Will digital health funding continue at this pace or did the COVID 70% increase primarily in the telehealth space create a bubble?
Aaron Martin kicks off this conversation with a quote to get us grounded. “There is an old economist joke that economists have called five out of the last two recessions.”
“My sense is that over the next ten years we’re going to see a marked shift in the health care landscape where digital health—which is health care that leverages the power of advanced computing and analytics to improve experience, outcomes and affordability—will take on a central role in our health care system. It will likely be a hybrid role of digital health merging with, and/or powering and supporting in-person healthcare to make it more predictive, preventative, efficient and effective. ” Sukanya Soderland
“right now, we’re still in the early and middle innings on transforming health care as a society.” Bill Evans
“I think COVID has helped everyone take digital health really seriously. And they should do so from here on because digital health is here to stay. These companies are stabilizing and they are maturing” Raj Prabhu
“the flood is here and it’s going to continue. Instead of building a dam, build a tributary for these things to happen in an organized, thoughtful way within your organization. The companies that do that will find the diamonds in the rough. ” Sean Duffy
A lot of wisdom in this article. If you were to paint a picture of what health and the delivery of healthcare looked like in 10 years, how different would it look like from today?
Today in health, it, the story is digital health funding. My name is bill Russell. I’m a former CIO for a 16 hospital system. And create our, this week in health, it a channel dedicated to keeping health it staff current and engaged. VMware has committed to this week in health its mission of providing relevant content to health. It professionals. They recently completed an executive study with MIT on the top healthcare trends, shaping it, resilience, covering how the pandemic drove unique transformation in healthcare. This is just one of the many resources they have for healthcare professionals for this and several other great content pieces.
Check out vmware.com/go/healthcare. All right. Here’s today’s story, healthcare evolution, their summit produces some great interview content today’s story is about the question of will digital health funding, boom, or bust. And it’s five experts weigh in. And so here’s the story. This is actually from June 2nd.
The five experts. Sukanya Soder Linde, chief strategy officer and senior vice president for blue cross blue shield of Massachusetts. Aaron Martin for Providence, bill Evans from rock health. Sean Duffy CEO of modern health.
And Raj Prabhu, CEO and co-founder of Mircom capital group. The first question they ask people is how do you see the digital health funding, boom, shaping out? Is it going to be a bubble that will burst or will it turn into something sustainable? And Aaron Martin kicks us off with this quote, which I love.
There’s an old economist joke that economists have called five out of the last two recessions. And he’s not wrong. This is the kind of question that is very difficult to answer at this point. There’s just so many moving parts.
He goes on to say to me, the question is, how fast does it slow down or deflate? What’s the retrenchment look like if you’ve seen this pattern before, there’s going to be a pullback. It’s inevitable. Just two to three years ago, I had made 16 to 17 investments and I think there was one exit. Everyone was in the same space.
These companies were growing, but no one was getting bought. No one were just going public. The game changers were the IPO’s that happened early last year. Finally you had companies that could be acquired with public stock.
So kindness Soderlund says my sense is that over the next 10 years, we’re going to see a marked shift in the healthcare landscape where digital health, which is healthcare that leverages the power of advanced computing and analytics. To improve experience outcomes and affordability. That’s a great definition by the way of digital health healthcare that leverages the power of advanced computing and analytics to improve experience outcomes and affordability will take on a central role in our healthcare system.
It will likely be a hybrid role of digital health merging with, and, or powering and supporting in-person healthcare to make it more predictive. Preventative. Efficient and effective.
So the question then becomes what’s the magnitude and the pace of change within the 10-year period. I think this is absolutely the right question to be asking right now. I’ve talked to people who have said. We have entered the age of acceleration COVID has launched us into a digital transformation period.
In healthcare that is going to be extremely rapid and some are calling for the next five years that healthcare will look completely different than it looks today. I’m not sure that that’s the case, but I do believe we are in a 10-year period. Where it will look dramatically different at the end of a 10-year period.
She goes on to say there will be certain inflection points or triggers that might help accelerate that change or in contrast elongate it. Those factors range from whether we have transformational regulation, take hold to the role of big tech or extra industry players, or how much employers may upend the status quo to whether providers and payers.
Are going to significantly shift their business model. These are all excellent points. There are disruptive players in the digital health space that are looking to radically transform how the traditional incumbent healthcare model works. If some of these scale successfully, we may see this new future emerge more quickly. If they only make headway in pockets, it may be 10 to 12 year journey.
Okay. Bill Evans, rock health. Right now we’re still in the early, the middle innings of transforming healthcare as a society. I think there’s going to be a lot of well capitalized businesses that come out of this period. Who will be well positioned to carry on that innovation. Raj Prabhu a difficult question to answer for sure. But I’ll take a shot at just looking back 10 to 11 years.
It’s good to see the numbers and the trends in digital health adoption. When I look at them, There were only a few years where the funding kind of flattened a little bit. But we’ve never seen a significant decline in the digital health funding. That being said, we’ve also never seen a spike, like last year’s 70 to 80% funding increase year over year.
If there’s any bubble, I would say that it would be the COVID bubble, meaning that COVID premium. We got last year with regards to tele-health that could flatten out a little bit as consumers, go back and visit their doctors and hospitals in person, which is happening. The usage of tele-health apps will drop. And then the revenues of those companies will start to slow down and that’s going to trickle down to venture capitalists.
They may start moving the money to other spaces within digital health.
That is one area. I think I could pretty much predict we will see some sort of slowdown. In those technologies that got a boost solely because of COVID. They go onto a different question. What should healthcare leaders in payer provider and life science organizations know about the funding surge? Probably goes on to say they should take digital health seriously before COVID digital health was always there.
It was a new thing and a lot of funding was coming in all. That’s fine. But the payers providers, did they take it seriously? I’m not sure about that. I think COVID has helped everyone take digital health really seriously. And I’m not sure that that is an incorrect statement. I think that is true.
I’m hearing a lot more urgency in the conversation around digital health. Around its necessity, as opposed to the cool factor or the buzzwords that were going around before.
And he goes on and they should do so from here on, because digital health is here to stay. These companies are stabilizing and they are maturing. Tele-health reimbursement was an issue three years ago.
But is it anymore? I don’t think so. And I don’t think so either. I think there’s too much political weight behind it. I think it is going to continue. I think we’re going to see tele-health funding increase. I don’t know where they’re going to get the money. Well, maybe a little print it. We’ll see.
Not only do they have to take it seriously, but they have to keep up with it because startups are launching all the time
and new technology is constantly emerging. You need to know what’s out there that is game changing and will help your organization increase efficiency or manage patients.
Make digital health, a part of your business, operations and strategy going forward. If not, you will be left behind. . This is absolutely true. Digital health is going to change things pretty dramatically.
And this is probably, I think, one of the most pragmatic things that is said to us in this article. As providers of healthcare.
And this comes from Sean Duffy from Omada health and he says, keep it. Open-mind. From a strategy standpoint. How do you tool up your organization to listen, validate and vet without breaking things and be clear on what you focus on and what you value. There will be some truth to that matter. What are the clinical fundamentals?
What is the evidence-based information you can lean on to support digital health implementations. Have you thought about validating clinical and economic outcomes? How are you thinking about your path to maturity from a compliance standpoint?
Having the same process to listen and hear these digital health companies out as you have in the last three years, isn’t going to work because the flood is here and it’s going to continue instead of building a dam. Build a tributary for these things to happen in an organized, thoughtful way within your organization. The companies that do that will find the diamonds in the rough. I love that. That’s a great closing in of itself. My, so what on this is.
It’s going to continue. There’s just too much money at play at too much value to be unlocked. The economy is a wash with money. Right now. We’ve printed money gobs of money over the last 18 months over two administrations. To stave off what was perceived to be a depression slash recession causing event.
There’s money in the system. Healthcare is top of mind, the landscape is shifting rapidly. You have digital adoption and reimbursement changing. And the use of technology is still very early in the industry. Winners big winners are going to emerge from this time. Think Amazon, Google, apple, and others that came out of the.com bus. But with a focus on healthcare, these players are going to win by shoring up the funding source and placing bets on winners to create a complete ecosystem. Teladoc could be one of the early winners, but they won’t be the last. They just got access to public money first.
How does the health system process for starters, I would know how the market works, understand how investment helps and hurts certain players in the market. You are after all making million dollar bets with every purchase you make, you may want to be able to predict the future of a company in which you are investing the millions in that new product.
Finally, I would go back to what Sean Duffy said toward the end. I’m not sure I could encapsulate it any better.
There is going to be a flood of new innovation in this space. Do not build a dam, build a tributary
for thoughtfully bringing these kinds of innovations into your organization. That is my so up for today. And that’s all for today. If you know someone that might benefit from our channel, please forward them a note. They can subscribe on our website this week, health.com or wherever you listen to podcasts.
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