Even if healthcare technology startups survive the venture capital valley of death, what may finish them off later is commercialization and the hurdles presented by reimbursement and slow adoption.
One purchaser of health tech has devised a path to test and validate new innovations by generating the clinical and economic evidence that startups need for a positive coverage approval from insurers and adoption by clinicians.
Pittsburgh-based integrated health system Highmark created its VITAL Innovation Program in 2015 to use the organization’s resources as a way to test FDA-approved technologies internally.
VITAL is organized under the overarching Highmark umbrella, which allows it to easily access claims data from the Highmark Health plan, as well as clinical data from the company’s Allegheny Health Network health system. Highmark covers around 4.5 million members in Pennsylvania, Delaware, and West Virginia.
Through this process, Highmark has been able to speed up the adoption of technologies from companies like HeartFlow, FreeSpira and Torax Medical. Importantly, companies like HeartFlow have also been able to use the evidence generated to win broader reimbursement from other private insurers.
Now, Highmark is looking to commercialize the program in an effort to boost innovation across the industry as well as open up a new revenue stream for itself. The hope is that startups looking to gain real-world evidence of their technology will pay for this service.
Sarah Ahmad, Highmark Health’s senior vice president of innovation and transformation strategy, believes the ability of an integrated health system like Highmark to provide both clinical and economic insights to startups is a key program attribute.
“There’s other integrated systems, but I think the ability to work with a startup to give them the evidence that they need to essentially perfect their solution is pretty different,” Ahmad said in a phone interview. “There’s a lot of companies that are investing in startups and they may be co-creating a bit with startups or incubating and accelerating startups, but what we’re doing is really helping them create the most viable and desirable product for the marketplace.”
The VITAL program starts off with a market assessment to understand a company’s competitive landscape and potential market opportunity, followed by a prospective test done in collaboration with Highmark-affiliated clinicians. The latter provides a stronger evidence base for the technology.
The organization’s commercial model relies on selling prospective customers a number of discrete products including the initial opportunity assessment, the prospective test within Highmark’s system and potential longer term retroactive studies and associated consulting services.
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Prospective tests generally span six to 12 months and are developed in collaboration between VITAL’s team, the customer and a lead researcher from Highmark’s clinical staff. The group builds out a clinical protocol outlining how the product will be implemented to help drive outcomes among a selected patient population. What startups pay Highmark depends on the hypothesis being tested and the requirements of the opportunity assessment and the study.
Ahmad differentiated VITAL from pilot programs by calling it a “test” that is intended to be used in the product development cycle. The main function of the program is to better determine whether a product works from an economic perspective, as well as to gauge the experience for patients and clinicians using the technology.
“The experience that I had when I was running pilots in my previous role (at Humana) is that we would find out pretty late that there were some things that weren’t ready from an experience standpoint, all the way through the impact that the device or the technology had from a medical cost or care standpoint,” Ahmad said.
She added that VITAL has a repository of over 100 solutions and performs 10 to 15 prospective tests annually with plans to scale up that number over the next year. The program’s list of clients include Welldoc, Omron Healthcare and YouScript.
One of the program’s earliest participants was Heartflow, a Redwood, City-based company that has developed software to non-invasively detect and diagnose cardiovascular diseases.
Campbell Rogers, Heartflow’s chief medical officer, said Highmark’s program represented an excellent opportunity to test and prove the value of the company’s technology in the real world across a range of different care settings.
When the company first started with VITAL, Rogers said virtually no commercial payers in the U.S. were willing to reimburse for Heartflow’s product. Now, that number is up closer to 95 percent. The data resulting from the program’s participation was seen as a selling point that led to other coverage approvals because of Highmark’s reputation and status as a large payer and integrated healthcare system, Rogers said.
“Getting from zero to 95 percent is not a linear process. It’s about getting a couple early people and starting a domino effect and Highmark became one of those early adopters through VITAL,” Rogers said.
On the other end of the spectrum, was a product from Trice Medical tested by VITAL meant to help patients avoid MRIs through a knee arthroscopic device. Early on in the testing process, clinicians gave the feedback that the tool was not useful in helping to diagnose meniscus tears and was causing patients discomfort in the clinic, but there was clinical value in using the product to determine whether a patient needed a knee replacement.
This information was used by the company to help refocus its business and sales strategy, Ahmad said.
The VITAL model and the trend that it represents is not without its detractors.
Sam Hanna, an associate dean at American University who previously helped run accelerator and incubator programs at PwC, said that he was skeptical of the larger trend of traditionally slow healthcare incumbents pitching their capabilities to drive innovation.
“A lot of these healthcare entities are trying to act like a startup, but much of it has been for show,” Hanna said. “Innovation just for innovation’s sake is not going to be fruitful, there is a need to be able to measure progress and define the terms.”
Hanna said while the evidence generation created might be valuable, there was still a gap in helping to usher in new innovations across healthcare. That requires expertise in functions ranging from finance to marketing that VITAL may not have the ability to provide.
Paddy Padmanabhan, the CEO of Damo Consulting positioned Highmark’s program as part of the larger trend of established providers and payers branching out into different service-based revenue sources in the face of declining revenue from more traditional activity.
He pointed to recent examples including Intermountain Healthcare’s launch of Castell, a startup company meant to provide consulting services to healthcare stakeholders as they transition to value-based payment models and Xealth, a Providence St. Joseph Health spinout that allows doctors to prescribe digital health content, apps and services.
“I expect more of these models to emerge, however it remains to be seen which ones will be successful,” Padmanabhan said. “Having data and evidence is one thing, commercializing it to generate meaningful revenues and gain broader adoption in clinical workflows is an entirely different matter.”
Observers also pointed out common challenges in healthcare initiatives to boost innovation, including the lack of subject matter experts in healthcare technology and the hurdle in getting top-level decision makers to buy into new products and services.
Highmark’s membership in the Blue Cross Blue Shield Association may blunt the challenge of not having buy-in from decision makers. VITAL group has a formal relationship with the Association’s care sourcing team which is constantly on the lookout for evidence-based solutions to benefit all the Blues plans.
“We see the larger ecosystem, what we do here is definitely an incubation for our partners across the country at other Blues plans,” Rogers said.
While the VITAL program is currently limited to FDA-approved medical devices and digital health tools, Ahmad said it plans to scale up include potentially branching out into areas like pharma and more closely partnering with companies developing solutions that can assist patients from their diagnosis through their management of their condition.
“I truly believe that there is a lot going on out there right now and it can be very dizzying for people, patients and customers,” Ahmad said.“The more that we’re able to bring some of these solutions together and offer them up to people based on where they are in their own health journey and make it so they don’t have to think so much about their condition, the more impact we’ll have on their lives.”
Photo: Peshkova, Getty Images