When it comes to investing, the eye has it

This is a guest post by life sciences entrepreneur Mikael Totterman

Eye on investing

Eye on investing

I was surprised by a recent Wall Street Journal article, which reported that venture capitalists are now investing more in the eyes than in any other organ. In 2013, VCs injected $850 million into eye-related startups, more than they invested in traditional areas such as the heart and orthopedics.

Intrigued, I attended the American Academy of Ophthalmology Annual Meeting in Chicago earlier this month. to learn more. In discussions with venture capitalists, industry thought leaders, and physicians, I heard four main explanations for the rush to invest in the eye:

  • Large and growing market with significant unmet needs
  • Lower reimbursement risk
  • Entrepreneurial and technology-friendly physicians
  • A favorable regulatory framework

Large and growing market with significant unmet needs

The eye disease segment of the ophthalmic market is driven directly by an aging population. This includes common conditions such as wet macular degeneration. It’s the leading cause of vision loss for Americans over 60, but treatment options are still quite limited. Eleven million Americans suffer from some form of macular degeneration today. That figure is expected to rise steadily to 22 million by 2050.

In addition to the disease-based market, refractive vision correction represents a significant market opportunity. The refractive correction market is very substantial with over 150 million individuals in the United States alone needing vision correction across a broad range of age groups. Historically, LASIK-related companies (both excimer and femtosecond lasers) have generated substantial returns for venture investors.

Lower reimbursement risk

Compared to other medical technology markets such as orthopedics and cardiology, the vision correction market is much less affected by reductions in insurance reimbursements. Procedures are generally paid for directly by patients, and top physicians can charge premium fees. Market dynamics are similar to the cosmetic surgery market, which has been an attractive opportunity for investors.

Entrepreneurial and technology-friendly physicians

Definitive data are scarce, but the impression I have is that the refractive surgeon market is an early adopter of technologies. Most refractive surgeons I met appear to be very open to trying new approaches and tools. This contrasts with other segments of the medical market, such as general practitioners, where adoption is slow.

Favorable regulatory framework

Most conference participants felt that the regulatory climate is improving. The FDA is providing clearer guidance into what is required to achieve regulatory approval. This is very favorable for investors who are considering putting their capital at risk.

While it’s impossible to predict the future, things seem to be looking up for ophthalmic investing and entrepreneurship. I intend to continue to track this market closely.

photo credit: Lucas Vieira Moreira via photopin cc

Is Partners HealthCare charting a new course? I’m quoted

I’m quoted in today’s front page Boston Globe article (Partners HealthCare chief met a trail of resistance), which dissects the tenure of outgoing Partners CEO, Gary Gottlieb. It should be no surprise that the continued expansion of the biggest and strongest healthcare system in Massachusetts under Gottlieb has led to friction and controversy.

The reporter asked me about whether a new CEO would change the company’s strategy. Here’s what I said:

Partners executives have said bolstering their network of hospitals is critical to coordinating patient care and keeping costs in check through more efficient care. Gottlieb’s successor and Partners’ board will have to decide whether to stick with that approach.

“The broad expansion, it’s not obvious that they need to do that,” said David E. Williams, president of Health Business Group, a Boston consulting firm. “Partners doesn’t need to expand at all and it would still be the biggest and strongest in the state.”

I suggested that Partners could decide to go back to its roots as a world-renowned academic medical center with its Massachusetts General Hospital and Brigham and Women’s Hospital. There are other ways to coordinate care and control costs besides owning community hospitals and physician practices.

By healthcare business consultant David E. Williams of the Health Business Group

Telehealth at Mercy Health: Podcast interview with CFO/EVP Strategy Shannon Sock

Shannon Sock, Mercy Health CFO & EVP of Strategy

Shannon Sock, Mercy Health CFO & EVP of Strategy

Today’s Center for Connected Health Symposium #cHealth14 featured a high-powered panel discussion with top executives from Wellpoint, American Well, and the VA along with Shannon Sock, CFO and EVP of Strategy at Mercy Health. The topic: Large Scale Connected Health Interventions –Lessons Learned.

After the panel, I sat down with Shannon to talk about Mercy’s 10-year journey in telehealth. The big, midwestern integrated delivery system has made telehealth a strategic priority since at least 2006. That commitment is ramping up further with the construction of a 120,000 square foot, $50 million virtual telehealth center, slated to open next year.

In this podcast interview Sock described Mercy’s telehealth approach and accomplishments as a first mover. He also touched on the challenges of getting his colleagues to approach telehealth as a strategic asset, the opportunity to diversify Mercy’s revenues by providing services to other systems, direct contracting with employers, and the exciting new possibilities of patient engagement arriving with Apple’s HealthKit and similar initiatives.

Sock also highlighted the competitive jockeying that’s taking place between health plans and large health systems. The plans are starting to insert themselves into primary care delivery (e.g., Wellpoint with American Well) while big systems are building the infrastructure that they hope will let employers bypass health plans entirely.

I would love to be the moderator for round 2 of this panel so we could dig into these competitive issues more directly.

By healthcare business consultant David E. Williams of the Health Business Group


Innovation at Aetna: Podcast interview with Michael Palmer, Chief Innovation & Digital Officer

Michael Palmer, Aetna's Chief Innovation & Digital Officer

Michael Palmer, Aetna’s Chief Innovation & Digital Officer

Michael Palmer, Chief Innovation & Digital Officer at Aetna, will deliver a keynote address (Leading Innovation in a Connected World) tomorrow at the Partners Connected Health Symposium in Boston.

I caught up with him today to get his perspectives on the following topics:

  • What innovation means for Aetna and how that differs from what it means for small companies or other industries
  • The extent to which Aetna’s customers are seeking innovation vs. more prosaic factors such as reliability, consistency
  • How Aetna is partnering on innovative approaches in genomics, cancer care and other areas
  • What Aetna thinks it can bring to the consumer market to beat innovators such as Humana and Oscar Health

By healthcare business consultant David E. Williams of the Health Business Group


Minimally invasive surgery: Discussion with Covidien’s Chief Medical Officer

Dr. Mike Tarnoff, Covidien's Chief Medical Officer

Dr. Mike Tarnoff, Covidien’s Chief Medical Officer

Minimally invasive surgery (MIS) has been broadly available for well over a decade, yet penetration is widely variable. Open surgical approaches are still common for many surgeries including hysterectomy and colorectal.

In this podcast interview, I asked Covidien’s Chief Medical Officer, Dr. Mike Tarnoff to explain what’s going on with MIS adoption in the US and around the world, and what role doctors, patients, and industry should be playing.

By healthcare business consultant David E. Williams of the Health Business Group