How Technology is Fixing the Broken Patient Journey — Part 1
A digital disruption of the healthcare sector
The global healthcare sector is notorious for being expensive and inefficient with traditional providers struggling to cope with modern day industry dynamics.
Key challenges faced by the sector are:
- Ageing and growing population
- A system focused on treatment rather than prevention/health maintenance
- Minimal penetration of new technologies
- A bureaucratic sector, sluggish in reacting to change
As well as these general industry developments, there are specific healthcare challenges in the UK alone. The over-65 UK population is estimated to reach 25% by 2044, compared to 14% just 40 years ago. NHS public spending represented 30% of the UK budget in 2015–2016 (more than £125 billion), compared to 11% in 1955–56². These trends combined are putting significant pressure on the UK health service rendering their care unsustainable in the long term. The UK is not alone with most European countries are also battling with similar issues.
As population increases and ages, it is natural to ask ourselves if there will be healthcare resources to meet the growing demand. In the majority of Western Europe there are between 30 to 40 physicians per 10,000 population, dropping to 20–30 in the UK and in the US, with significant uncertainty as to whether this proportion will be maintained in the future as the population evolves.
The healthcare sector desperately needs a technological revelation to help digitalise the patient’s journey, bringing with it; efficiencies, automation and a focus on prevention rather than adhoc treatment. Take a look at where it ranks in McKinsey digitalisation index (!)
From a funding perspective, volumes are strong with $3.4 billion invested in digital health just in the first half of 2018⁵, but the sector has been lagging behind other more mature technology sub-sectors, with 75% of funding rounds concentrated at Seed to Series B stage. This also clearly proves there is a growing opportunity for Venture Capital firms funding early stage innovations.
A significant amount of my time has gone into mapping out the sector, meeting brilliant and passionate entrepreneurs and reading research. The sector is broad and innovations are in their infancy at each stage of the patient’s journey:
- Wellness and prevention (fitness, nutrition, smoking cessation, stress management, sleep)
- Symptom onset (symptom checking, managing clinical information, finding a doctor)
- Diagnostics (devices and software applications able to diagnose conditions)
- Treatment (medication, prescription, digital clinics)
- Monitoring (remote patient monitoring, app-enabled rehabilitation programs)
In turn, there are several tools addressing each of the above stages:
- Consumer apps
- Consumer wearables and connected sensors
- Patient information collection tools
- Telemedicine
- Connected virtual assistants
- Health records data-hubs
For each category of tools addressing stages of the patient journey, I have gathered my thoughts, pros and cons, and best investment strategies, which I will reveal in Part 2 of this blog (stay tuned).
It’s an exciting time for the sector and it’s easy to get drawn into these innovation offerings, so to sufficiently evaluate the opportunity - here are my : 5 Top Tips for those looking to invest:
- Even if the technology itself is impressive, independently of the B2B, B2C or B2B2C strategy, don’t forget the ultimate user is a human, most likely with some sort of health condition. A patient-first approach is essential to the business core proposition;
- The healthcare industry is extremely risk averse — innovation should significantly improve standard practices at minimal risk. There is no space for inaccuracy;
- Large tech corporations are strengthening their efforts in healthcare technology, so it is key for new start-ups not to overlap with their current strategies;
- Those traditionally tasked with product development (i.e. engineers and technical experts) are generally not the same people who are living with or treating a healthcare challenge: there needs to be healthcare experts in the founding team;
- On the other hand, there needs to be strong business capabilities in the management team, which might be very technically knowledgeable, but unable to drive the business to sustainable scale.
In summary, traditional healthcare cannot sustain current spending patterns and volumes. There is a critical need to create more efficiencies and focus on prevention rather than disease treatment. Despite the macro pressures and industry specific challenges, there is a huge and untapped opportunity in the health-tech sector leaving a blank canvas to savvy and passionate entrepreneurs who can genuinely add value and take the sector to the next level.
More of my thoughts on Twitter, Linkedin, Talis Capital website.
(1) Life expectancy data from Gapminder.org, interactive data visualisation at OurWorldinData.org; CBInsight: “Healthcare in 2025, 2035”
(2) BBC: “10 charts that show why the NHS is in trouble” (8 Feb 2017); data from ONS
(3) World Health Statistics 2010; CBInsight: “Healthcare in 2025, 2035”
(4) Mckinsey Global Institute: Digital America: a Tale of the Haves and Have-Mores (December 2015)
(5) RockHealth: 2018 Midyear Funding Review (July 2018)
