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The Future of Healthcare: “We need to adopt incentives for digital solutions” with Dr. Ian Tolfree

…Adopt incentives for digital solutions. Rural areas and senior care, particularly those that treat Medicaid/care patients, don’t have the resources to adopt new solutions or the know-how oftentimes. This can be streamlined into a single device and intake, but the know-how and capital for adoption doesn’t exist. I almost want to develop open source software, […]

…Adopt incentives for digital solutions. Rural areas and senior care, particularly those that treat Medicaid/care patients, don’t have the resources to adopt new solutions or the know-how oftentimes. This can be streamlined into a single device and intake, but the know-how and capital for adoption doesn’t exist. I almost want to develop open source software, EMR, scheduling, everything for these guys in a Redhat type model so I can get them to a point where they can purchase, and use, solutions that will be reimbursed. In my dad’s nursing home, a nurse will take data by hand, enter it into a computer on a cart, which gets entered into another computer later.


Asa part of my interview series with leaders in healthcare, I had the pleasure to interview Dr. Ian Tolfree. Dr. Tolfree is the Entrepreneur-In-Residence for Vesta Health, where he advises on new health tech ventures while running his own pharmaceutical startup, TBT Pharma. He has a Phd in theoretical physics, worked in the intel community, and ran a university tech incubator before becoming a serial entrepreneur. At the incubator, he worked with over 70 research groups. The rapid number of iterations in a short period of time allowed him to see patterns and develop a tech agnostic, risk mitigated approach to technology commercialization.


Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?

Chance. It turns out when I graduated there weren’t many jobs in theoretical physics, so I went to the intel community. Every day, the next 35 years looked identical, which gave me a panic attack. The opportunity presented itself to run an incubator, which turned out to be a biotech incubator, so I ended up with a crash course in healthcare.

Can you share the most interesting story that happened to you since you began leading your company?

It’s a journey, one in which I learned faith. Unless you have a trust fund or an exit, being an entrepreneur is challenging emotionally and financially. 18 months ago I gave up my salary in the company I was running to keep the employees around, and consulting work magically appeared. Right as we were about to fold we got an influx in funding through an incubator competition. 6 months later I left for various reasons, and took money out of my IRA to go all in on raising money for my pharma company. As I was nearing the end of my runway, I got more unsolicited consulting work helping a genetics company turn from diagnostics to drug development, as that project was ending, I met the Vesta group and became an EIR, and here I am. Somehow things worked out, and tomorrow has taken care of itself.

Can you tell our readers a bit about why you are an authority in the healthcare field?

I’ve been working in healthcare for approximately seven years. Initially, I was building university spinouts, then running my own company, and now working on the capital side. I’ve seen a huge number of iterations in a small period of time. I’ve also had health problems, allowing me to see from the consumer perspective. The nature of training is to study problems from a big picture, which I’ve had to do to put new tech into a market context.

What makes your company stand out? Can you share a story?

I’ve been focused in dermatology for a few years. My pharma endeavor is repurposing, taking a generic oral compound and putting it into a cream to treat psoriasis, post-surgical pain, and similar conditions with a single product — over 20 million Americans are in our potential addressable market. Repurposing isn’t sexy, but the social impact is huge. What makes it stand out is the relatively lost cost of development because we have a shortened regulatory path, and the stage of development — not many startups have so much clinical data, We have the potential to have a huge impact on patient outcomes and costs in the system, benefitting everyone, while being profitable. We have data on over 200 patients, with no adverse events, and perform very well — it should be in every medicine cabinet eventually. The cost of production is dirt cheap, and the trials are cheap. We can price it on par to generic solutions and it is all profit, which is a win for patients, doctors, payers, and investors.

My other company, Sitala Health, is a digital solution for chronic skin conditions, again aims to reduce costs and improve outcomes. We’re in the early stages of product development. This area is of particular interest to me because my dad went from being an able-bodied working man to living in a nursing home in four years because of a toe infection.

One of the things we saw was that there were a lot of digital companies doing a great job tackling parts of the chronic wound problem. There are digital imaging tools, indication specific electronic medical records, patient treatment services, but no broad clinical guidance. Outside of a few major metro areas, in the rural areas and nursing homes in secondary markets, providers do their best but treatment can be better. In digital health though, between the long sales cycle and limited resources, no one company can tackle the whole problem. Mental health is another area this is true. Given our backing, it made sense to be able to leverage what others were doing to tackle the whole problem and let everyone — patients, other companies, providers, payers, benefit.

Capitalism and social impact are often seen to be at odds. I think we need to reframe the discussion and think impact capitalism, how can we do good and do well at the same time.

Can you share with our readers about the innovations that you are bringing to and/or see in the healthcare industry? How do you envision that this might disrupt the status quo? Which “pain point” is this trying to address?

TBT Pharma is simple but elegant. Topical statins, yes cholesterol medicine. Everyone has heard someone say “stress made my skin condition worse”, that is what we treat. You can’t produce stress hormones without cholesterol, so we target stress hormone production in the skin with a simple solution that you can’t get from the oral form. For some indications, like psoriasis, the approved drugs are expensive and rife with side effects — think $10–20k/year, and the risks vary between kidney and liver failure to cancer. Some indications have no approved drug, like scarring or wounds, and are dominated by expensive devices. We believe we can come in with a low cost, low side effect solution that works benefitting doctors, patients and payers in the long run, reducing costs on the system. Since ultimately we all pay through indirect costs, we are trying to change the treatment paradigm to benefit all stakeholders.

Sitala is addressing the pain point of bringing best practices and the best digital solutions to providers who wouldn’t normally have access to the best care. Our aim is to get everyone treated as if there were at a top tier hospital, reducing regional care disparities. In both cases we’re upending the treatment paradigm.

What are your “5 Things I Wish Someone Told Me Before I Started” and why.

  1. Capital raising is hard, traditional VCs invest in trends, not in products. My pharma company is oral to topical repurposing, which isn’t hot right now. We have phase I data 3 indications and serve a huge unmet need, but it isn’t a CAR-T immunotherapy, not sexy, so raising money has been difficult. The interest of industry and investors is dominated by expensive treatments for rare diseases, not cheap treatments for population health problems.
  2. A corollary is people invest in sentiment, not soundness. Going back to Car-T, there are a lot of players in the space, it is a long risky time to market, but because it is hot, raising capital is easy for them — that is true for most immuno therapies. It’s like the old saying nobody got fired for hiring IBM.
  3. Be careful choosing your partners — I’ve had great ones who were the first and last person I talked to each day, what I miss about working on those deals is them. I’ve also had partners who were the barrier to success, and resulted in everyone walking away after two years of trying to build something. Pay attention to those early red flags.
  4. Just because it’s been published, doesn’t mean it should be trusted. Academics are judged by their rate of publications, not whether or not the results are reproducible. Buyer beware.
  5. Not everyone cares about doing good and doing well. A lot of people are only motivated by their own self interests. I’d love to go into more detail but a few of these lessons are sensitive topics.

Let’s jump to the main focus of our interview. According to this studycited by Newsweek, the US healthcare system is ranked as the worst among high income nations. This seems shocking. Can you share with us 3–5 reasons why you think the US is ranked so poorly?

  1. There are many competing interests, and these interests aren’t aligned
  2. The fragmentation in the industry, at the state level and within, slows the sales cycle, reducing the rate of innovation and uptake
  3. Outcomes aren’t incentivized, treatments and procedures are
  4. The people who need a voice, don’t have one
  5. The industry focus is on expensive treatments for rare diseases, and treating chronic conditions, not curing them or cheap treatments with mass appeal.

You are a “healthcare insider”. If you had the power to make a change, can you share 5 changes that need to be made to improve the overall US healthcare system? Please share a story or example for each.

  1. Aligning interests: Push the incentives into preventing, not treating chronic conditions, diabetes is a great example, ensuring physicians are driven by outcomes, not revenues. The ACA changed how chronic wound products were reimbursed, from fee for service to bundled payments. A few products got grandfathered into the old system (Epifix by Mimedex). These products did very well for a few years, despite limited outcomes data, because providers made the most money using those products. This value based model should extend to all areas.
  2. Build flexibility into the FDA approval process to reduce costs. A clinical trial is deemed a success or failure based on whether or not it meets predefined end points. If a positive but unexpected result happens: like a cancer drug not only extends a patient’s life but cures the patient, it is seen as a failure because technically the end point wasn’t met. At great expense one needs to do a new trial. Outcomes should be allowed to be changed after the fact.
  3. Increasing the data availability. Healthcare doesn’t have a big data problem, it has a data problem. The data is expensive to get and fragmented, and people are either incentivized to not share or sharing is expensive. I recently tried to help a company get data on MS, and the foundations were great. The NIH public data was highly fragmented. In the case of endometriosis, forget about it. Protecting patient data while aggregating data from lots of small trials could be drive and reduce the cost of discovery.
  4. Change the investor mindset. Incentivize market needs, e.g. non-sexy products at the investment level, through tax credits. The current trend is for small market but expensive products, not cheap volume plays which can be lucrative. The system needs both, and incentives can persuade investors to the latter. I often joke a Car-T therapy with 6 mice will have the world beat a path to their door, but a 505b2 with data on 200 patients will hear crickets because it isn’t sexy despite being, on average, 1% of the cost and 10% of the time of a new drug.
  5. Adopt incentives for digital solutions. Rural areas and senior care, particularly those that treat Medicaid/care patients, don’t have the resources to adopt new solutions or the know-how oftentimes. This can be streamlined into a single device and intake, but the know-how and capital for adoption doesn’t exist. I almost want to develop open source software, EMR, scheduling, everything for these guys in a Redhat type model so I can get them to a point where they can purchase, and use, solutions that will be reimbursed. In my dad’s nursing home, a nurse will take data by hand, enter it into a computer on a cart, which gets entered into another computer later.

Thank you! It’s great to suggest changes, but what specific steps would need to be taken to implement your ideas? What can individuals, corporations, communities and leaders do to help?

  1. To individuals, get involved, the worst outcomes happen to the most disenfranchised patients, who either don’t have or haven’t found their voice. This is something community leaders can help with, especially the new Congress, but they need to be better informed about policy to phrase the conversation in terms of a discussion we can have v. something that is polarizing.
  2. To investors, don’t think of capitalism vs. social impact, think impact capitalism. The way we invest in trends, we likewise can shape market and the future of them. I think this is particularly true of family offices who manage money generationally vs. funds that have a limited lifetime, this group can really shape the future. Intermoutain Health, a large hospital chain in Utah, formed a non-profit pharmaceutical company with a consortium of hospitals to produce low cost generics. Instead of complaining, let’s do something meaningful.
  3. To companies, it depends on the sector to get specific. At a high level though, we need to figure out how to align interests from all groups because it is in the best long term interest of our nation because we can’t afford ballooning healthcare costs, and we can’t afford to have an unproductive population. If a product works the best, it should be covered, and doctors should use it. Right now, this isn’t always the case.

What are your favorite books, podcasts, or resources that inspire you to be a better healthcare leader? Can you explain why you like them?

Nothing healthcare specific, as I am inundated with data in my life. But books from successful people and analysts to learn more about management and people, and character studies: Good to Great; Start with Why; Zero to 1. I’m currently reading “Journey to the West”. Change isn’t healthcare specific, it is human, and understanding people better is where I dive into books and magazines.

How can our readers follow you on social media?

https://www.linkedin.com/in/ian-tolfree/

Thank you so much for these insights! This was so inspiring!

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