Slashdot: With us today, we have Alfred Poor, editor of Health Tech Insider who had graced Slashdot’s pages before and we all lived. He just got back from CES and we're going to talk about the marvelous advances in wearable technology and health technology. But first, how was the show in general?
Alfred Poor: The show had a couple of new records this year. I mean it's always crazy. I mean for those who don't know about CES, it always happens the first week of January in Las Vegas. It's always in Las Vegas because that's the only place big enough in this country for a show this size. And it's getting bigger every year that in fact convention center is tearing down the old Riviera Hotel and Casino to make additional exhibit space so, which is kind of exciting, but this year, the two things that were new was one, they had great warnings about all the security they were going to have at all the entrances.
Alfred Poor: How you’d get wanded and your bags inspected and all that stuff. And so there was great fear and trepidation that there would be hour-long lines trying to get in. Basically, they just waved people through and look at the occasional bag. That was a non-event much to everybody's relief. The other interesting thing is, this was the first year for Lyft and Uber at the conference.
They had specific areas a couple blocks away where they were allowed to pick up and drop off. But that was a big change over prior years. But other than that, a lot of great stuff, lot of news, and pretty much the computer, tablet, smartphone stuff was pretty flat. Lot of very interesting things going on with cars. But the big news definitely was in the wearable and health categories section. The exhibit space in the stands where the stuff was shown probably almost doubled over last year.
Alfred Poor: Significant growth.
Slashdot: Okay. So, what will we wear of the tech variety?
Alfred Poor: Right. Well, one of the big takeaways is, the fitness market was clearly the low hanging fruit. The companies like Fitbit and the others got in there with their fitness products because fitness enthusiasts are willing to spend money, where on earth will we put out 300 bucks for a new pair of shoes, even though they've only been wearing the last one for a few months. So, there's a willingness to spend. There's disposable income in that category. The problem is that that category is completely crowded now. There are more step counters, heart rate monitors, calorie trackers. You just walk up and down the aisles and everybody's got them.
Slashdot: And not only that, I know this because I got my wife one for Christmas. There’s all kinds of 20- and 30-dollar Fitbit and fitness thingy knockoffs out there, so I'm assuming the profit in that area is zooming downward.
Alfred Poor: Yeah. It's got to be much less money involved, lot of competitive pressure. I mean the other factor that matters that these things are a lot accurate.
Alfred Poor: My friend and publisher Dan Rosenbaum wore two, one on each wrist and each day reported his step and mile count every day. The two he had were within about five percent of each other, which means you need a third one to find out which one was right.
Alfred Poor: But I mean, the fact is studies have shown that some of these devices are no more than 20-percent accurate, which for fitness is fine, it doesn't matter if your bathroom scale is only 10- or 15-percent accurate because so long as it’s consistent, you can see whether you're increasing or decreasing. But in terms of clinical quality data, this is datathat you need to act on. A lot of these devices just aren’t precise enough to be useful.
Slashdot: Wait a minute here. It's not the clinical show. This is the Consumer Electronics Show.
Alfred Poor: Well, that's what you think, but I mean it's a business-to-business show, right.
Alfred Poor: It's people selling to businesses. And the fact is the way I view the wearables market right now is that consumer is the past and business is the future. So, they have built the market – they built the industry by selling to consumers. They've been able to get the early adopters to buy the Apple Watch, the Fitbit band and products like that. That's a pretty finite market. They probably got pretty high penetration. There's already a lot of sort of jadedness in the market because people say, yeah, I had one and I wore it for three weeks, three months, now it's in a drawer.
So that's not a market that's going to be a high growth area. And for me, analyzing the situation, I’d fall back on the probably apocryphal Willie Sutton quote. Willie Sutton being the famous bank robber who reportedly was interviewed and asked why do you rob banks and reportedly his answer was well because that's where the money is. And so there's no money for consumers in fitness products.
Alfred Poor: It’s nice to have. They help you track your exercise. They help you feel better probably, maybe help you lose weight. But the fact is it doesn't put money in your pocket at the end of the month.
Alfred Poor: So, who stands to gain from better information about the health of the individuals? From where I sit, this is going to come from the health insurance companies, our healthcare providers, the big hospital systems and that sort of thing. And the employers, many employers, both large and small self insure for their health insurance. I have a friend who's an insurance agent and he says many of his middle and even small client companies self-insure their medical insurance, probably shouldn't, some of them, because they're too small, but the fact is that's what they're doing. So, any cut in the healthcare expense is going to show up on their bottom line.
Right now, for the average patient to be admitted to a hospital according to some sources that I've talked to, the moment you step through the door, it costs $30,000. This is on a hospital admission, okay. I’m not talking about an emergency visit. So what that means is that if you can put off or prevent that admission, you can save a significant amount of money. And so we're going to be seeing wearables as a means of tracking an individual's health and determining that they may have a treatable problem before it reaches a crisis level and possibly even before the symptoms become obvious. This is something that's been pilot-tested with heart failure patients.
Slashdot: That's interesting.
Alfred Poor: And rather than have to send a nurse out to see them in the home once a week or whatever, if they can be remotely monitored, they know which patients need to see a nurse, when, and they find out about that before they get into a crisis and have to be readmitted to the hospital. So, those businesses are the ones who are going to save a lot of money. And so I think that the fitness companies who are developing the accurate products with a clinical accuracy, that are going to be suitable for diagnosis and treatment applications, they're going to be selling not to the consumer, but rather to these companies. It's a whole lot easier to sell ten thousand or a hundred thousand units in a single sale than it is to try to sell one unit at a time to 10,000 or 100,000 people.
Alfred Poor: So you look at who's going to benefit and the easier way to get them into the channel, you're going to have the Blue Crosses and the United Health Cares of the world buying these by the cartload for their subscribers. And my guess is that Medicare will get in on this too because, again, it will transfer directly to the bottom line in lower healthcare costs due to better prevention.
Slashdot: One thing I wonder is the next thing after monitoring you is a big thing to get you to improve your behavior.
Alfred Poor: Okay. One quick aside on those bonus programs, we're going to see some very interesting developments in that area because there's a lot of unresolved stuff going on. For example, the Americans with Disabilities Act, probably makes most employee health benefit bonuses illegal if somebody who has a disability isn’t able to participate in. So that's just one of many, many, many unintended consequences that we're going to be dealing with over the next few years with this wearable health technology. But I agree that we're going to end up with reaping a lot of benefits from it, because of that. But you talk about the behavior modification in trying to get people to change their lifestyle, well it turns out that you can do a lot of things that have a huge impact even without changing their behavior such as it is.
For example, one of the main reasons the treatments where this is some medication involved, one of the main reasons that the treatments are ineffective is not because the drug is not effective, it's because of lack of patient compliance with the treatment, they skip doses, they cut their pills in half, they do whatever. So if you have a system that can track and make sure that the patient is taking the pills when they're supposed to take them, all of a sudden your secondary costs go way down because you don't have to deal with the complications that arise from them not taking their meds.
And there are wonderful systems. One of the things I saw at CES this week, are you familiar with e-ink, it’s a display technology and it's what's called a bistable technology. You put up an image, you can then disconnect the power and that image will hold until you refresh it and put a different image up there. So it uses practically zero power to put the image on. They're using it for timetables for transit systems, they are using it for signage, of all stores that are using it in supermarkets for the price signs, some of the wearable, wrist wearable devices are using them as the display because they use almost no power compared to an LCD or OLED. But there is a company that is using this e-ink technology in printed electronics to create a smart fill pack. That will tell the user when it's time to take the pill, but also can report wirelessly whether or not the pill has been taken. And this could be affordably introduced to any blister pack kind of medication that people have to take. So this is a kind of development where you're not, again, relying on the patient's behavior, but actually use technology to back them up and to make sure that they follow the treatment instructions.
Slashdot: So it's really working on patient behavior.
Alfred Poor: Yeah, but it's not relying on them to do it on their own.
Alfred Poor: So that's just one example of how we're going to find big benefits from all this and we're going from the wearables to little band-aids that you put on your chest or your arm that are going to be able to measure all sorts of stuff. One of the things that I saw that particularly intrigued me, there is a company, this is more fitness but very much to the health side, people who want to lose weight generally want to lose fat.
Alfred Poor: And so the typical way you do this is you wake up in the morning, go through your routine and then weigh yourself first thing in the morning and you do it consistently every day at the same time, same point in your morning. I know with me my weight will swing two, three pounds in one direction or another from one day to the next. And I know I'm not losing or gaining three pounds of fat in a day, there's something else going on, but the body fat measures aren’t accurate enough to tell me about that and whether it's water or a big meal or whatever else is going on, it doesn't tell you much. But this company has devised a way to identify biomarkers in your breath, the fact is that when you break down fat, the fat goes through a different metabolic channel than sugar or starch might. And one of the byproducts of that digestion, that metabolizing it, is that you produce acetone, the same chemical that you would use a solvent for paint jobs and stuff. The average person in their resting metabolism has about one part per million acetone in their breath. If you have two parts per million acetone in your breath, you're burning about a half pound a week – half pound of fat a week, not muscle or water – to make sure you are losing fat.
You can do this any time during the day, it doesn't have to be right before or right after your exercise or anything like that. It's part of your overall metabolism. So you just blow at this little canister and put it in a little box and it tells you what you number is and so you can see whether or not your exercise regimen or whatever it is you're doing to try to lose weight, whether or not that's producing a higher level of acetone in your breath.
Slashdot: So is this something you blow into?
Alfred Poor: It’s something you blow into, you blow into a little canister.
Slashdot: Okay. And obviously tiny parts per million, we're talking about some very accurate sensors.
Alfred Poor: Actually that's another takeaway from CES this year. The sensors now are good enough. They're not great but, again, the bulk of the sensors that we're using come out of smartphone technology. Certainly the motion in cameras and accelerometers and gyroscopes and all that stuff, they are made incredibly cheap, right I mean the marginal cost of these things is getting down towards zero as well as their size. But the interesting thing that's developed in this market is that the engineers are getting extremely clever about being able to tease data out of the noise from these sensors. So it could be a really dirty static filled set of data but they're able to go in and extract reliable information from it. So it's not that the sensors are getting so much better, it’s the algorithms that are processing the data that comes out of them.
Alfred Poor: They are getting so much better. And there's just product after product that I saw this week where algorithms were the big story about how they're managing to find or infer useful information from your wearable data.