As digital health care technology becomes more advanced, there’s a growing delineation between clinical-focused technology and devices that focus on health and wellness, Vaughn Kauffman told Investment Advisor in April. Kauffman is a principal in PwC’s Health Industries Advisory Services.
That’s partly down to who’s buying the devices. In the health and wellness area, it’s usually consumers themselves. “It’s a discretionary spend, whereas when it’s a more focused, clinical device, the target is the actual doctor,” Kauffman said. He added that “we’re seeing both ends of that spectrum starting to converge, which really creates some interesting business models,” and suggested that “the question for those [health and wellness] companies is how does that data help influence the decisions around taking care of people?”
Ultimately, “the center of gravity in health care is starting to shift to the consumer,” Kauffman said. He noted that the shift started with health savings accounts and high-deductible health plans; “as we see deductibles increase, the consumer is becoming a larger catered group. What that brings is a louder voice in the market around needing to provide more convenient, cost-effective options.”
Consumer-focused health care technology is becoming more cost effective, he said, in part due to startups in Silicon Valley. PwC found that by mid-2014, digital health care startups had raised $2.3 billion, more than they raised for all of 2013. More than $200 million of that went to devices like wearables.
But wearables are more than just FitBits and Jawbones. Kaufmann described tools that can help monitor patients after they’re discharged from the hospital or help consumers determine if they need a visit to the doctor in the first place. Some of those startups in Silicon Valley have created “disposable patches that track all major vitals that any doctor is concerned about in any sort of prognosis: temperature, blood pressure, EKG. Those metrics all then hook wirelessly to the phone, then go into the cloud.”
Do-it-yourself strep or ear infection tests help consumers decide if they need a doctor or if they just need rest and fluids.
“What’s interesting about that is anywhere between 15 million and 30 million visits a year can be attributed to ear infection, or at least someone thinking they might have an ear infection,” Kauffman said. “If I can use this technology as my initial triage, think of the cost avoidance there of maybe not having to go in at all if someone can look at a high-definition image remotely.”
Kauffman compared these consumer-focused health care technologies to the way Internet banking allowed consumers to “become their own teller for certain types of transactions.” He predicts that in the future, hospitals will still be used for certain procedures, but that consumers will be more willing “to go to a retail clinic that’s more convenient and lower cost.”
One of the main benefits of all this data-collecting technology is how much and how frequently it can be collected. “I’m looking forward to the day when I can collect this information, it goes to my primary care physician and they call me to come in for a physical based on the data that they’re seeing, as opposed to me arbitrarily going in once a year and having them ask a few questions, check a few vital signs.”
Kauffman said the need for more convenient, less expensive care is pretty even across all demographics, but is especially strong in the 35- to 64-year-old age group because they’re most likely to be managing not just their own care, but their children’s and their parents’ as well.
Over half of clinicians are comfortable with using mobile apps and devices to monitor patients’ vital signs, according to a December study from PwC’s Health Research Institute. Eighty-six percent of clinicians said that technology will become more important to doctors over the next five years.
However, the survey also found doctors may be more comfortable with “DIY” health care than consumers. Although half of doctors surveyed by PwC said they would use data gathered by patients using a home urinalysis device to prescribe medication or decide whether to set an appointment, just one-third of consumers agreed.
Regulation is another driving force in the preponderance of health and fitness technology that serves the consumer. A lot of those companies don’t want to be more than a pedometer integrated with the cloud because, as Kauffman explained, the regulations imposed on a simple wearable device that counts your steps and monitors your calorie intake are less onerous than a full-fledged FDA-approved medical device.
“That’s why we often say new entrants are coming into health care on the health and wellness side because it’s an easier sandbox to play in,” he said.
And there’s still an adoption issue. Although one in two consumers say they’ll probably buy a wearable device in the next year and one in five consumers already own one, only one in 10 of those use it every day, according to Kauffman.
“Part of the problem is that the data that it’s collecting doesn’t provide any meaningful insight. Typically the people who are buying it are the fitness fanatics who are healthy already,” Kauffman said.
He said the high level of interest among consumers who don’t have a wearable is attributed to some maybe extraordinary ideas about what it can do. “Around 56% of them felt that a wearable will play an important role in extending their life by 10 years,” Kauffman said. “The promise of the role of wearables is there from consumers’ perspective, but its practicality” is limited “because the information isn’t really being used to influence them in any significant way.”