Home Healthcare: The Future of Medicine - Back to the Suture

The Pandemic's Impact on American Healthcare

The recent pandemic has served to illuminate both the strengths and weaknesses inherent within the American healthcare infrastructure. Significant advancements in vaccine and treatment development were notably achieved by scientists and companies based in the U.S.

Systemic Challenges and Inefficiencies

Conversely, the crisis exposed difficulties in healthcare distribution and highlighted substantial cost inefficiencies. Healthcare currently represents almost one-fifth of the nation’s GDP—a proportion exceeding that of any other country—yet clinical results often fall behind those of other developed nations.

Misaligned Incentives and Hospital Reliance

A core issue lies in the misalignment of payment structures and incentive programs. Additionally, there's an excessive dependence on hospitals as the primary locations for delivering care. Approximately one-third of all healthcare expenditures occur within hospital settings, despite the potential for more effective and affordable at-home care models.

The majority of healthcare providers currently operate on a fee-for-service basis, rather than prioritizing preventative care arrangements.

A Shift Towards Reactive Care

These combined factors contribute to a healthcare system that is largely reactive, transactional, and inefficient. Improving both patient outcomes and controlling costs requires a shift in focus—moving care delivery back to the home, where it originally began.

The Historical Context of In-Home Care

In-home care isn't a novel concept. During the 1930s, over 40% of all interactions between physicians and patients occurred in the patient’s home. However, by the 1980s, this percentage had declined to less than 1%, influenced by evolving health economics and technological advancements.

The Rise of Hospital-Centric Models

This 50-year transition led to the consolidation of costs and centralized access to specialized diagnostics and treatments, fostering the development of centers of excellence. However, it also facilitated a move from proactive to reactive care, diminishing the long-term relationship between patients and their healthcare providers.

Currently, patients frequently receive diagnoses and treatment from individual physicians who often operate in isolation, lacking comprehensive consultation with one another. Such fragmented care often only occurs after a patient requires emergency intervention, resulting in increased costs and diminished health outcomes.

The Future of In-Home Healthcare

In-home care currently constitutes only 3% of the overall healthcare market. However, projections indicate substantial growth, potentially reaching 10% or more within the next decade. This expansion promises to enhance the patient experience, improve clinical results, and lower overall healthcare expenses.

Leveraging Technology and Value-Based Care

Realizing these improvements necessitates the integration of next-generation technology and the implementation of value-based care strategies. Fortunately, a significant opportunity for positive change is currently available.

Key Drivers of Transformation in Healthcare Delivery

Recent years have witnessed five pivotal advancements that are fundamentally reshaping how healthcare services are provided, creating substantial opportunities for improvement.

Technological Advancements

Remote patient monitoring (RPM) and telemedicine have reached a level of sophistication allowing for widespread implementation. These tools empower healthcare providers to oversee patients’ health remotely, fostering ongoing, preventative care within the familiar environment of their homes, and often at a lower expense.

Shifting to Value-Based Care

The rise of value-based arrangements is incentivizing providers to focus on patient outcomes rather than simply the volume of services rendered. This model encourages proactive patient management, with a focus on preventative care delivered in cost-effective settings like the home.

By successfully preventing hospitalizations, providers can significantly reduce healthcare costs – potentially by 20% or more.

Demographic Shifts and Chronic Disease

An increasing prevalence of chronic conditions, coupled with an aging U.S. population, is placing greater strain on the healthcare system. Simultaneously, this demographic trend expands the potential market and strengthens the impetus to effectively serve these patient groups.

The Impact of the COVID-19 Pandemic

The COVID-19 pandemic has accelerated the adoption of virtual healthcare among a broad segment of the American population. While telehealth had been discussed for years, the pandemic served as a catalyst for its widespread acceptance by patients, providers, and insurers.

Consumer and provider enthusiasm suggests that telehealth will remain a permanent component of healthcare delivery, even beyond the pandemic.

Regulatory and Reimbursement Changes

The pandemic also prompted the easing of certain regulatory and insurance barriers that previously hindered the expansion of in-home care. Reimbursement processes for services like telemedicine and remote patient monitoring have been streamlined, facilitating greater access to these care modalities.

Looking Ahead

These five factors collectively represent a powerful force for change within the healthcare landscape. They are driving a shift towards more proactive, preventative, and patient-centered care models.

Significant Avenues for Healthcare Advancement

Five key shifts are poised to motivate further entrepreneurial endeavors aimed at enhancing the U.S. healthcare landscape. Specifically, three domains present particularly promising opportunities for innovation, offering the potential to simultaneously elevate patient well-being and curtail escalating medical expenses.

Immediate Medical Attention

Currently, a substantial number of individuals seek care in emergency departments when it isn't truly necessary. From a patient's standpoint, hospital-based emergency care can be a source of stress, characterized by noise, high costs, and extended waiting periods. Preventing avoidable emergency room utilization could yield cost savings estimated at approximately $32 billion.

Services like Ready and Dispatch Health are streamlining access to urgent care within the comfort of one’s home, mirroring the convenience of food delivery. These types of companies can effectively reserve emergency room resources for genuinely critical cases.

Ongoing Health Management

A majority of U.S. residents cope with at least one chronic health issue, with 30 million managing five or more. Notably, a mere 10% of individuals with chronic kidney disease (CKD) are even aware of their condition. Strive Health integrates cutting-edge technology with personalized patient support to achieve improved clinical results, while potentially reducing healthcare expenditures by up to 30%.

Comparable requirements and solutions exist for other enduring health challenges. Heartbeat Health and Hinge Health utilize technologies such as remote patient monitoring (RPM), specialized devices, and telemedicine to treat cardiovascular and musculoskeletal patients in their homes, respectively. Furthermore, Heal has recently collaborated with Humana to broaden its in-home primary care approach.

Supporting Healthcare Systems

As the delivery of care transitions from hospital settings to patients’ homes, the supporting infrastructure and supply chains must adapt accordingly. Companies such as Medically Home offer software and logistical support to healthcare systems overseeing patients at home. Meanwhile, Tomorrow Health and Better Health facilitate the delivery of essential medical equipment and supplies directly to patients’ residences.

The Potential of Home-Based Healthcare

While favorable conditions currently exist, significant hurdles remain in the path of constructing genuinely scalable businesses within the home healthcare sector.

A primary challenge lies in the continued fragmentation of the U.S. healthcare system. Few organizations possess the capacity to provide care on a nationwide basis, and even fewer can successfully establish national contracts.

Furthermore, the business models employed by many pioneering startups are still undergoing validation. A considerable number will face substantial economic difficulties for an extended period as they strive for sustainability.

Despite the increased acceptance of telemedicine spurred by the COVID-19 pandemic, a considerable shift in behavior is still necessary. Individuals must actively choose home care as an alternative to hospital visits, and insurance coverage must adequately support this transition.

However, the underlying trends are compelling. Advancements in remote patient monitoring, the rise of value-based care models, and the expansion of virtual healthcare are all contributing factors.

These developments, coupled with a growing population managing chronic illnesses and diminishing regulatory and insurance obstacles, are fostering a vibrant ecosystem of innovative home health companies.

Benefits for All Stakeholders

In-home care offers demonstrable and lasting advantages for all parties involved – payers, healthcare providers, and patients alike.

This is attracting increasing attention from innovators eager to address the evolving needs of the healthcare landscape.

We are confident that the positive impacts of their efforts will soon be widely realized throughout society.

• Payers benefit from reduced costs and improved outcomes.
• Providers experience increased efficiency and patient satisfaction.
• Patients enjoy greater convenience and personalized care.

Disclaimer: Strive Health is a CapitalG portfolio company.