Today’s Healthcare Innovations, Invested Capital Will Drive 5 Key Trends in 2020
There is no shortage of innovators today producing advancements that are shaping the future of healthcare. From groundbreaking precision medicine treatment to the drive for pricing transparency to the growing acceptance of mobile healthcare by consumers, the headlines paint a picture of hope for improving the healthcare experience and reducing the overall cost of care.
As a former hospital administrator and for-profit health system strategist, and now as a venture capitalist leading healthcare investment activities, it’s exciting to watch these developments from both perspectives. Entrepreneurs are pushing boundaries, challenging current care delivery models, and developing technology that supports them. In this environment of change, several key trends are emerging that offer a glimpse into healthcare’s future:
1. The drive for price transparency
You can’t make it through a fraction of today’s news cycle without hearing someone utter the word transparency, whether the context is a Congressional hearing or how a company runs its business. In healthcare, transparency of pricing is the issue du jour, and the debate continues over how to offer consumers pricing information, in a vernacular that is easy to understand, about the healthcare they purchase. Publishing each hospital’s charge master does little good for the layperson or the lifelong healthcare expert, but pricing information aligned with such terms as a doctor visit, a childbirth, a knee replacement, an emergency room visit, etc., would enable patients to better translate the services and procedures and their associated costs.
The Affordable Care Act (ACA) requires hospitals to publish their list prices for the services they provide. But, as a frank article by The Commonwealth Fund earlier this year points out, “what’s resulted — confusing, unwieldy lists of thousands of goods and services posted on thousands of individual hospital websites — is of dubious relevance to patients in its current form.”
The challenge is to find a common, consistent definition of healthcare’s cost components. Whoever figures it out first—that is, those who can combine price transparency with corresponding quality and out-of-pocket-cost information for context—will be market leaders. We’re not there yet.
2. Technology for closing the mental health services gap
The story of mental health treatment in America is a story of disconnect. For example, the Anxiety and Depression Association of America reports that anxiety disorders are the most common mental illness in the United States, affecting 40 million adults or 18.1 percent of the population every year. Even though this disorder is highly treatable, only 36.9 percent of those suffering receive treatment.
The barriers aren’t just financial. Lack of availability and transportation, and the ever-present societal stigmas of seeking treatment, are just as real. A study entitled “mHealth for Mental Health: Integrating Smartphone Technology into Behavioral Healthcare” suggests that mobile phone software apps can help overcome those barriers and, while not meant to replace in-person visits with therapists, can provide valuable support for behavioral health professionals and the patients who need their services.
Several companies have made strides in this area. Creating a platform that helps patients identify their clinical needs and then connects them with an appropriate provider, either virtually or in-person, in a relatively quick manner is what technology companies are striving for. Their work is aimed at solving a big picture issue: By helping people suffering from mental health conditions get treatment earlier and more regularly, they can prevent these patients from becoming an even greater cost burden to the healthcare system—which experts agree is the inevitable result when mental illness goes untreated.
3. Innovation in wellness and long-term care
Technology and services looking to improve care for post-acute episodes, compliance with medication management, senior living, and chronic diseases all are drawing notice from investors this year.
For example, companies are using advanced technology to gather data about the conditions and risk factors of Americans suffering from chronic diseases, and are then relying on digital messaging to nudge patients about good health practices aimed at keeping those conditions under control, such as checking their blood pressure, dietary habits, or blood sugar levels at home.
This type of early intervention runs contrary to traditional models of healthcare, where reimbursement has been based on treating illnesses rather than compensating providers for the time they spend maintaining a patient’s good health. This new model simply makes good sense in a country where approximately 71 percent of the total healthcare spend is associated with care for Americans with more than one chronic condition.
Indeed, new Medicare reimbursement codes have laid the groundwork for the proliferation of companies that are offering technology and services to help physicians reshape their practices and adopt the new wellness-focused approach. In 2015, Medicare began reimbursing for non-face-to-face services for Medicare patients with multiple chronic conditions. The program is working. The Center for Medicare and Medicaid Innovation (CMMI) recently released a report showing the program’s association with lower growth in Medicare costs, reduced hospital admissions, and increased connections with community-based resources for patients.
4. Technology for home-based care
Healthcare is no longer just about the clinic, the hospital, or the doctor’s office. Because traditional healthcare delivery systems include costly inpatient treatment options for a variety of acute procedures and illnesses, an increasing number of companies are focused on bringing care to patients in their homes. This includes patients who would go to the emergency room or post-surgical patients who need to be monitored, as well as patients being treated for acute conditions that would require a short inpatient stay.
Such home-based technologies can be active, such as telemonitoring devices that can capture vital signs, weight, or symptoms and report them to a remote provider. One specific example supporting medication adherence is Pillo, which stores and intelligently dispenses the right medication at the right time. Ideal for patients with complex treatment schedules, Pillo also records when pills are taken or doses are missed. Passive technologies include fall detectors concealed under carpets, and bed sensors that capture restlessness, sleep interruptions, or pulse and respiration during sleep. As technology pervades everyday life, as more consumers are accustomed to Skype visits with loved ones and asking Alexa for the daily weather report, patient resistance to these new home-based healthcare technologies is not what it once was. We’ll see more smart innovators and investors ride this tide of acceptance to success.
5. Precision medicine: the wave of the future
Eli Lilly’s $8 billion acquisition of precision-cancer-drug developer Loxo Oncology shows the importance and value of precision medicine that targets specific mutations in DNA. Precision medicine innovations for diabetes and other diseases are also prevalent this year, and they were a major topic of discussion at the 37th annual J.P. Morgan Healthcare Conference I attended earlier this year—the largest healthcare investment event in the industry, bringing together thousands of investors, innovators, and healthcare professionals who can legitimately be described as being on the cutting edge.
In precision medicine, treatment approaches are developed based on patients’ genetics, environment, and lifestyle. Pharmacogenomics, the study of how genes affect a person’s response to particular drugs, is a relatively new field in which tailored drugs are being developed to treat a wide range of health problems—not only cancer and diabetes, but also cardiovascular disease, Alzheimer’s disease, HIV/AIDS, and others.
The World Economic Forum isn’t the only organization predicting that precision medicine will change the future of healthcare. Blockchain technology and Artificial Intelligence (AI) are playing an important role in analyzing patterns in patient data and providing insights that can aid the production of customized medicine—and innovative firms are stepping up to the plate to develop products that will help “the wave of the future” become a reality.
Blockchain is also gaining traction as an enabler of cost-efficient data sharing among health plans. We’ll surely hear more about applications of this disruptive technology to help the healthcare industry meet new challenges.
The leaders are still anyone’s guess
With the level of excitement around consumer engagement and the uses of technology to change modern medicine approaches, who will the leaders be? As yet, no company has established itself as a true leader in any of the trends highlighted here. But competition is fierce and the pace is fast and furious. We’ll be watching closely through 2019 and into 2020 to see who emerges with breakthrough innovations as the new decade unfolds.
Sarath Degala is VP at venture capital firm BIP Capital, where he leads its healthcare investment activities. He offers 16 years of healthcare administration experience achieving noteworthy operational and financial results within a variety of healthcare settings.
