05 April 2020
It’s January 2020, and a 35-year old man is in an airborne-isolation unit at the Providence Regional Medical Center in Everett, Washington. Over the next days, he is physically cared for by nursing staff, but a robot equipped with a stethoscope takes his vitals and sports a video screen for doctors to talk to the patient from afar.1 Eventually, the patient recovers and is discharged.
The robotic nurse deployed for the US’s first documented case of COVID-19 may invoke a Netflix sci-fi blockbuster, but digital health technologies – from robotics and telemedicine to biosensors, big data and artificial intelligence algorithms – are slowly transforming the way we deliver healthcare.
Pre COVID-19, the digital health market was already growing rapidly. In 2018, it was 12 times smaller than the pharmaceutical market. By 2023, it was expected to have grown to be only a fifth of it.2
Post-COVID-19? All bets are off.
The growth in digital healthcare is being fuelled by several primary factors – first and foremost the advancements in technology that are being applied across all aspects of human endeavour – including to the way we monitor, diagnose and treat our health.
Next, global populations are generally becoming healthier, wealthier, more urban and better educated. This means we live longer, with better understanding of health and better access to health services.
It all adds up to more people living longer, even while managing chronic health conditions, and that means many more people are requiring more complex medical care over longer periods.
Even before COVID-19, healthcare systems were not always coping with this load. Both public and private health systems, including those in some of the world’s wealthiest countries, are haunted by chronic financial challenges. The average profit margin for top clinical hospitals in the Netherlands was under 2 per cent in 2017; 12 per cent of hospitals in Germany are in financial distress and the UK’s NHS hospitals trust runs a deficit in the billions of pounds.3 “As much as 31 per cent of healthcare spending goes to administration,” says Julian Feneley, Head of Healthcare, Macquarie Capital Europe. “That provides an obvious opportunity for technology to reform existing practices.”
This complex combination of drivers in the healthcare market has attracted the attention of technology and healthcare companies, as well as some non-traditional players and a range of start-ups.
These efforts and investments are likely to be significantly accelerated in a post-COVID world. “One thing is now abundantly clear,” says Bo Crowell, US Head of Healthcare Services in Macquarie Capital. “Most healthcare systems were completely unprepared for a crisis of the magnitude of COVID-19 – and it will be an enormous catalyst for change.”
“One thing is now abundantly clear. Most healthcare systems were completely unprepared for a crisis of the magnitude of COVID-19 – and it will be an enormous catalyst for change.”
Bo Crowell, US Head of Healthcare Services, Macquarie Capital
Beyond robotic nurses, there are many other ways digital technology is coming to the fore as COVID-19 tests healthcare systems everywhere.
“A lot of medicine currently relies on a physician identifying a likely illness based on symptoms, but even the most adept and experienced doctor won't have seen every rare disease and condition," said Bo Crowell in a 2019 interview. “How can we expect them to instantly identify something new, like the novel coronavirus?” he added last month. And, he says, that’s where AI comes in.
COVID-19 was first detected outside of China not by physicians but by a Canadian health monitoring platform called BlueDot. The platform uses an AI-driven algorithm that scours foreign-language news reports, animal and plant disease networks, and official announcements to give its clients advance warning to avoid danger zones - like Wuhan in early January.
AI may also be able to help better protect, and reduce the load on, physicians in the front line through more sophisticated and rapid detection of COVID-19 patients. Chinese company Infervision has developed an AI program that can quickly detect lesions of possible coronavirus pneumonia from a lung CT scan, helping doctors make a faster judgement about a patient’s condition. While a manual read of a CT scan can take up to 15 minutes, AI can help read the image in 10 seconds. In the UK, technology company behold.ai has developed similar technology with their ‘red dot’ algorithm, which can be applied to x-rays, rather than CT scans. The company is partnering with Wellbeing, operators of the UK’s most widely-used Radiology Information System currently in 700 locations across the UK.
“This partnership would enable fast processing of the high volume of chest x-rays required in diagnosis of COVID-19, thereby easing pressure on the NHS,” says Julian Feneley. He notes that in the US, the red dot algorithm has been approved for triage of pneumothorax (collapsed lung) but not yet specifically for COVID-19.
In the lab, technology is playing a role in better identifying and understanding disease. Reading the COVID-19 genome allows researchers to monitor how the virus is changing and provides a basis for evolving the diagnostic tests and developing a vaccine. While a vaccine is expected to take up to 18 months to develop, this is a much shorter period of development time than has been required previously. Chinese scientists were able to publish the COVID-19 genome just after a month after the first case of pneumonia was reported. By contrast, during the SARS crisis in 2002, this process took many months.
Technology is being used to manage the outbreak too. In Israel, a company called Oxitone has created an Apple Watch-style device that could feasibly monitor the health of large quarantined populations - predicting illness early and sending medical care where it’s needed most.
In Singapore, the government has recently launched an app called TraceTogether to identify people who have been within 2m of coronavirus patients for at least 30 minutes, using wireless Bluetooth technology. If a user gets infected, the authorities will be able to quickly find the other users he has been in close contact with, allowing for easier identification of potential cases and helping curb the spread of the virus.
The fast pace of these changes has implications for privacy and data protection too and leads to some important questions about individual versus public health. “As a society, we are going to have to grapple with the trade-offs of the privacy of our personal healthcare vitals and data versus the common good,” says Crowell.
‘Nobody knows what the future holds’ is a truism that has been harshly illuminated by COVID-19. But both Bo Crowell and Julian Feneley say that the crisis will have a transformative effect on the way we think about, and manage public health, and that health technology – already growing apace – will come into further sharp relief as the crisis subsides and we meet the new normal.
“The way we engage with the healthcare system, and more importantly with our health care, will change dramatically over the coming years,” says Crowell. “With real time access to data and virtual providers, healthcare consumers will become much more active participants in how healthcare is directed and consumed.”
Robert “Bo” Crowell joined Macquarie Capital in New York 2018. He has almost 20 years of strategic experience advising healthcare clients at a range of major international financial services organisations.
Bo has a focus on mergers and acquisitions, debt and equity capital raisings and providing customized solutions to clients. His past transactions include: the acquisition of Coventry by Aetna, sale of Health Plan Services to Wipro, the sale of ATI Physical Therapy to Advent International and financing for Hellman & Friedman’s acquisition of Multiplan Inc.
Transaction activity in healthcare services has increased dramatically due to several sector tailwinds including technology disruption, innovative new business models, vertical integration, regulatory and reimbursement changes, consumerism in healthcare and favorable demographics.
Dr. Julian Feneley joined Macquarie Capital in London in 2017. Julian started his professional life as a medical doctor and has since spent over 20 years advising healthcare clients.
Julian focuses on strategic advice, mergers and acquisitions, and debt and equity capital raisings for European clients with businesses across the healthcare sub-sectors, from services to products, equipment, and digital technologies. His experience also includes several years as CEO of a leading dental technology and service provider in the US.
Recent transactions include the sale of Outcomes First Group, the sale of Oberberg and the acquisition of Stada by Bain and Cinven.