For decades, health care has been largely exempt from the rampant emergence of technology that has disrupted other industries. But it seems the industry’s turn has come at last: In the first half of this year alone, venture capitalists invested $2 billion in health tech and startups. And the influx of investment capital is not expected to slow down anytime soon, with predictions that by 2020, retail pharmacy clinical, coaching and diagnostics will grow from $250 to $400 billion; next-generation diagnostic tools, health tech and wearables will increase from $2 to $150 billion annually; and smart care teams will grow from 4 to 12 percent of spend.
Startups aren’t the only players realizing the potential of this health care revolution: Incumbents, including tech firms and retailers, are also investing in health-related projects. In addition to funding 23andMe and launching Calico, a biotech R&D company, Google has invested in a dozen health, wellness and life-science startups through Google Ventures and, perhaps most significantly, is developing cognitive computing to compete with IBM Watson’s technology. Meanwhile, CVS Health, which tripled its investment in digital and multichannel ecommerce, is opening a digital innovation lab so it can continue to test meaningful products and services.
Indeed, the creation of a new model of health and healthcare is perhaps the greatest single business opportunity of our lifetimes, both for innovators and incumbents. And the marketplace is ripe for change. Studies show about 40 percent of the $3 trillion the U.S. spends on healthcare each year could be avoided. At the same time, when nearly everything can be purchased with the click of a button, the user experience of healthcare is falling behind, making it hard for patients to understand what doctor to see or if prices are in line with the market. It’s perhaps no wonder then that, just as technology has transformed how we shop, so too is it beginning to transform what consumers expect from healthcare providers and health plans.
Tipping supply to demand
In traditional business, you succeed by meeting customer demand. In the digital age, you create it. Tech entrepreneurs, for example, are creating demand for 24/7-health information in the palm of our hands, leading to the increased use of personalized apps, social networks and wearable sensors such as Fitbit, Jawbone’s UP band and Livongo that are helping us better understand our health and leading us toward healthier habits.
The upshot of this shift is the emergence of “Health Market 2.0,” as healthcare transforms from a supply-oriented industry to one where consumers can take control over their own health. This new market will emerge in the form of three distinct movements, including: The quantified-self movement as personalized apps, wearable sensors and social networks encourage “life logging” for consumers to track their health status in real time; transparency as pricing information starts to become available on online shopping sites and exchanges that consumers can use to compare care and services, shifting the basis of competition from reputation and referrals to price, value and outcomes; and smart care teams of physicians, nurses, social workers, coaches and nutritionists who focus on prevention and prediction. Instilled in the health care workers’ approach is the wide-ranging use of information and insights — including big data and real-time daily living and clinical data.
Read more at Entreprenur.