At MBS, our conviction that changing consumer spending decisions could transform healthcare underpinned our decision to establish this practice nearly four years ago.
Despite being a service industry at heart, healthcare as a whole – dominated by insurance companies and public health systems – has for years under-valued individual consumers and has chosen instead to design services for the convenience of those institutions. Looking beyond those bureaucratic behemoths, and the historic passivity of patients – “the Doctor will see you now” – and understanding how transformative technology and the digital revolution could be, we have been excited about the opportunity healthcare offers for consumers to seize some autonomy.
These reflections were front of mind when I recently attended HLTH Europe in Amsterdam. The biggest health conference on the continent, squarely focused on innovation and the possibilities of digital healthcare, I was thrilled to be part of talks and panels hosted by some of the leading minds in the sector, and to connect with the leaders whose thinking is taking healthcare forward.
“Despite being a service industry at heart, healthcare as a whole has for years under-valued individual consumers.”
The conference was an exciting and optimistic space, full to the brim with smart, committed people applying their abilities to better healthcare for us all, and I was challenged to think about the implications for leadership of everything from ageing, chronically sick, populations to AI; faster, more accurate diagnosis, to robotics, genomic screening, and personalised treatment.
After two days, I realised I hadn’t heard the word ‘customer’ once. But on day three, the magic started happening when the role of the consumer came to the fore.
The green shoots of a shift towards some individuals taking their health into their own hands have been sprouting in recent years, highlighting the importance of preventative measures rather than reactive ones. Many of us have been nudged into a walk, even a run, by the buzz of a wearable watch whilst, according to an article in The Guardian, individuals in the UK are now spending an average of nearly $3,500 a year on health and wellness and in the US, more than $6,000 – on self-selected items from fitness classes to treatments for chronic pain and subscriptions to meditation apps.
And now AlbionVC, the tech investor behind businesses from Oviva and Healios to Quantexa – and the European Healthtech Market Map – is calling the consumerisation of healthcare as a major trend. Global professional services giant, Deloitte, meanwhile, is talking about customers, not just patients, as a force in healthcare.
NEKO, which we profiled in our previous column on innovation in diagnostic services, and which operates on a membership subscription model, is a prime example of this. It offers individual customers full body scans, using more than 70 sensors and 50 million data points to screen, in under an hour, for conditions ranging from the early signs of cardiovascular diseases, skin cancer and diabetes to other chronic illnesses, reviewed immediately by doctors and followed up with in-house care. During his session, founder and CEO, Hjalmar Nilsonne presented evidence of the health improvement experienced by his customers in Sweden, over a period of a year.
Whilst recognising that his customers are self-selecting, and affluent enough to afford NEKO’s services, NEKO’s direct-to-consumer model is gaining traction with investors, raising $260m in Series B funding in January this year.
“While optimistic talk of the emergence of Nike-style power brands in healthcare may be some way from fruition, the trend is there. “
Although not everyone can afford to regularly engage with these preventative options, those who can, increasingly, are. The growth seen by both GLP1 manufacturers, the businesses behind Wegovy and Ozempic, and the providers of those drugs, like PrivateDoc and indeed Oviva, demonstrates the scale of what has effectively become a self-prescribing weight loss market. Between 2024 and 2035, GLP1s are expected to grow from a market value of $2.05 billion to $10 billion, while companies like Novo Nordisk have reported more than doubling net profits over the last five years, much of it down to Ozempic.
While optimistic talk of the emergence of Nike-style power brands in healthcare may be some way from fruition, the trend is there.
Meanwhile investors are seeing value – and the opportunity for scaling – in direct-to-consumer healthcare businesses. Portuguese-founded Sword Health, which uses both AI and licensed clinicians to support customers in accessing support for their physical and mental health, recently raised $40 million in a funding round, at a valuation of $4 billion. And Hinge Health, which successfully IPO’d in May raising $437.3 million, is ‘creating a new healthcare system – one built around you’. The business focuses on digital solutions for joint and muscular pain and was born out of the founders’ frustrations with the musculoskeletal treatments they’d both experienced.
The exciting growth of emerging businesses like these underlines how digital technology is enabling consumer-led models to assert their power in a sector that has traditionally heard institutional voices much more loudly.
However, the fundamentals of healthcare should not be overlooked. One session I found particularly affecting centred the future of children’s healthcare – and the more fundamental importance of affordable nutrition and good sleep before the dazzling excitements of AI, digital innovation and robotics. When it comes to children’s health, clinicians are applying the advancements in tech in a different way, putting children, who are digital natives after all, at the forefront, with the intention of helping them reach their clinic appointments, or easing their experience when going through medical treatments.
Seattle Children’s Hospital’s therapeutic gaming experience, which allows children to explore the hospital through the virtual world of Minecraft, is perhaps one of the most eye-catching examples of this different sort of innovation. The platform enables children to connect and play with other children also in the hospital, even while they are unable to leave their rooms. It is private, secure, and designed to help reduce children’s fear about being in the hospital – and it is improving their rate of recovery. While a very different application of technological advancement, it is another example of how foregrounding a customer, as an individual, and engaging positively with the tools that are now available in the digital space, can make a real impact.
“The fundamentals of healthcare should not be overlooked.”
The themes of accelerating technological change, not least around AI, innovation, and consumerisation, discussed at HLTH Europe show no signs of slowing as this week’s announcement of the UK government’s 10 Year Plan demonstrates. For us at MBS, we are always thinking about what makes great leadership, and it’s clear there needs to be a shift in thinking from many of those leading, and investing in, consumer healthcare businesses. Alongside clinicians, scientists and operators, the conference highlighted that, to be successful in the future, consumer healthcare businesses will need their leaders to understand, anticipate, and prioritise customers. As sector stalwarts Spire saw when their self-paying customer revenues grew fast after the Covid-19 pandemic, it is those customers’ behaviours which will continue to drive direct-to-consumer models, digital and technological innovations, and growth. It is an exciting time for the sector and for those joining it.
A perspective-stretching experience, HLTH Europe renewed my convictions around the opportunity and innovation potential that exists within healthcare. The upswell in customer-fuelled growth is starting to impact the sector as whole and it is a trend we are proud to know we saw coming. We are only seeing the beginnings of how the consumer, armed with digital technology, a spirit of curiosity, and a desire for autonomy over their own health, is altering the healthcare sector, but what is yet to come is full of excitement, innovation and opportunity. The leaders who understand those customers’ needs and desires are those who will be rewarded with growth, impact and success.
