Digital Health: Opportunities
This is the last post in a 3-part series that highlights our passion for digital health and our conviction in backing entrepreneurs who are transforming the industry. Parts one and two are available.
Despite the complex challenges and roadblocks that Healthcare presents, there has been immense progress. Over the last century, the efforts of passionate and dedicated healthcare workers and massive public and private investment has led to incredible outcomes in healthcare. Life expectancy has increased by 30 years, child and maternal mortality rates have plummeted by over 90% and vaccines have mitigated once fatal diseases. Healthcare technology has played a pivotal role in this revolution with the development of sophisticated medical devices and wearables, the adoption of electronic health records , the rise of telemedicine and mobile health platforms, remote patient monitoring and the mapping of the human genome. Looking ahead, each challenge in the industry represents an opportunity for innovation.
Regulation
The Health Information Technology for Economic and Clinical Health Act (HITECH) and the Affordable Care Act (ACA) are both aimed at making healthcare more affordable and efficient. HITECH is aimed at increasing technology adoption in the industry to better promote the secure usage and exchange of data. For example, electronic health record adoption has grown significantly over the last few years, unlocking access to a tremendous amount of data for health systems and entrepreneurs. New technologies and tools like telemedicine are also being reimbursed by CMS in an effort to reduce costs and promote innovation. This has led to an increase in IT spend in healthcare, a significant portion of which is going to startups. Analytics solutions, in particular, have enabled providers to detect patterns, find insights and improve treatments rapidly in numerous areas of healthcare, which had led to the creation of new categories to sell into.
Additionally, insurance coverage is undergoing significant transformation through the ACA, which seeks to reduce the uninsured population and drive better health outcomes and lower costs. To support this, providers and payers are developing new models to share risk. For example, accountable care organizations coordinate care among doctors, hospitals and other institutions to improve the overall care. As seen below, such new models have been adopted rapidly.
Such coordination requires the providers to share data and deploy new systems to promote efficiency, manage risk and predict outcomes, which again creates opportunities for entrepreneurs. CMS has helped this process by establishing programs for better outcomes and penalties for things like readmissions. Such changes in the way money flows through the system has brought about one of the largest shifts in healthcare in decades.
Another piece of legislation, the Medicare Access and CHIP Reauthorization Act (MACRA), further highlights the role that startups can play in bridging the gap between reality and the vision of value based care. MACRA outlines how Medicare payments will evolve during this transition, but more than half of physicians are not even aware of the impending changes. The short rampup time will require hospitals, clinics and other providers to leverage technology to be compliant.
Automation
The key to driving better health outcomes, especially in the face of an expertise and experience gap, is to develop a holistic view of the patient and not just rely on the information gathered during medical encounters. Demographics, social interactions, income levels, activity and the environment all impact the well being of a person. Manual workflows cannot possible collect and process this information, so automated data capture and analysis will be critical to sustain the shift to value based care. The good news is that such technology is being developed at a rapid pace. Hundreds of companies today focus on better understanding diseases, generating insights and predicting outcomes through automation. More that 30% of the data collected globally is from the healthcare industry. As entrepreneurs leverage this information, costs will come down and outcomes will improve.
Patient Engagement
On the patient side, the rise of consumer clinical applications and devices has led to more engagement. The outcome based model also incentivizes providers to better articulate the causes of medical conditions and the benefits and side effects of treatment. Wellness and mental health have received more attention. A number of consumer applications and provider programs have sought to make the patient a true partner in the treatment journey. The increase in high deductible plans have given patients a financial incentive to play a more active role in their care. Startups have provided the underpinnings for this transition and we fervently believe that they will play a pivotal role in transforming all aspects of healthcare.
This is an incredible time for the industry. America’s health system needs to get more efficient, improve results and lower costs the way other industries do. Regulation, technology, consumer behavior are all changing rapidly to deliver upon the promise of effective and affordable care and it is exciting to see entrepreneurs driving this innovation.
At Storm, we fervently believe in this vision and will continue to back entrepreneurs who are willing to take on the challenge of transforming our healthcare system.