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November 1, 2016

Digital Healthcare Innovation Summit: The Maturation of a Space

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Digital Healthcare Innovation Summit 2016: The Maturation of a Space

The Digital Healthcare Innovation Summit 2016 is tomorrow, November 2nd, at the Mandarin Hotel in Boston. Our complete agenda and (sold-out) registered attendee group promises to make this a great event for all involved. As in past years, all content from the conference is digitized and will be available post-conference for those unable to attend at the conference website.

We are witness to the maturation of digital health in a number of areas at a time of political change.

We are less than a week from a critical Presidential election and are honored to have Governor Charlie Baker with us to be interviewed by Todd Cozzens on the “state of the state” of US healthcare. For those of us in the industry, healthcare policy and the transformation of the “rules of the game” for the American system are held in the balance. Regardless of political leanings, the US is still working through the PPACA, and markets, providers, and patients alike await the outcomes of Presidential, Congressional, and Senate elections. Our agenda includes a keynote from Dr. David Blumenthal, President of the Commonwealth Fund and former ONC HCIT head for President Obama. Years ago, David authored a tour de force titled ” The Heart of Power” detailing the complete political history of healthcare policy in the US. Professor Jonathan Gruber from MIT, one of the architects of the PPACA, joins us for an afternoon keynote. John has been forthright in his accounts of where the PPACA has been successful and where it has been challenged. Amidst this backdrop of healthcare policy transformation, digital health has begun to mature into a proven field with clinical and economic value, valid business models, and continued exits.

As co-chair, I am pleased with our lineup this year as evidence that the field of digital health is reaching the status of an established investment sector. Our distinguished keynotes and panel members will provide us the opportunity to engage with the issues as a group at a key checkpoint for the field. We are on track for $4B of sector investment in the space in 2016, which equates to about 10% of total venture funding. This $4B is in the ballpark of the sector investment in 2014 and 2015. We have seen $10B in M&A exits (up from $6B) so far in more than 80 companies. Although the IPO markets have been much slower in 2016, we witnessed NantHealth and iRhythm earn their stock tickers (NH and IRTC respectively). We have also witnessed the maturation of a cadre of venture and private equity firms that are investing more thematically in HealthTech, Tech Enabled Healthcare Services and Digital Health. These investment firms are accumulating the networks, knowledge and scar tissue to support their CEOs and executive teams in driving growth, evidence, and exits. The evidence to support the clinical and economic value of these investments is growing and starting to look more like what we have expected previously from more established sectors in healthcare. Strategics continue to take notice and have continued to acquire, with IBM and McKesson leading the 2016 charge.

Analytics are moving from retrospective to prospective, prescriptive, and real time, with ROI within 3- 6 months, making the experimental a practical reality. Health systems are using retrospective analytics to understand where costs lie, where practice patterns should be changed, and how care pathways actually affect outcomes. The winner of this year’s award for Most Innovative Company of 2016 is Health Catalyst, a pioneer in the space. Health Catalyst has become a leader in the space of analytics and healthcare data warehouse technology, and has forged strong relationships with key enterprise customers like Allina, Stanford, Kaiser, and Partners healthcare. Client level evidence has buttressed the case for the use of analytics in catalyzing change in the clinical, financial, and operational aspects of health systems.

Although ACOs experienced a difficult start, we see maturation of the model, and find that physician led ACOs offer a unique approach to the management of population level risk. Brandon Hull from Cardinal Partners will seek to answer the question of whether 2016 is the year of the Physician ACO. His panel includes the CEOs from VillageMD, Privia, and Iora Health, all of whom are pioneers in building systems and practices to allow physicians to successfully take risk, arguably one of the most challenging parts of the PPACA. For those of us partial to physician leadership of clinical operations, the hope that tools and systems can be built to empower providers to take on risk successfully is paramount to making these organizations successful as a fixture in the US healthcare system.

Digital therapeutics and digital diagnostics are proving their clinical and economic value and are maturing into unique classes of interventions. The combination of persuasive design with smart approaches to clinical coaching for behavioral modification is leading to results. A 2015 meta-analysis by Amanda Hull, et al. concluded that evidence exists to support the statement that digital health interventions can positively modify behavior in weight loss, smoking cessation, and in the management of diabetes. In fact, this year, as a result of such evidence, the AHA developed approaches and recommendations to support the use of digital interventions in specific clinical circumstances. In the digital diagnostics arena, the 2016 IPO of iRhythm (IRTC) supports the tenet that using semi-automatic methods of processing biosignals has the potential to lead to important changes in clinical decisions and earlier detection of life threatening arrhythmias. Physicians are armed with better data, more impactful conclusions, and a more streamlined workflow with faster results.

We are quickly seeing real applications for the use of deep learning, machine learning, and artificial intelligence in healthcare. We are rapidly moving from a retrospective approach to data to a real time approach using sophisticated technologies to categorize, support decisions, and even interact with patients in conversation using AI. In the afternoon, we will hear from GE’s President & CEO, Charles Koontz, GE Healthcare IT & Chief Digital Officer describe how machine learning, AI and other technologies are being used in fields like image processing and image analysis and cardiology. Our afternoon includes a panel focused on AI and machine learning led by Noah Lewis from GE Ventures. With big Strategics and more than 90 funded companies in healthcare alone powered by AI including our panel members OPTUM, AnalyticsMD, Evidation Health, and Apervita, AI in healthcare has become one of the hottest investment trends of 2016. We will all see in 2017 how and where these bets bear fruit.

Telehealth continues its march to become a ubiquitous new care model and has established its utility in several applications from direct to patient to teleconsultation. Bernard Tyson, CEO of Kaiser Permanente, commented in Fortune this year that half of Kaiser’s visits are virtual. In less than the time it takes to train a new internist, Telehealth has blossomed, leading to improved access to patients and the potential to improve outcomes. The results are coming in – from both the patient facing and teleconsult sectors. Kepplinger, et al. published this year a review of the evidence on the utility of telemedicine to improve stroke care. TeleMental and TeleBehavioral health have also arrived, and the evidence to support their therapeutic use is being developed. Ann Lamont of Oak will take us through the tour of leading companies in the space with Quartet, TalkSpace and Lantern, with the added perspectives on behavioral health from the Steward Health Systems.

Dr. Gary Gottleib, CEO of Partners Healthcare and a leader in the US healthcare system, will be interviewed by co-chair Bill Geary of Flare Capital in the afternoon. Gary’s career has spanned clinician, hospital CEO, and health system executive and CEO. He has devoted his career to the leadership of a complex, cutting edge health system associated with Harvard Medical School.

The consumer continues to mature as a force that is central to the US healthcare system, under the post PPACA constructs. With deductibles rising, with exchanges functioning but teetering, and with consumer expectations rising as their non healthcare consumer experiences create even more delight, we see this theme expanding. The Consumer and Retailization of Healthcare panel led by Steve Kraus promises to provide us to some answers. Leaders from Docent, Bright Health, Dignity, and Centura will focus on the role of the consumer, opportunities for greater engagement and involvement, and the effects on traditional models and disruptive models of innovation.

Paul Wallace will lead a panel featuring leaders in providers and payors in the afternoon focusing on how these institutions think about strategic investments in innovations. In a time when more innovation is occurring through more than a transactional relationship with vendors and firms, strategic innovation has become a priority for leading health plans and provider systems.

We will hear a markets update from the public perspective by analyst George Hill at Deutche Bank, and from the private perspective by Katya Hancock at StartupHealth. In a year with few IPOs and consistent private sector activity, I look forward to comparing and contrasting the views on either sides of the ticker tape.

I want to thank my co-chair Bill Geary, and our amazing Advisory Board for their incredible leadership this year in bringing this great program to fruition. Our advisory board (in alphabetical order) includes Carl Byers from F Prime Capital, Lynne Chou from Kleiner Perkins Caufield & Byers, Todd Cozzens from Leerink Transformation Partners, Doug Greenberg from Korn Ferry, Katya Hancock from Startup Health, Michael Hanewich from SVB, Brandon Hull from Cardinal Partners, Lucian Iancovici, MD from dRx Capital, Steve Kraus from Bessemer, Steve Krupa from Psilos, Ann Lamont from Oak HC/FT, Noah Lewis from GE Ventures, Ali Satvat from Kohlberg Kravis Roberts, Don Trigg from Cerner, Paul Wallace from Heritage, Michael Weintraub from OPTUM, Lawrence Wittenberg from Goodwin, and Krishna Yeshwant, MD from Google Ventures.

We have incredible sponsors with GE, Goodwin, Korn Ferry, OPTUM, Silicon Valley Bank, Athenahealth, Norwest Venture Partners, dRx Capital, Amazon, Deloitte, Psilos Ventures, and Startup Nation that make this summit possible. We are fortunate to have them and hope that they benefit from this event as much as the speakers and attendees will.

See you at the Summit.

Robert Mittendorff, MD, MBA, Partner
Norwest Venture Partners