Healthcare is changing rapidly, and if technology solutions aren’t designed to keep pace, the company that designed them has already lost the race.
The healthcare market is ripe for technological disruption. This was true before COVID-19 but the pandemic only exacerbates the need. Opportunities for telemedicine, AI and other revolutionary technologies are still wide open, but companies must position themselves to strategically align with the following four trends in order to take full advantage of the coming transformation.
An industry at its breaking point
I’ve worked with health plans to evaluate technologies for more than 25 years and I’m often asked to speak on healthcare disruption. I like to start by asking my audience to raise their hand if they have had more than one dissatisfying experience with their health plan—typically everyone’s hands shoot up. When I ask the same question about their experiences with the provider community—physicians, specialists, hospitals, labs and so on—everyone’s hands shoot up again.
The point is that in terms of the delivery and financing of care, we have been failing the consumer/customer for decades. And that’s because we have never truly thought of health plan members or healthcare patients as customers. As healthcare costs continue to escalate and employer and consumer satisfaction wane, purchasers of healthcare, whether they are employers or the government or the end user, have reached a breaking point. They are actively looking for alternatives that disrupt the status quo. At the same time, technology has evolved to the point where it’s capable of delivering radically new solutions. This combination of consumer demands and technological readiness is changing everything.
And now, COVID has dramatically shocked the system into viewing technological advances much differently. Where adoption of telemedicine and other technologies had been slow, due in part to provider inertia, a desire by providers and patients alike to maintain in-office visits, and reimbursement limitations, the new focus on shifting care away from hospitals and other settings to more home-based environments may be the catalyst to making the available opportunities become reality.
A Prescription for Healthcare Technology Disruptors:
Focus on the consumer, not the system
The last few years have shifted power away from healthcare financers and providers and into the hands of consumers. Consumers are paying more for healthcare and they want a system that reflects their needs. As they take a more active role in their own care, they want access to more options as well as the information that helps them understand and evaluate those options in terms of the financial outlay involved and the health outcomes predicted.
Providers and health plans who don’t find ways to meet those expectations will struggle. They are being squeezed by competition from companies like Google or Amazon and elbowed out by more creative boutique plans that directly approach employers and offer to replace elements of the main carrier’s plan with nimble, more consumer-friendly options. By focusing on solutions that meet the needs and preferences of the consumer, technology companies can help more traditional plans and providers stay relevant and competitive, too.
By focusing on solutions that meet the needs and preferences of the consumer, technology companies can help more traditional plans and providers stay relevant and competitive.
Think outside the hospital
The pivot towards a more consumer-centric healthcare model is creating new opportunities for service delivery outside the hospital. Hospitals are vital, but they can be scary, unfriendly and sometimes dangerous places for patients. From a system perspective, hospitals are also an overburdened resource and, in some cases, the least economical way to deliver the required care.
Technology is the key to helping healthcare providers address consumer demands and economic constraints by situating more services outside the hospital. For example, with continued advancements in medicine, minimally invasive procedures and technology such as robotics, an increasing number of complex surgeries, such as knee replacements, can now be performed safely and efficiently at an ambulatory surgery center. Aftercare can be delivered through “shadow” hospitals set up in the patient’s home, with remote monitoring technology and apps that enable the patient to report on their progress using their iPad or iPhone. These innovations lead to higher patient satisfaction, beneficial outcomes and more affordable price points.
Hospitals are vital, but they can be scary, unfriendly and sometimes dangerous places for patients.
Telemedicine is also moving healthcare interactions outside hospitals and physicians’ offices. The parent of a child who has contracted a simple infection such as pinkeye no longer has to make the journey to a medical facility for a fairly obvious diagnosis. Instead, a video call with a physician can provide a quick confirmation, followed by a prescription sent electronically to the nearest pharmacy.
Leverage the power of consumer devices
While thinking outside the hospital is important, so is thinking inside the device. Phones and tablets are now woven into the fabric of consumers’ lives, and those devices are becoming a vital, convenient and affordable conduit for healthcare delivery in an increasingly complex world.
The American healthcare system is complicated, and consumers have to find their way through the complexities of in-network benefits, out-of-network benefits and other restrictions and hurdles. In the last decade or so, high-deductible plans and complex benefit packages are exposing more of the consumer’s wallet to the healthcare decisions being made and requiring consumers to be more involved, proactive and educated about the process. Should they purchase the MRI with no deductible? Or would a much less costly X-ray suffice? If the MRI is the best choice, where can the consumer go to comparison-shop and find the best-quality care for the best price?
This is an area where technology has the potential to make a significant impact with “Ask Siri”-style apps that help consumers navigate the options and calculate total and out-of-pocket costs.
Beyond simply helping consumers find their way, there’s also an opportunity to apply healthcare data and adaptive learning to “nudge” consumers toward better choices, such as the best surgeon for a particular procedure or better lifestyle choices. Consumers are already used to these nudges in a variety of digital contexts, where their devices serve them information considered to be the most relevant and helpful. By applying that technology to healthcare choices and journeys, we can influence their use of the healthcare system to ensure that they see better outcomes and that the healthcare system is used to its best advantage.
By applying technology to healthcare choices and journeys, we can influence the use of the healthcare system to ensure that people see better outcomes and that the healthcare system is used to its best advantage.
Think beyond the needs of today
The business model for any disruptive healthcare technology needs to align with the needs of patients in the future, not just today. Demographics are changing rapidly, and if those technology solutions aren’t designed to keep pace, the company that designed them has already lost the race.
For example, the population is aging rapidly, and the number of Americans moving into Medicare or turning 65 is increasing. How will that impact the healthcare system, and how can technology address those challenges? In another example, specialist healthcare services are centralizing in metropolitan areas and becoming increasingly hard to find in rural areas: how will rural Americans gain access to quality care?
Healthcare technology companies that anticipate and address these challenges have an opportunity to transform the level of care. We are already seeing the potential for electronic consultations that enable specialists to pre-screen and diagnose the consumer remotely. Primary care physicians can also use electronic equipment to deliver a wider range of services to rural patients, such as using handheld wands to diagnose cancerous moles or taking digital X-rays that can be sent to a radiologist anywhere in the world for review and diagnosis.
A note on healthcare private equity partnerships
One of the reasons I teamed up with LLR Partners is help drive and inform the companies we consider for investment on these concepts. If these companies are not forward leaning and don’t embrace the changing landscape that technology is creating, we may think twice about the company’s growth potential.
When talking to private equity firms, here are two pieces of advice: First, make sure you are prepared to demonstrate how your business aligns with the key trends transforming healthcare. Second, make sure the PE firm on the other side of the table is questioning you about them. If they’re not, you should be the one thinking twice about whether they truly understand the healthcare market and are the right partner for you.
If a PE firm is not questioning you on the trends transforming healthcare, you should be thinking twice about whether they truly understand the healthcare market.
Here’s the bottom line.
The changing role of the consumer in healthcare, changing consumer expectations and the rapid advancement of technology will disrupt current paradigms for healthcare plans and providers. These disruptions will create tremendous opportunities for technology businesses. The leaders in the future of patient care will be those that know how to align their solutions with the key trends shaping this transformation.