Checking the Climate in Digital Health Technology: August 2022

Kate Gunning,

Managing Partner, Focus Academy LLC

www.focusacademy.bio

The US healthcare environment is evolving and changing since the onset of COVID in early 2020 and Digital Health is an area of rapid change, particularly evident as we are now in the middle of 2022. Keeping on top of the market and the changes that are coming in terms of the economy and the investment landscape, it’s important to keep track of the opportunities and the threats that this sector is.  experiencing post-pandemic.

We have reviewed the recent developments in Digital Health and noted some interesting trends and opportunities being presented in the current changing environment.

1. Digital natives love Telehealth 

Though there was a dramatic increase in the utilization of Telehealth during the pandemic, this has fallen off amongst the older baby boomer generation and older adults. However, according to recent research, digital natives still love the easiness of the Telehealth visit and utilization rates are expected to remain at 73% for the Gen Z and 83% for the millennial generations, while dropping to 51% for the baby boomers.

2. Expanding Telehealth access

Congressional support is on its way for the increase in access to Telehealth services, by extending congressional Telehealth funding for four years instead of two in the US. The legislation also hopes to expand the eligible list of practitioners to include rehabilitation therapists, to expand services for Federally Qualified Health Centers and Rural Health Clinics, to provide virtual hospice visits, and to delay Medicare in-person requirements. Audio-only technology will be provided for places with low broadband capabilities, so that Telehealth services become accessible to all communities.

3. Interoperability

Interoperability is an important component for the expanded use of digital health technology, referring to the seamless exchange of data across organizations and systems. This is an extremely important component to make it easier for patients and providers by making relevant data easier to access without security or privacy problems. Moreover, interoperability in the healthcare industry can reduce the cost of care by minimizing the need for repeated or unnecessary tests and making diagnosis faster.

4. AI promotes early intervention

AI has proven to be most valuable so far in the area of imaging. One of the first computer aided detection AI systems to analyze images gathered during a scan, GI Genius, allows physicians to identify conditions more quickly, promoting early intervention by identifying pre-cancerous and cancerous colorectal polyps during a colonoscopy. The system works by scanning every visual frame of the procedure in real time and alerting physicians to the presence of lesions — including small, flat polyps that can easily go undetected by the human eye. By detecting and removing these polyps, clinicians reduce the odds of patients developing colorectal cancer.

5. Behavioural health is still an area of growth, though there are significantly more players in the space, and they are more competitive. There has been a significant increase in the demand for behavioural health interventions and the business models are changing, i.e., how do these solve the mental health problems, what is the ROI, and the evidence to support progress and improvement with objective metrics.

6. The move in the US from a “fee for service” model to a “value based” model will depend greatly on the adoption of digital health technology. One of the main concerns, though, for the management of chronic disease, is the ability for remote patient monitoring, especially for those living in remote and more impoverished areas. It has been reported that audio only tele-visits were higher among people of color, adults without a high school degree, people with lower incomes and those without health insurance. Insurers are currently only covering tele-visits that use video. This is now a considerable concern for those unwilling or unable to use video for their appointments. The US House of Representatives recently passed a bill to extend the telehealth flexibilities under the public health emergency for another two years.

7. Wearables can empower patients, but adoption is challenging

A recent study of over 7,000 patients indicated that there are three main barriers to adoption of wearables by patients. Researchers found three main overarching themes: the role of providers and potential benefits to care, driving behaviour change and barriers to use.

On the clinical front, it was reported that not all health systems have great track records of adopting new technologies quickly. Healthcare workers would probably need more training to encourage engagement and push behaviour change among patients. The ongoing monitoring and feedback would also add to their workloads, according to the study. It’s also the case that consumer wearables are not calibrated for use in healthcare, which could lead to inaccurate data.

Additionally, it was found that for patients to receive appropriate support, a preliminary assessment is required to match to the wearable device and prevent negative impact of an individual not meeting goals.

Other barriers to adoption indicated that though individuals said they were willing to use wearables, actual use was inconsistent. Users sometimes forgot to put them on, lost them or simply became disinterested. The design, cost and technical and privacy issues could also impair use.

Other notable drivers to watch include:

• Consumer-brand healthcare market players with significant digital capabilities and potential to disrupt traditional healthcare service models (Amazon, CVS, Google, etc.)
• $65B in Federal digital equity funding is making significant investments in broadband development and deployment laying a vital infrastructure for industries such as healthcare to build on
• A shift to deliver more care services outside of traditional setting in home and community-based settings will drive new service models and digital health capabilities (e.g., hospital at home)
• Provider organizations' implementation of enterprise-level digital transformation strategies seek to marry data, automation, and virtual capabilities in a strategy that eliminates friction points in virtual care and transforms data to deliver seamless and personalized care experiences.

2022 saw a dramatic decrease in investment in the digital health sector as opposed to 2021, according to Rock Health’s recent report on the state of the market. As most investors will attest, 2021 was a bumper year and an anomaly and 2022 digital health funding is on track to outpace funding in 2020. Companies are trimming costs and reevaluating their go to market strategies, and there is a slowdown in larger deals and later stage funding. However, the climate is still good for earlier stage investments, according to the venture community and strong areas of investment remain in the areas of digital mental health, pharma R&D solutions and administrative ad clinical workflow solutions. As there were record funds raised by the investors in 2021, it’s expected that “early-stage digital health companies, which are more likely to be free of 2021 valuation baggage are likely to attract investor attention in today’s market.”