Telehealth & Telemedicine: Small Business Development Opportunities

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1 Telehealth & Telemedicine: Small Business Development Opportunities 1 P a g e

2 TABLE OF CONTENT Sections Pages Telehealth & Telemedicine Defined 3 Market Analysis 4 Small Business Development Opportunities 7 Private Investment Activities 9 Business Formation & Growth Process Market Analysis Business Model Business Plan 10 New Technology Development Funding Options Small Business Innovation Research (SBIR) Maine Technology Institute (MTI) About HealthTech Maine P a g e

3 Telehealth & Telemedicine Defined Technologies Defined Telehealth is the use of electronic information and telecommunications technologies to support long-distance clinical health care, patient and professional health-related education, public health and health administration. 1 Telemedicine is the use of medical information exchanged from one site to another via electronic communications to improve a patient s clinical health status. Telemedicine includes a growing variety of applications and services using two-way video, , smart phones, wireless tools and other forms of telecommunications technology. 2 Primary Technology Users Patients Employers Physicians Hospitals & Health Systems The Global Telemedicine market grew from $9.8 billion in 2010 to $11.6 billion in 2011 and will almost triple to $27.3 billion in 2016, growing at a CAGR of 18.6 %. Source: Information Week/BCC Research Report 1 Health Resources and Services Administration 2 American Telemedicine Association 3 P a g e

4 Market Analysis Market Size IHS, healthcare industry market analysis experts, predicts the US telehealth market will grow from $240 million in revenue in 2013 to $1.9 billion in 2018 an annual growth rate of more than 50%. The global telemedicine market was worth US $14.3 billion in It grew at a 14.3% rate. The global telemedicine market is anticipated to reach US $36.3 billion by 2020 noted by Transparency Market Research. The telemedicine market is segmented into tele hospital and tele home markets. The tele hospital market was worth $6.9 billion and tele home market was valued at nearly $2.9 billion, however the tele home segment is growing faster than the tele hospital segment at a projected CAGR of 22.5% vs. 16.8% The telemedicine market can also be segmented into technology--hardware, software, telecom, network--and service segments. The technology portion grew from $3.8 billion in 2010 to $4.6 billion in 2011 and is expected to reach $11.3 billion in 2016, with a CAGR of 19.8% over the next five years. Technology Users Hospitals Over fifty (50) percent of U.S. hospitals utilize telehealth services. Hospitals, in fact, see both technologies addressing issues regarding reducing readmissions, generating cost savings, and producing effective patient outcomes. They also view both technologies as important links to stay connected with and monitor patient progress. Finally, cooperating with other healthcare facilities, e.g. an urban hospital working with a rural hospital, to provide specialty care is a rewarding aspect in utilizing telemedicine. Health Systems Like hospitals, health systems appreciate and realize the same benefits of using telehealth. Health systems, at the same time, see telehealth as a growth revenue source: health systems, for example, can charge a direct fee to patients seeking virtual consultations. 4 P a g e

5 Ninety (90) percent of healthcare executives expressed, in a 2014 survey sponsored by law firm Foley & Lardner, that their organizations have already begun developing or implementing a telemedicine program. Most also say that offering meaningful telemedicine services will be critical to the future success of their organizations. Physicians Connecting with and monitoring patient progress are two benefits physicians mention regarding using telemedicine. Physicians utilize telemedicine in either a hospital or an office setting. American Well, a leading telehealth vendor, released a 2015 study indicating that 70% of doctors prefer using video visits, compared to or phone calls, when diagnosing a patient s health issue. Patients By 2018, nearly seven million patients worldwide will use telehealth, compared to the 350,000 that used the technology in 2013 according IHS Technology. Patients who have never used a telemedicine service expressed an interest in using it. Austin, TX-based Software Advice published a survey showing that 75 percent of patients, who have never used a telemedicine service, are interested in trying. Patients cite convenience as one of the major reasons for wanting to use telemedicine. Finally, an Intel survey revealed 72 percent of consumers said they re willing to see a doctor via telehealth video conferencing for non-urgent appointments. Three Alliance for Connected Care, which is an industry nonprofit organization representing leading telehealth companies, published a study showing its members reported a 95% patient stratification rate with their services. The two surveys mirror academic study results demonstrating high patient approval rates for telemedicine. Employers Large employers, in particular, are embracing telemedicine as a healthcare cost saver. Towers Watson, a global health benefits advising firm, indicated that U.S. companies could save $6 billion on healthcare spending annually with the use of telemedicine. Towers also noted that 37 percent of employers surveyed in 2014 said that by this benefit year (2015) they expect to offer their employees a telemedicine benefit as a low-cost alternative to emergency room or physician office visits for nonemergency health issues. That is a 68 percent increase from 2014 when 22 percent of employers offered the benefit. Another 34 percent are considering offering telemedicine for 2016 or P a g e

6 Industry Leading Companies Telehealth Service Vendors Telemedicine Startups & Emerging Companies GE Healthcare Cardio Net HealthSpot First Opinion McKesson Honeywll HomMed DermatologistOnCall SnapMD Philips Health Agfa-Gevaert Maven Clinic Touchcare Healthcare Informatics Aerotel Medical Systems HealthTap 1DocWay Siemens Healthcare Bosch Healthcare AMD Telemedicine Polycom Critical Industry & Market Issues Despite growing demand from patients, health providers and employers, reimbursement, professional licensure, and regulatory issues are key barriers preventing the use of both telehealth and telemedicine from expanding at a greater rate. Although 24 states and the District of Columbia require private insurers to pay for telehealth, 26 states do not have such payment. Medicaid provides payment for some type of telehealth service in all fifty states, but the coverage is not the same in all states. Medicare, on the other hand, pays for limited coverage throughout the U.S. In late 2014, the Federation of State Medical Boards, a national non-profit representing the 70 medical and osteopathic boards of the U.S. and its territories, finalized a model for an interstate compact for physician licensure. The aim of the compact is to reduce barriers for physicians who are looking to obtain medical licenses in multiple states, and will help facilitate licensure portability and telemedicine. State legislatures and medical boards across the U.S. will use the model to adopt the necessary changes. State legislatures and Congress are working out regulatory issues that are constraining the growth of telehealth services and the practice of telemedicine. 6 P a g e

7 Business Development Opportunities HealthTech Maine Both telehealth and telemedicine are growing, emerging industries that are witnessing increased demands from the healthcare providers, patients, payors and employers. Although there are many, creative, viable technology solutions participating in the telehealth and telemedicine industries, the market is wide open for additional innovations that will serve the needs of technology users. Below are selected industry sectors that offer business development opportunities for health technology entrepreneurs to provide innovative technology solutions to the telehealth and telemedicine industries. Industry Sectors Solution Market Size Patient Portals Remote Patient Monitoring mhealth (Mobile Health Used by hospitals and physician practices, the technology allows patients to communicate directly with health providers, as well as potentially review their medical records, via the web. Remote patient monitoring (RPM), also called homecare telehealth, is a type of ambulatory healthcare that allows a patient to use a mobile medical device to perform a routine test and send the test data to a healthcare professional in real-time. 3 Mobile devices used to monitor and report a patient s vital sign. Also used to help manage health conditions. Expected to reach $898.4 million by 2017, up from $279.8 million in 2012 representing a 221 percent increase according to a Frost & Sullivan published study. Generating $5.8 billion in 2013, this sector is expected to earn roughly $27 billion by The global mobile health market was valued at $10.5 billion in 2014 and is expected to grow at a CAGR of 33.5% during , according to a new report by Allied Market Research. 4 3 Using definition from SearchHealth IT 4 Global Mobile Health Market: 8 Key Trends You Should Know, Fred Pennic 7 P a g e

8 Industry Sectors Solution Market Size Smart Homes With Healthcare Technologies Mobile Security Telemental Technology solutions that support independent living seniors/individuals with chronic health conditions that need to be monitored and managed. These mobile security solutions prevent unauthorized access, provide advanced endpoint data and device protection, and safeguard the hardware devices from malware. 5 Using telemedicine to deliver healthcare services for patients with emotional, mental, or behavioral health issues. According to a study released by Juniper Research, the smart home market will reach $71 billion by 2018 up from $33 billion in 2013, and $25 billion in MarketsandMarkets, forecasts the global Mobile Security Market to grow from $1,507.7 million in 2014 to $5,754.8 million by 2019, at a CAGR of 30.7%. A 2009 Substance Abuse and Mental Health Services Administration survey found that less than one-quarter of the estimated 45 million American adults who have a mental illness received treatment. According to the U.S. Health and Human Services Health Resources and Services Administration, 80 million Americans live in regions where there is a shortage of mental health care providers. 5 Mobile Security Market Worth $5,754.8 Million by million-by html 8 P a g e

9 Private Investment Activity According the Rock Health, telemedicine received a total of $285 million dollars from private investors in From 2010 to 2013, telemedicine raised a total of $272 million combined. Clearly, investors now see telemedicine as a significant target in the digital health sector. Like telemedicine, telehealth has caught the interest of private sector investors. The Mercom Capital Group reported that telehealth generated $369 million, from private investors, which represented a 297% growth from year-to-year. Notable Telehealth Companies Acquiring Private Investment American Well Doctor On Demand TelaDoc Enables patients to instantly connect with doctors over video feed. Virtual Medical Practice, allowing patients to connect via Video Visit to board-certified MDs via mobile or web A telehealth services company providing medical care for adults and children via video conferencing or telephone consultations. Notable Telemedicine Startups Acquiring Private Capital Avizia Sherpaa Spruce The company uses Cisco TelePresence technology to enable HD, real-time video collaboration in hospitals amongst patients and professionals. A startup whose staff physicians give medical advice and treat employees of its clients via a mobile app. Provides phone and text-based medical treatment and advice to companies employees, reducing the time and money they waste in the standard health-care system. 6 The maker of a telemedicine app that enables remote treatment of dermatological conditions like acne, poison ivy and tick bites. 7 6 Sherpaa Rethinks Health Care Delivery on a Budget, Yuliya Chernova, Wall Street Journal May, 23 rd P a g e

10 Business Formation & Growth Process Successful business formation and growth, within this industry, rely on health technology entrepreneurs effectively producing and implementing three things: a thorough market analysis, a comprehensive business model and a practical business plan. All three documents provide health technology entrepreneurs with key information and data enabling the company to (1) develop a viable technology that meets an identified clinical or commercial need, (2) recognize and responds to the needs of potential buyers and users, (3) capture and utilizes the company s competitive advantages, and (4) articulate a cost-effective business operational strategy that results keeping costs down, generating consistent revenues and earning profits. In addition, the three document help the health technology entrepreneur prepare substantive state (Maine Technology Institute (MTI)) and federal (Small Business Innovation Research (SBIR)) grant proposals leading to acquiring new technology development funding.. Healthcare Marketplace New Health Technology Idea Market Analysis Business Model Business Plan Small Business Funding Sources Small Business Innovation Research (SBIR) Grants Maine Technology Institute (MTI) Grants Clients Competition Revenues Profits Business Growth 7 Google-backed Telemedicine Company raises $15M to support its Spruce app, Varun Saxena, Fierce Medical Devices, April 22, P a g e

11 Startup or Small Business Growth Funding Options SBIR Program HealthTech Maine Started at the National Science Foundation in 1982 and now includes eleven other participating federal agencies, SBIR is a small business development program. It encourages and enables health technology entrepreneurs to compete for research and development (R&D) non-dilutive seed funding to create market-driven novel medical technologies or healthcare IT solutions. More importantly, applicants can use the funds to conduct research and development on self-initiated product/technology concepts. The National Institutes of Health (NIH) SBIR program offers small health technology startups with some the best chances to develop innovative healthcare/medical technologies. Small health technology startups, through a competitive proposal submission process, seek two rounds of SBIR R&D funding. The first round, referred to as Phase I, offers $150,000 to $225,000 for proof of concept; while the second round, referred to as Phase II, offers from $1 Million to $1.5 Million to produce a product prototype NIH SBIR s program provides supplemental funds to extend research activities or accelerate product commercialization. NIH s National Cancer Institute (NCI), for example, provides Phase II Bridge Awards. The awards are up to $1million more dollars per year for three years, which can be used for clinical trials or regulatory approval process. Phase II Bridge Awards, offered by a limited number of NIH Institutes and Centers (ICs), enable small health technology firms to move effectively beyond their Phase II grant. Sample NIH SBIR Funded mhealth Projects EverWrist: A Novel Electronic Fall Monitor for Seniors CARDIOWEAR: A Wearable System for Ambulatory Cardiac Monitoring Mobile Intervention to Enhance Physical Activity in the Chronically Ill EverWrist will employ a novel, patent-protected paradigm to detect falls, and will automatically summon assistance by sending a wireless signal to a console unit that delivers an alert to a prioritized list of caregivers, ensuring that it is received by a human being. A fully wearable sensor, ambulatory ECG monitoring device called CardioWear to enable continuous cardio- electrophysiology monitoring in home/ambulatory based conditions. To fill the urgent need for a safe and engaging intervention that promotes physical activity in a population of patients with chronic diseases (e.g., diabetes, asthma, osteoarthritis, and chronic heart failure). 11 P a g e

12 Selected List of Funded NIH SBIR Telehealth & Telemedicine Projects Project Name A Telehealth Innovation to Support Weight Loss Surgery Project Description Two primary behavioral pitfalls are nutritional mismanagement and insufficient physical activity. Consistent with NIH's mission to promote innovative approaches to combat obesity, we propose a scalable tele-health program to improve adherence, promote smart behavior, and assure healthy weight loss management. Coordinated Telehealth Care Program for Rural Elders With Congestive Heart Failure Pdremote: Automated Telehealth Diagnostics for Remote Parkinson s Monitoring Monitoring of Heart Failure Patients Via the Internet A Wireless Telehealth Home Care System A Real-Time Multifunctional System for Home Telehealth Establish the feasibility, acceptability, and short-term effectiveness of a unique Coordinated Telehealth Care Program that integrates strategies for home telehealth/remote patient monitoring and care coordination for rural, older patients with a diagnosis of congestive heart failure (CHF) Build and clinically assess PDRemote, a system for automated telehealth diagnostics for remote Parkinson's disease (PD) monitoring. An Internet-based communication system (ITS MyHealthfile) that provides heart failure patients with frequent communication with their health care providers for management of their medical status and allows patients to gain understanding and control of their health care. The development of a new low-power and low-cost wireless connectivity network for securely connecting home medical devices to the Internet. A real-time multifunctional digital system for home telehealth, which uses only a single phone line connection. The anticipated commercial product will be able to deliver multiple types of health care services and real-time monitoring to patients at a distance in home settings. 12 P a g e

13 Maine Technology Institute Maine health technology entrepreneurs, e.g. physicians, nurses, researchers, scientists, engineers, inventors and experienced healthcare professionals, are able to acquire Maine Technology Institute (MTI) grants to help with developing an innovative medical technology or healthcare IT solution and grow a small health technology firm. Health technology entrepreneurs, for example, interested in new medical technology development can use either MTI s Phase 0 KickStarter or Seed grants. Phase 0 KickStarter, TechStart and Seed Grants are three funding vehicles that aid Maine health technology startups with developing an innovative technology solution and grow their companies. For instance, the KickStarter grant, worth $5,000, enables health technology startups to use the funding for preparation and submission of a Phase I Small Business Innovation Research (SBIR) proposal. More specifically, the money can be used for hiring grant writers, subject matter experts, other consultants or purchasing market research reports needed to complete the proposal. In terms of funding business development activities, MTI offers TechStart grants. The TechStart grant is designed to help health technology entrepreneurs produce key strategic documents, such as business plans or market analysis, which contribute the growth of their startups. TechStart grants are worth $5,000 dollars. Grants Funding Amount Purpose Phase 0 KickStarter $5,000 Money to prepare and submit a Phase I Small Business Innovation Research (SBIR) proposal TechStart $5,000 Money for business development activities like business plan development. 13 P a g e

14 About HealthTech Maine HealthTech Maine is a private consulting firm providing small business development assistance to Maine's health technology entrepreneurs, such as physicians, nurses, researchers, scientists, inventors, engineers, technologists, and experienced healthcare professionals. In particular, we help health technology entrepreneurs formulate, start and build successful small health technology firms. Our Consulting Services Market Analysis Development: This service is designed to help health technology entrepreneurs and eligible small businesses discover a potential market for a proposed innovative medical technology or unique healthcare IT solution. Moreover, it involves uncovering the competitive nature of the identified potential market, market size and industry conditions associated with the proposed technology concept. Business Model Development: This service is designed to help health technology entrepreneurs build a business case for its startup. The business model is composed of building blocks, such as value proposition, customer segments, customer relationships, key resources, key partners, channels, cost structure, and revenue stream. Each building block plays a role in supporting the company s ability to offer an innovative medical technology that generates revenues and produces profits. Business Plan Development: The business plan is a key strategic document that indicates how the health technology startup costeffectively executes business development functions, e.g. Marketing, Management and Finance, which help grow the company and earn profits. We work with our clients to produce a business plan that helps the company and its medical technology or healthcare IT solution establish a solid position in a designated market. Small Business Innovation Research (SBIR) Proposal Development: We have assembled a successful team of experts to help Maine health technology entrepreneurs acquire federal SBIR funds, from the National Institutes of Health (NIH) and the National Science Foundation (NSF), to produce innovative medical technologies or unique healthcare IT solutions. The service also includes securing a Maine Technology Institute SBIR Phase 0 KickStarter grant that will pay for the preparation of a SBIR Phase I proposal. Contact Person: Mr. Darrell Williams can be reached at: , [email protected] 14 P a g e