- Hospital CIOs are currently eyeing health tech partners for the long haul.
- And health systems that demonstrate clear ROI, like Amwell and Health Catalyst, are in a solid position to win deals.
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Health system leaders think health tech companies have long-term potential, and they're starting to see value in these companies beyond a COVID-19-colored lens: A survey of 20 health system CIOs and innovation leaders shows over 60% are interested in investing in platforms that target patient experience, telehealth, and operational efficiency.
The coronavirus pandemic severely impacted health systems' budgets, which fast-tracked health system-health tech partnerships:
- Health systems faced steep financial losses, leaving them scrambling for ways to restore revenue. From March 1 to June 30 of this year, US hospitals and health systems lost nearly $203 billion, per the AHA. These losses can be largely attributed to lower patient volumes, cancellations of elective procedures, and the costs of additional logistics, support, and PPE supplies. Despite a $175 billion relief package from Congress, health systems still had to invest in care solutions and resort to furloughing or laying off employees for some financial padding.
- To contend with newfound healthcare delivery and operational woes, health systems quickly turned to digital solutions to stay afloat. Virtual care became a go-to healthcare delivery option almost overnight—telehealth vendors secured millions in funding from health systems' VC arms as they looked to implement digital health solutions to recoup revenue. For instance, Genesis Health System invested in Bright.md to virtualize and streamline its healthcare delivery operations—which allowed it to reach patients amid widespread stay-at-home orders and optimize its provider workforce.
Health tech startups that prove they have ROI potential will usher in a wave of tie-ups with eager health systems. With health systems already struggling to hold onto their shrinking budgets, startups will have to prove clear value to reel in health system customers: 50% of health systems think their budgets will not normalize for at least one year, per Dreamit Ventures-MedCityNews.
A 2020 Center for Connected Medicine survey of 130 health system executives shows telehealth tools and virtualization of administrative tasks produced the highest ROIs—which will likely capture the interest of health systems.
For example, Northwell Health, one of the largest health systems in the US, reported a $1.2 billion financial loss due to the pandemic—yet in August, the health system partnered with health data company, Health Catalyst, to leverage its analytics capabilities to boost precision medicine efforts and reduce spending on extraneous tests and procedures.
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