It used to be that when you got sick, your doctor would come to you. But as medical equipment, expertise and knowledge, and the entire modern healthcare system evolved, we created grand institutions to make granting healthcare to the masses more efficient. That system did us much good—but also comes with much cost. Today, healthcare is dramatically changing once again to embrace new equipment, expertise, and knowledge. In short, it’s leaving the building. a16z General Partner Jorge Conde argues in this talk (first given at the 2019 Oliver Wyman Health Innovation Summit) that the healthcare system is getting unbundled—and everything from where we get our care to what our medicines will look like to even how we experience symptoms will look very different in the future. The same trends that created the modern healthcare system are now pushing us to a future that might look a lot more like our past.
Ten years ago, Marc Andreessen famously wrote an op-ed in the Wall Street Journal where he described how and why software was eating the world. What he meant by that was that software or technology broadly transforms virtually every industry that it touches. And if there is one industry that has given software indigestion, it’s been the healthcare industry; and in turn, software has given the healthcare industry some indigestion as well.
We are at a turning point now in how we’re thinking about where technology will shape the future of healthcare, how it’ll change how we access healthcare, how we think about treating diseases, and ultimately, how technology can help keep us healthier longer.
Let’s start at the beginning. We all get sick. And while the details and the circumstances may differ, the patient journey is always somewhat similar. You start to feel crummy. Your body tells you something is wrong. You hop in your car. You go to the doctor or if it’s more serious, you go to the hospital. You get diagnosed. You hopefully get treated and when you get released, if you need any additional therapy or medicine, you get back in your car and you drive to a pharmacy.
That is how we access the healthcare system today. But what if there was a world without hospitals or pharmacies? It’s actually not that far-fetched and in the not too distant past, we once lived in that world.
Back then, when you got sick, your doctor came to your home to take care of you. Everything that doctor needed was in his medicine bag—his Gladstone bag. If there was anything you needed for your care that wasn’t in that bag, he could walk down the street and go to an apothecary or a compounding pharmacy and get something made for you.
As medicine advanced, we built grand institutions to house the new practice of medicine. A great example is Johns Hopkins Hospital, which opened its doors in about 1889 and was one of the first models of a teaching hospital in the United States. What drove the creation of Johns Hopkins was a recognition that medicine was becoming increasingly specialized. We started to see specialties emerge and develop, and alongside that, physicians that were specializing in specific disease areas or parts of the body. With that specialization, it became more impractical to have the doctor come see you at home; instead, this whole bevy of specialists was centralized in one place. It makes more sense for you to go to them.
Along with the specialization of medicine comes the specialization of technology and equipment used in care. If we look midway through the last century, a lot of that equipment is big and it’s expensive and it’s bulky. It doesn’t make sense to put any of that stuff in a Gladstone bag, it makes sense for you to go to it..
Grand institution centralization also requires the ability to scale. The Johns Hopkins medical system today is an ~$8 billion system, with thousands of beds and thousands of physicians, caring for patients that come from all over the world. But with scale comes challenges. In terms of cost, from a dollar standpoint, we spend about a trillion dollars every year paying for hospitalizations in the US, some of which may be unnecessary and some of which may be inefficient. We also know that beyond the dollar costs, there’s a great human cost to treating patients through the hospital systems because of the complexity of care. There’s also a human toll associated with medical errors and a risk of hospital-acquired infections.
However, there is a shift in technology today that is going to meet with other key tectonic shifts in the healthcare system. These shifts include the stakeholders in the space (both existing and new entrants), the changing expectations and demands of patients, and the emergence of new technologies.
First, the industry structure. The silos that have traditionally defined the healthcare system in the US have started to dissolve. We have insurers, payors, and technology companies coming together to form more monolithic groups across the continuum of care. Payors—whether they’re traditional insurers, governments, employers—are becoming increasingly frustrated with the state of affairs today. More and more is being expected and demanded of patients in terms of the money that comes out of their own pocket for their own care. It’s not surprising that patients, in turn, are demanding more of the healthcare system, especially as technology has transformed virtually every other part of their lives.
One of the fascinating things happening in healthcare today is the new entrants coming into the space, many of which are dominant incumbents in other adjacent industries. These new entrants have come from retail or technology and are now focused on healthcare given all of the challenges and perceived opportunities. In addition to these large companies moving into the space, you have new companies being built from scratch, many of which are using technology at their very core to think about new ways to deliver care.
There are several key new technologies that we’re seeing start to move into the healthcare system. The utilization of artificial intelligence is increasing across the healthcare system. We’re also seeing the availability and application of big data; now the question is how we can use it in an effective way. We’re seeing the rise of new modalities in medicines that have incredible promise to tackle and even cure some of our most intractable diseases. These medicines, however, come with an incredible cost and limited accessibility.We find ourselves now at an inflection point. Healthcare has left the building. The delivery of care has broken out of the traditional walls of the hospital and moving towards where we work and live.
We find ourselves now at an inflection point. Healthcare has left the building. The delivery of care has broken out of the traditional walls of the hospital and moving towards where we work and live. In the future of healthcare, how will we get access to the system? We’re already seeing a lot of this happening today. MinuteClinic and urgent care clinics provide access to a broader and broader range of treatments for a broader and broader range of conditions in a walk-in, retail setting. With the demographic shifts in this country towards an older population, we’re also seeing more and more of healthcare happening at home.
This is not to say that hospitals will disappear altogether. But what’s likely is the kinds of procedures and activities that we’ll see in hospitals will be limited to the things that are so incredibly complex—like surgeries—that require incredibly specialized equipment, as we saw in the early days of the rise of the centralized hospital. We’ll see more and more of technology moving into the home to enable us to do a broader range of care services in that setting.
As how we get access to our care changes, who will deliver our care also changes. Medical schools are now working to ensure that their physicians are technology native, in terms of being able to train and use new technologies. We’ll also see the emergence of new specialties that come from the use of technology in healthcare, much like radiologists after the development of of X-ray technologies.
Telemedicine, too, gives us the ability to return to the time where the doctors come to you. Now you can access a broad range of specialists through your computer screen or your phone. We’ll continue to see this become a very active front door for care. Companies like Omada or Livongo are using technology to help assist specializations and act as digital coaches for some of the most complex and chronic conditions that require persistent management.
Who delivers our care is changing, how we get access to care is changing. And if part of the reason for going to the hospital is because all the specialized equipment is there, the Gladstone bag is changing as well. It is now the phone. It’s a supercomputer that sits in our pockets and there are already a broad range of healthcare related applications, whether it’s an EKG or managing blood pressure or doing DNA sequencing. This change is happening in real-time and once it becomes software, it will move at an increasingly accelerated pace.
Hospitals will not disappear altogether. But whereas your care used to come to you, then centralized hospitals made you come to them, now we are seeing various ways of how your care is coming back to you in a very personalized way.
So what about pharmacies? If you look at the history of pharmacy in the United States, is the father of pharmacy had this very prophetic vision where he said, “If the pharmacist becomes a mere dispenser of medicines, he’ll relapse into a simple shopkeeper.”
The rise of the retail pharmacy was due to improved manufacturing technologies to give us pills and capsules, which allowed medications to be widely available at a reasonable cost to manufacture. Now you can walk to your corner store and pick up whatever medicines you need. But this is an area where we’re seeing dramatic changes as well.
First of all, the idea of going to pick up your medicines is going to disappear. Your medicine is more likely to get drop-shipped to you in the near future then you getting in your car and going to pick it up. We’ve seen Amazon acquire PillPack. We also have companies like Zipline that are using drone technology to deliver medicines to some of the most difficult to access places in the world and it’s not hard to imagine that that will be coming to a front yard near you some point soon.Medicine is, in many ways, also leaving the pill bottle.
Medicine, in many ways, is also leaving the pill bottle. As digital therapies emerge, it may be that your next prescription isn’t a pick-up, it’s a download. We see living medicines emerging, like engineered cells or gene therapies, which can’t be picked up at a pharmacy, but will be delivered to you in a very, very different setting. Going back to William Procter’s original vision, medicines were once made especially for you, then they were manufactured for the masses, and now they’re being programmed for you again, whether it’s the logistics of it coming to your door or the literal biology of it being programmed specifically for a patient. Just like how the physician’s practice is going to change with the use of technology, in many ways we’re going to see the emergence of a next generation of pharmacists. They won’t be just a shopkeeper, but someone who’s actually helping manage a very complex range of medications.
Of course, all of this is predicated on the fact that people get sick. But what if we don’t get sick anymore? What if symptoms disappear altogether? This sounds pretty far-fetched, but if you look at the history of healthcare over the last decades, we’ve made incredible strides in addressing some of the most vexing conditions. While there has been the emergence of other conditions, we’re getting much better at early detection to help catch disease earlier in its progression.
Companies like Freenome are using artificial intelligence to make the next generation of diagnostics. Companies like Q.Bio are working at the intersection of advanced computation and medical physics to build the physical of the future. Screening, however, is a reactive process that happens at a scheduled pace. What we’re increasingly seeing is technology becoming woven into our everyday social fabric. Healthcare will become an everyday part of our lives. Wearables monitor our health on a regular basis, like cardiogram, and can follow your heart rate and pick up some incredible things like atrial fibrillation, high blood pressure, and potentially other ailments before they become more serious conditions.
This idea that we may not get sick anymore is incredibly intriguing in the sense that it’s probably hard to imagine that it’s happening today. But we’re starting to see that the earlier and earlier intervention of care can have an incredible impact, not only on costs but on the outcomes for patients wellness.
The question is, are we ready? We’re talking about the future and all of this probably sounds incredibly Pollyanna-ish and perhaps even a bit naïve, but what we know is that the healthcare system has over decades adapted to novel technologies. Imperfectly perhaps; with challenges, of course. But the delivery of care has continued to improve with every subsequent generation and that will undoubtedly be the case as we move towards the future that we’ve just described here.The healthcare system has over decades adapted to novel technologies. Imperfectly perhaps; with challenges, of course. But the delivery of care has continued to improve with every subsequent generation.
I’m going to misquote my good friend and Gotham City Police Commissioner Jim Gordon when I say, “What do we need to do to get the healthcare system we need, to get the health care system that we deserve?” If healthcare is moving outside of the four walls of the hospital, we know that we will need technology to create frictionless coordination of care. Devoted Health is a company that is reimagining what a Medicare Advantage plan would look like from scratch by building technology into its very core. PatientPing is working to coordinate across an entire healthcare system to create a seamless web of communication. This provides continuity of care across the healthcare system, across caregivers, across the country. Tomorrow Health managing the very, very tricky transition between getting care in a hospital-based setting and moving into the home. They work to ensuring that the patient has the right technology to access the right equipment to manage this delicate transition.
As we think about miracles of medicine, we will need the ecosystem and the infrastructure to ensure that the next generation of therapies and cures like engineered cells and gene therapies are accessible and can be delivered to patients who need them. This is going to require a pretty broad range of ecosystem development. Number one, the hospitals are going to need the logistical ability to deliver this care. This is a very complex vein-to-vein treatment. It looks very different than most other modalities of medicine. Number two, and arguably most importantly, if we’re going to make this widely accessible to patients that need them, it’s going to have to be affordable. We’ll need new models for how pharmaceutical companies charge for these therapies. We’re going to need new models for how payors are able to pay for this and take on the associated costs with providing this therapy. Lastly, to connect those two things we’re going to need the models and the technology to monitor for efficacy, to make sure that the therapies are effective to justify the costs.
This is work that is in progress. It’s very early days, but this is what must be built if we expect to have these next-generation therapies to have the effect and the wide availability that they will need. We all get sick and while that’s probably not going to change anytime soon, but because of the people that work broadly across the healthcare system looking to deliver real innovations to improve patient care, we have the opportunity to make sure that we collectively all get better.