"As with many parts of health care, there will be a healthy mix of physical and digital, but for me, this is an area that will be durable over the long-term. It was already a trend, but COVID has accelerated it." - Katherine Wood, Principal at TPG Capital.
A panel of industry thought leaders met on November 12th to talk about how COVID-19 has been a major factor in Trending Towards a Record-Breaking Year in Digital Health Investments during the HLTH Matters GoLIVE Webinar Series hosted by HTLH. The discussion was moderated by Christopher Donovan, Partner and Co-Chair of Foley & Lardner's Health Care Industry Team, and included panelists Katherine Wood (Principal at TPG Capital); Julie Yoo (General Partner at Andreessen Horowitz); and Richard Mattera (Chief Development Officer at UnitedHealth Group). Below are just a few major takeaways from the discussion.
"How do we take care and service models that already exist in the offline universe and do them ten times better? That's game one of the World Series. Game two is how do you actually get to doing things we couldn't do before to recreate care models?" - Julie Yoo, General Partner at Andreessen Horowitz
Similar to previous HLTH webinars, Mr. Donovan kicked off the discussion with a baseball analogy. What inning are we in with regard to the investment pipeline? Answer across the board: early innings, or rather, this trend started years ago with a long rain delay, as Ms. Yoo described it. "Any time there's transformation, the first version of things will be a lot of doing old things better. How do we take care and service models that already exist in the offline universe and do them ten times better? That's game one of the World Series. Game two is how do you actually get to doing things we couldn't do before to recreate care models?"
"SPACS [Special-Purpose Acquisition Companies] are the flavor of the month," started Ms. Wood, who mentioned being stunned by some of the valuations she has seen over the recent months, indicating that we may see even more in the near future, which Mr. Mattera agreed with. He observed there is a lot of innovating in the digital space right now, especially with telehealth and behavioral health, but indicated that the investment deals will start to look more like a consolidation play. "You're starting to see online companies trying to build the wallet," he says, "they've got the consumer acquisition upfront, and now they're focusing on building their wallet and profit."
"From a long-term perspective of employers, they want to get out of the health care game," he says, "and spend too much time in their benefits department and starting to push it out to people to manage for them." - Richard Mattera,Chief Development Officer at UnitedHealth Group
Mr. Donovan mentioned that, from a legal perspective, the "on-demand" health care technology service sector is particularly "hot" across the investment platform from virtual care, to private equity, but asked the panelists what other areas of the industry are "hot," and which they're avoiding. Naturally, behavioral health was a topic that cropped up again, where, as Ms. Woods comments, COVID-19 really opened up access in getting care for behavioral health, and telehealth/accessibility through other delivery models as a whole is a good example of a consistent trend post-COVID. "As with many parts of health care," she says, "there will be a healthy mix of physical and digital, but for me, this is an area that will be durable over the long-term. It was already a trend, but COVID has accelerated it."
"Digital is facilitating consumer-centric health care," commented Mr. Mattera. The end game is to help the customer experience, the consumer experience. "We think there's a tremendous amount of headroom in those areas," agreed Ms. Yoo. With regard to employer channel models, Mr. Mattera indicated that they are seeing a trend of clinical services going directly to employers, and they are starting to see some COE's for oncology or cardiology. "From a long-term perspective of employers, they want to get out of the health care game," he says, "and spend too much time in their benefits department and starting to push it out to people to manage for them."
"The market is changing," added Ms. Yoo. So much of what has constrained the provider side from being able to scale is the fact that we have provider networks that have historically been limited to local geographies-which doctors practice or have a clinic within 20 miles of someone's home-and that's been the big unlock for virtual care. No longer is geography a constraint on how we define physician networks, and therefore the demand side of the equation, and that will lead to the creation of companies that operate at a magnitude larger than what has been seen in the past with regards to patient care.
"One of the challenges we have faced at our firm is the corporate practice of medicine laws, the various state licensure laws, which prohibit out-of-state physicians from treating patients in a different state, which is obviously what the telemedicine value proposition is." - Christopher Donovan, Partner at Foley & Lardner LLP
To that point, Mr. Donovan added that, from a legal perspective, "one of the challenges we have faced at our firm is the corporate practice of medicine laws, the various state licensure laws, which prohibit out-of-state physicians from treating patients in a different state, which is obviously what the telemedicine value proposition is." Obviously, there has been some loosening of those regulations during the COVID pandemic, but he asks the panelists if we have stretched the rubber band of these boundaries so far that when this pandemic does end, will it snap back to a shape that we can recognize prior to the pandemic or will regulations stay much closer to pandemic level models? Have we set up a new normal with all this use of telemedicine?
Mr. Mattera responded that he didn't think states would completely drop their desire or belief that they should have the ability to regulate health care within their state. Instead, we may see a greater push for multi-state packs to license and uphold a base set of standards, but all the walls won't come down completely. Ms. Wood agreed and stated that, like a lot of things, it will vary. "There will be evidence that care quality can be pretty high in a digital setting, and I think it'll still be a mix," specifically with patient attitude toward telehealth. Ms. Wood believed a positive attitude toward telehealth would persist after COVID because a lot of those barriers have been completely broken down, to which Mr. Mattera concurred that he believes the public has become more amenable to having access to telemedicine, a service that many were not taking advantage of prior to the pandemic. Ms. Yoo agreed that there has been a high adoption of telehealth from the pandemic, opening up users who were not users before, and has expanded the market for those kinds of services. Especially in the case of acute care setting, she added that, a key questions being asked is how do you optimize capacity in large health systems-and that's where virtual care can be a massive lever in terms of thinking about a given patient population.
You can get more details on these takeaways-and additional thoughts from the panel on the influence AI has on the industry, and of course, whether a new administration, if election results stay where they currently are, will have an additional impact on current trends-by watching the webinar in its entirety here. You will also be able to access and watch past webinars from the series as well.
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