Healthcare systems are full of internal contradictions. The more successful the system, the longer citizens live. But the longer citizens live, the greater the strain placed on the system; older patients are prone to diseases which typically are more prevalent as longevity increases, so the cost of the system rises. The more the system succeeds, the more it precipitates its own collapse.
The reality for Europe’s aging population is that healthcare is going to consume an ever-greater proportion of GDP. The UN’s World Population Prospects report projects that the proportion of Europeans aged 65 years and older will grow from 16% in 2000 to 22% by 2030. As a result, spending on healthcare within the EU will consume 14% of GDP in 2030, up from 8% in 2000, according to the World Bank. Throw into that gloomy prediction that longer life spans mean an increasing number of people suffering from chronic conditions, and it suggests that unless there is a shift in the way healthcare is provided, cash-strapped systems in Europe will struggle to manage increasingly sickly, aging populations. It is hardly a rosy picture.
Can technology help? So far it has not lived up to its promise, says Dr. Anurag Gupta, research director specializing in healthcare for analysts Gartner. “For the last 20 years, everyone has been saying, “okay, now is the time,” he says. “Every time it has just gone past. The big change is not really happened.”
This Time It Will Be Different
Gupta is confident that this time it really is different. “The big change is going to happen with that supercomputer that so many of us have in our pockets.” A 2013 PwC report conducted for the mobile phone industry trade body, GSMA, predicted that as early as 2017, increasing use of m-health could save €99 billion in healthcare costs across the EU and add €93 billion to EU GDP if its adoption is encouraged.
Smartphones, and other connected devices that can be used to monitor patients and report back, offer the potential to nudge the healthcare system away from treating sick people, to stopping them from getting sick in the first place. “The healthcare provider has been educated to respond to pathology, not to keep people well,” says Skip Snow, a senior analyst at Forrester Research. “The entire system has to shift. It has survived in an almost pre-industrial model. Healthcare is under a huge pressure for processes to be automated.”
The Doctor Will See You
If some western European citizens complain about their healthcare systems, spare a thought for Eastern Europe.
“We are operating in the eastern markets, Poland and Czech Republic, Turkey, Russia,” says Peter Bialo, CFO of Warsaw-based DocPlanner, an online service that lets patients book appointments over the web. “A lot of them are from the Soviet era so that means old equipment, old ways of doing things.
“In western Europe it’s about 30 days on average to see a specialist. In Poland that is about 60 days.”
DocPlanner, which went live in 2012 and has raised two rounds of funding totalling $4 million, is currently serving six million unique visitors a month, up from 4.5 million a few months ago, having acquired Turkish rival Eniyihekim earlier this year.
The company started as a Yelp-type service, allowing patients to find and rate doctors and specialists. “Patients a lot of time don’t know who to go to, except for their GP. If he had to refer them to a specialist maybe he could refer them to a friend and be biased about it. We gave patients the option to be able to see the whole listing of doctors in a country, read relevant and legitimate and credible reviews so that you can make a decision.”
The company added its booking service, for which doctors, not patients, are charged. “In Eastern Europe doctors’ offices may not have a full-time receptionist so it can be hard for patients to make appointments.
In return, says Bialo, their system reduces missed appointments. “There is a very high no-show rate in general in private medicine. We estimate that about 30-40% of patients do not show up for appointments.”
Having started in Poland, DocPlanner now operates in many states across central and Eastern Europe. Bialo, a former Rocket Internet employee, says Germany and Scandinavia are not on their radar. (“They have pretty good public care systems.”) They are considering some southern European markets such as Italy. But he says the greatest opportunities lie in Asia. “We are testing Indonesia now as well and the traffic is growing pretty quickly. It seems like emerging markets tend to be stronger for us.”
All of which should provide huge opportunities to entrepreneurs. Companies such as Fitbit were quick to step into the market with fitness devices that let health-conscious consumers monitor their activity. Some 37,000 retail outlets worldwide now sell the devices, says Jeff Clavier, a speaker at LeWeb and a VC at Silicon Valley firm SoftTechVC, early investors in Fitbit.
But while such devices offer a way to empower concerned consumers to take control of their own wellness, which in turn has the potential to nudge the healthcare system away from pathology and towards prevention, significant work remains. A 2014 U.S. report, “Wearable Technology & Preventative Healthcare,” found 74.9% of U.S. adults do not track their weight, diet, or exercise using a fitness tracking device or app.
Hectoring People To Change Doesn’t Work
Getting people to change is going to take some innovative approaches; hectoring isn’t going to do much. Less than half of respondents (44.3%) said that better healthcare advice from their physician would be an incentive to use a fitness tracker.
Rewards may work. Since June Russia’s Alfa Bank has offered higher rates of interest to customers who adopt and use trackers. There are no figures for its take-up. Some 57.1% of non-tracking U.S. adults said that the possibility of lower health insurance premiums would make them more likely to use a fitness tracking device.
But, says Forrester’s Snow, while there are huge opportunities for fitness and wellness-related companies, people thinking of breaking into the $6.5 trillion global healthcare market need to be realistic. “You are not having two guys in the garage reinventing healthcare.”
The market is divided in two: regulated medical devices which deal with health and diagnoses for medical professionals, and unregulated wellness devices used by consumers. Like many venture capitalists Clavier says SoftTechVC shies away from the regulated sector. “Typically we don’t want to invest in companies that have a regulatory involvement,” he says. “They are expensive, it takes too long. When we fund a company we typically have 18 to 24 months of runway to prove that the company is viable and is worthy of the next round of financing. That goes out of the window for anything which requires any sort of regulatory process.”
And while the idea of using connected devices to help medical practitioners monitor patients sounds appealing, unless those devices are regulated there are legal issues in using such data.
Opportunities In Healthcare IT
“Once the doctor drags the information into the chart then the institution becomes liable for the facts,” says Snow. “If the person reported that I have arrhythmia and nobody acted, who is responsible for negligence? It is very complex crossing the wall. This is not the technology, this is a business problem.”
One company that has succeeded in getting regulated is Hamburg-based Tinnitracks, a service that helps sufferers of tinnitus, a hearing condition characterized by a persistent high-pitched whistle. The company, which treats the condition using a medical procedure called “lateral inhibition,” sells a service that applies sharp-edged filters to music files to remove the selected frequency. “By putting silence around the frequency where the tinnitus is, you stimulate the neighboring cells,” says CEO Jörg Land. “Due to the cross linkages of the cells you can retrain the tinnitus.”
Passing medical regulation in Germany was, he says, a “pain in the ****, but we did it because it is a market entry barrier for anyone to follow us. IT engineers and architects do not like to comply to medical regulations. They are used to deploying very fast steps. Nowadays we have to document everything because by law we have to.”
Where opportunities do exist for start-ups is in what Yashu Reddy, who runs the London end of Healthbox, a health accelerator with offices in the U.S., UK and Israel, describes as operational efficiencies; simply put, making the existing system work better. She says Healthbox has seen at least 1,500 health-related start-ups and made investments in more than 80. “At least 40% of the companies that we see are in the wellness and fitness space, but operational efficiency is another huge area,” she says. “We are looking at solutions that actually help providers. There are a lot of operational efficiencies, pathway management, so looking at the entire path and how to optimize it would be another sector within the digital health space.”
Look To Fintech
One such company is Warsaw-based DocPlanner that helps patients, mainly in Eastern Europe, find doctors and book appointments. The company recently acquired a Turkish company and is now serving six million unique monthly visitors.
Alex van Someren, managing partner of early-stage funds at Amadeus, a London VC firm, says the healthcare IT sector has huge opportunities. Amadeus has invested in TrialReach, a UK company that matches patients who have a medical condition with clinical trials that could potentially help them.
“It sounds ridiculously simple,” he says. “It turns out no one was capable of doing it. There is a lot of complexity.
“What it does actually, besides facilitating those connections, is generate a lot of data. It learns a lot about how people tend demographically to be able to participate or not in trials and all that is really interesting. Ultimately the data is where the money is.”
Gartner’s Gupta is optimistic that change is coming. He looks to another highly-regulated sector, finance, for a parallel. “As some of the fintech companies have found, banks are changing. Start-ups are not changing dramatically the whole bank business model, but they are eating away at the corners.
“That is precisely what is going to happen in healthcare.”