The Health-tech Boom: Will Data be its Downfall?
Health-tech start-ups are securing record-breaking amounts of funding, with $12.9 billion raised in the U.S. in the final quarter of 2020. Similar trends were seen for start-ups in Europe, with the continent seeing a $750m increase in funding in 2019-2020, the largest increase of any sector. Health-tech had already gained considerable investor engagement by 2019. However, Covid-19 has highlighted shortfalls in current healthcare systems, and as such, investor interest has only increased.
What is Health-Tech?
The primary goals of health-tech are personalisation, prevention, and precision. The ability to track and understand an individual’s body will enable earlier diagnosis and treatment, resulting in lower overall costs. As such, many insurance companies are encouraging their users to wear tracking devices akin to that of a black box within a car. The principal reason for this is that an increase in health results in a discount, whilst a decrease in health results in a premium. This is by no means a revolutionary concept – increased risk increased fee is a basic principle of insurance. However, there are worries of insurance companies refusing treatment from information gathered by the wearer’s device, or insurers only issuing cover on the condition that the device is worn.
Investment and Issues
The complexity surrounding health-tech cannot be underestimated. Google tried and failed to create automated medical records around a decade ago. Given that a trillion-dollar company was unable to succeed in the market, this does not bode well for the viability of health-tech. However, since Google’s failed attempt, others have succeeded or begun the path to success. This can be seen in the 2020 IPO market – Amwell’s $742 million and One Medical’s $245 million IPOs both saw large increases in the aftermarket, showing investor appetite for health-tech stocks that shall reduce the overall cost of healthcare.
Big Tech are still very interested in the health-tech sector, but the rationale behind their interest is distinct from others. This can be seen in Amazon’s new offering for prescription drugs within the U.S., where they are planning to sell the drugs for an 80 per cent discount. This will instil fear into many pharmacies in the U.S., who are simply unable to compete with Amazon’s price point. It also begs the question of why Amazon has an interest in this area, if not for the revenue available. Many stipulate that Amazon’s motivation is data, as knowledge of the drugs an individual is prescribed allows a vast insight into their life.
The issue here is not that Amazon is collecting this data, but that individuals have little choice otherwise. When was the last time you read terms and conditions in their entirety? Personally, I have never. Even if you read them thoroughly – would you cut yourself off from Amazon/Facebook/Google, thus alienating yourself from vast quantities of information and communication channels? The answer would probably be no.
Data collection and safety is by no means a new issue: but it is one that needs addressing alongside the advancements of health-tech. Over half of U.S. consumers have said that privacy issues discourage them from using health devices. As such, to enable this sector (and many others) to reach its full potential, data concerns must be addressed.
Many individuals are working to improve online safety – one idea is the use of PODS (Personal Online Data Stores) by Tim Berners-Lee (the creator of the World Wide Web). This would allow individuals to store their data in an online safe, giving companies an access key if required. This would not enable companies to store any data; instead, they would only be able to access it when authorised to. There are many ideas akin to this in the pipeline. As to which and whether they shall be adopted, and how they will change the marketplace, remains to be seen.
Importance of Data Security
Safety of health data has been lax in the past – the NHS was hacked in 2017 due to the outdated systems that were in use, which were very vulnerable. It is unlikely that new health-tech systems will be running on a seventeen-year-old server like the NHS was at the time of the cyber-attack. However, the health data that will be stored by these companies is an estimated ten times more valuable to hackers than bank details. As such, data security is paramount.
Health-tech is a booming sector; the opportunities to save and improve lives seem endless and its advantages have been realised by investors, insurers, governments, and others. But to ensure its widespread uptake, and to allow new start-ups to gain credibility, consumer’s legitimate data concerns must be addressed in a simple and understandable way.