20 UK start-ups and the trillion dollar US healthcare opportunity

British entrepreneurs have an unexpected advantage in the US healthcare shake-up, as Future Health 2012 participants found

20 of the brightest sparks in British med tech took their story to potential investors and partners in Boston, Massachusetts last month. Under the banner of the Technology Strategy Board (TSB), they met an extraordinary array of talent in technology, capital and marketing.

“Each of the companies on our mission, Future Health 2012, is at the bottom end of the hockey stick,” says Dr Zahid Latif, the TSB’s head of healthcare. “They have high growth potential in the next two to three years, based on interesting technology and plans of how to commercialise it.”

Their week was spent along a two-mile stretch of the Charles River, which is home to America’s top  medical school at Harvard, top engineering institute at MIT, top hospital at Mass General and more venture capital than in the UK as a whole. But what are the chances of anyone listening to what an up-and-coming British enterprise has to say? Surprisingly good, it appears.

“Britain is at a huge competitive advantage,” says Edward Kerslake, CEO of Topera Medical, a US specialist in cardiac diagnosis. “In health, your enterprises have had 25-30 years of innovating for value. We are just starting this year in the US.”

The massive US opportunity

The scale of US spending on health is astonishing: $2,600bn or 17% of GDP compared to 7% in the UK. Less impressive are the results. Despite all its ingenuity, the US languishes at 28th in the world for life expectancy.

Policymakers and insurers are starting to ask questions about how more value can be created from the complex and fragmented US system. The answer? Instead of fees for each service performed as the client progresses from the doctor to the hospital, a single payment will be made for a complete outcome.

A procedure, such as a hip replacement, might currently add up to $16,000, according to UKTI’s lead on US healthcare, Anne Avidon, who is based in Boston. In future, she says, the two main public programmes, Medicare and Medicaid, will now bundle all services into one package and pay a total of $25,000.

If anything then goes wrong, no extra payments will be made. It is up to all the health professionals to share the risk of extra tests or re-admissions after surgery. The calculation is that too many costs and inefficiencies occur as the patient transfers from one service to another.

“The mood has changed in how we provide healthcare,” says William Denham, former chief medical officer at GE, who is now involved in running his own start-ups. “Clever solutions are no longer enough on their own. You have to create some value.”

To some coming into the market, it may be surprising how often the NHS is cited as an example of what a large, integrated system can achieve. Its capacity for generating data on clinical and commercial activity attracts particular envy.

“Multi-disciplinary collaborations rarely happen here,” says John Collins at CIMIT, a leading facilitator of innovation in health among medical schools and hospitals in Massachusetts. “The clinical, technical and commercial sides are all so busy, they pull apart.”

“Our target is for more interoperability between devices and data. In health, unlike any other sector, technology has tended to drive up costs. The challenge is to create systems that can turn better performance into lower cost.”

As one participant on the Technology Strategy Board trip commented, the health system can appear to be “a multi-headed monster”. It takes time and a few attempts to identify who will actually buy your product, who will influence any decision and who might lose from its introduction.

Even if you are saving costs overall, you have to be sure that you are offering value to everyone in the chain of care. Some describe them as the Five P’s: payers, policy-makers, physicians, providers and patients. Fail to convince any one of them and you can find yourself blocked.

For new entrants, it can be hard to make a start. One approach, as the TSB mission heard at MIT, is to find nooks and crannies in the system. Perhaps find physicians who will support you and run trials. Or try talking to one of the systems for integrated healthcare in the US, such as the Veterans Association.

Value innovators

In pitching to potential investors and partners, participants on Future Health are developing some clear points of difference. In designing cost out of the system, for instance, Radius is creating a lightweight, portable x-ray scanner for use on site and in the field; and Rathlin is transforming life support for newborns with a simpler, more compact system to regulate their hearts and lungs.

In improving ease of use, Geko is replacing surgical socks with a $17 clip, which are more comfortable for patients and less bother for nurses; and for the 670 million people around the world without the right glasses, Eyejuster has developed a lens whose strength you can adjust yourself.

Identifying new clinical needs remains a powerful argument as well: Arterius is cutting the risk of thrombosis for heart patients by making stents that can be absorbed into the body once they have repaired a coronary; ipCardio is producing the world’s first 3D heart simulator on which students can train, rather than practice in real life; and VueKlar’s stents make it easier and less invasive to track the complications associated with heart disease.

Other areas in which new sources of value are being sought in the US include: digital health; tests at the point of care; personalised medicine; and regenerative medicine.

Digital health

A wave of start-ups is already happening in digital health, attracting the attention of venture capitalists, who invested $184m in 27 deals in the first quarter of 2012, according to a report by Mercon.

“We are seeing a revolution in digital healthcare,” says Andrew Chitty at Year Zero, whose company is rolling out digital health records to 1.6 million patients in the NHS. “It will transform the relationships between providers and their patients.”

Campbell Grant at SiteKit on the Isle of Skype, which is creating electronic records for British children up to the age of five, argues that in the US physicians will start to lose their power. “Mothers will no longer have to rely on outside organisations for their information.”

“Similarly, in chronic conditions, we can escape the snap judgements that physicians have to make in 10 minutes. Instead, they can draw on everything the patient has experienced over 20 or 30 years.”

The consequences could be far-reaching. As the Obama administration pushes to make good on its promise to open up patient records within 24 hours, the connections between different rounds of care will become clearer. For instance, Americans have been subject to many more x-rays than Europeans, because no overall track is kept of their treatment, says Richard Boyd at VueKlar, whose stent can be used in MRI scans, so lessening any exposure to radiation.

By capturing data about the histories of their case, wider improvements can be made to the quality of life for Americans with long-term conditions, as well as cuts made to the cost of their care. Take Parkinson’s. If patients can track their progress on an app every day, says Bruce Hellman at uMotif, you can do everything possible to manage early symptoms, which is good for the patient and 40% cheaper to treat than at later stages of the disease.

Similar improvements are being made in other chronic conditions, such as diabetes, asthma and hypertension. Apps from Safe Patient Systems are already proving that they can reduce rates of unplanned hospital admissions by 60% and face-to-face contact by 80%.

For clinicians, the gains can be equally positive, says Janet Munro, a psychiatrist who is now running Optimal Medicine, whose software is in effect a GPS for mental health, mapping out the medical options at each stage of treatment. You can spot straightaway, for instance, whether one drug might interact with another, she says.

Tests at the point of care

However, it takes time to know whether anti-depressants are working. For the 400,000 new American patients who start taking medication for the first time each year, it usually takes six to seven weeks to find out whether it is the right one. Jonathan Kingslake at P1Vital now has a technique for establishing how a patient is progressing within a week through a test of their emotional bias. 

The speed at which diagnoses are reached can be critical. In the detection of cancer, pathology can be a particular pinch point. By replacing microscopes and slides with digital displays on screen, Des Speed at Path XL reckons he can speed up the flow of work by 20%-25%.

Similarly, Barbara Lead at Anaxys is developing a breath test for identifying lung cancer much earlier than normal and Devaki Bhatta at Maganparva has a new technique for blood poisoning at the point of care. Her reasoning is brutally simple: for every hour lost, 8% more patients die.

Personalised medicine

The hope is that medicine can become more personalised. Blockbuster drugs can be a crude weapon with negative side effects. Instead, patients will be prescribed treatments that suit the nature of their condition and their genetic make-up. Each cancer, for instance, has hundreds of variants and the most successful treatment of breast cancer, herceptin, is only effective in 25% of cases.

The testing of biological markers such as DNA, technically known as molecular diagnostics, is a fast-growing business, offering insights into which therapies work best for different patients. Hugh Ilyine at Destina has found a way of eliminating background interference on DNA tests, so eliminating the chance of finding a ‘false positive’ on results, and Guoliang Fu at Genefirst is developing a simple, one-step test for mutations in cancer and infectious diseases.

Regenerative medicine

It might be early days for personalised medicine, but solutions are already being found in regenerative medicine. In Boston, Adrian Ford is explaining how Tissue Regenix has developed a process for re-growing cells around implants such as hip replacements or heart valves.

Going forward, demand for more cellular research into regenerative applications is being held back by a shortage of live cells on which to run experiments. At Cellcap, Damian Bond is pioneering a way of harvesting stem cells through fat tissue, which can then be used in sufficiently high numbers in their active biological form.

Taken as whole, comments the TSB’s Dr Zahid Latif, these companies display Britain’s extraordinary range of diversity in med tech underpinned by scientific excellence and a strong entrepreneurial spirit. “In choosing which companies to bring, it was really hard to make a choice. We could easily have brought the next 20, reflecting our strength in depth on devices, diagnostics and digital.”

“At the TSB, we want to support the growth ambitions of all these companies by linking them to major challenges and designing systems that are ready to adopt technology.”

For further details, see: www.futurehealthmission.com and www.ukinusa.fco.gov.uk.

20 of the best

The full list of participants in the Future Health Mission organised by the Technology Strategy Board to Boston

Anaxys: Breath test for lung cancer. Arterius: Biodisposable, instead of metal, stents. Cellcap: Efficient collection of live stem cells for research. Destina: Clear testing for DNA with no false positives. Eyejuster: Change the strength of glasses at the turn of a dial. FPicardio: First 3D heart simulator. Genefirst: One-step gene testing for cancer and infectious diseases. Magna Parva: Point-of-care tests for blood poisoning. Optimal Medicine: Fast retrieval of options for treating mental health. Path XL: Software to detect cancer. P1vital: See whether anti-depressants are working in one week, not seven. Radius: Lightweight, portable x-rays in 3D. Rathlin: Life support for new born babies. Safe Patient Systems: More information for patients over the web or mobile. Site Kit: Putting personal health records online. Sky Medical Technology: An easy clip to speed up the flow of blood. Tissue Regenix: Regrow tissue round heart valves and joint replacements. uMotif: Easy-to-use digital guidance for Parkinson’s. VueKlar: MRI-friendly stents. Year Zero: Tools for digital patients.

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