Maria Shepherd, President and Founder, Medi-Vantage02.14.22
While the mass stampede of orthopedic surgeons shifting procedures to doctor-owned ASCs has been occurring, there have been some remarkable acquisitions of digital health companies in the past year. Digital health companies raised an incredible amount of money in 2021. The question is, “Will there be enough value in digitally enhanced medtech for physician-owned orthopedic ASCs to buy these devices?”
Digital health funding reached a new pinnacle in 2021. In the Rock Health 21Q3 report, it was reported investment climbed to $21.3 billion in 541 deals and average funding for Series A, B, and C rounds more than doubled since 2017 (Figures 1 and 2). The average deal in the first three quarters of 2021 was an impressive $39.4 million.1
Why This Is Important
Are we experiencing a digital health bubble or another record-breaking year? The years 2017-2019 averaged $7.6 billion per year of venture funding in digital health and in 2020, investment jumped to 14.6 billion.1 Last year (2021) exceeded all those benchmarks through the third quarter, reaching more than $21 billion.1 Again, the question is, “What can we learn from this?”
According to the Rock Health report,1 the digital health companies determined as most attractive for investments were:
It is not a pretty picture. By 2032, the AAMC predicts the United States will need roughly an additional 46,900 to 121,900 physicians, which includes both primary care and specialists. Surgery will be hard hit, with an extra estimated 14,300 to 23,400 surgeons needed by the same time and almost double that for other specialties such as radiologists and pathologists. Further, age is a significant factor as well; the AAMC reports that one-third of all physicians currently practicing will be older than 65 by 2032.2
Help is on the way, however, in the form of nurse practitioners, physician assistants, and specialized registered nurses whose numbers are expected to increase. Further research is required on the types of services they will be providing, and if (or at what point) the supply of these types of healthcare professionals will become saturated.2
The takeaway for medtech? Broaden the use of the device to as many of these different types of healthcare providers as possible. For example, one of my clients is developing a new device used during the delivery of babies. A critical success factor will be if the physician must insert the probe or if a nurse can perform the task. The dynamics of Labor & Delivery is changing rapidly, and the broader the approved use of the device, the more often it can be adopted and utilized.
Augment/Improve the Treatment of Disease
One example of digital health augmenting and/or improving the treatment of disease comes from the recently acquired Gauss Surgical, a digital health medtech that developed Triton—an AI-enabled platform for real-time monitoring of blood loss during surgery.3 The Triton value proposition is it enhances patient care during surgery by recognizing hemorrhage, allowing the surgical team to intervene earlier to reduce or stop blood loss.
Estimating and quantifying blood loss has been an unmet need throughout the history of surgery. One of Triton’s earliest applications has been in Labor & Delivery. Reports indicate as many as 5 percent of newly delivered mothers can suffer a post-partum hemorrhage,4,5 which is the leading cause of death for new mothers around the world.6,7
Another example is AppliedVR—a startup in the immersive therapeutics space. In 2020, the company was awarded breakthrough device designation for the EaseVRx. Then, in November 2021, the company announced it gained de novo approval from the FDA for the technology to treat chronic lower back pain.8 That same month, AppliedVR declared it had finalized its $36 million series B funding round. The pain relief space is a huge unmet need and AppliedVR was the first to receive FDA de novo approval for a pain indication.
Patients use EaseVRx (a prescribed medical device with software on a proprietary hardware platform) at home. The system provides pain management training using cognitive behavioral skills in an immersive virtual reality headset that combines biopsychosocial pain education, diaphragmatic breathing training, mindfulness exercises, relaxation-response exercises, and executive functioning games. In a clinical trial, patient outcomes were significant. The data showed a 42 percent drop in pain intensity; a 49 percent decrease in activity interference; a 52 percent decline in sleep interference; a 56 percent reduction in mood interference; and a 57 percent drop in stress interference.8
Human factors usability is important to patients, providers, and payers. Each stakeholder must become confident a digital therapeutic will provide positive outcomes. In a clinical study, EaseVRx participants showed high engagement with an average full use of 5.4 sessions per week and patient satisfaction was judged by the System Usability Scale9—a common usability scale used in assessing usability in medical devices.
The third example is the Zimmer Biomet ZBEdge Connected Intelligence Suite that connects robotic and digital healthcare technology.10 The firm has been in the robotic space for quite some time, but it recently announced the OptiVu Mixed Reality Solutions platform, which uses the Microsoft HoloLens smartglasses to serve the Zimmer Biomet OptiVu Mixed Reality apps. Zimmer Biomet and Microsoft have announced a powerful collaboration to advance innovation in mixed reality applications for orthopedics on the OptiVu Mixed Reality platform. But Zimmer Biomet states on its website that OptiVu Mixed Reality is not commercially available at this time.11
The Medi-Vantage Perspective
Is there any wonder why deal volume surged in 2021? With all these great devices, enhanced by the benefits of digital health, augmented reality, virtual reality, artificial intelligence, and machine learning, why not invest in the benefits?
We have long said human factors usability is a strategic imperative for medical device companies. This is because ease-of-use is a game-changer for surgeons and drives patient compliance with new technologies. This factor alone makes relevant and high-performing digital—whether incorporated on existing devices or as standalone new devices—powerful new tools to improve patient care while reducing the costs.
References
Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical, where she boosted the company valuation prior to its acquisition by Medtronic, director of marketing for Philips Medical, and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy and innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services, and assesses prospective acquisitions. Shepherd has taught marketing and product development courses, speaks regularly at medtech conferences, and can be reached at mshepherd@medi-vantage.com. Visit her website at www.medi-vantage.com.
Digital health funding reached a new pinnacle in 2021. In the Rock Health 21Q3 report, it was reported investment climbed to $21.3 billion in 541 deals and average funding for Series A, B, and C rounds more than doubled since 2017 (Figures 1 and 2). The average deal in the first three quarters of 2021 was an impressive $39.4 million.1
Why This Is Important
Are we experiencing a digital health bubble or another record-breaking year? The years 2017-2019 averaged $7.6 billion per year of venture funding in digital health and in 2020, investment jumped to 14.6 billion.1 Last year (2021) exceeded all those benchmarks through the third quarter, reaching more than $21 billion.1 Again, the question is, “What can we learn from this?”
According to the Rock Health report,1 the digital health companies determined as most attractive for investments were:
- Software developed to accelerate R&D
- Delivery of on-demand healthcare services
- Augment the treatment of disease
It is not a pretty picture. By 2032, the AAMC predicts the United States will need roughly an additional 46,900 to 121,900 physicians, which includes both primary care and specialists. Surgery will be hard hit, with an extra estimated 14,300 to 23,400 surgeons needed by the same time and almost double that for other specialties such as radiologists and pathologists. Further, age is a significant factor as well; the AAMC reports that one-third of all physicians currently practicing will be older than 65 by 2032.2
Help is on the way, however, in the form of nurse practitioners, physician assistants, and specialized registered nurses whose numbers are expected to increase. Further research is required on the types of services they will be providing, and if (or at what point) the supply of these types of healthcare professionals will become saturated.2
The takeaway for medtech? Broaden the use of the device to as many of these different types of healthcare providers as possible. For example, one of my clients is developing a new device used during the delivery of babies. A critical success factor will be if the physician must insert the probe or if a nurse can perform the task. The dynamics of Labor & Delivery is changing rapidly, and the broader the approved use of the device, the more often it can be adopted and utilized.
Augment/Improve the Treatment of Disease
One example of digital health augmenting and/or improving the treatment of disease comes from the recently acquired Gauss Surgical, a digital health medtech that developed Triton—an AI-enabled platform for real-time monitoring of blood loss during surgery.3 The Triton value proposition is it enhances patient care during surgery by recognizing hemorrhage, allowing the surgical team to intervene earlier to reduce or stop blood loss.
Estimating and quantifying blood loss has been an unmet need throughout the history of surgery. One of Triton’s earliest applications has been in Labor & Delivery. Reports indicate as many as 5 percent of newly delivered mothers can suffer a post-partum hemorrhage,4,5 which is the leading cause of death for new mothers around the world.6,7
Another example is AppliedVR—a startup in the immersive therapeutics space. In 2020, the company was awarded breakthrough device designation for the EaseVRx. Then, in November 2021, the company announced it gained de novo approval from the FDA for the technology to treat chronic lower back pain.8 That same month, AppliedVR declared it had finalized its $36 million series B funding round. The pain relief space is a huge unmet need and AppliedVR was the first to receive FDA de novo approval for a pain indication.
Patients use EaseVRx (a prescribed medical device with software on a proprietary hardware platform) at home. The system provides pain management training using cognitive behavioral skills in an immersive virtual reality headset that combines biopsychosocial pain education, diaphragmatic breathing training, mindfulness exercises, relaxation-response exercises, and executive functioning games. In a clinical trial, patient outcomes were significant. The data showed a 42 percent drop in pain intensity; a 49 percent decrease in activity interference; a 52 percent decline in sleep interference; a 56 percent reduction in mood interference; and a 57 percent drop in stress interference.8
Human factors usability is important to patients, providers, and payers. Each stakeholder must become confident a digital therapeutic will provide positive outcomes. In a clinical study, EaseVRx participants showed high engagement with an average full use of 5.4 sessions per week and patient satisfaction was judged by the System Usability Scale9—a common usability scale used in assessing usability in medical devices.
The third example is the Zimmer Biomet ZBEdge Connected Intelligence Suite that connects robotic and digital healthcare technology.10 The firm has been in the robotic space for quite some time, but it recently announced the OptiVu Mixed Reality Solutions platform, which uses the Microsoft HoloLens smartglasses to serve the Zimmer Biomet OptiVu Mixed Reality apps. Zimmer Biomet and Microsoft have announced a powerful collaboration to advance innovation in mixed reality applications for orthopedics on the OptiVu Mixed Reality platform. But Zimmer Biomet states on its website that OptiVu Mixed Reality is not commercially available at this time.11
The Medi-Vantage Perspective
Is there any wonder why deal volume surged in 2021? With all these great devices, enhanced by the benefits of digital health, augmented reality, virtual reality, artificial intelligence, and machine learning, why not invest in the benefits?
We have long said human factors usability is a strategic imperative for medical device companies. This is because ease-of-use is a game-changer for surgeons and drives patient compliance with new technologies. This factor alone makes relevant and high-performing digital—whether incorporated on existing devices or as standalone new devices—powerful new tools to improve patient care while reducing the costs.
References
- bit.ly/odt220101
- bit.ly/odt220102
- bit.ly/odt220103
- bit.ly/odt220104
- bit.ly/odt220105
- bit.ly/odt220106
- bit.ly/odt220107
- bit.ly/odt220108
- bit.ly/odt220109
- bit.ly/odt220110
- bit.ly/odt220111
Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical, where she boosted the company valuation prior to its acquisition by Medtronic, director of marketing for Philips Medical, and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy and innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services, and assesses prospective acquisitions. Shepherd has taught marketing and product development courses, speaks regularly at medtech conferences, and can be reached at mshepherd@medi-vantage.com. Visit her website at www.medi-vantage.com.