Last week, the New York Times reported a truly disruptive development in healthcare & pharma: “Amazon, Berkshire Hathaway and JPMorgan Chase — announced that they would form an independent health care company for their employees in the United States… It was unclear, whether they would simply help workers find a local doctor, steer employees to online medical advice or use their muscle to negotiate lower prices for drugs and procedures… [This] announcement landed like a thunderclap — sending stocks for insurers and other major health companies tumbling. Shares of health care companies like UnitedHealth Group and Anthem plunged…”
Let’s unpack this a bit. Sure, an announcement with such disruptive implications in an industry that can affect life and death decisions is big news. Plus, at 18% of U.S. GDP, healthcare and pharma is nothing to sneeze at, pardon the pun. However, although the three giants certainly have the potential to transform the face of healthcare, in fact, the digital wave has already affected the industry in three key areas: reduced friction in end-to-end patient experience, personalized preventive/diagnostic care through direct patient connections, and improvement in drug discovery and development.
As most of us have likely experienced, the most inconvenient part of seeing a doctor is often the hassle surrounding the appointment. According to a survey by Accolade, patients’ top concerns in healthcare include: coordinating different aspects of benefits and healthcare (55%), selecting and understanding benefits (50%), and managing care across different doctors, specialists, and facilities (41%). Digital innovators have clearly taken note and are building products to reduce friction in the end-to-end patient experience. One emerging focus area is to simply help with scheduling a doctor’s appointment. According to a 2017 Merritt Hawkins study of physician’s offices, the average wait time for new patients is 24 days! Zocdoc, an online scheduling app, helps patients find nearby doctors in their network, browse reviews by other patients, and book appointments—all with a few taps on the app. While Zocdoc’s stated goal is to get its 6 million monthly patients an appointment within three days, the vast majority get appointments within 24 hours. In fact, Accenture predicts that by 2019, 64% of patients will schedule appointments digitally, and the top 100 U.S. health systems will provide digital self-scheduling capabilities. Another area for patient experience improvement is online doctor consultation. Innovators such as MDlive and Teladoc offer a 24/7/365 video/phone base consultation that costs less than $40 per appointment, has a 10–15 minute average response/callback time, and offers an easy prescription process. In addition to the obvious improvements in end-to-end patient experience, these innovations are enabling care for patients from a broader range of locales and income levels that they could not otherwise access.
Across industries, digital has disintermediated supply chains and enabled brands to serve end users directly. Health systems are also providing personalized preventive/diagnostic care through direct patient connections. Companies have focused on chronic conditions—diabetes, mental health, and cardiac care—for digital solutions, as these conditions drive the majority of healthcare costs. For example, Virta boasts actual reversals in type 2 diabetes for patients that use the site’s individualized treatment plans. Registered patients enter data on their blood pressure and glucose levels through smartphone apps and get personalized interventions on nutrition and behavior change education, support from health coaches and peers, and medication management by physicians. For parents of young children, Kinsa leverages smart thermometers to take accurate fever readings and, based on analytics around those readings, offers guidance through its mobile app on symptoms, diagnoses, and medication doses. For cardiac care, CardioSecur “turns your smartphone into a mobile, personalized ECG in just 3 steps” by attaching the cable (to a smartphone), capturing ECG data in 10 seconds and receiving actionable feedback (including, if necessary, “See your cardiologist NOW”). All of these offerings are further enhanced through accurate health data from wearables (e.g., Apple Watch) and direct-to-consumer genetic testing kits (e.g., Ancestry.com).
The average total cost of getting a new drug from invention to pharmacy is about $2.9B. Leading pharma/biotech firms are using digital tools to reduce that cost on two fronts—drug discovery and development (primarily clinical trials). In our earlier blog, 'What makes quantum computing disruptive?', we discussed how quantum computers can enable simulations of complex molecules for drug development. At drug discovery stage, these simulations can replace the traditional trial-and-error approach of experiments on biological specimens, making the drug discovery process four times faster at a quarter of the cost. At the drug development stage, more than 90% of drugs entering clinical trials fail mainly due to the difficulties in recruiting trial patients and logistical challenges of collecting patient data. Innovations such as Clinpal, Pfizerlink, and Science37 use a combination of web/app interfaces and social media to recruit a larger and more diverse sample of trial patients, as well as receive accurate health data in real-time.
Historically, the profit pool in the hospital-payor-provider ecosystem has been captured primarily by pharma. Going forward, however, the critical asset powering most healthcare innovations—personalized preventive care, improved drug discovery and development—is patient data (also see earlier blogpost, 'Why is data the new oil?'). As the majority of patient data sits with providers, it’s not inconceivable that they capture the majority of the upside from digital transformation. That, if it were to happen, would be truly disruptive!
We would like to thank three industry leaders for their generous insights for this blogpost: Aaron Martin, EVP & Chief Digital/Innovation Officer at Providence St. Joseph Health; James Kugler, Chief Digital Officer at Merck Group; and Judy Sewards, VP Digital Strategy and Data Innovation at Pfizer.