3 Healthcare trends that are already eating the world
Hybrid Clinics, AI Co-Pilots, and Weight Loss Drugs
The end of a year is always a time for predictions about the next. I’ve heard a smart sentence recently: “The future is already here — it’s just not evenly distributed”. So, instead of guessing what will happen in 2024, I will highlight 3 huge healthcare trends that are already visible on the market and are gaining the momentum.
Hybrid Healthcare Clinics for Everything
Hybrid clinics combine brick-and-mortar locations with an online/mobile presence to provide end-to-end care. The modernisation of medical clinics was inevitable. The trend typically unfold as follows:
- Someone notices a type of healthcare clinic that is stuck 20–30 years behind in IT, marketing, and perhaps patient realationships.
- Then, a startup emerges with:
- Its own techstack to increase the efficiency of medical workers (mobile app with chat, improved CRM, automated messaging, transcription, etc.)
- Cool marketing (brand building from day 1)
- A focus on excellent patient experience (treating patients like customers, measuring NPS, quicker response time than incumbents).
These startups usually appear in the US and then are replicated in other geos (Germany is a great exapmple here).
Over the years, we have seen better or worse applications within this trend. The general characterstics of these startups include:
- Huge markets — TAM is measured in $ billions, especially in the US
- Limited margins vs. SaaS startups — tech enabled services tend to have lower gross margins — 40% on average, vs 65% for cloud healthcare companies
- CAPEX heavy — financing physcial clinics or equipment is ofter necessary, costing between $0.5m and $1.5m per clinic.
- Complex Operations — managing multiple clinics, their capacity, staff, local healthcare regulations is difficult and time consuming at scale.
- Difficulty scaling abroad —unlike SaaS, which might be global from day 1, hybrid clinics face challenges expanding outside their home market due to unique regional specificities (eg differences in processes, range of services, reimbursement options, and governing bodies like NHS in the UK or NFZ in Poland).
Despite some of the challenges listed above, such companies can significantly improve patients’ lives and become meaningful businesses. That’s why we invested in Jutro Medical, a mobile-first primary clinics in Poland, back in 2020. Jutro currently operates 10 clinics, helping thousands of patients across the country.
Generative AI / Co-pilots
Co-pilots are systems designed to assist users, not replace them. There are many AI co-pilots for coding (e.g. GitHub Copilot), marketing (e.g. Jasper), legal work (Harvey), and other use cases. If ChatGPT can pass the United States Medical Licensing Exam, then MDs deserve their co-pilots too. These can improve not only quality of their responses but also their empathy.
These systems can support medical staff with both administrative and clinical tasks. On the clinical side, they can assist with diagnosis, decision-making, and treatment plans. MDs face a significant administrative burden, and AI can help with this too. Structuring and summarising transcripts is an obvious first step. Medical coding (turining meeting notes into codes that can be reimbursed by insurers, especially in the US) sounds like a logical next step. There are ~135k professional medical coders in the US, each earning an average of ~$50k/year. Improving their efficiency by 30% could save $2B/year in the US alone, so the market opporunity is quite interesting. However, creating tools with sufficient accuracy for this task is challenging.
Weight Loss Revolution
I’ve heard many times this year that GLP-1 drugs are a breakthrough in medicine comparable to ChatGPT in AI. I’m sure they are huge financial breaktrough to NovoNordisk, a Danish company behind drugs like Ozempic and Wegovy. The drug manufacturer is valued at ~$400B, more than GDP of the whole country.
For those who don’t know, GLP-1 drugs, based on Glucagon-like peptide-1, have been used for over 5 years in diabetes treatment. They recently have gained more attention for their weight loss potential (see: Elon Musk and other celebs taking it). These drugs reduce appetite, leading to up to 15% body mass in 1 year.
Morgan Stanley Research analysts estimate that around 7% of the U.S. population will be using GLP-1 drugs by 2035. It will impact various industries. Consumption of carbonated soft drinks, baked goods, salty snacks as well as alcohol will fall. Airlines will use less fuel. Drug manufacturers will make even more money :)
Everything comes at a cost and it’s not different with GLP-1 drugs. 1 year therapy in the US without insurance can cost up to $10,000. There are some potential side effects like nausea, diarrhea, vomiting as well as decrease in muscle mass and bone density. Additionally, there’s a rebound effect. Weight returns if the medication is stopped without lifestyle changes. That’s why combining these drugs with a behavioral change program might be one of the biggest opportunities to build healthcare startup in the coming years.
We invested in Embla, a digital weight loss clinic expaning from Denmark to the UK. Embla offers access to the medical doctors experienced in GLP-1 drugs, as well as coaches who can help patients with their diet, sleep, and activity levels. Since Embla uses around 60% less medication than standard guidelines, their members experience very few side effects while still achieving 15% weight loss after 8 months on average! We believe the founders, Nicholas and Laust, are exceptionally well suited to lead this business. Nicholas, a medical doctor, previously worked on the GLP-1 programs at Novo Nordisk. Laust was the founder and CPO of PatientSky, a healthcare platform that IPOed in Oslo with a market cap of over €175m. Both are extremly data- and mission- driven. That’s why the company is driving research forward and has collected one of the largest clinical datasets on GLP-1. You can read more about their latest round here.
Did you enjoy the post? Do you want to chat about these trends or share your insights about other trends? Let’s connect on LinkedIn!
This blogpost is obviously not an investment advice and definitely not a medical advice :)
