Much has been written about how COVID-19 has altered the landscape of health care delivery. In the weeks after the global pandemic began, the percentage of virtual outpatient care visits skyrocketed from 0.1% to 14% before settling (for now) at around 6-7%, which is ~60-70x above pre-pandemic levels.1
Simultaneous to this rapid adoption of virtual health care, we’ve observed a free fall in both the utilization of and employment in nursing care facilities.2
Similarly, healthcare systems have experienced major disruption from massive budget shortfalls related to delayed elective procedures as they took an “all hands on deck” approach preparing for an influx of COVID-19 patients.
Yet amidst all this chaos, the recognition that the healthcare system needs to quickly join the rest of the technology-enabled world has driven digital health investment to new heights.
As Yogi Berra said, “It’s tough to make predictions, especially about the future.” And while Yogi’s words have never been more true, there are old lessons and new trends from which we can draw insights to help inform investment themes which we believe will drive further innovation in healthcare technology.
If you accept these five assertions, you can begin to form a view on the areas of healthcare that are likely to see rapid adoption in the years ahead. The healthcare system will always work to balance financial sustainability with improving its ability to deliver value (in its many forms – outcomes, convenience, engagement, satisfaction).
We believe healthcare delivery in the home will grow and as that happens, new technologies and new business models will be formed that will further innovation
We believe healthcare delivery in the home will grow, even care thought to be impossible to deliver without the equipment and staff in a hospital or clinic setting. As that happens, we would expect to see new technologies and new business models being (while noting some are already being) formed that will further innovation. Along with that will come new stresses on healthcare’s technology and human infrastructure (e.g. remote monitoring systems, medical supplies, family caregivers), which we think will also be solved by a continuous cycle of innovation and growth.
Below are a few investment themes about which we are particularly excited at the moment.7
1. Research from The Commonwealth Fund. www.commonwealthfund.org/publications/2020/oct/impact-covid-19-pandemic-outpatient-care-visits-returnprepandemic-levels
2. Article from Modern Healthcare. www.modernhealthcare.com/post-acute-care/nursing-home-employment-continues-free-fall-industry-prepares-worker-exodus
3. Source: Bureau of Labor Statisitics. Latest data is preliminary.
4. Source: Rock Health. Note: Includes U.S. deals >$2mm; data through December 31, 2020
5. Analysis from IQVIA. www.iqvia.com/insights/the-iqvia-institute/covid-19/shifts-in-healthcare-demand-delivery-and-care-during-the-covid-19-era
6. Analysis from The Wall Street Journal. www.wsj.com/articles/the-covid-19-death-toll-is-even-worse-than-it-looks-11610636840
7. Adams Street views the listed companies in Figure 4 as illustrative of the themes described; these are all not Adams Street investments.
Important Considerations: This information (the “Paper”) is provided for educational purposes only and is not investment advice or an offer or sale of any security or investment product or investment advice. Offerings are made only pursuant to a private offering memorandum containing important information. Statements in this Paper are made as of the date of this Paper unless stated otherwise, and there is no implication that the information contained herein is correct as of any time subsequent to such date. All information has been obtained from sources believed to be reliable and current, but accuracy cannot be guaranteed. References herein to specific companies or sectors are not to be considered a recommendation or solicitation for any such companies or sector. Projections or forward-looking statements contained in the Paper are only estimates of future results or events that are based upon assumptions made at the time such projections or statements were developed or made; actual results may be significantly different from the projections. Also, general economic factors, which are not predictable, can have a material impact on the reliability of projections or forward-looking statements.