Five major trends in global healthcare technology investment after the COVID-19 pandemic
This year's COVID-19 pandemic has had a huge impact on countries around the world, and it can be said that the most direct impact is on the healthcare industry. From medical service institutions such as major hospitals and clinics, to pharmaceutical companies, to research and development institutions for new drugs and vaccines, to medical research institutes, etc., it can be said that the entire industry is undergoing a test once every 100 years. The medical funds and medical institutions I have participated in have also changed a lot since the outbreak of the epidemic. I hope to share some of the major trends we have observed in the field of healthcare through this article.
I. The rapid development of telemedicine/online medical care
Soon after the outbreak of COVID-19, everything from medical institutions to patients realized that hospitals had actually become the hardest hit area of the epidemic. The influx of patients into hospitals has led to a huge number of cases of the spread of the coronavirus. Other than physical isolation, it is difficult to have a complete solution to this. Actually, the only solution is to try not to allow patients who don't need to meet in person to seek medical treatment remotely or via the internet.
(Columbia University Digital Health Symposium, Photo Credit: Columbia University)
The author attended the Columbia University Digital Health New Opportunities Online Seminar held last month, and a data revealed by a Presbyterian Hospital doctor is very illustrative. He said that before the COVID-19 outbreak, the actual number of patients treated online each week at New York Presbyterian Hospital was about 1,000 patients. Since the outbreak of the epidemic, the number of people currently treating patients online each week in hospitals is about 30,000. In other words, the number of patients treated online at a top New York hospital has increased 30 times.
It is worth mentioning that the government's deregulation of online diagnosis and treatment has also played a big role. In the past, doctors in the US were required to practice after local registration in each state. After the outbreak of the epidemic, the government allowed doctors to conduct online medical services over the Internet from other locations across states. This change suddenly freed up empty medical resources in many places, and also accelerated the development of online medical care.
Of course, the capital market also highly respects telemedicine. One of the star companies in the US stock market this year is Teladoc (telemedicine company). The stock price has more than doubled from the beginning of the year to now, with a market capitalization of more than 15 billion US dollars. The company is headquartered in the suburbs of New York where I am located. Listed on the New York Stock Exchange in 2015, it is now able to provide telemedicine services in 50 states across the US. The services offered fall into six categories: platform and program services, guidance and support, expert health services, mental health services, telemedicine, and integrated virtual care. As a software company, Teladoc Health is involved in artificial intelligence and analysis. The company mainly uses telephone and video conferencing software to provide on-demand telemedicine. Patients can log in to the service at any time and get in touch with an American practitioner within a few minutes. The company's doctors treat non-emergency situations such as flu, pink eyes, infections, sinus problems, mental health issues, skin conditions, etc. The company has a network of doctors covering 450 medical subspecialties, and 55,000 doctors have joined.
(Teladoc listed on the New York Stock Exchange in July 2015, photo credit: NYSE)
In terms of revenue sources, Teladoc mainly signs contracts with insurance companies and large employers to generate revenue through annual annual fee income and personal consulting fees. It's worth mentioning that the company's medical services are available in around 30 languages. The rapid development of telemedicine has given a huge boost not only to medical companies, but also to businesses such as cloud computing and network service providers. There are very high requirements for data transmission speed, bandwidth, storage capacity, etc. Looking at the next step, the huge opportunity for telemedicine lies in remote surgery. Currently, there is an extreme shortage of resources for doctors in surgery, especially neurosurgery, oncology and other related industries. Patients and doctors often need to fly long distances to surgery centers. Some of the innovative investments I have participated in include projects where senior physicians perform surgeries on others through remote control robots. Once this technology matures, it will have a revolutionary impact on surgery.
II. Decentralized medical facilities
A major change in recent years by a large American healthcare management group that the author is involved in investing in and managing is the construction of “decentralized” medical facilities. In other words, in the past few years, apart from several world-class comprehensive medical centers across the US, such as Mayo Clinic, Cleveland Clinic, and Massachusetts General Hospital, in fact, general regional comprehensive medical centers have gradually shrunk. It has been replaced by the booming development of specialty medical institutions. Examples include an American chain of cardiovascular diagnosis and treatment institutions, an American chain of dermatology clinics, clinics specializing in immune diseases, etc. More and more patients are choosing to go to specialized clinics rather than general hospitals. As segmentation develops, more and more “surgical centers” are being built. These specialized surgery centers generally do not have hospital beds. After the surgery was completed on the same day, they went home to recuperate on the same day. Nurses will regularly visit your home to check your recovery. The biggest difference from inpatient rehabilitation in a hospital after surgery is a drastic reduction in costs. At the same time, these independent specialist clinics and surgical centers are generally built in residential areas, which greatly reduces the commute time for patients.
Of course, after the outbreak of the coronavirus, this “decentralized” medical model was promoted at an accelerated pace. First of all, many patients, especially those at high risk of serious underlying diseases, are at great risk of going to large medical centers, respiratory departments, or other patients who may be carrying the coronavirus in close contact. In specialist clinics, this risk can be greatly reduced. For patients requiring surgery, it is also very necessary to perform the operation at an independent surgical center and then go home for a vacation to isolate the possibility of contact with other patients. We see that in the next step, the whole society will invest a large amount of resources into this new medical model. The medical real estate companies we are investing in have also begun to build these next-generation “decentralized” in-community healthcare facilities.
III. Wearables
America's top five tech giants: Apple, Google, Amazon, Facebook, and Microsoft have all entered the healthcare sector on a large scale. For these tech companies, healthcare actually represents the most advanced technology and innovation field. From artificial intelligence, big data, to mobile connectivity, these are the core investment directions of these companies. At present, the continuous development of wearable devices can actually provide medical and health data 24 hours a day to monitor important physical indicators in real time. For example, the health function of Apple's iWatch has successfully saved thousands of lives by issuing health alerts.
For example, the case already reported by the media is a “blood pressure drop alarm”: someone wakes up at night to go to the bathroom, faints when his blood pressure drops suddenly, and his face first falls on the bathroom floor. His fall triggered the fall detection feature on the Apple Watch, which automatically notifies emergency services if it detects no movement a minute after detecting the person falling to the floor. After receiving an alarm from Apple Watch, the local hospital came to the door to rescue this person. Of course, Apple Watch isn't the only one that has a health monitoring function. Fitbit, an electronic watch company acquired by Google, also has strong capabilities in wearables.
Currently, COVID-19 patients have many changes in important vital signs such as heartbeat, body temperature, etc. in the early stages of the onset of the disease. As a result, researchers at Columbia University Medical School are also experimenting with big data modeling, analyzing the correlation between changes in vital signs data and the coronavirus, and trying to use data sent back from wearable devices to predict or discover COVID-19 patients. If combined with individual location information, it is actually possible to quickly detect potential patients with high accuracy.
4. Chronic Disease Management
One of the biggest stocks in the US capital market this year is the chronic disease management company Livongo. The stock price has increased fivefold this year, with a market capitalization of more than 12 billion US dollars. Livongo is a consumer digital health company that operates with the goal of enabling people with chronic diseases to live a better life. It has developed a new approach to diabetes management, combining the latest technology with counselling. By providing the right information, tools, and support in a timely manner, we provide members with real-time, personalized insight and support to make diabetes management easier. The approach is leading to better financial and clinical outcomes, while also creating a better experience for diabetics and their care teams for their families, friends, and healthcare professionals. They'll send members a package including items like Bluetooth blood pressure cuffs or blood sugar monitors, then gather data and sync their apps. The platform will also send notifications and tips to patients to help manage the condition and provide real-time feedback. In a way, it's a digital coach. The company was founded in 2008 and is headquartered in Mountain View, California, next to Google's headquarters.
The family office of the Harvard University Club, which I participated in, once held a seminar on health investment. You can refer to the article I published at the time “The Harvard Club Family Office Discusses How to Deal with the Five Major Diseases Facing Humans? ≫. The theme of the conference was the five major diseases currently facing humanity: Alzheimer's disease, cancer, diabetes, obesity, and heart disease. According to forecasts, more than 95% of the world's population will develop one or more of these five major diseases. The good news is that these five major diseases are all chronic diseases, and they can all reduce the chance of getting sick through preventative medications and lifestyle changes. For example, the FINGER (The Finnish Geriatric Study to Prevent Cognitive Disorders and Disability) study shows that 33% to 50% of Alzheimer's patients can avoid getting sick or at least delay onset with proper exercise and nutritional supplementation; at the same time, other studies have found that the same proportion of cancer and most diabetes, obesity, and heart diseases can also be avoided.
Take obesity as an example. When faced with obesity, society always simply attributes it to an unhealthy diet and lack of exercise, yet more and more research shows that obesity in adults is related to childhood abuse. Mr. Stetson mentioned that Dr. Vincent Felitti (Vincent Felitti), founder of the Department of Preventive Medicine at Kaiser Permanents (Kaiser Permanents) and director of the obesity treatment program, discovered that when his patients successfully lose 50, 80, or even hundreds of pounds, they keep dropping out of the program, especially those who weigh the most and lose the most weight. He initially thought that so many patients had left only because they had reached their goal of a healthy weight, until he discovered that a middle-aged female patient had lost her initial morbid weight of 295 pounds to 150 pounds in six months. Instead, she had anxiety and panic attacks.
There is little chance of a complete cure for these chronic diseases. However, through effective individualized management, the quality of life of patients can be greatly improved. Under the traditional medical system, doctors and nurses are extremely expensive to provide long-term comprehensive monitoring to all patients, and it is almost impossible to do it. However, through technological platforms, it is now possible to manage the physical conditions of patients with diabetes, high blood pressure, etc. with high quality 24 hours a day. For example, Livongo published data in 2017 “Using Connected Glucose Meters and Counseling with Certified Diabetes Educators to Reduce the Chance of Abnormal Blood Sugar Travels: Livengo Diabetes Program (2017)”. The research program looked at registered members of the platform from October 2014 to December 2015. Data collected from 4,544 participants showed that rates of hypoglycemia and hyperglycemia were reduced using remote BG tracking and personal health coach intervention. The obvious implication is a decrease in emergency department visits for patients with recurrent hypoglycemic events. Similar to other platforms in the US, such as Omada Health, have also made significant innovations in chronic disease management. Teladoc, the leading US telemedicine company mentioned in this article last month, and Livongo, a chronic disease management company, announced a merger to create a Big Mac with a market capitalization of nearly $30 billion in the digital health sector.
5. Insurance companies participate in medical investment, and hospitals reverse mergers and acquisitions of insurance companies
Traditionally, medical institutions in the US are non-profit organizations. Many of them are independent medical institutions, such as the famous Mayo Clinic, which is a non-profit medical center with a history of more than 150 years. It includes 5,000 doctors and researchers, 50,000 nurses, and other service personnel. Many are also affiliated with comprehensive universities, including the Johns Hopkins Medical School Hospital, the pioneer of modern medical education in the United States. The medical school under the New York University where I work was founded in 1841. Several of its hospitals and research centers have a total of 1,100 full time professors and 3,000 part-time professors. All students enrolled are free of charge.
The core of a health insurance company's business is to sell insurance policies and then accept claims for reimbursement of medical expenses from patients. For these health insurance companies, the annual premium income, that is, the price of the policy, is strictly regulated by the government. If you want to increase profit levels, or not lose money, the only way is to reduce costs. But the reality is that healthcare costs are rising all over the world. For insurance companies, it is difficult to control patients' medical expenses at third-party medical institutions. Of course, one solution is to sign up with some designated hospitals or clinics to reduce costs by getting large fee discounts at designated hospitals.
Another simpler and more crude solution is to directly merge and buy hospitals so that patients can go to the insurance company's own hospital to see a doctor, and the fertilizer does not flow into foreign fields! For example, the United States Medicare Group has been buying hospitals and setting up doctor-management subsidiaries. Signa CIGNA Insurance has also launched a subsidiary “Nursing Today Clinic” to provide “traditional doctor office replacement services” in Arizona. As the conflict between the insurance industry and the medical industry has intensified in recent years, the trend of large-scale mergers and acquisitions of doctors' resources in the insurance industry is accelerating. Including the Louisville-headquartered human insurance company that purchased Concentra, an urgent care system based in Addison, Texas. Indianapolis-based WellPoint Insurance Company has acquired CareMore Health Group, a healthcare plan operator with 26 clinics based in Cerritos, California.
Of course, for large hospital chain groups with strong resources, they also don't want to be continuously encroached upon by insurance companies and exploited by insurance companies. Hospitals that join the insurance company system often need to cut patients' bills to 10%, which means that insurance companies often only pay very low fees. Therefore, in recent years, some large healthcare groups in the US have begun to invest in the construction or merger and acquisition of insurance companies themselves to obtain patient resources by controlling insurance companies. Once the patient has paid the medical insurance policy, the hospital will minimize medical expenses for the patient and avoid excessive medical treatment.
6. Summary
In summary, the current development of the healthcare industry is changing rapidly. There is not only a wave of decentralized medical center construction, but also telemedicine, and innovative enterprises in chronic disease management have become hot spots in the capital market. Meanwhile, technology industry giants such as Apple, Google, Amazon, and Microsoft have also made large-scale investments in wearable medical devices, big data, and artificial intelligence in recent years. The COVID-19 outbreak has, to some extent, accelerated these trends. Medical innovations that may have been developed over the next five years may have already been realized in five months of this year. The author's team has participated in investing in and managing some innovative projects in the US healthcare industry, and has a lot of first-hand experience. Next, we plan to connect America's best medical resources with the domestic healthcare industry, help upgrade technology, and connect with global capital markets.
Source: Kevin Chen Kaifeng Chen
