Wasteful spending constitutes an estimated 34% of U.S. healthcare, exceeding $1 trillion annually, and can be attributed to factors such as prevention failures, duplicate services, and over-treatment that could be eliminated without impacting patients. We are operating within a healthcare system that is reactive, inefficient, and overly reliant on trial and error.
So what should we focus on to reduce wasteful spending while improving the quality of care? Early intervention. Detecting patient predisposition to diseases, monitoring for early signs of disease onset, and proactively altering lifestyle choices can keep patients out of hospitals.
I spoke with Michael Snyder, PhD, Director of Stanford University’s Center for Genomics and Personalized Medicine, who has proven this theory. Through constant monitoring and analysis of his own body, he discovered his DNA held a predisposition to diabetes despite his doctor saying otherwise. Tests eventually confirmed the disease, but Dr. Snyder was able to reduce his glucose levels to normal within nine months through diet and exercise improvements.
Healthcare trends are already moving us toward earlier intervention. Recent advancements in technology and science help medical practitioners deliver more precise and personalized health insights to patients. In the last 15 years, the cost of mapping a human genome has fallen from $100 million to below $1,000, allowing the use of data from patient DNA to become an increasingly viable method for providing accurate, actionable recommendations before symptoms occur. Many researchers believe that within ten years, all medical records will include DNA profiles.
Many researchers believe that within ten years, all medical records will include DNA profiles.
Credit: Getty
Moreover, sensors have become smaller, enabling remote diagnostics and monitoring (think Apple Watch or Fitbit). Advancements in artificial intelligence are driving innovation in healthcare as well, helping companies harness increasingly available data to offer enhanced insights to patients. Viome, for instance, is a subscription-based service that sends microbiome testing kits to consumers and leverages AI algorithms to provide food recommendations based on the consumer’s microbe composition (Viome closed a $25 million Series B round in April 2019, including funding from Marc Benioff). This proactive and tech-enabled individualized approach to medicine is known as precision health.
Technology is also progressively giving patients more access to information about their health than ever before. Websites like WebMD, social media, and now wearables that track and share statuses illustrate the consumerization of healthcare. The critical issue with wearables at the moment, however, is that the information they provide is not necessarily actionable. Precision health applications, which primarily rely on remote monitoring, close that gap, and significantly improve the utility of wearables, creating a positive feedback loop that further drives consumer demand.
...sensors have become smaller, enabling remote diagnostics and monitoring... CREDIT:
Getty
The future of healthcare, therefore, lies in consumer-facing precision health startups. The first stage of this movement focuses on patient access to remote testing and diagnostic monitors. The value in this approach is evident through companies like 23andMe, currently valued at almost $2 billion. One tailwind reducing historical barriers to entry to innovation in this space has been the FDA’s approval of at-home DNA tests.
However, consumers demand more than just information about their health, as evidenced by the number of companies like Viome that now provide customized advice based on initial diagnostics. While this space is still nascent, recent acquisitions show high exit potential for startups that use technology to provide personalized information and services for patients. For example, Medtronic purchased Nutrino, an AI-powered personalized nutrition platform, in November 2018. While the purchase amount was undisclosed, Nutrino had raised $11.5 million to date, having completed their Series A round just a few months prior.
Investable precision health startups have to overcome two key entry barriers. The first is support from providers, most of whom lack sufficient time for each patient but are seeking better solutions as U.S. healthcare transitions toward value-based care. The second is developing costly technological innovations typically born out of research labs. These unique processes must have the capacity to alter patient outcomes while gathering proprietary data to bolster AI capabilities. Successful startups also need to consider reimbursement options for patients, and many will adopt subscription-based revenue models, ensuring regular checkups or consistent monitoring.
As companies compete to emerge as unicorns during this era of higher-resolution medical care, we will inevitably see more personalized approaches to diagnosis, monitoring, and treatment. Our system has aimed to present the right treatment to the right group of patients, but soon it will offer the right treatment to the right patient at the right time and in the right amount. While current market disruption is incremental and fragmented (e.g., Viome only addresses microbiome care), within the next decade we will see startups integrating a broader spectrum of technologies such as wearables, blood testing, and DNA sequencing to consistently monitor a person’s body and recommend individualized lifestyle changes to prevent the onset of chronic disease.
Timing of this is key as evidenced by the failure of Arivale, which raised over $50 million only to close its doors in April because costs outweighed patients’ willingness to pay. Though the investment horizon may be a few years out for the most exciting applications of precision health, scientists like Dr. Snyder are actively working to make affordable precision medicine a reality worldwide through centers such as his Stanford Healthcare Innovation Lab.
Patients are progressively gaining control of their own health care with the increase in consumer-facing digital health startups, and regulations in the U.S. are adjusting accordingly. Before long, we will all know much more about our individual genetic predispositions, and more importantly, we will know what to do about them.
