SAN FRANCISCO — On the final day of the Health 2.0 Conference and the culmination of Health Innovation Week, attendees were exposed to an array of applications aimed at transforming the health care system.
From product demos to case studies to an active exhibit hall and a live code-a-thon, health innovation was on display.
While many of the tools elicited excitement and high hopes, there was an underlying tone of skepticism among some in the audience. On the conference Twitter feed, some attendees questioned how the much-hyped Sharecare application by WebMD founder Jeff Arnold could be successful without a consumer voice. During coffee breaks, others argued about whether patients would actually use such tools, especially if there is an added cost involved.
A session titled "Funding and Incentives for Health 2.0" proved to be a fitting end to the conference by addressing some of those concerns head on. Venture capitalists and veteran technology entrepreneurs discussed funding models for health 2.0 and offered advice to entrepreneurs.
What's Changed, What Will Change?
Mitchell Kapor, founder of Kapor Capital, said the "ecosystem for developing health 2.0 apps" is like an "arid desert." However, he added that it's "still early" and "innovation will take off."
Kapor noted that the cost of entry in health 2.0 "has just crashed." He added that what would have cost $5 million to launch 10 years ago now costs $50,000 thanks to advances in the Internet and other technology. From an investment point of view, that allows you to invest in more things and spread out your risk, Kapor explained.
Bryan Roberts -- managing general partner at Venrock Associates -- said the playing field has leveled out. He said the "quality of entrepreneurship has skyrocketed in health IT," and there is an "influx of really high quality people." However, as a result, health IT likely "will get overfunded," he warned. Still, Roberts predicted that "we'll come back here in three years and be amazed at what's" happened.
Consumer Buy-In
Lisa Suennen -- co-founder and managing member of Psilos group, a health care-focused venture capital firm with over $580 million under management -- warned that health 2.0 tools that rely on consumer pay will fail.
However, Esther Dyson -- chair of EDventure Holdings -- disagreed with Suennen, saying, "For a lot of people, convenience is worth something." She added that peer pressure will help drive consumer buy-in. Dyson added that previously there was only a market for health care and bad health but that "now there's a market for good health."
Roberts said wider consumer use of health 2.0 tools will occur when consumers "have real financial responsibility" for their health care.
Investor Strategy, Advice to Entrepreneurs
Suennen said that in three to five years, money will be invested "where you can measure true return in investment." In other words, investments will be made in tools that reduce health care costs, rather than those that increase costs or time.
Don Casey, CEO of West Wireless Health Institute, said that so far, the health care industry's focus has been on "toys, not outcomes." However, he predicted that there will be a significant shift in the next three to five years.
Dyson said that "good areas" in which to invest are those that "produce data that this stuff actually works."
Suennen urged entrepreneurs to "tell a great story" when pitching their products. She also said that entrepreneurs should consider what kind of company they want to become, adding that if they want to be a smaller firm, venture capital might not be the way to go.
Dyson urged conference attendees looking to get into the health 2.0 business to focus on what the "other person is hearing," rather than what they are saying.
Casey noted that prospective businesses often lead with technology but that he views health care as a business model problem. He said entrepreneurs should "start with a business model solution and then add technology to it."
Roberts told entrepreneurs that we're "in the honeymoon period right now." He urged them to "revel in the time period" but to prepare for things to come.
Same Old, Same Old?
During the question-and-answer session following the panel discussion, Jane Sarasohn-Kahn -- a health economist and iHealthBeat contributor -- called the panel a "let down," compared with the day before, when federal government officials pushed for more innovation and touted no-cost access to government data. She added, "I feel like I heard all this 10 years ago," adding, "it feels very old to me."
In response, Kapor said that while the federal government is "still important," it's not going to have "an astounding effect" on the health care landscape in the near future.
Casey reiterated that he is "incredibly optimistic about where health care is going."