The incredible pressure and complex medical environment in the healthcare sector is indeed the holy grail of technology applications.
The Translation Bureau is a compilation team that focuses on technology, business, workplace, life and other fields, focusing on foreign new technologies, new ideas, and new trends.
Editor’s note: The healthcare market will usher in real change. In the eyes of A16Z partner Julie Yoo, the driving force behind it is software. Recently, she published an article on the A16Z blog, sharing in detail how the software swallowed up health care services. In her opinion, this has only just begun. The original title of the article is “How Software is Eating Care Delivery in Healthcare”, compiled by the Translation Bureau, hoping to inspire you.
We believe that the moment is the moment when the healthcare market is welcoming real change, especially in the medical services sector.
In this article, I will describe:
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Some favorable factors for creating unique opportunities for technology startups in the healthcare sector;
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What opportunities in specific areas are mature and companies can make a difference;
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And some features that we believe will help to succeed in this area.
In many ways, the incredible pressure and complex medical environment in the healthcare sector is truly a great place for technology applications.
Users (patients) in the medical system are often in a fragile, sometimes terrible state of demand, and face a large amount of information asymmetry, inefficiency and lack of transparency. All of these types of questions are very helpful in getting the technology to work.
And, not only in terms of patients, but also in terms of suppliers and deliverers.. Currently, most of the discussion in these areas revolves around the question “Would that robots and artificial intelligence replace doctors?”
But we believe that the right question should be: If the robot can automate 80% to 90% of the daily tasks that doctors or frontline medical staff must complete – these tasks deprive them of the experience they could have provided to the user – what happened?
For tech startups, this is a huge opportunity to really make a difference in this area.
So why is it now?
Basic Data Layer in Healthcare
One of the main positive factors is that the technology-implemented infrastructure has been laid. This allows us to look up and focus on high-end use cases and application areas.
I am referring to the use of electronic health records in the supplier market, as well as many core systems for delivery, and are creating record systems that are very good at storing data.
But they don’t do well in terms of supporting interoperability and data mobility.
This is a huge opportunity for tech startups:
Creates mobility around clinical data, management data or transaction interactions – in the form of APIs or platform companies as a connector between distributed service providers in this space.
With the establishment of this interoperability layer, we believe that technology companies can seize opportunities and participate.
The second positive factor is the concept of “hospital split”, which I am particularly interested in.
As a patient, we used to go to a single acute medical facility called a hospital to get medical care.
Now, many of these hospital services are being offered to us in a more convenient, convenient and inexpensive way.
we Seeing two business models emerged in this downwind:
1. The emergence of new access points. As consumers, we can get more convenient and affordable medical services through these emerging medical websites – whether it’s virtual medical, retail clinics, community services, or even home healthcare. Technology platforms can be used as an infrastructure to operate and connect consumers to these access points.
2, vertical full stack mode. Another set of business models we see here is the “vertical full stack” mode. These companies will establish a full-stack management service for a subset of patients characterized by a disease or a certain degree of demand, becoming an expert end-to-end provider of these patient populations.
In this group, this type of company becomes super-specialized, can take risks, and motivate patients to become more proactive in making themselves better or staying healthy. .
Towards a more consumer-centric approach
The last positive factor we often think about is consumerism—or rather, the combined effect of several factors, forcing stakeholders to adopt a more patient-centric and consumer-centric approach.
Consumers are taking on more financial burdens for their healthcare needs. In the past, the cost of reimbursement for our employer or health insurance plan is now being transferred to us in the form of a higher deductible.
At the same time, consumers are comparing our experience in healthcare with the rest of our lives (retail, tourism, transportation), and these experiences have been magical in the past few years. Improvement.
The gap between these experiences is at a turning point, and many consumers are angry at what they get from health care, so the market’s suppliers are forced to become more consumer-centric and consumer The business is starting to compete.
This is not only because reimbursement expenses are shrinking (and reimbursement)The dynamic changes are very uncertain. It is also the emergence of new entrants in the market. Both technology companies and global Wal-Marts are actively pursuing some low-sensitivity market segments.
This is another factor that forces service providers to really rethink how they do business.
All of these activities, and the convergence of these macro trends, are creating unique moments for technology companies to build their businesses in multiple market segments of interest to us.
So, what areas of the market do we think the next generation of companies will change?
The next generation of healthcare companies will:
1. Change the way we get medical services. These companies are essentially creating new front-end experiences for healthcare. When you have a need, how do you understand what choices you have, what aspects of your insurance cover, and what can satisfy your preferences and needs from a convenient point of view?
2. Change the way we pay for medical expenses. The concept of “financial technology for healthcare” is one of the most obvious opportunities for technology applications. It is a very high volume of transactions, many of which are highly modular in nature and therefore very conducive to automation. , standardization and technical scale.
3. Change the way we experience care. Such companies are actually changing the actual care experience itself. Whether as a supplier or a patient, technology will improve the medical experience.
We will delve into every market segment to see examples of companies pursuing these market opportunities.
New ways to get medical services
Acuity is one way we look at the market: to serve different consumers, we need different acumen. If I need a flu shot, or a mild rash that is treated, my needs are very different from those that are diagnosed with cancer or when I have to undergo major surgery.
Highly related to this is the willingness to consume. As a patient, how much do you want to find the right option for yourself through self-service, instead of relying on experts to guide you to the best option? We have seen many companies in these two dimensions.
WeAlso see that the company is selling products to different market segments. Some companies sell insurance products to cover the consequences and cost risks of specific groups of people.
Some companies are targeting suppliers’ brands: medical systems, hospital networks, and companies that care about long-term relationships with customers once they attract users.
Finally, there is the concept of an open market, which is essentially aimed at indifferent consumers who want to shop and want to see all of their choices in a given market.
How Finance Technology Simplifies Healthcare Processes
Once you’ve determined where you are going to receive treatment, you’ll be very concerned about how to pay for the treatment. In the category of “financial technology for health care”, we see two opportunities.
One fact is that income cycle/medical payments are one of the lowest areas of labor productivity in this industry. In terms of the number of employees at a certain income level, medical care is about eight times that of other industries. Combined with this fact, it can be found that this market has serious pricing complexity, and it is impossible to directly calculate how to pay for these things or their costs.
These dynamics create opportunities for a number of different companies to streamline payments.
Many companies at the top of the chart are pursuing a variety of goals, from improving the patient billing experience to service providers facing the claim submission experience, to how claims are awarded and reimbursed – some companies even Attempting to abandon, replace or abolish the claim system altogether.
In the lower right corner, we see companies that are creating novelty products for novel insurance features or creating novel ways to pay for medical care.
There are a lot of interesting dynamic-based pricing models, and for consumers, their medical costs are more transparent and flexible.
Once you get medical care, you have to figure out how to pay for it. This boils down to: What is your experience when you really accept this service?
We also see that there are a variety of companies pursuing the entire process of patient access to medical services. These are full-stack providers that focus on specific diseases or specific areas of health care.
One example is a digital pharmaceutical company implementing an e-commerce model to manage your prescription drugs. Companies in the middle are often horizontal platforms that create a connection between the patient and the supplier (or contact between different medical environments). The goal here is to improve communication efficiency. Finally, there are companies that offer “last mile” care.
Many companies are creating ways to automate and leverage artificial intelligence to reduce changes across the industry and automate management services.
Based on our engagement with entrepreneurs in the medical technology arena, here are some insights into what we are looking for in this area and what we believe can bring success to the company.
What do we value?
1, company form. One of the core issues we focus on is the actual form of the company. This is not only about growth opportunities, but also how we think about how to capitalize our business. For example, if you are a horizontal platform company, primarily based on technology and deployed in an API-based manner, the company’s financial position will be very different from that of infrastructure-based companies, and infrastructure-based companies are A full-stack managed service company that needs to deploy potential people to the field to support a service-oriented delivery model.
2, business characteristics. What are the characteristics of this industry? What makes it possible to become a real big company? Is this business focused on becoming a node in the healthcare field with a lot of business? For a specific user community, this product is used every few weeks or a year, compared to products that are used in hundreds of transactions per day or every day. Opportunities are more challenging. We also want to consider whether a solution can quickly demonstrate a very clear return on investment (ROI), so that the opportunities for expansion in the customer base will be clearer and there will be fewer barriers around it.
3. Business model. Business model is crucial. Few companies onlyClosed because of poor quality. More often than not, companies face the greatest challenges in distribution. What are your strengths? When you sell products in the B2B field, what are you doing to improve efficiency, or let you overcome resistance to some extent? This may be to establish channel collaboration; or to bring you into a specific ecosystem through unique integration, thereby reducing the risk of users adopting your solution; or you can create network effects through geographic density or user groups.
4. Source of income. This is a service-oriented market, and recurring income streams are the main way you make money. We hope that the company will be able to reproduce the high leveraged revenue stream with a certain degree of predictability.
We just started…
One of the biggest reasons why we are so excited about the current opportunities in the medical field is that this has just begun.
Today’s health care service is where the Internet returned in 1999 – the core infrastructure has just been laid.
In addition, the early digital companies that have been established in the past few years in this area have just begun to scale, providing us with not only general evidence of opportunities in this area, but also our confidence.
Success tends to bring extra success in the healthcare market, and we are optimistic about the early signs that the flywheel is starting to turn in each of these areas.
After all, traditionally, the healthcare market has lagged behind in technology adoption.
Translator: Scale.