Startups are the New Face of Healthcare

June 18, 2019
Posted by Colan McGeehan

A history of lagging innovation has left the healthcare landscape ripe for disruption. A profusion of healthcare startups aims to turn the opportunity into industry-wide disruption.

Healthcare may not seem like an exceptionally ripe space for disruptive innovation: a devilishly complex system of laws, regulations, and industry norms doesn’t seem particularly welcoming to new ideas and creative thinkers. Yet, it is — for each impediment comprising the general pall that makes healthcare such a challenging space in which to innovate, there exist equally potent opportunities for innovation.

For one, rising costs have placed added pressure, urgency, and impetus to the notion of industry-wide disruption. At the same time, an evolving patient population has begun to ask of their healthcare what they’ve already been granted from every other aspect of their lives — access, speed, choice, and low-friction digital experiences. Patients accustomed to getting everything online and on-demand are pushing for (and reacting positively to) streamlined care options.

In response, a number of newcomers have recently risen to the forefront of public attention, bringing unprecedented and potentially life-saving technological advancements to market. In this landscape, many players with a startup mentality are no longer considered industry outsiders, but, rather, industry leaders.

Disrupting Inflated Healthcare Costs

Industry-wide, healthcare spending is ballooning with no signs of slowing down. In 2018, American workers spent 65% more on family coverage than they did just ten years before, while over half had deductibles of $1,000 or greater. Saddled with these costs, patients are eager for lower costs and more options.

Patients can now turn to insurance and health service comparison tools like Policy Genius in order to more easily compare a range of options and gain visibility into real service costs. They’re turning to new options for health insurance, like Bind, which works specifically with self-insured employees, using a machine-learning algorithm for sliding-scale health insurance pricing without deductibles. New York City-based health insurance startup Oscar is delivering a simplified slate of coverage options, along with powerful, millennial-focused messaging, and creative usability perks. That Oscar can no longer rightly be called a health startup (its valuation surpassed $3 billion in 2018) instead it is a disruptive innovation example..

While these organizations are innovating on cost, others have gone to market with solutions to clear gaps in the current health insurance environment, where traditional rules can leave patients frustrated. Carrot Fertility, for instance, provides benefit packages to companies, aiming to make IVF treatments more accessible and more inclusive.

Meanwhile, employers are just as eager as patients to address soaring healthcare costs. Companies that offer healthcare plans are paying out more than ever — some 82% of plan costs for individuals. In response to this trend, giants like Amazon, Berkshire Hathaway, and JPMorgan are backing their own health insurance startup, aiming to lower costs for a collective 1.1 million employees. At the other end of the spectrum, platforms like HealthJoy are leveraging chatbots to trim company costs.

How Patient Choice Is Changing Healthcare Services

For years, healthcare lacked disruptive innovation, lagging behind while other industries made major strides in personalizing and streamlining the customer experience — and new health startups are moving in to fill the gap.

The SolvHealth app, for example, helps patients find same-day appointments, while Zocdoc, currently valued at over $2 billion, provides scheduling and patient reviews. Apps like Medici allow HCPs and patients to message directly as a supplement to in-person care.

Other disruptive innovation examples involve startups focused on potential new models of healthcare, allowing patients to choose services based on preference. Some of these still rely on in-person care — the Heal app actually allows patients to schedule at-home doctor visits. For top-notch health services entirely separate from insurance, patients can choose San Francisco-based Forward membership. Other startups bypass HCPs entirely, focusing on specific home health needs — like Quip for electric toothbrushes, Candid for DTC orthodontic products, and Keeps for baldness treatment.

But telemedicine may be one of the hottest spaces in the industry, giving patients the accessibility and convenience they’ve come to expect. In a model that is becoming increasingly popular, LemonAid allows patients to talk online with a doctor, for a fixed fee, to get quick prescriptions for specific conditions. Apps like Talkspace allow patients to video chat with mental health specialists. For busy, remote, or otherwise limited patients, telehealth options make it easier to pursue immediate treatment, which, beyond convenience, can cut costs and improve health outcomes.

Streamlining Healthcare for Improved Results

TechStartups are helping healthcare move at the pace of modern life, with convenient pharmacy services and diagnostics that bring next-generation technological breakthroughs to market. The result? In many cases, improved patient outcomes.

Pharmacy startups have already made major shifts in the industry. Companies like Pillpack — a startup purchased by Amazon in 2018 for almost $1 billion — sort medications, coordinate refills, and ship packages directly to customers. Many patients prefer the ease of pill packaging and delivery, but a well-designed product isn’t just convenient — it could actually encourage patients to take their medicine correctly, something which about 50% of chronic suffers don’t do.

Then there’s diagnostics. While diagnostics represents just 3% of healthcare spending, it plays a crucial role in a whopping 70% of clinical decisions. Despite this, the space has historically lacked competition. Perhaps unsurprisingly, testing and processing can take weeks. As a result, patients frequently forgo expensive tests or never follow up on results.

Ambitious companies are aiming to accelerate and otherwise improve the diagnostic process. Investment in this area was slow until about 2014, but technological advancements are finally making many of these business models more viable. Genalyte is working to achieve one-drop blood testing, while Confer Health is working to make clinical-grade diagnostic tools available to patients in their homes.

In this new landscape, there is rich business potential in leveraging new diagnostic technologies. While the public is familiar with the health insights available with mail-in genetics tests, more recent startups are using AI to analyze genetic data for signals that would otherwise be invisible to human doctors. Intended as additive services for HCPs, these tools tend to focus on specific conditions or care points: Renalytix AI was designed to help diagnose kidney disease, while IDx uses retina scans to look for conditions like diabetic retinopathy. Not only do such tools hold potential in terms of reducing the costs of diagnosis — they can also catch diseases earlier.

Healthcare Marketing Evolves and Innovates

The entrepreneurial mentality has become one of the most important ingredients for success in healthcare marketing. Healthcare marketers are facing many of the same challenges these startups are working to address. We operate in a highly regulated space, and must fully understand and abide by regulatory guardrails in order to message our clients’ audiences effectively. With more digital channels and media options than ever before, marketers have more opportunities to reach, educate, and connect with patients. The trick is to reach the right patients through the right channels with the right message at the right time.

Success won’t come from reaching every possible patient as cheaply as possible, but from finely-tuned targeting, well-tailored messaging, and an ever-deeper understanding of what each patient wants and needs. With the right behavioral data, granular insights aren’t just possible — they’re inevitable.

This new generation of healthcare startups has proven that despite regulatory impedances, you can innovate; you can improve the patient experience, and you canmeaningfully differentiate yourself in the marketplace. The companies with the expertise necessary to take smart risks will be able to innovate industry-shaking solutions to age-old challenges.

We believe that those kinds of risk — industry-shaking but measured — deserve the support of the healthcare industry. That’s why we’re launching Disruption Garage, a one-day, Shark Tank-style event intended to help discover and launch the most innovative new ideas in healthcare today. If you’re sitting on the next big disruptive idea, apply to pitch it to the PHM Lion’s Den panel of judges for the opportunity to bring your project to life.



As Chief Investment Officer of Publicis Health Media, Colan McGeehan oversees investment management, partnerships, programming, and events for PHM. Colan has spent much of his 17 year career collaborating with healthcare clients to develop innovative solutions that drive results, first on the publisher side of the business and now on the agency side. 

Having spent time at companies such as the New York Times, WebMD, Sharecare/The Dr. Oz Show, and Time Inc, Colan’s expertise spans across platforms and disciplines. He serves as an Executive Sponsor to many of PHM’s clients, positioning him to leverage his unique ability to connect clients and partners to bring imaginative ideas to life. 

Colan lives on a farm in the Hudson Valley with his wife Cristy Lee, where they have been featured on multiple episodes of the hit DIY Network show Barnwood Builders. He is currently an active board member, investor and advisor to various startup, venture capital, and private equity firms in the healthcare and entertainment industries.

Connect with Colan on LinkedIn.



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