Tag Archives: digital health

Signify Premium Insight: What Signify Research Expects in 2023

With the distractions and disruptions of Covid finally fading, digital health enters 2023 with a clarity of vision, if not full predictability, not enjoyed for three years.  

The broader underlying trends driving digital health – for example, the digitalisation of health systems, hospital IT upgrade investments and a shift towards value-based care (VBC) models in the US – continue. These have the overarching goal of reducing the costs of healthcare provision, streamlining workflows, improving patient care and expanding healthcare services reach. 

For some digital health players, particularly the disruptors who entered the market (with mixed success) directly in response to breakneck pandemic-driven demand, the ‘end’ of Covid creates new challenges to their models. In the highly fragmented remote patient monitoring (RPM) market, in particular, some companies will fall by the wayside. For others, the relative calm of 2023 buys time to plan with greater certainty and implement strategic plans. As such, specific trends will emerge in digital health in 2023, which we outline here. 

Big Tech Becomes Mainstream   

After almost a decade of knocking on digital health’s door, Amazon, Google and, to a lesser extent, Microsoft will finally make the leap from pure cloud play into healthcare IT and services. Amazon and Google will build on recent acquisitions and product launches to cement their position as disruptors in healthcare IT and services. 

VBC will drive Big Tech’s move into the mainstream. Amazon’s HealthLake data aggregation solution, launched in late 2020, will kick on. We also foresee Amazon making more acquisitions this year to flesh out its portfolio. This follows its $3.9B acquisition of primary telehealth concierge business One Medical last year.  

VBC will also be the springboard for Google’s digital health strategy in 2023. The company will expect to leverage its $1B Verily investment, the launch of an AI-powered medical imaging suite last October and its Care Studio platform. These, along with an integration tie-up with EHR vendor MEDITECH, promise to disrupt the existing IT vendor ecosystem in 2023. 

In the public cloud market, the power struggles between EHR vendors and Big Tech, which have been a feature in recent years, will make way for a more collaborative approach this year. Partnerships between Google Cloud and Epic (in the US), and Amazon Web Services (AWS) and Dedalus (in Europe) will accelerate the adoption of hospital EHRs to the public cloud (from a relatively low base of just 15% in the US in 2022, for example). As more hospitals complete their migration journeys, hospitals will in 2023 start to realise lower operating costs, total cost of ownership and improved data security. Increasingly analytics and artificial intelligence (AI) will play an influential role in this, particularly in the early stages in the curation of data to support clinical decision making. Big Tech’s role as a conduit for IT vendors delivering software to provider and payer organisations will also evolve during the year.  

VBC Reboot Takes Root  

Having been hamstrung by Covid for three years (after underwhelming and underperforming for the best part of a decade), the US VBC market will finally shake off the shackles and reach its true potential in 2023. The value of the global VBC market is forecast to reach $11.3B in 2025 (with the US accounting for 80% of that), from $6.8B in 2021.  

Large health systems, Integrated Delivery Networks (IDN), big tech, big retail and major EHR vendors will all drive VBC services adoption. Business models will be increasingly predicated around VBC, and new revenue streams realised. 

IT will play a central role in this, especially investment in risk stratification, care management and patient outreach tools. 

US retail health clinics are aligning with this new VBC reality (see also below). This year will also see pharmacy retail giants expand their primary care services to more of the population than ever before. It is forecast that these clinics will, in 2023, account for double the share of the US primary care market than they did in 2022, deploying their financial firepower to develop the scale needed to improve patient experiences and reduce total healthcare costs.  

As more large retail clinics offer primary care services and IDNs continue to acquire practices and hospitals, there will be a continued reduction in the number of small, independent family practices and standalone hospitals in 2023. 

Size is Everything: Consolidation Around Big EHR Vendors to Pick Up Pace    

The trickle towards procurement around large hospital EHR vendors, underway over the last two years, will become a more pronounced stream in 2023. This will widen the gap between the likes of Epic (in the US) and Dedalus (in Europe), and tier-2 vendors. 

In Europe, consolidation around big EHRs will be notable in Germany, where the €4.3B Hospital Futures Act (KHZG) hospital digitisation initiative is being executed. KHZG funding allocations are based on the vendors meeting criteria around 11 main pillars covering diverse technologies. Big EHR vendors hold the cards in this. 

Oracle Cerner is poised to capitalise on this trend in the UK, where the NHS is encouraging Acute Trusts that are part of the same Independent Care System (ICS) to move towards a common vendor for EHR. Oracle Cerner is already well placed in this market. However, the company has challenges elsewhere this year, and the market will be watching its steps closely. It continues to grapple with a steady erosion of US market share to rival Epic, as well as persistent problems with its flagship Millennium EHR solution on a multibillion US Department of Veterans Affairs contract. Cerner, which was acquired by Oracle last year, must also find a way to stage manage fallout from software multinational SAP’s recent announcement that it would pull support for Oracle Cerner’s i.s.h.med EHR solution by 2030. This year, we expect Oracle Cerner to respond to this by offering clarity to its customers on its intentions for i.s.h.med. Until it does, the vultures will be circling.  

Household Names to Become Synonymous with US Primary Care  

Walgreens, CVS and Amazon will become household names in primary care provision in the US in 2023, deploying their unrivalled physical reach and supply chain and logistics expertise to reach more of the US population than ever.  

This follows a 2022 of headline acquisitions including Walgreens company VillageMD’s $9B purchase of urgent care provider Summit Health, and CVS’ $8B buyout of Signify Health. As the US retail pharmacy chains assemble the technology (for example risk stratification, analytics and workflow tools, as we discussed earlier) needed to transform primary care, these, alongside healthcare systems, payers and independent practices, will begin to make more money from VBC. 

The retail giants will, however, face challenges in 2023. These include how to handle higher acuity cases, and how to manage the connection between healthcare provision and securing reimbursement from government and commercial payers. 

Telehealth and RPM to Change Tack   

Telehealth and RPM will adopt a more strategic stance in 2023, replacing the reactive, quick-win approach of the Covid era. Cementing themselves in a maturing VBC ecosystem, telehealth and RPM vendors will support VBC delivery. Real time remote patient data and video/virtual consultations will be at the heart of this effort. 

We expect more acquisitions, partnerships and product launches from telehealth leaders Teladoc and AmWell, as well as VBC pioneers Innovaccer and Health Catalyst. As telehealth and RPM becomes more mainstream and more consolidated, the emphasis here will be on developing toolsets that will manage patients and serve VBC contracts via virtual care.  



Signify Premium Insight: General Catalyst: An Appetite for Disruption

This Insight is part of the Signify Premium Insights (SPI)-Digital Health service, which will launch on 9 January 2023. From that date, this and all SPI-Digital Health Insights will be available only by paid subscription. Click here for a free one month trial of this service. 

It has been a whirlwind last 18 months for US venture capital (VC) giant General Catalyst (GC). Having unleashed $2.3B-plus in capital through its Health Assurance Fund since last year – becoming the world’s top digital health investor in the process – it then announced, on 15 November 2022, partnerships with 15 major health system networks.   

GC was typically forthright in announcing the development. It insists the new partners will offer a “cross-pollination of learnings that can be a powerful antidote to today’s broken and siloed system.”  

This is a clear reference to current interoperability challenges and the march towards value-based care (VBC), especially in the US. Given the growth potential in these areas, allied with GC’s bold approach (and financial clout), the company is primed to be the healthcare disruptor, influencer and enabler-in-chief of our times. 

The Signify View 

GC launched the Health Assurance Fund in 2021. It was backed by an initial $1.7B funding, followed by a second, $675M injection in 2022. Combined, the funding commitments make GC a leading healthcare investor and, significantly, the world’s leading digital health investor over the last 18 months. GC tops Galen Growth’s respected Health Tech 50 platform, and has completed more investments (36 deals in the last 18 months) in early-stage companies than any other VC. Overall, GC has more than 90 healthcare companies in its stable today, plus several non-healthcare companies.   

The 15 health systems that have partnered with the Health Assurance Fund lend greater momentum and gravitas to GC’s strategic ambitions to transform digital health. Chris Bischoff, GC’s managing director, recently spoke of ‘radical collaboration’ happening between technology investors and leading healthcare systems to drive this transformation. Given GC’s track record to date, it is hard to bet against this latest strategic initiative having the same, disruptive, influential and enabling impact. 

Defined Strategy 

GC’s broad-brush healthcare investment strategy spanning more than 90 companies tees the company up well for future success. The VC firm has assembled an enviable, diversified portfolio of companies covering key digital health growth areas, including value-based care (VBC) IT, care management, RPM, mental health and research/drug discovery, as well as other healthcare segments. GC targets high impact, high return investee companies that can modernise healthcare. 

The company cashed in on the $18.5B sale to Teladoc of Livongo, which gave it further resources to build the Health Assurance Fund. GC is also diversifying its geographical focus. In September this year, it announced a partnership with Guy’s and St Thomas NHS Foundation Trust, as its first health system partner outside the US. The tie-up will deploy existing or new digital tools from GC’s portfolio companies to improve hospital capacity, reduce wait times and address manpower shortage issues at the UK’s largest hospital system. 

There can be little argument as of now that GC is firmly established as a healthcare heavyweight across the industry. And there is more to come. 

Sharper Focus 

With its latest 15 health system partnerships, GC’s Health Assurance Fund is now sharpening its focus. It is no coincidence that several of the group of 15 are heavily focused on VBC. GC frequently talks publicly of the ‘critical work’ facing its partners: how to modernise healthcare, cut costs of healthcare provision and reduce administrative hurdles, and this fits in neatly with VBC principles. 

Announcing news of the latest partnerships earlier this month, GC pointed out that the 15 health systems together serve around 10% of the entire US population. It is a formidable bloc with the potential to make a profound impact on the accessibility, quality and costs of care for millions of people.  

Portfolio Challenges 

GC’s bold investment strategy is not without challenges. As is the model in VC, for every Livongo, there will inevitably be investments that fail to deliver. More pertinently, the sheer diversity of GC’s product range across 90-plus companies could present problems. 

One the face of it, GC’s product strategy seems to be less clear than its overall investment strategy. Some of the product vendors it is invested in are point solutions designed to address specific healthcare needs. In many cases, there are product overlaps between different companies in the GC stable. 

Under normal circumstances, this would not necessarily be a problem. However, many buyers in large hospital networks in the US and UK, GC’s focus geographies, are trying to reduce the number of vendors they are using to support their IT. This is obviously bad news for point solutions vendors, and better news for the big vendors offering more rounded VBC, EHR and healthcare IT solutions portfolios. The trend of hospital IT procurement consolidating around the likes of Epic and Cerner is a threat that GC must address. 

EHR and VBC vendors could hold the key for GC and its partners here. Many of these vendors have so-called ‘marketplaces’ which seek to integrate third-party point solutions into their portfolios to fill gaps in their portfolio. Often, EHR vendors use the marketplace to provide insight for their own product roadmaps. When they see a successful marketplace product, they often mimic it with their own product or buy the marketplace vendor. This is both an opportunity and threat for GC’s companies.  

For the healthcare provider, it is simply a case of selecting the best point solution available on their healthcare IT marketplace to address a specific need. For GC’s portfolio companies, it is a case of getting listed on the marketplace as a third-party provider. This is easier said than done, but being backed by a company of GC’s weight, it should not be an insurmountable problem. 

A Date with Data 

Clearly, VBC is firmly in GC’s crosshairs right now and, despite the challenges it faces around product mixes and point solutions, it is ideally placed to be the digital health disruptor it aims to be.  

GC and its portfolio vendor partners will also be aware of the potential around the management of vendor data. We have written in a previous Insight how Oracle Cerner plans to establish a national EHR database (see Insight here). We questioned in that Insight whether the data being held in-house with EHR and VBC vendors like Oracle Cerner and Epic was, in fact, the big story here. We also questioned if the data would be better commercialised for pharma providers, lifescience companies and research organisations to support clinical trials, for example. In any case, we envisage a lot of investment coming into the data space. 

The End Game 

It would be remiss not to consider GC’s sincere ambitions behind the Health Assurance Fund, and the realities that, as a VC fund, it must make a return on its investments. Its ultimate strategy is therefore to scale its portfolio companies with a view to either selling them to another, larger technology vendor, or for an IPO. For most, this will not happen imminently, but GC will certainly not cling onto its portfolio companies indefinitely. 

Statement of Intent 

In just 18 months, GC has made an indelible mark on the wider healthcare industry. In digital health it is carving a reputation as a disruptor, influencer and enabler, and is well equipped to deal with challenges around point solutions. There is a sense that this is just the beginning of an exciting new chapter for GC’s Health Assurance Fund. In welcoming its initial 15 health system networks into the fold, GC makes another bold statement of intent. It will not be the last. 

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