AI-powered preventive healthcare – How will healthcare companies profit from healthier consumers?
AI-powered preventive healthcare aims to make us all healthier
Increasingly advanced machine learning is impacting healthcare in a range of areas, from automating the analysis of medical scans for tumours to improving business operations in hospitals and surgeries. One of the most ambitious areas is the application of AI in the preventive healthcare space. The ambition is nothing less than to make all of us the healthiest selves we can be and eliminate preventable illness and death.
So, how could this be achieved? In theory, the application of machine learning in this space would comprise of
- capturing and bringing together different data sources about a large number of individuals’ habits, activity levels, physical & mental wellbeing, environment, nutrition, genetics and medical history to understand patterns that show what contributes to developing an illness or condition
- identifying what data points can be used as the earliest indication that an illness or condition is being developed and what choices may help an individual avoid developing this illness or condition
- feeding this back to the individual as advice, based on their individual context, sometimes with incentivization to act on it. Advice could include recommended sessions with a doctor or other healthcare providers, drug prescriptions, nutrition or fitness recommendations, or suggested lifestyle changes such as moving away from a polluted area or quitting smoking.
In this case machine learning is applied to intercept diseases before they develop and predicting illnesses to prevent them.
For such uses to become prevalent we must understand the future value pools that will exist in the preventive healthcare space and the incentives for companies to target them.
Health companies want to become long-term health partners
This new service will require closer relationships between healthcare providers and consumers, as it requires the sharing of data, a trusted relationship in which consumers accept the advice given, and honesty & transparency that allows the accurate capture of data. For companies this offers the opportunity to engage with consumers directly, build a long-term relationship and drive loyalty. Consumers and companies become partners that work together towards the goal of a healthier self.
To deliver this service, companies need to make significant investments, for example in data capture and standardization, machine learning capabilities, data capture devices, an aggregator platform for healthcare providers, and a well-designed user experience, among others. The benefits of having a close relationship with the consumer and the threat of consumers being pulled into the ecosystem of a competitor has driven high levels of investment and M&A activity in this space. Most important is establishing control points – whoever controls the preventive healthcare decision will control the downstream provision of the required interventions, which is referred to as the ecosystem in this article. For example, whoever can identify first that a consumer is pre-diabetic and is trusted by the consumer to make a healthcare decision for them, can then decide the care pathway they follow: the experts they engage, the medication they take, the symptom management tools they use. To own this control point requires the consumer data and the capability to drive out insights.
Not all healthcare providers will embrace this in equal measure. Their focus will depend on their core revenue model and subsequent behaviours they are incentivised to drive in consumers. There will always be disabilities, acute injuries, chronic illnesses etc. but an examination of revenue sources will give an indication of which business are most like to invest behind making consumers healthier and less dependent on medical support and medicine.
Making consumers healthier – good for business?
Insurers and public healthcare providers
Insurers and public healthcare providers have a vested interest in a healthier population, as it reduces their pay-outs (or public spend on healthcare) and increases profitability. Earlier detection of health problems is both cheaper and more successful in terms of delivering effective interventions. They are also well positioned to play in this space. Insurers have connections with other healthcare providers which puts them in a good place to be an aggregator within the healthcare ecosystem. Further, they have a history of collecting data on the people they insure, e.g. they already have a good view of patients’ requirements, who attended to it and sometimes even what the outcome was. This is less detailed than what they will need to capture in the future, but it means that there is a foundation and data infrastructure in place that will give them an advantage against other players. It is therefore no surprise that insurers have been busy investing in acquiring data capabilities and launching AI-powered consumer Apps for their members. One of the most prominent examples is Vitality, which captures data on the healthy habits of the people they insure and rewards them with cheaper fees and partner perks. Last year, the insurer launched ‘Vitality GP’, an end-to-end offering that provides mobile consultations with GPs, referrals, and access to other wellbeing professionals. This is a good example of an insurer taking steps to position themselves at the heart of an ecosystem, which has the potential to move towards predictive recommendations & advice. A question that remains is whether private insurers will be invested enough in the long-term health of consumers or instead driven by a short-term vision due to yearly renewals that allow premium increases. Public healthcare providers, on the other hand, are clearly focused on long-term health improvement, but often struggle to allocate more budget to areas which do not show short-term returns. The biggest contribution of the public sector is therefore supportive legislation that encourages private players to invest and innovate. The Finish government, for example, is driving the standardisation of health data and opening up genome data for research and product development.
Pharmaceutical and consumer healthcare companies
Pharmaceutical and consumer healthcare companies have also been embracing this space, acquiring start-ups and investing in data capabilities. There are some clear benefits to offering a preventive healthcare service to consumers: it is a way to forge a closer relationship with customers, have more touchpoints with them and use the platform as a D2C channel for targeted upsells of their own product range, especially of health-promoting products such as supplements and other wellness-enhancing offerings. Having a direct relationship with consumers that cuts past doctors or retailers, is a strong incentive to play in this space. However, as outlined earlier, revenue models are a key indicator of future strategies in this space. At the heart these types of companies profit from unhealthy consumers. Despite the revenue opportunities of a preventive healthcare service, such as subscription costs or ads and referrals revenues, their main source of income will remain the sale of products to treat illness. That means that there won’t be the same incentive to invest and innovate their offering as other players have, which means that they may fall behind and become less competitive. But there is a clear opportunity for these companies: to focus on consumers with chronic conditions. They will always need medication and a closer relationship will increase the companies’ revenue from this consumer group. By helping them extend their lifespan through predicting and identifying measures to reduce the impact of their illness and avoid developing related conditions through both lifestyle choices and medicine from their own product or service range, the companies can essentially increase those consumers’ lifetime value to them. Recent M&A activity suggests that several companies are following this strategy already. Merck, for example, has made several acquisitions in this space, e.g. in Well Doc and Livongo Health, both of which are intelligent chronic conditions management systems. Roche recently acquired mySugr, a company that develops motivating mobile apps to manage diabetes. With chronic diseases on the rise in most countries, there is much value in this market. Additional benefits which can be reaped from the data that the companies will capture from those individuals that shouldn’t be underestimated, include informing R&D and product development.
Tech companies have invested significantly in the healthcare space in recent years, spreading their investments across multiple areas. A key focus, however, is the preventive healthcare angle. Here companies such as Google, Amazon, Apple and Tencent have made investments across all the elements necessary to offer a full preventive healthcare service as outlined at the beginning of this article. Firstly, we can see significant investment by tech players in creating a unified health data infrastructure in the health space. Google’s subsidiary DeepMind, for example, is building a new data backbone using FHIR (standardized data format for healthcare data) to make it easier for itself and third-party developers to build apps on top of this new infrastructure. Apple has been investing in getting patients and institutions to adopt Apple Health Records, which aim to link official health records with patient-generated data. Data generation is the second area that companies are investing in, with a prominent example being the Apple Watch which now can also take ECG readings. Apple also recently acquired Gliimpse, a company that offers a personal health data platform that enables the user to collect, personalize, and share a picture of their health data. Thirdly, investment flows towards on the one hand making this data available to third parties to increase the number of applications based on health data, and on the other hand to the companies’ own applications. Apple, for example, has invested in ResearchKit and CareKit, a framework for developers to build apps that will let consumers manage their own well-being on a daily basis. Google recently invested in Senosis Health, a mobile health monitoring start-up that develops apps to measure, diagnose, and manage diseases. Another approach that Tech companies have been taking is to set up their own clinics. Examples include Apple Clinics for its employees, and Amazon’s partnership with JP Morgan and Berkshire Hathaway which includes setting up in-house clinics. This allows companies to capture data on their employees and patients, test new approaches and understand if preventive measures work by keeping close tabs on compliance, an important element of being able to measure the robustness of recommendations in the preventive healthcare space. All these services combined could build the end-to-end service outlined at the beginning of this article. The incentive to tech companies is that they can generate revenue from this service in similar ways to their core business, including through targeted Ads and preferential referrals/display of certain healthcare providers within their service or the sale of IoT devices and wearables. But companies such as Amazon are exploring creating additional revenue stream as well, for example by moving into the insurance space themselves.
It seems very likely that tech companies will dominate the preventive healthcare ecosystem in the future, disrupting both private and public healthcare players. This is because they are uniquely experienced in combining multiple data sources on individuals to serve up targeted offerings in response to an individual’s profile. Additionally, the revenue structure relates closely to their current model, a further incentive to invest in this space. So, by capturing data and identifying if there is something likely to be wrong with a patient first, they will be able to choose who they direct them to; it is likely that there will be white-labelled providers such as Prime doctors and Prime medicine as a result.
The battle for data and consumers is on and a good strategy is key
All healthcare players are making investments into building a preventive healthcare offering. They are driven by an incentive to be the first company to present consumers with a credible and useful offering, as the first mover is likely to win a significant market share early on and lock consumers into their ecosystem, which will make it harder for other players to steal them later. It is about capturing a very desirable slice of the healthcare market which is focusing on mostly healthy individuals who are motivated to stay that way. In theory, the high level of investment is great news for us consumers, as competition will lead to a better service and uncover effective ways to stay healthy and avoid preventable illnesses. But the question remains about consumer willingness to accept and embrace these services. As beneficial as prevention is to us, it is a logical rather than an emotional decision – so a critical success factor will be how it is packaged and sold to consumers. This might mean that consumers will not be the ones paying for it, making monetisation of the service through other means more important. Consumer attitudes differ in different parts of the world, as do conditions beneficial to AI development, such as large population data sets and public funding. The geographical angle has not been explored in this article, but many indicators point towards China moving more quickly in this space than some other countries.
In summary, even though it seems like Big Tech will become the centre of the new preventive healthcare ecosystem, there are plenty of partnership opportunities, especially to overcome the silos into which health data is currently split, and chances to own pockets of the future market, for example in areas where more serious diseases are detected, and deep medical experience is important. To remain relevant and competitive healthcare companies must have a coherent data and investment strategy, informed by their own ambition of what role they want to play in consumers’ life in the future, and by what their current and future competitors are planning. They must act quickly – the rewards to be had are plenty.