The Health Care Hype Cycle: Which New Trends in Health Care Offer True Promise?

At the Wharton Healthcare in Business Conference on 2/14/20, Investor panelists Ali Behbahani, Nancy Brown, Marty Felsenthal, and Harel Gadot shared their experiences working on the frontiers of health care investing to examine whether headline-grabbing trends such as value-based care, digital health, and medical robotics hold true promise for improving our health care ecosystem.

Below are some of our high-level takeaways from their discussion.

Value-Based Healthcare

• Currently, there is a thin smear of quality measures that is present at most healthcare organizations and until these measures become widespread, value-based care is not truly implementable.
• The investors commented that from a life sciences perspective, an existing belief is that if a drug improves the standard of care, the system will find a way to pay for it and therefore value-based care has yet to penetrate that space.
• Behbahani gave his med-tech perspective and mentioned the terminology is more holistic. He noted that one product cannot bring radical change to an entire procedure’s value chain. From an investor’s viewpoint, one must look at how a physician, hospital, and payer can benefit.

Tech Company (Amazon, Google) Involvement in Healthcare

• As far as major tech company involvement, the investors believe the only real potential problems lie within privacy issues.
• These companies will not displace the need and utility of focused healthcare companies that serve vital purposes.
• The investors discussed the value of the tech companies in supplying valuable analytics on the front end and providing engagement to customers on the back end. They can contribute to supporting the development of a full care management platform.

Disruptions to Healthcare Based on Upcoming Elections

• Investors seemed to agree that they don’t see “Medicare For All” being implemented anytime soon, as Medicare Advantage is growing and here to stay.
• They believe the ACA unleashed a lot of innovation around mechanisms to attain affordability and access.
• Overall, elections won’t affect investment strategies because as an investor you look further down the line. Investors maintain awareness of what is going on, but the political climate does not sway their decision-making process.

Our Conclusions and Takeaways

Based on the panel, it seems as if there is discord between the hype portrayed by media sources on the future of healthcare and what the investors believe are the true value drivers within the market. Value-based care is the paradigm shift that we idealize in healthcare. However, until quality measures are readily accessible and standardized across institutions it stands as a far-off goal. The panelists believe that big tech company interventions are beneficial for the market overall, as it spurs innovative thinking and provides analytic firepower to push forward digital health. Lastly, it seems as if the political chatter that is on everybody’s mind does not phase the investing ideologies of the panelists — they believe that their long term thinking surpasses any policy change that can be made by current candidates.