Health Innovation Outlook: Optimism Leads

Healthcare is a dynamic practice. Whether you are a provider, a solution entrepreneur, or securely established in the industry, you understand that the surrounding macro environment often changes faster than innovation can be developed and implemented for timely patient impact. However glacial the pace of healthcare innovation may seem, the forward momentum continues and the holy grail of improved outcomes at lower cost remains within reach.

Nothing seems to curb the enthusiasm of healthcare innovation quite like a government administration change. In 2008, the inauguration of the Obama administration with its promised health care overhaul shifted the innovation landscape, highlighting the country’s $3 trillion annual healthcare spend, its unsustainable trajectory, and negative competitive impact on businesses large and small. Medical technology companies saw a shift from physician-preference based sales to RFP-based sales prioritizing cost and comparative effectiveness. Device companies were incented to invest in longer term clinical registries as hospitals developed multidisciplinary technology review committees to consider all attributes of a particular implant or device. Power gradually shifted from the physician to the hospital, and payers challenged hospitals to prioritize quality over quantity of care. Consequently, medical technology innovators were asked to provide integrated solutions, not just point of care devices.

With the passage of the Affordable Care Act – its coverage of more individuals and state Medicaid expansion – the industry was further pushed to provide more, higher quality care with similar resources at lower cost. Each year has brought new value-based payment models from CMS, and commercial payers have followed suit. Model acronyms abound and permeate most health care discussions: BPCI, OCM, CJR, MACRA, VBPs … the distillation is that the entire healthcare community must provide evidence-based, guideline-driven, coordinated care for patients to improve outcomes and lower cost … all while maintaining operational efficiency and profit margin. Healthcare is, after all, big business.

Innovation sees and seizes upon opportunity and need. The shifting sands of policy have already spurred the emergence of new business models and technology to support them – healthcare cost growth has slowed while the sector evaluates the impact on patient outcomes. The new administration, along with disclarity of what parts of the ACA will survive continue to feed healthcare predictions – the empowered and engaged health-consumer, “disruptive innovation”, quality outcomes at low cost, sector consolidation, interoperability. But it is important to remember that the fundamentals don’t change. The reality is that each of these spaces continues to evolve on a continuum of innovation that responds to the unmet need – which, at its essence – is more efficient and effective patient care, with improved outcomes. In our view, innovation and technology investment that supports these will continue to win because:

1.     Providers will continue to be asked to do more with less. The often bloated healthcare system will need to streamline itself with smart data and analytics that support risk-stratified allocation of resources to drive efficiency and profitability.

o   WINNERS: Analytics and population health management providers who can integrate clinical and cost data to drive real-time decision making and cost effective administrative reporting

o   EXAMPLES: Aledade, athenahealth, Health Catalyst, Pieces Technologies

2.     Providers will continue to consolidate to leverage synergies and preserve profits. Vertical integration of hospital systems, large medical groups, and post-acute care providers will continue to accelerate.

o   WINNERS: Solutions that seamlessly integrate workflows and enhance care coordination across the continuum of care

o   EXAMPLES: Apervita, CipherHealth, CareSkore, RelayHealth,

3.     Providers have more health IT solutions than they know what to do with. While Meaningful Use has slowly dragged a paper- and fax-based industry kicking and screaming into the 21st century, the unintended consequence of rapid(ish) EHR adoption is a plethora of systems serving a variety of functions that don’t talk to one another.

o   WINNERS: Interoperability solutions that can integrate disparate and legacy IT systems to support #s 1 and 2 above

o   EXAMPLES: Moxe Health, Orion Health, Redox

4.     People want quality, accessibility, and affordability. We are an Amazon Prime society. People have become accustomed to on-line purchasing and instant gratification – all at affordable prices. They expect the same from their healthcare.

o   WINNERS: On-demand, scalable service solutions including mental health, physical therapy, and primary care consultations. Traditional pure play tele-health, mobile health, or digital health – these are scalability-enabling tools that still require a human touch. Importantly, these can be leveraged in rural health settings or for populations with traditionally poor access to care.

o   EXAMPLES: Accolade,  Lantern,  Reflexion Health, SnapMD, ZipNosis

5.     A growing portion of the population will continue to age and live longer. We all know the population is aging – and that earlier diagnosis has improved mortality while increasing life years with disease. Once terminal diseases are now chronic. Where socioeconomics allow, individuals are pursuing health and wellness to not only preserve longevity, but function.

o   WINNERS: Solutions that support personal wellness tailored to the needs of the individual including digital health, biosensors and wearables, and personalized “omics” (genome, microbiome, metabolomics)

o   EXAMPLES: Arivale, Halo Neurosciences, MC10, ToolBox Genomics, uBiome, Welltok

6.     There are plenty of conditions that need cures and better treatments. Cancer. Heart disease. Alzheimer’s. The greatest promise of the last few years has been the acceleration of genomics, immunotherapy, and companion diagnostics. While the investment is bigger, the risk greater, and the timeline longer, real science still provides the platform for big discovery. In combination with smart analytics, the potential for targeted, personalized therapies is realized, unlocking exponential leaps forward in health outcomes.

o   WINNERS: Moonshot initiatives including cancer genomics and precision medicine and “smart”, biometric sensing implantable devices with triggered feedback loops.

o   EXAMPLES: Bigfoot Biomedical, Grail, NAViCAN, Verily

According to Rock Health’s year end report, 2016 saw a record number of health start-ups companies funded – and while funding was incrementally down from 2015, the prevailing sense of opportunity and growth is strong. While the details of the coming health policy restructuring are unclear, the forward momentum of the last decade towards data-driven, coordinated decision making for patient-centric care is here to stay. The enabling technologies of AI, lower cost genome sequencing, and proliferation of blockchain capabilities provide healthcare systems and providers tools for smarter, more efficient care delivery with improved patient outcomes. At the end of the day, the industry in the aggregate is driving towards a population that lives longer, healthier, and where therapies are targeted and personalized based on actionable, real data.