Healthcare in the US is not only huge in size (over $3 trillion is spent each year or 15% of total GDP) but is also relatively recession-proof compared to most other industries (we all need healthcare services at some stage in our lives!). But what looks like a very attractive industry for investment on the surface is often not so easy when we take a closer look with regulatory hurdles, significant data compatibility challenges, high concern for patient safety (meaning time frames to make any changes are very long) and a very conservative attitude and therefore slow to change culture being just some of the hurdles that any entrepreneurial or innovative company needs to overcome. Perhaps even more significant is that most technology startup firms only grow by moving fast, trying prototypes, gaining feedback and then iterating. Healthcare is far less tolerant of this approach and prefers to avoid any kind of failure along the way-often for very good reason where people’s health or even life, at least in some cases, is at stake.
As we move towards value-based care and results or outcomes that are measurably better (as opposed to a fee-for-service system), attention to individual patient needs is the new priority and this is an area where digital health solutions can excel, especially as so many people now carry a smart device with them at all times. Whether it’s using software to connect customers/patients with clinicians or caregivers that match their preferences or helping customers to find a tailored insurance package, this is an ideal time for agile digital companies to find segments and niches where they can fill gaps in the healthcare market and allow them to compete with some of the larger and more entrenched players very quickly.
Although there are many areas of digital health that are interesting to look at, let’s consider five that seem to promise the most interesting solutions:
Data Collation and Interpretation
Healthcare is an industry that is capable of generating huge amounts of data right across the spectrum. This comes from wearables on people and in the home, various sensors, and real-time analytics from smartphones and tablets. These big data sets can help with creating sound population health analysis, drug use and efficacy research and development statistics, disease monitoring outputs, and even tracking patient treatment over time. With Big Data also comes the need for high levels of intelligent analysis so that we have better information on which to make our healthcare intervention decisions on a much more individualized basis.
Mobile and integrated applications have exploded in recent years, particularly as the penetration of both smartphones and tablets has increasingly reached so far and wide. In healthcare this means that there are already well over 100,000 apps in the online stores to purchase, with the potential for much more development. This development will be in both the B2C space in helping patients to better access the services that they need, but perhaps more exciting, will also be heavily in the B2B space, helping healthcare providers to better collaborate an coordinate their efforts and save large amounts or time and money in the process.
Better service/patient SaaS connection platforms
Software as a service or SaaS has become a hugely popular business model in many industries with healthcare being the latest to adopt this approach increasingly aggressively in many areas. This approach in which software is licensed on a subscription basis from a centrally hosted system can help in matching patient needs with niche services, enabling healthcare education to be widely and quickly disseminated and even provide products and services that can be operated remotely (such as alerts, monitoring devices and even medication dispensing systems, for example).
Aging in Place and Creating easier Access to Care
What is now called “telemedicine” or “telehealth” has become a more and more common way for individuals to gain access to a clinician in a way that minimizes the need to arrange transportation and appointments, saving time, hassle, and money. Some healthcare providers have already made good use of this technology, but we are only at the beginning of the changeover. Not only will telehealth penetration grow quickly in the next few years, but the platforms to exchange information will evolve substantially too, all helping to enable the huge shift from intuitional healthcare to healthcare delivered in the home, especially as the nation’s aging population grows substantially.
Health IT Growth
Most hospital administrators and physicians running healthcare provider organizations believe that healthcare information technology will improve the quality of care provided for all patients in the long term, especially when organizations can get beyond the many problem of transitioning from paper records to electronic ones. The main area of interest here is the so-called electronic health record; making it not only easily accessible to the patient but truly transportable across multiple healthcare providers. Open systems with full interoperability is often the ultimate goal of electronic health records and digital companies that are prepared to share data across platforms will be the big winners here.
In summary, all of the digital health-based solution/technology categories described above will have a huge impact on healthcare in the next few years and will alter the way that care is rendered substantially. This means that Healthcare as an industry is ripe with opportunity for investors and entrepreneurs but they will only be successful when both investors and entrepreneurs appreciate how the industry operates, can develop products and services and iterate in different ways and are prepared to be extremely patient in a sector that is extremely complex.
Jon Warner is a business consultant in Los Angeles and adviser to Adaptive Healthcare, a healthcare investment fund. He works with clients in healthcare and life sciences to develop business strategy, performance and productivity goals, as well as technology deployment tactics.