It’s been a while…. I’ve been quite busy over the last couple of months trying to build stuff….. I’ll explain in another post. In the mean time, I thought I’d share some content I had the chance to write for another reason on to my blog. I’ve realized I do a lot of writing but not a lot of posting. I hope with such a nice set up and audience, I’d switch that around for the rest of the year. So here’s an exercise I worked on a couple of weeks ago on defining an investment thesis for the healthcare sector. Thought it would be interesting to think of how the healthcare industry is changing as a whole and where the opportunities are for the entrepreneur, investor, and everyone else.
Over the last 20 years, I’ve had a well rounded set of experience and exposure to the healthcare industry. I grew up in a healthcare household. My father worked for several cutting edge biotech companies and my mother has worked as a nurse in hospitals and did home care. I had cousins who all became different types of medical doctors. For several summers, I worked and interned at hospitals and pharmaceutical manufacturing facilities in my teens. I’ve been through two near-death experiences where I had to be hospitalized for an extended period of time due to mysterious diseases (a story for another day).
The healthcare industry faces some tough challenges in the next 10 to 20 years. An evolving regulatory environment and changing business models have created declining margins for public and private healthcare in the United States. While margins have declined, demand and costs have significantly increased. We’re seeing growth in our population but also a demographic transition. Baby boomers, for example, are entering a phase in their lives where healthcare will become the primary expense but with diminished savings and labor costs on the rise, how will baby boomers afford to have the same kind of care their accustomed to while dealing with a longer life expectancy and more expensive care?
While the healthcare industry faces regulatory, demographic shifts, and margin challenges, there are some major themes that get me excited about its future. Healthcare, just like other industries, is shifting from responsive to preventative. With the proliferation of the internet, mobile, and other smart devices, healthcare is something that doesn’t just happen when you’re in a hospital. It has the potential to happen 24/7 and this has a significant implication on service delivery, business models, and product innovation. Preventative medicine flips the traditional healthcare business model on its head and allows for an endless possibility in ways we can treat people before they ever step foot into a doctors office.
The shift to preventative health is also driven by access and the creation of information in ways we haven’t seen in the healthcare space. For example, I used 23&Me to learn about my genetic makeup/lineage but also received health reports. This information wouldn’t have been available to the average consumer or even a medical professional 10 or 15 years ago. We’ve also seen an increase in the digitization of health records too. Combined, I see a future trend of personalized and holistic healthcare service delivery that isn’t beholden to location or labor costs. This presents an amazing opportunity to solve for population growth and demographic shifts. We can improve quality of care and also deliver high-quality care at scale.