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Technology-led innovation in digital health: The law of inverse relationships

While researching for my upcoming book, I asked the nationally recognized CIO of a health system what he thought of the market for emerging technologies such as AI, cognitive, blockchain and digital health solutions in healthcare. His response was: The teacher is ready, but the student is not.
What he meant was that the technology vendor community is developing innovative solutions at a faster rate than the ability of the healthcare sector to adopt it.
It’s no secret that healthcare IT is a couple of steps behind other sectors such as banking and retailing. I have been keenly noting the seeming contrasts in the outlook for healthcare IT when I speak with healthcare industry executives and technology providers.
Here are some examples:
  • Healthcare policy uncertainty is taking a toll on discretionary spending in IT. However, VC funding for digital health funding has been on a tear this year.
  • While VC-funding for digital health has been robust, most of the money is going to a select few companies.
  • The select few companies that are cornering VC money are in no way guaranteeing a successful exit for their financiers. Witness some of last year’s stars that look like dogs this year – such as the wearables market, which saw one major company reportedly on the verge of folding and another major player effectively pulling the plug on their program.
  • For all the noise about emerging technologies such as AI, cognitive and blockchain, the top clinical IT priorities are IT security and electronic health records (EHR).
  • So what gives? At one level, it’s the old story of hype exceeding reality for early-stage technologies. While larger health systems are making progress in experimenting with new technologies and use cases (read my earlier blog on AI in healthcare), the vast majority of the healthcare providers are focused on optimizing EHR systems, as per the findings of the 2017 Leadership and Workforce Survey by HIMSS. The bulk of the available IT budget is going towards business as usual (BAU) activities. This is not surprising; given the millions (billions) of dollars spent in the past few years on implementing these systems, health system CEO’s are keen to maximize the returns on their investments before looking at a shiny new object.
    I call this the law of inverse relationships in technology-led innovation: The more the noise, the less the funding it’s actually getting. Generally speaking.
    The HIMSS workforce survey validates this by indicating that there is a “remarkable disconnect” between vendors and healthcare providers on IT providers on EHR as a priority for health systems. Moreover, hospital and non-hospital providers diverged on their business priorities, which flowed through into IT priorities as well. Not surprisingly, vendors seemed to be more aligned to the priorities of hospital providers than non-hospital providers. (The HIMSS survey confirms the yawning gap in IT focus between the hospital and non-hospital providers while suggesting there may be a latent “hunger” for IT solutions among some non-hospital providers.)
    Some of this can be explained by the overall structure of the healthcare industry. Of the 5,500 or so hospitals in the U.S., a small percentage (10% or less) are considered target customers for most technology firms. These would be typically large academic medical centers, national health systems or multi-hospital systems that have the budgets and the profit margins to support innovation programs. Non-hospital facilities such as ambulatory care and long-term care are not in the consideration set. The target market shrinks even further when it’s a question of emerging technology solutions.
    This poses a challenge for technology vendors, especially those trying to sell innovative technology solutions in a technology environment effectively ring-fenced by EHR vendors ( I refer primarily to healthcare providers; the payer and life sciences markets have a different set of dynamics). A basic assumption in validating the market opportunity is that the target market segment has the propensity to spend on IT solutions and has a dedicated IT function to manage the spend. This assumption is not necessarily valid for a large part of the healthcare provider sector, which results in a relatively low market size and consequently low penetration for advanced technology solutions in the bigger picture. 
    The near-term implications of these trends are:
  • Slow adoption rates for emerging tech and digital health innovations, which will force many young companies to close down as they run out of funding before they can establish a sustainable revenue model.
  • Enterprise-level innovation programs will be at risk if new solutions and ideas fail to gain traction quickly enough. Failed initiatives will have a very hard time recovering from setbacks, with implications for ongoing funding support.
  • Technology risks arising from immature products; lack of integration with systems of record resulting in increased costs and workloads; and IT security issues related to aggregation and integration of data from an increasing variety of sources.
  • A big question that arises in this context is: Who pays for all this innovation? In the current structure of the healthcare economy, it is critical for technology-led innovation to be aligned to revenue models for users. In other words, if a technology solution is not covered by a fee-for-service arrangement between a provider and a payer, there needs to be an ROI model that starts to pay off in a relatively short period.
    Like the one ring to rule them all, it boils down to this: alignment between vendors and users on the costs and benefits of technology-led innovation.
    The good news is that many solutions are indeed crossing this chasm (and are being wooed with more VC funding as a result). The use of advanced analytics models in population health management and the use of mobile-enabled applications for improved patient engagement are two areas where the benefits have been sufficiently established to provide momentum for growth. As more and more use cases go mainstream, we will see the adoption curve climb, especially as the newer solutions get tightly integrated into “core” transaction processing systems. As the Queen would say, keep calm and carry on.
    This article is published as part of the IDG Contributor Network. Want to Join?

    Georgia rolls out NEC's facial recognition technology across major cities

    NEC's Video Face Recognition Technology
    Image: NEC
    NEC Corporation has announced its advanced surveillance system has been rolled out across major cities in Georgia, including the nation's capital Tbilisi.
    The surveillance system uses NEC's facial recognition software for video called NeoFace Watch, which checks images captured by CCTV cameras in real-time against offender databases and "watch lists" for faster detection of "suspicious individuals".
    According to NEC, using video images from standard cameras for face recognition requires advanced techniques since images are influenced by environmental conditions such as camera location, image quality, lighting, and subject size, in addition to the behaviour of subjects, such as their walking speed, face direction, and sight line.
    To achieve "reliable" face recognition of a video image, NEC said it developed feature point extraction technology that enables the identification of an individual even if their face is partially hidden or the image is taken from different angles.
    NEC's facial recognition software also uses deep learning technologies to identify individuals by a low resolution face image captured by a distant camera.
    "By offering city surveillance systems that are enhanced with facial recognition technology, we are contributing to proactive crime prevention and efficient criminal investigations," said Tomoki Naka, managing director of NEC Telecommunication and Information Technology.
    This surveillance system, which began operation in June, was introduced as part of Georgia's "Safe City, Safe Region, Safe Country" program with the goal of improving public safety.
    400 CCTV cameras were installed across major cities in Georgia, under the directive of the Ministry of Internal Affairs of Georgia, and "tens of thousands" more will be added in the future.
    NEC's facial recognition technology is also being used by the South Australian police force to identify persons of interest and missing persons. However, the South Australian government said in September last year that the technology's capacity to identify people on real-time CCTV footage would not be used initially.
    The South Australian government's decision to deploy facial identification follows the Northern Territory's implementation of the technology in September 2015.
    Earlier this week, the Australian Minister for Immigration and Border Protection Peter Dutton announced that a new AU$22.5 million, three-year contract with Vision-Box Australia will initially see 105 new smartgates rolled out across Australian airports, enabling passengers to be processed using facial recognition and eliminating the need for passports.

    Government of Canada invests in Quebec's clean technology sector

    Minister Bibeau and Parliamentary Secretary Lametti announce $7.8 million to develop cleaner technologies for less pollution and healthier communities
    SHERBROOKE, QC, July 28, 2017 /CNW/ -�Quebecers will benefit from new jobs created by innovations in the energy, mining and waste treatment sectors as a result of a $7.8-million investment by the Government of Canada.
    This investment in three Quebec companies?one in Sherbrooke, another in Qu�bec and a third in Montr�al?will create well-paying middle-class jobs as a result of the new business opportunities generated by the development of technologies that lead to less pollution and healthier communities.
    The announcement was made today by the Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie, on behalf of the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development.
    The investment includes:
  • $3.9 million for The Magpie Mines Inc. of Montr�al, which is using low-grade ores to develop a process to produce synthetic rutile, a popular white pigment used in paints, plastics, paper and foods;
  • $2 million for E2Metrix Inc. of Sherbrooke, which has developed a new approach to wastewater treatment that reduces the amount of contaminants being released back into surface water, resulting in cleaner communities; and
  • $1.8 million for FlyScan Systems Inc. of Qu�bec, which has developed a sensor that can detect small leaks in underground pipelines used to transport oil and liquid gas.
  • The projects announced today are being funded through Sustainable Development Technology Canada, which works with Canadian companies to bring early-stage clean technologies to market.
    Investments in clean technology are part of the Government's�Innovation and Skills Plan, a multi-year strategy to create well-paying jobs for the middle class and those working hard to join it.
    "The new wastewater treatment processes developed in Sherbrooke by E2Metrix will go a long way toward protecting our ecosystems. Our government is proud to support projects like this, which promote clean technology and develop innovative sustainable development solutions."The Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie
    "Our government's investments in clean technology reflect our commitment to protecting the planet. But they also point to a clear and strategic direction for economic development through innovation. That's because innovations in clean tech will lead to products and services that have an impact on all sectors of the economy. And clean tech has the potential to create thousands of well-paying jobs for Canadians. That's how innovation leads to a better Canada."David Lametti, Parliamentary Secretary to the Minister of Innovation, Science and Economic Development
    "Technological advances like those brought about by E2Metrix allow the city to reduce its environmental footprint. These novel solutions tackle global environmental and energy challenges, and I am very proud that the project to validate this innovative technology, which will take place over two years, is being carried out in city facilities."Bernard S�vigny, Mayor of Sherbrooke
    "Today's announcement showcases the strength of innovation being developed in Quebec. SDTC's investment in each of these companies will support the development of transformative clean technology solutions that will deliver real environmental and economic benefits for Canadians."Leah Lawrence, President and CEO, Sustainable Development Technology Canada
    "In Canada, like in the rest of the world, the capacity for wastewater treatment has reached its limits because of population growth and the emergence of new contaminants. The innovation developed by E2Metrix results in significantly lower concentrations of phosphorus and ammonia without resorting to chemical coagulants, leading to safer residues while reducing the volume of sludge generated. The unique properties of our patented anode make this possible. Our process, which complies with current regulations and the stricter ones to come, eliminates pathogenic micro-organisms and products that are harmful to human health such as hormones and endocrine disruptors."Mohamed Laaroussi, CEO, E2Metrix
    Quick facts
  • To help clean technology firms grow, the Innovation and Skills Plan includes investments of nearly $1.4 billion in new financing on a cash basis, starting in 201718. This new financing in the form of equity investments, working capital and project finance will be made available to clean tech innovators through the Business Development Bank of Canada and Export Development Canada.
  • Budget 2017 also commits $400 million to recapitalize Sustainable Development Technology Canada's SD Tech Fund, which supports the development and demonstration of early-stage clean technology projects.
  • Canada is committed to growing the economy while meeting carbon-emissions targets. The Pan-Canadian Framework on Clean Growth and Climate Change, developed with provincial and territorial partners, outlines how Canada will drive innovation and growth while reducing carbon pollution.
  • Associated links
    Follow Minister Bains on Twitter: @MinisterISED
    SOURCE Innovation, Science and Economic Development Canada
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