Healthcare Apps Everywhere

If you’re in Healthcare and you’re not working on an App or using an App you may be looked at as being from 1999. All types of entities are providing Apps to “someone,” and sometimes, to anyone without using the appropriate market demographics to identify if the app works!  This applies to all stakeholders, including:

• Physician
• Hospital
• Insurance Company
• Clinical Laboratory
• Pharmacy
• Home Health Company
• Pharmaceutical Company
• Health Information Technology Company
• Healthcare IT Vendors
• Patients / Consumer

The usual stake holders are listed above.  Sometimes even physicians and patients use the Apps and there questions concerning discernible real world benefits.  It’s too early for most applications to show real benefits and outcomes for the vast majority of apps and their respective stake holders, especially patients.

The number of downloads is one “metric” used by vendors, healthcare providers, and other entities to measure success.  Downloads say nothing about the “meaningful use” or success of a product offering or App.  The ubiquitous stethoscope app is just one example of the weirdness surrounding the “real” functionality of an app.   Three Million Doctors Download iPhone Stethoscope App is a link to a company that suggests a large number of downloads by “physicians.”  There are only, as of 2010, 850,085 practicing physicians in the United States.   There are many stethoscope apps in the Apple Store and the Android store.  The number of app downloads is not a function of actual use in the healthcare industry.

The download numbers are an example of a healthcare “App” industry that is looking at the wrong metrics for success in healthcare.    There is a more fundamental number which is not being factored into many business plans in cloud based medical application development focused on consumers.   There is a wrong assumption that is found in many venture capital and investment presentations made by App developers.  Healthcare application developers routinely assume there will always be a smartphone in the hands of an end user with the costliest diseases such as, Diabetes, COPD, Hypertension, and Cardiac Diagnoses.

Patients with the  costliest diagnoses are usually older and it cannot be assumed that this population has a smartphone or even knows what to do with a smartphone or iPhone.  Pew Research (chart below) conducted a survey in January 2014 which found results that should be strongly considered for elderly patients and their use of smartphones.  The Pew study found that smartphone market penetration for people aged 50-64 is approximately 49%, while smartphone use among people over 65 is only 19%.

These numbers are staggering consider the massive venture and angel investment in technologies that are dependent on smartphone penetration in markets that are most likely to have the costliest diagnoses and complicated conditions.New mobile health vendors and astute investors should consider the basic facts about the real meaning in download numbers.  But, it is even more significant to know the market penetration of smartphones in the universe of users with the costliest diagnosis codes.
The healthcare industry, particularly vendors and investors that have App excitement needs to focus on the fundamental business demographics which are not based in number of downloads.  Furthermore, the patient focused medical App development vendors must acknowledge how there will be market penetration in demographic groups that do not have access to smartphones (iPhone and Android).

Hospital Data does NOT Equal Community Health

The Becker Hospital Report is a misleading "population health" study that incorrectly projects community health with hospital payment data.  About 15 tears ago I worked at HCIA.  HCIA found Albany Hospital was the worst in the country for cardiac care.  The following year Albany Hospital was one of the best in the US by changing admissions requirements.  Hospital data does not reflect the health of a community.  Below are the "healthiest cities" according to the Becker Report. 

1. Washington D.C. 

2. Minneapolis-St. Paul, Minn.

3. Charlotte, N.C.

4. Virginia Beach, Va.

5. Portland, Ore.

6. Boston

7. Chicago

8. Philadelphia

9. Grand Rapids, Wyo.

10. Atlanta

Billions wasted by Big Data Healthcare Contractors in a Texas Sized Medicaid Fraud

Over the past 20 years, Texas has privatized computer systems and call centers for its Medicaid program to contractors, including IBM, Accenture (formerly Andersen), Electronic Data Systems, (currently HP), and Xerox.   Accenture’s contract alone was for $899 million.  In 2006, IBM received a $869 million contract in 2006.  In 2008 IBM’s servers crashed which compromised Medicaid fraud investigations.  The private contracts have been a disaster for residents of Texas that receive benefits.  Delays, misinformation, and denial of coverage are just the tip of the proverbial iceberg.

While many influential people are heralding the potential of Big Data in solutions across multiple industries including healthcare, lack of domain expertise and oversight will destroy any big data deployment.  Many of the bungled Texas Medicaid contracting disasters could have been prevented with competent checks and balances.

Surprisingly, after IBM’s server debacle in 2008 Texas paid the majority of IBM’s contract and transferred the contract to Capgemini and Xerox.  Xerox was fired by the Texas Health and Human Services Commission charging that Xerox paid hundreds of millions of dollars in rubber stamped Dental Claims.

Headlines are made across the country documenting prison sentences for Medicare and Medicaid providers and recipients that defraud the State and Federal healthcare programs.  Doctors, dentists, chiropractors, and home health administrators are found guilty of Medicare and Medicaid fraud on a daily basis.   Very rarely do you find contractors going to prison for fraudulent activities in the deployment and operation of State Medicaid contracts.

Existing technologies and data sets can keep tabs on contractor performance in Medicaid and Medicare contracts.  These systems can prevent fraud and increase the quality of care in Medicaid and Medicare services.

Texas attempted to rein in Medicaid fraud and recently hired a small technology firm, 21CT.  The no-bid contract worth $110 million was a project utilizing big data to visualize healthcare fraud.  The company utilized healthcare claims databases to identify potential Medicaid fraud.    Rampant fraud at the company hired to identify fraud has been alleged by Texas Health and Human Services and an FBI investigation is reportedly under way.

The data gathered by mobile health technologies including patient monitoring and sensors provide a means of increasing quality of care and identifying healthcare fraud.   Incremental inclusion of mobile health data sets into big data analysis will be a benefit to patients and prevent Texas sized healthcare frauds committed by vendors and contractors.

mHealth or Global Economy, Boom or Bust?

$10 billion was invested by Venture Capital companies in a single quarter in 2014 including investments in mHealth and Digital Health applications.  At one level this may seem to be "irrational exuberance" as dramatically demonstrated in the internet bubble 15 years ago.  The internet bubble effected the Global Economy and considering the size of the $3 trillion US Healthcare Market, mHealth may be an interesting indicator for a digital economy as a whole.

Valuations in digital / social media entities are at all time highs.  Uber and Alibaba are easy examples.  Xiaomi the Apple "knock off artist" just became the most valuable start-up at $45 billion.  Considering China is Xiaomi's primary market, this valuation is astounding.  I thought China was going through recession (based upon media reports) compared to its relative meteoric growth over the past 2 decades.

Rock Health's Managing Director, Malay Gandhi, makes a thoughtful case against any potential "bubble" in the digital health space in a report by stating, "it’s an inherent dissatisfaction in healthcare driving digital health’s growth; 258 digital health companies each raised more than $2 million in 2014. According to Rock Health’s report, the top six categories for digital health funding last year (accounting for 44 percent of all digital health funding in 2014) were: Analytics and Big Data ($393M), Healthcare Consumer Engagement ($323M), Digital Medical Devices ($312M), Telemedicine ($285M), Personalized Medicine ($268M), Population Health Management ($225M)."

Rock Health also points out that during the internet or dot-com bubble that over $30 billion was raised in a single quarter in internet company investments.  This number is even more significant considering the realtive size of the US economy in 1999-2000 versus 2014.  Malay Gandhi's analysis seems solid as well by comparing the tech heavy NASDAQ versus the Dow Jones in 1999- 2000 versus today.  The stock index charts also support Gandhi's statements.

In 1987 the stock market crashed. In 1998 the global economy and the stock market crashed.  In 2000 the tech heavy NASDAQ crashed.  In 2008 the global economy and the US stock marked crashed. Comparison of the internet bubble of 2000 make today's NASDAQ and mHealth valuations appear conservative, especially considering the diversification of investments in today's market.

As a Vice President at Medical Manager Corporation (known today as WebMD), I remember thinking in March 2000, that maybe people will need to sell some stock to pay for some gains in the NASDAQ.  

U.S. venture capitalists invested $48.39 billion last year, the biggest total since 2000, according to new data from the National Venture Capital Association, PwC, and Thomson Reuters.

“Internet models today are fundamentally more sound than Internet models of 2000,” said Deven Parekh of Insight Venture Partners, a firm which has backed Chinese online giant Alibaba.com and message service Twitter.

The $48.39 billion, spread among 4,356 deals, compares to $29.96 billion in 2013, and $105.01 billion in 2000, the largest level since the association began keeping records.

Software deals accounted for 41 percent of all cash, the highest percentage since the report’s inception.

The troubling scenario found  in the stock index charts demonstrate a 1 year gain in GDP (2014 - 2015) of nearly $1.5 trillion in a single year.  This is a significant increase in GDP during a time frame when global oil prices have been cut in half and copper prices are at 2009 levels.  Like oil, copper is a significant indicator for industrial and construction activities,


There is a real pent up demand for restructuring in the US Healthcare System.  A significant amount of this change will occur as a result of innovation. New technology adoption and addressing healthcare (Medicare and Medicaid) fraud and abuse will be highlighted in 2015.  The future of digital health technologies look bright against potential global economic headwinds.  Unlike 2000, the "economic eggs" are diversified among multiple baskets.

Obama: Medical Fraud is Top Priority in 2015

Obama "Medical fraud a Top Priority in 2015"

Courts in 2015 likely will continue to handle many healthcare fraud cases, particularly related to the anti-kickback law and the Stark law, which governs physician referrals and financial relationships, said Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association. HHS' Office of Inspector General listed fighting fraud in Medicaid and Medicare among its top management and performance challenges for 2014.

Saccoccio predicted that fraud allegations involving pharmacies might gain a higher profile in 2015.

Big Data Analysis and novel fraud detection systems will make a significant impact in 2015.

http://www.modernhealthcare.com/article/20150110/MAGAZINE/301109989

Big Data catches Medicare Fraud in Real time

US authorities have saved billions of dollars by mining big data to identify and prosecute healthcare fraud, learning from the playbook corporations are using to disrupt their industries and expand their businesses.

DOJ uses Big Data to crack down on Medicare Fraud.

The US Department of Justice, Federal Bureau of Investigation and Department of Health and Human Services’ office of inspector general have been scouring billing records to identify frauds that are estimated to bleed Medicare, the taxpayer-funded ...

DoJ uses big data to crack Medicare fraud schemes - FT.com ft.com

US authorities have saved billions of dollars by mining big data to identify and prosecute healthcare fraud, learning from the playbook corporations are using to disrupt their industries and expand their businesses. The US Department of Justice,

New data analysis techniques from sophisticated algorithms are catching physicians committing fraud in "real time"