They MIGHT Be Giants

But can they change health care?

The New York Times reports yesterday that IT titans Microsoft and Google were set upon using their individual might to “improve the nation’s health care.”

Try as we might to be impressed by caliber of these indisputable pioneers, IN VIVO Blog is having a bit of troubling mustering anything more than a “ho hum.” Perhaps, if we try real hard, we might push it to, “We’ll believe it when we see it.”

See, we’ve been hearing (and writing about) about this IT revolution in health care for close to 10 years now. Back then Internet entrepreneurs—albeit with shoddy business plans and puddle-deep knowledge of health care—promised to bring the power of IT and the Internet to bear on the $1.3 trillion dollar health care system. The end result? Now many of those same entrepreneurs are promising to bring the power of IT and the Internet to bear on a $2 trillion-plus health care system.Yep, a 50% increase. How’s the might of IT doing so far?

So what’s different today? Well, to be fair, the Internet model is in a lot better shape than it was 10 years ago. Google, which continues to impress us (have you used the Street View feature on Google Maps? Amazing), wasn’t even around, and no one had quite figured out how to make money off the Internet yet. Today, Google’s model and services serve as a foundation for many of the start-ups in this area today. As for Microsoft, IN VIVO Blog won’t pretend we know much about the company other than we use Windows and Internet Explorer. But there’s little doubt the company hasn’t focused on health care up until now because it had much lower fruit to pick in other industries. Hospitals and doctors are notoriously bad customers for IT companies.

Perhaps that’s why both companies appear to be targeting the consumer… er…the patients. Question is can these companies capture some of the juice for a health-care consumer product? (It’s hard to imagine a ready list of drug allergies garnering the excitement of finding a new sushi restaurant on your iPhone.) Here’s what’s reportedly being planned, according to the Gray Lady:

A prototype of Google Health, which the company has shown to health professionals and advisers, makes the consumer focus clear. The welcome page reads, “At Google, we feel patients should be in charge of their health information, and they should be able to grant their health care providers, family members, or whomever they choose, access to this information. Google Health was developed to meet this need.”

A presentation of screen images from the prototype — which two people who received it showed to a reporter — then has 17 other Web pages including a “health profile” for medications, conditions and allergies; a personalized “health guide” for suggested treatments, drug interactions and diet and exercise regimens; pages for receiving reminder messages to get prescription refills or visit a doctor; and directories of nearby doctors.

Google executives would not comment on the prototype, other than to say the company plans to experiment and see what people want. “We’ll make mistakes and it will be a long-range march,” said Adam Bosworth, a vice president of engineering and leader of the health team. “But it’s also true that some of what we’re doing is expensive, and for Google it’s not.”

Bosworth deserves credit for remaining humble, but the question we have is—will all this really improve health care? The profile idea and the prompts sound like window-dressing (web-dressing?). Sure, some people might benefit from an email reminding them to make a follow up appointment, but that doesn’t mean they’ll follow through. As for the personalized health guide, the information is out there and often collected by Web sites like WebMD. How does a simple aggregation of data help? (And when does the notion that Google—which bases its Gmail ads on the content of the messages—will have complete health profile on record stop feeling weird? The assurances that this data will remain completely confidential don’t do it for me.)

Note: Google Blogoscoped, which tracks the behemoth, has previews of Google Health Screen Shots here. Lots of sizzle but not seeing the steak.

Microsoft’s efforts, in contrast, sound a little more grounded—at least initially. Again, from the NYT:

… “It will take grand scale to solve these problems like the data storage, software and networking needed to handle vast amounts of personal health and medical information,” said Steve Shihadeh, general manager of Microsoft’s health solutions group. “So there are not many companies that can do this.”

This year, Microsoft bought a start-up, Medstory, whose search software is tailored for health information, and last year bought a company that makes software for retrieving and displaying patient information in hospitals. Microsoft software is already used in hospitals, clinical laboratories and doctors’ offices, and, Mr. Shihadeh noted, the three most popular health record systems in doctors’ offices are built with Microsoft software and programming tools.

But then the talk veers off into discussion about creating consumer-oriented tools such as online offerings “as well as software to find, retrieve and store personal health information on personal computers, cellphones and other kinds of digital devices — perhaps even a wristwatch with wireless Internet links some day.”

A wristwatch? Perhaps this would work for Dick Tracy. Yes, the current process of sending faxes and letters to get a simple medical record transfer done is onerous. But do we need a wrist watch? Just let me download my records onto a thumb drive and bid me good day.

Yes, IN VIVO Blog has a difficult time seeing all of this having any real impact from these consumer-oriented efforts. They sound great, but will they really make a difference?

While Microsoft and Google bring some much needed buzz to health care’s out-moded record keeping, there are at least two other multi-nationals worth keeping an eye on in the race to digitize health care: Siemens AG and General Electric. Keep in mind that Siemens and GE also have major plays in healthcare IT and they develop the imaging and diagnostic tests that make up the bulk of a patient’s record. Who better to lead healthcare’s digital revolution than the companies that generate the actual data patients—and more importantly, doctors—want tracked. (BTW, keep an eye out for an analysis of Siemens’ IVD approach in the upcoming Sept. issue of IN VIVO.)

Brailer's New Quest

IN VIVO Blog had the opportunity to talk with David Brailer in a previous professional life. He’s thoughtful, intelligent, and proved to be a very good pick to be the federal government’s first health care IT czar. He gave a face to the important need for IT and health care integration, and it’s a concept that has since stuck with the American public.

In that conversation, which came after he’d already announced his decision to resign his post and go back to California, Brailer more than hinted that private equity or venture capital might be in his future. Smart money had him joining an established firm, probably some big name technology investor with a fair amount of dough already being invested in multiple industries. Brailer, in this scenario, would head up a foray into health care-IT investing, and he’d be a great pick to do so.

What was not envisioned, however, is what actually happened. The California Public Employees' Retirement System--eager to find new technologies to save money on its $4.9 billion in annual health care costs--gave Brailer $700 million from Calpers to invest in health care-IT and health care services companies.

Acccording to reports like this one in Modern Healthcare, Brailer's new firm, Health Evolution Partners, will invest $500 million of that money directly into companies. The rest will go into a $200 million fund of funds that will be committed to other venture firms that invest in the space.

Okay. Does this concern anyone?

No knock against Brailer. He isn't an experienced investor, but he's got street cred, clout and spent the past 15 years doing some level of due diligence. In 1992, he founded CareScience Inc., a supplier of technology tools used in practice management and patient care. He took it public in 2000. But he resigned in 2003 citing differences with the board over the strategic direction of the company. This opened the door for him to be Health Care-IT Czar, giving him an extraordinary perspective on the industry.

But…

Is this sector, which just emerging from the hangover of the "e-health days" of 1999-2000, going to be able to absorb $700 million? According to the published reports, Brailer expects to run through this dough in five years or less. That's $100 million per year or roughly 10% to 15% of what's gone into the health care IT sector and health care services sectors over each of the past two years, according to VentureOne. That’s an enormous influx of cash in a sector that only recently has begun showing some nice returns, albeit mostly on the clinical/hospital sides with companies like Visicu and Emageon.

Perhaps the Internet bubble has us conditioned to think that too much money is always a bad thing. Maybe this is just what the health care-IT czar ordered, a shock of cash to give this somewhat moribund business new life.

But is this good investing? Calpers, according to the reports, is more interested in finding companies with technologies that may someday save it money rather than making money on investments. This sounds an awful lot like a corporate venture capital program in which the parent company is more interested in identifying new technologies than seeing returns. But those corporate investors bring a lot more to the deal than capital. They bring distribution, marketing and usually an established customer base along with decades of expertise.

Brailer brings some of that to the deal, no doubt. He's promising discipline. He told the Sacramento Bee. "We're not going to give them money and say, 'Good luck.' It's going to be very hands-on with these companies." And Calpers could be a huge help if it quickly adopted the products put forth by Health Evolution Partners' portfolio. Brailer, in fact, boldly suggested to the Sacramento Bee that Calpers members could begin benefiting from these advances as soon as next year. (We placed a call at Health Evolution Partners and hadn’t heard back yet. We hope to run an interview with Brailer in an upcoming post.)

The fear here is Calpers is throwing money at a complex problem, and that money will be wasted because the infrastructure—customers, public investors, other sources of capital, regulatory freedom—just isn't in place to support these businesses. It certainly helps that they signed a talent to do the throwing for them. But time will tell whether money is all that was missing.