Innovation in Healthcare Services Transforms the Consumer Experience

Think ‘innovation’ in healthcare and one typically pictures an AI-supported device that can diagnose a type of cancer sooner than the current technology or a slick digital interface that aids a patient’s registration ahead of a visit to a physician’s office. Niche technology development programs always garner their share of investment dollars as witnessed by the record $60 billion in venture funding of digital health deals in 2021, but it’s only part of the story.

It's harder to identify innovation in the much broader (and bigger) healthcare services market. Think hospitals, physicians, and home health; these three sectors accounted for roughly $1.5 trillion in spending in 2022. There are two interesting innovation trends developing in the physician sector driven by the critical fact that over the next decade, the U.S. will experience a shortage of 45,000 physicians (up to possibly more than 100,000) according to the Association of American Medical Colleges. The developing physician shortage is well understood and has been tracked for some time (made easy because of how long new physicians spend in medical school). This trend worsened over the past two years because COVID accelerated the retirement or job-switching out of healthcare of a significant number of providers and exacerbated the critical issue of patient access the healthcare system.

One obvious innovation in healthcare services is the dramatic uptake in the use of digital tools by physicians (also aided by COVID). Examples highlighted in a recent AMA report include: 80% of physicians used telehealth visits in 2022, up from just 14% in 2016 and nearly triple from what was reported in 2019 and 30% of physicians reported using remote monitoring devices in 2022, up from 12% in 2016 and nearly double from where use was at in 2019. The use of digital tools allows physicians to be more efficient with their time and expand access for patients to the healthcare delivery system (especially via telehealth).

One non-obvious but notable innovation in healthcare is also being driven by the shortage of access as well as changing payment models that focus on value-based reimbursement. Retailers like Walmart, Walgreens, CVS and Amazon are entering the primary care market in a big way. In Bain & Company’s study on trends in primary care, Bain predicts by 2030, 5-10% of primary care encounters will be in a retail setting, and that experience is likely to be more enjoyable than the traditional physician’s office visit. Examples of this trend include Walmart’s announcement that it will open 16 additional health centers in Florida and Amazon’s recent purchase of One Medical to reboot its Amazon Care initiative. This may mean the next time you stop in at BestBuy to purchase new health monitoring device, you may be able to knock out this year’s annual physical as well.