As we turn the page on 2020, Spurrier Capital Partners (“SCP”) is entering 2021 with true optimism that this past year was a wake-up call to all stakeholders across the U.S. Healthcare continuum as it pertains to the adoption and usage of healthcare technology solutions. The COVID-19 epidemic placed a spotlight on inefficient practices within traditional care delivery models, recognizing the critical nature of digital technology in the current provider-patient landscape and in pandemic preparedness planning. In effect, this has led to a confluence of events that has generated strong secular tailwinds in which macroeconomic and healthcare forces have converged to accelerate the digital transformation of healthcare by years,
if not decades.
The COVID-19 pandemic dramatically pulled forward technology adoption, acceptance of virtual care as a viable alternative, highlighted structural deficiencies in our brick-and-mortar health system, and significantly elevated public recognition of the need to address “whole-person” health.
Key healthcare stakeholders are now becoming long-term partners in harnessing digital technologies, rather than being late adopters or partners only in times of emergency. Ultimately, this crisis has sparked a Healthcare Digital Revolution that has accelerated the trajectory of technological adoption and rekindled a fire of innovation within all facets of the healthcare ecosystem. SCP is committed to partnering with healthcare technology companies that are transforming the healthcare ecosystem through disruptive digital solutions.
TECHNOLOGICAL INNOVATION DISRUPTING THE STATUS QUO
A longstanding perception of the U.S. Healthcare system is the paradox that America has the best providers, the best scientists, the best therapeutics, and the best diagnostics and devices that are needed for outstanding patient care; but the delivery is not what it should or could be. As a system that had yet to fully embrace the Digital Revolution, the U.S. Healthcare system was ill-equipped to cope with the pandemic and all stakeholders were forced to embrace technology to successfully face the crisis. COVID-19 has sparked the transformation of stakeholders by unleashing the power of digital technologies and beginning to address the current deficiencies in the healthcare operations landscape.
Healthcare providers are digitizing existing infrastructure at break-neck speeds, but many are still managing the crisis through traditional methods. The past year has created a tipping point, and both consumers and employers now demand digital tools be tightly integrated with traditional care delivery to create a streamlined and safer patient experience. The pandemic catalyzed an accelerated shift within hospitals from legacy systems to next generation solutions across many key areas, including interoperability / data management technology, patient flow, capacity and equipment tracking, as well as improved healthcare workforce management. SCP anticipates tailwinds from COVID-19 will continue to drive adoption of Telemedicine, patient engagement, and other remote patient monitoring technologies that are helping to facilitate the shift outside the four walls of the hospital to outpatient facilities, post-acute care settings, and patient homes.
THE RISE AND SUSTAINABILITY OF TELEHEALTH
At the onset of the pandemic, healthcare organizations raced to implement all types of Telehealth solutions to support their communities under shelter-in-place orders. Today, the healthcare industry stands lightyears ahead in its adoption of Telehealth systems, including providers using technology to deliver care through Telemedicine, communicate with patients through innovative patient engagement platforms and enable data collection directly from patient homes. There has been a structural shift where COVID-19 accelerated Telehealth adoption and utilization by healthcare providers, patients, and payers. Pre-pandemic, Telemedicine visits attributed less than 1% of office visits; Telemedicine visits peaked to 50% during April and now sit around 11%. CMS’ most recent fee schedule made the temporary reimbursement change permanent which not only further solidifies the acceptance and value of Telemedicine by patients and providers, but also demonstrates CMS’ commitment to a technology-driven delivery model.
Increasing access to care at home and outside the four walls of the hospital provides a safer, cost-effective, and high-quality alternative to traditional care models. Through this rapid adoption of Telehealth solutions, providers will reduce costs for consumers and insurers, increase convenience to users, and improve capacity restraints. COVID-19 provided a much-needed catalyst for the widespread utilization of Telehealth solutions and proved that it is a viable platform for patient and provider interaction. As we enter 2021, SCP expects to see adoption of Telehealth solutions to continue and remain in place long after the current pandemic.
A great example of investment in Telehealth solutions involving an innovative patient engagement platform transpired just ahead of the current pandemic when SCP advised a leading patient engagement platform, Relatient, on its sale to Brighton Park Capital. Brighton Park invested in Relatient to improve the patient experience through their innovative engagement platform which drives better outcomes for healthcare organizations.
HEALTHCARE AND GOVERNMENT POLICIES
With a spotlight placed on inefficient practices, technology became necessary for some patients to access care, thus relaxing industry barriers, driving new collaborations, and creating market opportunities. To expand access and reduce costs, regulators have rushed to ease restrictions to proactively manage an individual’s health. This is likely to be a significant catalyst for the healthcare landscape that could have long-term ramifications as patients, providers, and payers (both private and public) grow accustomed to the newly digitized climate. We have already seen regulators take steps to make some of these changes permanent, such as with Telehealth.
Such innovations will ultimately bring about better patient outcomes, as well as cost savings for patients, providers, and society. Successful and responsible implementation of new technologies in healthcare presents an extraordinary opportunity for governments to better support innovation and meet the evolving needs of the patient population. The current political arena has already demonstrated willingness to support regulations that bring these new technologies to market, such as the HHS’s 2020-2025 Federal Health IT Strategic Plan. Likewise, during the pandemic, the U.S. government has created numerous public-private partnerships with companies, such as TeleTracking, who for the past 30 years has been focused on mitigating the operational challenges hampering our nation’s ability to provide consistent access to quality health care across all of America. TeleTracking’s partnership with HHS has enabled real-time nationwide visibility into bed capacity, staffing, PPE, and therapeutics just when the U.S. Government needed it most. A predictable and transparent public policy environment open to public-private partnerships will fundamentally underpin the digitization efforts needed to transform the healthcare system beyond the COVID-19 epidemic.
Despite the sobering reality of COVID-19 regarding the lives lost and forever changed, the pandemic has nonetheless created a fundamental shift in the Healthcare Technology landscape. Gartner expects worldwide healthcare spending on IT to achieve a five-year compound annual growth rate (CAGR) of 6% and to reach an estimated ~$170 billion by 2024. While the shift towards digitization was well underway before the pandemic, we only expect the accelerated trends experienced in 2020 to continue in 2021 and beyond in order to meet newfound patient demand for connected care.
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