Healthcare- Facing Digital Disruption

Summary

The pandemic has opened the floodgates to large-scale digital adoption and innovative new ventures across the healthcare sector in India. This will lead to widespread disruption over the coming decade. The consumer can look forward to greater choice, improved health, access to new technologies, and a superior healthcare experience.

2020-A watershed year

Healthcare has lagged behind almost all industries in customer focus and digitization till now. But with the lockdowns in 2020, doctors had to resort to video consultations, patients got comfortable with remote diagnosis and treatment, and local pharmacies in India accepted prescriptions on messaging apps and delivered at the gate against digital payments. In the USA, customers using telehealth to replace canceled visits to doctors went up from 11% in 2019 to 46% during 2020. Further, 76% expressed interest in using telehealth going forward. In India, 50 mn people accessed healthcare digitally from March to May 2020 with 80% of them doing so for the first time. Clearly, the sector is poised for momentous changes in the years to come.

Healthcare – facing the digital wave

In 2019, the global digital health market was estimated at $350 bn. Some of the major healthcare categories and examples of the digital applications that are making an impact are outlined below.

1. Wellness: Disease prevention through sleep tracking, meditation and fitness, and preventive protocols.
2. Diagnosis: Use of genomics and omics, imaging diagnostics using Artificial Intelligence (AI) and Machine Learning (ML).
3. Telehealth: Remote patient support and monitoring, virtual meetings and interaction, digital information capture and exchange, patient self-directed care.
4. Improving the effectiveness of therapies: Clinical decision support, software-managed medical conditions, electronic patient-reported outcomes, medical data analytics.
5. Enhancing drug delivery processes: use of AI and ML, siteless trials, simulations, and protocol optimization.
6. Improving Supplies: Digital pharmacies, supply chain solutions for medical supplies
7. Payments and Financing: Insurance, loans, and payments- all managed digitally.

Digital health is attracting enormous investor interest. A record $8.4bn of equity funding flowed into privately-held digital-health ventures in the third quarter of 2020, more than double the amount a year ago. There was also a spurt in dealmaking.

Consumer-centric healthcare ecosystems needed

The healthcare sector in India (and in most of the world) is organized by service lines or specializations. The patient has to deal with each service provider- diagnostics center, doctor, hospital & internal specialist departments, pharmacy, specialist, etc.- separately, carrying her medical records (handwritten, printouts, or DVDs) from one to the other. This happens even within a large modern hospital. This methodology evolved over past decades when accidents, acute problems e.g. heart attack, and contagious diseases requiring episodic interventions were the predominant medical concerns.

With life expectancy increasing, the prevalence of chronic conditions (e.g. diabetes, heart disease, kidney problems, hypertension…….) is rising.  These conditions require long-term, regular care covering a large number of service providers. In most acute medical problems too, the consumer has to deal with multiple agencies e.g. doctors, diagnostics labs, hospitals, specialists, pharmacies, etc. There is clearly a need for an ecosystem to deliver a personalized and integrated experience to consumers while at the same time enhancing provider productivity, engaging formal and informal caregivers, and improving outcomes and affordability.

A consumer-centric healthcare ecosystem will include the following components:

• Traditional care: Direct care covering diagnostics labs, hospitals, doctors, pharmacies, and specialists
• Home and Self Care: Remote monitoring, self-service solutions, home health, virtual care, and virtual pharmacies
• Social Care: Support networks covering community, religious centers, family, and Government assistance
• Daily life activities: Patient actions and habits enabling wellness and health, including fitness and nutrition.
• Financial assistance: Insurance coverage, payment structuring, digital payments, loans/financing, and asset management.

The capture of electronic medical records (EMR) and sharing between different healthcare providers is a precondition for the successful operation of such an ecosystem and requires government intervention.

Future healthcare ecosystems will have to be built around the needs of different patient segments and their care journeys. For instance, healthy patients may set wellness goals, use a predominantly digital ecosystem, and rely on personal data and insights from various digital devices including wearables. At the other extreme, patients having complex chronic conditions will need a healthcare ecosystem that covers all the components outlined above. For them, coordination between providers and services, delivered virtually and in-person, at or near the home, becomes critical to the end-to-end experience and health outcome.

The objective of healthcare is to improve health by caring for the consumer and curing or controlling the medical condition. Across the world,  new productivity metrics are being developed. Some firms are moving away from fee-for-service to risk-based contracts that pay out when outcomes improve (e.g., if diabetics get blood sugar under control).

Telehealth Platforms in China

The pandemic has accelerated online consultation and remote diagnosis & treatment of patients in hospitals. This has led to numerous telemedicine platforms, centered around hospitals, being set up in China.

Some major healthcare ecosystems in China are outlined below:

• PingAn Good Doctor is the leader in telemedicine services in China having four major business segments: online medical consultation, consumer medical care, health mall, and health management & wellness. It has 1836 in-house medical staff and 6000 external doctors. It reported 831,000 average daily online consultations in 2020. By June 2020, registered users grew to 346 mn with 67 mn active users.
• JD Health is the largest online retail pharmacy in China with a share of 30%. It launched a “family doctor” service with 171 in-house and 68,000 external doctors. In addition to seeing doctors online or offline, users can buy medicine on JD’s online retail pharmacy and enjoy its fast delivery service- same day or 30 minute delivery in 200 cities. It reported 72.5 mn active users in 2020.
• Ali Health has more than 15,000 medical institutions connected to medical insurance payment services and 39,000 doctors for online consultation. It is the second-largest online pharmacy in China (share 27%) having about 65 mn active users. Using an omnichannel model, it offers delivery of medicines in 1 hour in 200 cities.

Healthcare ecosystems offering seamless online and offline services to patients have started operating in China. The collection of health data in a centralized and organized manner, with supportive regulations, is enabling digital delivery. Online healthcare platforms are expected to continue to grow to create a more patient-centric engagement model.

 

Healthcare in India- Implications and Options

The telehealth market, including remote monitoring, is expected to grow from $203mn in 2019 to $679 mn in 2024 (Frost and Sullivan). The impact of digital health coupled with the changing needs and expectations of consumers will create opportunities and challenges for all parts of the healthcare sector as summarised below.

1. Digital Health Ventures: Numerous digital tech ventures have been launched in different categories of healthcare. Earlier such tech forays into healthcare often did not significantly improve health outcomes. For them to thrive, a close working relationship with traditional healthcare firms will be required. Partnerships between the two, along with joint or embedded offerings, will increase adoption and yield better results.
2. Hospitals: All hospitals have experienced increased use of remote and digital processes during 2020. Going forward, huge shifts are likely to take place for hospitals- from inpatient to outpatient care and from outpatient to home care (which most patients prefer). What was once done in a hospital room may be done in offices or in homes, including procedures such as chemotherapy and X-rays. Healthcare ecosystems will emerge as hospitals, tech companies, insurers, and governments work together to improve patient care and health. Many ecosystems may have general coverage. Others may focus on specific chronic ailments or conditions needing specialized attention across players. Some may pioneer outcome-based care models.
   • Two operating healthcare ecosystems in India are summarised below.
     1. Apollo24X7: Apollo has 10,000 beds, 70-plus hospitals, 300 clinics, and close to 4,000 pharmacies across India. They are in health insurance and are a third-party administrator (TPA). The Apollo 24X7 healthcare platform was started in February 2020 and onboarded 3,000 doctors within the first 60 days alone. Today it has more than 7,000 physicians and 30,000 other healthcare professionals. Patients can use an app to get teleconsultations, remote diagnoses, drug refills, and even secure a medical loan through Apollo’s partnership with HDFC Bank. The operating philosophy in Apollo24X7 is that the virtual has to work seamlessly with the physical – e.g. all online drug orders are delivered from Apollo pharmacies within two hours.
     2. Practo: It is a healthcare platform where the Practo app helps consumers with all their healthcare requirements – from finding the healthcare provider to booking an appointment, online doctor consultation, getting diagnostic tests done, and even ordering medicines. There are around 30,000 doctors, clinics, and hospitals on the Practo app.
   • Several hospital chains e.g. Fortis, Aster, and Manipal Hospitals have promoted healthcare platforms. All hospitals will have to decide whether to join one of the healthcare platforms already launched or to anchor a regional platform or create a specialized ecosystem for one or more chronic conditions. Some may choose to become specialists in some discipline (e.g. Tata Memorial for cancer) and forge links with more general healthcare platforms.
3. Diagnostic Centers: They need to incorporate the latest equipment and techniques for future growth. The large diagnostics chains eg SRL, Dr. Lal Pathlabs, Metropolis, or Thyrocare can potentially become anchor members or co-promoters of healthcare ecosystems. Others can join one or more of such platforms.
4. Home Care providers: There will be growing demand for home care and patient monitoring using the new generation of digital technologies. Firms like Nightingales Home Health (Medwell Ventures), and Portea which specialize in home care can become key members of healthcare ecosystems.
5. Clinics, and Doctors: Many have already adapted to remote working. They need to incorporate the latest techniques available in their specialties and consider becoming part of healthcare platforms.
6. Medical Stores/Pharmacies: Many pharmacies, especially in metro cities, have adopted digitally enabled transactions- orders on messaging apps, digital payment, and delivery at the gate. Pharma retail chains e.g. Fortis Healthworld, as well as single stores, can consider joining one or more online healthcare platforms offering quick home delivery of medicines- say, within an hour.  They may have to further digitize their operations to integrate their inventory and order management with the platforms.
7. E-pharmacies: Several online pharmacies have been set up e.g. 1mg, PharmEasy, and Netmeds. They should consider joining the healthcare ecosystems likely to be set up. They may need to have a physical presence or arrangement with local stores to ensure speedy (one to two hours) execution of orders.
8. IT Firms: The digital transformation of the healthcare sector opens enormous growth opportunities for tech firms. Companies like Microsoft(Azure), Amazon(AWS), and Google are eyeing the interoperable, cloud-based data infrastructure that is needed. Others like Amazon (Alexa) and Apple (Siri) are working on consumer-facing applications that will assist the patient in health monitoring and management using sensors, wearables, analytics, and AI.
9. Government: It has launched the National Digital Health Mission that aims to create an open digital health ecosystem (health ODE). This will be a shared digital infrastructure that can be leveraged by both public and private enterprises to build and provide new, innovative, healthcare solutions. It will include a unique patient Identity (ID),  health records, interoperability, and automatic claim settlement. Once ready, it will revolutionize India’s healthcare sector. However, till it gets implemented, each ecosystem may have to develop its own data records and standards.

Healthcare- Facing Digital Disruption

The pandemic has introduced consumers to telehealth and digital technologies. Numerous ventures offering digital health applications have been launched. Widespread disruption in the healthcare sector can be expected over the coming decade. In the future, multiple healthcare ecosystems are likely to emerge- some general and others focussed on specific health conditions- with the objective of improving patient health and consumer experience.  Innovative outcome-based models will also emerge. Firms that make judicious choices and seize emerging opportunities will be the winners of tomorrow. Others will get left behind. The consumer can look forward to greater choice, access to new technologies, improved health, and a superior healthcare experience.