Virtual dermatologists

Virtual dermatologists

Canadians have longer waits to see a medical specialist than most other industrialized nations.That’s according to a report by the Canadian Institute for Health. A virtual dermatologist and a smart phone just might be one way to bridge the gap.

Health Plan of San Joaquin is a managed care plan that serves more than 380,000 people living in California’s Central Valley.  In 2012, the plan began offering virtual dermatology referrals through a company called Direct Dermatology.  In the beginning, GPs and internists referred patients to a virtual dermatologist  complete with background information about the patient plus photos of the rash or skin lesion – both uploaded to a secure web site. The virtual dermatologist would give an opinion about the rash to the referring doctor within a few days

More recently, patients have been referred to a bricks and mortar building where they are interviewed and photographed first by a nurse.  If necessary, a skin biopsy can be done there too.

So far, the program has been quite successful.  Researchers from Rand Health  the largest independent health policy research program in the U.S.  crunched the numbers. Of close to 400,000 patients in the plan, 8614 were referred a dermatologist.  Overall, half the patients saw a dermatologist in person, and half had a virtual appointment.  After the U.S. Affordable Care Act came into effect in 2014, more than 108,000 new patients entered the plan.  Of the newbies referred to a dermatologist, one quarter saw one in person and three quarters had a virtual appointment.

That means access to virtual dermatologists enabled the plan to keep with a huge increase in the demand for dermatology referrals. It did so despite the region having far fewer dermatologists than the national average.

Like other specialties in medicine, virtual dermatology has attracted its share of critics.  They maintain that no one – not even a dermatologist who often makes spot diagnoses based on the typical appearance of a skin lesion –  can diagnose a patient without seeing them in person.  Texas and other states in the U.S. have tried to put the breaks on virtual appointments.

I like the way Health Plan of San Joaquin adapted its virtual dermatology program to anticipate that objection. The bricks and mortar clinic I told you about also serves as the place where the virtual dermatologist can refer patients with more complex skin and other conditions for a more complete assessment by a dermatologist in person. The use of the physical clinic is reassuring.  In the study, those who received a virtual appointment only were younger and more likely to have minor skin problems like acne and warts; those seeing a dermatologist in person were older, had more serious skin problems like cancer, and tended to have other serious medical problems.

I imagine that some of these critics would be dermatologists who might feel threatened by this.  I think dermatologists enjoy being in scarce supply in Canada.  They get to schedule delayed appointment – by which time the skin rash has either gone away, or is so easy to diagnose that even a medical student can offer a correct opinion.  If dermatologists lose significant business to virtual colleagues, then more and more of them will go the virtual route themselves.

Smart phones work surprisingly well with virtual appointments.  A 2015 study by researchers at the University of Pennsylvania found that a smart phone app can help doctors prioritise referrals to a virtual dermatologist.  In another recent study, researchers in Sweden and South Africa recruited subjects to rate the quality of photos taken by various smart phones – and compared them to photos taken by a digital camera.  The image quality generated by the smartphones was just as good.  Add-on devices are being developed that can enhance today’s smart phones to the point where they might be able to help detect cancer.

It’s tempting to say that what happens in health care in the U.S. is not applicable to Canada.  In this case, I think that’s incorrect.  Virtual access to a dermatologist under the Health Plan of San Joaquin is not a marketing gimmick to generate income.  The Health Plan of San Joaquin is not for profit.  Like Canada, it provides publicly funded health care – in this case – under contract to California’s Department of Health Care Services.

What is different to me is that the U.S. is more willing to try new ideas.  In Canada, we let fears of breaching patient privacy act as a break on the development of virtual medicine.  That’s changing, but not as fast as I’d like and, as we need to keep up with an ever-increasing demand for services.

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TELEDERMATOLOGY CAN HELP: A RAND/Harvard study shows that skin-doctoring-at-a-distance makes it easier for patients to get specialized care. The researchers studied a collaboration between Palo Alto, Ca.-based Direct Dermatology and Health Plan of San Joaquin, a Medicaid managed care plan with nearly 300,000 enrollees in an area where immigrant farmworkers get their share of skin conditions. “Patients covered by Medicaid have traditionally been one of the groups with limited access to dermatologists, but teledermatology is making it possible for patients to receive the care they need through a network of primary care physicians, teledermatologists and local dermatologists,” said Dr. David Wong, CEO of Direct Dermatology (now DirectDerm).

In New York, A Digital Health ‘Mashup’ Builds A Startup Army

In New York, A Digital Health ‘Mashup’ Builds A Startup Army

Xconomy New York — [Corrected 8/24/15, 12:40 pm. See below.] The booming field of digital health means different things to different people. Even the president of StartUp Health, a New York-based firm that wants to help build 1,000 digital health startups—yes, literally—acknowledges his company is a little tough to define.“We’ve had a challenge with how people bin us and bucket us,” says Unity Stoakes, who co-founded the firm in 2011.

That’s because StartUp Health is, in Stoakes’ own words, a “mashup.” It’s part accelerator, and part venture fund. It’s a mentorship program, a virtual classroom, a network of healthtech entrepreneurs, and a generator of industry reports, detailing things like which subsectors of healthcare are attracting the most money. Stoakes calls StartUp Health a “health innovation company,” but then quickly acknowledges how confusing that sounds.

However StartUp Health is defined, at least one large nonprofit healthcare provider thinks it’s doing something right. This past June, Aurora Health Care, a Milwaukee-based healthcare system, invested $5 million to become StartUp Health’s lead backer, says Stoakes. [An earlier version of this paragraph mistakenly said Aurora is based in Madison, WI. We regret the error.]

It’s not just the cash that’s significant. By forming a multi-year alliance with the entrepreneurial network, Aurora gets to scout new technologies coming through StartUp Health that could change its business and health practices.

Stoakes says, for instance, Aurora is testing a virtual product from Modesto, CA-based Direct Dermatology: snap a pic of a mole with your smartphone, mail it, and a clinician will check it out.

“[Aurora’s] got the ability to be a petri dish for our entire portfolio,” he says.

The firm that Stoakes (pictured above) and Steven Krein, both longtime tech entrepreneurs, founded four years ago now has about 25 employees. They launched with the help of high profile backers, such as former Time Warner CEO Jerry Levin, now the StartUp Health chairman, flamboyant basketball owner Mark Cuban, former AOL CEO Steve Case, tech investor Esther Dyson, and Foundry Group managing director Brad Feld. At the outset, Stoakes and Krein boldly predicted they would help launch 1,000 digital health startups in a decade.

They’ll have to pick up the pace. The syndicate invests up to $200,000 in 10 to 12 startups a year. To date, StartUp Health has nurtured 106 companies that have collectively raised over $200 million in funding. Stoakes claims it is the largest portfolio of healthtech startups, with companies from New York to the San Francisco Bay Area and even abroad in countries like Israel.

“Portfolio” is a key word, because StartUp Health takes equity stakes, anywhere from 2 to 10 percent, in young companies.

Once invested, StartUp Health begins a three-year “academy” for its startups, with coaching, virtual classes, quarterly in-person executive summits, exclusive reports and studies, all while connecting them to its entrepreneur peer network.

One example of the reports available: Stoakes says StartUp Health knows which venture investors and potential customers are not “entrepreneur-friendly,” and is happy to share that information.

“We have a whole database about who to avoid in the industry,” he says.

But the firm also helps makes connections. AdhereTech is a maker of smart pill bottles for drug adherence. CEO Josh Stein says that StartUp Health provided introductions to customers who are using his product, and investors who backed AdhereTech’s $1.75 million Series A last year. Stein wouldn’t name names or disclose how much equity AdhereTech gave up to join in 2013, but says what makes StartUp Health different is the length of the program.

“Continued support is a huge need for healthtech companies,” Stein says.

So far, four StartUp Health portfolio companies have been acquired—Avado Health (acquired by WebMD), Gritness (Under Armour), Basis Science (Intel), and Arpeggi (Gene by Gene)—but the terms weren’t disclosed for three of those deals. Intel reportedly paid in the $100 million to $150 million range for Basis.

Of those remaining, all but two are operating, and about three quarters are either out raising money or have already done so, according to Stoakes. He declined to specify StartUp Health’s returns or discuss how many companies are profitable, except to say that most of them are generating revenue and scaling and “our fund is way up, beyond our expectations.”

Stoakes says StartUp Health began with a $7.5 million microfund. The company’s bankroll is now getting bigger. A Form D filing shows that StartUp Health is looking for $30 million, and VentureBeat reported that the Aurora investment is meant to be the first of several $5 million installments, with the rest to come from big companies in retail, healthcare, and other sectors. Stoakes confirms that the $5 million from Aurora—which didn’t respond to requests for comment about its investment—is the first tranche “of a much larger raise with a [group] of strategic partners.”

This type of support is important for digital health. As my colleague Alex Lash wrote last year, the field badly needs clinical data that show their apps and gadgets improve outcomes and save money to match the hype and dollars going into them.

With that, and StartUp Health’s unique place in the healthtech ecosystem in mind, I spoke with Stoakes at length. Here are some edited excerpts from our conversation.

Xconomy: There are a lot of different accelerators, incubators and funds specifically devoted to healthtech. Where does StartUp Health fit in?

Unity Stoakes: We call ourselves a health innovation company, but people are always like, ‘Well, what’s that?’ We have this academy that helps grow companies and we have the largest portfolio of digital health companies, so we’re a mashup between an investor, an incubator, a business network like [Young Presidents’ Organization], and a school for entrepreneurs. We also track massive amounts of insights and data into where the money is flowing, what business models are working, who’s investing in what subsectors, and in what regions, and our companies can have access to that. So as they’re doing customer development [and] raising capital, they know in real time what’s going on in the market around the world.

X: How do you compare that approach to other organizations trying to help digital health startups grow?

US: We’re now seeing a fragmentation of [these entities]. Some programs, their customer is really the hospital or industry. Some accelerators are working just with idea-stage companies on these eight-week programs to help get an idea off the ground and maybe help get a little seed round. The same month we launched [in 2011], Rock Health launched as an accelerator. They’ve since abandoned their accelerator program and have basically become a VC firm, a seed investor.

Then you have organizations like ours that work with a little later stage companies. We’re focused much more on commercialization over several years, on really building scalable growth companies.

X: Why that approach?

US: When we launched, in the tech world there was Y Combinator and Techstars, which are tech accelerators: 12-week programs that give you a little bit of cash and a demo day. That model just did not work in healthcare. You need a long-term construct in order to get anywhere. We launched with the vision of helping build 1,000 companies over the next 10 years. There isn’t going be one Uber-company that’s going to fix healthcare, it’s going to be hundreds or thousands of companies that each fix a different aspect of the system and, combined, becomes what transforms the whole industry. If we can be the organization that brings it all together, and makes it very easy for industry and investors to tap into, then we see that as not only a great business, but one that makes a big impact.

X: So it’s an all-comers approach?

US: It’s almost around the charter school model, which is no entrepreneur or student left behind. Rather than focus on one or two hits, how can we use the network effect to pull everybody forward? And even if it’s a double or a triple or home run, and not a grand slam, that’s meaningful to us. That’s a different philosophy than a VC would operate under.

X: Isn’t that much riskier and cumbersome?

US: We just believe a smarter way to do it is to not walk past a company just may need a little more nurturing. A lot of venture investing today has become derisked, they’re doing it at later stages. We’re going the other way which is going very early, developing a methodology and network to nurture these companies through the dips and valleys, get them over the hump at a time when nobody else from the venture community would look at them.

X: What are some of the lessons you learned, the mistakes you made, developing that process?

US: We learned that it’s very important not to be 100 percent virtual, and also not be 100 percent in real life because people are spread out everywhere and they’re traveling. We learned that being location agnostic is absolutely critical. You have “doctor-preneurs” that may have practices in Los Alamos, NM; they’re not going to move their practices to come to Silicon Valley or New York for three months. Also, companies that aren’t paying attention to their business model from day one, chances are they’re going to fail in healthcare. You can do that in the tech world and scale up and figure it out, but in healthcare you really have to understand the business model much earlier in the lifecycle of your company. Lastly, if you don’t have a full-time entrepreneur leading your startup, it’s just not going to work.

X: What mistakes do young healthtech startups make?

US: They confuse their users with their payers. There are a lot of people building widgets versus more comprehensive solutions, and [the latter is] what the market is really yearning for. There are companies we’re seeing that just do not know how to package their story. And it’s amazing to us how many companies don’t know the competitive landscape. I don’t know if they just have blinders on, but there are a lot of me too-type things. Which I guess is normal—there were 200 Youtube type companies when Youtube launched.

X: How would you say the dynamic between startups and large companies is changing?

US: In the tech world, the disruptors just go around the established players. If you’re Facebook, you don’t go partner at the beginning with the big media companies, you eat their lunch and you go around them and destroy them, and then later they have to advertise on your platform.

In healthcare, it doesn’t work that way. Because of how much of healthcare is controlled by the government, payers, providers, and the care systems, you have to collaborate with them to get anywhere. The industry is realizing it needs to collaborate with entrepreneurs in order to innovate and drive costs down; to prevent hospital readmissions from spiraling out of control; to transform the care delivery process; and to implement home healthcare, telehealth, and digital health solutions.

Not only are we interested in their capital to back us, but also their ability to either further invest in our companies or commercialize and help strategically grow them.

X: There’s been a lot of hype with digital health. There’s a long way to go before it’s integrated into society. What has to change?

US: There’s a transformation underway to focus on data. We still need to turn that data into actual insights that are going to change outcomes and behavior, and to be able to prove that. That’s why you’re seeing so much investment in platforms to analyze the data now. That was the largest [digital health investment] category in 2014 and in the last 18 months. Companies are saying, “We can track someone’s entire genome, we can get all this information, but now is there a platform that can make that data meaningful to me as a consumer or a patient?”

Can we also look at an entire population and make those data useful to the insurance company, and to the hospital, and start looking at macro-trends and population health trends? That’s where things are going.

X: Have you found healthcare organizations willing or resistant, to try new things?

US: With hospitals and the provider landscape, there are three categories. One group is focused on financial engineering, M&A, and consolidation. Another group is literally doing nothing, they’re pretending like technology doesn’t exist and they’re going to keep operating the way they are until they go out of business or someone disrupts them. And then you have the very progressive group :organizations that realize they need to reinvent and focus on earlier stage innovation. Every week new organizations fit that bill, they’re realizing if they don’t do this, they’ll be the dinosaurs that go extinct.

Telehealth Q&A

Telehealth Q&A

Why has teledermatology never taken off? Technically, we’ve been able to do it for years, yet most providers have been unwilling. This year, however, I expect we will cross the tipping point. The convergence of digital health records, expanding reimbursement, and consumerization of health care have led to a surge in demand, and now a supply of teledermatology services.

Much of this growth is from direct-to-consumer teledermatology providers. These are telehealth services marketed to patients where they access a dermatologist directly, paying out of pocket or with insurance. One such company is the aptly named Direct Dermatology.

Founded in 2009, it is an online dermatology clinic that provides 24/7 access to board-certified dermatologists. It is experiencing rapid growth and is currently looking to expand its network of dermatologists. For this month’s column, I share an interview with Dr. David Wong, cofounder of Direct Dermatology and clinical associate professor at Stanford (Calif.) University. I have no financial or other conflicts of interest to disclose.

Initially, telehealth was designed to serve rural communities with limited access to health care. Today it is used more widely. Would you share some examples of its use?

Dr. Wong: Much of the initial telehealth efforts and success have been in rural communities because telehealth solves a major problem of access to medical care in underserved areas. But it can be extremely valuable in all geographic areas, not just rural communities. Access is a problem even in urban areas, where wait time for a dermatologist appointment averages over 1 month. Telehealth has the potential to not only improve access, but also to improve quality of care and deliver care more efficiently for the patient, provider, and overall health system.

Teledermatology is being used by several employers as a benefit to their employees to provide convenient and timely access to dermatologists and decrease employee time away from work. There are several direct-to-consumer online teledermatology services that are being used by patients in all communities, especially urban communities.

The fact is that the majority of dermatology cases are seen by primary care physicians. If teledermatology can provide rapid, efficient, and reliable access to experienced dermatologists, the quality of dermatology care in the country will improve.

Please share some of the tangible benefits of teledermatology, such as triage, reducing the disparity in access to dermatologists, employer benefits, etc.

Another factor is that dermatology problems don’t occur only during business hours – we are seeing a growing number of cases submitted from our own patients over the weekend or in the evening. The ability to evaluate acutely developing skin problems within a few hours, such as rashes in children, can alleviate a lot of anxiety and avoid unnecessary emergency room costs.

Teledermatology also is beneficial to dermatologists in allowing us to provide care from anywhere on a flexible schedule. We don’t have to go into the office to “see” our patients. Both patient and provider satisfaction in our office’s teledermatology practice is very high.

Reimbursement has been a major drawback with telehealth. For example, Medicare reimburses for telemedicine services in some states, but others have restrictions. There are also more restrictions on the “store-and-forward” format than for the live, interactive format. Would you shed some light on this?

Dr. Wong: Yes, reimbursement has been a barrier to telehealth. But that is changing. A total of 22 states and the District of Columbia have passed parity laws for private insurance coverage of telemedicine, and 10 states have pending legislation. But whether telemedicine is actually covered by each health plan varies even in those 22 states. And coverage can vary depending on whether it is store-and-forward or live interactive teledermatology. Medicare still only covers store-and-forward teledermatology under a federal demonstration program in the states of Hawaii and Alaska. We believe that the ultimate driving force – delivery of high-quality and cost-effective specialty care to more patients – will continue to support the current trend in expanded telemedicine coverage.

What type of liability do dermatologists face when using telehealth?

Dr. Wong: The good news is that there have not been any malpractice lawsuits related to teledermatology to date. But physicians performing telehealth services should ensure that their malpractice liability insurance policy covers the exact form of telehealth that will be provided (just as it covers any other medical services that physicians provide), prior to starting to provide those services. Most medical malpractice insurance does not automatically cover telehealth services. In addition, be sure to understand state regulations about licensing, informed consent, and online prescribing.

How do patients feel about teledermatology? Do you notice any differences regarding patients’ gender and age?

Dr. Wong: I’m going to specifically speak about “store-and-forward” teledermatology, which is the predominant mode of teledermatology being used today. Store-and-forward teledermatology is an asynchronous mode where pictures of the skin problem and medical history are sent to the dermatologist. In general, patients love teledermatology. It is convenient; they don’t have to take time off from their busy schedules. They don’t have to wait for the next available appointment in my clinic. They can get answers and are placed on treatment that same day. In our practice, there is an opportunity for rapid, secure communication exchange with the dermatologist during the consultation as well. Of course, there are skeptics who wonder whether dermatologists can really make an accurate diagnosis with a picture. But once patients experience the service, they are typically very satisfied with what our dermatologists can do and with the quality of care. Anecdotally, we’re seeing a nearly equal distribution of male and female consumers seeking care through teledermatology. Individuals in their 30s comprise the largest age segment, but we see patients from all age groups, even pediatric cases sent by parents.

What do you say to physicians who are concerned that teledermatology will eventually replace in-person visits and erode the doctor-patient relationship?

Dr. Wong: Teledermatology will never completely replace in-person visits. But it will become an important component of our practices. Teledermatology can actually improve the doctor-patient relationship because it allows for increased connectivity between doctor and patient. It is important for dermatologists to define how teledermatology enhances our existing practices by improving the quality of care and actually strengthening our relationship with our patients.

What advice do you have for dermatologists who are considering implementing teledermatology in their practice?

Dr. Wong: Speak with other dermatologists who have had experience with providing teledermatology services in their practices. Learn from their best practices. In addition to adopting a new technology, think through how it incorporates into your clinic operations. And pay attention to regulatory and legal compliance in an environment where there is constant change.

What are your predictions for the future of teledermatology?

Dr. Wong: The future of teledermatology is exciting. It is now an important tool to provide even better care to our patients. The technology for high-quality photography from mobile devices has rapidly advanced, and in most cases, when done properly, the resulting images are as good as – or better than – what you can see with the unaided human eye in an exam room. Because of the way our field has thoughtfully implemented teledermatology alongside traditional dermatology, teledermatology will very soon become a standard of care. The term “teledermatology” will no longer be used because it will simply be a standard part of dermatology practice.

For more information and contacts, please visit

David Wong, MD: Top 40 Healthcare Transformers

David Wong, MD: Top 40 Healthcare Transformers

Direct Dermatology, Co-founder and CEO

One of healthcare’s biggest challenges is providing patients with timely access to care, so it bothered Wong that some would be forced to wait for months before seeing a dermatologist. “These access problems diminish quality of care,” he says. “Melanoma is deadly and diagnosing it early can be the difference between life and death.” So in the age of smartphones with high-quality cameras, Wong did something about it: He co-founded Direct Dermatology, a telehealth company that taps top-notch dermatologists to treat patients from afar. “We knew we could leverage technology to get accurate diagnosis and treatment recommendations,” he says.

For patients, it means access to the best dermatologists and with a degree of convenience that’s not usually associated with the US healthcare system. While Wong acknowledges that telehealth solutions aren’t new, he believes the field of dermatology was primed for disruption once employers and health plans starting hopping onboard in substantial numbers. And it doesn’t hurt that the Direct Dermatology model works. “We are able to manage more than 92% of our cases completely online,” he reports—and that, too, is good for the dermatology specialty. “As the number of people using telehealth increases, the wait time to see doctors in person will decrease.”



Innovations abound within the pharmaceutical digital marketing space. As a whole, the industry has worked to increase the availability of healthcare information and better address the needs of healthcare consumers. In its recent “Top 40 Healthcare Transformers” article, Medical Marketing and Media provides a snapshot of some of the leading industry innovators.  Many executives have leveraged online platforms to connect with unique industry stakeholders.  Others have modified the way patients receive healthcare by creating new—or rethinking existing— telemedicine platforms.  In some cases, companies have even begun connecting patients with doctors who are prepared to make house calls. 

For WEGO Health, patient centricity starts with connecting influential leaders in the digital space, from bloggers to tweeters, with industry decision makers, including regulatory agencies and pharmaceutical companies. By doing so, Jack Barrette—the company’s CEO and founder—hopes to give these patient advocates a greater stake in the direction of healthcare. So far, his company has successfully connected upwards of 100,000 individuals.

Still other executives have worked to broaden their audiences and appeal to new generations.  For example, Derek Flanzraich founded the website Greatist. This online resource, which targets 18-35 year olds, provides wellness tips and workout suggestions—all with the general understanding that, “being healthy doesn’t have to suck.”  The forum also includes plenty of interesting articles, including the benefits of running, relative to walking.

Other innovators featured in Medical Marketing and Media’s Top 40 list includes those rethinking the way healthcare visits take shape.  Certainly, telehealth isn’t new. However, some of the ways this concept is being applied are. David Wong, Co-founder and CEO of Direct Dermatology provides dermatology patients with the option to connect remotely with experienced dermatologists. Using smartphones, patients are able to take pictures of their moles and—based on the picture—dermatologists are able to diagnose whether or not melanoma is present. So far, Direct Dermatology is able to manage over 92% of its cases completely online.

On the opposite end of the spectrum, other executives, like Sam Zebarjadi, Co-founder and CEO of Medicast favor a more convenient—but still in-person—doctor-patient interaction model.  Medicast operates in California and Florida and champions the concept of doctors making house calls, at a price between $149 and $249, per doctor visit. The process is straightforward. Patients have the option of accessing the program via a mobile app, submitting a request form online or calling a number provided on the company’s website.  Then, within 30 minutes of their request, patients can expect to see a qualified physician, in the comfort of their own home.