Amidst the COVID-19 Pandemic, the fragility of the US healthcare system has been exposed.
We now face a myriad of problems:
The sheer number of patients in need of treatment for the virus itself is overwhelming the healthcare infrastructure.
Shortages in supplies and professionals are stirring up fear that not everyone will be able to have access to medical treatment.
Social distancing and quarantine measures have forced many doctors to cancel routine and non-emergency appointments.
Ultimately, there is no certainty of how long this Pandemic will persist. Certain scientists have even made reasonable projections that COVID-19 will last as long as 2 to 3 years.
A higher mortality rate among young people and low-income families in US exposes an inherent inequality in the healthcare system.
A few questions arise from how we currently tackle this pandemic: Why were we not prepared for the pandemic? How can we make healthcare more accessible? As we have seen that in many industries, technology has allowed us to scale up businesses and provide a more accessible and capital-efficient product to fulfill a wide array of consumer needs. However, what does that mean for the healthcare industry?
We at Bridge Point Capital believe that the future of healthcare includes a consumer-driven business model with an actively engaged consumer. Telemedicine/Telehealth has long offered a viable solution; however, this approach hasn’t yet received enough demand prior to the outbreak of coronavirus. As a result of the crisis, there has been a large uptick in the need for digital platforms to service the sick due to enforced social distancing, misinformation and fear for catching the virus. Consumers have literally been forced to adapt to this new service approach during the crisis. Fortunately, the system has been working successfully. We believe that this has permanently changed consumers behavior.
According to George Karapetian M.D., Facility Medical Director of Memorial Care Medical Group in San Juan Capistrano, regarding the future of telemedicine, “you almost need a crisis for people to accept new ways to engage or do business. This is very true in the healthcare industry.”
Many medical practices who kept their lights on during this crisis were forced to embrace video conferencing with clients and fine-tuning services digitally. Although such services were not a novelty, every new product faces a learning curve, the steepness of which in turn depends on the need, simplicity, and efficiency of the product. The COVID-19 disruption has created an optimal environment where practice speed up this learning curve out of necessity. Regardless whether they hold an analog or a digital mindset, medical practices finally find themselves engaging and learning about the pros and cons of offering a digital practice alternative.
Now, let’s pivot towards consumer preference in order to understand how different generations interact with the medical system. Accenture in 2019 conducted a ‘Digital Health Consumer Survey’ to better understand consumer preferences impact on future health trends.
As shown in the chart below, the result of “Who has a PCP?” indicates that only 55% of Gen Z have a PCP, “Some younger generations say they would like to have a PCP but have not found one that meets their preferences for affordability and convenience.” (Accenture 2019)
What are millennials looking for? The chart below expresses the younger generations' dissatisfaction with current services. This suggests that there is a large unmet need and that if telemedicine aims to be efficient it should tackle those needs.
We have witnessed a shift in the way medical practices are interacting with consumers, as the chart below highlights that “More than half of patients surveyed expect digital capabilities—and these expectations increasingly influence who patients choose in a provider.”
So, considering the Accenture’s survey lets shift focus to some of Bridge Point Capital’s views of the current climate. Millennials and Gen Z have a very democratic socialist political tendency, which is almost always associated with an advocacy for universal and affordable healthcare in the American political dialogue. This is a result of a different fundamental logic held by this category, which is divided into three parts according to our observation and research:
1. Millennials and Gen’z familiarity with the digital world, which is inherently transparent and relatively equal, has planted a deep belief in a modern version of equality in their minds.
2. A deterioration of material well-being. College tuitions and housing prices have multiplied over the years, while minimum wage has remained to be the same (adjusted for inflation) over the past 30 years. Many students cannot pay their debts, and many of them cannot own a house. It is no longer true that you can be part of the middle class if you simply work hard. The “American dream” is slipping away.
It is therefore natural for Gen Z and Millennials to accept telehealth solutions on the assumption that those are cost-effective and life-preserving. When it comes to doing health check online, these digitally-enabled young consumers have no issue interacting with it.
The overarching trend that will help telemedicine prevail long after the current surge in the market is based on principles highlighted above. There still needs to be a better alignment between all the stakeholders like insurers, hospitals, consumers and medical professionals. Although we are observing tremendous changes within major companies like Walmart, Amazon, Google and CVS, which are shifting towards healthcare services and striving to making healthcare more accessible, a lot of work still needs to be done. The COVID-19 disruption is only catalyzing the speed at which we accept changes brought by technology, which can create a more efficient, accessible and affordable means of Healthcare. In Summary, Bridge Point Capital remains confident that telemedicine is here to stay, and it is up to investors and businesses to implement it into society.