Edit No. 24: A discussion on the consumerization of healthcare

Today’s post is a special one as it features some of my wonderful colleagues at Wittington Ventures. I’ve written about our fund and team in the past (see here). As I’ve mentioned in former posts, my colleagues Megh Gupta and Katie Hayes lead our healthcare investing efforts. I sat down with them recently to discuss a topic that has been on my mind: the consumerization of healthcare. 

When people think about the future of commerce, they’re not necessarily thinking of healthcare. But the term “healthcare” represents so many products and services that we buy and consume as people. And I’ve always been fascinated by the intersection of consumer technology and healthcare — particularly within the context of companies making it easier for people to access health related products and services in the same way they are able to access everything else in their lives (i.e. apparel, groceries, etc.). 

Between telehealth and at-home care, healthcare is increasingly finding patients wherever they are — in settings and contexts that are most convenient for them. In my discussion with Megh and Katie, we explore what this trend means, and how it translates to healthcare becoming truly ubiquitous — in the same way that general commerce has become in other industries and verticals. 

Without further delay, here is the full transcript of our conversation:

Given that digitization is making access to healthcare easier, what are emerging trends in healthcare that are getting you excited? 

Katie: 

One thing that’s getting me excited is the ability to build businesses centered around providing care for a particular ailment due to digitization. I think the first inning that we saw of this were companies like Livongo and Verily, which focus on diabetes. They took quite a simple concept — the keto diet, and provide coaching spanning different areas of care, critical biomarkers, medication management, and labs all centered around the diet piece. In support of that, I think a positive outcome of the pandemic is people’s increased comfort with receiving virtual care. And so, a chronic disease is no longer this life sentence for patients — there are all these virtual programs out there to support people’s wellbeing. If you have chronic back pain, you can use Hinge Health. If you’re obese, you can use Calibrate. All in all, we’re still in the early innings of this phenomenon playing out. 

What role do employers play in providing access to these telehealth solutions for their employees? How does this impact the decision-making of patients in choosing which tools to use?

Katie: 

What’s interesting is that the patient typically isn’t the customer. While there’s this element of having to make conscious decisions about which digital health tools to use, patients take into consideration what’s provided under their health plan. For example, employers used to offer in-person smoking cessation programs, but now offer digital health programs, like a digital smoking cessation program or a weight management program through Noom or Calibrate. 

At the end of the day, the patient gets what’s offered by their employer, but it’s their choice whether or not to use it. And that partially depends on their comfort with digital tools, but also partially from the results they’re seeing. If a coworker loses 60 pounds and is no longer diabetic, they are more likely to use the benefit offered by the employer.

Does the consumerization of healthcare imply that health ownership is falling more into the hands of patients? 

Katie: 

I think the topic of health ownership presents a big challenge since patients often neglect their health, disregard wellness checkups, and ignore chronic disease screenings until they feel an ache or pain. That’s why we’re particularly excited about our investment in Truvian, which makes routine health testing more convenient and actionable. But in terms of proactive measures like chronic disease screenings that folks should be getting, they’re often not thought of early enough. Although patient data is being stitched together by companies, unless there is an acute reason like a severe medical condition that requires significant care coordination, patients often don’t have the motivation to take ownership over their health. While there have been attempts to tackle this through incentive schemes for wellness checkups and startups that sought to accelerate that awareness, at the end of the day, we’re bad at taking ownership unless we feel the ache or pain.

Aside from explicit incentives, what are some solutions that are effectively empowering people to take ownership of their health without adding a burden to their routine? 

Megh: 

I think having more frequent touchpoints with clinicians and easier access to data that maps your progress parlay into the awareness of how you’re feeling, and then being able to take responsibility for it. While it’s great that employers are adopting these digital tools for their employees, they only matter if they drive better patient outcomes — and that’s something we have to be able to effectively measure. 

At the end of the day, health ownership is the responsibility of the patient and the clinician providing the care. Solutions like telehealth, for example, often make it easier and cheaper to own your health. But there has to be a balance between fair compensation, for doctors to be motivated to engage in this format, and cost effectiveness for the healthcare system. This ties into the shift from fee-for-service to systems like value-based care or a capitated payment model, where patients and clinicians work together to lead to better outcomes for the patient, but also in a way that is cost effective for the healthcare system. 

What are examples of startups that are making health ownership for patients – and by virtue of that value-based care – easier to accomplish? 

Megh: 

At Wittington, we saw Nurx (now merged with Thirty Madison) enable health ownership by improving accessibility to healthcare in areas where it is inaccessible due to a lack of providers or confidential options that allow for discussions on sensitive health issues. Nurx, which falls into the category of telehealth and digital pharmacy, had also branched into creating creative solutions for the treatment of migraines. Through an easy-to-use application, patients could show symptoms to a clinician through asynchronous communication with a video piece in a way that allows for a proper assessment and determination of the right course of treatment. Other examples of healthcare companies enabling health ownership through better accessibility include Hinge Health (for remote musculoskeletal therapy), Affect Therapeutics (for substance use disorders), and Brave Health (for mental health for the Medicaid population).

In terms of startups providing the infrastructure to help enable value-based care, we’ve come across companies such as Pearl Health, Aledade and Innovaccer.  These companies are building solutions to allow physicians to identify and manage opportunities to improve patient outcomes while tracking associated costs, enabling clinicians to more easily participate in value-based care arrangements. 

It seems as though telehealth companies need to rely on storytelling as a means of differentiation. Does brand building play a role in gaining customer trust and creating that moat? 

Katie: 

Well, companies such as Thirty Madison acquire new patients by telling their story to gain trust. It’s similar to the journey of choosing a physician in that there’s an element of trust that gets you into, and keeps you in the relationship. 

One thing I found powerful when Nurx (before it merged with Thirty Madison) was launching their migraine offering in this high-impact market was their discovery through research that 80% of migraine sufferers are women. They conducted surveys with their patients that had birth control and a few other products with Nurx and asked, what else do you need? What else do you suffer from that you would love some care for? And then they thought of a new way of approaching migraine care, as Megh was alluding to, through this asynchronous, video format. 

They were then effective in communicating this story — their why and how they’re tackling this problem space differently — to consumers when this offering went to market. And I think it came together really well to signify the trust that someone needs to have when they hand over another piece of their care to a digital health company such as Nurx. 

Are there other consumer healthcare companies leaning heavily into branding that you’re tracking or find interesting? 

Katie: 

Absolutely. For the first time with the pandemic, we’re seeing healthcare companies brand themselves as part of their differentiation strategy. Right now, I’m seeing several interesting companies in the mental health sector. Real is one of them. Through a community-driven model of care, they offer a wellness membership that focuses on women in their 20s and 30s. OURS Actually is another interesting company I’ve come across. They’re an early-stage couple’s therapy platform that’s breaking down the stigma of couples therapy by repositioning it as something proactive. While that’s not an easy narrative to tell, they’re doing a fantastic job at telling it by presenting it as the best wedding gift that you can give to a friend, or the best thing that you can do for yourself in a relationship. 

You just listed some interesting companies on the consumer-facing side. On the backend side, what sorts of companies are getting you excited that are building the infrastructure for consumer-centric businesses such as Thirty Madison, and which parts of the value chain are they focusing on?

Megh: 

We’ve been focusing on a few different areas on the backend side recently: data interoperability in healthcare, clinical trial management systems and technologies, and aging-in-place. Companies such as Slope, Health Gorilla, and Ribbon Health have innovative plays in these areas, from supply chain optimization in clinical trials, to breaking down data silos and enabling healthcare 2.0 businesses to leverage infrastructure. In the aging-in-place market, Tomorrow Health is helping patients get medical equipment at home easily, addressing the confusion and high cost often associated with purchasing medical equipment. I think this is relevant to your coverage on Fire Ant, Qasim, as it blends retail and the go-to-market aspects of healthcare, especially focused on outpatient settings, and getting products into the hands of users in an area that’s otherwise convoluted and confusing.

That’s a good segue into the trend we’ve been seeing of retailers making moves to become full-service healthcare providers. How do you think retailers are evolving to meet the emerging healthcare needs of their patrons? 

Katie:

Anything that puts care closer into the habits of the consumer will increase consumption. Back to what I was previously saying about how it’s difficult for people to take action before they feel that ache or pain, having chronic disease screenings, for example, available in the path of least resistance is the best way to do it. Frankly, retailers are still figuring out what the winning model is going to look like. In the states, we’ve seen some folks take more of the M&A route, as in the case of Walgreens with Village MD. Certainly, what you see across the board is that retailers have a direction in mind in terms of how they want to offer more care. 

While regulatory pieces need to fall into place to offer built-in pharmacies, oftentimes retailers are getting around this by having actual providers like nurse practitioners or physicians that are available to offer care. That’s interesting from an economic perspective because it breaks down boundaries by making care more affordable as retailers don’t have the same overhead as traditional providers. Nor do retailers have the legacy tech systems that hospitals have that are both expensive, and, frankly, difficult to innovate on top of. 

So, we’ve seen some interesting moves as in the case of Walmart coming out with Walmart Health as a standalone concept. By offering a program where patients can choose not to pay with insurance, they make the total cost of your visit cheaper than what your co-pay would be with insurance. Their ability to offer care at a much lower cost has so much potential. 

Megh: 

It really comes down to accessibility. In a world that’s increasingly shifting towards digital commerce, retailers’ objectives to increase traffic into their stores is a great use of the bricks and mortar that these folks already have. Not everything in healthcare can be done digitally, and you’re still going to need in-person touchpoints for demographics who don’t have access to the technology necessary to be able to engage in digital health care. 

In addition to that, aside from big retailers like CVS, Walgreens, and Walmart that are already in healthcare, Dollar General is a new player in the arena because of their big footprint in some socio-economic neighborhoods where there may not be a CVS or Walgreens. Setting up a healthcare operation within a large retailer is non-trivial, and there’s a real opportunity for Dollar General to democratize access to healthcare for their clientele and population.

Diving deeper into the topic of retailers moving into healthcare, what does Truvian do, and what got us excited about their value proposition to make us want to bet on them? 

Megh: 

Truvian has a countertop multiplex testing system that processes a panel of 30 analytes commonly used in lab tests to assess cardiovascular disease, kidney health, liver function, and most things in a typical wellness panel. The technology assesses this from a pediatric vial of blood, typically a 400-microliter draw, and processes the blood test in 30+ minutes in a non-lab environment. It’s a game changer for democratizing access to healthcare, specifically lab diagnostics that have traditionally been centralized. In this case, lab diagnostics are something that have traditionally been very centralized, where a patient goes in to see a clinician to get a requisition for a test and wait three to five days for results. But now, doctors or healthcare settings, like pharmacies and retail locations, can provide almost instantaneous lab result access to the population. 

What got us really excited about Truvian is this whole bit around having data-driven healthcare conversations. If you’re able to arm both patients and clinicians with a way to seamlessly and instantaneously get results, you could see yourself in a world where while you’re waiting to see the doctor, you have a 30+ minute test done, so that when you do go in to see the doctor and talk about the ailments you’re facing, they can have a real data-driven conversation with you about your health, because they have the results right in front of them at that point in time. 

Alongside Truvian, what are retailers like Shoppers Drug Mart doing to accelerate the vision for more accessible healthcare?

Megh: 

There’s an interesting play with what PC Health and Shoppers is doing by way of it being a subsidiary of Loblaw. The ability to marry food and nutrition with healthcare is promising in that people can shop for groceries and receive healthcare under one roof. Enabling patients to fill prescriptions and talk to healthcare providers in this setting can influence patient behaviour, and offering loyalty points to encourage healthy choices can also have a meaningful impact health outcomes. This goes back to my previous point that technologies don’t matter unless they improve health outcomes. 

This, coupled with the ability to measure what type of medications folks are putting into their shopping baskets, allows us to triangulate what kind of underlying conditions they may have. It’s quite powerful as only a handful of players across North America have access to both of these sets of information.

To round out our discussion on the consumerization of healthcare, do you have any parting thoughts or suggestions for startups looking to connect with you?

Katie: 

Sure, firstly, it’s interesting when you ask us these questions from a consumer perspective because it’s not the typical lens we use to look at healthcare. Rather, individuals need to start thinking about health services more like a consumer. They should be thinking about treating themselves to a wellness panel at the Cleveland Clinic, and creating a wishlist of the self-care tools they want. Individuals should consider how they can spend their money and what their return on investment would be in terms of their health. The ultimate winner when a digital health tool works is the patient. And so, thinking of yourself as a consumer of healthcare is a mindset that not many people adopt, but it’s certainly a good one to have.

In terms of companies that we’re interested in right now, we’re seeing a lot of potential in the senior care sector. Although we’re not finding as many startups in this space as we think there should be given the size of the opportunity, we’re excited to dig into this space further. 

Megh: 

What really gets me excited is the widespread availability of data in healthcare. We’re at this interesting point in time where we can effectively monitor biometrics outside of a hospital, create time series data to measure what the individualized normal is for each person, and make more personalized health care decisions based on that. With a better understanding of individual differences in biometrics like heart rate, we can create better treatment plans that lead to better outcomes. Digital tools like Fitbit and the Apple Watch also allow people to be conscious of their biometrics, making patients more acutely aware of their current condition while motivating healthier behaviours. Healthcare has long tried a one-size-fits-all approach, but clearly people are unique, and therefore the care that they receive needs to be unique as well.

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Before I let you go, I want to put in a plug for Megh and Katie with respect to the themes they’re currently investing around. I’ve listed them below. If you’re building a company in any of these areas, you can reach out to them through our Wittington Ventures website:

• Value-based care: Startups building solutions that help enable value-based care and risk sharing in healthcare to gain traction.
• “Infrastructure as a service” solutions: Companies that enable digital health companies to be spun up quickly (e.g., API for anything).
• Chronic care: This area is becoming even more top of mind with an ageing population. This will not just represent “Livongo for X”, but also include things around remote patient monitoring.
• Technological solutions around clinical trials: Startups focused on decentralization, supply chain/operations and real-world evidence.
• Attention on Medicaid: A lot of companies are spending time on Medicare, but the Medicaid population is also massive and highly sticky.