Technological innovations are driving healthcare delivery across the globe. Be it providers, insurers, health science sector or the government, digital transformation has touched every sphere of the healthcare industry. American payers and providers have grabbed every opportunity to embrace new technologies to improve care delivery, patient education and the overall health outcomes.
The Biden administration acknowledges the role of digital solutions and innovations in having a robust healthcare infrastructure in place. A recent HHS initiative to establish an $80 million Public Health Informatics & Technology Workforce Development Program reflects the government’s commitment to strengthen US public health informatics and data science.
But policymakers are not the only ones who are betting big on digital technology to achieve excellence in healthcare.
McKinsey, in a recent report, has categorized digital health technologies into five categories: R&D, wellness and disease prevention, screening and diagnosis, care delivery, and finance and operations. Every category is expected to grow by at least 8 percent per annum through 2024.
Leading Digital Health Markets
Patient Care: There are no prizes for guessing that a majority of digital health players focus on technologies that have a direct impact on patient care. About 49 percent of the digital health companies covered in the McKinsey study fall into the care-delivery category — a $157 billion market as of 2019, comprising 45 percent of the overall digital health market. Large market size combined with high growth rates makes care-delivery an attractive proposition for companies interested in entering digital health.
“Companies in this category either provide novel therapeutic solutions enabled by digital technologies—such as Livongo for diabetes—or use technology to broaden patient access to healthcare solutions, for example, telemedicine company Teladoc (offering remote patient support) or online pharmacy PillPack (supplying therapies to patients),” says the report.
Research and Development: Along with patient care, research and development (R&D) is another potentially promising opportunity for digital health entrants. The R&D category represents the single largest value pool by market size ($109 billion in 2019). This is mostly driven by strong interest from large pharmaceutical companies. The authors say many companies in this value pool provide precision-medicine solutions that are aimed at enabling faster drug discovery or AI-enabled patient recruitment and decentralized- or virtual-trial solutions to improve the efficiency of clinical trials. “This market, however, is relatively mature compared to other digital health areas and is expected to grow at a slower rate of 8 percent per annum compared with other value pools, which are typically growing at 10 percent or more per annum.”
Finance and Operations: Third in the list is finance and operations. The two value pools (optimize the financial model and increase operational efficiency) within this category command the highest compound annual growth rates (CAGRs) observed in digital health. Besides, companies in both value pools tend to receive some of the highest valuations on average. “The finance and operations category represented an estimated market size of $26 billion (2019), which was 7 percent of digital health overall, even though a mere 12 percent of digital health companies compete in this category. That said, this growing market may be a good fit for nontraditional digital health entrants with a strong value proposition to improve financial outcomes,” says the report.
Top Market to Pump Money Into
Digital health has been attracting investors for quite some time now. In fact, funds continued to flow even amid the Covid-19 pandemic. Going ahead, the report says that digital health players with strong clinical capabilities are likely to find a favorable funding environment in the care-delivery category. “Care-delivery value pools represented 47 percent of digital health funding in 2019, up from approximately 42 percent in 2015. In 2019, digital pharmacy Capsule and medical-product delivery service Zipline led funding in this category, receiving $200 million and $190 million in funding, respectively,” note the authors.
The Digital Divide
The prevailing pandemic gave the use of tech in healthcare a much-needed acceleration. Unfortunately, the increasing technology use also widened the digital divide, leading to disparities in patient portal adoption and telemedicine access. According to an AHIP brief, “vulnerable populations may have reduced or lost income and dropped their internet or data plans to save money, turned off smartphones they can no longer afford, and lost access to publicly available Wi-Fi with the closing of schools and libraries”.
The government admitted that COVID-19 pandemic has exposed gaps in the public health reporting and data analysis, particularly around race and ethnicity-specific data. Some of these gaps can be attributed to “limited technological infrastructure and chronic underfunding of the staff needed to support public health data reporting at the state and local levels”. To achieve the full potential of technology in healthcare, bridging the digital divide is the key.
Conclusion: Focussing on the right technologies matters the most as it can serve the dual purpose of bridging the digital divide and strengthening the care delivery platform. Private players as well as the government will have to play an active role in ensuring that the benefits of technology reach all. And this should happen without disturbing the primary value propositions of digital health technologies, that is healthcare cost reduction.
