Can Silicon Valley fix America’s loneliness epidemic?
“Healthcare spending is the Harlem Globetrotters, and cost control is the Washington Generals,” a truism from leading healthcare policy expert Neal Masia that so far has stood the test of time (in this fixed showcase of basketball and theatre, the Globetrotters always win). Neal elaborates, there was this one time — 1997 — when Congress passed the Balanced Budget Act. At this time, the total national debt was around $5.4 trillion. It had taken over 200 years to accumulate that debt. The Act worked so well that our national debt is now about $28 trillion.
Suffice it to say, our healthcare system has room for improvement. Though healthcare represents nearly 20% of GDP, and per-capita spend has increased roughly 31x in the past 50 years, our life expectancy is shrinking, and our health is significantly worse than the OECD average across a slew of metrics.
Why is this? If you ask six people, you’ll likely get ten different answers. Following the money, three themes seem to be undeniable. The U.S. is comprised of an aging, increasingly sicker, population dominated by a fee-for-service (FFS) healthcare system. According to CMS, Medicare is the largest and fastest growing segment of healthcare. Spending grew 6.7% to $799.4 billion in 2019 (over 20% of total health expenditures) and is projected to experience the greatest spending growth through 2030. Moreover, the sickest patients consume an outsized portion of healthcare services; the top 5% of the population account for approximately 45% of total healthcare spend (driven in large part by ER visits). Though other countries have somewhat similar demographics, the U.S. is motivated by a FFS reimbursement model which incentivizes volume of care over value.
CMS recognizes this trajectory is unsustainable and has been gradually implementing a paradigm shift in reimbursement, moving away from FFS to value-based care. Value-based payments reward performance, rather than volume, and have gotten traction in the most important segment of healthcare by way of Medicare Advantage. Today, roughly one third of Medicare consumers elect to enroll in an MA plan rather than traditional Medicare and CMS is further incentivizing the shift to value through new payment models such as Direct Contracting.
The adage “An ounce of prevention is worth a pound of cure” (attributed to Benjamin Franklin) is well known in the world of healthcare, but now, providers and insurers are starting to be compensated for it. With the increasing prevalence of value-based payment models, the healthcare industry has a newfound appreciation for wellness and preventative care. For good reason, there are numerous companies rolling out technologies and devices to emphasize fitness, meditation, and the like. However, one of the less penetrated, and increasingly important, digital health opportunities is the implementation of technology to combat loneliness. Though this problem is pervasive across all demographics, it is especially prevalent in the Medicare population.
The numbers are hard to believe. America’s loneliness epidemic is deadlier than obesity, results in $350B in lost productivity, costs insurers $170B every year, and results in $38B in emergency room care. Put another way, “Loneliness shortens life like smoking 15 cigarettes a day,” former US Surgeon General, Dr. Vivek H. Murthy.
Technology is often thought of as a driver of isolation, but many innovative start-ups are building digital platforms to connect seniors with college students, nurses, and other qualified volunteers. Fierce Healthcare reported the story of Andrew Parker, who recognized that his aging grandfather, who had early dementia, needed more support around the home. Fierce Healthcare reported “Papa,” as Parker’s family called their grandfather, didn’t need traditional home care services; he needed a social connection. This led Andrew Parker to connect his grandfather with a local college student to help him manage his daily life and provide companionship. Andrew went on to launch a company, named Papa, to tackle loneliness and social isolation among seniors.
Papa uses digital tools, such as a website, mobile app, and call center to match aging seniors with college students. ‘Papa Pals’ have to submit a personality test, virtual interview, motor vehicle inspection, and even a test of the tonality of their voice (only 15% of applicants become Papa Pals). Similarly, Palo Alto-based startup Mon Ami recently raised funding to grow its online community which is designed to find and book companions for elders. In recognition of the scale of the loneliness epidemic, Israeli company ElliQ has raised $58 million to build social robots, dubbed “digital companions,” to provide assistance with loneliness, social isolation, and health.
In a continued effort to reward value, CMS has expanded supplemental MA benefits to cover companies such as Papa and Mon Ami. Andrew Parker said, “We are now mainly going through large health plans, health systems, and employers as a benefit.” Additionally, the pandemic has provided two key tailwinds for digital health companies focused on addressing loneliness in the Medicare eligible demographic. Due to necessity, adoption and familiarity with digital technologies have markedly increased among the Medicare population. Secondly, the pandemic has highlighted the importance of relationships for both physical and mental health. In addition to the vast financial benefits, addressing the loneliness epidemic is at the heart of virtually all healthcare companies’ overarching mission: to enable people to be healthier and happier.
