The Health and Wellness Team
The final series in this year's six part impact sector deep dive focuses on health and wellness. The Health and Wellness team includes first year Investment Associates Allison, Ashley, Boyce, Elena, Ioana, and Jessica and undergrad Investment Analyst Dan Wang.
The $7B USD healthcare sector continues to evolve in response to changing healthcare needs and trends.[i] Three sub-sectors comprise the broader healthcare sector: behavioral health, physical health, and healthcare enablers. New companies have explored ways to address the varying challenges each sub-sector faces with the goals of improving delivery, access, and ultimately health outcomes.
Key Impact Goals
Within the healthcare sector, our investments should achieve three primary goals:
Cost-Effectiveness/Affordability: How much does the offered solution reduce the total cost of healthcare for its target population? How does the offered solution alter payer, patient and provider payment dynamics?
Accessibility: Can the offered solution be made consistently available to the target population through the appropriate distribution channels? Can the offered solution be provided equitably?
Improved Quality: How does the offered solution improve the quality of healthcare delivery, services, or patient outcomes?
Importantly, these three goals are highly interconnected and must all be taken into account when assessing the total impact of any potential solution. Solutions overly focused on a single impact goal may overlook negative consequences in a separate impact area (e.g., extreme focus on improved quality at the expense of affordability). Evaluating solutions with all three goals in mind will help identify any potential tradeoffs of this nature.
The healthcare system breaks down into three overarching sectors: behavioral health, physical health, and healthcare enablers.
Behavioral health issues affect millions of individuals within the US and worldwide, with significant geographic variation in trends and limitations. Behavioral health consists of two segments:
Mental Health: Anxiety, behavioral, eating, and mood disorders as well as suicidal behavior
Substance Use: Reliance on and addiction to substances like alcohol, marijuana, cocaine, heroin, and prescription opioids.
Physical health encompasses maladies that affect physical well-being and consists of three segments:
·Acute: Characterized by severe and rapid onset, acute conditions include heart attacks, infections, epidemics, and viruses
Chronic: Defined as illnesses lasting three months or more, chronic conditions include arthritis, heart disease, diabetes, some cancers, and obesity
Prevention: Focused on minimizing the incidences of acute and chronic conditions, prevention includes research and early interventions.
Healthcare enablers are essential for the effective and safe delivery of healthcare products and services. This subsector includes solutions that improve the basic structures and facilities (e.g. buildings, roads, power supplies) to facilitate/enable health solutions and consists of three segments:
Infrastructure: Reliable network of roads, water systems, and power supplies
Healthcare Systems: Sufficient number and quality of healthcare facilities to ensure long-term access to care
Personnel: Education, deployment, and sustaining of high-quality healthcare professionals.
The following map presents a visual representation of the healthcare system sub-sectors and their alignment with key impact goals.
Sector Profile: Behavioral Health
Behavioral health includes two major segments – mental health and substance use. Mental health encompasses emotional, psychological and social well-being. Common disorders/illnesses associated with mental health include: anxiety disorders (e.g., obsessive compulsive disorder, panic disorders, post-traumatic stress disorders); behavioral disorders (e.g., ADHD); eating disorders (e.g., anorexia, bulimia); mood disorders (e.g., depression, bipolar disorder); and suicidal behavior. Substance use covers the intake of alcohol and other drugs, such as marijuana, cocaine, heroin and prescription opioids. Substance use disorders occur when overuse of alcohol and other drugs lead to clinically and functionally significant impairment, such as health problems, disability, and failure to meet major responsibilities at work, school, or home.
Treatment for behavioral health issues generally occurs through three different channels: (1) self-care and informal health care (e.g., self-monitoring of high-risk behaviors, web-based drug use disorder therapy); (2) primary health care (e.g., screening for behavioral health disorders by doctors, psychological treatment for depression); and (3) specialty health care (e.g., medication-assisted drug treatment, psychiatric therapy).
Behavioral health issues affect millions of individuals within the US and worldwide.
In 2015, 241,000 adults in the US suffered from an alcohol use disorder and 132,000 adults battled an illicit drug use disorder. In addition, over 43 million Americans were diagnosed with a mental illness.
Approximately 240 million individuals worldwide are dependent on alcohol, more than a billion people smoke, and 15 million people use injection drugs.
About 23% of all years lost because of disability is caused by mental and substance use disorders.
Trends in behavioral health issues vary significantly by country. However, substance use and mental health disorders are generally most prevalent in low-income and underserved communities. Notable trends in behavioral health in the US include:,,
Increasing rates of youth depression,
Increasing rates of suicidal thoughts among adults,
Increasing rates of marijuana use,
Declining rates of alcohol misuse and tobacco use,
Increase in non-medical use of prescription drugs.
Limitations within behavioral health treatment globally include:
Low perceived need for care: Recent studies show that low perceived needs for treatment deter individuals with mental health issues from seeking professional care.
Failure to seek help: While evidence-based treatments and care systems exist to treat individuals with mental health and substance use issues, the majority of affected individuals fail to seek help from professionals due to stigma and discrimination.
Low levels of retention in care: Populations experiencing mental health and substance issues exhibit high drop-out rates from treatment for a variety of reasons (e.g., desire to solve issues themselves, find treatment ineffective, lack access to culturally-appropriate care).
Sector Profile: Physical Health
Physical health includes maladies that affect physical well-being, and consists of three segments: acute patient states, chronic patient states, and prevention. Acute conditions appear suddenly and may quickly progress, requiring immediate medical attention and care for short periods of time. Examples of common acute conditions include heart attacks, infections, epidemics, and viruses. In contrast, chronic conditions, defined as lasting three months or more, involve the slow development of symptoms that may worsen with time. Because chronic conditions do not go away with treatment, patients must use medications for extended periods of time for disease maintenance or to slow disease progression. Common chronic disease states include arthritis, heart disease, diabetes, some cancers, and obesity. Without proper treatment, acute states may develop into chronic states or lead to other chronic patient conditions. Lastly, prevention includes activities focused on reducing the incidences of acute or chronic health states through research or early medical and non-medical interventions prior to disease onset.
Notable trends within this sector by disease state include:
Faster spread of global epidemics: With increasing globalization, the spread of diseases and epidemics across the world has accelerated. Recent epidemic trends like Zika, Ebola, and more resistant flu variations require quicker containment and treatment to slow their spread.
Growing incidence of chronic disease: Arthritis, cancer, Type 2 diabetes, heart disease, and obesity are the leading causes of death worldwide. Unfortunately, many patients also experience co-morbid chronic conditions, and with advances in medical treatment, people are living longer with these co-morbidities (e.g., aging baby-boomer population).
Growing aging populations: Globally, we face growing elderly populations that require new models of care, moving away from institution-based aging towards community-supported aging. Increased use of technology and analytics (e.g., tele-health, remote monitoring) has allowed elderly populations to maintain independence longer.
Personalized care: There are increased developments of treatments designed specifically for individuals’ personal traits, including genetic make-up, especially in cancer. These scientific advances in drugs and devices can be integrated with low-cost diagnostics, disease management programs, and clinical decision support to optimize value for the individual.
Adherence focus: There are increased developments in treatment plans and medications to try and increase adherence.
Limitations within physical health treatment include:
Patient behavior and mindset: The effectiveness of interventions in treating physical health issues depends heavily on the patient’s behavior and mindset to reach the desired outcomes. If patients do not adhere to prescribed treatment plans or do not want to make behavioral changes, then treatments will be less effective.
High drug costs: Increased cost of medications is putting strain on all parties in the health care payment chain. Even as more patients are gaining health insurance coverage, they still face high pharmacy deductibles and rising out-of-pocket costs.
Dependence on government or health organization aid: Primary funding sources for curbing epidemics and disseminating disease treatment in lower income or developing areas tends to be limited to the public sector, rather than drawing on larger private sector resources.
Privacy management: With increased digitization of patients’ health information and patient data collection (e.g., personalized genomics), there is higher risk of breaching confidential patient information. Thus, there is increased imperative and difficulty in adhering to the Health Insurance Portability and Accountability Act (HIPAA) that seeks to protect patient privacy.
Sector Profile: Healthcare Enablers
According to the World Health Organization (WHO), “more than one billion people cannot obtain the health services they need because those services are either inaccessible, unavailable, unaffordable or of poor quality.” Challenging economic and political conditions limit governments’ ability to devote necessary resources to maintain adequate healthcare infrastructure. Although healthcare is one of the largest sectors in the world (10% of global GDP), healthcare spending varies widely by country. For example, while the US spends 17% of GDP on health, South Sudan spends less than 3%. This discrepancy in healthcare spending translates into major differences in access to and quality of care. In recent years, this challenge has been further exacerbated by rising costs of care and aging populations.
Healthcare enablers can be subdivided into three categories: physical infrastructure, healthcare delivery systems, and personnel. Poor quality or unreliable infrastructure – roads, water systems, and electricity – can have a huge impact on the delivery of care. For example, in the absence of reliable electricity, healthcare providers cannot maintain optimal conditions during transport, storage, and handling of vaccines (i.e., cold chains) and often resort to portable refrigeration systems delivered on foot. Regarding healthcare delivery systems, an insufficient number of hospitals or clinics limits the number of patients with access to care as well as increases patient travel distance. In Nigeria, only 40% of the population lives within a 1-hour walk of a health center and drops to 25% during the wet seasons when flooding impairs roads and bridges. Finally, the lack of sufficient numbers of healthcare personnel – such as doctors, nurses, and midwives – leads to long wait times for patients or improper diagnoses and treatments.
Notable trends within this sector include:
New Technology: An Economist Intelligence Unit survey found that online, mobile, and digital technologies are expected to offer the best return, with 40% of respondents highlighting it as a top innovation for optimizing a country’s return on healthcare investments. New technologies –such as mobile apps, wearable health monitors, and sensors –can cut costs, improve quality, and expand access to remote communities. (For example, in South Africa a program called Project Masiluleke uses text messages to provide counseling to HIV/AIDS patients.)
Community Care: Increasingly, governments are finding new ways to reach remote populations with low-cost community-based care. (For example, as part of the National Rural Health Mission, India recruited and trained 250,000 community health workers to provide basic health care services and triage challenging cases.)
Public-private partnerships (PPPs): A growing number of public infrastructure projects – related to water, sanitation, energy, transport, telecommunications, healthcare and education – are being financed by a consortium of government and private partners.
Limitations within the healthcare enablers sector include:
Aging Populations: Across the world, population aging is accelerating rapidly. By 2019, it is expected that nearly 11% of the total global population will be people ages 65 and over. Among the contributing factors are increased life expectancy, declining infant mortality, improved sanitation, and improved prevention of communicable diseases.
Lack of skilled personnel: According to the Clinton Health Access Initiative, more than four million health workers are needed globally.
[i] BMIResearch, “Global Pharmaceuticals and Healthcare Report,” June 2016, p. 10.
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