Qualcomm Life boosts mhealth ecosystem with 2net and $100 million venture fund (transcript)

This is the transcript of my recent podcast interview with Qualcomm Life.

David E. Williams:      This is David Williams, co-founder of MedPharma Partners and author of the Health Business Blog.  I’m speaking today with Rick Valencia, Vice President and General Manager and Anthony Shimkin, Senior Director of Marketing at Qualcomm Life.  Rick, Anthony, thanks for being with me today.

Now I understand you were at the mHealth Summit earlier this month where Qualcomm announced a new subsidiary called Qualcomm Life.  Can you tell me about that and what the thinking is behind the new venture?

Rick Valencia:          You bet David.  Qualcomm Life is a business that’s been in the making for nearly a decade now.  For about eight or nine years, Don Jones and a team here from Qualcomm have been evangelizing the concept of bringing wireless technology into the health care arena and specifically into medical devices.

Then in the last year or so we developed a business plan.  After having listened to a lot of customers over that eight or night year period and getting their specifications and requirements and understanding what the real challenge was, we developed a business around those specific needs.

The launch announcement was focused on three specific areas.  First and foremost was that we are now open for business as Qualcomm Life,  bringing about 40 partners with us, all at different stages of integration into the platform.  Second we launched the 2net Platform, the 2net Hub and three other gateways of getting information off the medical device.

Third, we announced a $100 million Qualcomm Life Fund where we’ll invest in early stage businesses in wireless health: devices, services and applications.  We’ve already made five investments in wireless health companies and we will continue to invest and help stimulate this market.

Williams:         There was a fairly long gestation period for the business. Why?

Valencia:          In the first eight or nine years there really was no specific business plan.  The objective was to promote the concept of embedding wireless technology in the medical device and start to build the ecosystem that’s required to support a business and an industry.  We went about doing that including building standards organizations and trade groups.  We were one of the instrumental partners in launching the mHealth Summit.

There’s even an education opportunity now within wireless health where right at Qualcomm’s campus in partnership with Case Western University, you can get a masters in wireless health.

Williams:         Great.  Rick, despite the fact that I’m sure you’re using a lot of high quality Qualcomm gear in your phone, the network is prohibiting us from have a completely clear connection, but I think I got most of what you had to say there!

The concept of remote patient monitoring and at-home monitoring has been around for quite awhile and there have been a lot of different devices and business models in the market going back even before the eight or nine year gestation period that you described for this effort. Everyone sees the appeal yet the uptake and success have been pretty limited so far.  Do you see a sharp break from the past or should we just expect slow, incremental progress?

Valencia:          There are two general areas are going to have a fairly major impact.  I’m going to focus on the first, which is the technical issue and then I’m going to let Anthony jump in about health reform.

Technically speaking what’s happened is a lot of these devices have been put in the home to send data back to a caregiver or disease management company, but they just don’t work or they’re siloed.  In other words, three or four devices that are used, all of which send data in their own stream. You’d have to view the data in its own native format or get a fax with the information handwritten.

The promise of the 2net platform is to take multiple streams of data off of multiple devices, get it all into one platform, standardize that data so that it can be viewed all at once in a simple to understand, easy to use view.

One big issue is that device companies assumed people had Wi-Fi and could connect their devices to it. In a lot of cases that’s not true, so the device never sends a single message.

By sending home the medical device or devices with a 2net Hub, it is in essence paired in the factory with this gateway device. You plug it in the wall and it just starts going.

So from a technical standpoint we think that this will really be a game changer for the device manufacturers.

A. Shimkin:     This effort has been around for years, why isn’t it picking up?  Offering several different gateways to get the biometric data off the devices is one of the advantages that Qualcomm Life brings to the table.  It can serve as a catalyst to accelerate some of these initiatives.

There has been some recent legislative trade news, as I’m sure you’re probably aware.  One is that hospitals will not continue to get paid on readmissions.  The cost and the issue in the United States with that problem is pretty significant.  We’ve seen a lot of interest early on from care delivery organizations.  These would be systems like the VA, which I know has a significant effort around remote monitoring to track those patients upon discharge so that they’re not coming back into the hospital for a series of disease states whether it’s diabetes, congestive heart failure, or COPD.

Now you’re starting to see several large scale Integrated Delivery Networks  taking a significant interest in what these remote monitoring efforts have to offer.

We’re seeing a groundswell of interest, not only from customers, but from physicians.  A recent survey reported that up to 88% of physicians were interested in tracking and monitoring their patients’ health at home.  The top three areas were weight, blood sugar and vital signs.

When you look at the three or four different pillars, we’ve seen a significant acceleration over the last six to twelve months trying to push the whole remote monitoring offering across the continuum of care and especially in the home.

Williams:         What’s the implication of rapid physician uptake of smartphones and tablets? Is that having an impact on remote monitoring that is perhaps greater than some of these longstanding devices, which are often just a glorified bathroom scale at the end of a wire?

Valencia:          There’s no question about it.  Something like 80% of doctors are now using some form of tablet or smart device in their practice, whether that’s just doing web searches for information or actually using the devices connected to their electronic medical records.  They’re starting to use wireless technology in a way that’s having an impact on their practice and their ability to care for their patients, keep track of their patients and also communicate.

One of the key value propositions that the 2net platform and hub offers is that we actually create a two-way communication between the patient and the doctor. So it’s not just a matter of getting the data off of the medical device back to a caregiver or doctor or wherever it’s intended to go, it’s also the ability for that doctor or caregiver to communicate back with the patient and maintain that two-way connection.

The tablet or smartphone also provides an opportunity to present the data in a way that is more meaningful to a physician and patient.

Shimkin:          Over 50% of patients would be interested in using a smartphone or PDA to monitor health.  You’re seeing the acceleration of technology.  As the apps become easier to use for different generations, easier to integrate, (which we’re really seeing across the spectrum in terms of interoperability), I think it’s a matter of time before you start to see some of these pick up more.

If you look at the proliferation of technology, one of the things that we cite here at Qualcomm is the number of people out there with access to a cell phone. It’s more than people worldwide with running water, electricity or the use of a toothbrush.  So it’s going to be a standard that’s hard to ignore not just in the US but worldwide.

Valencia:          Ease of use is going to be the key, taking those streams of data and delivering them in a way that’s meaningful for a doctor and patient.

The 2net platform is an open ecosystem so we are connecting any medical device and allowing any service provider or application developer to develop new solutions that we can’t even think of today, new applications and ways to present the data back to a physician or patient where it’s actionable.

Think about leveraging streams of data off of multiple devices; you can imagine a disease management scenario with a diabetic where you have a glucometer, an insulin pump, a weight scale and activity monitor.  Imagine having those four different streams of data being encapsulated in an application that presents the information in a very meaningful way on how you’re progressing or not progressing towards your goals. Instead of a doctor having to watch a ticker of your blood glucose levels throughout the day to figure out when he ought to intervene, he can view data in a way he’s comfortable using it without altering his day in a way that’s unmanageable.

Williams:         We’re talking about ease of use here as a key aspect in two-way communication.  Are you seeing any impact from the Patient Centered Medical Home, which could provide some reimbursement beyond the physician visit to actively monitor some of these feeds? Or is it just an abstract notion at this point?

Shimkin:          No, I think a lot of that also comes from payer interest.  Some of the evidence that I’ve seen has come out of the VA.  When you’re talking about putting an aging parent in a long-term care situation that costs $75,000 a year and up, the VA has really been at the forefront of some of these initiatives for remote monitoring patients to get those costs down into the low single digits thousands of dollars.

When you just look at the impact of forward thinking care delivery organizations, you’re starting to see a lot of interest in terms of clinical outcomes. It’s very difficult to ignore the body of evidence around the impact. You’re starting to see a significant pickup in payer interest.

Last but not least, we can talk a bit more about the consumer.  There’s a lot around consumer preference.  You have the aging grandparent who is in the home who really doesn’t want to leave the home.  They want more of their care in the home. You’re seeing very strong preferences from some patients with one or several chronic conditions wanting more care available in the home rather than being put in some other situation.

William:           Rick, you mentioned a $100 million Qualcomm Life Fund that has made five investments already.  Can you talk a little bit about one or two current investments and also how you’re thinking about making investment decisions in the future?

Valencia:          You bet David.  One example would be Telcare.  Telcare is a company that has the first FDA approved glucometer with cellular technology embedded in the device. They’re providing the opportunity for diabetics to have their tests go immediately to the cloud and back to where it’s intended to go.  In some cases it might be to a parent with a child who has diabetes who is at school so they can be keeping track of their readings on a regular basis throughout the day.

In addition, we recently invested in a company by the name of AliveCor.  They’re commonly known as the iPhone ECG device.  It’s a device that is a case for an iPhone in which you just put your fingers on the two sensors on either side and it generates your ECG. In an emergency situation to have a device like that where you can quickly apply it to a person and get that ECG and have that sent to a doctor somewhere immediately to determine exactly what you’re dealing with is obviously an important and valuable use of wireless technology in health care.

What we’re looking for are early stage companies.  Typically Qualcomm is not a lead investor.  We typically invest alongside more traditional venture investment firms and we like to invest within companies that need our support strategically, whether it’s the technology, the platform, or our relationships that we can support them with.  We believe that our involvement can further a company’s efforts just by being a partner with them.  That’s where we would typically be most interested in investing.

Williams:         I’ve been speaking today with Rick Valencia, Vice President and General Manager and Anthony Shimkin, Senior Director of Marketing at Qualcomm Life.  Rick, Anthony, thank you very much for your time today.

Valencia:          Thank you, David.

Shimkin:          Thanks for having us, David.

December 21, 2011

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