Issue 051.
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Digital health research from Brian Dolan.
Welcome to E&O.
Last week’s newsletter had a 55 percent open rate. Here’s what’s happening this week:
- Starting to see some smart takes on how the pandemic will change healthcare and digital health. If you haven’t read these yet, dig in to John Moore’s Chilmark Research site and this one (from a few weeks ago) over at Lisa Suennen’s VentureValkyrie blog.
- Seems like each week there is an update on Roche’s VR digital therapeutic for autism. The company announced it was partnering with Harman, a division of Samsung, to build the technology components of the offering. They hint it may lead to digital products for other conditions, too.
- CSL Behring, a large biotech company focused on rare diseases like hemophilia, von Willebrand disease (VWD), primary immunodeficiency (PID), hereditary angioedema (HAE), fibrinogen deficiency, Alpha 1 antitrypsin deficiency, and others — announced that it had tapped BrightInsight and Mobiquity to help it develop “digitally-enhanced treatment experiences and regulated digital health offerings to support” its therapies. The company expects the first such offering to launch this year.
- Pear Therapeutics launched the Pear Assistance Program, which “will provide access to reSET and reSET-0, free of charge, to qualifying patients who are currently under the supervision of a licensed US healthcare provider.”
- While I haven’t yet seen any official signs of that rumored $100+ million round Pear raised last year, a few others announced funding this week: Wellth raised $10M co-led by yabeo and Boehringer Ingelheim. Hikma invested an undisclosed amount into Altoida, which offers an FDA-cleared and CE-Marked Alzheimer’s predictive digital biomarker. Limbix, which is developing mental health-focused digital therapeutics for adolescents, raised $9 million led by GSR Ventures.
- New digital therapeutics startup to watch: North Shore Therapeutics, which is focused on digital psychiatry. Northshore Co-founder and Chief Strategy Officer Joe Powers was an initial lead for Headspace’s first foray into digital therapeutics.
* Finally, Facebook’s health ambitions are ramping up. The company has promoted its Head of Health Tech Research, cardiologist Dr. Freddy Abnousi to Head of Health Technology. It is now looking to build out the team around him with at least 10 new health tech positions: a new Director, Head of Health Tech Research, a Behavioral Health Economist, a Payer-Provider-Partnerships Strategy Lead, a PPG ML/Signal Processing Lead, two Clinician Leads, and more.
* One more thing: That PPG-related position at Facebook is surprising, isn’t it? The job description includes this: “Explore, research, prototype, design, develop and test signal processing algorithms to analyze raw sensor data.” This suggests most major tech firms will have some kind of A-Fib-related SaMD before long.
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Novartis gets EMA nod for Propeller Health-powered Breezhaler for uncontrolled asthma
Last week Novartis announced that the European Medicines Agency’s (EMA) recommended the approval of its Enerzair Breezhaler “as a maintenance treatment of asthma in adult patients not adequately controlled with a maintenance combination of a long‑acting beta2‑agonist (LABA) and a high dose of an inhaled corticosteroid (ICS) who experienced one or more asthma exacerbations in the previous year.”
The EMA’s recommendation now goes to the European Commission, which has 67 days to decide if the medical device should be granted market authorization throughout the EU.
Novartis claims that if it gets approval the combination product will be the first asthma treatment in the EU that can be prescribed together with a digital companion.
Propeller Health, which Resmed acquired in January 2019, built the sensor and app custom for the Breezhaler device. It enables once-daily inhalation use, and provides “patients with inhalation confirmation, medication reminders and access to objective data that can be shared with their physician in order to help them make better therapeutic decisions.”
If this product makes it to market it will mark a major commercialization win for Propeller Health. As Resmed CEO Mick Farrell said in October:
“As we outlined when we acquired Propeller in January, the digital health opportunity with respiratory medicine adherence will take time to build into critical mass. This quarter we passed a significant milestone with more than 100,000 people enrolled into the Propeller ecosystem. Let’s be clear, we are still in the early days of market development here. The analogy is that we are just lacing our shoes for the digital health ultramarathon in both COPD and in asthma. So, there is lots of terrain ahead.”
In May 2019, Farrell explained that a commercialization development, like the one Propeller is on the cusp of with Novartis’ Breezhaler, would likely flip the business unit to a profitable one:
“It is public [knowledge] that Propeller is working with some very large pharmaceutical companies, and some of them don’t want us to talk about it. But if any one of these pilots starts to commercialize, and [our customer] is comfortable with us talking about it publicly, we will update you on that. And this would then move very quickly from dilutive to accretive in a heartbeat… It is a medium- to long-term play. We are not calling the date, the time or the hour or the quarter that, that happens, but that is what the investment is around.”
Five business models for MSK-focused digital health startups
Business models might be overselling it. These are five of the most common go-to-market strategies that MSK-focused digital health startups typically fall into. At least one entrepreneur I talked to for this post referred to these as “orientations”.
These five orientations are also probably worth thinking through for any digital health company working in a therapeutic area that has surgery as a major cost-driver.
Direct-to-consumer.
Alright, we’ll make this one quick as its really only an early or ancillary way to go.
Self-pay options are available from some MSK digital health companies as an early way to get participants into a care program when the startup is just launching. As noted in the Hinge report, this was true for that company in its first year:
“That same month Hinge Health launched an arthritis tracking and exercise therapy program direct-to-consumer for a one-time fee of £149 (roughly $184). The offering included a welcome kit similar to what Hinge offers today: A tablet, two wearable motion-tracking sensors embedded in exercise bands, unlimited customer support, and a 12-month warranty on the hardware.”
As I wrote in the Omada Health report a few months ago, the other reason some digital health companies keep a DTC option around is for peer support. If your significant other or another family member has the same medical condition as you but doesn’t have the same employer health benefits, maybe they are willing to pay out-of-pocket to go through it together. Given some MSK companies offer small group peer support a la Omada, it makes sense that they might opt to offer a DTC option for family too.
Preventive – Surgery Avoidance – Conservative Care Treatment.
Right now this is the big category. Most digital health companies focused on MSK have prevention and surgery avoidance at the heart of their value proposition to self-insured employers and payers. I covered this in the Hinge Health report, as this is Hinge’s primary focus:
“54 percent of a company’s employee population is likely to be affected by some kind of MSK issue in a given year, according to data from The Bone and Joint Initiative… most employers recognize that MSK issues are at least a top-four area of spend for their organization.”
“Hinge also points to the medical literature to argue that 50 percent of MSK spend is wasteful, largely because 80 percent of employees with MSK issues do not receive non-surgical, preventive care. It then cites its own analysis of claims from 100,000 employees in its customer base, Hinge claims that 64 percent of MSK spend is on surgeries. Another 13 percent is spent on medications for MSK disorders. Hinge goes on to cite data that MSK issues are the number one cause of opioid use, absenteeism, and disability among workers.”
No one doubts that the number of MSK-related surgeries is higher than it should be or that too few MSK patients have access or take advantage of preventive care programs. It is difficult to determine which patients might be destined for surgery and which aren’t.
In this model, MSK digital health companies use some combination of remotely delivered therapeutic exercises, behavioral health, and education to make claims around surgery prevention. They show outcomes based on patient surveys and/or longterm billing claims analyses. Pricing is determined as a percentage of savings from the number of prevented surgeries, which can be considerable since MSK-related surgeries typically run in the tens of thousands of dollars in the US.
Some MSK digital health companies have surgery avoidance, which they may refer to as conservative care therapy or treatment, as part of their offering, but not as its sole focus.
Surgery Optimization and Worker’s Compensation
Not all MSK surgeries are preventable. Some are necessary following an injury, while others are deemed necessary for patients with chronic MSK issues. Maybe they tried one of the programs above, but they had lived with their chronic condition for many years and it had progressed to a later stage that could not be reversed.
For those patients who are going to have surgery, there is an emerging group of digital health companies focused on ensuring they have the best possible outcomes as quickly as possible. Peerwell is a good example of an MSK-focused digital health company that has this approach. Here’s what Peerwell CEO and founder Manish Shah told me in a recent interview:
“It is rare to find a complete white space in the healthcare delivery canvas. Early on we hit on this, and it was a surprise that it wasn’t being done anywhere in healthcare. It was around the surgery optimization experience or, more specifically, ‘pre-habbing’ people before surgery. Beyond that, it was the realization that there are so many things you can do to fully prepare a person for surgery. We didn’t look at physical therapy as the anchor for what was going to help this person through their treatment journey. With our medical advisors, we developed our five pillars, which are physical therapy, nutritional planning, pain and anxiety, health literacy, and environment.”
Here are a few ways those pillars can impact outcomes. Peerwell has found that patients with poor nutrition and higher blood sugar are more susceptible to infection in the OR and their wounds are also likely to take longer to heal. When people are told they are going in for surgery, their anxiety can be heightened because the prospect of surgery is, of course, scary. Peerwell offers a targeted mindfullness program specifically related to a future surgery. One more: Helping patients prepare their home environment for their return following surgery can help reduce falls and other accidents.
As noted above, MSK-related surgeries are expensive. If they are necessary, self-insured employers and other payers want to ensure they go well the first time and don’t need to be repeated.
Another area that is related to this orientation that Peerwell also has a focus is workers’ compensation. Workers’ comp is mostly MSK-related. Here’s Shah again:
“If you get injured on the job, it is usually some kind of musculoskeletal injury that pushes you into treatment. For us, that was a natural place to find people who would benefit from our product, and there is an alignment on the payer side. That could be the employer or it could be the fully-insured carrier. There is alignment to help that person through the duration of that injury to recover and get them there as quickly as possible and to reduce the medical spending associated with it as much as possible.”
Employers are typically paying the injured worker a majority of their pay in addition to paying wages and maybe training for a temporary replacement.
The claims that companies in this orientation can make include some of the ones above, like qualitatively assessing pain levels and looking at reductions in pain from beginning of program vs. end of program. Peerwell looks at a number of measures. For surgery, length of stay is a key metric. Where the patient goes after leaving the hospital — is it home or to skilled nursing facility? Do they need home health or outpatient PT? How much of it do they need? These immediate, post-surgery considerations soak up a lot of the spend associated with MSK. Peerwell’s published and in-the-works studies show reductions across each of those.
Centers of Excellence and Bundled Payments
Another go-to-market strategy for MSK-focused digital health companies is working with payers and providers participating in bundled payments programs. Medicare has piloted bundled payments programs for the past few years, and companies like Reflexion Health have touted this reimbursement model as an important one for MSK since at least 2015:
“Even before the CMS launched the [Comprehensive Care for Joint Replacement] initiative, Reflexion Health has been a staunch proponent of the power of bundled payments to positively influence joint rehabilitation care. Over the past decade, we’ve worked to innovate virtual therapy solutions that coordinate care on the bundled payment model between hospitals/surgical centers and preferred outpatient clinics or physician groups… while simultaneously offering reduced-risk solutions to payors.”
In this orientation, the digital health company provides the remote physical therapy platform as a vendor or partner to the health system, typically as an extension of their in-person practice.
Prescription-only digital therapeutics (PDTs)
In the next few years, it is likely a few MSK-focused digital health companies try to pull their digital programs through the FDA as a digital therapeutic, and, subsequently, seek payer support for marketing them as prescription-only digital therapeutics.
This is part of the roadmap for Kaia Health, which currently sells into self-insured employers and payers — like Hinge does. Kaia, however, has positioned itself as a digital therapeutics company with an eye on PDTs, so it is possible they try this route in the future.
Quick links to E&O research reports
The links below aim to make it easier for paying subscribers to find the long-form research reports on the E&O site:
The Digital Health Enrollment Report (Subscribers-only Link)
The Omada Health Report (Subscribers-only Link)
The Google Health Report (Subscribers-only Link)
The Pear Therapeutics Report (Subscribers-only Link)
The AliveCor Report (Subscribers-only Link)
Apple’s Healthcare Work Experience (Subscribers-only Link)
Approximating Livongo’s S-1 (Subscribers-only Link)
That’s a wrap for Issue 051.
