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Our data-driven predictions on what could happen in
healthcare in 2018
2018 Digital
Health Trends
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Nikhil Krishnan
A B O U T T H E A N A L Y S T
Nikhil Krishnan is a senior analyst at CB Insights, where he produces data-
driven analysis and research reports on trends in digital health, ag tech, and
construction. He sends the weekly Digital Health Insights newsletter to
30K+ members. His research has been featured in The Economist, New
York Times, Wall Street Journal, and more.
Prior to joining CB Insights, Nikhil worked at Uber, the Small Business
Administration, and Relationship Science.
Most popular analyses by Nikhil:
Oscar Health Insurance Strategy Teardown
Apple In Healthcare
@nikillinit | nkrishnan@cbinsights.com
Senior Analyst
12
Contents
1 3
2 1
27
35
49
55
Increased M&A of digital health
companies
Health giants get into each other's
business lines
Tech giants push further into
healthcare
Virtual trials increase in frequency
Lab testing incumbents see
challenges
Medicaid becomes a focus area
64
7 1
78
85
96
Medical research into
smartphone and internet usage
on mental health
More companies will target the
intersection of sleep and
healthcare
Increasing use of light in
diagnostics and therapeutics
New patient financing options
Blockchain hype continues to be
just that
13
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Increased M&A of digital
health companies
14
Digital health M&A has been declining
Digital health first exits, 2013 - 2017
Digital health
M&A
Digital health M&A has
been on the decline as a
result of increasing
available private capital,
high valuations, and
hesitance from existing
healthcare incumbents.
15
Corporates are
bringing money
to the US
Wall Street Journal
16
J&J chief Gorsky bullish on tax reform,
plans $16B in repatriated overseas cash
January 10th, 2018
We're already seeing money being spent
17
Digital health companies could provide
complementary areas of expertise to
different corporates
Some possible areas of interest
18
Pharma corporates can use digital health to
reach consumers directly + find AI expertise
Possible acquisition areas:
Companies like Recursion Pharmaceuticals and
Atomwise could be attractive targets for their AI
+ biology expertise.
As pharma moves into services, digital
therapeutics could offer complementary services
(Omada Health, Pear Therapeutics, etc.)
Asynchronous telemedicine companies can use
services and direct-to-consumer distribution for
off patent, low risk products.
19
Medical devices corporates can find UX and
software expertise
Possible acquisition areas:
Wearables companies which can provide
consumer and user experience expertise
(Jawbone, Owlet Baby Care, etc.)
Companies that sell devices to improve the
efficiency of doctors (Augmedix, Simplifeye, etc.)
AI-enabled medical devices (Alivecor, Bigfoot,
etc.)
20
Tech giants can find companies knowledgeable
in healthcare analytics + data sources
Possible acquisition areas:
AI-enabled medical devices (Alivecor, Bigfoot,
etc.)
EMRs or APIs that sit between providers, labs,
and consumers (Kareo, Health Gorilla, etc.)
Existing players that have established their own
distribution and relationships for a tech company
to use as a jumping off point (Express Scripts,
PillPack, etc.)
21
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Health giants get into each
other's business lines
22
Health Care Cost Institute
Consolidation =
price increases?
Despite utilization going
down, prices continue to
go up across the board.
While there are several
factors that could
contribute to this, a
leading one is the number
of pseudo-monopolies
created through
consolidation, allowing
giants to price higher.
Prices keep going up
23
Walgreens Said to Tweak Rite Aid
Deal to Gain U.S. Approval
September 18th, 2017
You can only consolidate so far
24
Entrance of tech
giants is forcing
existing
incumbents to
bundle services
together
VS.
25
"I think there are 3 things triggering [the CVS-Aetna acquisition].
One of them is Amazon, not quite explicit yet what they're
planning on doing but whatever it is it's scaring CVS."
John Rowe,
Aetna Ex-CEO
CNBC
T H E A M A Z O N E F F E C T
26
Large line-crossing initiatives will force others
to respond
Large acquisitions
Co-branding +
partnerships
New business lines
$69B Acquisition
$4.9B Acquisition
Joint Individual
Health Plan
Joint Medicare
Advantage Plan
Hospital Groups Creating
Company to Make Cheap
Generic Drugs
January 18th, 2018
27
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Tech giants push
further into health
28
Media attention on tech giants in healthcare is
increasing
29
Tech companies
are coming to
healthcare
As software becomes a
point of differentiation in
healthcare, tech giants
have an advantage with
expertise in the area as
well as direct
relationships with
consumers.
CB Insights
Tech giants are investing in healthcare
2012 2017 YTD (5/18/2017)
30
Former FDA Commissioner joins Verily and
more digital health hires
May 18th, 2017
Talent With Health Expertise Is Going To Tech
31
Tech companies are working with regulators
32
More health patents are being filed
Patent: Turning your phone
into a monitoring device
Patent: Automated
abdominojugular reflux test
Patent: Wireless heart rate
detection
Patent: Nutritional
information/diet monitoring
for augmented reality
33
Executives are talking most about Amazon
34
"We should all be acting like Amazon is
getting into our business, because
frankly we have to create a crisis to
think about how to be more effective
and efficient"
Alex Gorsky, Johnson & Johnson CEO
35
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Virtual trials increase
in frequency
36
Step 1:
Get pharma and biotech
companies comfortable with
mobile studies
37
ResearchKit is demonstrating the benefits of
mobile studies
Enrollment is much larger, faster, and
less expensive to acquire participants
No overhead means no significant
increased cost with scale
Environmental data is captured as well as
data during an episode (e.g. seizure)
38
"To get 10,000 people enrolled in a
medical study normally, it would
take a year and 50 medical centers
around the country"
B E F O R E
Alan Yeung MD, Medical Director at Stanford Cardiovascular health
39
Apple enrolls 11,000 people in a
heart study in one day
More than 48K are participating in
MyHeart Counts today
N O W
40
How Purdue Pharma Hopes To Use The
Apple ResearchKit
May 1st, 2016
Drug Companies Are Testing ResearchKit
41
23andMe conducts at-home studies
42
"23andMe's research platform is currently the world's
largest consented, re-contactable database for genetic
research. This data will lead to a better understanding of
the biological mechanisms of disease, and accelerate the
discovery of novel treatments through human genetics."
Fortune
and is making its own drugs
43
Step 2:
Demonstrate benefits of
site-less trials
44
Site-less Trials:
Uses mobile tools, continuous remote monitoring,
and telemedicine to recruit patients, distribute
supplies, monitor their reactions, follow their
progress, and analyze the results
45
Physical sites are expensive for trials
Department of Health and Human Services
46
Science37 delivers end-to-end fully
virtual clinical trials using telemedicine,
mobile, and remote workers
Select Investors
Lux Capital, Sanofi-Genzyme
Bioventures, Redmile Group, dRx Capital
C O M P A N I E S E N A B L I N G V I R T U A L C L I N I C A L T R I A L S
Funding
$66.5M
S I M I L A R C O M P A N I E S
$5.83M
$130K
$3.94M
47
First site-less trial completed, more to come?
"AOBiome Therapeutics Reports Positive Efficacy Results from
Phase 2b Clinical Trial of Ammonia Oxidizing Bacteria (AOB) for
the Treatment of Acne Vulgaris
The Phase 2b study was jointly conducted with Science 37, a clinical research company, that has pioneered
a 'site-less' clinical trial model with its proprietary mobile technology, the Network Oriented Research
Assistant (NORA) used in the trial to capture real-time data from patients at their homes."
PR Newswire
48
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Lab testing incumbents
see challenges
49
Lab testing saw
$53B
of industry revenue in 2017
IBISworld
50
November 22nd, 2017
Medicare will cut payments for clinical
lab tests by $670M next year
Medicare reimbursement changes are starting
to pressure the industry
51
LabCorp has started investing outside of testing, Quest
Diagnostics has been focused on consolidation
Lab testing
companies
diversify?
Feeling the pressure from
lowered reimbursements,
lab diagnostics
companies like Quest
Diagnostics and LabCorp
might look to private
markets for other
business lines. LabCorp
has increased investment
activity into other
businesses in the last
year, Quest has focused
on acquiring labs.
52
as a small start-up plan, Clover had little negotiating power with
giant lab companies. So Clover started pushing back on the
claims, telling the labs that it lacked sufficient proof that the tests
were medically necessary. The startup outlined a list of items
that it needed within 30 days before paying these bills. Rather
than adhering to Clover's demands, the labs turned around and
billed the patients Clover's elderly members.
CNBC
Could insurers get into labs?
53
Athelas develops instant, at-home blood
diagnostics for oncology care.
Select Investors
Sequoia Capital, Initialized Capital
S T A R T U P S A R E B R I N G I N G S I N G L E F U N C T I O N T E S T S D I R E C T L Y T O C O N S U M E R S
Funding
$4.08M
O T H E R S I N G L E T E S T S
$5.5M
(Metabolism)
$1.64M
(STD testing)


54
There are more test to bring home still
55
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Medicaid becomes a focus
area
56
Medicaid covers
68M Americans
Medicaid.gov
57
It's a big part of the budget
Total State Budget Including Federal Assistance, FY 2015
MacPac
28.2%
19.5%
10.1%
42.2%
Medicaid
Elementary And
Secondary Education
Higher Education
All other
58
Proposed Louisiana health care cuts
eliminate mental health, substance abuse,
adult day care services
May 1st, 2016
When regulatory flux settles, states will have to
figure out how to manage care with less
59
States are
spending more
States are expecting their
spend to grow faster due
to an increasing number
of people enrolling in the
aged and disabled
groups, high cost
prescription drugs, and
provider rate increases.
Kaiser Family Foundation
-4.0%
3.2%
6.8%
10.5%
3.5%
3.9%
5.2%
2.3%
1.5%
5.3%
13.2%
3.9%
2.7%
1.5%
2012
2013
2014
2015
2016
2017
2018
Projected
Medicaid
Enrollment
Total Medicaid
Spending
Medicaid spending is outpacing enrollment
2012 2018 projected
60
Chronic disease and mental health are
interrelated and unmet for Medicaid members
have below fair mental health
have >1 chronic condition
people have mental health/chronic
conditions such as comorbidities
of total Medicaid dollars goes to 20% of
Medicaid enrollees with behavioral health
conditions
Kaiser Family Foundation
26%
48%
38.6M
48%
61
Non-medical issues need to be addressed for
the Medicaid population
Housing issues
Food insecurity
Violence (domestic abuse
and otherwise)
Transportation
Healthcare system
complexity
62
Companies are addressing specific issues
such as
transportation
enrollment and benefits
explanation
engagement and follow-ups
63
Or they're taking a holistic approach
Companies are working within high Medicaid concentration
communities
Total Raised: $20.8M
Total Raised: $9.72M
64
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Medical research into
smartphone and internet
usage on mental health
65
Nomophobia:
Fear of being without access to a
working cell phone
66
High screen time is starting to be linked to
depression and suicide
SagePub
67
Social media sentiment is turning
Sean Parker,
Facebook ex-
president
"I don't know if I really
understood the consequences
of what I was saying, because
[of] the unintended
consequences of a network
when it grows to a billion or 2
billion people and ... it literally
changes your relationship with
society, with each other," Parker
said. "It probably interferes with
productivity in weird ways. God
only knows what it's doing to our
children's brains."
Marc Benioff,
Salesforce CEO
"Here's a product cigarettes
they're addictive, they're not
good for you, maybe there's all
kinds of different forces trying
to get you to do certain things.
There's a lot of parallels [to
social media].
I think that for sure, technology
has addictive qualities that we
have to address, and that product
designers are working to make
those products more addictive
and we need to rein that back."
Chamath Palihapitiya,
Early Facebook
Employee
It literally is a point now where I
think we have created tools that
are ripping apart the social
fabric of how society works.
That is truly where we are.
The short-term, dopamine-driven
feedback loops that we have
created are destroying how society
works. No civil discourse, no
cooperation, misinformation,
mistruth."
68
Investors are taking a stance
"There is a growing body of evidence that, for
at least some of the most frequent young
users, this may be having unintentional
negative consequencesgrowing societal
unease is at some point is likely to impact
even Apple."
-Open Letter From Jana Partners And Calstrs
To Apple Inc.
"Society is demanding that companies, both
public and private, serve a social purpose. To
prosper over time, every company must not
only deliver financial performance, but also
show how it makes a positive contribution to
society."
-Larry Fink's Annual Letter To CEO's
69
Onward is building a new approach to
addiction recovery.
D I G I T A L A D D I C T I O N S T A R T U P S A R E C O M I N G U P
Funding
$2M
70
"According to the research studies that Onward conducted for the past
year, 1,400 self-identified pornography addicts and 2,500 screen over-
users showed some interesting results.
Roughly 89 percent of Onward's users reduced their screen time and
the amount of time they spent watching pornography and 51 percent
of those surveyed stopped watching porn entirely. Meanwhile, screen
time users saw a reduction in their social media usage that equated
to 75 fewer hours spent online per year."
A P P S C A N F I G H T A P P S ?
71
2 0 1 8 D I G I T A L H E A L T H T R E N D S
More companies will target
the intersection of sleep and
healthcare
72
Why sleep is an attractive area
1. Can target health-conscious buyers
+ people pay premiums to improve
sleep
2. Creates valuable datasets to
understand sleep and health
relationship
3. Another avenue to create direct-to-
consumer relationships
ZZZzzz
73
Sleep apnea affects
25M+ People In The US
American Academy of Sleep Medicine
74
There's more interest and studies being done to
understand the role of sleep
36
59
66
70
76
91
113
164
2010
2011
2012
2013
2014
2015
2016
2017
Number of
journal articles
with "Sleep" in
the title
(via Nature)
75
Apple is looking into the sleep ecosystem
Acquisition of a sleep tracker
Sleep tracking is built in to
the personal health record
Studies building on Apple
tools
The Apple Watch can
accurately detect
hypertension and sleep
apnea, a new study
suggests
November 13th 2017
76
Wearable makers are following suit
Fitbit Ionic smartwatch
introduces blood oxygen
sensor
August 28th, 2017
77
Different areas of sleep ecosystem are seeing
development
S L E E P A P N E A D E V I C E S
S L E E P A S S I S T A N C E
S L E E P S E R V I C E S
S L E E P C O N T E N T
78
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Increasing use of light in
diagnostics and therapeutics
79
DermaSensor is designing a handheld
sensor that will be able to evaluate skin
for potential cancer in seconds using
spectroscopy
S T A R T U P S U S I N G L I G H T F O R D I A G N O S T I C S
Funding
$4.5M
O T H E R S T A R T U P S
Otoscope
Malaria
detection
Allergen
detection
80
New chips,
hardware, and
light applications
can turn phones
into diagnostics
tools
81
Tech companies want to use light to improve
monitoring using hardware you're around
Patent: Uses a
camera, an ambient
light sensor, and a
proximity sensor to
monitor different
biomarkers
Patent: Uses optical
sensors and light
projections to
determine the
functionality of
different organs,
starting with
cardiovascular health
82
Improving phone cameras + UV light + faster
processers = mobile fluorescence microscopes
Fluorescence Detection:
By combining disease markers with antibodies
and shine different wavelengths of light and look
under a microscope to see if cells are affected.
This is useful for disease diagnostics, like
malaria (below).
Nature, CDC
83
"We describe here a compact smartphone-based fluorescence detector for mHealth. A key
element to achieving high sensitivity using low sensitivity phone cameras is a capillary
array, which increases sensitivity by 100. The capillary array was combined with a white
LED illumination system to enable wide spectra fluorescent excitation in the range of 450-
740 nmMoreover, the capillary array required a sample volume of less than 10 l, which is
an order of magnitude less than the 100 l required for the plate reader. As fluorescence
detection is widely used in sensitive biomedical assays, the approach described here
has the potential to increase mHealth clinical utility, especially for telemedicine and for
resource-poor settings in global health applications."
NCBI
Using smartphones in fluorescence
detection is useful in low resource settings
84
Neolight is a medical device company
that develops phototherapy beds to cure
jaundice in pre-term and full term
babies.
P H O T O T H E R A P Y : U S I N G L I G H T A S A T R E A T M E N T
Funding
$3.48M
P H O T O T H E R A P Y S T A R T U P S
Skin Conditions
Neurological disorders
85
2 0 1 8 D I G I T A L H E A L T H T R E N D S
New patient financing
options
86
High deductible plans are becoming popular,
making consumers "shoppers"
Share of workers with $1000+ annual deductible for single coverage
Kaiser/HRET Employer-Sponsored Health Benefits Survey
31%
34%
38%
41%
45%
51%
2011
2012
2013
2014
2015
2016
87
Paying for care is becoming difficult for people
Kaiser Family Foundation
63%
58%
27%
37%
10%
5%
2015
2017
Don't know/
Refuse To Answer
Difficult To Pay
Easy To Pay
69%
64%
24%
31%
7%
5%
2015
2017
57%
50%
34%
43%
9%
7%
2015
2017
Monthly Health Insurance
Copays
Deductibles
88
They're postponing care due to inability to pay
% of respondents or immediate family that have done the following due to costs in the last 12 months
Kaiser Family Foundation
12%
16%
21%
23%
27%
29%
32%
Had problems getting mental health care
Cut pills in half or skipped doses of medicine
Not filled a prescription for medicine
Skipped a recommended medical treatment or test
Put off or postponed getting care
Relied on home remedies/OTC drugs instead of seeing a doctor
Skipped dental care or checkups
89
Companies are focusing on ways to
make it easier to pay for healthcare
90
Likeinsurance for insurance?
91
Flexible healthcare lines of credit
Companies are helping with high-upfront payments via debt and credit
lines
92
A healthcare company that originally
started in patient and doctor matching +
booking, recently released an HSA
Select Investors
Accel Partners, CRV, Highland Capital
Management, Aspect Ventures
N E W C R O P O F H S A C O M P A N I E S
Funding
$44.4M
O T H E R H S A C O M P A N I E S
$10.2M
$4.32M
93
Blockchain startups hope to turn patient data
into money
94
Blockchain startups hope to turn healthy
behaviors into money
95
Sempre Health's behavior-based,
dynamic pricing solution uses claims
and EMR data to predict the optimal
price for the right patient at the right
time.
Select Investors
Social Capital, Alchemist Accelerator
Funding
$2.54M
P E R S O N A L I Z E D P A Y M E N T C O M I N G T O H E A L T H C A R E ?
96
2 0 1 8 D I G I T A L H E A L T H T R E N D S
Blockchain hype
continues to be just that
97
Blockchain in theory addresses problems
acutely faced in healthcare
Data governance +
interoperability
Authenticity of goods and fraud
management

Faster + rules-based
authorizations and
adjudications
98
ICO funding is taking off, an easy way to get
lots of money for an early stage project
CB Insights, TokenData
99
Media is looking closer at how blockchain can
impact healthcare
CB Insights
100
We're starting to
see healthcare
ICOS
101
Across different parts of healthcare
I D E N T I T Y + P R I O R A U T H O R I Z A T I O N
S U P P L Y C H A I N T R A C K I N G
D E C E N T R A L I Z E D E M R S
T E L E M E D I C I N E / S E C O N D O P I N I O N S
102
Gem Partners With Philips for Blockchain
Healthcare Initiative
April 16th, 2016
Corporates Are Slowly Piloting Systems
103
Massive price swings demonstrate volatility in
the space
104
Lack of regulation, eager investors,
and the promise of new technology
has made this area attractive for
new companies
But there are virtually no products,
users, or success stories yet
105
The SEC is devoting a significant portion of its resources to the ICO market.
Through statements, reports and enforcement actions the SEC has made it clear
that federal securities laws apply regardless of whether the offered securitya
purposefully broad and flexible termis labeled a "coin" or "utility token" rather
than a stock, bond or investment contract. Market participants, including
lawyers, trading venues and financial services firms, should be aware that we
are disturbed by many examples of form being elevated over substance, with
form-based arguments depriving investors of mandatory protections.
Wall Street Journal
The crackdown on bad actors is coming
106
Questions?
Twitter: @nikillinit
nkrishnan@cbinsights.com
107
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Nikhil Krishnan
nkrishnan@cbinsights.com