Digital Transformation of Healthcare - Alexa: I’ve got a tummy ache
Frick’s general practitioner has referred him directly to the hospital. This isn’t the first time he’s gone to the family doctor due to abdominal pain, but this time the md concluded it was best to have Frick admitted to hospital. But at the hospital, they miss access to a central patient file to see, for example, information past treatments and their results, prescribed medications or x-rays to be shared across all disciplines of the medical care system. Thus, misunderstandings and delays can result and inevitably lead to longer hospital stays and follow-up treatments. And as the proportion of the population comprised of older people steadily increases, so do the health-related costs (see VP Bank study on the future of the healthcare system “Global Health Care: Invest in Health” published in September 2018).
A Eurostat study reveals that one-eighth of Switzerland’s economic output (gross domestic product) can be attributed to healthcare services; in the EU, the average proportion is only around 10%. And according to the U.S. Centers for Medicare & Medicaid Services, this figure stands at 17.9% in America. So, in this regard, the digital transformation of the healthcare system not only helps to reduce costs, it also improves the quality of treatment.
This is the third episode of our series «Digital transformation - The path to the future». The series draws on five drivers to explain how digitalisation is changing business models and how investors can benefit from this evolution. Find the introduction and the overview to the series here.
In its own studies on the future of the healthcare system, consulting firm McKinsey points out that the biggest hurdle for digital transformation stems from outdated organisational structures. The flow of information – from initial diagnosis by general practitioners, to further treatment by specialists or referrals to hospitals – is still largely decentralised and therefore inefficient. In fact, this is also the case within many hospitals. Granted, they already work with electronic patient dossiers, but to the greatest extent the treatment processes are not interrelated. Waiting times and coordination problems can lead to delayed treatments and thus to protracted follow-up procedures.
According to the World Health Organisation, total health spending is rising faster than the global economic growth. They increase more rapidly in low- and middle-income countries (close to 6% on average) than in high income countries (4%). A large part of that total will go towards postoperative care. Given those prospects, it should come as no surprise that a combination of artificial intelligence, virtual reality and robotics is already contributing significantly to the more efficient allocation of budgets. And here, it is important that all data within the entire healthcare system be interlinked.
The digital revamp of treatment processes has attracted a great deal of attention from technology companies. The standardisation and hence increased security of so-called “Cloud-based” data storage make it possible to cluster patient information cleverly and to evaluate it analytically with the aid of artificial intelligence.
Google, Microsoft, Tencent as well as Intel and Samsung are also supporting start-ups in this field, with data management and analytics, genome research, clinical studies, diagnostics and digital administration receiving the greatest amount of financial backing. With more than 20 companies under its corporate umbrella, Google can attend to the entire value chain of a hospital. These services range from patient transport, diagnosis and patient observation, to medical equipment, software solutions for virtual operating theatres and the ordering of medical supplies. Microsoft focuses more on organising the information flow, patient monitoring and telemedicine.
Machines in the service of mankind
Another promising approach for reducing healthcare costs is the use of robotics – not as a mechanical nurse, but rather in diagnostics of the quality of treatment and in terms of rehabilitation. Today, eleven times more robots are used for surgery in hospitals than eight years ago, and that figure will almost double again by 2021. One example of this is the Mako system from medtech specialist Stryker, an apparatus used primarily for hip and knee joint operations. Its robot arm assists during the surgery and demonstrably reduces post-operative costs by up to two-thirds in the 90 days following the operation. In 2018, the system was used in over 100,000 operations worldwide. But even this impressive performance has not made Stryker the global market leader; it ranks somewhere between second and fourth, depending on the specific area of application.
From the laboratory to the sidewalk
Other areas where robotics are rapidly growing in the healthcare realm focus on diagnosis, orthopaedics, rehabilitation and hygiene, but also on the training of doctors and medical specialists. The latest advances, especially in orthopaedics, open up entirely new horizons. The MIT Biomedical Devices Design Laboratory, for example, has crafted independently balancing arm prostheses that “observe” their own movements and correct them if necessary. They come very close to the movement sequences and use of one’s own limbs. This technology is already so far advanced that the bridge between research and actual human application has been crossed. Since 2017, so-called exoskeletons are being used in the field of rehabilitation: mechanical prostheses are attached externally to the limbs in order to assist in bearing weight and bringing the patient’s physical capabilities back to normal after severe injuries.
Future Health Basket
As digital transformation relentlessly progresses in the healthcare sector, above-average growth potential is in the making for many companies. The actively managed “VP Bank Future Health Basket” certificate takes this trend into account and invests in the shares of 37 companies from four interrelated areas: “Demography”, “Economy”, “Digitalisation” and “Healthcare Technology”. Through targeted diversification, opportunities across the entire digital value chain are seized upon whilst heightened stock-specific risks are significantly minimised.
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