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Top Five Business Risks to Address in Navigating COVID-19 Safely and Strategically

The world of digital health changed drastically overnight when COVID-19 began to spread across the globe. Almost instantaneously, a number of market opportunities grew exponentially, and companies’ trajectories either made them a powerhouse or caused them to significantly pivot operations to be able to meet demand in this new world. Along with an incredible market opportunity, this new world order has created significant changes in risk for digital health and telemedicine companies. The combination of these factors creates winners and losers in the market. The winners are able to capitalize on the opportunity safely and strategically, but the losers will miss the mark. That is where I want to help you today—navigating the ‘safely’ and ‘strategically’ part of this equation. With the new risks present in the marketplace, I don’t want anyone to get caught off guard and have an unexpected negative outcome or lawsuit be the end of a great business idea or take your focus away from capturing market opportunity. To that end, I want to arm you with five things to think about and process to make sure you are safe and strategic in your approach: Because of the incredible market need, regulations and enforcement of laws surrounding HIPAA and medical provider licensing have been temporarily relaxed. I encourage you to think about how to set up your business so that you will be compliant— not just on a temporary basis, but long after this crisis period. This means answering a few questions: Am I HIPAA compliant, and are all of my providers licensed in the patient’s location (or at least in a state that is part of a licensing reciprocity agreement)? Do I have adequate insurance coverage in case information is compromised and patients or customers sue me for compromising that data? Did you know that insurance policies, particularly medical malpractice policies, require the provider to be licensed where the patient brings a lawsuit for coverage to respond? Regardless of temporary changes to regulations, you could be faced with a difficult scenario if providers are not appropriately licensed As a digital health company, a data breach or an error in your software/algorithm could lead to a provider making harmful decisions for a patient and potential subsequent injury. Are you confident that your insurance program would respond and defend you if this were to happen? This is where we see the most common gaps in insurance programs. Many digital health companies are able to temporarily bill for and receive payment for remote services from payers. However, new billing codes pose a risk because it could be difficult to ensure you are billing correctly. Furthermore, the reimbursement may not last post-COVID. This brings up a couple of issues: Do you have insurance coverage to defend you for any errors in billing for remote services provided by you/on your platform? Do you have a long-term payment model strategy that accounts for both reimbursement pathways and a return to low or no reimbursement for these services? Regulations have changed and are constantly shifting, and it is VERY important to note how they may vary from state to state. It is crucial to have an attorney partner who keeps up on state regulations and can advise you appropriately. Beracah Stortvedt co-founded the Digital Health Practice at Marsh & McLennan Agency. He helps companies in the space grow their businesses safely and strategically through business insurance solutions (D&O, Medical Malpractice, Product Liability, Cyber Liability, etc.) in ways that generalist brokers cannot. He also uses his background as an underwriter and an MBA with an emphasis in strategy to help his clients obtain the best available risk transfer options at the lowest cost.

Where to look for digital health applications?

The U.S. health care system is not unique in having deficiencies along with strengths. Examples of strengths and deficiencies of the system - relevant to digital health’s potential to make an impact - are presented in Table 1.  Digital health solutions can address the most pressing deficiencies, i.e., cost of care and reach/coverage of the under served. Care coordination and continuity of care are also areas which digital health solutions can improve.  Another deficiency of the care system is that it mostly activates when a person falls ill, i.e., it is reactive, not preventative. Digital health solutions can provide effective and affordable pathways for preventative care. The health care system also has a number of inefficiencies and waste - areas where digital health solutions can be effective. Finally, it goes without saying that digital health solutions can also enhance the strengths of the system. Table 1: Example strengths and deficiencies of the U.S. health care system where digital health can have an impact Table 2 outlines some of the opportunities and challenges for adoption of digital health. In general, enhancing quality, improving convenience, extending reach and reducing cost of health care are the anticipated benefits from digital health solutions.  Enhancing quality would result from: (i) timely, targeted care based on collection and/or communication of relevant health data and information; and (ii) new care possibilities that are enabled through continuous monitoring, wireless communication and/or rich new databases of disease conditions.  Improving convenience would result from the resulting mobility afforded the patients and the care providers.  Extending reach would result from possibilities in diagnosis, therapy and monitoring at a distance and/or in places otherwise difficult to reach.  Reducing cost would result from keeping patients out of care facilities through preventative care solutions and timely diagnosis, as well as by reducing errors and amplifying the productivity of the health care providers.  Regarding cost, technology integration into medicine has often been responsible for increasing the cost of care, a point to keep in mind. Table 2: Opportunities and challenges in adoption of digital health The rate of adoption or digital health will however depend on overcoming the challenges, including technology availability, acquisition and ownership cost, regulatory efficiency, reimbursement policy, clinical and health education, demonstrated outcomes and patient awareness. Technology availability refers to the extent and richness of solutions possible to a wide range of health problems. Acquisition and ownership cost refer to costs associated with purchasing the solutions and operating/maintaining them, respectively. Regulatory efficiency refers to the time and cost associated with obtaining approval for specific solutions to particular problems. Reimbursement policy refers to covering the cost of utilizing digital health solutions, including when used for prevention, which is a great application opportunity but not reimbursable in the current system, for the most part. Clinical and health education refers to the need for the health providers to adopt digital health solutions and know when/how to deploy them; it also includes teaching patients about preventative and self-management practices. Demonstrated outcomes refers to clinical or field studies that show the efficacy of digital health solutions. Finally, patient awareness refers to the visibility of patients into digital health solutions to promote their self-interests and to gain their willingness to use such solutions. Fortunately, there has been tremendous progress in overcoming these challenges over the last five years as the potential of digital health has been recognized. The current pandemic has been a catalyst of visibility for digital health and has significantly accelerated its acceptance into the health care system.

Three Things Entrepreneurs Should Know Before Selling Their Company

Perhaps you’ve been building toward this day for months or years. Or maybe the COVID-19 pandemic has convinced you the time is right. Regardless, you’re considering selling your business. Here are three important things you can do now to improve your chances for a great sale and increase your proceeds that are often overlooked or undertaken too late: Do your estate planning, gifting, etc. before you engage with a buyer so that your personal ownership is as low as practicable. Large corporate buyers sometimes ask controlling owners/sellers to re-vest in their ownership as part of the sale. For example, if you own 60% of the stock in your company and you’re needed to help the buyer in transitioning the business, a buyer could ask you to re-vest in half your stock over three years, meaning that if you are terminated immediately after the sale, depending on the circumstances, you may end up only being paid for half of your stock, 30% of the stock in the company. While you would obviously try and negotiate to reduce the number of shares subject to re-vesting, reduce the re-vesting period and try to provide that you’d lose nothing if you were terminated without justification, you still run the risk of losing all of your re-vested stock. If you have gifted stock, set up trusts, etc., however, so that less of your original stock is in your name or subject to your control, then less of your original stock is available to subject to re-vesting. Formalize your employment agreement and lock in your highest salary and bonus. Most founder/owners feel that they will make their money as owners of the business, not through their salaries as officers, so they allow themselves to be low-balled with their salaries and bonuses when their companies are acquired. By locking in your compensation in a formal signed agreement before the M&A event, you have a greater chance that the acquiring company will base its new employment agreement with you on the current one. Normally, it’s too late to ask for more executive compensation once the M&A transaction starts. Get your cap table, company documents and contracts into avirtual dataroom. Consult your lawyer and move most of your key documents into a virtual data room. It will help you and your lawyers evaluate what corporate clean-up you need to do and make it easier to comply with buyers’ requests for documents. Deals go faster when sellers competently provide documents when requested and earn buyers’ trust, and time is usually your enemy when selling the business: few buyers will come to you and offer you more money because things are going great, while many will want to reduce the price if things aren’t going well. Moreover, sellers more easily know what to include in the purchase agreement’s schedule of exceptions to avoid paying a financial price for a material misrepresentation. Take these three steps now, before you engage in formal M&A discussions, to ensure the maximum return for your company. You worked hard to build it; you deserve to be paid top dollar upon exit. William W. Eigner is a Partner at Procopio in its Mergers & Acquisitions and Strategic Joint Ventures practice group. He is listed in The Best Lawyers in America and in Super Lawyers. He has won many awards and has been called the “go-to guy for M&A” by SD Metro Magazine.

Must-Know Health Care Ecosystem Terminology

Many of us working in digital health space have not been schooled in the U.S. health care system terminology. Here is a basic, but indispensable, overview. For an in-depth study, you are referred to “Essentials of U.S. Health Care Systems” by Shi and Singh [1]. The basic types of systems of care delivery in the U.S. are managed care, integrated care, Veterans Health Administration, and underserved care.In these systems, the patient (i.e., the covered person, referred to as ‘enrollee’ or ‘member’) is not the primary ‘payer’ for the services received.Employers or the government foot the bill for the most part. Managed care is the dominant system; it integrates, coordinates and prices health care delivery functions. The above figure, adapted from [1], illustrates the elements and construction of a managed care system. The managed care organization acts like an insurance company to the employer or government, with its ‘plan’ analogous to insurance policy. The ‘plan’ sets forth the benefits and costs of care for the enrollees. Enrollees often contribute to a fraction of the plan premium through their employer. They also are usually responsible for a fraction of the cost of the care received, referred to as ‘copay’. Plans usually prescribe a set of health care ‘providers’, collectively referred to as the ‘network’. Out-of-network providers are usually not part of the plan benefit or require higher copay by the patient. In integrated systems, a provider organization has integrated and coordinates its own network, through which it delivers comprehensive health care services. A few examples of such systems are Mayo Clinic, Kaiser Permanente, Cleveland Clinic, and Geisinger Health System. In contrast to managed care, integrated systems are both the provider and the insurer. The Veterans Health Administration is an integrated system by the government for the benefit of active and retired military personnel. It is part of the Department of Veterans Affairs (VA) and the largest integrated health system in the U.S. The underserved systems, usually supported by the government or charitable funds, provide health care services (through community health centers, for example) to the uninsured—usually from the disadvantaged groups and communities. Government insurance programs such as Medicare (for qualifying senior citizens), Medicaid (for qualifying low-income citizens), and State Children’s Health Insurance Program (for children of uninsured families) additionally support the underserved. Table 1 summarizes the terminology associated with the types of care services that the aforementioned systems provide. Primary care is the domain of the primary care physicians and focuses on prevention, diagnostic, therapeutic, health education, counseling, and minor preventive surgery. Care by specialized physicians—usually referred to by the patient’s primary care physician—is noted as secondary care. Tertiary and quaternary are further specialized care services—referred to by the primary care physician or secondary care specialists. In closing, medical device manufacturers and pharmaceutical companies are also important elements of the health care ecosystem. The former research, develop and commercialize the medical devices—often technology intensive—that aid in disease diagnosis, therapeutic procedures and monitoring needs. The latter are companies that research, develop and commercialize drugs (i.e., medicine). The medical device and pharmaceutical industries are highly regulated, in the U.S. by the Food and Drug Administration. Table 1: Terminology associated with the different types of health care services References [1] L. Shi and D. Singh, Essentials of U.S. Health Care Systems, Jones and Bartlett Learning,
5th Edition, 2019. [2] http://medical-dictionary.thefreedictionary.com (Accessed July 28, 2020) [3] http://en.wikipedia.org/wiki/Urgent care (Accessed July 28, 2020) [4] http://en.wikipedia.org/wiki/Laboratory(Accessed July 28, 2020) [5] http://en.wikipedia.org/wiki/Clinical_laboratory (Accessed July 28, 2020)

Top 3 Approaches to Digital Health Innovation

Generally speaking, there are three basic approaches to digital health innovations: app driven, sensing driven, and service driven. In other words, there is either a novel app, a new sensing capability or an innovative service. Innovations may also combine these approaches, for example, to solve more complex needs, enhance differentiation, rationalize higher prices, and increase barriers to entry. Tables1 outlines the basic approaches to app-driven innovations in digital health. Tables 2 and 3 do the same for sensing- and service-driven innovations. In the case of sensing approach, the sensors maybe in the phone or in a separate device, often referred to as a “smart” device.Such smart devices incorporate connectivity—wired or wireless—to facilitate transmission of the measured data. Innovations enabled by such smart devices need not be exclusive to also using a phone’s embedded sensors for additional capability. Table I: App-Driven Digital Health Innovation Table 2: Sensing-Driven Digital Health Innovation Table 3: Service-Driven Digital Health Innovation It is important to point out that in all approaches, there is a need to address. The approaches to the solution often require innovation in one or more areas. A given need may require a measurement capability that does not exist, necessitating innovation in sensing. There may be an opportunity for a new service, not readily and/or conveniently available. Finally, an innovation may be in the form of an app; a growth area in this respect is digital therapeutics, wherein an app can be a prescribed medication.

Don’t Make the Digital Health Solution Mistakes of the Past!

Digital health product and service opportunities span a wide spectrum of health and wellness needs.  They also enable development and deployment of new business models. In developing these solutions, the smart phone platform is hard to overlook because of its ubiquity and personalization.  In other words, if it can be done with a smart phone, other approaches fight an uphill battle. Any innovation project should carefully weigh the application requirements to assess if a custom platform is competitive in the long run.  Smart phones advance at a rapid pace, the nature of smart phone marketplace—characterized by customer receptivity for new features and capabilities.  As a result, a custom platform that is unique today may not be competitive tomorrow as the smart phone platform integrates more capabilities. Today’s smart phone is an amazing machine; it not only provides a variety of wireless and wired connectivity features, but also computing, storage, (optical) imaging, display, and sensing.  Furthermore, smart phones are ‘glued’ to their owners, i.e., are essentially a wearable; they can be used to perceive (inputs/sensors), analyze, and visualize (display) specific diaries associated to with the wearer.  The computing and storage capabilities allow for powerful analytics and data storage, right on the phone.  Smart phones have high-resolution imaging and display capabilities suitable for rich photo/video data capture and visualization, respectively.  These phones also pack more and more sensors in order to better interact with the physical world (i.e., the wearer and her surroundings), be it for data entry or environmental perception. A typical smart phone today has sensors for most, if not all, of these measurements: sound, touch, temperature, pressure, humidity, motion, orientation, heading, proximity, light, and image. Many of these sensing capabilities by themselves or in combination can be used for health solutions, e.g., image affect, analyze voice and cough, assess hearing, image skin and wounds, archive actions, track activity, detect falls, coach physical therapy, assess tremor, etc. As we miniaturize new sensors and lowers their cost, more will be integrated into the smart phones. A variety of external sensors can be used in association with a smart phone to expand the range of the digital health application space.  These sensors leverage the phone’s platform and use its capabilities to deliver specific data measurements.  Associated with these products is usually a service to further engage the user and enhance the business model. Another point of note in digital health innovation is that wireless enablement should be a genuine benefit, not just a feature.  The wireless enablement is not always necessary; application requirements should be assessed carefully.  A given wearable application may be satisfied by collecting and storing data for a period of time, then downloading the data.  Nevertheless, the wireless enablement provides a more seamless and convenient uploading process.

How to Leverage Connected, Smart Devices for New Applications

Connected, smart devices are integral to the Internet of Things (IoT), of which health and wellness applications are a part of and are referred to as digital health. Devices are smart when they incorporate sensors. They are connected when they can communicate with a backend computational platform—usually implemented as a wireless link via Internet to a cloud computing platform. Connected, smart devices have many applications in monitoring us and what we do, as well as the world around us. Let’s consider a hypothetical application to understand the typical anatomy of IoT/digital health solutions. Jugglers are a staple of entertainment! They juggle a variety of things; let’s pick balls as an example. Say jugglers are interested in quantifying their skills and performances, as well as adding a bit of bling to their show. Examples of the latter are balls that light up with a specific color at a specific altitude and canalso flash in a coordinated fashion. The first requirement is to add sensors to the ballsto track their motion, measure their altitude and identify them individually. These tasks can be accomplished by embedding acceleration and pressure sensors in the balls to track motion and altitude, respectively. Similarly, each ball can be identified by giving it a unique radio-frequency identification tag. The next requirement is to transmit the data from the balls. Given the nature of the application, data communication must be through a wireless link. As a result, each ball needs a wireless transceiver. Many applications use Blue Tooth Low Energy to link smart devices to user mobile phones. In effect, the phone acts as a wireless gateway to send the data to the backend. Other wireless link options are WiFi and cellular, for example. They progressively require more power at the sensor node—the ball—and are more expensive. The cellular link to the smart ball requires a data plan subscription as well, which adds operating cost. Clearly, the smart balls need a power source which needs to be replenished periodically. Engineers use low-power electronics designs to minimize power consumption. However, power consumption is also affected by data transmission volume and rate. As a result, applications require a thoughtful planning of data processingat the sensor node—edge node—to arrive at a data volume and transmission rate that is power optimal for the intended application. Once the data is available at the backend, data analytics techniques are used to mine information and insight from the data. The information and insight are then visualized to the juggler through a mobile application (App) running on his/her smart phone. The App is also the interface by which she/he enters and queries information. There may be a website interface as well, but increasingly less so because of preference for mobile devices. In sum, the anatomy of IoT/digital health solution comprises smart devices, connectivity, computation and mobile application software.

From Enabling Technologies to Wearables to Digital Health

The rationale for digital health is the ability to extend reach, improve quality and reduce cost of care by keeping the patient out of the hospital and emergency rooms. These benefits are particularly impactful for those with chronic diseases, which account for roughly 80% of the US health care expenditures, i.e., $3+ trillion and growing. 50% of the population in the U.S. has at least one chronic disease, of which 50% have two or more. Examples of prevalent chronic diseases are hypertension, obesity, arthritis, asthma, chronic kidney disease, depression, chronic obstructive pulmonary disease (COPD), diabetes, sleep disorder and heart failure. There are also consumer health and wellness applications that are enabled by digital health technologies. These applications usually help to quantify health and wellness performance parameters during activity—ranging from exercise to sleep to meditation, for example. The figure below is intended to visualize, using a tree analogy, the role of enabling technologies in advancing digital health. Each of the enabling technologies—sensors, connectivity, computation, power and social networks—are important in their own right, but their whole is greater than the sum of their parts. The latter is often referred to as “convergence” of these enabling technologies. Sensors are key to perception of the world around us and measurement of our own performance parameters. They are often said to make wearables “smart”. One study predicts that sensors will enable a $75 billion wearables technology market by 2025—with health and wellness as a significant application area. The study forecasts 3 billion wearable sensors by 2025, with about 1/3 being new sensor types. Wearables usually require an electronic power source. As devices are miniaturized to be nonintrusive, the power source has to shrink as well, which underscores the importance of continued advances in battery technology. Mobility and inconspicuousness usually necessitate wireless communication to and from wearables, which makes advances in wireless communications to optimize power and data rate/volume. Computational technologies (e.g., cloud, data science, artificial intelligence, etc.) enable storing, analyzing and visualizing data for information and insight, which is then communicated to the user’s social network. This social network can include a variety of relationships, including those in the user’s care circle. Wearables are deployed on the body—often wrist, chest and feet, for example. They can be deployed for sight, hearing, smell, taste, speech, touch and a variety of biomarkers. As such, wearables enable digital health by enabling diagnostics, monitoring and/or therapy. In turn, digital health extends the reach, improves the quality and reduces the cost of care by keeping patients out of the hospital and emergency rooms, and improving quality of life.

Digital Health Awakening

During our journey into the future, there are inflection points along the way that have a great impact on our path forward. As we adapt to the new realities influenced by this pandemic, our perspectives and focus change, which is leading to a Digital Health awakening. Technology has increasingly impacted our lives by enabling greater convenience, putting endless information at our fingertips as well as advising us with vast connected knowledge. The speed of technologies we are familiar with in our everyday lives has seen a slower pace of implementation in healthcare. Wearables, apps, voice assistants, cloud computing, and artificial intelligence are increasingly ubiquitous. However, integration into healthcare has been challenging for a variety of reasons. First, it is a complex and challenging endeavor. A wide variety of stakeholders with differing priorities challenge the alignment necessary to move forward. There is a natural resistance to change by incumbent methods and systems. However, the pressure to change has been mounting with the emergence of consumerism in healthcare. As technologies mature and we become more comfortable with integrating them into our daily lives, barriers to effective adoption when applied to health and wellness fall away. Naturally, patients desire to be central to their healthcare and synchronize general wellness with overall health, as well as the information necessary to make educated choices in collaboration with their provider. Digital Health solutions can make this a reality, improve outcomes, and achieve efficiencies that all stakeholders seek. Enabling virtual, connected, and convenient management of high quality healthcare into our daily lives. The stage had already been set for a great digital transformation of healthcare over the next 5-10 years and the arrival of this pandemic has provided a catalyst for rapid deployment of health technologies such as telehealth that were eagerly awaiting greater adoption. Over the past couple of months, the appetite for new solutions has dramatically increased and stakeholders are in better alignment than ever before. Furthermore, the pandemic impact will result in the acceleration of this digital transformation. Stakeholders that have been waiting on the sidelines are now thrust into implementing their Digital Health strategy with this accelerated timeline or be left behind while proactive adopters achieve greater efficiencies and better outcomes for the patients they serve. As we face the challenges of today, Digital Health can be increasingly leveraged to pave the way for our journey into a bright and healthy future that is just the beginning. With added capabilities from AR, VR, and 5G, new solutions will leverage this massive influx of data with machine learning and AI into smarter choices that benefit all stakeholders and our healthcare will forever be changed. Contact us to gain a highly capable and innovative health technology partner that can help accelerate your Digital Health Solutions and bring them to market at a fraction of the cost. #DigitalHealth #HealthTech #Wearables #mHealth #eHealth #TeleHealth #MobileApps #CloudComputing #MachineLearning #AR #VR #5G #VoiceAssistants #HealthcareSolutions #HealthcareInnovation #ConnectedCare #Covid19 #HealthIsWealth #Consumerism #Healthcare #Health #Sensors

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