Credit Suisse http://www.credit-suisse.com, virtually hosted 12 digital health companies at their 4th Healthcare Disruptive Technologies & Innovations (HCDT&I) conference for 1x1s and/or small group meetings. The Conference was virtually attended by ~130 institutional investors
Presenters included founders and/or executives at Crossover Health, VillageMD, Grand Rounds, Transcarent, Ginger, Pager, K Health, Dispatch Health, TigerConnect, First Stop Health, Conversa Health, and Forward.
The first takeaway from presenters, suggests that PCPs across the country are facing several challenges and looking for help dealing with the ever increasing administrative requirements to operate a successful medical practice as well as transitioning to value-based care.
During the pandemic, primary care practices were hit hard by loss of revenue, which is forcing organizations to rethink how they operate. Even from an access of care standpoint, a presenter argued that a significant percentage of Americans do not have the ability to access primary care, and certainly not 24/7 access.
While 2/3 of Americans may have a PCP, those physicians may not be readily available even for a simple drug refill or medical check-in. Various tech enablement primary care model companies are working with these physicians partnering, employing, etc.) and leveraging a broad range of tools and services to facilitate high quality care delivery and/or enable value-based care.
Employers are also increasingly investing in primary care with the objective to lead to reduced costs further downstream (e.g., in specialty care, emergency and inpatient care). Our presenters argue that while several new innovative PCP models have emerged in recent years, the market remains highly under-penetrated and the real competitor for these companies is the “status quo”.
As for the second takeaway, the presenters believe that the Direct Contracting Model aligns with the administration’s goal of creating a sustainable Medicare trust fund and address the issue of health inequalities. While a lot depends on how CMS establishes the benchmarks starting in 2023, the program could be a 10%+ margin business according to a presenter.
Presenters note that the demand for VPC is clearly beginning to emerge among large employers. Some discussions are also happening among middle market employers. Most of the relevant companies/vendors are aggressively investing in or exploring ways to roll out VPC capabilities.
The presenters see mental health as a global crisis driven by supply demand imbalance. Pre-pandemic, ~450 min people globally had a diagnosed mental health conditions, with two thirds of them not getting access to care. Further, around one billion individuals globally have undiagnosed behavioral health conditions. In the U.S., ~50% of countries have zero mental health providers. This supply demand imbalance means that behavioral health, which was already a crisis pre-COVID, is now “exponentially worse” moving beyond COVID-19.
As for going back to work, one presenter noted that about 70% of people are reporting that staying at home is beneficial to their mental health. As a result, as companies start bringing people back to their offices, it is likely to result in a spike in mental health utilization.
Also, with respect to telehealth/RPM utilization, an argument was made that as people return to work and share their experiences with their colleagues about their positive experiences with virtual care and/or RPM platforms, it could very well be a near term positive catalyst for the industry.
The presenters believe that it has been a challenge for most HR teams and health benefit managers in the U.S to scale the level of benefit personnel investment to keep up with the amount of investment in clinical solutions.
Employers want their employees to use clinical services and products. As a result, they are increasingly relying on services such as employee navigation and engagement. Data will be the key to tie it all together and the companies that have invested in data platforms and scalable models will have a clear advantage.
The presenters argue that successful companies operating outside of the insurance industry have one thing in common—extremely good user experience. Some presenters argue that as self-insured employers spend more money taking care of their employee populations, it accrues to the benefit of health insurers, PBMs, and health systems/providers.
These misaligned incentives and lack of traction in flipping the healthcare system upside down from a regulatory or innovation perspective, is opening up opportunities for some of the digital health companies. These companies are focused on bringing the 1) user experience, 2) easy access, and 3) trusted/unbiased information back into the healthcare insurance construct.
With respect to some of the new entrants into healthcare, the presenters note that some of these entrants, such as Amazon and Walmart, know how to create great experiences that the consumers like and the consumer trusts. The presenters see these non-traditional healthcare entrants as potentially great partners as well as competitors. This evolving landscape is likely to put pressure on the organizations having 1-2 solutions as more comprehensive while integrated solutions are likely to be successful in the long term. One presenter argues that the next 18 months will determine success for the next five years and will determine success over the next 25 years.
There are abundant opportunities to leverage technology, such as AI and machine learning across various aspects of healthcare. Machines have the ability to identify and analyze patterns that can create much better predictive capabilities when compared to a human healthcare provider. Such areas, as radiology and imaging have already implemented some of the technologies that can transform the insights displayed to a provider. While there will always be a mix of humans and machines in healthcare, presenters believe the mix is going to tilt heavily towards machines.
Lastly, several digital health disruptors are increasingly focused on leveraging smart tech to pick up patient signals to predict illness, decline, or poor outcomes in health for an early intervention. This is also allowing healthcare providers to deliver on the promise of evidence-based health.
For Credit Suisse’s quick high-level industry note discussing the takeaways from the Healthcare Technology: Top 10 takeaways From our 4th Healthcare Disruptive Technologies & Innovations (HCDT&I) Conference, for more information, ask questions, provide feedback or news, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.