff.
TS: And we talked a little later in the day about interoperability.
SK: It’s a tough word.
TS: And it was a nice presentation to start, and Nancy Dentzer – Susan Dentzer, rather, sorry, from Robert Wood Johnson Foundation led a great discussion on that. But it’s also something that’s arrived that you can see. You know, there’s actually a base of data we can work from.
SK: There’s a base of data; it’s getting bigger every day. We’re learning how to integrate more pieces into it: genomics, consumer information, so two ends of the spectrum, if you will. And that’s going to tell us a lot more about patients. And we know that it’s a psycho-social model at the end of the day from the patient’s perspective in terms of how they take care of themselves and avoid continuing being very sick. And who doesn’t want to do that? Most of us do. But we don’t know how to do it, and we’re confused about it. So if we can coach people through that in the different ways by understanding their data and how to optimize that experience, again, we’ll be able to dampen the cost curve. One thing you won’t be able to dampen, I don’t think, is the cost of hospice and the last 6 months of life. But there was sort of a claim in there earlier in the day that said that if we could figure that piece of it out, maybe we could even save money there. And that’d be very interesting.
TS: Good point. And we went on to mobility and talked a bit about mobile devices and what it’s going to take to find their way into healthcare. And I think it was interesting; I think the number was at – and I’m drawing –
TS: Well, half – you’re right. Half of Internet service is now done via mobile.
SK: German –
TS: No granted, healthcare is trending that. But what was also interesting was the fact that there are users within the healthcare industry who are using mobile devices, even if their providers or their institutions, rather, haven’t adopted it yet. I mean the demand is there, it’s just a matter of the providers and the company, the hospital getting comfortable with the system.
SK: Well, I can tell you hospitals are very uncomfortable with the idea that mobile devices are being used inside of their four walls, and they don’t know what – how they’re being used, and they’re not secure. So there’s a great wave of innovation about how to secure that mobile data, how to create a surveillance network over what’s taking place, so that – you know, all sorts of legal issues –
SK: – can come up as patient data is floating around –
TS: There’s some real concerns, yeah.
SK: – in the airwaves. And so that’s a big issue. That’s probably leading the drive towards building these networks inside of hospital that the hospital controls in some way.
TS: Sounds like China.
SK: Yeah. But you know, I mean you don’t really want to have nurses texting across basically the public airways while they’re –
TS: No, it’s a very good point.
SK: – consulting on a case or something like that. So these networks are going to get built. The byproduct of that is you’ll be able to measure work flow in some hospitals eventually, by virtue of the fact that everybody’s got a smart phone, we know where they are, we know what they’re doing, we know what they’ve done, and we’ll be able to improve work flow, which is really a big issue in terms of the cost, staffing costs in hospitals. They don’t really understand that well how to staff. They generally will over-staff to avoid poor care. So the last thing that you want to have is a nurse unavailable to take care of somebody. But as they begin to get their hands around workflow, they’ll be able to optimize staff for time of day, weather conditions, etc.
TS: And population health, we hit upon that. And that was a great panel. Robert Mittendorff led that discussion. Peter Antall from Amercian Well, Chief Medical Officer, really talked about just how much – and this kind of led into a tele-health discussion. But how much examination can be done remotely, and how you can really engage a patient with your phone.
SK: Yeah. You can.
TS: And you can do a lot of diagnosing there. It’s not just a how’s it going kind of thing. You can really figure out and you can really see that person. He equated it to a home visit.
SK: Yeah, I would think. I would think so. You can’t obviously do a physical probing –
SK: – but you can certainly assess somebody’s condition and I think that’s going to be a very popular consumer product. And I’m looking forward to ways in which you can actually deploy that in more of a critical care setting. Very interesting as that begins to roll out.
TS: And Jonathan Bush –
SK: Yeah, I didn’t see that –
TS: I know.
SK: – so your job is to tell me what happened.
TS: He was a little energized, yeah.
SK: He always is. He always is. He’s a coffee drinker like you and I.
TS: He had a large iced coffee, and I’m sure there were a few shots of espresso in there. And he and Brandon Hull, who interviewed him, who was an early investor in Athena have a really great rapport. It was a nice back and forth. But his point about Athena was like, Look, the tech industry isn’t doing it. They’re not building this cloud based system for hospitals, so we’re being forced to do it. We would rather not do it, but we’ll do it if we need to.
TS: And really was very evangelical in his approach and really always energizing, as he is. So that was a great interview. And then we got into – I had a nice chat with Jason Gorevic of Teladoc. We gave him the Digital Healthcare Innovator Award. And he’s our first recipient of that, and I think given what they’ve accomplished over the last 6 years, including a really strong IPO in July, I think it was worthy. Now he’s learning life on a public market, which is a good problem to have, but it’s very different than being a private company. And he now –
SK: So how do you get this award? Do you get nominated by –
TS: Well, we have our internal system and we sort of look at the – we had a few candidates and we talked about it with our advisory board. And we, you know, we’re comfortable with our process, and we were thinking he was certainly deserving.
SK: Well, he deserved it, absolutely. Absolutely.
TS: Yes. And then we went – the conversation, and you sat through this, I think the analytics, and we talked about this in clinical insight with Bill Geary from Flare Capital Partners. I did interview Bill separately, but I missed this panel discussion.
SK: Well, it’s analytics is it. I mean my one takeaway from when you begin to sort of bring everything that’s digital health into one room, you begin to realize that every digital health product has an analytics component to it. It’s a core competency for any company dealing with data. So while there are actually analytics companies out there, if you’re a consumer engagement company, you’re deploying analytics. If you’re a value based care company or a bundled payments company, you’ve got to be deploying analytics. And it really is core to this entire industry that it gets better and better at organizing and coming up with information out of large data streams.
TS: And again, that’s here. And rise of the consumer, always a great conversation. I talked with Harry Leider from Walgreen’s just about their efforts to reach out, but there’s so much interesting stuff going on,
SK: And Walgreen’s knows the consumer.
SK: You know; I see all these startup health plans like Oscar that want to get into the health insurance business. I think the question was asked if Walgreen’s would become a health insurance company. I think he said no, and then I think he said, but maybe we would sponsor one. But he then said something interesting, which is a diabetic probably sees their doctor twice a year. They see a Walgreen’s pharmacist maybe 20 times a year. And if you want to connect to the consumer in a physical way, not necessarily solely a digital way, it’s taking place in the pharmacies. That’s where it’s happening. They are right there. And it will be very interesting to see whether they decide to do anything about it.
TS: Yeah. I mean a lot of them have the clinics and such and that helps sort of expand those healthcare offerings. But Walgreen’s is using digital technology to collect healthcare data about their customers.
TS: And they’re just doing it as a way to, they say, encourage health and to get people to come in and earn rewards and save money. But at the end of the day, five years from now, they’re going to have all this data on their customers. Now what do you do with that? Goes back to analytics. It’s got to have some value, right?
SK: Well, so I think Optum pointed out that they’re bringing someone in from Target to help them with the consumer side.
TS: Yeah, that’s right.
SK: I think Larry Renfro pointed out that he is looking for a door front or a façade, front entrance way into the consumer if he doesn’t really have a storefront to his business with the consumer.
SK: Aetna just brought in someone from the casino business to help them with their consumer –
TS: That’s excellent.
SK: – operations. So these health insurance companies are looking for knowledge and expertise in terms of how to market to consumers, right? Walgreen’s already knows how to do that.
SK: And they do it well. Really well. So if that’s the future of healthcare, you have to ask yourself whether they’re going to stake a claim in a bigger space other than the retail and pharmaceutical side.
TS: They’ve got Rite Aid now, so they’ve got some size and heft to go against CVS.
SK: They’ve got –
TS: That’ll be interesting to watch. Digital therapeutics – I didn’t –
SK: Why not, right?
TS: Yeah. I had a great talk with Sean Duffy at Omada, and is it tech or is it social? Whatever it is, you know, he’s helping people lose weight and helping them change behavior.
SK: Yeah. And I think, you know, the Breaking Health Podcast we did with Jan Bruce on stress and resilience sort of falls into that same category. What is the return on investment for digital therapeutics for patients, for employers? OK. Sean Duffy has figured out that he should be paid for helping people lose weight. I think that’s a pretty awesome revelation, that he can document that his people are losing weight. You know, if they’re losing weight, they’re going to have better outcomes one way or the other, and that he’s getting paid for that. Jan Bruce should be paid for improving people’s resilience and cardiac therapies could get paid for improving people’s heart condition. If we can really create that type of a model out there, and it’s tough to do – it’s tough to sort of get everybody behind it – then we’re starting to have like – healthcare is starting to look like every other business, right? Where people get paid for outcomes and results.
TS: Imagine that.
SK: Yeah, imagine that.
TS: What a concept.
TS: And we had Ulrich Muehlner from Novartis on that panel. I talked to Carolyn Zimmerman, who’s with DRX Capital, separately, which is a joint effort between Novartis and Qualcomm. So I mean pharma is hip deep in this as well.
TS: So –
SK: I think there’s a theory, and I don’t think touched on anywhere is that all drugs and therapeutics will ultimately come with some sort of digital product that’s attached to it. And they probably won’t get paid extra for it, but it’ll be just part of being – if you’re on a medication, particularly for chronic illness, that there should be some sort of an app and a digital sort of helper to work with that, like [it was?] when you put a pacemaker in or if you had a stent, that there ought to be some support that takes place in the digital infrastructure around those products.
TS: You would think so. I mean you just have your phone ask you how you’re feeling today.
TS: You walk up the stairs ten times, whatever you need to do, I mean it makes perfect sense.
SK: And it should be able to tell you how some of those devices are working, especially the pacemaker.
TS: Yeah, great point. Ryan Stewart from Leerink made a presentation.
SK: Good guy.
TS: He’s a great guy. I of course I missed that. Did you happen to catch it?
SK: I did. I mean it was – I think the message was there are a lot of innovations starting to make its way to the public market. I think the reception has been sort of up and down. Some companies up, some companies down. I think the public market understands Fitbit a lot better than they might understand some of these other models of care. You know, Fitbit’s a consumer product; it’s easy for retail investor and an institutional investor to understand as a sort of an innovation. But nonetheless, companies like Genovolon and eValent have made their way into the public markets over the year. And we’re starting to get some of these ideas that we talk about in this conference to become ideas that public equity investors are beginning to think about. But the results to date have been mixed if you look at the performance of the IPO’s. Some of them have done well, some not so well. And I really think that for this to be a big momentum into the public markets, they’ve got to start dong better. Nonetheless, the M&A market remains robust. People can build startups and sell them for pretty good prices.
TS: It’s always a good thing.
TS: Next we had precision medicine. Was particularly concerned about that.
SK: Yeah, yeah, that was mine.
TS: That’s right. And how did that go? What’s your takeaway?
SK: Well, I mean we had a nice conversation. Precision medicine is an odd thing for regular people to sort of digest. And I told the story of going in and getting a maternal test and a fetal test when I had my child recently. And it’s not a good experience for a pregnant woman to be told the probabilities of various birth defects as they go through that. But at the end of the day, when the testing was finished, and we were told that there was a 1 in 527,000 probability of our child having a birth defect, we both felt pretty good going through the rest of the process.
SK: So it worked. But the clinical interaction, if you will, between the doctors and us were a little bit clunky, and I think it’s because it’s a new way of interacting with patients. You know, doctors usually give you very high level stuff. You know, you’ve got this disease, this is the way we treat it. They don’t normally start dealing in probabilities with you. At least it’s not commonplace. So that’s one of the clinical challenges of precision medicine. But the other side of it is that I think it’s very clear that it’s a merger of drug development and diagnostic development with real computer science. The computer science is so awesome that the biological science becomes a lot more certain. So the ability to actually develop things that we’re trying to develop in precision medicine is there. And right now the infrastructure needs to be built, and we need to create business and economic structures to support the promulgation of this technology to the marketplace.
SK: It becomes a business building exercise. Which is great for VCs because that’s what we know how to do. We don’t necessarily know how to do science experiments.
TS: And it’ll be great to – I’m sure we’ll have this on our agendas going forward, and were going to track this industry, and I’m sure –
SK: It’s fun.
TS: – two or three years from now –
SK: I mean I could have just talked to these guys for an hour. It’s very sci-fi, very Gattica, you know.
TS: Gattica, nice reference. And I had the chance to talk with Pat Basu of Doctor on Demand, which is – I mean they pay their doctors. The doctors interact with patients via their phones, but they’re on staff. They’re essentially a doctor’s group with doctors –
SK: This is a great company. I love this company. I saw this company when it was very young in the very early days. And I think there was a lot of people that said this isn’t going to work. And God bless them. They’re making it work; it’s fantastic.
TS: And I know the concierge medicine has sort of a color to it, but this isn’t necessarily – this is not something for the wealthy. This is someone who can afford $40 for a visit.
TS: But what’s $40 if you miss a half a day of work or you gotta take a cab somewhere or something like that? I mean it all comes out in the wash eventually.
SK: It’s great if you can afford it and if we can figure out how to distribute it down through the insurance model. That would be even better. The insurance companies have concerns about this increasing utilization for unnecessary utilization. So if they can figure out a way of putting some controls around it to solve that problem, it should grow.
TS: It was an interesting point by Teladoc was that they said if – they actually – according to their numbers and they had a Harvard researcher do it and –
SK: Then they must be right.
TS: – then they must be right. But the numbers make sense. A patient who goes through a Teladoc visit is less likely to have a follow up visit because many doctors will write the script and say, you know, come back in three weeks and we’ll check up on you. That isn’t necessarily needed as much for the tele visits. It’s more of a here’s this, and they don’t tend to have that second or third visit that can lead to more cost. So they say that I think it’s a $700 savings per live managed or something like that. I’m completely maiming those numbers, but an argument could be made that there is cost savings.
SK: If there’s cost savings, it’s a massive one.
SK: And I would imagine, from what I know, the larger health plans are doing pilots to make an effort to try to measure that. It’ll be interesting if they’re able to do that. If they do measure it, and there is cost savings, this will go pretty far.
TS: Excellent. And Lynne Chou wrapped it up with a discussion about optimizing pharma. I got a chance to talk to Rick Morrison at Comprehend. And I mean clinical trials, if there’s anything more murky–
TS: – than healthcare, it’s how clinical trials are managed and how the data is collected.
SK: How the data is collected, how you find volunteers.
SK: And of course the more terminal the illness, it’s, you know, how do you find a volunteer to jump in there. And that’s one of the issues with precision medicine that we didn’t really get to get into, but if you’ve got a new therapy for cancer, how do you convince somebody to do it? Based on an old therapy, and how do you find them in time to get them into sort of a trial? How do you organize a trial? So we’re going to see a revolution and a change in the way clinical trials are done, and we hope that the FDA can keep up with that.
TS: Terrific. Well, it was a great day. Chairman Robert Mittendorff deserves a great deal of credit –
SK: He sure does.
TS: – for putting this together.
SK: Good job.
TS: And all of these panels will be available on our website, digitalhealthcaresummit.com. So they will be worth seeing. I know I’ll watch them again.
SK: You’re going to watch the precision medicine.
TS: I’ll watch the precision medicine for the first time. And but there’s a lot you – I think you missed the first time around.
TS: So I look forward to hearing those stories again. Thanks for the
SK: Absolutely. Thank you.
TS: Well, that was a lot of fun. Both the Digital Healthcare Innovation Summit Day and this sit down, wrap up chat with Steve Krupa. We’ll try to do some more of those in the future, and don’t forget, if you were not able to attend, or if you were able to attend, you can find the content. We’ll have it up soon as we can at digitialhealthcaresummit.com. So think you for tuning into this Breaking Health Podcast, and tune in next week when Steve will resume his series of interesting interviews with leaders in the healthcare space.