Could healthcare’s big moment of disruption come from within?
In May, the American Medical Association (AMA) announced its plan to pump $27.2 million into Health2047, its Silicon Valley-based incubator built to develop and commercialize new, disruptive ventures to solve some of healthcare’s biggest problems. It was a sign that, even as key opinion leaders point to Amazon and Apple as crusaders of change in healthcare, the medical establishment is willing to make moves of its own.
The investment expanded a strong start for the AMA’s disruption experiment, which launched in 2015 with $15 million in early capital. Then, this past January, Health2047 helped lead a $10-million Series A round for its initial spinout, the healthcare network-as-a-service company Akiri, which develops and sells blockchain-based data security solutions.
Along with the cash injection from the AMA, Health2047 received a windfall of new talent. Former Apple director of strategy, Daphne Li, MBA; former IBM genomics and healthcare consultant Piers Nash, Ph.D., MBA; and Johnson & Johnson’s former vice president of health technology, Lúcia Soares, MBA, all joined the company as managing directors. Gary Cookhorn, the former managing director of Fortress Investment Group, came on as the team’s new chief financial officer.
In late 2017, Health2047 also added a new CEO, Larry Cohen, Ph.D., a veteran healthcare and pharmaceutical industry executive who spent a decade lecturing at Harvard University Medical School. Following the new investment, Cohen spoke with Healthcare Analytics News™ about Health2047’s origins, name and grand ambitions.
I’m new, so I’m never certain who knows what. (Laughing) That’s completely fair. We’re a wholly owned subsidiary of the American Medical Association, and our mission is to start ventures to work on the big problems in healthcare.
Jim Madara, M.D., is the CEO of the AMA. He took over about seven years ago and realized that the AMA had a lot of knowledge and insights from its relationships with physicians and the National Institutes of Medicine, and all of the studies it has done. And yet, they really hadn’t put a lot of that into action at all. What he wanted to do was start Health2047, which he sometimes calls the “commercial arm of the AMA.”
We like to consider ourselves an innovation enterprise. We’re about 25 full-time employees, with a mix of disciplines: We’ve got people with regulatory experience, engineers, software engineers, providers and healthcare economists. It’s an eclectic group of people. The idea is to take concepts and turn them into ventures, ultimately into investable ventures, and then spin out a series of companies that can start to work on these problems.
The name Health2047 comes from imagining what healthcare will look like at the middle of the century, 2050, but 2047 is when the AMA will be 200 years old, so we adopted that as our name.
There has to be a radical transformation in value delivered right now. Dr. Madara likes to say that we spend $3 trillion on healthcare and we get $2 trillion in value. There’s a phenomenal amount of waste.
We need to be treat chronic diseases much more effectively. Many of them are actually behavioral problems as much as they are medical problems. The solutions for many of these chronic diseases have to start at the personal care and behavioral levels before they present as medical problems down the road.
Something like 80 percent of the spend in the United States is focused on chronic care, and yet healthcare systems were really designed to treat acute episodes, whether it be for surgery or infectious diseases. The system has evolved around that, and there’s a need to adapt and focus on things that have to be monitored over time and require a lot more patient involvement than a surgical procedure would have. It’s just a very different way of thinking about how you’ll deliver chronic care outside of the hospital.
We’re focused on four areas: data liquidity, chronic care, physician productivity and healthcare value. Those four pillars are very common, and many companies in this space have one or all of them as their focus.
What we’re finding more and more is that as our ventures develop, we’re struck with how intertwined they become. They’re enormously interrelated. Any time you make progress in treating chronic health, you’re making progress toward value, and to do that, you’re going to need better data systems.
There’s a number of them. It’s easy to recognize where the problems are. So much of the data are in siloes; it’s not interconnected in any way, and there’s no interoperability. Your access to the data, from any given viewpoint, is severely limited. Therefore, the value of the data is severely limited.
Right now, data are basically used for billing, and the data haven’t filtered down to providing concrete and specific benefits for the healthcare providers themselves. If you open up access to the data, you inherently improve the quality of the data. If it’s being stored in [electronic health records] right now and not being used, you really have no idea how good it is.
By opening access up, you’ll see a dramatic transformation. The story that’s often told is that you can go to a bank anywhere around the world and withdraw money in seconds, but if I go to see a doctor, I need to physically carry a copy of my CT scan.
We spun out our first company just before I joined, which is Akiri, a network-as-a-software company that is focused solely on healthcare. It’s really focusing on the types of data that it will be able to transport. It’s being built around trust and security. That’s being designed as a backbone for healthcare, and that’s our first step.
The difference with Health2047 is the involvement with the AMA, the access that the AMA gives us to the physician community and regulatory agencies.
The company is focused on larger problems. The idea is to put together a consortium of players in the space — hospitals, individual physicians, payers, technology companies — to try to identify and solve problems together. One of our mantras is, “We can do together what we can’t do alone.” We have AMA as a neutral broker, and it has no agenda, which helps us convene this big group of people.
Another thing that the AMA really champions about Health2047 is that it’s a Silicon Valley-based company.
We can’t build this ecosystem of ventures by ourselves. Because of the preponderance of technology companies that are in Silicon Valley, we thought it was a very good place to be. There’s also a Silicon Valley approach to venture formation, which is to start with a clean sheet of paper. It’s about trying to wipe away your preconceptions, identify the problem and build from the ground up. Given the proximity, the kinds of people that are out here and the way that they think, it makes sense for us to be in Silicon Valley.
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