Banking on b2b2c teledermatology model, 3Derm adds health system customers

3Derm Systems, a teledermatology startup that spun out of Yale University and graduated from Healthbox’s Boston class two years ago, is preparing to go live with three health systems by the end of the year. It will use primary physicians to take pictures of patients’ skin problems that are stored and forwarded to board-certified dermatologists […]

3Derm Systems, a teledermatology startup that spun out of Yale University and graduated from Healthbox’s Boston class two years ago, is preparing to go live with three health systems by the end of the year. It will use primary physicians to take pictures of patients’ skin problems that are stored and forwarded to board-certified dermatologists in the health system’s network.

Central to its business is a camera system built by the company’s co-founders. It was not the easiest approach to take, as CEO and co-founder Elizabeth Asai explained in a phone interview with MedCity News.

At one point, Asai recalled, it explored a direct-to-consumer model. She and her team applied for and received funding through an SBIR grant to measure the effectiveness of taking images with an iPhone 5 and transmitting those images to board-certified dermatologists to interpret. They were hoping they could just rely on the software platform they built, but they were disconcerted by what they saw.

sponsored content

A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

“We had three dermatologists reviewing the images [from 70 study participants]. We were very concerned by the frequency of dermatologists selecting ‘no biopsy required’ for iPhone images of skin cancers. It’s what’s pushed us to continue to develop our imaging device despite the significant costs and risks that brings to a startup.”

The third generation prototype imaging system it has labored over is poised to go into production. Its software platform conforms to the standards of an FDA Class 2 medical device.

Asai said the model that the company has chosen is in keeping with what she says fee-for-value health systems are looking for: an efficient and accurate way to triage patients so that people with pressing dermatology concerns can get appointments faster. Its third generation prototype imaging system is ready to go into production and it recently moved from New Haven to Massachusetts to cut down on their commuting costs.

In describing how its system fits into a dermatologist’s workflow, it sounds a lot like teleradiology and that’s not an accident. Although each practice is different, the idea is that one dermatologist goes through these images ad determines which cases warrant an in-person visit and which cases can be diagnosed purely by the image or are less urgent.

On the reimbursement question, Asai said highly integrated health systems will cover the service. After all, the company is helping health systems to accelerate appointments with dermatologists for people with skin lesions that may turn out to be cancerous.

But another factor weighing on some health systems is leakage. They worry about patients getting treated out of network and being saddled with those higher costs.

Currently the company has focused its attention on Massachusetts but with six health systems scheduled to either pilot its technology or move into beta, that’s likely to change soon. Although many health systems have their own set of dermatologists, others may lack them. In those cases it will ensure that the physicians are either located in that state or are based somewhere else but are board certified for the state where the health system is located.

“Our bread and butter is being a safe and effective teledermatology service,” said Asai.

3Derm’s to do list for the rest of year is pretty extensive. The company plans to attend the upcoming American Telemedicine Association conference next month where it will look out for potential customers.

It is also plans to revisit the study referred to earlier but on a wider scale. It’s partnering with a health system this summer to run a larger, 350-patient study and hopes to obtain publishable data on efficacy as well as cost savings.

Add to that, fundraising. A Form D filing with the Securities and Exchange Commission showed it has raised $860,000. Although she declined to talk about its current round funding, Asai did note some of its investors including Healthbox, angel investor groups and the investment arm of an insurer.

 

[Photo credit: Photo from Flickr user tracilawson]