How Microsoft (and Startups) Can Make Money in Health IT, Personalized Medicine Is a “Crock,” and Other Highlights from the Xconomy Forum

5/14/10Follow @gthuang

Business leaders, researchers, and investors interested in the intersection of healthcare and information technology packed into the auditorium of the Frye Art Museum on First Hill in Seattle on Wednesday. Luke showed you some of the pictures from our Xconomy Forum already. Let me give you my observations from the event, in the form of a few notable quotes and ideas from our speakers.

One thing that leaped out at me was how intensely personal the field of health IT (and healthcare in general) is. Many of the speakers had a family-related issue that motivated them in their daily work—whether it was a parent or spouse who had battled cancer, or a parent who was a doctor and took them along on their rounds or shared stories of the big challenges in medicine.

Here are a few highlights from the talks and discussions:

Don Listwin, founder of Canary Foundation (and former No. 2 at Cisco Systems):

“Cycle time is the villain in healthcare,” Listwin said. “Personalized medicine is a crock. It takes 20 years to get pills through the system. All this business about ‘we’re going to sequence everything and it’s going to be great’ is interesting but…it’s not going to happen for a long, long, long, long time.”

Listwin also said it’s important to form partnerships in healthcare and biomedical research with China and countries in the Middle East. (“This country is broke; they are not.”) On the technology side, he is a proponent of blood tests coupled with molecular imaging—including ultrasound techniques—as the key to doing early cancer detection. Listwin is one of those people personally motivated to make an impact because of a family experience. He decided to devote his dot-com era fortune to early detection of cancer after his mother died from ovarian cancer.

David Cerino, general manager in Microsoft’s health solutions group (who previously worked in the worlds of online banking and travel):

“At Orbitz, when we screwed up someone’s reservation, we used to say, ‘Well, nobody died.’ Now I can’t say that, and I’m proud of it,” Cerino said. “Healthcare is an information problem but it’s fragmented…We have to put the consumer in the middle so they’re in control of the [health] information,” he said. “I call HealthVault ‘PayPal for health.’”

Cerino noted that Microsoft HealthVault makes money primarily in international markets. The service is free for consumers (he doesn’t call them “patients”) in the U.S. “We sell it on a per-citizen, per-year basis” to foreign ministries of health and other international government agencies that want to sponsor digital health records, for example, in Canada and Germany, he said.

Greg Foltz, neurosurgeon at Swedish Neuroscience Institute in Seattle:

“It’s a tsunami of information now becoming available to physicians,” Foltz said. “I take care of patients with brain cancer. What we’ve had to do in our center is create a team to help these patients; that involves bringing together software, programming, bioinformatics, and scientists used to looking at this data.”

He talked about the electronic health records (EHR) system at Swedish Medical Center, which got rid of paper records more than a year ago: “It’s clear it has prevented errors, and is helping patient care. For me, what I’ve witnessed is, the major barrier is people. Getting physicians to really embrace this is generational. Someone with an iPod and iPhone is embracing EHRs… Software moves faster than hardware, and they both move faster than people. Incentives in healthcare come from what motivates people—patient outcomes is a powerful incentive for doctors.” (Foltz also noted that if certain data-heavy records, such as brain images, come from a hospital outside the Swedish system, he can’t access them. He made it sound like anyone with a secure, high-bandwidth network for transferring those images would be onto something valuable.)

Kabir Shahani, CEO and co-founder of Seattle-based Appature:

“It’s about building the right workflow around the doctor’s day. How do I streamline all that information that’s coming in? For big companies, how do you get the right message to Dr. Foltz?” Shahani said, referring to all the marketing information on drugs and devices that bombards physicians and healthcare providers.

He talked about “an explosion of commercial and clinical data. There’s a bunch of commercial activity around the data. It’s a business, it’s a transaction between a company and a physician or a nurse. That transaction is changing dramatically. For every dollar they spend on [Appature’s marketing] technology, they’re getting five dollars back… Doctors are really focusing on ‘which app will give me the most insight in one hour a month?’”

Carla Corkern, CEO of Talyst in Bellevue, WA:

“Talyst has been putting [pharmacy] inventory management systems in hospitals for eight years,” Corkern said. On the adoption of new IT systems, she said, “Nurses tend to be willing to change before the physicians…You have to convince healthcare providers that it’s about patient safety.”

In response to Luke’s question about a good startup idea that the panelists weren’t working on yet, Corkern suggested devices for monitoring people’s health from their home. This device, and software, could arm the patient with lots of data he or she could gather at home and share with their physician for advice. There is still an opportunity for a “killer hardware device” for this home health monitoring, Corkern said. (Like the iPad perhaps? Maybe not.) And panel moderator Rob Arnold, president of Seattle-based Geospiza, talked about moving beyond genomic software for basic researchers into “clinical applications around genetic information” that doctors could use in patient care “that are deeply pragmatic.”

Malcolm Costello, senior vice president at Kryptiq, based in the Portland, OR, area:

“Your dog has a better chance of having an electronic health record than you do,” he said (perhaps my favorite comment of the day; maybe it was because of his Birmingham-area English accent). Pointing out that you can set up a grave plot and inscribe your tombstone on the Web, he said, “It’s easier to die online than it is to live online.”

Kryptiq applies the simple principles of e-mail to healthcare, he said—things like secure and private communications between doctors, or doctors and patients, that “fit with the workflow of a physician’s practice.” Costello said, “We’re the first company in the U.S. to combine electronic health records of different [systems] on a common, neutral network.” He added that Kryptiq is not trying to own the network.

Peter Gelpi, CEO and co-founder of Seattle-based Clarity Health:

The biggest challenge in healthcare? Gelpi said it’s that “you can’t deliver unless you have a group of people who will work together. It’s not technology, it’s alignment.” Clarity takes care of the insurance issues and other administrative hassles when a doctor refers a patient to another doctor. “We do referrals like a social network,” he said. “We’ve got a viral network going” that now includes some 300 doctors in Washington state.

“Our system doesn’t do billing,” Gelpi said. “We are the front of the revenue cycle. We are a broker and marketing service. We’re middleware to make transactions more efficient.”

Sujal Patel, CEO and co-founder of Seattle-based Isilon Systems:

“Three years ago, we realized a transformation was occurring in what biomedical research was doing to IT,” Patel said. In short, genomics institutes and other medical organizations need to store and access huge amounts of data—which is exactly the problem that Isilon solves. The biomedical sector now accounts for 15 to 16 percent of Isilon’s revenues (up from 2 percent in early 2008, and on double the revenue). Its customer roster includes a lot of big names, like Merck, Genentech, Sanofi-Aventis, Bristol-Myers Squibb, Illumina, Complete Genomics, the Broad Institute of MIT and Harvard, Stanford University, and Johns Hopkins University.

“One of the biggest challenges I see that will affect biomedical research in the next five to 10 years is that it will stretch IT in ways very few other [industries] have,” Patel said. “We see a bright future with this space.”

The closing keynote chat was between Rod Hochman, CEO of Swedish Medical Center, and Stephen Friend, the founder and president of Sage Bionetworks, both based in Seattle. Chad Waite of OVP Venture Partners (who said he sold medical equipment for five years in a previous life) moderated the discussion.

A few things stood out to me in the chat. Hochman said, “Today we’re working in a healthcare chassis that’s 100 years old. The delivery side is completely broken. We have the biggest backlog of paper in the world.” But there is hope for going digital: “We quickly wired up everything in our healthcare system in about 23 months. [It’s a] fallacy that this has to be a journey that’s never-ending.” (The Swedish electronic network has more than 600 doctors on it, he said.)

Meanwhile, Friend is on a quest to try to connect the dots between underlying genetic abnormalities and actual symptoms of disease that a doctor can see with conventional diagnostics. But doctors hardly ever gather data on patients that would be useful to help genome scientists make those connections. Friend pointed out that overall, “97 percent of oncology patients don’t get tracked” on their outcomes—that is, there is no clear data on what happens during their course of treatment, and whether their conditions improve or not. This figure struck me as astounding. “We’re living in an ignorance-based world,” Friend said.

He also talked about the need for academic institutions to stop being “ego-driven” and to do things for the greater good, like share their medical research data with colleagues and other institutions. That’s the big idea behind Sage Bionetworks, to create an open-source community for biologists. (This also overlaps with Michael Ball, CEO of Victoria, BC-based GenoLogics, who spoke earlier about combining genomic data with patient records to help create targeted therapeutics.)

Hochman said patient care would be greatly improved if doctors just did what they already know how to do, but in a more efficient way. At Swedish Medical Center alone, if doctors strictly followed the best practices for when they should and shouldn’t prescribe antibiotics, the hospital could save $5 million a year, Hochman said. He didn’t really get a chance to elaborate much on that, but I took his comments to mean IT could play a role in making it easier for doctors to actually follow what are already known as the best medical practices.

But possibly before a lot of new technologies can take hold, Hochman suggested hospitals are just going to start merging as another way to become more efficient. “Healthcare is going to go through a wave of consolidation that we’ve never seen before,” he said.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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