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Healthcare: Cyber wards

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Analysis
12 September 2012
Silicon Valley is hoping technology can reform the labyrinthine US medical system

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Healthcare: Cyber wards

Patients sit quietly in a waiting room at a San Francisco hospital, their expressions concentrated as they answer questions about their medical history. Rather than scribbling on clipboards, they are tapping iPads.

They press icons for male or female – the unmistakable lavatory illustrations of a blue straight–legged man and skirted woman in pink. The zero to 10 rating scale for mental health has a smiley green face at 10, and a sad red face at zero.

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Various other visual cues make filling in forms more engaging but, more importantly, extract more accurate and complete information from patients. The electronically culled answers are zipped directly to a central hospital database with all of the patient’s medical records, saving secretaries from making mistakes by having to decipher countless styles of handwriting.

"Just about any problem you can see in healthcare is trying to be addressed by a tech company," says Sterling Lanier, chief executive of Tonic Health, a Silicon Valley start–up that makes the iPad software.

Mr Lanier is one of many Valley entrepreneurs turning away from the world of social networks, mobile games and digital advertising to develop tools that address the entrenched problems in the lumbering healthcare system.

And it is not just a matter of iPads intended to scythe through bureaucracy. Patients are increasingly measuring their blood pressure and glucose levels from home with remote monitoring devices and iPhone apps. Some computer games now foster healthy behaviour. Enormous databases build up huge case histories to reduce medical mistakes and costs.

Healthcare: Cyber wards

Entrepreneurs say their technology could smooth revolutionary reforms of medical care in the US, which spends $2.6tn a year on health, or 17 per cent of gross domestic product. As policy changes roll out over the next few years, insurance companies will be forced to limit their profits, and hospitals will face penalties if patients return to the hospital within 30 days of being discharged. Doctors will no longer be paid for how many X–rays they take or laboratory tests they run but for how well their patients are doing.

However, while the entrepreneurs exude optimism about their ability to streamline the healthcare system, the sprawling industry proved resistant of reforms in the 1990s. It was difficult to translate the vision of a few bright technology experts to the massive healthcare administration sector.

Fears about the proposed technology revolution resonate in several other countries that have hit roadblocks when turning to technology to address healthcare problems. Doctors and other medical professionals around the world have historically been slow to adopt new technology, wary of the costs and the time needed to learn and adjust to new administrative procedures.

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In England, the National Health Service faltered in its efforts to overhaul its medical records system, switching from paper to electronic records, in part because of its inability to persuade doctors to make changes. The British government wanted to centralise technology purchases from a handful of vendors and rope all the hospitals in one region into the same system. Doctors had to change their habits and did not have a choice about which technology would work for them.

"There was no incentive, and it was a huge disruption to their workflow," said Harry Greenspun, a doctor and senior healthcare technology adviser at Deloitte.

In the US, where the government has also called for a transition to electronic medical records, only 25 per cent of physicians are "on target" to meet the deadline for the new federal standards, according to a study by the California HealthCare Foundation.

For entrepreneurs building technology tools that go beyond government mandates, such as online appointment registries or mobile phone apps for patients to contact doctors, there are even more obstacles.

Health is a heavily regulated industry in the US and a slow–moving one, particularly when compared with the rocket speed of social media and ecommerce developments. Investors do not want to be stuck in a multiyear approval process at the Food and Drug Administration or tied up in ever–evolving government policies.

While funding for information technology in the health sector is growing fast, according to the National Venture Capital Association, it is still relatively meagre compared with the billions flowing into the next would–be Twitters and Facebooks. Venture capital funding in healthcare IT hit $860m last year, increasing from only $340m in 2002. The biggest single jump came between 2010 and 2011 when funding soared from $499m.

Several entrepreneurs, such as Mr Lanier at Tonic Health, still see a lingering fear in the market and have relied solely on angel investors or friends and family for early financing.

"A lot of venture capital firms may be scared by the category or had a negative experience in the past, namely because of the long sale cycles, or because they could never get the technology to fully work," he says. "We encountered some hesitation from VCs who said: ‘I love this but the category makes me gun–shy.’ "

When Khan Wong got a strange rash on his calf last summer, he didn’t worry. When it swelled and turned purple in the following days, he did. His doctor was baffled and unable to make a diagnosis. Mr Wong chronicled the development of his rash as it got bigger and more purple in a series of photos he took with his iPhone and posted on his Facebook page. Among the series of horrified comments from his friends, a few offered their own diagnoses: cellulitis, spider bite, allergic reaction. In the end, Mr Wong saw three different doctors who proffered three different theories. A few days of ointment and a steroid shot and Mr Wong was fine, but there was never an exact diagnosis.

Technology is already becoming a key feature of healthcare as more and more patients and doctors find medical uses for their everyday consumer technologies. Doctors, too, take pictures of strange rashes to get second opinions from their colleagues. Medical students across the country are given iPads on their first day of learning, loaded with all their textbooks and a list of recommended apps to help with studying.

"It is impossible to go into an operating room anywhere in the US today and not see an iPad," says Chuck Farkas, a senior partner at Bain & Company’s healthcare practice. And there would be strong support among doctors and nurses for the rumoured 7–inch iPad mini: "the biggest call Apple has had from healthcare professionals is for an iPad that fits in the pocket of a white coat", he says.

It is the Silicon Valley–style, easy–to–use, consumer–friendly nature of these devices and mobile applications that US government officials are trying to introduce into healthcare. For the past few years, the US Department of Health and Human Services has been courting California engineers to make finding a doctor’s appointment or a good price on a prescription drug as easy as online banking or shopping for an airline reservation.

"We were drawn as a magnet to Silicon Valley, as they’ve solved so many other problems in other sectors, like financial services and travel," says Greg Downing, executive director for innovation at HHS.

His agency is offering data from other agencies – for example, disease occurrence and death rates from the Centers for Disease Control and Prevention, and clinic and doctor locations from the Health Resources and Services Administration – to engineers to weave into websites and mobile apps.

"We call it the ‘liberation of data’," he adds.

One result is a start–up called Castlight Health, which makes price comparison software for common medical procedures such as mammograms and colonoscopies. It functions like a travel website, aggregating data from employers’ cache of past insurance claims, and packages it into a searchable price database for consumers.

The goal is to bring transparencyto a field that has historically been opaque, permitting vast discrepancies in the cost for common procedures. With 30m–40m joining insurance rolls in the next few years as a result of healthcare reform, many are expected to be funnelled into "high–deductible health plans" and will pay much closer attention than before to the costs of services their doctors prescribe.

"Healthcare has become a very inefficient market because there’s no correlation between price and quality," says Peter Isaacson, Castlight Health’s chief marketing officer. "You can have the highest prices for the lowest quality."

Healthcare technology is being developed in various pockets of the country, in the Midwest and the north–east, where the industry has a strong presence and technology experts frequently interact with insurance and hospital executives. The Silicon Valley renegade approach is sometimes interpreted as hubristic in these circles, but Valley insiders say their way of working has big advantages.

"There’s an unfettered approach to problem–solving here," says Mark Goines, a partner at Morganthaler Ventures. "The inspiration comes from not being impaired by the way it’s always been done in healthcare."

Despite the obstacles and past failures, various experts argue that things will work out for Silicon Valley this time. Current government policies and incentives support experts to develop new technology and encourage healthcare providers to buy it, Mr Downing says.

And consumer electronics, particularly smartphones,are reaching record levels of penetration: 81 per cent among doctors and 48 per cent among the general population, according to data from Manhattan Research and Nielsen.

If the Valley has its way, patients will routinely be making appointments with a few taps on their smartphones, exchanging text messages with their doctors and even receiving treatment recommendations based on computer algorithms.

"We really are at a tipping point," Mr Farkas says.

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