Recent Posts
Connect with:
Monday / October 18.

It’s Time for Healthcare and Tech to Play Nice

Like many others, I found myself captivated by the political drama that swirled around the lead up to and eventual passage of Obamacare, along with its ultimate survival of multiple constitutional challenges. Regardless of whether you agree with every word in the 20,000 pages that comprise the Affordable Care Act, what is not up for debate is that its passage and many affirmations by the Supreme Court represent a tectonic shift in the industry.

For one, the ACA is perhaps the most significant piece of federal legislation related to healthcare that has passed since the introduction of Medicare half a century ago. There has been a litany of failed attempts to create a national mandate for healthcare insurance coverage. The ACA passed. It’s the law of the land. And until it is repealed or amended beyond recognition, that means all Americans are required by federal law to carry health insurance. The battle over this “compulsory coverage” is far from over, but according to the Harvard Business Review, we are already seeing some of its effects in the form of more than a 5% drop in the number of Americans without coverage (from 18% in 2013 to 12.9% in 2014).

Another upshot of the polarized – or perhaps polarizing – debates that rage around the issue is that the entire country has taken notice. We had no choice. With constant threats of government shutdowns, doomsday predictions by economists on both sides of the aisle, and of course the aforementioned challenges in the Supreme Court, it is nearly impossible not to have some awareness that healthcare in America is changing. In perhaps the greatest, most ironic plot-twist of all, the complete and utter failure of the initial launch of the Healthcare.gov site (the site on which people can go to shop for their new health insurance plans) led to a much more resounding success: it got others involved.

Scrambling to save its most prized accomplishment and with it the legacy of a two-term president, the Obama administration reached out to Silicon Valley to help right the ship. In so doing, they provided the affirmation that both the healthcare and tech industries so desperately needed, effectively telling each “you can play together.” No longer is healthcare destined to remain an industry run by autocrats and politicians. Now everyone is invited to the party.


Increased Activity

The explosion of healthcare companies in the last 5 years alone is a testament to the breaking down of the barriers between the two industries. Companies like Castlight and Amino Health are working to make healthcare pricing more transparent. Others including 23andMe and Picnic Health aim to give individuals greater control over their personal data than ever before. OneDrop couples software and hardware to make managing diabetes easy, simple, and dare I say, fun! Even our company, Orderly Health, was birthed out of this same desire to make healthcare simpler, easier, and more transparent.

It used to be that to start a healthcare company of any kind, you needed about 20 industry insiders, 10 years, and millions of dollars of investment. Now, scrappy young startups are taking on incumbents in seemingly every aspect of the healthcare space, whether by increasing consumer engagement with their health insurance (Welltok) or building an entirely new insurance company from scratch (Oscar), all in the span of just a few years. The marriage between technology and healthcare has become so culturally accepted that hash-tags like #digitalhealth and #healthtech, once the calling cards of a few niche health and technology bloggers, now festoon the posts of prominent companies and innovative thinkers on every channel of social media.

Entrepreneurs aren’t the only ones identifying opportunity within the healthcare industry. Investors, investment banks, and even incumbent healthcare companies themselves have all become much more active participants in reshaping an industry so characterized by change. Silicon Valley Bank opens its most recent annual report on healthcare venture capital investment by highlighting the 56 percent increase in healthcare venture funding year over year, which it insists is an indicator of a return to investor confidence in the industry.

While it’s always difficult to gauge investor sentiment, there’s certainly a surfeit of evidence supporting the case that investors are confident – or at the very least hopeful – regarding the future of healthcare. In addition to the funds pouring into the industry in the form of direct investment, traditional stalwarts are also placing bets on where healthcare is heading, reshaping the landscape of the industry in the process.

When Aetna acquired iTriage a little over four years ago, it was considered one of the first high profile exits for a mobile health app. Since then, the industry has been largely defined by a flurry of M&A activity. MobiHealthNews reported 33 mobile health acquisitions in 2014, while 2015 saw a record volume of mergers and acquisitions globally, resulting in a 66% increase in deal volume at a total value of $723.7B, according to Modern Healthcare.

The deal-making isn’t just limited to the behemoths adding a few new upstarts to their ranks. Much of the value in these transactions has come in the form of blockbuster mergers, as “the big five” have become “the even bigger three” – with Anthem buying Cigna, and Aetna buying Humana, and United Health continuing its acquisitive ways.

Rounding into 2016, these trends don’t seem to be showing any signs of slowing. A couple weeks ago, JP Morgan held its annual healthcare conference during which leaders in the healthcare industry from all across the country descended on San Francisco to discuss the future of the healthcare industry. In his post on the topic, Vince Panozzo, Senior Vice President at Strata Decision Technology summarizes some of the more salient observations during the conference.

Whether it’s a matter of understanding the changing cost structure and incentives within the healthcare industry, doing a better job of collaborating and data sharing, or offering consumers greater control and insight into how they are spending on healthcare, Panozzo asserts that the industry on the whole knows what needs to be done, and at this point “it’s all about execution.”

There you have it. We are all privileged to be watching the dawn of a new day in the healthcare industry. With a little effort, a bit of luck, and a lot of execution, we can be part of reshaping the future of this critical industry.


Like the coverage that CyberMed News provides? Follow us on TwitterLinkedIn, and Facebook to make sure you keep up to date on the most recent developments in Colorado’s digital health community.