Return of VHS — Virtual Health Services (VHS)

Virtual Health Services that redesign the patient journey through digital enablement and shift the full care delivery into home settings are the next iteration of healthcare innovation. Going full-stack being the key.

Market map

Problem

Inpatient care in Germany in 2019 cost around 99bn EUR. One Hospital case in Germany in 2019 cost 5.088 EUR (Statistisches Bundesamt, 2022). These are huge costs that can be avoided if the future Healthcare System will become digitalized, patient-focused, transparent, driven by data, and enabled by new medical technologies.

The traditional healthcare system has limited capacity, is often over-burdened and inefficient. Problems that need to be faced are hospital related complications: the fear of patients getting infected, shortage of hospital staff, the inefficient use of hospitals and in addition, the change of demand of the modern patient — to say it short: the problem is constrained supply vs. high demand.

The Covid-19 pandemic has acted as a catalyst to truly reimagine the future of healthcare. Hospitals faced increased pressure to prevent the spread of the virus and lower the burden placed in healthcare workers by scaling back in-hospital care.

Ever since more and more startups are aiming to enter the market of Virtual Health Services (VHS), because they know: Not only in the hospital but also in outpatient care there is an opportunity to shift a better and ongoing support into a home setting. Questionable in this space is: What is the winning strategy? Is it Remote Patient Monitoring and Video Consultation or does it go beyond into full-stack home care? And if so, who will be the leader in this market segment? What will be the absolute pain killer?

Remote Patient Monitoring works as a technology that enables the monitoring of patients outside of the conventional clinical setting. Monitoring has reduced the A&E attendance, but it acts more as a support in the home-based care delivery and does therefore still not solve the pain of quickly getting access to Healthcare when acutely needed.

Solution?

The U.S. is already on the run and proves: the full-stack Home Care that goes beyond just Remote Patient Monitoring has huge potential. One pioneer in the market segment full-stack Home Care is Dispatch Health. Dispatch Health is the leader in the U.S. and officially reached unicorn status in 2021 with its aim of building the largest system of in-home Medical Care. Their successful strategy seems to be the provision of an advanced level of care in the home, including 24/7 physician coverage with remote monitoring, emergency call button and daily visits from medical teams. Dispatch Health is taking the skills found in emergency rooms and hospitals and brings them into patients’ homes to substitute an avoidable emergency room visit. With this service they reached 170.000 patients in year 2020 and saved over $227M in medical cost (Fierce Healthcare, 2021).

An absolute pain killer is an end to end, omnichannel care model, which provides monitoring, consulting, and the visiting of patients. The solution needs to integrate remote monitoring and digital therapeutics with virtual visits and growing hospital-at-home and post-acute care-at-home models. Additionally, digital front doors can be created through integrating e-triage solutions with virtual visits.

The time to invest is now. The market grows as virtual health visits grew by more than 3.000% early on the Covid-19 pandemic (McKinsey, 2022). The consumer willingness increases, more patients with post-acute and long-term care needs are evaluating their options, the provider willingness increases, and the regulatory changes are enabling greater access and reimbursement. It follows that as the investments into virtual health companies grow, so does the pressure on the companies within the ecosystem to further innovate and find winning models grow. So, what do we need to look for?

Value Proposition

The aim on this market is to redesign the patient journey through digital enablement and to shift the care delivery into ambulatory and home settings, as well as value-based care models.

Within this approach the focus lies on the patient. Nowadays the consumer expects to be treated as a whole person with individualized needs. Technology gives greater access to healthcare, a more seamless experience and enables patient centricity.

Virtuality marks another valuable achievement as $250billion in outpatient spending can be shifted to virtual settings (McKinsey, 2022). The high potential for savings for virtual care models is included in acute care, combined with innovative care models in the home.

The integration of new services and products simplify diagnosis and therapy. It must be possible to integrate emerging home care segments like home infusions or home-based dialysis. Medical wearables can detect certain health issues earlier and can therefore prevent the need for inpatient care.

The adoption of these services and the implementation as a startup brings many challenges and major obstacles are in the way.

On the patient’s side safety is still and will always be the most important key factor. Which services can even be delivered at home to treat patients physical, behavioral, and social needs effectively? How can infection control, sanitation, and physical layout be secured? Care at home providers, technology companies, and investors play a crucial role by accelerating innovation in this space.

A key challenge will be to get the majority of patients convinced. How is it possible to gain decent costumer traction on this market? A patient will be constantly reminded of illness when treated at home and must also expect a probably unwelcome invasion of privacy.

What are the incentives for healthcare facilities and physician groups to pursue Care at Home for their patients? On the physician’s side it is essential to secure awareness and create capabilities. Virtual health-related activities must get integrated into the daily workflows of clinicians. Clinicians must get prepared for the shift in Healthcare. Medical Training has to prepare the next generation of physicians for the change from hospital to home.

What company can oversee all these pain points, challenges, and chances? Who will bring the capabilities, the strongness and the willingness to expand and be the European leader in the Virtual Health Service market? An uncertain and promising Healthcare future ahead! With the winners probably being built right now..

Written by Johanna Freimuth and Eckhardt Weber of Heal Capital.