Venture Bytes #61 - The Future is Now for Telemedicine

The Future is Now for Telemedicine

The future of an advanced telemedicine system is now. While telemedicine has been around in some form or the other since the 1950s, the current COVID-19 crisis has moved the needle in terms of its true value. Social distancing, which is expected to be the new normal for the foreseeable future, and the need for telemedicine at a time of crisis such as the current one, have driven home the urgency of a functioning telemedicine system.

A recent report by Global Market Insight is projecting that the global telemedicine market will expand from its current $38.3 billion valuation to $130.5 billion by 2025. This 19.2% compound annual growth rate (CAGR) will be largely fueled by worldwide telecommunication network developments, market opportunities in rural areas or those without easy access to healthcare services, and the continuing integration of healthcare and IT market sectors. Meanwhile telemedicine as a whole is set to reach a $64.1 billion by 2025 within the US alone, according to the report.

Technological innovations are not just making healthcare services more effective but also revolutionizing the way they are administered. The virtual visits, at first a secondary option, are now a key element of family doctors’ plans to administer timely and in many cases life-saving treatments. Key factors driving this trend are rising healthcare costs, increasing number of chronic cases, and improved capabilities for remote patient monitoring.

Favorable regulations are providing a strong tailwind for the promotion of telemedicine. In 2019, 35 states had begun the process of finalizing 54 telehealth related regulations. Some of the bills addressed key barriers to telehealth coverage that some providers are facing. Examples of bills which addressed this growing need are California Assembly Bill 744 that stopped health plans from limiting coverage to specific third party corporate telehealth providers, and Texas House Bill 3345 that allowed complete coverage for telemedicine or telehealth services based on the health professional’s choice of a delivery platform. The successful passage of a corona virus response bill that allows Medicare reimbursement for care providers using telehealth to treat seniors at home was a major win.

Additionally, a few leading government and private agencies have been advocating increased use of telemedicine. For instance, the Center for Disease Control and Prevention has recommended healthcare service communities broaden the use of telemedicine services to combat corona virus and encourage social distancing measures.

Accordingly, the average time spent on health, fitness, and medical apps in the U.S has surged through the week of March 1, 2020. Time spent on android apps of Mayo Clinic and Headspace have seen a spike of 200% and 90%, respectively. The trend is similar in China and Japan with time spent on medical and fitness apps increasing significantly.

The two fields expected to benefit from the current Covid-19 pandemic are robotics and remote patient monitoring devices. Demand for these devices has been bubbling up for some time but this crisis will increase the spotlight on them even more. The broader IoT (Internet of Things) category in the healthcare market is roughly $180 billion, and smart wearables and remote monitoring have emerged as the key growth areas. BioSticker wearable sensor, for instance, from BioIntelliSense’s is being used to monitor a wide range of patient’s health metrics including respiratory rate, heart rate, skin temperature, frequency of coughing, sneezing, and vomiting. Similarly, Providence Regional Medical Center in Everett, WA used a telemedical robot from InTouch Health to take vitals from and interact with the first diagnosed case of coronavirus in the US. While wide scale adoption of these devices will still take some time, it is very likely that lessons from the recent pandemic will help increase the use of robotics in streamlining basic diagnostic tasks in the long run.

Bending the Cost Curve

In 2017 the per capita healthcare cost in the U.S. was $10,209, around $3.5 trillion in total, or 17% of the GDP. The comparable cost in Switzerland was $8,009 or 12% of the GDP. Similarly, a March 2018 review by the Journal of American Medical Association found that while in 2016 the U.S spent twice as much as 10 high-income countries on healthcare, neither was the performance of health outcomes better, nor the health care utilization higher. The main drivers of costs were labor and administrative expenses and the cost of pharmaceuticals. Hospital care comprised 32.7% of the costs, physician services was 15.6%, and other personal health care costs were 15%.

The biggest factors driving healthcare costs higher are a growing and aging population, and an increase in chronic illnesses. A Mordor study estimates that 40% to 50% of healthcare resources go to elderly population. Likewise a rise in chronic illnesses, such as diabetes, that require multiple inpatient and outpatient visits, cost roughly $100 billion a year.

Against this backdrop, telemedicine services can enhance health outcomes while reducing related costs. In particular they help in reducing travel times and in improving management of chronic diseases, and professional staffing. Remote patient monitoring also results in shorter and fewer hospital stays. Home-based care-as-a-service can also help in reducing average patient wait times, which stood at around 29.3 days in 2016. Telemedicine services can help hospitals and clinics reduce long waiting times experienced by patients and accordingly provide better access to quality care.

Is it Time to Give Drones Their Due Share?

Various news reports show that drones have played a role in responding to the COVID-19 pandemic in countries like China and Spain. Nations across the world have imposed quarantines in an attempt to control the spread of the novel coronavirus (COVID-19). Some of these countries have utilized drones to help reinforce the message that people need to stay home. In Spain, Kuwait and the United Arab Emirates, drones equipped with loudspeakers have been telling roaming citizens to go back to their homes.

According to The South China Morning Post, drones have provided a similar type of surveillance in China, but modified agricultural drones have been used to spray disinfectant on public areas. Drones have also transported medical and quarantine supplies to reduce people’s exposure to each other and TO reduce delivery time.

Will the growing number of uses around the world lead to far greater acceptance and deployment of drones here in the USA? Automated deliveries via drones may take another 5 to 7 years to become truly operational and the regulatory landscape will have to evolve accordingly. However, automated deliveries already attracted a lot of attention as companies realize the economies and efficiency this enhancement can bring to their business.

The drone industry surged in 2019 with VC funding reaching record levels in the first half of 2019. Between 2012 and June 2019 investments in drone companies stood at $2.6 billion. Venture capital investments grew at a CAGR of 62% between 2012 and 2018 and the annual volume of funding ranged from $450 to $550 million from 2014 to 2018.

Projections from The Teal Group show that the global civil drone market could grow three fold over the next decade and the commercial segment could grow six times to $9.5 billion in annual sales by 2028. Key sectors expected to increase drone use include agriculture, construction, insurance, energy, communications, and delivery. MarketsandMarkets research projects the market will reach over $27 billion by 2030 growing at a CAGR of 44.7% between 2023 and 2030.

The easing of rules for the operation of small UAS (unmanned aircraft systems) has allowed operation of unmanned aircraft in class G (uncontrolled) airspace without air traffic control permission. This has been key in spurring investment in the drone industry.

Besides easing regulations, increasing battery capacity with decreasing costs has enabled drones to travel over 25 kilometers on a single charge for package delivery and become a feasible delivery option for medicines, food, and other packages. Reducing carbon emissions globally is another factor that is driving growth for long range delivery drones.

Investment is mostly focused on companies operating in niche areas that are less exposed to the cheap Chinese drones. VC investors are also apprehensive about investing in companies that require a long runway and are not able to offer a clear exit for investors. Hence, while the investments have increased, the VCs have been hand picking companies that are able to demonstrate operational efficiency and a clear long-term vision. For Instance, Zipline completed a $190 million funding in 2019.

The company provides drone healthcare logistics and operates its network in Rwanda and Ghana where it delivers blood, vaccines, and medicines in under 30 minutes. The company is looking to expand into the U.S with a pilot program in North Carolina. Other companies attracting investment include PrecisionHawk, SkyCatch, and Kespry. These companies offer a combination of hardware and software.

Enabling technologies for drones is another area attracting investment.

Drone delivery is categorized into four segments including retail goods, food, medical, and industrial goods with retail and ecommerce being the dominant applications followed by healthcare and pharmacy. Companies including JD.com, Amazon, and DHL are using drones in the retail and ecommerce sector. Some of the key drone delivery companies in the U.S. include Zipline, Flirtey, Project Wing (an Alphabet company), UPS Flight Forward, Amazon.com, Fed Ex, UPS, DroneUp (aerial data solutions).

In terms of deliveries direct to home, Wing became the first U.S company to deliver packages, over-the-counter medication, snacks, and gifts to residents of Christiansburg, Virginia. Wing has partnered with FedEx Express, Walgreens, and Sugar Mangolia (a local Virginia retailer). Manna, an Irish B2B drone delivery company, also raised $3 million funding in Dec 2019.

The company boasts of a fleet of “aviation-grade” modular drones. It plans to roll out a fully autonomous drone delivery platform beginning in early 2020 in Europe followed by a launch in the U.S. All-weather drones flying at no more than 500 feet could be used effectively for food deliveries. Manna will offer its services to on-demand platforms, restaurant chains, and dark kitchens. It will initially provide deliveries in rural areas and suburbs in Ireland and promises an incredible three-minute delivery time, which would be 10 to 13 times faster than manual delivery. The company has partnered with an Irish online delivery platform Flipdish.

Based on data from ARK invest research, delivery as a percentage of total food spending could reach 41% by 2030. Further, the estimates suggest that due to advances in battery power, delivery via drones could be as cheap as 20 cents per delivery once scale is reached. Additionally, while manual deliveries span up to 5 miles, drones could cover longer distances.

Research also shows that if drones are able to gain up to 60% of the food delivery market by 2024, food deliveries via drone could reach $7 billion by 2024.

We are on the cusp of the fifth industrial revolution — powered by drones — and our intention with Manna is to make drone delivery as pervasive as running water — to literally transform marketplaces, economies and communities all over the world” Bobby Healy, founder of Manna.

Leading food delivery companies are also gearing up to acquire or develop automated delivery technology. Postmates has received permission to test its delivery robot Serve on the sidewalks of certain areas of San Francisco. DoorDash has acquired Scotty Labs that helped it bring in house autonomous vehicle tech.**