The Rise (and Fall?) of Digital Healthcare

Software, Media & Technology

According to PitchBook data, healthcare focused PE funds have been the recent standout performer in raising new capital, with healthcare’s acyclic reputation an attractive proposition to LPs, given lingering uncertainty around interest rate cuts and key elections in the UK and US this year.

The digital transformation of healthcare, bolstered by the potential of AI to streamline processes and improve efficiency, and virtual wards picking up steam in the UK have all been in the news recently.

The telehealth market has grown dramatically in the last four years, fuelled by the pandemic, to be valued at $115 billion in 2023 and is forecast to exceed $285 billion by 2030.1

I was a relatively early adopter to telehealth services, and it brought a breath of fresh air in the early days. The slick app with integrated video consultations, easy access to health records and consultation notes was appealing, compared to changing General Practitioner (GP) every time I moved house and navigating outdated booking systems.

The first few years of my experience was smooth sailing. Consultation slots were abundant with slots available within 12 hours at times, therefore easy to fit around my lifestyle and job.

I was the clear target demographic, tech savvy and generally healthy, with some claims that telehealth services such as Babylon were discouraging older patients to register. At one point, 85% of Babylon’s GP at Hand patients were in the ‘younger, healthier, and more lucrative’ demographic, aged 20-39. In 22/23, GPs received on average £164 per registered patient from the NHS.2

As with most things in life, quality deteriorates as the number of users grows. In the case of my experience, wait times increased and consultations are no longer readily available (at the time of writing, the next available clinician via my app for a video consultation is three days away). It is also difficult to have continuity of practitioner and create a rapport.

My growing despondence might be backed up, while 80% of people have used teleservices at least once, 45% of patients believe they receive a higher quality of care via in-person visits.3

On paper, the digital service has clear advantages, allowing easy access to care for people in rural areas, savings on transport time and cost, integration with electronic health records and access to specialists around the country.

Although having developed rapidly in recent years, digital health and teleservices are still finding their place. Artificial intelligence will likely play a key role to enhance these services and integrate digital tools into virtual care.

AI’s ability to analyse patient data en masse will help to identify patterns, as well as assist with mundane tasks, improve clinical workflows, and ease administrative processes prior to a virtual session, before aiding note taking during sessions.

Combining AI into chatbots can then allow patients to be pre-screened and provided basic (for now) medical advice. Chatbots also offer engagement options for mental healthcare, with the ability to ask probing questions and provide a sounding board for patients.

While venture capital continues to pour money into digital health, over $1.1bn was invested into digital health start-ups in Q1 2024, the boots on the ground at the NHS are implementing virtual wards. Whereby patients are treated virtually from the comfort of their own bed, hooked up to wearable devices that provide daily readings to doctors and nurses, who review cases each day.

Virtual wards are seen as a solution for pressing issues in healthcare, such as capacity pressure, improving patient experience, and probably most desirable, cost savings. An evaluation of virtual wards in the South East of England showed more than £10m of savings and 9,000 admissions avoided in the past year.4

Telehealth may be seen as the future for first point of contact consultations, but the current outlook is far from rosy. The UK’s Babylon Health went into administration last year, after receiving $600m+ in funding and a disastrous listing on the NYSE via a SPAC merger. Babylon’s assets were sold to EMED Healthcare for a meagre £500k. While in the US, both Optum and Walmart have shut down telehealth offerings in 2024.

While I am persisting as a telehealth user for now, the initial buzz has certainly faded. Maybe some things really are better face-to-face.

By Conor Barrett on 03/07/2024