Mobile health: Hallelujah or bah humbug? by Fortune Editors @FortuneMagazine December 12, 2011, 3:05 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Is mobile the future of healthcare, or more hype than substance? By Lisa Suennen, contributor Given the incredible energy and thousands of attendees at last week’s mHealth Summit, it would be easy to get caught up in the hype that surrounds mobile health and it’s many potential uses. There were an enormous number of companies present and news of many new financings (e.g., HealthTap receiving $11.5 million from Mayfield, Mohr Davidow and others). For those of you not yet familiar with the buzz word, mHealth is basically what you get when you cross healthcare with mobile phones. It is essentially the love child of Ma Bell, Hippocrates, Dr. Oz and Steve Jobs. For the true believers, and there are a lot of them, mHealth is the answer to the healthcare systems prayers. By bringing texting and WiFi and reams of personalized data to the fingertips of the masses, healthcare will right itself, costs will decrease and angels will sing. Can I get a Hallelujah? The entrepreneurs in the mHealth space tend to be young and often new to healthcare — full of energy and absolutely certain that their product or service will be the one to change the healthcare system for the better. God knows some of them will be right. Hanging around these people can be very energizing and they are surely of a different temperament than those who preside over the traditional healthcare IT companies. These entrepreneurs are looking at healthcare unfettered by the unhelpful customs and disincentives of the past. They are not weighted to the earth by how things have always been done in healthcare, but literally floating in the so-called clouds (ha ha, get it? a cloud joke) held aloft by fresh perspective. It can be refreshing as hell to hear their stories. On the other hand, hanging around these guys can also make one drip with cynicism. The conference definitely had its share of wildly enthusiastic CEOs leading companies that had devised very compelling products to improve point of care diagnosis (Alivecor, CellScope), simplify healthy eating (Fooducate), improve public health (Asthmapolis) and engage consumers in all manner of activities to prevent and manage chronic disease (lots of companies). On the other hand I kept looking over my shoulder for the Ghost of eHealth past: “Let me take you back to the year 1999 when eHealth companies flooded the Internet, offering the promise of a much improved healthcare system only to leave behind the tattered corpse of Dr. Koop.com and the trail of a bazillion incinerated VC dollars and careers. Look upon them–the ones who thought they had it all figured out and were confident that, since everyone had Internet access, their products would become more ubiquitous overnight than that damned Lady Gaga!” “Bah Humbug,” I would say, “Anything but that! Don’t make me look upon the shattered dreams of all of those companies that only aspired to be the Webvan of healthcare! I can’t bear it! And please, dear God, no Lady Gaga!” The mHealth revolution definitely has some of the feel of the eHealth bubble of about ten years back. Companies are popping up left and right, many which are carbon copies of each other but with a twist (“we are the newest weight loss app but ours uses an entirely different font!”). There is a frothy financing market despite the overall healthcare venture capital downturn, with these nascent companies commanding valuations that have little to do with traditional metrics (“I have no revenue but my idea is so cool that I’ll settle for nothing less than $100 million in pre-money value and that’s only if you slap down a term sheet by midnight tonight!”). Healthcare IT is hot and mHealth is en fuego. Lots of big companies were at the mHealth Summit trying to look hip and mHealthy. Kind of weird to see Verizon VZ and AT&T ATT represent at a healthcare conference. A friend and healthcare luminary type with whom I was watching Verizon present said that such companies are perfect for the healthcare market because they are good at overcharging and bad at customer service. As I walked the exhibit floor the one question I asked of nearly everyone I talked to was, “Can you name 3 mHealth companies that have achieved $10 million in annual revenue?” Crickets. No one could name even one. (Self-interest alert: I do know one, which happens to be PatientSafe Solutions, a company in the Psilos portfolio with more than twice that in annual revenue.) That doesn’t mean that the others won’t get there, however. There is no doubt in my mind that mHealth will become a major part of the healthcare system. The question is when. The Ghost of eHealth Present, in the form of market analysis firm ABI Research, reports that the mHealth market is growing so fast that it will more than triple to $400 million by 2016. If you are an investor like me, and I’m sorry to use such a technical finance expression, that sucks. We are trying to build companies that we can sell for $400 million. If that is the size of the whole market 3-4 years from now, it’s hard to see it as a good investment today. On the other hand, you can’t help but see the evidence of why some of the mHealth products have the potential to make a profound difference in the lives of patients and providers. And it makes you want to get in on the action. There is definitely a burgeoning mass of data from successful mHealth experiments showing it is possible to improve access to care and clinical quality while saving money. Unfortunately, little of that was presented at the conference, but one presentation by Bella Hwang from Weltel, demonstrated how an mHealth project serving HIV-infected patients in Kenya used regular text messaging to dramatically improve adherence to antiretroviral drug regimens (62% compliance vs 50% in the control group) and suppress the viral load (57% vs. 48% in the control group; the project is estimated to generate $10 million in net savings over 3 years and break-even in year 2). It was an impressive analysis. I have seen other equally compelling stories, although they are largely from small pilot studies and not from large real world deployments. However, the night is young and Scrooge has not yet been out with the Ghost of mHealth Yet To Come. Just think what Tiny Tim could do with an iPhone, a compelling fitness app and an unlimited data plan! U.S. Secretary of Health and Human Services Kathleen Sebelius actually opened the conference with a speech in which she said that no healthcare sector has innovated as rapidly as mHealth and isn’t it amazing that there are over 12,000 apps related to health in the iTunes library. Amazing or scary? You be the judge. Anyway, Secretary Sebelius also said that the government is committed to supporting this sector because it is “the greatest technical breakthrough of our time to address the greatest problem of our time,” by which she meant the healthcare crisis. That might be a bit hyperbolic, but Dr. Eric Topol doesn’t think so. Topol, one of the world’s most renowned cardiologists and now Vice Chair of the West Wireless Institute, gave a very entertaining follow-up talk on the concept of Creative Destruction and how mHealth innovation can meaningfully change the field of medicine for the better. He hilariously demonstrated his hypothesis by using several mHealth products on himself while on stage, giving us a live ECG view of his own heart augmented by use of the conference hotel room free hand lotion since he forgot to bring his own ultrasound gel. One of the biggest impediments to the widespread adoption of mHealth is reimbursement, but even some payers were on hand and squarely on the bandwagon. Dr Richard Migliori, Chief Healthcare Officer of the nation’s largest private payer, United HealthGroup said that mHealth has the most promise of any technology to create health system reform because it is a true means of connecting people to actionable information. So in this, the holiday season, will I end up in the role of Scrooge, the mHealth pessimist or Bob Cratchit the mHealth optimist? Tough call. I think I’m sticking with schizophrenia for the moment while I sit by the (mobile) phone waiting for a call from the Ghost of mHealth Present telling me which is the best app in the iTunes library for mental health. God bless us, everyone, who makes the leap into the mHealth rapids. I have no doubt it will be an interesting, awful, awesome ride. Lisa Suennen is a co-founder and Managing Member of Psilos Group, a healthcare-focused venture capital firm with over $577 million under management.