HBI Deals+Insights / News

New models for the new era 

The conservative health and care services sector is in the process of being disrupted. Traditional models are being called into question. With the pandemic firmly in our rear-view mirror, the experimentation that it forced combined with gigantic leaps in technology and a shift in mindset from patient to consumer is setting the stage for fundamental change. 

But unfortunately not all good ideas will be adopted. Innovation in the sector is often hampered by payors, regulation, change resistance, cost or simply getting the business model wrong. That is why exploring these new delivery, financing and business models is at the core of the agenda for HBI 2024, which will take place on June 10-12 in London. 

So what are the new models that are fit for the future? 

Telemedicine continues to be touted as a solution to primary care backlogs and increasing access, but is hamstrung by a lack of a profitable model. Consider the spectacular fall of Babylon: a fantastic idea, and one not based on a lie (like Theranos), but caught up in its own hype, pursuing unattainable growth and fundamentally lacking a strong business model. 

We’ve seen a glut of virtual care companies enter the market. We have seen some digital groups add physical care and traditional primary care groups offering virtual care appointments, and compete with one another public sector contracts, insurer partnerships or cash payments. We are even seeing the club or subscription model being deployed through Amazon’s $99 membership to OneMedical. 

The future role for large hospitals is being called into question as more and more care gets pushed into an outpatient setting, and virtual wards are being created to free up inpatient beds. Whilst currently many outpatient services are still conducted inside a hospital, a push to meet the patient where they’re at could see services physically located in easier-to-reach settings. 

Staffing continues to be the single biggest cost and challenge for providers, with productivity being the holy grail for senior management. New staffing models are starting to emerge as a reaction to escalating costs and recruitment difficulty. Once again, digitalisation and automation is key to this challenge. A well cited model to increase capacity with a smaller workforce is teleradiology, where images are sent to other countries or locations to be read. This principle is now being used not just for the interpretation of scans but also taking the scans themselves. Technology is enabling one radiographer to operate two MRI machines simultaneously entirely remotely, with the potential to increase this to three in the not-so-distant future. 

Population health is often seen as the silver bullet to drive down costs and improve outcomes. But the evidence needed for payors to start reimbursing such models has been lacking…until now. Healthcare has now reached a tipping point: the convergence of quality data, machine learning and personalisation makes it much easier to trial new models and provide clear evidence for reimbursement value. The challenge here is two fold: how do we scale screening programmes to achieve this and, once we do, how do we set the system up to cope with an inevitable influx of patients in the short-term. 

Whole body MRI is gaining momentum for those who are wealthy and keen to understand their health risks (an expensive step-up from home testing kits!). The potential of the data gathered from this is enormous, but there currently isn’t a business model that exists to make this more affordable. 

Healthcare is set to be transformed by AI – perhaps to a greater extent than almost any other part of the economy – from both an operational efficiency and a clinical perspective. So what is its role in value creation? Operationally, using large language models can help write complex time consuming discharge notes or diagnostic notes, assist with staff planning and patient triage – a direct time save which can have a significant impact on EBITDA. The challenge for providers and investors alike is wrestling with the speed and scope of the technology to understand where it should be deployed and how much money should be invested. Providers who are able to develop clinical capabilities will be able to make a return by spinning out this technology and selling services. 

Quality is becoming increasingly important to payors, providers and patients alike and it is also increasingly more achievable, leading to a rise in value health models. The intersection of AI, better quality data, new therapies, genetics and research funding means healthcare may soon reach a point where precision and personalised medicine becomes the norm. Providers who embrace these new models now are set to win big over those who are slow to act. 

As the sector embraces change, we may see regulators and payors become more open to embracing change too, but the role of investors and providers is to develop and deliver on innovation to speed this along. The most important component of all this change is having strong leadership in place to drive it. 

HBI 2024 dives into these new models, showcasing innovation and success through case studies, exploring what the future holds, and most importantly the practical steps and leadership capabilities needed to embrace fundamental change. You can see the agenda and book your tickets here

We would welcome your thoughts on this story. Email your views to Lee Murray or call 0207 183 3779.