About the Author
Toni Peck is a partner in the firm’s Research Triangle Park office and a member of the firm’s Healthcare Sector Team. Her practice is focused on providing transactional and regulatory counsel to healthcare providers. This work includes mergers and acquisitions, joint ventures, reorganizations, management services organizations, academic medical center affiliations, and hospital-physician alignment strategies. She also counsels healthcare providers in a variety of regulatory compliance matters including, the Stark law, federal and state Anti-Kickback Statute compliance, HIPAA, 340B Drug Pricing Program, digital health, physician recruitment, medical staff issues, and antitrust concerns.
The use of digital technologies has accelerated almost overnight due to the COVID-19 pandemic, with healthcare providers and patients finding new and innovative, socially-distanced ways to deliver and receive services. This article explores the current digital health landscape, assesses its benefits, discusses some challenges to its continued widespread adoption, and addresses what is on the horizon for digital healthcare.
- Corporate funding for digital health companies reached $21.6 billion in 2020.
- Increased regulatory flexibility resulted in an increase in the development and adoption of digital health technologies during the pandemic; however, it is unclear whether this trend will continue.
- Privacy and security must be a priority for digital health tool creators in 2021.
Prior to the coronavirus pandemic, the use of digital technology in healthcare was on a steady rise; however, the pandemic has spurred rapid development of digital health technology as well as rapid adoption and utilization of that technology in the industry. This trajectory isn’t surprising. Digital health holds the promise of increased accessibility to high-quality, patient-centered care that can also increase patient engagement and reduce costs. However, the full realization of this promise may be threatened by policy and regulation that is failing to keep pace with and encourage this evolution.
What is Digital Health?
There is no universally accepted definition of digital health. In fact, researchers studying the definition recently came across no fewer than 95 published definitions for the concept of digital health.1 There were, however, some clear patterns: there is an emphasis on how data is used to improve care; there is a focus on the provision of healthcare, rather than the use of technology; and the definitions tend to highlight the well-being of people and populations over the caring of patients with diseases. As used in this article, digital health encompasses the use of digital tools and technologies to improve and manage an individual’s or a population’s health and wellness.
Current digital health landscape
Telehealth and wearables
Telehealth, the use of which has been on the rise in recent years, exploded in 2020 as the world fought the COVID-19 pandemic. Patients and healthcare providers turned to teleconferencing or mobile health to access consultations, diagnosis, treatments, prescriptions and other services they usually received in a hospital or clinic.
Telehealth services not only benefited patients, but also benefited healthcare providers who reduced their risk of exposure to COVID-19 by decreasing the amount of patients they saw in person. The use of telehealth also allowed providers to use less of the scarce personal protective equipment than they would otherwise use were there more in-person care. Despite appreciating the convenience of receiving telehealth services, patients still had significant concerns about privacy and security, the physician-patient relationship, and the ability to receive the right diagnosis and proper treatment.2 So while the pandemic put telehealth in the spotlight, it remains to be seen whether this interest in telehealth will continue post-pandemic.
Devices like the Apple Watch and Fitbit, which are typically purchased to improve fitness, took on new significance because many can provide users the ability to do things like monitor blood oxygen saturation levels, which can be helpful in diagnosing COVID-19.
We also saw a surge in the use of wearables due to the pandemic.3 Devices like the Apple Watch and Fitbit, which are typically purchased to improve fitness, took on new significance because many can provide users the ability to do things like monitor blood oxygen saturation levels, which can be helpful in diagnosing COVID-19. Wearables are diverse and plentiful and can track and monitor a vast number of health metrics, including blood glucose, blood pressure, and electrocardiograms to detect atrial fibrillation. It shouldn’t be surprising then that in a recent survey Insider Intelligence found that 80 percent of consumers are willing to wear fitness technology.4
Health and wellness
In 2020, the number of health and fitness app users increased by 27 percent from the prior year.5 Some apps focus on general wellness and health, while some apps are used for diagnosis and treatment of diseases. For example, some consumers use apps like Runkeeper and MyFitnessPal to track different health metrics for informational purposes, while others use apps to track specific health metrics that they can then send to their providers to use in developing and monitoring the patient’s treatment plan – apps like Glucose Buddy, which monitors and tracks glucose levels, medication, A1C, physical activity and carbohydrates intake to help patients manage their diabetes.
Biopharmaceutical company IQVIA conducted a study in 2015 in which it assessed the impact of wellness apps on the U.S. healthcare system. The study concluded that the use of apps in five patient populations that showed reductions in the utilization of acute care services due to app use – diabetes prevention, diabetes, asthma, cardiac rehabilitation and pulmonary rehabilitation – could save the nation’s healthcare system an estimated $7 billion annually. This amount is approximately 1.4 percent of the total cost of healthcare spending in these particular patient populations. According to IQVIA, if this level of savings were extrapolated across total national health expenditure, the cost savings would be $46 billion annually.6
Digital Medical Devices
A digital health technology is classified as a medical device if it meets the definition of Section 201(h) of the Food, Drug, and Cosmetic Act. Typically, if a digital health technology is used to diagnose a disease or condition, or in the cure, mitigation, treatment, or prevention of disease, it may be classified as a medical device. Medical devices can be instruments, machines, materials, as well as software applications. Medical devices are regulated by the U.S. Food and Drug Administration and depending on the classification of the particular device, it may be subject to long and expensive pre-market notification review and approval.
Advances in digital health have resulted in medical devices in healthcare being more consumer-facing, consumer-friendly and cost-effective. For example, once upon a time, one would have to go to a hospital or doctor’s office to be hooked up to machines to receive an electrocardiogram. Now, the latest version of the Apple Watch can perform that same test.
Additionally, consumer-facing digital medical devices played a large role during the pandemic. For example, many clinical trial sponsors used digital medical devices to monitor trial participants during the pandemic. Providers also had their patients use digital medical devices to monitor such health metrics as heart-rates, blood oxygen levels, and temperatures when monitoring a patient’s COVID-19 symptoms.
Artificial Intelligence (“AI”)
The field of artificial intelligence has come a long way from IBM Watson playing against (and beating) two Jeopardy champions in 2011. Now, IBM Watson is helping oncologists to detect cancer and save lives. AI, like IBM Watson, represents exciting and almost limitless possibilities for improving the accuracy of diagnosis and treatment, and increasing the efficiency and efficacy of healthcare while lowering its cost. In 2019, a third of all physicians reported using some type of AI in their practices.7 This number is expected to significantly increase over the next few years as the technology advances and providers become more familiar and comfortable with how to incorporate these technologies into their practices.
In 2019, a third of all physicians reported using some type of AI in their practices. This number is expected to significantly increase over the next few years as the technology advances and providers become more familiar and comfortable with how to incorporate these technologies into their practices.
While many science fiction movies depict AI as robot doctors who replace human providers. In reality, the future of AI lies in using the technology to aid physicians and healthcare workers to better diagnose and treat patients. For example, a study published in the January 2020 issue of Nature analyzed and compared the accuracy of breast cancer diagnoses in women made by Google Health’s DeepMind to those made by physicians in the United States and United Kingdom. As compared to the physicians, DeepMind reduced the number of false positives by 5.7 percent in U.S. cases and 1.2 percent in the UK cases. False negatives were reduced by 9.4 percent in the United States and by 2.7 percent in the United Kingdom.
Nutrition and Nutrigenomics
While there are health and wellness apps that will allow individuals to track their nutritional intake and calories, there is an existing and relatively new sector of digital health that has advanced how one thinks of nutrition by focusing on nutrigenomics. Nutrigenomics considers the relationship between nutrients, diet, and gene expression and how this relationship can facilitate the prevention of certain diet-related diseases such as heart disease and diabetes.8 By focusing on nutrigenomics, it may be possible to offer more targeted and personalized nutritional advice and services to patients based on the interaction of the patient’s diet and their genetic makeup. Currently, companies offer services where one can send a blood sample so that one’s genes can be analyzed. Based on the results of one’s genetic makeup, the company will then pair an individual with a nutritionist who will explain the best nutritional plan for the person’s body and/or a personalized workout plan. There are also companies who gather and analyze health information through wearables and will then explain the nutritional impact of certain health markers, such as glucose levels.9 There is great promise for better health outcomes and reduced healthcare costs by managing and controlling diseases such as diabetes and heart disease through individualized plans that are crafted to fit one’s unique genetic makeup as opposed to a one-size fits all approach.
What’s behind the increased investment in digital health?
Corporate funding for digital health companies hit a new high in 2020, with $21.6 billion invested.10 Aside from the pandemic, what’s really spurring on all of these advancements in digital health? Investment in this area is increasing due to the promise digital health offers to:
- Reduce healthcare costs: It has been well-documented that preventive care performed outside a hospital can reduce the high cost of healthcare. And while digital health technologies can advance healthcare provided in the hospital, the vast majority of digital health technologies are used in settings outside of the hospital. Even before the pandemic, healthcare spending amounted to 17.7percent of the U.S. gross domestic product (GDP).11 The challenge, however, lies in striking a balance between innovation and cost. Advances in technology in healthcare, at least initially, tend to be expensive. However, significant healthcare cost gains hinge on widespread adoption and the efficient utilization of the technology. Therefore, to lower the cost of healthcare, digital technology companies must also make user-friendly and cost-effective digital health technologies that will spur widespread adoption and utilization.
- Improve health outcomes: Digital health promises to give providers the tools to make more accurate diagnoses and develop better treatment protocols, which should lead to improved outcomes for patients.
- Enable value-based healthcare: At the crux of our healthcare system’s move towards value-based healthcare is the deliverance of improved patient care outcomes at a fraction of the current cost. This will require providers to deliver services more efficiently. Among other things, there is an expectation that value-based healthcare will result in an increased focus on coordination of care, prevention of diseases, nutrition and wellness, and patient education and adherence to treatment protocols. These are all factors in which digital health technologies can help. For example, many physicians have begun to use data from health apps and wearables to treat patients, provide them education and ownership over their health, and increase the overall quality of care. Moreover, with improvements in digital health, providers are more accurately able to diagnose and treat conditions, reduce medical errors, and reduce the cost of healthcare through these increased efficiencies.
- Reduce public health disparities: Digital health tools can help close the gap between the “haves” and the “have-nots” by increasing access to healthcare. Patients who may not be able to access quality healthcare because of where they live, lack transportation, their work schedules, or other social determinants can greatly benefit from telemedicine. Additionally, providers can monitor patient health metrics and adherence to treatment protocols through wearables and health apps. This type of monitoring can result in increased patient adherence to treatment protocols and improved health outcomes.
- Increase patient engagement: Digital health technology gives consumers and patients more access to their health information and empowers them to be proactive in their healthcare. For example, many healthcare systems have online portals where patients can review their medical records and interact with their physicians. Studies have shown that patients who are actively engaged in their healthcare have better health outcomes.
What’s next for digital health
The pandemic has accelerated shifts that were already underway in healthcare; the digital transformation that might have taken 10 years to accomplish could now take as little as three years.12 However, some changes, particularly in the legal and regulatory environment, are still necessary to ensure society is able to reap the maximum benefit from these shifts.
Privacy and Security
The accumulation and use of consumer and patient data is key to the digital transformation of healthcare. Moreover, data needs to be shared across the healthcare spectrum with different stakeholders in order to develop and refine technology, diagnosis and treatment. However, the vast majority of Americans consider their health information incredibly private and have concerns about how to protect its privacy and security, including concerns about who has access to their health information, how their health information is being used, and how healthcare providers and other healthcare stakeholders are preventing unauthorized disclosure and misuse of their health information.
While HIPAA may protect one’s protected health information held by covered entities (i.e., healthcare providers, health plans, and healthcare clearinghouses) and their business associates (i.e., vendors, suppliers, and other contractors), much of the health data collected by digital health technologies are not collected by entities that are considered covered entities. Health app developers, and companies that manufacture and distribute wearables are almost never considered covered entities and for the most part, consumers are left to depend on the individual digital health technology company to regulate itself and to determine how it will protect and use the health information it gathers from consumers.
Some of these digital health technology companies may be regulated by the FDA or the Federal Trade Commission. The FDA has issued guidance regarding the mitigation of cybersecurity risk in the design and application of medical devices; however, the FDA cannot enforce penalties for ignoring such guidance, since such cybersecurity guidelines are mere guidance and not law. On the other hand, the FTC has broad authority to regulate unfair and deceptive acts and practices. This authority allows the FTC to regulate companies and healthcare providers (those who are both covered and not covered under HIPAA) from making deceptive declarations about the privacy and security of their products and a failure to take reasonable security measures may constitute an unfair practice under the Federal Trade Commission Act.13
While many people have recently relaxed their vigilance over privacy when it comes to their personal health, with increased willingness to track and share data in order to speed diagnoses and treatment, it remains to be seen whether those attitudes will persist after the pandemic ends. Digital health tool creators need to be answering fundamental privacy and security questions in the meantime to ensure that tools connected to the internet are secure and that apps have strong security and privacy controls. Moreover, our regulatory environment needs to strike the right balance between ensuring there are rules and regulations that protect and secure consumer personal health information and enabling digital technologies the freedom to collect and share data for the benefit of innovation and improved health outcomes.
Our regulatory environment needs to strike the right balance between ensuring there are rules and regulations that protect and secure consumer personal health information and enabling digital technologies the freedom to collect and share data for the benefit of innovation and improved health outcomes.
International, federal and state regulations have not yet caught up to the growth and advancements of digital health technologies. Current laws and regulations are specific to state and international boarders; however, the use of many digital health technologies transcend such traditional borders. For example, physicians may use apps and artificial intelligence to be in one place and provide healthcare in other states or even other countries. In doing so, they may also encounter a number of different and sometimes inconsistent rules and regulations.
As a result of COVID-19, a number of federal and state agencies have relaxed enforcement of regulations and issued temporary exemptions to support the increased use of digital health during the pandemic. Over the last year, the FDA has granted Emergency Use Authorizations for products and vaccines intended to aid in COVID-19 relief efforts, issued enforcement discretion guidelines for a number of different types of products, and waived several regulatory requirements.
Additionally, states encouraged the use of telehealth by temporarily modifying their telehealth requirements. In most states, a provider is prohibited from providing telehealth services that include the diagnosis and treatment of conditions to patients who are in other states. With the onset of the pandemic, many states have relaxed these requirements to allow for increased access to telemedicine services. Additionally, the U.S. Department of Health & Human Services Office of Civil Rights issued enforcement discretion guidelines that relaxed the enforcement of HIPAA as it applies to telehealth services. However, it remains to be seen what impact these temporary measures will have in helping the FDA and OCR to craft improved efficiencies in their enforcement procedures and in helping these agencies to foster a regulatory environment that is conducive to the rapid advancement of digital health.
We also can expect to see (and need to see) changes to reimbursements for digital health technologies. Historically, both private and government health plan reimbursement policies have been slow to evolve along with the digital health age. The Centers for Medicare & Medicaid Services’ reimbursement for telehealth services – which before the pandemic were primarily limited to rural areas and certain conditions – were expanded temporarily in response to COVID-19. Private insurers have also expanded their reimbursement of telehealth services. It is likely that CMS and the private insurers will retain at least some of the expanded reimbursement for telehealth; however, it remains to be seen whether the sites of service and types of conditions that will continue to be reimbursed will be enough to make telehealth a permanent and viable alternative to in-person treatment. Additionally, some private insurers provide reimbursement for wearables used by patients to track their health metrics. Recent updates to the Anti-Kickback Statute permit providers to issue wearables to their patients as part of their provision of healthcare and CMS has, within the past few years, expanded reimbursement codes that include wearables used by providers for remote monitoring of patients.
Recent updates to the Anti-Kickback Statute permit providers to issue wearables to their patients as part of their provision of healthcare and CMS has, within the past few years, expanded reimbursement codes that include wearables used by providers for remote monitoring of patients.
Closing health disparities
Finally, the pandemic has shone a spotlight on existing disparities in healthcare. However, during the pandemic, CMS has taken some measures to reduce this disparity. For example, CMS authorized reimbursement for the provision of an expanded number of services through telehealth, permitted the provision of telehealth services by a number of different types of providers, and permitted federally qualified health centers and rural health clinics to offer telehealth services. While these measures increased access to healthcare in at-risk communities, there is still much to be done to close the heath disparities that exist in our nation.
Given the pandemic and the increased focus on the disparities in healthcare, there is also an opportunity to focus the conversation on how systematic changes can be made in our healthcare system to reduce such disparities. For example, studies have shown that many artificial intelligence algorithms are biased towards racial and ethnic minorities.14 More needs to be done to ensure there is no bias in the data and the assumptions upon which algorithms are based. Furthermore, there must be equity in the collection of such data. Algorithms based on faulty data and biased assumptions will only amplify the deleterious effects of such problematic data when used to aid healthcare providers with patient care.
Given the pandemic and the increased focus on the disparities in healthcare, there is also an opportunity to focus the conversation on how systematic changes can be made in our healthcare system to reduce such disparities.
The future is digital health. As the digital transformation of healthcare moves forward at an unprecedented, pandemic-accelerated pace, new opportunities and advancements, coupled with the appropriate regulation and increased equity, can help the industry deliver on the promise of digital health – more empowered patients who have access to better care, and experience better outcomes, at a lower cost. While a number of barriers still exist to widespread adoption of digital health technologies by providers, the pandemic has shown that with increased regulatory flexibility, innovation can coexist with privacy and security, and digital health can help providers provide more personalized care, achieve increased patient engagement, and attain better health outcomes.
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