By Todd Watts, CEO & Co-Founder, PatientFi
The U.S. healthcare system is in a crisis akin to climate change. Both move slowly but surely, both are the products of society-wide dynamics that are very hard to change, and both should be (and increasingly are) the targets of venture investment.
As of last year, the U.S. spends more than $12,000 per capita per day on healthcare (a mix of government/compulsory spending and voluntary spending). That’s almost double the next closest country, Germany, which spends just north of $7,000 per capita per day. In 2020, healthcare expenditure represented 19.7% of our national GDP (only slightly elevated due to COVID-19).
U.S. healthcare costs are rising faster than anywhere in the world. And it may go without saying, but they’re rising faster than people’s ability to pay them.
The result: an incredibly leaky system where people either don’t get care because they can’t afford it or get care but don’t pay. Either way, people are getting less care than they need and deserve, and providers are collecting less revenue than they need and deserve.
It’s a grim picture.
The system is riddled with dysfunction that serves nobody who participates in it. But if there’s any bright spot, it’s that dysfunctional systems are ripe for investment. And the increased adoption of new healthcare technologies to improve the system represents the most attractive investment opportunities.
Central healthcare industry issues and investment opportunities
Technological innovations in healthcare need to address two problems: increasing cost of care and inefficiency of care. The system is currently far too expensive and utterly inefficient. Thus, the most powerful investment opportunities will center on technological improvements that make care more affordable or improve the patient experience.
Consider opportunities from two perspectives: patient and healthcare provider.
The influence of Amazon’s customer obsession has transcended the retail industry. As customer experience has become a core tenet across the private sector, patient experience is coming to the forefront within the healthcare industry.
Ultimately, the issue with patient experience boils down to the fact that, by and large, we still treat patients the way we did in the 1990s. We make them wait in waiting rooms (strewn with magazines that may not have been changed since the 1990s), see doctors in person for nearly all ailments, and sign physical receipts when they leave.
In short: The patient experience must shift into the 21st century, and investors should capitalize on the various opportunity.
We should lean more heavily on telemedicine to reduce time spent in waiting rooms (and to free up more time for the providers). We should make electronic health records (EHRs) available to patients (and able to be shared) at the thumb-tap of a digital app. In part due to COVID, many outpatient facilities have finally started to tilt the patient-provider dynamic more in the patient’s favor (and with some nice benefits for providers, too).
The patient experience status quo is 30 years old. There are a lot of reasons why healthcare isn’t as quick to innovate as most other industries (and, conversely, why Amazon has struggled to break into the space), but a state of crisis should make those reasons irrelevant.
While mounting costs may seem to paint a prettier picture for providers, this is misleading. Reimbursements for common procedures, like cataract surgeries, have actually decreased over time, despite the fact that the diseases have grown more prevalent. This, coupled with the fact that the cost of living has increased, means providers are earning less income while living more expensive lives.
An enormous burden of revenue collection falls on healthcare providers. Knowing how much patients can pay for procedures, knowing what insurance to tap into before the procedures to take place, and having systems in place to collect as much of the revenue as they can are all challenges that spring leaks in providers’ revenue pipelines.
Greater efficiency is called for on the provider side to reduce the costs of running their operations. The less providers spend on managing dysfunctional payment dynamics, the more they can invest in care, resulting in healthier, happier patients.
The healthcare system of the future
The healthcare system of the future will look more like any modern retail experience. Providers will deliver the same efficiency of service that customers have come to expect from Amazon deliveries and Uber rides. To accomplish this, the providers are looking to technology. 83% of providers say they plan to incorporate new technology to meet consumer needs. Costs associated with current inefficiencies will be eliminated, and patients will shoulder less of a burden for care they desperately need.
Investors should focus on companies built to improve quality of care and reduce the cost of care. Whether it’s through more sophisticated telemedicine, more comprehensive mobile apps, or more empowered outpatient facilities, the U.S. healthcare crisis will be resolved by companies who make the most of the surge of innovation catalyzed by COVID-19.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.