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April 18, 2019

The Potential of Care Coordination and Patient Communication to Improve U.S. Healthcare

MHT Partners  | Healthcare Investment Bank

The challenges facing the U.S. healthcare system are complex but boil down to two fundamental objectives: to lower the aggregate cost of care and to deliver improved outcomes. These dual objectives are oftentimes at odds under the existing industry construct. For many reasons, such as restricted access to care, legacy fee-for-service models, high drug prices, and imperfect implementation of public health initiatives, the incumbent regime is deeply rooted. To boot, many powerful participants within the industry are positioned to benefit from the status quo.

Achieving improvements in cost and outcomes, and an increasingly common thesis for healthcare investors, revolves around implementing technology-enabled systems to enhance communication within the clinical environment. Deficient care coordination, patient flow models, and information sharing among providers is arguably the largest impediment to efficient healthcare operations. Triage, diagnosis, treatment, follow-up, and disease management are heavily dependent upon provider-provider and provider-patient communication channels. Nevertheless, existing network structures, despite rapid advancement of technology capacity and the decade-long focus on widespread electronic health record (“EHR”) implementation, haven’t sufficiently improved the flow of patient information.

One reason that communication has been stifled is due to the legacy of independence and entrepreneurship that underlies U.S. healthcare, whether that be among providers, facilities, or payors. On one hand the U.S. is positively differentiated in that regard; the incumbent-free enterprise system incentivizes innovation, differentiation, and a work ethic that is unique globally. Nevertheless, independence can disincentivize cooperation and coordination, as certain providers compete for the same increasingly elusive healthcare dollar. As new solutions are implemented, creative destruction will yield its fair share of losers as well as winners.

For that reason, incremental technology and structural solutions that incentivize coordination and enhance communication are the forces that will improve the U.S. healthcare model in the coming years. The companies that engineer those solutions, revolving around transparency, patient empowerment, technology as a means to improve communication, and comprehensive care coordination, are poised to emerge in the next decade as the latest commercial success stories within healthcare services.

Healthcare services and healthcare technology (“HCIT”) observers, including private equity investors, operating companies (a.k.a. “strategics”), nonprofit organizations, and governmental agencies, are all closely watching for differentiated innovation in care coordination and communication. All have a significant incentive to invest early in promising solutions, giving owners and founders of companies trafficking in the space broad and attractive strategic options.

At MHT Partners, a leading healthcare services investment bank, we believe that care coordination and patient communication are two of the most promising areas for investment in the healthcare industry. If you would like to learn more about MHT’s healthcare services advisory practice, please e-mail Taylor Curtis (tcurtis@mhtpartners.com), Patrick Krause (pkrause@mhtpartners.com), or Alex Sauter (asauter@mhtpartners.com).

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