The Valens Co., Inc.

The adoption of the MIPI A-PHY standard in robotic and endoscopic surgery tools, as well as other medical devices, could lower costs, improve video capabilities, and eliminate EMC problems. “After years of slow evolution in scope hardware development, I believe we’re at the precipice of a major hardware revolution,” said Matt Snell, Regional Managing Director at Valens Semiconductor, in a recent interview with MD+DI. Valens Semiconductor has 20 years of experience implementing long-distance, zero-latency connectivity technologies like HDBaseT and now MIPI A-PHY, for many different industries. Valens is bringing its MIPI A-PHY expertise to the medical device industry, especially in sectors that rely on sophisticated cameras such as robotic surgery tools and varying types of scopes. A-PHY enables high-resolution cameras; low-cost, long-distance cabling; and high resistance to EMC noise, which are all optimized for the upcoming shift toward disposable architectures. Snell will be presenting a session at MD&M South on how MIPI A-PHY could bring about major changes for these medical devices. “During my presentation, I will show a demo video of MIPI A-PHY delivering perfect video even when sharing the same channel with high-voltage electrosurgical and tool interference,” he said. “I will go through the case studies where we've helped companies redesign their current endoscopes and realize huge cost savings and simplification of their product.” Following is a synopsis of MD+DI ’s conversation with Snell, in which he shared his thoughts on the MIPI A-PHY standard for medical devices and how he believes it will revolutionize hardware development. Why is this topic important for medical device manufacturers? Snell: There's this need for uncompressed, zero-latency video over a long distance in medical devices. And that's exactly what Valens brings to the industry. We enable medical device manufacturers to overcome the distance and cabling limitations of the native protocols like HDMI, USB, Ethernet, or MIPI CSI-2 video, and ultimately deliver a better user experience through improved hardware. For example, with robotic surgery, you have all the cameras involved — at the end of the robotic arms, or between the surgical station that the surgeon is sitting at. Think of Intuitive Surgical or Medtronic, with their big surgical stations. Valens HDBaseT and MIPI A-PHY bring many new capabilities and advantages to endoscopic and robotic vision systems. A-PHY’s high bandwidth enables high-resolution 4K cameras, while the built-in DSP enables it to work over low-cost, thin cables over long distances, even in a high EMC noise environment. And Valens MIPI A-PHY coexists with electrosurgical tools. You'll have your scope doing the video, and then you'll have an electrosurgical tool right there at the same time. Currently, when a surgeon fires one of those electrosurgical tools, the video drops out. And surgeons have just learned to live with that, because there's no other way around it. Our resilience to EMI enables us to not to drop the video. This is unprecedented in current products. Additionally, the industry is driving toward disposable endoscopes. This is due to the costs associated with disinfection (special equipment, special facilities, etc.), and improper disinfection is common due to factors such as human error or poor training, so infection due to re-use is still a problem. A-PHY was built to enable disposable scope architectures by reducing the overall total system costs while significantly improving performance. Can you explain what the MIPI A-PHY standard for robotic and endoscopic systems is and how it works? Snell: To provide some context, let’s start with how the MIPI A-PHY standard came to be. During and post-COVID, there were a lot of shortages in the automotive supply chain, if you remember. And the automotive industry said, ‘We really need an open standard for all of the cameras and sensors that are going around vehicles.’ Historically, those were all proprietary interfaces. They came to the MIPI Alliance and said, ‘Hey, we need to take your expertise in open standards and bring this to the automotive world.’ And so, the MIPI Alliance defined what's called the A-PHY. The idea was to develop a long-distance, high-bandwidth, low-cost, and highly resilient to noise solution, because cars are noisy. A spec that enabled you to send those image sensors and all that sensor data long distance over really cheap cables that are really resilient to noise, and do it over zero latency to a centralized computer. We’re bringing those A-PHY capabilities now to endoscopes, to robotic vision systems, and so on. Because it's very high bandwidth and enables the use of 4K cameras for next-gen endoscopes. Our built-in DSP enables it to work over very low-cost, thin cables, and long distances. Today, endoscopes have a lot of fiber optics or a lot of very expensive cabling, so by removing all of that and just having a low-cost transmitter sending that raw video to a central receiver that then is going to talk to the processor unit, makes the endoscope become very low-cost. It becomes cheaper just to make it disposable than it is to actually disinfect it and reuse it. Plus, then you don't have the dangers of reinfection from reusing scopes, which is actually a really big problem in the industry as well.  So, it's a great solution. Is there a huge cost in redesigning or reconfiguring their current systems? Snell: No, it's a simple chip set to use. We provide a reference design for the whole thing and support our customers through that. Most of our customers are up and running with their prototypes within a couple of weeks. And they're very pleased with the performance. What other types of medical devices could benefit from standards such as this? Snell: Really, any camera-based products. Robotic arms are going to have more cameras, because if you think about robotic arms today, there'll be a camera at the end, but there may also need to be a second camera. Or, as the robotic surgery becomes more capable and the costs come down, the number of cameras will probably go up. So, we enable some great architectures of how you can connect multiple cameras together. Maybe you’ll have both a high-resolution and a low-resolution or low-light camera. There are all sorts of new things we're doing there. Like the head cameras that the surgeons use. If they were to use an existing camera, it's going to be heavy, it's going to be big, which causes neck strain and all that. If you can make a tiny little camera with a very thin cable that's part of their operating room gear, now they’ve got a first-person point of view. Those are the types of new applications we're seeing folks do in the medical space, separately in robotics. The need for cameras is through the roof. Who would you like to see attend your session? Snell: Those interested in medical imaging, video transport, resilient video during surgery, and next-gen endoscope and robotics development. We're finding that anywhere there's cameras, there's interest. What is the most important thing you would like your attendees to take away from your session? Snell: If I take a step back and I think about medical device imaging as a whole over the last 10 years, in some respects, it's been a slow evolution. Yes, cameras have been introduced more and more, but it's been a slow evolution of development. Most of what's out there in the world today is still very low resolution, with very thick cables, and they’re expensive. Even after all the developments we've had in the last 10 years, with this slow evolution of hardware development, I feel like we're at the precipice of a huge hardware revolution. This MIPI A-PHY technology enables high-res cameras, low-cost, long-distance cabling, and high resilience to EMC noise—all optimized for the upcoming shift to disposable architecture. And so, I want people to take away that that's where we are right now. All of these things that they've sort of accepted as just the way it is are going to all be solved, all at once. I want them to come away with sort of an introduction to that and a craving to learn more. Snell will present, “Confronting the Connectivity Challenge in Endoscopic and Robotic Surgeries,” on Thursday, April 23, from 11 to 11:30 a.m. in the MedTech Theater at MD&M South.

At this year’s HLTH conference in Las Vegas, Bessemer Venture Partners released a report that analyzed the digital health sector’s performance over the past five years and offered words of wisdom for the next cohort of startups seeking to build resilient business models that can deliver long-term value. During an interview at the conference on Sunday, the two authors of the report — Bessemer investors Sofia Guerra and Steve Kraus — discussed how they came up with their four predictions about where the digital health world is headed in 2024. “Services-as-Software” will emerge as a new category of healthcare AI As generative AI and LLMs get more advanced, a new category of AI tools are emerging that deliver a service as the final product rather than providing a workflow tool where the end user completes an action. This new trend flips the SaaS model on its head, Guerra pointed out. “SaaS isn’t going anywhere, by the way. This is a new category that’s emerging specifically for AI companies. When you think about the output of an algorithm, it’s not going to be a workflow tool that a user is interacting with to enable them to do work on the software — it’s going to be the work itself,” she said. For instance, some generative AI companies will likely emerge that sell prior authorization or clinical trial participant identification as the output of their software, Guerra explained. These companies will be selling services, but the services will be provided all by technology — there are “very little people involved,” she explained. In other words, with a Saas model, a person is in the loop using the software to make a job easier. With a services-as-a-software model, the person lets the software do the job for them. “Our thesis is that you’re able to tap into business process outsourcing-type markets, where there’s people likely in the Philippines and India doing a lot of that work, but now you can enable it using AI,” Guerra added. Guerra and Kraus pointed to SmarterDx, which provides clinical review and quality audit of medical claims, and Abridge, which is developing software for transcription and clinical note generation, as two examples of Bessemer portfolio companies in the emerging services-as-software space. Healthcare payment companies will have to align incentives between providers and payers There are a lot of companies on the market that focus on healthcare revenue cycle management — but incentives are still misaligned between payers and providers, and both parties are still plagued by payment inefficiencies. As a result, the market is rife with duplicate systems, and providers and health plans still struggle with manual processes and bloated administrative costs. “I think the holy grail really comes down to becoming the interstitial tissue between the payer and the provider — not designing a solution for a provider and one for a payer. That’s like a game of cat and mouse,” Guerra explained. She said there is a massive opportunity for software to connect the administrative processes of payers and providers, giving way to a more efficient healthcare payment system. For startups to succeed in building this software, they have to follow the money and align incentives between the two parties. Bessemer is looking for companies that can harmonize the payment process between the two stakeholders and eliminate duplicative, antagonistic systems for things like prior authorization, claims adjudication and quality audits, Guerra noted. Some examples of prior authorization companies seeking to foster a better payment relationship between providers and payers include Cohere Health and Verata Health, which was a Bessemer portfolio company until Olive acquired it in 2020. These companies used evidence-based protocols to automatically authorize medical services on behalf of health plans, which in turn accelerates operations for providers. If you want to sell tech to providers, you may need to rethink your distribution model The report highlighted indirect monetization as a new distribution advantage emerging in the digital health world. Some startups are providing their software for free, shrinking their sales cycles and allowing them to utilize indirect monetization strategies early on. “One of the biggest challenges in health tech is distribution,” Kraus said. “It’s really challenging to sell to health systems. Companies are trying to find pockets of spend that health systems already have to automate and make more efficient. It’s not like they’re creating a new spend — they’re just trying to use modern technology to make it cheaper, better, faster.” For example, Bessemer portfolio company House Rx, which aims to make specialty medication more affordable and accessible, provides technology to practices and profits from specialty pharmacy prescriptions through distribution agreements with drugmakers. Additionally, Verse Medical and Doximity are two examples of companies using indirect monetization strategies that aren’t in Bessemer’s portfolio. Contingency-based pricing is often easier for health systems to swallow than upfront fees, given the financial pressures providers are facing right now, Krause pointed out. The aforementioned SmarterDx is an example of a startup that uses this distribution model. “They will look at a hospital’s charts and say, ‘Hey, we think you’re missing some clinical documentation here. And by the way, if we identify $10 million, we’re going to take 10% — versus charging some kind of SaaS fee, which has to be approved upfront,” Kraus explained. “Especially in these tough times — when everybody is contracting with health systems that are having huge operating losses, and payers are having challenges too — thinking about distribution or pricing models that make it easier to sell into the system is going to be important for entrepreneurs.” The biopharma value chain must become more efficient Biopharma has had a strong market performance in the past few years, but the industry is beginning to face some serious challenges. Many of these companies are focusing on therapies that serve niche populations, such as precision oncology drugs, so R&D costs are rising while sales forecasts are dwindling. Additionally, the Medicare drug price negotiation program is putting new pressures on pharmaceutical executive teams, prompting them to use AI to make the value chain more efficient, Guerra said. Bessemer is watching startups that sell technology to biopharma research teams to enable more efficient target discovery, such as Sphinx Bio and Bessemer portfolio companies Watershed and Peptone. The venture fund is also excited about startups that facilitate faster and more efficient clinical trials, like Faro Health, Lokavant, readout.ai and portfolio company Mural Health, according to the report.

In its inaugural State of Health Tech report presented at HLTH 2023, Bessemer Venture Partners noted that despite a “perfect storm” of a market downturn coinciding with the trough of disillusionment in the health tech innovation life cycle, there are plenty of reasons to be encouraged by the progress technology companies are making in healthcare. The report also shared predictions for health tech trends in 2024. “Like any innovation hype cycle, there are peaks and troughs, and we’re now in a trough, and everyone’s feeling gloomy. It happened to be that the trough coincided with the market downturn, so it’s been doubly challenging. I think a lot of people are gloomy, and there are reasons to be gloomy.” said Steve Kraus, a partner with Bessemer Venture Partners, in a phone interview ahead of the report’s publication. “But I think you have to add some perspective. We only started 10 years ago. We’ve got a long way to run. So we want to also point to how far we’ve come and where we think we’re going…which is why we’re still super optimistic about the future.” Kraus acknowledged that while there are a lot of overvalued companies in healthcare, currently, there are plenty of companies providing real value, helping to reduce costs and improve patient outcomes. Among them are physical therapy business Hinge Health, part of BVP’s portfolio, and mental health support apps such as Headspace and Calm. The companies that will succeed and make it out of the trough of disillusionment will have five major characteristics in common, according to the report: Hair on fire problem: Solve a mission-critical problem for your customer. Hard ROI and clinical outcomes: Demonstrate clear and fast return on investment for your customer. Large and growing market: Take advantage of tailwinds and systemic shifts for adoption and regulation to articulate a strong ‘why now’ for your opportunity. Attractive unit economics: Focus on high margins and recurring revenues, which are strong signs of attractive and enduring business models. Strong multi-disciplinary teams: Build a team that marries industry and technical knowledge to accelerate distribution, and build best-in-class product. Looking ahead to 2024, the BVP report makes a few predictions for 2024 health tech trends. Among them are: The rise of Services as Software Advancements in generative AI and large language models (LLMs) are spurring a new generation of software applications providing a service as the final product. These developments have flipped the traditional SaaS model, creating a new “Services-as-Software” paradigm. It provides an opportunity for founders to gain market share by reimagining how they can provide solutions that were not possible in the past. One example of Services as Software cited in the report is payments workflow automation, where AI/machine learning products help buyers drive revenue growth and make informed decisions based on clinical and financial data. Revenue cycle management companies aligning incentives The current challenge of revenue cycle management is that it’s characterized by inefficiencies and misaligned incentives. The report notes that there’s a great opportunity for software to become the connective tissue between payers and providers, enabling a more transparent and efficient payment system. “In order to succeed at this task, business models must intricately follow the money and align incentives between the stakeholders. We are excited about companies that can harmonize and deduplicate antagonistic systems, such as prior authorizations and utilization management, claims adjudication, payment integrity, and quality audits.” The report also sees promise in companies facilitating the transition to more risk-based payment models, such as payers exploring individual coverage health reimbursement arrangements, and consumer directed healthcare. Health tech businesses leverage indirect monetization for a distribution advantage Companies that can earn a distribution advantage provide cheap or free software and service to their customers, shortening their sales cycles. These companies are positioned to leverage indirect monetization strategies. Among the companies illustrating these trends cited by the report are Verse Medical, Rupa Health, HouseRx (a BVP portfolio company) and Doximity. Making the biopharma value chain more efficient Software and AI could transform drug discovery and commercialization. Among the companies that exemplify these trends are Peptone (a BVP portfolio company),Seismic Therapeutic, Generate Biomedicines, Evozyne and Profluent.