How the rise in digital health will prove a powerful flywheel for the sector
Over recent weeks, the Government has announced several new strategies, including the International Technology Strategy and an AI white paper.
Both specifically highlight the value of technology for the health sector. While it's clear that healthtech innovation is moving up the agenda, the UK's healthcare systems continue to battle several headwinds, including a shortfall of health professionals and a rapidly ageing population.
Healthcare systems must evolve to address the increasing prevalence of chronic diseases driven by ageing demographics. These conditions demand more frequent diagnosis, monitoring, and intervention, typically requiring a multidisciplinary approach. Yet there is a noticeable gap between those needing care and the resources available to provide it. As seen through the virtualisation of care delivery accelerated by Covid-19, innovative solutions can ease the burden on our health services, making high-quality and cost-efficient care more accessible
The digital health breakthrough
Previously, digital breakthrough in what is a highly complex and heavily regulated industry has lagged behind other sectors but, since 2012, the US alone has seen 4,000+ digital health start-ups receive venture funding, with almost $40bn of VC funding in 2020 & 2021. Such investment has powered the first generation of digital health companies over the last decade (e.g. Huma, Kry, SWORD Health, Livongo etc.), helping to increasingly shift care out of the hospital and into the home and other virtual settings.
Functions like appointment scheduling, patient messaging, compliance management, and patient data access, will be fundamental for next generation digital health companies, just as they are for services today. However, as the industry matures, there is an exciting opportunity to build core infrastructure that productises these key steps across the patient journey, thereby lowering the barriers to entry for would-be digital health innovators.
As a result, future builders in digital health will be faced with the ‘build versus buy’ dilemma when deliberating on whether to utilise external software to power their product. As we have seen with the success of enabling infrastructure for open banking (Plaid), payroll (Truework), and anti-money laundering (ComplyAdvantage) in Fintech, the new digital health tech stack will help accelerate time-to-market, removing the need to reinvent the wheel building core infrastructure and shifting attention instead to generating maximum patient value.
Market opportunity for digital health infrastructure
The growth of enabling infrastructure in Fintech over the last decade provides an interesting parallel to the potential market opportunity for enabling digital health infrastructure. Healthcare and Financial Services are two of the largest sectors globally, both heavily regulated, and when looking at the top 100 players in each sector, market cap is still dominated by companies that have been around for longer than fifty years. While these large incumbents are daunting competitors, due to their age many of these businesses will be running on legacy technology infrastructure and monolithic systems, which underpins a disruption opportunity.
In Fintech we have seen multiple infrastructure unicorns minted over the last decade, Plaid (open banking), Stripe / Checkout.com (payments), Marqueta / Galileo (Card Issuance), Mambu (BaaS), Alloy (Fraud) etc. proving a powerful flywheel for innovation in the sector. Digital health is starting to follow suit with the rise of sector-specific infrastructure that could transform the internal and backend processes for the next wave of innovation.
For example, opportunities exist to help solve the challenges of clinical staffing and coordination across diverse teams and geographies. Startups like Medallion and Credentially ensure clinicians are properly licensed and credentialled to work across jurisdictions which is a key challenge for a scaling digital health company.
As care has shifted away from the hospital and into the home, a variety of on-demand care services to facilitate this new care model have developed. Companies like Current Health and Vital assist with remote patient monitoring, Sprinter Health and Hurdle facilitate lab testing and Scan.com enables access to medical imaging faster than if patients were to go through the traditional processes.
As models of care become increasingly complex and distributed, a fundamental area for digital health to address is the maintenance of central patient records and communication between the digital and in-person care. This is where healthcare-specific communication tools such as Spruce Health, Accrux and Tellescope have emerged , as well as workflow management tools like Awell and Uphill.
However, in order to deliver their service, startups must process a lot of data. This means that digital health innovators must maintain compliance with regulations such as DPA, GDPR and HIPAA for data sharing and storage. While typically start-ups can fly under the radar of regulators, in digital health they face huge tail risk from mishandling patient data and so the pragmatic entrepreneur may turn to services offering a variety of software around governance, data and policy management such as Medstack and Scarlet.
Everyone’s a winner
For providers, digital health infrastructure is about improving speed to market, reducing the burden of replicating and adopting existing technology and enabling providers to focus on patient outcomes.
With the increasing amount of data generated by medical devices, electronic health records, and new biomarkers of disease driven by improvements in NLP and computer vision, digital health infrastructure provides the necessary tools for storing, organising, and analysing this data in real-time. With all this data, there is huge potential to leverage machine learning to extract new insights into a patient’s health and drive further personalisation of care. It also enables remote monitoring and telemedicine, which can improve access to care for patients in remote or underserved areas and by shifting care out of the hospital.
The patient opportunity lies in the potential for improved care and access to healthcare services. Digital health infrastructure can enable patients to more easily access their medical records, schedule appointments, communicate with their healthcare providers and receive medical attention from the comfort of their own home. This can help patients take a more active role in managing their own health and make informed decisions about their care. While caution must be taken not to force the burden of care onto the general public, technology which can facilitate remote monitoring and care can be particularly beneficial for patients with chronic conditions or those living in rural areas with limited access to healthcare services.