Simple Math

Simple Math

Over the weekend while catching up on various news items we ran across another hookup in the interconnected diabetes management (IDM) space this one between Glooko and Fit4D. This hookup look so many others in the IDM space is an attempt to transform data into patient relevant, patient actionable information. While these companies will beg to differ, it is no different than Livongo hooking up with Glytec. Yep you can’t swing a dead cat these days without hitting these types of hookups.

The question we have is not whether these hookups will work out, as we have already stated in previous posts we see them as adding value to both parties. No, the question we have is when will any of these hookups go after the big prize, when will they move beyond the low hanging fruit and reach for the bigger fish. Our second question would be how the data gathering partners will remain relevant once the Dexcom (NASDAQ: DXCM) slap it on turn it on low cost CGM system gets here.

Let’s take the first question head and state that yes IDM works but so far, we have seen no evidence that it works or provides a return on investment for non-insulin using patients. Which just happens to be the majority of patients with diabetes. We have no doubt that these programs provide a solid return on investment for insulin using patients. However, with no disrespect to all these companies this is the easy part the low hanging fruit if you will.

Now from a business perspective we can understand this focus on insulin using patients. First off with these patients its relatively easy to gather verifiable data. As we have stated in the past by the nature of their therapy these patients must measure their glucose on a regular basis. It is also relatively easy using insulin dosing algorithms to help these patients dose the proper amount of insulin. Finally identifying money saved isn’t that hard either most of which comes from keeping these patients out of the hospital. As we have noted many times avoiding a severe hypoglycemic event does not juts save lives but also tins of money.

The issue comes when we move from insulin to non-insulin using patients. Patients who do not test their glucose levels regularly or may not test at all. Patients who are not as compliant with their therapy even if their therapy involves just oral medications. Yet these patients will suffer the same cost complications from poorly controlled diabetes and need just as much help as patients who use insulin. The problem is engaging this group so that diabetes management becomes part of their daily routine.

Let’s be clear here IDM does work, that has never been in doubt. The question for us has always been can any company bring scale to IDM, to move beyond insulin using patients and to all patients with diabetes regardless of how they treat their diabetes. Can any company show savings beyond keeping patients out of the emergency room?

This is another issue as the complications from poorly controlled diabetes do not show up overnight, they show up after years of poorly controlled diabetes. Perhaps the best way to think of this is a patient does not develop lung cancer from smoking one cigarette, they develop lung cancer after years of cigarette smoking.

When it comes to complications from poorly controlled diabetes the goal for most payors is to avoid them long enough until the patient moves onto Medicare. The fact is when it comes to Type 2 patients the goal for payors is to manage them as cheaply as possible until they move onto Medicare when it’s no longer their problem.

We have long noted that when it comes to IDM the goal is to turn all this data into patient relevant, patient actionable data. To engage the patient so they take ownership of their diabetes management. This is a much easier task with insulin using patients as they can see immediate benefits such as fewer hypoglycemic events. The bar is much higher for non-insulin using patients as these patients can “feel” just fine yet be completely out of control. Again, as we have said many times there is no physical pain or discomfort associated with poorly controlled diabetes. The truth is by the time the pain and discomfort arrive it’s too late.

Think of it this way when a patient loses weight they receive lots of positive reinforcement from friends, family members and co-workers. Anyone who has lost weight knows how great it feels when someone acknowledges the weight lost. Unfortunately, there are no outward signs that a patients A1C is under control. A patient does not walk into a room and have someone walk up to them and say, “My goodness your A1c is great keep up the good work.”

This is the biggest issue for IDM and non-insulin using patients. It’s not just turning data into patient relevant, patient actionable data. It’s providing constant positive reinforcement so that the patient will do all the heavy lifting required. We’ve said it before and we’ll say it again the easy part is providing the how to, the hard part is providing the want to.

Any company that can conquer that huge obstacle will be rich beyond their dreams. Yes, money can be made by helping insulin using patients but wealth can be achieved by helping the masses who do not use insulin. This isn’t complex its just simple math.