Health Care Is in the Midst of a Transformation
By Ziva Eger
They have all had their business models completely disrupted by hungry and innovative tech entrepreneurs. And those are not the only sectors facing this particular challenge: so far healthcare has escaped largely unscathed but even this, most well-established and vital industry, is about to face an equally powerful revolution.
This looming change is being largely driven by three forces. First is the massive and increasing financial pressure bearing down on healthcare systems across the world. Nearly one-fifth of the total US GDP is being spent on healthcare. Clearly, this is not sustainable and creates continuous pressure on the health industry players.
The second driver of change in healthcare is the emergence of the empowered and proactive health consumer. It is not surprising that consumers who are now used to shopping online for groceries, who manage their banking via their phones, choose their summer vacations with a click and order a taxi without even lifting a finger, expect the same from their healthcare providers.
Fortunately for the consumer (and for the healthcare innovators) it is now possible to envisage a healthcare system which goes above and beyond what we have today to meet these new, higher expectations. And that is thanks to the third driving force, the technology. The same innovations which have enabled change across almost every aspect of our lives, are now gaining momentum across the healthcare space. These developments facilitate the creation of healthcare system which can connect with the patient, collect and analyze his medical data and use it to provide him with personalized, on-the-spot and holistic support for his health needs.
The health industry itself is not unaware of the momentum gathering behind the forces of change and already some of the players are making their move. Established players are looking for ways to grab a larger slice of the healthcare pie by expanding across the value chain, offering the patient a wider range of services in order to answer his needs. Retailers, as an example, are expanding into the health services provider space by operating in-store clinics, all in an effort to get closer to the patient. At the same time, the value chain itself is changing. Tech giants, already experienced in disruption, are entering the health space, aiming to provide a new front door to healthcare.
The traditional pharmaceutical companies understand that in light of these changes, they must move in order not to turn themselves into a commodity. They understand they have to envelope the patient and provide him with more than just a pill. Therefore, big pharma is partnering with tech giants and investing in start-ups working on a variety of futuristic health service.
“There is no doubt that the healthcare ecosystem is on the verge of enormous change. However, while in other sectors the consumer has been the beneficiary of this change through cost saving and convenience, the changes in the healthcare world could also be life enhancing, and even life-saving. That is most certainly a goal worth achieving.”
Such startups are the unstoppable snow ball heading downward the healthcare mountain. One clear predictor of imminent disruption is the amount of money spent by VC in order to fuel the tech startups. In 2014 USD6.5BN was invested in healthcare start-ups and that number is expected to grow year-by-year until 2020. This money is not limited to any single field of innovation, either. While they focus mainly on serving the consumer/patient, these new breed of health care companies are focused on health apps, big data collection and analysis tools, IoT (wearables, ingestibles, implantables) and social media. One of the reasons for such diversity is that the game changer has not yet come to light: the Air BnB of healthcare has not yet appeared. So it seems likely innovation will continue apace across the entire healthcare service chain. With equal importance being placed on shifting from volume-to-value and reducing costs while putting the patient in the center.
While we are talking about innovation, we must not forget Israel, one of the world’s leading innovation hub. This is the nation that introduced the disk-on-key, the smart road navigator and the 3600 pilot helmet and it is now focused on building the next generation of healthcare solutions. At a time when six of the ten companies on Forbes’ “Top 10 Health Tech Changing the World” companies are Israeli, it is fair to say that the future of health solutions coming out of Israel looks promising.
Of course Israel is already home to one of the world’s largest pharmaceutical companies and a proven innovator in its own right. Being the world biggest generic drug company, Teva puts its products in the hands of 250 million people every day. However, in light of the changing health ecosystem, Teva is itself on the crest of the wave of change. By investing hundreds of millions of dollars in tech entrepreneurs and partnering with leading tech companies, Teva is aiming to lead delivery of solutions of the future.
There is no doubt that the healthcare ecosystem is on the verge of enormous change. However, while in other sectors the consumer has been the beneficiary of this change through cost saving and convenience, the changes in the healthcare world could also be life enhancing, and even life-saving. That is most certainly a goal worth achieving.