Is HealthTech startup Fitgenes the solution to Australia’s “unsustainable” healthcare problem?
Inventor Thomas Edison once said, “The doctor of the future will give no medicines, but will interest his patients in the care of the human frame, in diet, and in the causes and prevention of disease.” Today, this quote couldn’t be more relevant as there are two trends in Australia that are working against each other.
First, health is becoming less a priority to Australians. Research indicates that tobacco smoking, excessive alcohol intake, high blood pressure, physical inactivity and obesity accounts for almost a third of Australia’s total burden of disease. In 2010, preventable conditions accounted for approximately 20 percent of Australia’s healthcare expenditure (around $24.3 billion).
At the same time, the cost of healthcare in Australia is increasing at 5.4 percent per year compared to annual GDP growth of around 3.1 percent, according to Professor Stephen Duckett, Director of the Health Program at Grattan Institute. We now spend more than $147.4 billion (2012-2013) on healthcare, which makes up about 9.5 percent of Australia’s GDP. However, this is about the OECD average; and Australia fares well, ranking the lowest among wealthy countries in the OECD database.
But the current spend on healthcare in Australia has been deemed unsustainable by the government, who decided to cut hospital funding by $50 billion over the next decade. The potential impact of this is significant, given 40.4 percent of Australia’s healthcare spend goes to public and private hospitals. And public hospitals, which are funded predominantly by Federal and State governments, make up a majority of this percentage.
Given the public healthcare sector is in a state of flux, there are a number of startups in the private sector (both locally and globally) playing a significant and constructive role in health promotion. Locally, one of the fastest growing HealthTech startups is Fitgenes. CEO Robert Mair was fully cognisant of the state of Australia’s healthcare industry as he explained the vision that drives Fitgenes. Founded by Dr Paul Beaver and Leigh Beaver in 2009, the startup wants to address one of the biggest challenges in medicine and science today – that is, interpreting biological data and using that to delay the onset of ageing-related diseases, and even prevent conditions through lifestyle interventions.
What’s been lacking in the healthcare industry is the technology to decipher biological data and turn them into actionable insights – which is exactly what Fitgenes’ technology Pracware does. The ability to mine DNA and pathology data for specific variables that are indicative of a future health problem allows the healthcare industry to move from a reactive to proactive mode.
As Mair said, “The future of healthcare is in personalisation, in preventative healthcare. In pharmacogenomics, they use DNA information to help determine which drugs will suit which individual. We’re doing a similar thing, but we’re focusing on the use of lifestyle interventions – like diet.”
In brief, Fitgenes’ technology combines cloud computing with genetic testing to create individualised health plans for healthcare consumers. Mair told Startup Daily that a lot of valuable information can be extracted from DNA and pathology data, but it’s impractical for healthcare practitioners to analyse that data manually and create personalised health plans. This is where Pracware comes in.
“Our technology takes all this complex data like a patient’s genetic, medical and nutritional profile, as well as their lifestyle and habits, and turns it into useful information; and the technology presents it in a format that a healthcare practitioner who is sitting in with a patient can use,” said Mair.
“Practitioners are very busy. If you were to order a DNA profile, you can’t expect the practitioner to manually interpret that data and then manually create a treatment plan for the patient. And then it gets more complex when you want to compare and correlate DNA data with pathology data, medical history and health goals. You also need to take into consideration what other treatments and supplements the patient is using. You need to look at contraindications and so forth. The focus of our software is to allow all that complex science to be used in the clinic. The way we put is, we’re ‘translating the power of genomics into clinical practice.”
So how exactly does Pracware retrieve all that data? Fitgenes works with a number of pathology groups in Australia, so the data is uploaded into Pracware’s cloud-based platform straight from pathology labs. The technology has been designed so that it can be used anywhere in the world, making it highly scalable.
“We’ve designed it so that the data that comes out of pathology or diagnostic equipment can be uploaded into Pracware, and Pracware then distributes that information back to the healthcare practitioner,” he said.
In clinics, practitioners are able to manually input anthropometric information like weight, height and waist measurements, as well as other notes, and add it to the patient’s profile. Practitioners also have the ability to enter compliance information. This means that if practitioners make a recommendation to a patient or place them in a programme, they can keep track of progress.
Pracware currently aligns with 10 different practitioner modalities. It’s being used by GPs, naturopaths, nutritionists, physiotherapists, osteotherapists, chiropractors, and exercise physiologists, among others, even though these practices operate differently.
Because the technology is cloud-based, Fitgenes has been able to partner with clinics in various parts of the world – from Texas to Hong Kong. There are about 350 independently-owned clinics within the Fitgenes network.
The year 2010 marked the humble beginnings of Fitgenes’ software. Dr Beaver had tested a number of algorithms using spreadsheets. The company then went on to create a prototype of an application that would be installed on a desktop. In 2012, Fitgenes received a Commercialisation Australia grant of over $400,000, which helped in furthering the development of its technology. It was only last year that Fitgenes began beta testing Pracware.
Mair said the company has an ongoing development regime, managed by Fitgenes’ CTO Dino Appla, who used to develop air combat tactics software for the RAAF.
“There’s always new functionality and new science that we want to integrate into Pracware. This will be ongoing because more and more research is being done around DNA and nutrigenomics, and we want to be on top of it all,” Mair said.
In fact, the company is looking to apply Artificial Intelligence (AI) in Pracwareto speed up the delivery of health plans based on an individual’s genes. Appla told Startup Daily that one of the major challenges in delivering personalised nutrigenomic-based wellbeing programmes is genomic literacy.
“Genomic information can be complex and hard for end users to interpret; coupled with low level of understanding of genomics information among health and well-being practitioners,” he said.
But where does AI fit into this? Appla presents a bit of an odd question, saying “What’s the difference between a fighter pilot and a practitioner?” He answers the question himself: “Nothing!”
“Except pilots have to make decisions in fractions of a second and practitioners during a consultation period.”
Fitgenes will be implementing the application of similar intelligent agent technologies used in the air combat world of modelling fighter pilot tactics, to deliver an “expert system” capability that will allow practitioners make better decisions in providing Patients with an informed course of action.
“Pilots make cognitive decisions based on goals and events and arrive at tactics. Practitioners similarly need to make cognitive decisions based on health goals, DNA and phenotype data,” Appla explained.
“The complexity of DNA reasoning is growing so rapidly that practitioners simply can’t keep up. Building a black box system won’t help, black box meaning ‘data-in gives answer-out’ , [because it] can’t be examined as to why. Practitioners need to have trust in the computer system advising them; so our approach is to build a system that supports understanding and trust and rapidly transitions a practitioner from Novice to Expert “In-Clinic” delivery of genome-based health and wellness programmes.”
For those who aren’t well-versed in the areas of advanced computer and health science, this probably makes little sense. Essentially, if a feedback loop is created on an algorithm, the more data that is fed into the technology, the more intelligent it gets with making recommendations.
Mair explained, “When we’re dealing with patients, we’re capturing information about our patients through their health journey. So it they’re on a health programme, and we capture information throughout that programme, the more data that we capture and the more patients that we work with, the system starts to better understand how well patients are achieving health outcomes.”
“By optimising those algorithms, the technology can make more precise recommendations. It’s like data-mining. Dino and his team is looking at cutting edge IT technology to facilitate that, they’re trying to find ways to develop the algorithms behind the system to provide that automation.”
At the moment, Pracware has been designed so that it can host and interface with ecommerce, eLearning, accounting and practice management software as well as other emerging third party technologies such as nutrition and exercise planning programmes, mobile applications and wearable technology.
The company has been evaluating acquisition and joint venture opportunities as part of its mission is to become a global leader in preventative healthcare. Mair said, “our core focus is to use DNA to develop personalised health solutions. If we find another company that has complementary technology to that, then we will look at whether we can partner with that company or acquire that technology.”
Earlier this year, Fitgenes entered into an agreement to acquire 100 percent of Gordiantec’s shares in exchange for the issue of over 4 million shares to Gordiantec Vendors. Gordiantec, a Perth-based startup, was founded in August 2011 and funded by the $40 million early-stage venture capital group Ruuwa Capital LP. The company owns patented or patent-pending applications for diagnostics. The acquisition would have allowed Fitgenes to commercially exploit Gordiantec’s proprietary data and research.
In the prospectus lodged in August regarding the proposed initial public offering (IPO) and recompliance listing on the ASX, it stated that acquisition of Gordiantec would be finalised following the $3 million to $3.6 million capital raise. Fitgenes initially planned to sell 10 million to 12 million on the ASX; however, according to a recent statement published on the Fitgenes website, the company has withdrawn its offer and is refunding the capital raised. The reasons behind the withdrawal has not been publicly disclosed.
The reason behind the capital raise was not only to fund the acquisition of Gordiantec but mainly to assist with the rollout of Fitgenes’ clinics across Australia. Although there are hundreds of independent clinics (around 350, as mentioned previously) that have licenses to use Pracware, the company believes its biggest revenue opportunity lies in the rollout of its own clinics.
“Because clinics have relationships with the patients, there’s far more revenue coming into the clinic, versus what would be just wholesaling to a clinic,” said Mair.
“Across our independent clinic network, we achieved about 885,000 sales in the 2013 financial year. It’s approximately 30 percent growth across that network.”
But Fitgenes currently has one clinic in Perth with two consulting rooms, which is on track to delivering $2.25 million in annual revenue over the next six to 12 months.
“If you multiply that by the number of clinics that we will be rolling out under the group, the potential is huge. If we have clinics with four consulting rooms, they would theoretically generate more revenue,” Mair explained.
Fitgenes has plans to establish six to nine clinics across Australia within the next 18 months, as well as having flagship clinics in Singapore and Hong Kong.
When asked about where Fitgenes is based, Mair said that the company calls itself a “virtual networked organisation”. Although it was founded in Brisbane, the core team are based in multiple locations. The head office is located in Brisbane; the Science and IT team is headed up in Melbourne; the clinical team is based in Perth; and the company’s advisory board members are scattered across Perth, New Zealand and Malaysia. The independent clinics that Fitgenes is partnered with are located across Australia, Malaysia, Hong Kong, New Zealand and most recently the US.
Are HealthTech startups like Fitgenes the solution to our “unsustainable” healthcare system? Mair said technology will allow practitioners to deliver healthcare more efficiently and empower Australians to become more proactive about their health. This, however, ultimately depends on individuals taking action. As the saying goes, “old habits die hard”. But the government shifting healthcare costs to the private sector and consumers means there’s an incentive to follow through.
“There are initiatives in place to move healthcare spend to the actual consumer of healthcare. Examples include Minimum Gap Payments, Tax Incentives to have your own private health insurance coverage. That’s the government’s way of saying that the tax system can’t continue to fund healthcare spend because we have a growing and ageing population, and the cost of delivering healthcare is increasing,” said Mair.
“We have to look at how we can bring down the price of healthcare and transfer the cost of healthcare from the tax system to the end user. If you want to drive efficiencies in delivering healthcare, you need to adopt technology to do it.”
Mair said that Fitgenes’ mission to transform healthcare has been welcomed by healthcare practitioners all over the world – particularly the US. Many have flown to Australia just to participate in the company’s training programmes, and have taken the technology back to the States. That said, for the time being, Fitgenes will be focusing on the Australian and Southeast Asian markets.
What Mair is particularly proud of is the Fitgenes team, saying that everyone involved in the company joined because they’re genuinely passionate about the Fitgenes’ mission.
That’s not to say there haven’t been challenges. Getting the attention of healthcare practitioners has been one of the biggest challenges faced by the company.
“The key people that we need to engage with is healthcare practitioners because they’re at the frontline of healthcare service delivery. But practitioners are very busy, so it’s a real challenge to be able to get time with practitioners, to get them to come along and do training with our organisation, and to get them to take our products and services back into their clinics,” said Mair.
“I guess that’s a reflection that healthcare is a huge ecosystem, a huge part of our economy. Practitioners are often booked out three months in advance, which is an indication that they’re overburdened. So it’s a privilege to have healthcare practitioners learn about what we do and take it to their clinics.”
The biggest learning for Fitgenes has been that you can develop great technology, but it’s not self-sustainable.
“You need to overcome the obstacles of commercialising your product and really understand who you need to be working with. Initially, we were going to focus on our own clinics, but we realised that we needed to deliver our products through third party practitioners,” said Mair.
“While it’s been challenging, it’s also been very rewarding. We now have a product that works across a whole range of practitioners and a whole range of practitioner specialities. It’s being used by practitioners that specialise in autism, cardiovascular health, women’s health, executive stress, and there are many more areas that our product is applicable.”