By Darius Tahir
Posted: September 6, 2014 – 12:01 am ET
Original Article from ModernHealthcare, can be found here
A new health IT firm called Omada Health, which recently secured $23 million in startup financing, is working with people at risk of developing diabetes to help them head off the full-blown condition. The company’s executives say they can achieve better results through electronic-service delivery than other providers have gotten through traditional face-to-face encounters.
San Francisco-based Omada, founded in 2011, has its clients interact online with a personal coach and a peer group who try to influence the clients to reduce their weight. The program combines use of online chat rooms and lessons, phone calls and remote electronic monitoring. Weight loss is checked by a digital scale, which electronically transmits the data to Omada staff. Customers are either screened through a questionnaire or by a blood test to confirm prediabetic status.
Mike Payne, the company’s chief commercial officer and head of medical affairs, said Omada’s model can be disseminated more widely than bricks-and-mortar programs, is more flexible for participants and enables better data-based decisions.
The vision of providing better, faster, cheaper and more consumer-friendly healthcare is shared by many digital health and telehealth startups. Such health IT companies have received $2.3 billion in investment money the first half of this year, according to a report from digital health accelerator Rock Health. These entrepreneurs are seeking to take advantage of a number of trends in U.S. healthcare, including more consumer cost-sharing and greater accountability by healthcare providers for costs and outcomes. Still, shifting healthcare services to the digital realm involves new challenges in ensuring quality and appropriate utilization.
Technology companies are rushing into healthcare, often led by people with tech talent but little or no healthcare experience. For example, Grand Rounds provides second opinions and access to specialists. Its founder, Owen Tripp, previously co-founded Reputation.com, a site that helps users monitor and defend their online reputations.
There’s also Doctor on Demand, a startup that gives consumers access to medical consultations by video. Before taking an interest in healthcare, founder Adam Jackson co-founded a website called DriverSide.com, which helped consumers navigate the car-buying process. Doctor on Demand recently raised $21 million in venture capital.
These types of entrepreneurs are “easier to fund because they know what they’re doing,” said Dr. Bob Kocher, a venture capitalist with Venrock and a former healthcare adviser to the Obama administration. They know how to build a technology business, whereas people with solely healthcare backgrounds often don’t, he said.
Healthcare is increasingly attractive to tech entrepreneurs from outside the healthcare industry, said Omada’s Payne, who previously worked for Gilead Sciences, a biopharmaceutical firm. “There are a whole lot of folks who have been developers and managers at tech firms who have made their money and are looking for something different to do,” he said. They are thinking of “returning something to society in a more direct way.”
Some investors say the technological expertise and insights that tech outsiders bring to healthcare could change the industry. Stephen Kraus, a partner at Bessemer Venture Partners who focuses on healthcare, said entrepreneurs with tech backgrounds are flocking to healthcare to apply their technical skills, particularly in cloud computing.
Venture capitalist Vinod Khosla said tech types from outside healthcare have fewer preconceptions and are more likely to try radical approaches that lead to breakthroughs. Healthcare companies also are in need of tech experts to design the sophisticated interfaces that consumers have come to expect from digital products and services.
It’s clear that a growing number of Americans are receiving healthcare services through digital delivery models. A Deloitte report projects that there will be 75 million electronic health visits in North America this year. Similarly, a recent survey by HIMSS Analytics found that 22% of hospitals were looking to invest in webcams and two-way video for serving patients.
Another company capitalizing on the growth of telehealth is Boston-based American Well, founded in 2007. It offers healthcare providers and insurers an electronic platform enabling them to provide physician visits via video. American Well works with Ascension Health, WellPoint and the Veterans Affairs Department, among others.
Dr. Roy Schoenberg, American Well’s CEO, attributed the growth of his company to the boom in health plans with high deductibles and cost-sharing, prompting patients to seek out lower-cost providers. Video visits also mean greater convenience. On average, it’s a two-minute wait for a physician when logging onto American Well, company officials say.
But the shift to video requires a rethinking of how to conduct the visit, said Dr. Peter Antall, a pediatrician and president of Online Care Group, a telehealth-only practice that contracts with American Well. It “takes some creativity” to get around the inability to touch the patient or immediately order tests.
The difficulty of ordering tests during telehealth visits may reduce the use of tests. A January 2013 study in JAMA Internal Medicine found that in treating patients with sinusitis and urinary tract infections, doctors at the Pittsburgh-based UPMC health system who provided electronic visits ordered fewer tests than those seeing patients in the office.
On the other hand, the doctors doing e-visits ordered antibiotics at a higher rate. One of the study’s co-authors, Dr. Ateev Mehrotra, said in an interview that he worries about overuse of antibiotics in electronic visits.
Antall said his group recognizes this concern and audits its physicians’ prescribing patterns. In some ways, he said, the telehealth system allows his group to better control antibiotic use. For example, he noted, the group’s electronic health-record system blocks doctors from prescribing azithromycin to patients in geographical areas where there are high rates of resistance to the antibiotic.
Omada offers its services to employers, insurers and individual consumers, and hopes to serve hospitals and other providers in the future. Payment is partially based on outcomes, Payne said. For patients who lose 10% of body weight, the price might reach $800, while the typical client, who achieves approximately 5% of weight loss, pays about $493.
The company’s model aims to improve on the original diabetes prevention model pioneered by researchers from the Centers for Disease Control and Prevention. That model initially showed success in reducing body weight and incidence of diabetes. But the original program’s descendants, including programs at many YMCAs across the country, have not shown the same effectiveness. A recent meta-analysis showed only 2.4% weight loss after 12 months.
Omada’s team thinks its electronic model can do better. Patients don’t have to travel and can access the program when they most need it. “The moments they’re going to experience problems are at the restaurant, or the grocery store, or when they’re not going to the gym when they should,” Payne said. Omada users have called their coaches while they’re grocery shopping, for example.
The company’s use of data allows it to track the weight loss of individual clients and groups of clients in real time, and intervene quickly when things aren’t going well. And Omada can tweak its program and website based on real- time patient response. For example, in presenting diet recommendations, the company compared client responses to two different versions of its Web page to determine the best way to present a low-carbohydrate diet.
Still, some experts are skeptical of the effectiveness of programs like Omada’s. Richard Kahn, a professor of medicine at the University of North Carolina, argues that there’s little chance Omada’s digital approach to preventing diabetes in prediabetics can duplicate the effectiveness of the original model, which was resource-intensive. No study since has replicated those early results, he said, and he doubts digital tools will prove much more effective.
Dr. Aaron Carroll, a professor of pediatrics at Indiana University School of Medicine, criticized what he called “drift” in many diabetes prevention programs that target patients who aren’t necessarily prediabetic and therefore face lower risk of developing the condition.
Omada’s Payne acknowledged that while some of Omada’s corporate customers require that participants receive blood tests to confirm a diagnosis of prediabetes, most do not.
Yet Omada is undeterred. Payne said his company is looking at expanding its services to other conditions such as asthma, chronic obstructive pulmonary disease, depression and insomnia.
Despite the surge in health IT development, some observers caution that tech types may have trouble understanding healthcare. Dr. David Shaywitz, chief medical officer at the startup health IT firm DNAnexus, said that the typical 20-year-old coder, who probably has never needed any significant medical services, sees healthcare very differently than a person who has health issues and uses the system more frequently.
“There’s an emotional or empathic element to medicine that has escaped the reductionist tendency of Silicon Valley, and to the extent they don’t capture it they’re going to miss critical aspects of the problem to be solved,” he said.
Previous waves of tech interlopers have retreated after their healthcare innovations fizzled. For example, Google shuttered its personal health-record product in June 2011. But previous misfires aren’t likely to deter the tech community from trying again.
“Ultra-rationally,” Shaywitz said, it might make sense to stay clear of the difficult healthcare business. But that’s not in the spirit of Silicon Valley. “I think there’s a sense of possibility,” he said. “There’s an unreasonable hope, almost.”
Follow Darius Tahir on Twitter: @dariustahir