The annual Internet Trends report from KPCB's Mary Meeker is seen as a must-read for people trying to keep ahead in the startup/investment industry. That said, it’s 164 slides long and wide-ranging in content, so here's a (belated) analysis of its life science highlights if you haven't yet got round to browsing it.
Being internet rather than generally tech or startup-focused, the report excludes much of the life sciences sector but there is a fair amount specific to health tech as well as some wider trends which apply.
Healthcare in 2014: The catalysts for change
The specific section can be summed up as follows: the combination of (1) problems in the healthcare system and (2) new opportunities for tech in healthcare may now be catalyzing change.
Meeker acknowledges that the current (US) system is:
Health care costs up to 17% of GDP ($2.8T in 2012) with employers bearing a significant and growing burden. Expenditure for individuals is also rising.
27% or $765B is lost to inefficiency, bloated admin and missed opportunities.
The technology used on the consumer/patient side but also within the system has often been out-of-date.
But she also thinks there are many reasons for optimism.
New opportunities for tech
Investment increasing, capital requirements falling
Getting life sciences startups off the ground has traditionally required a large amount of capital but Meeker has good news. Investment in digital health ventures is rising, up 39% Y/Y to $1.9B in the US in 2013.
- Consumer communication with healthcare providers is going online/remote
A growing number (62%) of patients now communicate via email while Meeker highlights Teladoc, a provider of telehealth services which claims $798 of savings per consultation vs. office and hospital visits over 30 days. OneMedical, an innovative (VC-backed) healthcare practice which offers full online support, is to my mind another great example of how providers can make communication with consumers easier.
- Tech improving access to and engagement with healthcare for consumers
Meeker singles out Mango Health, a KPCB portfolio startup that helps users adhere to medical regimens such as statin prescriptions. The report claims a 84% statin adherence for Mango Health users vs. 52% market average. Another startup in this area is the Atlas-backed PillPack. While Meeker doesn’t mention the obvious hurdle of insurance, startups like Cake Health are working to make healthcare spending trackable while Oscar, which recently raised $80M, is on a mission to make healthcare insurance more “human”.
- Consumerization of healthcare
The report states that 52% of consumers want to access tools with rankings for quality / satisfaction / reviews to help them find suitable healthcare providers. Meeker doesn’t cover the role of consumerization in helping people to take care of themselves but it’s clearly a booming opportunity. From diagnostic and predictive tools (uBiome, WellnessFX, 23andMe pre-FDA dealings) to mobile accelerometers (Moves, RunKeeper) and media-dominating wearables (Fitbit, Jawbone’s Up), demand among consumers appears high.
- Government support
According to Meeker, $35B has been administered by the Office of the National Coordinator for Electronic Health Records, while penalties exist for non-compliance. In the USA, 84% of hospitals / academic / institutional practices now use fully-functioning EHR (Electronic Health Records), while 51% of office-based practices do.
General trends that impact health tech
- Mobile devices and sensors uploading troves of searchable and sharable data
The personal health benefits of collecting your own data (heart-rate, diet etc.) are clear and I’ve already touched on the rise of accelerometers and wearables. Meeker flags up the persisting concern that more information and transparency means more privacy issues, a delicate matter in the health arena. An issue for another post...
- Data mining / analytics tools improving and helping find patterns
It’s not just about the personal. According to IDC’s Digital Universe study, 34% of data is useful but only 7% of it is tagged and just 1% analyzed. Yet assembling data en masse provides huge pattern-spotting potential. On the health front, the Human Diagnosis Project aims to facilitate an open system, created by the global medical community, that maps any human health problem to its possible diagnoses. Meanwhile Meeker identifies Zephyr Health, a “big data” startup that mines information to help life sciences research.
Finally Meeker emphasizes the rapid improvements in genomic sequencing - now down to $1000 and 24 hours - as a “treasure trove” for medicine and healthcare. In fact, Genia Technologies claimed earlier this year that a $100 test was in the pipeline, while others see a $10 test as being possible in the next 20 years.
All in all, it's a positive story for health tech in 2014. KPCB itself has an established life sciences portfolio while Andreessen Horowitz recently brought life sciences partner Balaji Srinivasan on board. The firm made its first health tech investment in Omada Health in April, presumably the first move in its healthcare world-eating strategy.