Mind the Gap
by Ulu Ventures Principal Kathy Chen
As a millennial, I’ve mostly thought of and interacted with healthcare as a discrete service, something to activate only when I need it, or something that “happens to me” rather than what I proactively seek. In parallel, my interests around investing in healthcare have focused largely on discrete problems—“solving” and treating a disease. However, the last three years under a global pandemic has shaken up this somewhat-myopic notion. As I age personally, I am also beginning to experience and understand the significance of gaps and continuity in healthcare.
Taking a step back, health is in fact a continuous journey. Our bodies change, and life-changing events such as pregnancy or sickness make their mark. Ultimately, we age—in a process that’s both natural and a culmination of our life choices and experiences. A healthcare experience that is truly continuous is a powerful one, because a patient’s needs can be met at every stage of life. Healthcare that is available across every life turn builds resiliency not only at the individual level, but in society as a whole.
Most national healthcare systems fall short of that vision, and the United States is no exception. With a staggering $4.1 trillion in annual spend, the US healthcare system is the most expensive in the world, but yields surprisingly poor outcomes when compared to those of other developed countries. It’s hard to sum up the nuance and complexity of healthcare in the United States, but “discontinuous” is a word that applies to many of its shortcomings. And these days, with the unprecedented stress that Covid-19 brings to the US healthcare system, patients are warned to “mind the gap” now more than ever.
Discontinuity in healthcare affects people in many ways, but one of the most significant is the missing piece of preventative care: a key tool for staying healthy and catching illness at an early stage. From an efficiency perspective, it’s certainly more cost-effective to maintain the plumbing in your house than to wait until the basement is flooded to make repairs. However, of the ~$12,000 spent in the US per person each year on healthcare, less than 3% (~$300) is spent on preventative health, and even that ratio is ironically on the decline. There is a huge opportunity to think more creatively around prevention, beyond the basic programming it consists of today.
Many entrepreneurs are tapping into this idea, asking questions like, How can we get individuals more engaged with their own health? How can coaching, peer networks, and other behavioral interventions create healthy habits? How do we build these mechanisms into the healthcare system so more people can access support earlier? Companies like Livongo and Omada are some of the first-wave players in this paradigm shift: engaging individuals to take ownership of their own health through diet, exercise, and other healthy habits. The Deloitte study The Future of Healthcare Spending suggests that by 2040, we could see as much as two-thirds of healthcare spending shift into “well-being,” another way of saying “preventative health.”
Many gaps still exist in managing health conditions, especially chronic illnesses. Approximately 90% of healthcare spend goes toward chronic diseases including cardiovascular disease, diabetes, obesity, cancer, and dementia. These diseases are not only on the rise with an aging population, but many of them are occurring at earlier ages, creating warranted anxiety that these illnesses could “bankrupt” the healthcare system. These sobering statistics emphasize why we need both preventative solutions and early interventions.
While a good chunk of spending for chronic illness happens in hospitals and clinics, managing these diseases goes well beyond it. These lifelong conditions require care day-in and day-out, often with help from family members. In addition to their direct symptoms, chronic illnesses create stress, anxiety, and depression—silent health aggravators that can accumulate. In heart failure, a disease that affects over 6 million people in the U.S., an improved remote care and monitoring setup could have a pivotal role in managing the condition. However, the inadequacy of home care results in patients repeatedly readmitted to the hospital. At $13,000 per hospital stay, the costs add up quickly. Similarly, kidney failure and dialysis is another opportunity waiting for disruption, particularly as two service providers essentially own the entire market. Over half a million patients in the U.S. need dialysis, which often requires 3-4 hour visits to a dialysis center multiple times a week—that’s over 600 hours a year, rain, shine, or Covid. For both of these conditions, a remote solution that effectively extends clinical-grade care into the patient’s home is not only an opportunity for substantial savings, but one that will save and improve lives.
A particularly egregious gap that our society is only starting to acknowledge is along gender and racial lines. The US maternal mortality rate is the highest among developed nations, and over 50% of maternal deaths occur post-delivery. However, the current standard of care under Medicaid, which funds over half of all births, provides for only a single maternal follow-up visit in the first 6 weeks after birth, effectively cutting off coverage soon after a child is born. Postpartum care, a critical piece of the maternal health continuum, ends up severely underserved. What is more devastating is that maternal mortality disproportionately affects women of color; Black women’s mortality rate is 3x that of White women. Maternity care isn’t the only problem area: racial disparities in everything from chronic illnesses to Covid-19 mortality show the stark reality that for people of color, these healthcare shortfalls are not gaps—they’re chasms.
Finally, substantial gaps exist in how we access care, with social, financial, and logistical barriers creating significant bottlenecks. It is estimated that as many as one-third of patients avoid seeking medical care even when they know they should. Reasons range from wanting to steer clear of mental or physical distress, to a lack of health insurance and financial resources, to social or physical isolation. Many other patients don’t show up to appointments that they’ve made, resulting in an estimated $150 billion annually that falls right through the cracks. Solutions that bridge these gaps and help patients access available care could be extremely valuable.
Gaps are not only where patients are underserved, but where substantial dollars are being wasted. As much as 25% of the US healthcare spend goes to waste, through failures in care delivery, coordination, overtreatment, mispricing, and administrative overhang. Within these sizable fissures, entrepreneurs are seizing on massive opportunities to build and redeem value and venture dollars are following them closely. Riding on the forcing functions of a pandemic, venture investing in healthcare hit an all-time high of $14 billion in 2020; the momentum was unabated for 2021, which will likely set a new record. Powered by all this activity—including technological advancements across the board and a patient base that is increasingly involved in their own health—we are just scratching the surface of where healthcare could go in its next iteration. It’s an unprecedented time to rebuild and reinvent, where we should not only “mind the gap,” but “mine the gap.”