What’s ahead for digital health in 2018?

Top trends, takeaways, and insights from the Digital Health Innovation Summit, PULSE@MassChallenge Matchmaking, and the StartUp Health Festival at JP Morgan.

We recently attended the Digital Health Innovation Summit in Boston and the StartUp Health Festival at JP Morgan in San Francisco; sandwiched in between we hosted Matchmaking for PULSE@MassChallenge in Boston. Here are the 7 top insights we pulled from these events to help you get prepared for a successful 2018.

1. Digital health is still growing in a big way.

It’s definitely an exciting time to be a digital health entrepreneur! By the end of Q3 2017 the digital health industry surpassed its funding totals for all of 2016 — previously the most successful year of digital health fundraising.

According to StartUp Health, digital health funding increased from $8.2B in 2016 to $11.5B in 2017, an increase of roughly 40%. The number of deals also increased from 658 in 2016 (a previous high) to 794, an increase of roughly 21%.

At PULSE we also saw an increase in partnership offers within our program grow from 81 offers in 2016 to 100 offers in 2017, an increase of roughly 23%. The increase of offers indicates that there is a strong appetite by health and life science organizations to collaborate with startups.

The 32 startups we will accelerate in 2018 is still well above our target of 10–15 companies for the program. The number of startups we accept relates directly to the number of offers issued by our Champions (what we call our strategic partners who make partnership offers to startups like Vertex, the Commonwealth of Massachusetts, Boston Children’s Hospital, etc).

2. Success rests on the backs of strong business operators.

Jeff Immelt speaking with Bill Geary at the Digital Health Innovation Summit in November 2017

Jeff Immelt, former CEO and Chairman of GE spoke at the Digital Health Innovation Summit in Boston where he discussed the importance of “[turning] a good idea into a good business.”

To be successful, he urged companies to be digital and to focus on operations and outcomes.

Later in the day, Mohamad Makhzoumi of NEA said during the east versus west investor panel “there is a reckoning coming for the overvalued digital health companies.”

He wasn’t alone, Carl Byers of F-Prime Capital Partners (clad in Red Sox uniform) shared his feedback on the many digital health entrepreneurs he meets with, “the mission story is becoming less compelling.” He urged entrepreneurs to ask themselves “who is going to pay for this?”

The panel had a clear message: investors represent a new set of customers for your company. These customers are not looking for headlines. They may care about your mission. Ultimately, they’re looking for a return on their investments.

The east vs west investor panel at DHIS

Although the panel offered critical feedback, the mood was optimistic. These are problems that could be overcome with strong leadership. Also, the market still has significant problems in need of solutions.

Steve Kraus from Bessemer Venture Partners urged the room filled with investors and innovators to abandon the “unicorn paradigm.” Hyper-scale in healthcare takes time. Lynne Chou of Kleiner Perkins Caufield & Byers said “you have to earn the unicorn status.”

In 2018, a focus on outcomes, operations, and value creation will enable digital health entrepreneurs to generate more revenue and greater returns. To use the baseball metaphor of the panel’s uniformed east coasters, singles and doubles also lead to runs scored. With the right leader and conditions, maybe we’ll even have a few home runs.

3. Women are here, but there’s a long way to go.

One of the most talked about headlines at JP Morgan was STAT’s “Men named Michael outnumber female CEOs presenting at #JPM18.”

As STAT points out, 94% of the people presenting high-profile corporate updates were male and the adjacent conferences nearby (including StartUp Health) were also male-dominated.

If it wasn’t clear already, 49.56% of the world’s population is female (according to the World Bank). We have a long way to go to reach a slate of female leaders and speakers more representative of the population.

PULSE@MassChallenge is also subject to this scrutiny. We have traditionally exhibited more male than female speakers, presenters, and panelists at our events. This realization prompted us to host a panel on women in digital health for Hubweek in 2017, but it’s not enough. Supporting women in digital health will be a part of our broader 2018 initiatives at PULSE.

YiDing Yu, Co-Founder & CEO of Twiage accepting the Platinum Award at PULSE Finale

In 2017, 40% of the companies to win prize money at PULSE Finale had a female on the founding team. For perspective, 42% of the PULSE cohort in 2017 had a female on the founding team.

For the 2018 program, we made an effort to identify and encourage female entrepreneurs to apply to the program. The companies that made it through to Matchmaking (the Top-60 out of 504 applicants) were 47% female founded. The companies with women on the founding team even performed better during Matchmaking. As a result, 59% of the 2018 PULSE cohort has a woman on the founding team (a 40% increase from the previous year).

Some additional context, PULSE does not select which companies get into the program, rather we rely on the expert judges in our community and the partnership offers from our Champion partners. Startups get into PULSE when they receive and accept one or more offers from a Champion during Matchmaking — after they are sourced, apply, are vetted, and invited as a member of the PULSE Top-60.

We anticipate that 2018 will see more female executives emerge as leaders within the digital health and health community at large. Locally, some of our strongest healthcare institutions are female led, including Boston Children’s Hospital, Brigham and Women’s Hospital, and Boston Medical Center.

It was exciting to attend the StartUp Health Festival and hear from CEOs, such as Sally Poblete of Wellthie, share how she is a better entrepreneur because she is also a mother. She is an example that it is possible to be an executive both at home and at work.

We are also encouraged by the work Rock Health and others are doing to elevate the conversation. We highly recommend reading their most recent report on Women in Healthcare. However, as they note in the report, 33% of women (the most selected option) believe it will take 25+ years until we achieve gender parity in the workplace. Let’s work to get there sooner.

4. HHS is opening its doors to digital health entrepreneurs.

United States Chief Technology Officer of Health and Human Services sits down with Katya Hancock, Partner and Director of StartUp Health Network

When Bruce Greenstein, Chief Technology Officer of the US Department of Health and Human Services (HHS) came to speak at the Connected Health Conference in November, he shared plans of launching a series of nation-wide events to stimulate startup-government collaboration.

At the StartUp Health Festival he announced the date for the first HHS Startup Day — February 5th in Washington, DC. They also plan to take HHS on the road to visit locations such as Nashville, Boston, Austin, and others. You can register for the first event in DC here: https://www.eventbrite.com/e/startup-day-registration-41474489314

HHS is one of the largest government agencies in the world with a $1.15T budget in 2017. It has more budget authority than two times the GDP of Belarus. Despite their large budget, they have difficulty finding and attracting the best solution providers to work with them. This is what prompted his office to launch “Startup Days.”

We need access to the best technology in the market.
— Bruce Greenstein, CTO HHS

Greenstein believes these events will open the “front door of the government.” He also emphasized that the HHS “sales cycle is not that different than [or at least competitive with] the private sector.” By spelling out the process for entrepreneurs Greenstein believes it will result in greater access to leading technology for the government, enabling HHS to deliver higher quality services and be more effective with taxpayer money.

We also heard from the previous administration’s Chief Technology Officer, Aneesh Chopra and National Coordinator for Health IT at HHS, Dr. Farzad Mostashari.

Dr. Farzad shared that “the center of gravity [is shifting] outside the regulators” and that “there’s an opportunity to make money by saving money.” He also warned to not be fooled by the idea that an “open standard means I can plug in for free for whatever [I] want.”

Both Chopra and Dr. Mostashari spoke highly of the current HHS CTO’s work aiming to demystify HHS’ myriad policies, procedures, and problems (opportunities). As Aneesh put it, “know the policy. Know the opportunity.”

Finally, CTO Greenstein left the audience with a few poignant remarks about how policy could work better for patients and ultimately the entrepreneurs who want to help them. He asserted that electronic health records need to be built to share data based on the patient’s needs and that organizations should transition their thinking to a data sharing and not just data protecting mindset.

Data sharing needs to be the default. Every data use agreement needs data sharing in it.
— Bruce Greenstein, CTO HHS

It will be interesting to see whether this translates into a more formal guideline, but for now it’s exciting to see HHS leadership taking such a strong patient and startup-friendly position on data-sharing and interoperability.

PULSE is currently working with the office of the CTO to plan an HHS Startup Day in Boston for early 2018. If you’re interested in getting involved, please email pulse@masschallenge.org

4. Collaboration is the only way to make digital health work.

Former Vice President Joe Biden speaking at the 2018 StartUp Health Festival in San Francisco

In his speech to the StartUp Health Festival audience, Former Vice President Joe Biden outlined a path towards making moonshots a reality.

Causes like cancer foster bipartisan collaboration, and Biden shared the promise of what can be done when differences are set aside for the greater good.

Even in a lame duck session, they appropriated the money necessary to keep doing “the work we had to do” to fight cancer. That said, he knows we still have a long way to go. There’s “an enormous capacity for us to do an awful lot more.”

He called out to the audience,

What in the hell is wrong with us?! What are we doing?!! That’s where we need you. We need to break down these silos.
— Former Vice President Joe Biden
Former Vice President Joe Biden speaking to a standing-room only audience at StartUp Health Festival

He urged the audience to help him build “the cancer research enterprise people think we already have,” give patients “access to their records,” and provide more personalized and effective care.

The former vice president closed with, “there’s no reason why we can’t change cancer in the next five years.” It would only be possible if it was through collaboration.

We know the power of collaboration well, PULSE@MassChallenge launched as part of the Massachusetts Digital Health Initiative which is a public-private partnership between Governor Charlie Baker (Republican), Boston Mayor Marty Walsh (Democrat), the Massachusetts Competitive Partnership (industry), and other health, technology, and policy leaders. We literally would not exist without collaboration.

During the program at PULSE, that collaborative drive extends to our startups and Champions who team up to solve health’s massive challenges. As a result, our 2017 cohort of startups increased their revenues by 52% ($4.5M), increased their funding by 57% ($18.9M), and touched thousands of patient lives during PULSE. In MassChallenge’s other programs, the community’s collaborative support catalyzed over $2B in funding for MassChallenge startups and helped launch unicorn Ginkgo Bioworks.

Collaboration is more likely to generate results than anything you can do individually.
— Former Vice President Joe Biden

6. Top challenges — we have a few.

While there are too many challenges to list out (and this issue of the PULSE blog is already bursting past its limit), we thought we would capture some of the themes we heard from the conferences and from our community. First, it’s worth checking out StartUp Health’s 10 moonshots if you haven’t already:

  • Access to Care
  • Cost to Zero
  • Cure Disease
  • Cure Cancer
  • Women’s Health
  • Longevity
  • Mental Health
  • Brain Health
  • Children’s Health
  • Nutrition & Fitness

Returning to the investor panel from DHIS, each shared their areas of interest:

Lynne Chou of Kleiner Perkins Caufield & Byers speaking at DHIS in Boston
  • Patient payments — Carl Byers
  • Patient health records vs electronic health records — Steve Kraus
  • Unbundling of hospitals and services — Mohamad Makhzoumi
  • Consumer and holistic solutions — Lynne Chou

We put together a small report on the top challenges in our community based on the density of submissions in certain areas. Challenge collection at PULSE is open-ended, so the fact that we have so much overlap (enough to justify a top 5) is exciting. The top 5 challenges for our Champion community are:

1. Administrative burden

2. Care coordination

3. Chronic disease management

4. Opioid abuse support and prevention

5. Reduce medical costs

You can download the 5-page PULSE Vision report that contains the full-list of 2018 PULSE Challenges here.

7. Your new year’s resolution

Of course eating right is important, but according to Dr. J Craig Venter (Founder, Chairman, and CEO of Human Longevity Inc.) the real key to longevity is your muscle mass.

Running a startup or being an innovator in health is hard work, but it’s work worth doing. Remember to take care of yourself in 2018 (that goes for the author too).

Time to hit the gym!

Nick Dougherty

Program Director PULSE@MassChallenge