Digital Health Is The New FinTech
By Michael Baxter
The COVID-19 crisis has accelerated a trend that was happening anyway — Digital Heath is taking over from FinTech.
“For many, many years,” says Julien de Salaberry, CEO and co-Founder of Galen Growth, “we have been listening to every single media outlet and investor regaling us with tales about FinTech. We’re now in the era of Digital Health.”
FinTech has of course been characterised by startups galore — each one trying to find their own niche. The big corporations in financial services were slow to spot the shift towards digital and were often held back by their own IT legacy. When they finally woke up, we saw them drive digital transformation and agile business practice. Perhaps we also saw something that was even more important. Big corporations began to understand the importance of working with startups and scaleups. We saw these large organisations create or sponsor incubators and accelerators, as they tried to learn from startups, embrace their ideas and in some cases, eventually acquire these companies.
In short, large organisations in financial services tried to apply the lesson of The Innovators Dilemma, the theory developed the late Clayton Christensen, who argued that companies often become disrupted because they are too slow to adopt new business models or technologies.
COVID-19 has changed things — no one would question that. It is accelerating a shift towards digital across sectors, no doubt including FinTech. It is self-evident, however, that during this crisis, healthcare has been on the front-line.
HealthTech has had to play a vital role. Telemedicine, for example, has been transformed from a ‘maybe one day’ to an ‘absolute must.’
As Paula Amunategui, Regional Leader Marketing Excellence and Digital Innovation at Roche Diagnostics said: “We have been transferring more and more of our education and training activities and ongoing support to digital channels. But now, obviously, because you have no choice. It accelerates something that we were already doing.”
Miguel Rivera, who is head of business transformation, Asia cluster, Novartis agreed, saying: “In a way, we have seen the acceleration of digital transformation that was going to happen anyway.”
Miguel Rivera, Paula Amunategai and Julien de Salaberry were panellists at a recent Galen Growth webinar looking at the acceleration of digital health in the APAC region.
Also on the panel was Stephen Sunderland, Partner at LEK Consulting. Considering the way digital is transforming healthcare; he said: “The horizon over which [digital change] is actionable has moved from something like three years, with some new investments in the next couple of quarters, to what can we do right now. This because we have an existential problem in our business.
“And the only route through that is, is to digitalise in a more meaningful way and to do that quickly.”
He added: “Anything you write in digital is probably out of date in a month, but if you write it on digital in relation COVID-19, it’s out of date in about 24 hours.”
Healthcare probably sees more significant vertical fragmentation than financial services. Before the FinTech revolution, financial services saw a relatively small number of banks, insurers and consultancies dominate the financial services sector pretty much around the world.
Healthcare’s structure appears more complex, with the pharmaceutical companies on one side, for example, the health care providers on another, with payors and insurers another critical element.
Into this mix, goes digital health, but this creates the challenge of integration. There is a need for interoperability — as different stages in the customer journey might be served by different products, services and organisations.
Miguel Rivera said that you “need a care-continuum, that is constantly connected, because if you have a gap in the series, such as with telemedicine, e-prescription, or home delivery, then the patient is unable to access treatment.”
He then went on to explain what may be the biggest challenge in the digital transformation of healthcare: “What is lacking is connectivity between different parts of the patient journey. In an ideal scenario, I would like to see partnerships, including pharmaceutical companies, so that the patient journey can start being connected, completely digitally, where let’s say I have a telemedicine conversation, where there is e-prescription which is legal and can be reimbursed. But I don’t think there will be a single provider.”
Paula Amunategui said that “the future of digital health is an ecosystem play, that requires increased cooperation, from different players to make a more patient-centric approach, and not look at the piecemeal that we have today, which is simply not effective.”
She added: “If you just address the bits and bobs of on the patient journey, it is much harder to justify it. We are adding complexity rather than reducing it.
“This is not a single-player activity, and we also need the infrastructure to be able to scale.
“And work with governments and infrastructure providers. “
The webinar was moderated by John Cairns, Head of Multi-channel and innovation Japan and Asia at Sanofi. He said: “The need is for interlocking more integrated care, and looking at how we achieve that, as there are lots of component parts, different providers and different technologies which need to be compatible.”
Stephen Sunderland, who is based in Shanghai, has a perspective moulded from his understanding of the healthcare system in China. “From an ecosystem development point of view,” he said, “there was a certain level of scale and regulatory maturity around the digital health ecosystem coming into COVID-19 within specific parameters. I think that COVID has opened the door as to what those parameters could be in the future. The jury is still out on how wide you can open that door, from a regulatory perspective, or how fast.
“There is a huge amount of innovation, but we are effectively at war, and wars drive innovation but also open cheque books.”
He predicts a “good level of consolidation because of network economies. That’s the corollary of cybersecurity and interoperability — you can address those problems by putting your arms around them.”
Digital Health 2.0
But the COVID crisis has highlighted the shortcomings in the healthcare industry. Maybe there was an awareness that there was a need to be more digital, but a certain a wariness too. COVID meant that the industry had no choice but to embrace digital, not just to combat the virus, but to support traditional healthcare when hospitals became places people wanted to avoid. Digital has been forced upon consumers and providers, and maybe it turned out not to be as bad as they expected.
As Julien de Salaberry said: “What the pandemic is demonstrating is that, to just about every stakeholder within the healthcare value chain, the existing business model has proven to be inadequate. They’re all asking the same questions on how they can overcome this?”
For digital health “these are fascinating times for startups. We will also see more engagement from manufacturers, who will see the benefit of being agile, and in Asia, we will see a bias towards the patient journey, what we can probably describe as digital health 2.0. And the good news is that the Asia Pacific region is stuffed full of innovation.” So maybe then the COVID-19 crisis has brought digital health 2.0 closer, and it is in this new era that digital health becomes the new FinTech.