More health tech startups may fold or consolidate as capital starts drying up by end of 2020
Tech startups have had a bumpy ride in the last year or two, and my feeling is that this turbulence will inspire caution, if not downright resistance, in investors. Recent IPOs have yielded tepid financial returns (Uber, Peleton, Spotify), and the spectacular implosion of WeWork. The health tech sector has seen its own blowups: the rise and fall of Theranos and the indictment of Outcome Health executives on federal fraud charges. There’s also the recent case of uBiome, where inflated user growth claims, unauthorized bills to customers with subsequent multiple insurance claims, and regulatory run-ins culminated in an FBI raid and forced administrative leave for the founders. I predict that health tech startups that can’t meet the scrutiny of more skeptical investors may fail or be forced to seek shelter in corporate acquisition.
The government option for health care will become a reality no matter what the outcome of the 2020 elections
As presidential candidates debate the shape of healthcare reform, there are legal battles moving through courts that could affirm—or undo—the changes mandated by the Affordable Care Act. However, a longer-range view persuades me that the U.S. will inevitably join the rest of the developed world in building a universal care system under government auspices. Long-term opinion tracking by the Kaiser Family Foundation shows that after years of fluctuation, a majority of people support a national healthcare program under which all Americans could get their insurance from a single government plan. Individual states, most notably California, are legislating their own single-player plans, and the momentum in the current election cycle is for some form of government-provided insurance along with other reforms. I’m watching to see how the California experiment goes, and whether other states follow suit.
Big tech firms will try again to enter the industry through the consumer channel, but will not scale until they join with providers
In the latest ripple of the acquisition tide, Google has purchased Fitbit. Knowing that this might unsettle current users of Fitbit, the company promises they will have “the choice to review, move, or delete their data.” Some speculate that the deal has more to do with Google’s desire for a presence in the wearable device market than with the health data interests of their customers.
Facebook can monitor health and wellbeing through the language in posts and chats; Google can track the spread of influenza through its mentions in local searches. Popular consumer apps gather data on sleep, menstrual cycles, exercise sessions and the like. The WHO describes this realm as Social Determinants of Health (SDH): "the conditions in which people are born, grow, work, live, and age, and the wider set of forces and systems shaping the conditions of daily life.” As valuable as it may be, SDH lies outside the quantifiable data points of individual health care records. Thus, it’s not a viable door for tech firms to gain entry to the healthcare industry.
I’m watching the corporate sector seek partnership—and in some cases compete with—providers and insurers. I expect that partnerships with the chance to achieve long-term industry success include innovative approaches to EHR, care delivery, supply chain management, employer power and insurance, as well as interoperability and data aggregation.
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