August 28, 2023: Josh Sackman, President and Co-Founder at AppliedVR joins Bill for the news. As the first digital therapeutics company to receive a unique HCPCS code, how has this groundbreaking approach to healthcare changed the dynamics of treatment? Can VR be the bridge to holistic patient care beyond hospital walls, especially for veterans? And as Apple enters the VR arena with its premium-priced Vision Pro, what strategic differences will we witness in contrast to companies like Meta? Join us as we explore these riveting advancements in healthcare technology and ponder on their far-reaching implications.
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Today on This Week Health.
We don't see this dystopic future where everyone's in a headset and numb from pain. We want people to spend a small amount of time in the headset, acquire skills more effectively with lasting skill transfer. So a year or two from now, they're still getting the benefits.
Welcome to Newsday A this week Health Newsroom Show. My name is Bill Russell. I'm a former C I O for a 16 hospital system and creator of this week health, A set of channels dedicated to keeping health IT staff current and engaged. For five years we've been making podcasts that amplify great thinking to propel healthcare forward.
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Now onto the show.
📍 Alright, it's Newsday, and today we are joined by Josh Sackman, the president and co-founder of Applied vr. Josh, welcome to the show.
Bill, thanks so much for having me.
Well, I'm looking forward to this conversation for a lot of reasons. One is I have two virtual reality headsets right here. So it's an opportunity for me to get some free consulting and understand how it's being applied to healthcare. But also we're going to, we're going to talk about some of those stories.
And we'll talk about reimbursements for this kind of stuff. We'll talk about chronic pain management as well. And then we'll hit whatever other news stories we happen to. But before we get there, Josh, tell us about AppliedVR. How did it come about and what's the vision?
So, my introduction to healthcare actually came through my own experience as a patient.
I grew up with childhood chronic pain. And so... Pain, anxiety, isolation, they're a big part of my experience, coming up through my first 18 or 21 years of life. And so my career has always been really focused on how technology could provide relief for those types of things that I suffered from.
throughout my life. So I spent time in consumer health and different applications, really figuring out where technology drives the right tools, information and connection to others to be more successful with behavior change and coping with kind of those challenges in your life. And when I came across virtual reality in 2014, My mind was just blown.
We still do this demo sometimes, but we put these goggles on a person, you look down, you're in a virtual city, you realize you're standing on a window washing scaffolding, and we bring you up 500 feet, up the side of a building. And at the top, a railing drops, and you're given one simple task. Take one confident step, Into the virtual air.
Yeah. And you, and we're rational human. You can't do it. You can't do it. You know where you are. You can feel the headset, you can feel the carpet under your feet. You can see the little spaces in the goggles, but there's enough doubt because of the power of presence, this feeling that you're actually somewhere else.
And if you can transport someone somewhere else and create these deep, emotional, non-conscious connections. There's so many powerful things that you can do with it. And so, that sent me in this deep dive of really looking into the 20 plus years of academic research, showing how VR could be used in a wide range of areas, from pain management, dealing with PTSD and phobias, and building empathy.
And the first question that came up as I was going through that, this is so powerful, why am I just learning about it? Why isn't this being more utilized in the real world? And my first lesson in health care, It's how much great innovation is born in a lab and then dies there because there isn't a mechanism for how it gets productized, operational models, business models, the team, the capital it takes for that long R& D cycle to actually get innovation in the market.
So that was the journey I'd been on for the last nearly nine years now.
All right. So actually, instead of asking you questions on that, I'm just going to go into some of the articles. There's a New York Times article, can virtual reality help ease chronic pain? So Obviously, I mean, that's the premise.
What's the support for this? I mean, where have we seen it work and how effective is it?
So we had outreach from the reporter behind that article, Helen Ouyang, and she's an emergency room physician in New York. And as an ER doctor, over the last decade, she sees more and more patients with chronic pain turn into her.
And there's a massive chronic pain and opiate epidemic, but there's a second one that we don't talk a lot about. Which is, right now there's about a six month wait list to see a pain specialist. There are only a couple hundred pain board certified specialists in the U. S. And one out of five healthcare workers have left the market since 2020.
And so, even if you had all the motivation and knowledge of where to seek care, there's a pretty good likelihood That you can't find someone to get into, even with all the great advancements in telehealth. And so people are turning to urgent care, the emergency room, and other places, which aren't always the most effective places to get care.
And so she went on a journey to understand how to better support her chronic pain patients as an ER doctor, and got fascinated by this world of VR for chronic pain, and started talking to different specialists in the space. And the idea behind it is chronic pain is a multidimensional problem. There's, of course, biological, physiological components, but the psychological and social determinants of pain are often undertreated.
And so, stress lack of sleep anxiety phobias. Isolation, all these things can really contribute to the experience of pain. And so what we look at is how VR, because of that presence and because of the ability to create those deep emotional non conscious connections, how can we teach people to better regulate their nervous system, develop psychological coping skills, and even in some experiments, we've played around with how we could actually build communities and connections between patients.
And that's the foundation for how we're approaching chronic pain. And there's other approaches to phantom limb pain with showing mirroring in VR and physical therapy applications, but Applied VR is squarely focused on developing psychological coping skills using the cognitive behavioral framework where patients go on the goggles once a day for eight weeks, and we're seeing remarkable results with the program.
So when they put on the goggles, they, there's a bunch of different experiences, there's a bunch of different applications that applied VR, I assume that's you have done the research, you've created the applications that people will use based on what their situation is.
Yeah, that's right.
We've been working with Dr. Beth Arnall, who's a world renowned pain psychologist and researcher at Stanford. Who's really focused on this world of self management. How do you give people the tools they need to manage their condition and to be able to deal with the ongoing management, in some cases, throughout their lifetime?
And so we worked with Beth to develop a curriculum over eight weeks, which is comparable to other types of cognitive behavioral kind of pain management the duration of programs. that every week there's a clinical theme that teaches skills through the voiceover of the program. But we use five evidence based approaches to actually train those skills.
So the first is diaphragmatic breathing. What's cool about VR is you can actually take something abstract like breathing and visualize it. So as you exhale, you see breath particles in the scene. As you follow the instruction to slow down your breath, you make a tree grow or flowers blossom. So real time positive reinforcement biofeedback through those modules.
Or if you're not slowing down your breathing, you can get coaching. But there's also pain neuroscience education, interoception, relaxation, attention and distraction control, and other principles that build a comprehensive program for patients so when the headset comes off, they're better equipped to deal with their pain.
The goal is not to keep them in VR forever. It's to keep them in for the shortest period, to learn the skills so they're better prepared for the condition.
Oh, that's interesting.
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All right, so talk to me a little bit about reimbursement for this kind of therapeutics, I assume is what we would call it.
What is the reimbursement look like in this area?
For those who have followed the digital therapeutic space and the distinction with the digital therapeutics is. It's a FDA regulated pathway to be able to make the claims about what your product does. And there's plenty of digital health solutions that don't go that path.
The Omadas, the Livongos, the Hinges. They really take a virtual provider approach to use technology and human services. And whether it's a doctor or coach or therapist, they're providing a holistic approach to the care management for that patient. In our case, we're providing a pretty independent, self managed therapy that patients, without the direct observation and management of a physician, they're putting in a, on a headset and going through the course of therapy in the home.
Now, when Medicare was when CMS was conceived back in the 60s, there was no idea that there'd be such thing as a digital medicine coming. There were devices, and there were drugs. And so there hasn't been a statutory category that can actually take a benefit category with existing funding and apply it to the payment of a digital therapeutic.
And so companies that have been purely software centric, Paratherapeutics, McKinley those are two examples who have had some challenges of driving reimbursement in the market and ultimately that led to the demise of Payer. And that's because without CMS Pathway, a lot of the other payers don't have the benchmarks because they look to Medicare and they look to CMS to see their coverage policies and pricing.
And a big part of the payer mix with a lot of chronic conditions are Medicare. And so because we have physical hardware, We combined it with our software and took it through FDA as a traditional medical device. So it's not just the software, but we tested the hardware for all the electromagnetic compatibility and battery safety and all the things you would do to any type of in home medical device.
And we went through CMS to petition for a HCPCS code as durable medical equipment. Because DME does exist as a benefit category, and we were successful in getting the recognition that because it's a single purpose device, it's pre configured and can only be used for healthcare in the home, and has durability, the device is meant to last with a patient, or in our case, multiple patients over several years.
CMS was, we were the first digital therapeutics company to get granted a unique HCPCS code and DME benefit category determination. And now we're working to get the pricing and coverage policy in place. Well, we also work with the private health payers to develop policies with the big national plans, regional plans, IDNs.
And so, it takes a lot of work to conduct pilots, clinical trials, develop real world evidence, conduct health resource utilization and cost effectiveness analyses to build a big body of evidence that gives the confidence that you're actually going to generate a strong ROI with a new product in the market and
get it paid for.
Wow so I assume you took one of the devices that's already available in the market and then you turned it into a single use device. Is that accurate or did you build your own from scratch?
Correct. We added some modifications for the breath capture and to make sure that it's incredibly easy to use.
And so we take a consumer device, we shell it, use it for all the hardware components, but we install our own operating system, our own analytics, our own background services, have our own onboarding interface content, and all the software is developed by AppliedVR. And so that was our way of controlling a device without having the responsibility of manufacturing hardware as a startup.
Do you have departments within health systems that have adopted this as a... Prescribable program or therapeutic?
Yeah, the first channel we're live in is the VA. And the VA has been one of the most innovative health systems. And so right now, we've deployed hundreds of headsets that are currently getting covered by the VA, both through their innovation program, which has allocated effectively grant funding to support the early adoption, as well as we're actively selling under a contracting vehicle in the VA.
And so this is being prescribed to veterans through VA hospitals. as well as local care providers that are affiliated with the VA, and the device goes into the home, we telephonically onboard them and support them through the program, and then work with the VA physicians to share the data back so they have the right information when they come in for their next visit.
Well, that's a good place to start. I could think of a ton of use cases in that space, but I'm also thinking about those people that are confined to a bed or confined to a room and those kinds of things. Are there applications there?
We started there in the early days of trying to create a VR healthcare business.
Which was crazy back in 2014. In fact, I remember going to Amita and saying, you shouldn't say VR. People don't really know what that means. I think it means voice recognition. And so, even just the letters VR didn't really carry any weight in any domain, let alone in healthcare. And so, from about 2015 to 2018, it was our mission to build the credibility, data, and brand behind what we're doing.
And because the hardware was full of friction, it started out tethered to computers, and then the biggest breakthrough was you could run it on your phone, either plugged into Google Cardboard or into a Samsung connected headset. And that was really the only way to provide a wireless experience for VR.
And so we worked closely with Samsung to optimize the best we could. But we realized patients likely wouldn't be able to use it very effectively on their own in the home. And so we thought the hospital was a perfect place to start our innovation program because it's highly controlled and there'd be a lot of support from the staff.
And so from 2015 to 2018, we deployed in over 200 hospitals, ranging from Cedar Sinai, and Stanford, and New York Presbyterian, and Will Cornell, all the way to local rural hospitals, as well as some community centers, ambulatory surgery centers, and private practices as well. And it was a great place to build the experience about how to operationalize operationalize VR in a healthcare setting.
It's also a very challenging business model, especially the way hospitals are run these days, which is a razor thin margin, or even at a loss. Getting things paid for in an inpatient setting is a lot different than on an outpatient setting, because often there are these bundled payment codes. Hospitals are given a lump sum of money, and it's up to them to figure out how to optimize the right way to spend that money for the patient.
And things like VR are so outside of all the basic needs that they're really focused on the patient. And often, there's so many things that you can do in a healthcare facility to manage pain. With nerve blocks and other types of things that you can do. And it's when patients were getting discharged, the physicians and patients were saying, VR is really great, I would love to bring this home.
How do I do that? And so that really woke us up to really where the biggest unmet need and pain was. It's not so much in the hospital where pain is pretty well controlled. It's when patients get home and they have a real lack of options.
All right. In the last five minutes of this, I want to hit on Apple's Vision Pro.
And it's application to healthcare. So it's interesting to me. I mean, they have the watch and there's rumors that the watch, the next iteration of the watch will have a blood pressure monitoring on it. It's already has a bunch of other features that they're just slowly, very slowly, like one feature every time they release a new watch.
So in about 10 years, we'll have a lot of signals from that watch. Obviously, they're already in our ears that you're, I mean, everywhere you look, there's somebody with earbuds in and that kind of stuff. Now they're going for, I guess they're calling it spatial computing. We can talk about that category if you want.
But the cost of it is really high. I think it was over, is it over three grand for 3, 500, 3, 500 for a headset, which is enormous compared to some of the other sets that are out there. I mean, what do you think the adoption rate is going to be on this? What are they looking to do?
What's Apple looking to do in the VR space? And is there any relation to?
When you launch a product with a pro moniker and you attach the 3, 500 price point, I think it signals that they're not focused on mass adoption. A lot of early innovation is adopted through enterprise use. And when you look back and think about computers and the internet and 3D printing and a lot of other things.
You start where you can have the right form factor, have the right specifications of the device, that you can really focus on the usability and drive a lot of critical value that enterprise can support while you work on Moore's Law and you get the cheaper compute, you get the cheaper chips and, aspects in the device that ultimately you could bring to the consumer.
And I think that's what Apple's doing here. The nice thing about working like with an applied VR. is we're taking the device and It's effectively a rental. So we prescribe our device for eight weeks at a time, the patient takes it home, ships it back, and it goes to another patient. So companies like Applied VR can bear the cost because it's spread across 10 or 12 patients across the lifetime of the device.
And so they're really focused on, in exponential technology, the growth curve feels very flat for a long time. Until there's really major improvements in UI, usability, form factor, cost. And I think they're starting to check off at least some of the usability boxes that have really held VR back from really being consumed more widely than now.
This will be an interesting strategy for Apple. Starting at 3, 500 bucks pro version. It is not going to sell massive amounts at that price. It will sell more than I think what people anticipate just because there's so many Apple fans out there. They want to see what the Apple. experience is with regard to virtual reality and and AR, augmented reality.
But, I look at this and I, I don't remember an Apple product that started very expensive and got cheaper, but that's almost what this needs to do. It almost needs to, hey, they're going to figure it out. They're going to have a lot of users come in and they're going to get tons of feedback and it's in fact that the article where I'm looking at is Apple's Vision Pro Health Lab in the wild and it really is a lab.
I mean, they're just going to get users starting to use it. They're going to figure it out and it's almost like they had the device and they're saying. All right, we need to go to the next level. You know what we need? We need a lot of people to use it and give us feedback so that we can fine tune it and get ready for a, potentially a more broadly available products for general availability to the market.
And it's a very different approach from other companies like Meta. That subsidized the product, sold it at a loss for a lot of time, focused on developing a very early content ecosystem, centric in gaming, entertainment, and social networking. Whereas Apple has really been very selective in what developers they bring on early on.
Selling not at a loss, but maintaining a premium price. To support what they think the value is in the marketplace and really focusing on enterprise applications, video conferencing, a virtual desktop experience, and really thinking about how to drive utility for a very small group of users until they can, as you said, figure out one feature at a time, what works, and then open their aperture from there.
Yeah, it's going to be interesting. Josh, I want to thank you. I want to thank you for your time. I want to thank you for the work that you're doing. This is, this really is going to be an interesting space as we move forward. And I would imagine, just thinking back to the pandemic and how we isolated so many people.
And I mean, that's when I started playing with virtual reality and I thought this is a way to get people out of isolation. And it, and you guys are Really progressing this. I was also interested in the eight week timeframe, get them into virtual reality to make progress, but not leave them in virtual reality and become almost addicted, like, like a pain medication, almost addicted to it, I guess.
Exactly. We don't see this dystopic future where everyone's in a headset and numb from pain. We want people to spend a small amount of time in the headset, acquire skills more effectively with lasting skill transfer. So a year or two from now, they're still getting the benefits. They're still practicing the skills.
We hear people tell us. I was in my garden, my back pain started flaring up. I slowed down my breathing and just imagine flowers spreading from my garden. And so we're really creating skills with this visceral experience that they could start actually practicing those skills and use them on a day to day basis from that point forward.
That feels really good. Yeah,
I I encourage all healthcare technologists to I mean, just get a headset, you don't even have to spend a ton of money and just experience it. And it really is one of those things that if you put it on for any period of time your brain cannot distinguish that
you have entered a different place and that kind of stuff. And as you get that feeling, you start to realize we can do a lot of things with people in a therapeutic way to help them to deal with situations like chronic pain. So I appreciate your work and thank you for your time.
Thanks so much, Bill. Appreciate it.
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