Where health IT is and where it needs to go — An investor's approach

The healthcare industry holds a massive amount of data, but most providers don't know what to do with it.

Catherine Stapleton, director of Washington, D.C.-based Precipio Health Strategies; Newton Juhng, senior vice president of McLean, Va.-based Capital One; Brian Brownschidle, executive director of Chicago-based XMS Capital Partners; and Pete Tedesco, vice president of New York-based Health Enterprise Partners, spoke on a panel titled, "Hot Trends in Health IT Investing" at the 13th Annual Healthcare and Life Sciences Private Equity & Finance Conference, hosted by McGuireWoods and RSM, in Chicago.

"I think a lot of what's problematic in healthcare right now, is that you have pieces of data and you're trying to extrapolate what to do with the person based upon those pieces, rather than having a larger data set to work off of," explained Mr. Juhng.

The panelists viewed five key sectors of Health IT through the investor's lens.

Physician benchmarks: We have the data — now what?
The crux of health IT rests on behavioral modification. For data to be useful, medical providers must receive it at the right time to make the right choice.

Under government mandate, healthcare providers manage and aggregate data, but the government failed to direct providers how to use the gathered data. Even though the industry is trending toward value-based, physicians are still being reimbursed based on the fee-for-service model.

"In order for you to ask [physicians] to be better at what they're doing, you have to give them some parameters to the game...what they can do to improve their scores," said Mr. Juhng.

Hospitals prepared to accept some risk should start benchmarking their data and outcomes against similar hospitals in the area. This allows the leadership to understand costs and outcomes, which indicate whether the hospital is ready to take on risk and still make money.

Should investors bet on telehealth?
From texting to video calls, telemedicine presents a cheaper alternative for healthcare delivery. "There's more that can be done for less," Mr. Juhng concluded.

Companies choosing to enter the space must ensure they are substituting telehealth for a service, not offering an additional service. Consumers want to cut down their appointments, so successful telehealth companies will connect a patient to an internal medicine physician and a specialist during the same video chat, for example.

"That's where you get money," said Ms. Stapleton. "Going to one site and getting multiple things done at one time."

However, most companies haven't been able turn a profit with the telemedicine model yet, which presents a major obstacle and has turned away investors from entering the space. "In theory it's good. I think dollars coming behind it is what's going to make it interesting," said Mr. Juhng.

But Mr. Tedesco warned "investor beware," as the telemedicine space presents few barriers to entry. Because existing telemedicine companies have not differentiated themselves from each other, the space won't bode well for investors.

Wearables: We wear data, but are we using it?
From Fitbits to Jawbones, consumers embrace wearable technology.

Companies that use the data as a treatment plan instead of a wellness plan will come out ahead. Most people who use wearables are already active, so the data isn't as valuable. Therefore, investors will find opportunities in companies that target patient populations who would benefit from wearable data, such as number of steps or heart rate monitoring.

Some companies are already integrating the wearable data stream into an EMR. "The opportunity is there, but I don't think it's going to be an every practice thing," said Ms. Stapleton.

Behind the scenes of electronic medical records
Data/analytics isn't a new concept for the healthcare industry — but the industry is currently drowning in the amount of data available. The key lies in interoperability, combining the data into one useful piece. No single dataset supersedes another in importance; a patient's lab data is just as crucial to the equation as the patient's medications.

Companies that figure out how to implement data into workflows will find success in this sector. Many businesses are assisting medical providers in mining their data to positively affect care and outcomes.

Electronic health records have become too commoditized, Mr. Jungh asserted. The focus should be on the back-end, looking at who you're integrated with and what you can do with the data.

Investors may be more interested in EHRs in niche areas, where they lose some of the commoditization and become more valuable. "A general EHR is not something that you tend to get too excited about," said Mr. Jungh.

Personalizing the experience with predictive analytics
The industry needs to see stronger analytics to deliver an ideal personalized patient experience.

"If you get these better data repositories, what's going to be the opportunity set here is actually having predictive analytics that are useful and meaningful to the provider and payer," said Mr. Brownschidle.

Right now, there are too many reactive companies. With predictive analytics, physicians can pinpoint specific patients at risk of certain conditions and intervene with health plans.

"The data is going to get more intense and it's going to get larger and larger, so the question is, how do we weed through all that and get what we need to make an effective decision?" said Mr. Juhng.

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