Is Healthcare IT in Need of a Health Check?

Posted on March 18, 2013 by Gareth Spence

doctor_ipadThere can be no question that 2012 was a bumper year for healthcare IT. The sheer volume and size of investments was enormous. Fast-forward a few months and the pace doesn’t seem to be slowing. In February alone, there were over 30 deals closed for a total of $107.95 million invested. This represents twice the deal volume of the same time last year.

Examining information from InterWest Partners, there’s clearly one big driver for this spending and that’s Big Data/Analytics. As you may expect, the healthcare industry has enormous hopes for this area and is more than willing to invest. In fact, one of the hot startups of the moment is xG Health Solutions and this is backed by industry stalwart Geisinger Health System.

healthcare_investmentsHowever, take another look at the chart from InterWest Partners and look beyond Big Data/Analytics. What do you see? There’s a clear disconnect in focus between investors and entrepreneurs. Telehealth and mobile diagnostics are the two areas that appear to excite entrepreneurs. Yet this excitement is more of a murmur for the investment community.

Looking around at the genuine impact these two technologies are already having on patients’ lives, it’s difficult to understand why there should be such hesitation to invest. Yes, Big Data/Analytics will help to drive new efficiencies and power new research initiatives but will it be capable of disrupting the current treatment system?

Let me expand on this a little further.

The continued development and coverage of mobile networks is having a profound effect in the way healthcare is provided. This is especially true in poorer countries. India is perhaps the leading proponent of this. A number of Indian healthcare organisations are now using the rapid spread of national mobile networks to drive new telehealth services. The impact on patient care is proving enormous.

One need only look at the area of peritoneal dialysis to see this in action. Previously, patients would need to travel to hospital for this treatment. For many, this was no small trip, particularly if you live in parts of rural India. However, with the ready availability of new online services, patients are able to administer the dialysis from home while being monitored remotely by hospital physicians.

Compare this with similar dialysis services in the U.S. Here, fewer than 10% of patients are treated remotely. Most are requested to visit a hospital three times a week. One Indian doctor notes that even if the U.S. could move only a small number of its dialysis patients onto a telehealth service it could save millions upon millions of dollars in Medicare and Medicaid.

The whole notion of mobile health is a hot topic and was widely discussed at this year’s Mobile World Congress. A joint report from the GSMA and PwC suggests that telehealth services could cut health care costs in developed countries by over $400 billion. The report explores several key services that are instrumental here, ranging from remote monitoring to digitization and simplified access of health records.

Even though there are significant financial incentives to drive ahead with telehealth and mobile services there are clear challenges. Aside from the lack of investment, we also need to consider the enormous cultural shift. According to research from Pew Internet & American Life Center, fewer than 10% of American mobile phone users have downloaded a health app. One could argue that downloading MyFitnessPal doesn’t quite compare with a life-saving dialysis app, but doesn’t this figure suggest a potential apathy. Are people ready for the additional responsibility that telehealth brings?

What’s clear is that momentum in healthcare IT is building. Yes, entrepreneurs, investors and healthcare organisations may differ on priorities, but what’s incontestable is that we’re gradually moving towards a digital, collaborative and connected healthcare system. A system that is no longer centred around a hospital but around a network. A system that enables us to use our connected devices to drive our own physical wellbeing.

Do you believe that a new era of digital healthcare is upon us? What are the main obstacles that we need to overcome? Have you tried any telemedicine services? If so, how do you rate your experience? Let me know what you think.

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  • http://www.diffractionanalysis.com/ Benoît Felten

    I suspect one of the big reasons some of the shifts are not happening is also that huge parts of the healthcare industry (insurance companies, I’m looking at you…) have no incentive to see the cost of treatment going down as that would make their premiums mechanically go down as well.

    In fact, there’s a story I was told that’s quite chilling but I think illustrates this point. A company I know was pitching a home monitoring system for patients with cognitive disabilities to a bunch of healthcare execs. At the end of the presentation, an insurance guy put his hand up and said:

    - “Let me get this strait: you’re targeting our most costly patients, and offering solutions to extend their lives???”

    • http://about.me/garethspence Gareth Spence

      Thanks, Benoît. I certainly share your concern that there may be some companies within the healthcare ecosystem that don’t want to see the market disrupted in any way, that don’t want costs reduced. One wonders how true innovation can be developed in this environment.

      Perhaps the real development in telehealth and digital healthcare will be driven out of necessity by poorer nations. Looking at the current situation, I don’t see that being too unrealistic a proposal.

      What’s the current situation in France? Is the country moving forward with telehealth services?

      • Benoit Felten

        Not really, no. I always expressed it this way: these developments may push healthcare into three areas: cheaper, more effective or further reach. That last one is the one we’ll see developing the most in the short term.