Investors looking to back healthcare tech companies should look for these two essential qualities

By Todd Watts, CEO and Co-Founder, PatientFi

The American healthcare system is going through a crisis akin to climate change. Both are slowly but surely changing, both are products of social dynamics that are very difficult to change, and both should be (and increasingly are) targets of risk investing.

As of last year, the United States spends over $12,000 per capita per day on health care (a mix of government/compulsory spending and voluntary spending). That’s almost double the nearest country, Germany, which spends just north of $7,000 per capita per day. In 2020, healthcare spending was 19.7% of our national GDP (only up slightly due to COVID-19).

Health care costs in the United States are rising faster than anywhere in the world. And it goes without saying, but they are growing faster than people’s ability to pay for them.

The result: an incredibly permeable system where people either don’t get care because they can’t afford it, or get care but don’t pay. Either way, people get less care than they need and deserve, and providers get less income than they need and want. deserve.

It’s a dark picture.

The system is riddled with dysfunctions that serve no one who participates in it. But if there’s a silver lining, it’s that dysfunctional systems are ripe for investment. And the increased adoption of new health technologies to improve the system represents the most attractive investment opportunities.

Core Healthcare Industry Issues and Investment Opportunities

Technological innovations in the field of health must respond to two problems: cost of care and ineffectiveness of care. The system is currently far too expensive and totally inefficient. Thus, the most powerful investment opportunities will focus on technology improvements that make care more affordable or improve the patient experience.

Consider opportunities from two perspectives: the patient and the healthcare provider.


The influence of Amazon’s customer obsession has transcended the retail industry. While customer experience has become a fundamental principle in the private sector, patient experience is at the forefront in the healthcare sector.

Ultimately, the patient experience problem comes down to the fact that, by and large, we’re still treating patients the way we did in the 1990s. We’re keeping them waiting in waiting rooms (littered magazines that may not have changed since the 1990s), see doctors in person for almost any ailment and sign physical receipts when they leave.

In short: the patient experience must move into the 21st century and investors must capitalize on the various opportunities.

There should be more reliance on telemedicine to reduce the time spent in the waiting room (and free up more time for providers). We should make electronic health records (EHRs) available to patients (and able to be shared) with the click of a digital app. Partly because of COVID, many ambulatory care facilities have finally started to tilt the patient-provider dynamic more in favor of the patient (and with some nice benefits for providers as well).

The patient experience status quo is 30 years old. There are plenty of reasons why healthcare isn’t as quick to innovate as most other industries (and, conversely, why Amazon has struggled to break into the space), but a state of crisis should make these irrelevant reasons.

health care provider

While rising costs may seem to paint a prettier picture for vendors, this is misleading. Reimbursements for common procedures, like cataract surgeries, have actually declined over time, despite the diseases becoming more prevalent. This, coupled with the fact that the cost of living has risen, means providers are earning less income while living more expensive lives.

A huge burden of revenue collection falls on healthcare providers. Knowing how much patients can pay for the procedures, knowing what insurance to go to before the procedures take place, and having systems in place to collect as much revenue as possible are all challenges that cause leaks in the sources of provider income.

Greater efficiency is required on the supplier side to reduce the running costs of their operations. The less providers spend to manage dysfunctional payment dynamics, the more they can invest in care, resulting in healthier, happier patients.

The healthcare system of tomorrow

The healthcare system of the future will be more like any modern retail experience. Providers will deliver the same service efficiency that customers expect from Amazon deliveries and Uber rides. To do this, providers are turning to technology. 83% of providers say they plan to integrate new technologies to meet consumer needs. Costs associated with current inefficiencies will be eliminated and patients will bear less of the burden of care they desperately need.

Investors should focus on companies designed to improve the quality of care and reduce the cost of care. Whether through more sophisticated telemedicine, more comprehensive mobile apps, or more autonomous ambulatory care facilities, America’s healthcare crisis will be solved by companies that make the most of the wave of… innovation catalyzed by COVID-19.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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