Smartphones Enable Patients To Manage Early Diabetes for Under $100 Per Year

The IoT and the Changing Healthcare Environment

The world is filling up with internet-enabled sensors of all kinds, generating a huge amount of storable data about everything, including our health. This Internet of Things (IoT) in healthcare represents an array of wearables, phones, and specialty medical devices that are already producing, analyzing, and sharing medical grade data. 

In fact, the smartphone, with its numerous embedded sensors, plugin capabilities, and app development ecosystem, is very likely now the highest-utilized medical device in the world. Going far beyond basic physiology monitoring functions like step counting, certain device extensions are functioning as 'labs on a chip,' using biochemistry and microfluidics to do the same diagnostic work previously confined to large, expensive, time-intensive, and centralized laboratory testing facilities. All of the new data being generated is not only useful to individuals and their doctors, but can be aggregated to provide population-level insights about health. For example, Walgreens is now displaying patient-reported information on medication side effects from PatientsLikeMe on their pharmacy website. PatientsLikeMe is heavily involved in the new Health Data Exploration project, an effort to better define the parameters and methods of collecting and managing both passive and active personal health data. Much of this data will come directly from smartphones. 

The IoT has been slower to disrupt medicine than many other industries. On a macro level, healthcare is a sensitive area, requiring carefully coordinated regulatory, security, and safety measures. On a micro level, many specific policies and delivery models are outdated, and will eventually need to modify to take the new and emerging models of care into account. This is already happening; for example, the FDA has eased approval requirements for low-risk mobile medical apps. 

The emerging IoT, the lower time and cost barriers for regulatory approval, and the increasing demand for low-cost treatment methods is throwing fuel onto the fire of smartphone-enabled medtech growth. 


New Opportunities to Improve Chronic Care: The Case of Type II Diabetes

The case of diabetes is illustrative: In the U.S., about 50 million people have diabetes; in India, the number jumps to at least 65 million, a number growing quickly due to changes in diet, and because many Indians are at least 30% more genetically predisposed to developing diabetes than whites. Type II diabetes accounts for about 90% of total cases. 

In response, entrepreneurs in India have developed a range of intriguing, low-cost, user-friendly products bringing basic but effective diagnostic, monitoring, and management capabilities to people with diabetes. 

First, there are the multiple parameter testing devices, exemplified by our earlier-featured Swasthya Slate, which can conduct about 30 biochemical tests on body fluids, or the more focused BPL Lifephone Plus, which measures just ECG, blood glucose, heart rate, calories burnt, and steps taken. The former, largely developed for clinical screening use, may retail around $1,000, whereas the Lifephone retails for around $200, in-line with the comparable cue.me and Scanadu devices shortly hitting the U.S. market for $150 and $200, respectively. India-based Biosense's uCheck Universal kit runs over 10 urine-based tests in addition to blood glucose, and retails for about $80.

Low-cost Glucometers

While the same range of diabetes-specific devices is available in India, the high-end continuous glucose monitoring systems are not yet affordable for most people. On the low-end, J&J has developed the OneTouch glucometer for India, selling the device and a supply of strips anywhere from $10-$25. But standalone glucometers have become somewhat commoditized, with many local entrants undercutting branding efforts. This photo from the historical Cash Pharmacy in Bangalore shows a local Dr. Morepen's GlucoOne for $17 obviously outshining a duller ad for Bayer's Contour TS glucometer. These devices are sold as part of a BoP strategy favoring scale over unit margins, and they are often just a part of companies' product portfolios.

Other indigenous companies are taking a more integrated approach to diabetes care in India. One startup called Jana Care, operating in Bangalore with roots from Harvard & MIT, has developed a small device that plugs into smartphones to run a full 'diabetes panel' of tests: HbA1c, blood glucose, lipids, creatinine, and haemoglobin. They are in process of receiving international regulatory approval for all tests, positioning them as the only company offering smartphone-based HbA1c tests, and one of the only companies offering the full 'diabetes panel' at point of care using the same low-cost form factor. They've also closed the loop on the training side with their Habits Program app, a 3-month curriculum based on the Diabetes Prevention Program that includes weekly phone calls from a trained health worker to discuss personal progress. The cost to the patient varies by provider, but is only marginally higher than a standalone glucometer, and is affordable to most patients in India. 

Could Jana Care successfully commercialize in the U.S.? Low cost is not their only comparative advantage. Another is that their products have already been developed to target a large number of 'non-digital natives,' so that the training materials, notification processes, and general usability of the products is very friendly for users of all ages and backgrounds. This may be a marked advantage in serving people with Type II diabetes in the U.S., whose ranks skew heavily towards the middle-aged and elderly for whom complicated digital solutions will likely not be attractive. 


Question for Discussion:

Would the Jana Care package provide real value to people with diabetes, and to their care providers, in the U.S.?

Bending the Cost Curve: Medtech Will Do What the ACA Cannot

In his new book America's Bitter Pill, Steven Brill tells the story of ObamaCare (ACA) as a political effort to reform U.S. healthcare, a system he compares to a jalopy that costs too much to drive. A jalopy healthcare may be, but Brill's premise that the ACA represents the right service crew to fix up the old car seems incomplete when reading about the fascinating medical technology advances that Dr. Eric Topol shares in his new book The Patient Will See You Now. Whereas Brill seems to look at healthcare reform from the 30,000 foot level of Washington policymaking, Topol simply looks at the technological advances enabling more accessible, effective medicine. These two views, both top-down, and bottom-up, must be considered in developing broadly informed opinions on improving healthcare in the U.S.


Brill's View of Healthcare

Brill repeatedly frames the dilemma of healthcare reform as a political choice between 'bending the cost curve,' and extending coverage. The story of ObamaCare amply demonstrates that materially decreasing costs through policy is too difficult to achieve politically, though ObamaCare did result in over 10 million newly insured Americans. That's the ACA's main contribution so far, and it suggests that government's role is less to fix up the jalopy than to decide how many people can ride in it.

The failure to bend the cost curve was not for lack of trying on the part of the economic team. Peter Orszag and other economists fought hard to include provisions targeted at cutting costs, but few of these passed with any teeth. In critiquing Brill's book, Orszag argues that the curve may still bend, pointing to the continued expected growth of ACOs, increasing digitization practices among providers, increasing price transparency in the market, and additional instruments like HDHPs that help patients self-regulate spending. These provisions may help decrease costs over time, but they haven't yet, and at the end of the day, the ACA was only estimated to result in savings of $30 billion per year. That's a lot of money, but it still only represents about 1% of annual healthcare spend in the U.S., and only 4% of the $750 billion of wasted annual healthcare spend estimated by McKinsey.

The shocking gap in Brill's ultimate analysis is that it elides the powerful forces of technological progress by which costs often decrease over time. He does point to 'Integrated Finance & Delivery Systems'--a special kind of ACO that attains market dominance within its region or specialty--as a potential solution for controlling costs. In fact, transforming hospitals into ACOs is a key, if difficult to enforce, part of the ACA. Even this transformation does not dramatically reduce healthcare costs per se, but only opens the door for the adoption of new delivery models by partially aligning the financial incentives of providers towards saving money while continuing to provide quality care.

In Brill's telling, we are left with a story about increased health insurance coverage, but little in the way of fixing the leaky jalopy. Hope springs instead from the world of grassroots technological innovations, a ground-level scientific view that Dr. Eric Topol knows well.


Topol's View of Healthcare

The Patient Will See You Now is a non-stop documentation of extraordinary scientific, technological, and process innovations that are enabling the democratization of healthcare. The number of new technologies he cites runs into the hundreds, but a few trends most noteworthy for our purposes here include advances in the diagnostic use of genetic sequencing; the creation of a personal Graphical Information System (GIS) containing visual data on one's physiome, anatome, genome, proteome, metabolome, microbiome, epigenome, and exposome; near-ubiquitous sensors providing multi-dimensional diagnostic data and monitoring of most major medical conditions; and the emergence of efficient medtech for low-resource settings. Of course, hundreds of startup companies have sprung up to participate in the commercialization of these technologies, many of which hold promise for lowering costs while improving outcomes.


The Innovator's View of Healthcare

It's not likely that many of the fledgling companies advancing disruptive medtech innovations were at the table during the prolonged, anguished ObamaCare discussions, and in Washington, 'If you're not at the table, you're on the menu.'  Indeed, the ACA in its current form contains both provisions that encourage and discourage disruptive innovation, according to the authors of Sieze the ACA at the Christensen Institute. Here are the most salient ones:

• Provisions Encouraging Innovation
1. Individual mandate
2. Employer mandate
3. ACOs
4. Wellness programs
5. CMS Innovation Center

• Provisions Discouraging Innovation
1. Essential Health Benefits
2. Insurance exchanges coverage requirements
3. Cost-sharing funnels buyers into Silver-level plans
4. Fixing the medical loss ratio
5. Medicaid expansion

Smart innovators will be able to navigate the current regulatory environment to succeed, but they may increasingly choose to do so in other markets first. The geographical advancement of medical technology has often resulted in confluences of market conditions that seem to turn raw scientific knowledge into low-cost, effective medtech applications. One such market is India, whose often internationally-trained entrepreneurs are developing low-cost, high quality medtech at a dizzying pace. Topol mentions several in his book, such as Manu Prakash's 'origami' microscope that costs $1 to assemble, or Sangeeta Bhatia's urine test for cancer detection developed at MIT. There are many more, some of which are listed in our database. 

Regardless of the point of geographical origination for disruptive medtech, the delivery models that will emerge with these new technologies hold the potential to providing affordable, quality healthcare for everyone. Policymakers in Washington should seek to pave the way for the success of emerging medtech, an outcome that should be a central part of any discussion about refitting the jalopy of U.S. healthcare into a shiny new model for the world.

ECG Tech from India Could Save U.S. $50 Million Today

Electrogardiography: A Brief Review

Electrocardiography (ECG) is a diagnostic method of recording the electrical activity of the heart. This is traditionally performed by attaching electrodes to the skin, which then pick up waveform electrical impulses generated by the polarization and depolarization of cardiac tissue. These are mapped on an electrocardiogram and interpreted to measure heart performance and health.

The use of ECGs is ubiquitous and popular among providers, and especially tertiary care hospitals. The Mayo Clinic, for example, performs about 240,000 ECG tests per year in their laboratory, and the global market for ECG machines is set to grow to over $5 billion by 2020. This growth is driven by the wide range of increasingly common conditions ECGs are able to effectively monitor, including heart arrhythmias, anginas, pericarditis, most symptoms of heart disease, the thickness of the heart's walls, the rate and regularity of heartbeats, the size and position of the chambers, and the presence of any changes to the heart's function in response to surgery, devices,  or medications.

The average cost of a provider-administered ECG test in the U.S., which is comprised of the test itself + the interpretation of results by a trained Cardiologist, is $1,750. As usual, the prices vary substantially from provider to provider, the lowest in the U.S. being $550, and the highest being $3,300.


The U.S. Market for ECG Machines

ECG machines vary in diagnostic ability, physical footprint, and price. The current market for these machines can be divided between the 'incumbent' products most of us associate with ECGs, and emerging 'disruptive' products that are portable and less expensive. The incumbents are made by about 16 manufacturers from the developed world, including Burdick, Welch Allyn, Schiller, GE, Bionet, Philips, and Nihon Kohden. They are often equipped for use with 12-leads, often include printing capabilitieg, and they are large enough to be wheeled around. They cost between $1,200 and $3,000 each.

By contrast, the disruptive class of ECGs are made by an (almost) entirely separate set of manufacturers, mostly from the developing world, including ReadMyHeart, InstantCheck, PC-80, AliveCor, ECG Check, Dimetek DiCare, MD100E, PC-80B Color, HeartCheck PEN, REKA E100, and Afib Alert; they often use 1 to 3 leads, rely solely on integrated digital displays, are handheld, and cost between $25 to $500. Dr. Grier at North Dakota State University has compiled an exceptional review of available 1-lead, handheld ECGs on his research page. Most of the 1-lead devices are from China, but some, like AliveCor, are U.S.-based companies. All of them have faced limited adoption among healthcare providers in the U.S., where the incumbent technologies are still used. As a group of physicians evaluating AliveCor stated,

". . . This device has significant limitations in the acute evaluation of chest pain associated with heart attacks. A single lead tracing will miss many real ischemic events, enough that even if it was stone cold normal it would not change our suspicion of myocardial ischemia. If there are significant elevations or depressions, it would probably raise our suspicion for myocardial ischemia, but we would still need a 12 lead ECG, begging the question of how it changes management."

Indeed most of the disruptive handheld ECGs above--at least in the U.S. context--have competed against non-consumption by offering patients and homecare nurses the ability to run ECG tests they could not run before. While additional monitoring increases the risks of false positives, the physicians above also concluded such portable testing could be useful for post-operative heart monitoring during convalescence.


A More Immediately Disruptive Class of ECG From India

India has produced a number of 12-lead handheld ECGs that may be more disruptively positioned than the 1-lead ECGs above, which begin to look like 'hobby devices' in comparison. One of the first major advances was GE's famous MAC India model released in 2007, which brought the price down to $500 from $2,000 - $10,000 for their other hospital-grade ECG machines.

GE's MAC India

In the past 8 years, other Indian companies have released 12-lead ECG devices that achieve greater portability, as well as allow for diverse methods of test data transmission, remote analysis, and storage.

Maestros Mediline launched the E UNO R-10 device in 2010 in partnership with Vodafone. The device relied heavily on Blackberry phones, and was designed mostly for remote consultation use, just as ECGs are in the U.S., except that ECG technicians in India will often travel to administer tests, the results of which are then transmitted to a centralized doctor at a hospital for interpretation. Developers have built applications allowing for use on the Android platform, but the device was not less expensive than GE's MAC India, costing about $500.

Maestro Mediline's E UNO R-10

Lifeplot CCD1 was another offering developed in Pune, India, that does not rely on any specific network or device for transmission of test results, making it potentially more versatile. Though the original model was more expensive at $2,000, LifePlot released a more advanced product just 2 years ago for only $700.

LifePlot UNIQ

The prices for these devices have likely come down, but there are less feature-rich ECG devices appearing in the Indian market from both indigenous and international sources. AliveCor has signed an exclusive agreement with the highly respected Apollo Hospitals chain to use its ECG technology for clinical tests, begging the question about whether the U.S. cardiologists' review of AliveCor's limitations above reflects incumbent biases more than solid clinical rejection, whether something is just better than nothing for India, or whether AliveCor's 1-lead technology has reached a point of relative parity with 12-lead testing. At a price point of $75, perhaps the tradeoff of some marginal performance is worth it.

AliveCor's ECG Device

The appearance of the indigenous Sanket PiE by Agatsa follows past patterns of the introduction of disruptive technology into the Indian market by foreign firms, followed by the release of indigenous versions which may or may not be better-suited for indigenous market conditions. Since Sanket is not yet available on the market, it's not clear what the price will be, but it will presumably be comparable to AliveCor.

Agatsa's Sanket PiE

One of the most immediate differences between the handheld ECGs being widely sold in India vs. those in the U.S. is that they are 12-lead ECGs, while those from Dr. Grier's page are all single-lead devices. This signals a serious disruptive position relative to traditional ECGs in the Indian market, which is a nice illustration of how the context of innovation shapes its ultimate shape. Many elements of the Indian market demand a fully functional, low-cost, handheld ECG: Sheer in-affordability of existing technology for huge numbers of needful patients, the necessity of portability for ambulatory community health workers, and a large supply of IT talent.

Would the U.S. Benefit from Adopting Indian ECG Technology? 

The U.S. market context is much different from that of India, which explains the strategies of handheld ECG devices like AliveCor, Scanadu, and Wello, which--so far--have not competed directly against incumbent technologies, preferring instead to position themselves mostly as patient-centric devices for self-use, providing only supplemental data to traditional provider-based ECG machines. This could still represent the beginnings of disruption, which often incubates in a foothold market that can sustain a nascent technology until it improves to the point of dominance across all or most of the dimensions of quality that matter to customers. At that point, the incumbent technologies quickly fade away. This is the story of transistor radios disrupting vacuum tube radios throughout the 1950s and early 1960s.

However, one of the biggest issues behind lack of serious medical adoption of handheld ECGs in the U.S. is that the alternative processes / delivery models are not yet in place for the use of these machines within provider settings, whereas in a market like India, the new devices are often competing against non-consumption, so in many cases they've had much more 'experience' in serious clinical use. What might the U.S. learn from the delivery models that have emerged around the use of these portable devices?

Adopting leaner delivery models and technology is likely where the real savings lie, but even if the U.S. were to switch over to the equivalent technology available in India today, substantial savings would immediately materialize. Just taking GE's MAC India at a $500 price point, if the average price of an incumbent machine is $2,000, and each of the 7,000 hospitals in the U.S. purchases 5 new ECG machines per year (as benchmarked against the yearly purchases of a UK hospital with 5 sites), this results in over $50 million in yearly savings on equipment costs alone, not including the lead replacement cost, which is also material judging from the UK hospital's spending.


Question for Discussion: 

• What barriers prohibit the U.S. from purchasing lower-cost ECGs for clinical use? 

20+ Facts About Healthcare Costs in the U.S.

General Healthcare Spend*

1. The U.S. spends nearly 20% of its yearly GDP on healthcare. Other developed countries spend about half that, but the additional spend in the U.S. does not generally result in improved patient outcomes
2. The healthcare-industrial complex spends more than 3x the amount of the military-industrial complex on lobbying each year
3. Prices for U.S. prescription drugs are ~50% higher than those in other developed countries
4. McKinsey estimated an annual healthcare overspend of $750 billion in the U.S.
5. Company financials seem to indicate that if the U.S. payed for healthcare at similar levels to other developed countries, the profit margins for medtech and pharma companies would remain high enough to continue encouraging innovation

Image Courtesy of Sweetpsychic.com

Hospital Economics

1. Hospital chargemaster prices are often capricious, and reach levels 10-15x higher than Medicare reimbursement rates
2. Medicare price models are imperfect, but they are cost-based, and attempt to factor in all direct costs and allocated expenses required to provide a given product or service
3. Hospitals around the U.S. market aggressively to Medicare patients
4. The average hospital collection rate is ~35% of the total amount billed
5. Average operating profit for non-profit hospitals is ~12%
6. Medtronic sells its products at a 4x markup to COGS, and hospitals routinely sell devices to patients at a 2.5x markup to the wholesale price
7. Pharma companies commonly offer wholesale prices at 10x to COGS, and hospitals routinely sell these drugs at a 4-5x markup to the wholesale price
8. Hospitals routinely double- and triple-charge for items on the chargemaster that could reasonably be included under their general facility and room charges
9. Doctor groups with in-house IVD labs seem to order more tests than those using outside labs
10. A typical PET / CT piece of equipment will pay for itself within 1 year by carrying out 10-15 procedures per day. The equipment has an expected life span of 7-10 years

Patient Economics

1. 60% of personal bankruptcy filings in the U.S. per year are related to medical bills
2. Patients are often delivered large portions of medical bills not covered by their insurance plans
3. 'Medical billing advocates' often achieve discounts of 30-50% on medical bills just by calling in to negotiate on behalf of patients

Image Courtesy of The Atlantic

Payer Economics

1. Healthcare insurance premiums under ObamaCare will rise mainly due to 3 provisions: 
1. Prohibitions on exclusion of pre-existing conditions
2. Restrictions on co-pays for preventive care
3. End of annual or lifetime payment caps
2. The largest payers have historically negotiated reimbursement rates at 30-50% higher than Medicare rates, but increasing hospital consolidation is shifting more collective buying power back to the providers, so that the final negotiated reimbursement rates are moving closer to chargemaster prices
3. FDA-approved drugs are reimbursed by Medicare at 'average sales price' + 6%. The manufacturer calculates and provides the average sales price

*All facts in this post are from Steven Brill's article Bitter Pill: Why Medical Bills are Killing Us, and his newly published book, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System . They represent only a small portion of his findings, but are among the most objective and meaningful to me.

GE India Could Save U.S. PET/CT Scan Patients $7.5 Billion Per Year

Cancer is abnormal cell growth with the potential to spread to other parts of the body and disrupt normal functions, resulting in illness or death. Claiming over half a million lives per year, cancer is the second leading cause of death in the United States, second only to heart disease. There are over 100 known cancers effecting humans, some being more lethal than others. In all cases, early detection is crucial for improving the chances of successful treatment.

Cancer Cells, from WebMD

Cancer detection typically involves a range of methods and tests but is broken into two stages: Screening and diagnosis. Researchers have provided cancer screening guidelines to encourage regular screenings for potential symptoms of cancer, which differ for each type. Cancer symptoms might include heightened levels of proteins or other byproducts of cancer in the blood, abnormal growths, pain, bleeding, or discoloration of tissue. If potential symptoms appear, the doctor will move towards diagnosis, ordering additional tests to gather more data. These tests can be numerous and costly, and might include PET/CT scans, ultrasound, endoscopy, and MRI for imaging; lab testing on bodily fluids to detect tell-tale biomarkers; and biopsy to collect cell samples for microscopic evaluation by a Pathologist. Using data from these tests, doctors attempt to provide a definitive diagnosis and prognosis to the patient.

Many of the tests above are very expensive, but entrepreneurs in India are working on addressing an enormous and unmet domestic need for early cancer detection through innovative, low-cost product design. For example, GE Healthcare has developed the gorgeous Discovery IQ PET/CT, representing $15 million and 3 years of R&D at its center in Bangalore. Innovating within the constraints of India, they have succeeded in creating a scanner that's 40% more affordable than comparable alternatives, is modular and scalable to allow for price discrimination, offers a unified service of detection, planning, and assessment through state of the art hardware and software, and is a beautiful machine. The cost savings have come from conducting R&D in India, from redesigning a more cost-effective machine from the ground up, and from manufacturing the machine in India.

Discovery IQ PET/CT Scanner, from GE Healthcare

Currently, India only has about 120 PET/CTs operational in the country, whereas the required number of units to adequately address patient demand is over 1,000. Judging from the CEO & President of GE South Asia Terri Bresenham's remarks on Discovery IQ, GE hopes that the price elasticity of demand for PET/CT scanners in India is flexible enough that a 40% price reduction will help to fill this gap. I hope so, but it may be that more disruptive technologies like CellMax Life may ultimately be what brings early stage cancer detection to the masses of India.

Even if the Discovery IQ does not realize substantial financial returns or market share gains in India, GE and the world can still benefit tremendously because GE has created a superior, low-cost product. Producing 50-slice equivalent CT speed imaging, the highest PET axial view available on the market, the Q.SUITE platform for improved PET quantitation, and the Q.CLEAR platform for up to 2x image improvement (SNR) + 2x improvement in PET quantitation accuracy, Discovery IQ is a PET/CT that gets the job done. Certainly there are PET/CTs that may perform better on any one of these dimensions, but does it matter? For example, some PET/CTs are now capable of taking 512 slices, but since no meaningful diagnosis accuracy improvement was found from the jump between 64-slice and 128-slice scanners, 64-slice scanners generally make for the best value. In fact, according to Niharika Midha at GlobalData, the PET/CT "Hardware has reached this plateau . . . There is only so much that can be changed to the machine."

If GE India has tightly engineered Discovery IQ for maximum value (ROI), then this device may sit at the very rim of the performance plateau, including all of the right features, but not overloaded with cutting edge technology and experimental features that price it out value-conscious procurement networks.

GE Logo and Slogan from Inroads

Given that most PET/CTs cost between $2 and $3 million, the 40% price reduction for Discovery IQ puts it between $1.2 and $2.8 million for cost of acquisition. The median prices for CT scans charged by providers hover between $700 and $900, and the U.S. government estimates that 80 million scans are performed annually. The price for PET scans is about $5,000, but only 2 million are performed annually for Oncology diagnostics. Adding these up, approximately $75 billion is spent on PET/CT imaging per year in the U.S.

Of course, only a minor portion of this total spend could be chalked up to equipment cost, so if we instead look at the lowest PET/CT scan costs, and assume the imaging centers offering such low prices are highly efficient so that the overhead and profit margins per procedure are small, we might say that the 40% equipment cost savings generated by Discovery IQ could be passed on rather directly to the end payer. The lowest prices charged for CT scans seem to be around $200, and the lowest for PET scans around $1,200. Reducing these costs by 40% and multiplying by the yearly number of procedures shows a potential costs savings of nearly $7.5 billion per year.

This begs many questions. Could GE keep the cost this low in selling to PET/CT providers in the U.S.? If not, how much of the 40% cost saving be eaten up, and by what? Would GE even want to disrupt their home PET/CT market by importing Discovery IQ? Certainly short-term financial analysts held captive by Wall Streets valuation process would balk, as would the sales force taking lower per sale commissions. On the other hand, volume can make up for decreased unit margins, and such a move may gain GE significant additional market share. Also, the modularity of Discovery IQ might result in natural price discrimination, where the highest-end clients are able to pay for additional functionality, and could widen the base of the market by making a basic PET/CT available to clinics previously unable to afford one.


What Do You Think?

• Should GE disrupt themselves by importing and commercializing Discovery IQ in the U.S.? If so, what main barriers would they face? 

India's New Health Tablet Performs 30+ PoC Diagnostic Tests

The Swasthya Slate ('Health Tablet') is a portable diagnostic device that enables users to conduct 33 diagnostics tests with a simple box, power source, test sensors, and a smart device using the Android OS. The videos on this page give an excellent view into how the testing, analysis, and reporting process works. Of the 120m or so smart phone users in India, about 80% are using an Android OS, so the technological infrastructure is already in place for Slate to quickly scale up.

Photo Credit: Swasthya Slate

Launched in March, 2014, the Slate is the work of the Public Health Foundation of India, which also manufactures the device. The project is led by Dr. Kanav Kahol, formerly a bioinformatics professor at Arizona State University. With all sensors included, the device is being manufactured in India for only $800, a price expected to drop by 20% as it further scales. At this price, the primary target customers are health ministries, agencies, and clinics who will purchase the devices for public health management, putting them into the hands of community health workers (CHWs) who canvas the country as frontline care providers. The new diagnostic processes enabled by the device show the real value it's created, described in the following steps, and enabled by the components illustrated in the photo below:

1. CHW visits village
2. CHW conducts PoC diagnostic tests within minutes per individual
3. Diagnostic box sends test results to smart device via Bluetooth
4. Smart device uploads patient EMR to secure cloud
5. Slate's data management software analyses data
6. Slate's software communicates results to stakeholders via multiple channels

Photo Credit: Forbes India

The time and cost savings resulting from this process are substantial. Not only do the patients avoid costly travel for multiple tests when needed, but Slate only charged $1.25 for a panel of 10 standard biometric tests during their pilot. Referencing the table below, this is nearly 1/20th the cost of what the government was charging before at subsidized prices for the same 10 tests. Theranos, a highly disruptive lab diagnostics company featured in an earlier post, charges in the range of the government prices, but does not appear to offer Urine Glucose tests or the more manual tests like blood pressure, temperature, ECG and Malaria. And standard laboratory diagnostic test prices are sky high in comparison, as the prices from anylabtestnow.com show. Slate's measurement accuracy performance is within 99.9% of the traditional path lab technologies, and they continue to publicly track their clinical evaluation data to improve the device's performance. 

How Transferable is the Slate Device to U.S. Healthcare? 

Theranos is valued at $9 billion because they are providing essentially the same laboratory diagnostics as traditional labs at a fraction of the cost (often 1/10th-1/20th), using less invasive methods, and at much faster speeds. Slate appears to provide PoC diagnostic test results even faster than Theranos using RDT strips, at another huge price discount (1/20th of Theranos's prices from the chart above), and in similarly non-invasive methods. They have also developed 18 apps so far to fulfill the true meaning of 'software as a service.' On the other hand, Slate only offers 33 tests, whereas Theranos is set to offer the full range of possible laboratory diagnostic tests, which number into the thousands. Convincing the medical establishment that the diagnostic results from Slate represent medical grade data would be difficult. EHRs have been slow to become truly personal due to hospital policies and HIPPA. Many of Slate's apps are culturally-bounded, and would need to be re-written.

Nevertheless, I am optimistic of Slate's potential to disrupt clinical laboratory diagnostic testing in the U.S. Here's why:

Firstly, there are encouraging signs that both the FDA and the medical establishment are beginning to approve diagnostic biometrics from wearables, and if from wearables, why not from Slate? At any rate, Theranos is operating as a CLIA-approved lab without FDA approval due to the unique classifications for laboratory diagnostics, and because Slate is already tracking their clinical evaluation data carefully and cheaply, this may not be such a large barrier even if their system does require approval. Secondly, apps are relatively easy to write. Thirdly, if Slate's battery of tests represent the most commonly ordered tests, then it could disrupt Theranos even as Theranos is disrupting Quest and LabCorp. After all, the device is affordable, portable, and modular enough for use by school nurses, the smallest retail clinics, and even by patients themselves. If a device like Slate becomes the go-to for routine diagnostic tests, how commonly will people need to level-up and go to a Walgreens to order a Theranos test that costs 10x the price, or to a hospital where the test will cost 200x the price? 

According to Dr. Kahol's Twitter feed, he has already received requests for the device from both emerging and developed health markets, such as Pakistan, South Africa, Malaysia, and the UK. Field workers from at least 8 different countries, representing both developed and emerging markets, are already using the device on a pilot basis, as this usage map shows.


Question for Comments: 

• What barriers prevent Swasthya Slate from transferring to U.S. healthcare markets, and how might you recommend they reduce these?  

$100 Stents from India in the Offing

Since the USFDA approved cardiac stents in 1994, there has been tremendous growth in their use, to where 700,000 are implanted in patients annually in the U.S. alone.  Manufacturers' sales of stents reached $5.5 billion in 2012.

In the U.S. about 50% of stent implants are for acute conditions, such as unstable angina, or chest pain caused by the buildup of plaque in the arteries surrounding the heart. The other half are for elective-use patients in stable condition. This video from the Mayo Clinic illustrates Percutaneous Coronary Intervention (PCI), the procedure for which the large majority of stents are used:

The price of stents has followed the broad pattern of decline typical among innovation life cycles. Bare Metal Stents (BMSs) were first priced wholesale around $1,600 in the early 90s, but today the average cost is around $700 each. Drug-eluting Stents (DESs) were a new model introduced in the early 2000s that have helped marginally reduce potentially fatal angioplasty complications, such as blood clotting. These were originally priced around $3,000, and now cost about $1,500 each. According to Bloomberg, "Hospitals receive an average payment of about $25,000 per stent case from private insurers . . . [and] Doctors who implant stents earn a separate fee that averages about $1,000." The stent cost, then, only comprises ~5% of the total price of implantation, not to mention the ongoing costs for the patient, including blood-thinning medications, which are prescribed as a matter of course to mitigate the risk of restenosis.

Until 2001, India imported nearly 100% of stents used, although there were successful early innovation efforts at lowering the cost of stents through indigenous innovation. A network of doctors and engineers at Care Hospitals, Mediciti Hospitals, and the Society for Biomedical Technology pioneered a low-cost coil stent patented as the Kalam-Raju in 1995, crashing the prices of imported stents by several factors, and remained about 50% less expensive, costing around $250. One of their main reasons for creating a low cost stent was that the reason for the "very low number of cardiac procedures carried out in India is poor affordability arising from the high cost of imported consumables." Depending on the report, there were about 2,000 Kalam-Raju stents implanted before mesh designs replaced the coil stents.

Kalam-Raju Coil Stent, 1995

Indian innovators have generally trailed the major OEMs in stent innovations, so the design shift from mesh to scaffolding, and the biochemical shift to drug-eluting stents have not been kind to the market for indigenous stents in India. There remains a general mistrust of locally manufactured products among large, urban hospital systems, who remain the largest buyers of stents. These developments have maintained a high import price for foreign stents in India, and some reports show patients paying up to three times the import price for stents! Needless to say, the penetration of angioplasty in the Indian market remains tragically low. Of course, the high price of consumables is not the only reason for this. Another is the very low number of cardiologists in the country.

Nevertheless, it's clear that any solution to providing stents when and where they're needed in India will require low cost, high quality stents as part of the solution. Efforts to create affordable indigenous stents have continued in India, such as Relisys' Corel+C in 2007, a collaboration between Dr. Balram Bhargava, Relisys, and Germany's CINVENTION to create a non-polymer-based DES that was both safer and 50% the cost of imported DESs. Ultra efficient cardiac care centers like Narayana continue to ensure foothold markets for indigenous stents that are 'good enough.' While some may scoff at the use of 'good enough' applied to Class 3 implantable devices where quality is at a premium, we should all keep in mind that some device features are luxuries, and that having the basic version of a device that's almost as good, but that costs multiple factors less is far more valuable to a patient whose alternative is nothing at all. And the benefits of the 'best-performing' stents are quite marginal. A recent study found the rates of late stent Thrombosis to vary only marginally from one stent type to another as follows:

• BMS stents: 1.5% 
• Old generation DES: 1.1% 
• New generation DES: .9%

Insured patients in the U.S. will pick the new generation DES every time for a .2% risk reduction, but the potential for disruptive innovation lives on in Indian healthcare, where only some 25% of the population even has access to some form of insurance, so that patients often haggle extensively with providers on costs for which they pay out of pocket. 

The implicit question of each globalhealth.care post is always, 'could this device disruptively transfer into the U.S. healthcare market?' Let's compare the prices first: 

• Avg cost of BMSs and DESs in the U.S.: $700 and $1,500
• Avg cost of BMSs and DESs in India: $200 and $500

$200 is a already a low price for a stent, but the Indian OEMs give a further 25% discount to hospitals who buy directly from them, bringing the cost to $150. Furthermore, the Indian Council of Medical Research is currently conducting a study comparing the quality of imported vs. indigenous stents made by companies like Opto Circuits India, Sahajanand, Translumina Therapeutics, Vascular Concepts, and Vasmed Technologies. If they find similar levels of clinical outcomes, this would help drive domestic uptake, and further decrease the price through economies of scale, perhaps to around $100 each. 

Hospitals using fee-for-service reimbursement may desire to purchase lower cost stents, where 'cathlabs' have become valuable sources of profit at fixed reimbursement rates. Just switching to a $500 Indian DES from a $1,500 U.S. DES would save a hospital performing 2,000 implants per year $2,000,000. In time, payers will reduce reimbursement rates as low-cost stents contribute to low-cost implant procedures, further enabled through remote surgery trends and other efficiency gains. In the meantime, it may already be the case that ACOs and other specialized surgery centers in the U.S. who are incentivized to reduce costs at or above average outcomes would be interested in offering patients a choice between a $100 BMS with a 1.5% chance of Thrombosis, or a DES for $1,500 with a .9% chance of Thrombosis.

Starter Question for Comments: 

• What's stopping low cost stents from being adopted in the U.S. today?