The Healthtech ‘Arms Race’

Michael O’Sullivan – Managing Partner – Psyclarity Health.

If you’ve been following recent news, you’ve probably seen the fuss being made about the “bidding war” between some of America’s biggest corporate players, including UnitedHealth, CVS and e-commerce behemoth Amazon. But those with an ear to the ground know that this is only the latest development in an escalating land-grab for one of America’s fastest-growing industries: home medical technology. The subject of the most recent episode? The $8 billion sale of Signify Health (subscription required), a home healthtech and analytics company, to CVS Health.

The scramble to acquire Signify Health has been covered adequately in other articles. I’d encourage readers to see Bruce Japsen’s report for a lucid breakdown of the key points—but in this article, I’d like to look at what this acquisition represents in a broader context, why it matters and what it means for American healthcare going forward.

The State Of Today’s Home Healthtech Market

The global home healthcare market is growing rapidly, and the past two years have seen significant acquisitions and rumors of acquisitions in this space. Amazon announced a $3.9 billion deal to acquire tech-centered primary care startup One Medical in July, BestBuy spent almost $400 million acquiring patient monitoring tech vendor Current Health in October 2021, and Google has been on something of a healthcare tech spending spree since 2021, with parent company Alphabet recently announcing that Verily, its health tech arm, had raised $1 billion to compete with Amazon in a home health technology “arms race.”

Looking at the patterns behind these developments, it’s starting to look like a sea change for the American healthcare industry. And how could it not be? Years of emerging technology-driven health solutions in the private sector, along with a historic and intensifying disconnect between traditional healthcare players and the needs of the American populace, met in the unprecedented Covid-19 pandemic, whose effects (still not fully accounted for) have made it uncomfortably clear that old-fashioned healthcare frameworks simply weren’t up to the task of addressing a health crisis in the modern world.

So, if this is indeed a turning point for U.S. healthcare, we need to ask how we got here, what’s changing and most significantly, what does it mean for patients, American citizens and the future of our healthcare system?

The Rise Of Private Healthcare And The Home Healthtech Renaissance

The past decade or so has seen a gradual but significant reshuffling of the American Medicare program. KFF reported in August that nearly half (48%) of eligible U.S. healthcare beneficiaries are now enrolled in Medicare Advantage programs (offered by Medicare-approved private companies), up from just 19% in 2007. Federal spending on Medicare Advantage bonus payments has also increased every year since 2015, reaching at least $10 billion in 2022. The data paint a clear picture: the majority of healthcare spending will soon end up going to private firms. More interesting, though, is the entry of tech giants like Amazon and Alphabet into the healthcare space. If there’s a sure sign that the future of the home healthtech industry is bright, this is it.

But to see these tech giants’ entry into the healthcare space as purely altruistic would be naïve. Amazon’s recent announcement of a merger agreement with iRobot, the company behind the widely popular Roomba robot vacuum cleaner, raised eyebrows among civil rights and data privacy advocates who worried the company would use these devices to gather sensitive data about their customers’ homes and private lives. It’s a valid concern, and the extremely sensitive nature of the data gathered by home healthcare technologies makes the issue even more grave.

What Does The New Era Of Technology-Led Primary Healthcare Mean For American Providers And Patients?

The question I don’t see many people asking at this point is why we’re seeing some of the biggest names in technology, as well as an increasing number of other private sector players, scrambling to claim their stake in the home healthtech arms race. In my opinion, it’s an inevitable consequence of major healthcare players’ reluctance to evolve in step with the demands of an increasingly digital population. Sure, there’s been widespread digital transformation among many healthcare entities, but for the most part, these organizations have taken a “bare minimum” approach. Offline systems have been supplemented with or replaced by digitized versions of those same systems; but in most cases, primary care providers have shied away from true innovation in the digital space.

The power vacuum that has been emerging in digital healthcare for the past decade or more is now being filled by those with the necessary technological frameworks and the experience and ability to analyze big data and distribute digital services at scale. As to what this means for the future of the American healthcare system—and the American healthcare customer—the jury’s out at this stage. While many are raising concerns about the integrity of the corporations stepping in to sweep up what may become some of the most valuable tools in a new generation of healthcare services, we would be remiss not to note the many failings of the traditional American healthcare system.

Could these new players give the healthcare industry the shake-up it needs? Only time will tell. But my money is on the next few years of tech-led healthcare to be something of a wild ride.


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https://www.forbes.com/sites/forbesbusinesscouncil/2022/10/24/the-healthtech-arms-race/