The quest to provide more affordable and accessible healthcare, magnified by the COVID-19 pandemic, has spurred an explosion of innovation, which in turn has attracted massive amounts of capital. To put this into perspective, consider this: In 2019, digital health saw $7.7 billion in VC investment, and that number rose to $14.6 billion in 2020. However, the first half of 2021 alone saw $14.7 billion in VC investment.
Its marriage with fintech is the catalyst for the transformation of the healthcare industry. Similar to the unbundling of financial services and how fintech is scaling vertical SaaS, the pandemic-fueled disaggregation of healthcare has created new players that are taking a page out of the fintech revolution book — all starting with payments.
A growing number of startups are now leveraging the fintech playbook to solve a key part of the healthcare problem — the shifting dynamics between patients, payers and providers, and how payments and related electronic health records (EHRs) flow between them. Not only is the onus of payments and data flow moving from payers to patients, but providers are now facing a monumental shift to new billing and engagement models, requiring new technologies and platforms to help with the change.
Through the lens of fintech, here are three key areas to watch in healthcare.
Gamifying consumer wellness to stave off chronic illnesses
One of the largest trends impacting the population today is the steady rise of chronic illnesses. It is estimated that nearly half the U.S. population will have a chronic illness by 2025. People are getting sicker for longer periods of time, which leads to a constant spending streak. Patients not adhering to medical guidance is a major factor and is responsible for $100 billion of healthcare spending and over 100,000 deaths annually. With around a fifth of patients never filling their prescriptions, it has become a priority to educate and incentivize patients to complete care and avoid readmissions or ER visits.
The convergence of health and fintech will be an important catalyst to address some of the most pressing issues facing healthcare today.
To curb the rise of chronic illnesses and the associated recurring costs, many startups are using behavioral economics and gamification to incentivize patients and build healthy habits. For example, companies like Paceline in the U.S., Sweatcoin in Europe and Betterfly in Latin America gamify wellness by combining fitness and financial rewards.
On the other hand, startups like Sempre Health and Wellth are tackling medical non-adherence with behavioral economics. For example, Wellth financially rewards actions like on-time prescription intake or regular A1c tests for diabetic patients.
Fintech for affordability and reducing friction
Looking at payers, there’s a major shift stemming from the rise of high-deductible healthcare plans (HDHP) — enrollment has risen 43% in the last five years — emphasizing an increase in premiums and patient financial responsibility. Out-of-pocket expenses threaten the financial stability for many, with 40% of Americans unable to pay an unexpected bill of $400.