The healthcare industry is buckling under pressure and ripe for disruption, says AirTree investor Jackie Vullinghs
Wednesday, January 15, 2020/
As investors, we look for waves of change that startups can ride. Because when the world changes and startups are early to a new, fast-growing market, they will be pulled by customer demand.
Within healthcare there is a tsunami approaching, emerging from the convergence of three interrelated trends: ageing populations, chronic disease and rising costs.
The statistics tell the story.
- The number of over-85s in Australia is +125% since 1998. By 2050, this number will be up another 350% as baby boomers hit retirement. Over-85s consume three times as much healthcare per person as those 65–74, and twice as much as those 75–84.
- How many people do you know with diabetes? Or high blood pressure? Cancer? Over 47% of Australians have one or more chronic conditions and this matters because chronic disease accounts for 37% of all hospitalisations, the most expensive way to deliver healthcare.
- Did you know 10% of global GDP is spent on healthcare? That’s $10.5 trillion every year. And it’s growing over 5% annually. But the increased cost is not resulting in better care. As an example, the US has the highest healthcare spending in the world but is the worst-performing when compared with similar nations.
Our antiquated healthcare system is not equipped to deal with this combination of trends.
The problem of incentives
Until recently, the most common way to measure effectiveness in healthcare was to measure the number of procedures completed.
However, if a doctor is paid for the number of procedures they complete, they’re incentivised to complete more, even if it isn’t the most effective route to long-term health. Stories of unnecessary scans and surgeries abound.
In a world where our healthcare needs are increasingly complex and wrapped up in our everyday lifestyle decisions, how do we evolve these incentives?
There is a global move away from fee-for-service to more accurately measuring quality and outcomes.
In a value-based healthcare system:
- Patients have their needs addressed in an integrated way;
- Clinicians have the data they need to continuously improve care; and
- Organisations have incentives that are aligned with value for patients.
However, to effectively measure anything, you need data. While measuring the number of interventions completed was easy, measuring outcomes is significantly harder.
The rise of the EMR
The great change over the last few years enabling the shift to value-based care is the widespread digitisation of medical records. Now that we can capture patient data from a variety of devices and store that data in an individual patient record, we can finally get a complete picture of a patient’s health across different care pathways and over time.
With this data, clinicians can coordinate individual patient care and understand which interventions are the most effective.
How can startups play a part in this change?
Improvements in smartphone capabilities and the rise of wearables have come at just the right time to help encourage the transition to value-based care and a more holistic approach to health.
Some of the areas I am excited to see develop include chronic care management, home health and improved clinician experience.
Improving the clinician experience
1. Chronic care management
For patients with chronic and complex conditions, the fragmentation of the healthcare system can be difficult to navigate. And with many chronic conditions, lifestyle choices outside a clinical setting are core to keeping people out of hospital over the long term.
Startups are targeting specific chronic conditions and tailoring programs to help individuals manage their health every day.
For pre-diabetes, Type 2 diabetes, hypertension and high cholesterol these programs use a combination of connected health devices for tracking, weekly lessons, personalised daily action lists and professional health coaches available through telemedicine on your smartphone.
In behavioural health, startups are enabling cost-effective care by using digitally-delivered cognitive behavioural therapy to help with anxiety, depression, substance abuse and sleep disorders. Other startups intelligently match individuals with the right care provider through telemedicine.
In cancer, apps can help individuals track the severity of their symptoms, read up on the latest research, and see an up-to-date record of their diagnosis and treatment plan. Clinicians and family members can also support the individual by remotely monitoring their progress.
These programs are proven to be effective. Independent studies consistently see improved health outcomes at lower costs. At scale, these programs could save health systems billions every year.
2. Home health
Delivering care in a clinical setting is expensive. However, startups are taking advantage of advances in wearables and machine learning to build products for remote monitoring and diagnosis.
At the same time, the growth of telemedicine and at-home testing broadens the scope of home care, enabling patients to receive wide varieties of primary care from the comfort of their own home.
Wearables for remote monitoring can detect falls, voice-based virtual assistants can help with medication adherence, and a range of devices using machine learning enable patients to take measurements and detect anomalies without requiring a doctor’s presence. These devices are being used in fields as diverse as epilepsy diagnosis and cardiovascular monitoring.
Through telemedicine, those living far from a clinic can get access to high-quality care quickly, and advances in testing mean tests that previously could only be delivered in a clinical setting can now be done quicker and more cheaply from the patient’s home.
Even serious conditions are starting to be treated at home.
Johns Hopkins’ ‘Hospital at Home’ program admits patients to their own homes rather than to the hospital, and their care is managed through the use of advanced remote monitoring and telemedicine.
Improving the clinician experience
Inside the clinic, technology can enable the move to value-based care by allowing doctors to spend less time inputting data and more time with patients.
It is a well-known truth that doctors hate technology.
This is the fault of decades-old EHRs poorly designed for a clinician’s workflow and woefully incapable of interoperability. As a result, doctors spend two hours on EHR tasks for every one hour of direct patient care, and technology is seen as a leading contributor to physician burnout.
Startups are looking to solve this through.
Computer vision is extremely effective at detecting anomalies in images, making it ideally suited to the scans and slides used in modern healthcare. Startups are building diagnostic support tools in radiology, pathology, dermatology and fertility. These will allow clinicians to spend less time analysing images and more time with patients.
Over the next few years, we’re likely to see an explosion of software startups targeting everything from appointment booking to clinical trial recruitment. Startups that provide an easy integration will be a building block to enabling new software products tailored to suit a clinician’s workflow and save them time.
And, as NLP tailored to specific industries and contexts improves, voice applications will be able to listen to patient conversations and type up notes into the EHR, freeing up the clinician’s time to engage personally with patients.
The time is now
The desperate need for cost reduction and better outcomes will force governments to evolve regulation and drive new incentives for payers and providers. Startups today have the opportunity to gain adoption by providing evidence-backed, cost-effective solutions improving the experience for both patients and doctors.
Australia is uniquely positioned to innovate in this area as a single-payer system. With the right incentives and regulatory environment, startups can quickly gain scale and go global, using data from one of the most diverse populations on the planet.
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