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Mar 11 2020

Healthcare inefficiencies in the United States

If you are a betting person, you would probably bet on the Tech companies to solve HC inefficiencies in the United States..

 

In the States, we spend 19% of our GDP on healthcare, but recognize that probably 20% of that is waste. According to CB Insights research, there is over 175k medical coders working to ensure that Hospitals and Doctors get paid; the average cost of bringing a new medicine to market now exceeds $2.5B; and the cost of employer-based coverage is now over $20k per employee per annum..

 

Given the demographics and increased demand for healthcare—this is now an industry ripe for technology companies to step in and figure it out…Where will they focus- AI , Digital tools/platforms and Digital Health…We have heard the players- Google and Microsoft are moving fast…

 

Google is the undisputed leader in digital health- with over 92 deals and 57 portfolio companies. Their focus is Genomics, Clinical Research platforms, Patient Data and Insurance—all in an effort to drive more meaningful data, better insights and faster commercialization. Their tools include : ML, AI, Advanced Data Analytics and Remote monitoring.

 

Microsoft uses its many incubator programs to work and scale up digital health companies at early stage/Seed investment levels.  It uses its venture arm M12 for later stage funding and focuses on Population Health and Disease management companies. They are also the leaders in storing and use of data.

 

But what lessons can Amazon and Jeff Bezos provide?….if you read his shareholder messages annually, it is clear they are coming to play in healthcare as well….And he applies these beliefs across every business unit, not just in health.  The ROI--his shares since the 1997 IPO have risen from $5 to $1800 per share…His headline messages consistently include:

 

-Wandering is an essential counterbalance to efficiency

-Move fast and focus on customers (think patients)

-Don’t deliberate over easily reversible decisions

-Bet on ideas with large markets and unlimited upside

-Focus on inputs and outputs will take care of themselves

-Work backwards from customer needs to know what to build next

 

In his own words, “ Day 2 is stasis. Followed by irrelevance. Followed by excruciating painful decline. Followed by death…And that is why it is always Day 1 at Amazon”..Hear any Pharma or Hospital execs talking like this?

 

BTW, in 2019 Amazon spent more than 22B$ on R&D, first place! The largest Pharma R&D spender was J&J in 6th place at $10B. Coming in behind Amazon were Google, Intel, Microsoft and Apple

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