They’re the questions on everyone’s mind. What is the fate of the Affordable Care Act? If “repeal and replace” becomes reality, what exactly does that replacement look like? And for those at the intersection of healthcare and technology, how will these policy changes that impact digital health investments in 2017 and beyond?
At the 35th J.P. Morgan Healthcare Conference, W2O Group hosted its 3rd Annual Digital Health VIP Luncheon to find out the answers to these questions and more. W2O’s digital health practice leader, Rob Cronin, teed up the discussion, reminding the audience just how much communications – from media to influencers – still matters in driving policy decisions and broader health IT discussions. “The election taught us a lot, or reminded us a lot, about communications,” he said, where data is at the core and influence is its own form of currency.
But when it comes to how the new administration will influence healthcare policy, while there will no doubt be significant changes, “I think value-based payments will stay,” said Jodi Daniel, partner at Crowell & Moring, formerly with CMS. Daniel spoke to the importance of population health management, noting that “anything that helps population health management will be very much aligned with the policy in Washington.”
Also emphasizing the importance of value, Sean Hogan, general manager of IBM Healthcare & Life Sciences, spoke to the needs of the consumer. Regardless of what shakes out at the policy level, “we need to help consumers make better health decisions,” said Hogan, who also pointed out that achieving success in a value-based environment “calls for tools that can help people deal with the enormous amount of information thrust upon them.”
Enormous amount of information is right. As of 2011, more than 150 exabytes — or 150 billion gigabytes — of healthcare data existed in the U.S alone. That river of information is only going to flow faster as industry interoperability (slowly, but surely) continues to progress.
For IBM Watson Health, this has meant doubling down on the application of cognitive, natural language processing (NLP), artificial intelligence (AI), and now blockchain, to improve care, control costs and advance health globally. On January 11, IBM Watson Health and the FDA announced a new partnership focused on using blockchain to enable the secure, efficient and scalable exchange of health data.
And to advance health globally, the industry needs to have a better understanding of both specific populations and the individuals within them. In fact, Lisa Suennen, healthcare’s Venture Valkyrie and senior managing director of health investments at GE Ventures, isn’t sold on the term population health. “What you’re really doing is personalized healthcare within a population,” Suennen said, reminding attendees that “one program doesn’t fit all. One program fits one in 57.”
The idea that care must targeted at the individual level is not a new concept in the industry. It is also one of the chief reasons that healthcare technology companies are starting to “look an awful lot like healthcare service providers,” pointed out Matthew Holt, panel moderator and Health 2.0’s godfather. Why? “That’s where the money is,” noted Suennen.
It’s also where the savings are – and the ability to guide consumers on the path to better health using a blended tech/services approach. Rajeev Singh, CEO of Accolade, Inc., has seen the impact that this can have on both consumers’ health and their level of engagement. The company’s on-demand healthcare concierge service is transforming how consumers engage with their care, with human compassion playing as big of a role as science and technology. Singh said that eighty percent of Accolade’s employer customers are already implementing some form of value-based payment structure.
“Services are where the solutions are,” said Singh, stressing that “you can’t have a real solution without a component of services in your story.” Singh also feels a shift in mindset needs to occur at the investor level before we see more significant movement. However, he does not believe that pending policy will stifle innovation or oust value-based frameworks – “undoing the private sector’s desire to move in one direction seems to go against the Republican ideology,” he said. Accolade’s latest $70 million series E round in 2016 brings total funding to $160 million.
One reason for the relatively early phase of investor interest in the space, said Livongo’s chief executive officer, Glen Tullman, is that “Silicon Valley tech has typically not understood how to navigate healthcare. Now, there’s a healthier level of respect.” Livongo is working to change the face of diabetes care management by using technology and health coaching to help diabetes patients better manage their chronic condition.
Given that chronic disease — diabetes included — is set to have a global impact of $47 trillion come 2030, the need to have both solutions and services dedicated to improving care and decreasing costs has never been more urgent. Tullman also believes the industry will see massive disruption in the way that technology companies, healthcare providers and healthcare purchasers – employers included – contract and integrate with one another.
Daniel said that we’ll continue to see new players in the healthcare space, but cautioned that the “technology is only as good as the improvement the services allow.” Her 15 years spent with HHS gave her a front row seat to healthcare technology’s growth. Her experience tells her that those tools that help reduce cost, increase transparency of cost and quality data and help consumers make smarter choices will take priority for VC dollars.
Speaking of those coveted VC dollars, as we are amidst one of the biggest shifts that healthcare has seen to date, what types of companies and services will reign supreme moving forward? Moreover, is now a good time for healthcare technology investments overall?
“Under any scenario, the focus on cost will continue,” said Hogan, noting that innovators and investors alike are going to focus on growing offerings that provide a better service at a better price. Singh agreed, saying that these types of technologies are where “there is money to be made and that’s what investors will follow,” regardless of what happens at the policy level.
Suennen was quick to point out that provider insolvency is going to be one of the main reasons that technologies designed for value will continue to see traction. “Value-based companies are making progress because hospitals still need to improve their efficiency,” she said. “It doesn’t matter if they buy in to (value-based care) or not – they’re going to have to.”