Ed Holzwarth

The 4 things we know about the $100 billion digital health market

Recently I had the privilege of moderating a panel on the future of health tech. It was a spirited conversation about the challenges and opportunities in that market over the coming decade, and an excellent refresher on the underlying reasons I do what I do: I believe the most effective clinical, research, and connected health applications can improve people’s lives while creating serious economic opportunities and benefits.

By some estimates I trust, healthcare technology is a $100 Billion market including internal tools, standalone apps, and hardware systems that connect to a myriad of sensors. Systemic change is creating demand for more flexible, accessible health technology, and is reshaping who needs what kinds of care and how. Demographic studies tell us that there will be more of us turning 65 than previous generations, and that as we age we want to continue living in our homes while playing active roles in our communities. These numerical and behavioral trends mean that connected home, telehealth, and remote sensing applications might just have found their customers.

The future of health tech is both exciting and complex, and there are 4 things we know for sure.

digitalHealth

Known 1: Regulatory and policy factors define the business rules by which the industry plays.

In the US, healthcare is regulated by the FDA, HIPAA and the ACA. The insurance companies including CMS also play a defining role. Outside the US there are different rules, such as the EU GDPR. While to some these acronyms might conjure a horror film starring people with clipboards and rubber stamps, believe it or not, we’ve found that none of these are that scary after you’ve worked with them and even come to appreciate the importance of their role.

One of the most important factors is that the economic interests in healthcare are different from the marketplace interests, for a complex combination of reasons. The economic imperative, and the real opportunity is quite simple: more than three quarters of our nation’s $2.7 trillion healthcare spending is associated with preventable disease (CDC). To the extent we can invest more in prevention, the more we can save in treating disease in the long run. Unfortunately, the healthcare marketplace has done little to incentivize that kind of solution. Instead, we have a complicated reimbursement model in which the economic gains for prevention get lost in translation. Policymakers have tried to align the marketplace incentives with the economic incentives, introducing in recent years ideas like Value-Based Care, Accountable Care and Meaningful Use, but most agree these are at best partial solutions, and at worst marketing jargon for shared risk they didn’t sign up for.

Known 2: Technology platforms and standards allow innovators to focus on delivering value to end users.

The team at Little Green Software is a big fan of standards and platforms that stimulate innovation by creating a shared solution to common industry challenges like intergration and interoperability. We’ve covered these important platforms and standards in previous blog posts:

The panel cited a few other great examples:

  • OpenMRS, a open source EMR that has made an impact in developing countries
  • Validic, a commercial solution, but nonetheless meeting the need for a standard API to connect with the ever-growing list of health data sources including wearables and apps.

Of course, there remain challenges and opportunities for platforms and standards. For example, while EHR adoption by providers is now high, including by senior living providers, the adoption by EHR vendors of the HL7 FHIR standard for sharing health data still has a ways to go. In case the HL7 FHIR Committee is reading this: it is surprisingly difficult to get a good answer to the simple question “What EHR’s support FHIR?” or its natural follow up, “Which FHIR resources are supported by each EHR?”. It would be great to see this added to Project Crucible, an excellent resource that does answer the related question, “What FHIR resources are supported by which developer sandboxes?”

Known 3: Patients drive the market.

It’s great to be excited about sensors, Big Data, AI, and IoT – these are very exciting, enabling technologies that have opened new opportunities in our field. Yet, to be effective, they need to honor the problems the industry is solving.

All healthcare value chains begin with the patient, the healthcare consumer. Patient value is the primary economic driver in healthcare. It may seem obvious, but: innovations in healthcare must be go beyond cool new technology and create economic value for the patient.

Building systems that support doctors and the whole spectrum of healthcare professionals maximizes their capability, helps patients, and creates value in dollars. Technology, rightly applied, can do that by reducing the inefficiencies in repetitive tasks, data collection, communication, and decision making to make measurable progress in how people experience treatment. Most importantly, this kind of emphasis on patients keeps products focused on problems that need solving.

That perspective helps clarify my work as I look to the next 10 years in health tech.

When patients and providers’ interact with a product, they have to like it, and then, they have to actually use it. That challenge is especially meaningful when one considers the impact of these products on human lives. So, as we design products that leverage the cool new technology, we must remember that user experience is paramount if we wish to avoid building perfect, unused solutions. As a panelist who works with children recovering from trauma noted, if healthcare tech can’t reduce repetitive tasks and practitioner burnout, then it’s not solving some of the core problems in the field.

That progress can happen in the way we understand health, too, with more flexible, human approaches to gathering data. Tools like MeTree, MyPeeps and PPD ACT are helping patients and practitioners make smart health decisions. Researchers can actually monitor behavior in real time, suggest new treatments or modifications, and serve their patients better.

Known 4: We still have much to learn.

The panel last week also reminded me of the many areas we have not yet fully understood in human health. From genetics to psychology to technology, healthcare will continue to require the investment of brainpower to understand and change health.

I founded and help lead two companies in this space specifically to make such investments and impacts.

Pattern Health has demonstrated that behavior change is possible and sustainable by layering the right combination of behavioral psychology innovations into a comprehensive connected care platform. Recognizing how much we have yet to understand in guiding health-related behavior, Pattern Health has built research features into its platform to support its long term investment in learning so that its product, for both clinical and research applications, continues to innovate and improve.

Meanwhile, Little Green Software is making impacts in many other areas of digital health, as a healthcare-focused app development agency that partners with clients whose innovations require a custom software solution. The Little Green team loves working with innovators and researchers, who we consider the great explorers of those domains that we have yet to fully understand.

With a topic this broad, it was inevitable that the conversation we had at the HealthTech 2027 Meetup that evening felt unfinished. As I think about the next 10 years in my industry, I’m encouraged by what’s been accomplished and challenged by the hypotheses we have yet to prove. I very much look forward to continuing the conversation.

Like this topic?

The CXO Talk Podcast Michael Krigsman’s recently interviewed David Edelman, CMO of Aetna to talk about the digital transformation of healthcare.