COVID 19 has shed new light on the term “national security” and laid bare our vulnerabilities as a people. Ken Rogoff, a Harvard economist, recently likened our situation to the Wizard of Oz “where Dorothy got sucked up in the tornado with her house, and it’s spinning around and you don’t know where it will come down”. Though he was speaking for the economy, the analogy is apt for our healthcare system as well—we are all more than dizzy now. However, we can expect that as our house lands from this pandemic, we will see our healthcare landscape differently and go about the hard work of a health system reset—a focus more on the front-end of preventative health, as opposed to the back-end of cures, and with a more distributed, value and outcome based system rooted in the community as the prime arm of implementation. These changes, based on biology-based technologies, digital systems, AI/data science, and investment, have been stirring for awhile and Covid is accelerating them. I lay out below six areas of concentration, the need for which has been further spotlighted by Covid. In each area, I have laid out a few companies whose thinking may be representative of the trend, though by no means should these be viewed as “the future leaders”.
High Touch Primary Care: The Covid truth is that while our hospitals have performed admirably, they have stuck out as “aircraft carriers” for care in an era when care perhaps should be better distributed. After all, how is the country going to vaccinate its 330 million people? Just as important, a better operating model, spurred by $5BN in VC investments, may better blend the payor and primary care with front-end prevention. These companies have found that they are able to reduce hospitalizations substantially, as much as 40 percent, by increasing their face to face and digital touch points with their customers and working with their customers to make health behavioral changes. Of course, $5BN is just a speck in the overall primary care and payor system, but this set of companies as they continue to grow will set a higher bar for incumbents and accelerate the trend toward value-based, more outcome-driven healthcare. (see oakstreethealth.com, hioscar.com)
Diagnostics: Covid has brought forth the truth that that which you cannot test, you cannot measure, and that which you cannot measure, you cannot manage. And, of course, that early detection can lead to better informed actions, which in turn leads to better disease outcomes. Diagnostics traditionally has been a backwater for innovation investment, a stepchild compared to therapeutics. Yet a new class of diagnostic companies based on CRISPR, genetic and nanoparticles technologies are showing promise in providing an accurate, easy to use at home test kits, not just for Covid but for other infectious diseases at low prices, thereby opening up the consumer markets and potentially simplifying aspects of primary care. (see mammoth.bio, e25bio)
Telemedicine: There have been more telemedicine-based consultations taken place in the few months of this Covid pandemic than in all of the previous years combined. Convenience aside, one health insurance and provider company has found that for certain rudimentary face to face exams (e.g. strep throat, pink eye, minor injuries etc.), online exams were 2x or more less expensive. Yet there is a 2.0 model emerging, based on digitally measured detection, monitoring and reporting, that will cement this as a protocol. Biosensor based systems are already being commercialized for in-home monitoring of diabetes, cardio-vascular conditions, and other complex, chronic diseases. Ironically, in the area of disease detection, we have seen the earliest rollouts of scaled telemedicine for detection in emerging markets such as India and China, where the resources and cost constraints are significantly heavier. (see imedrix.com, butterflynetwork.com)
Tools for Precision Therapeutics: We have all read the reports on Remdesivir and other potent drugs in our anti-Covid arsenal – they work “some of the time” or “usually”, and for the patient, the efficacy “depends” on conditions we don’t know or understand. And this should not have been a surprise as we know of the issues of consistency in drug efficacy. However, we are seeing the development of a whole generation of new tools that show promise for measuring and monitoring the efficacy of drugs. These range from in-body sensor systems with out-of-body communication capabilities for tracking therapeutic mechanisms to the measurement of metabolite bio-markers—the various “in-house” chemicals produced by our body as a sum result of our genetics, environment, lifestyle and age – and which may give predictive indicators of drug behavior for an individual. Imagine personalized prescriptions and better monitoring of efficacy in near real-time. (see olarisbor.com, proteus.com)
Diet & Nutrition: As we all know, obesity is identified as the second leading indicator, after age, of those admitted to a COVID ICU. Japan and Korea have had Covid mortality rates, on a per capita basis, roughly forty to sixty times less than the US; and while this has been largely attributed to less disease outbreak due to “better testing” or “social discipline”, could it not also be partly due to their obesity rates being 7-10x lower than U.S. levels? Though nutrition has historically been off the beaten track for the bio-pharma industry, science-based nutrition companies are filling this vacuum. Some are helping their customers by optimizing their food choice for nutrition based on the genetic tests of their microbiome, while others have shown a level of efficacy in pairing nutritional diets with cancer therapeutics, and trialing “food as adjunct medicine.” (see viome.com, Faeth Pharmaceuticals)
Healthcare Accessibility: Studies have shown that Covid rates are positively correlated with socio-economic disparities and ethnic minorities, not much of a surprise. The issue of socio-economic access to healthcare, by far, is our hardest nut to crack, as it deals with both policy, social and lifestyle issues. Yet the incidence of chronic disease, an economic noose in our healthcare system, more heavily afflicts the poor and disadvantaged, with enormous social and economic costs to us collectively. We envision a significant tweak of the system, where we have public-private partnerships for addressing access disparities and improving health incomes. Such partnerships may be able to more effectively provide capital for improvement of health outcomes based on capitated or value-based payment structures. (cityblock.com, socialfinance.org).
Our healthcare system is being prodded by entrepreneurs armed with the latest advances in life science, and digital system technologies. They bring a different energy level to the sector; and have put their stake in the ground that diagnosis and monitoring can be made significantly more efficient by digital means and the use of the latest life science technologies; better digital systems can prompt and track patient care and health outcomes in a more productive and informative way; and front-end systems focused on health maintenance and disease prevention can be more cost-effective than our current more reactive system. We envision that this type of preventative healthcare will present challenges and opportunities for life sciences companies. With better therapeutic tracking and monitoring the bar will be raised for and opportunities and the means will be available for improving therapeutic performance. New health insurance and primary care provider models will have more value-based attitudes with respect to treatments and prescriptions. And if their strategies of prevention work, in the distant future, we will see less incidence of chronic diseases.
DISCLOSURE: Neither EMS Capital nor DEFTA Partners have any financial interests in the companies mentioned, except for DEFTA Partners’ investment in iMedrix. The views expressed herein are solely those of the author.
Stanley Sakai is CEO of EMS Capital, a fund co-manager in green sustainability innovation, sponsored by the Tsinghua University Science Parks; and a Venture Partner of DEFTA Partners, a venture capital investor in early-stage life science investments.