Oct 27, 2020

A recent survey conducted by UL’s exploration and investment division identifies key trends and developments affecting a health and wellness industry in the US undergoing significant changes, reflecting major shifts in the broader healthcare landscape.

UL surveyed members of the Mid-American Healthcare Investors Network (MHIN), a group of venture capital investors representing healthcare systems, insurance companies and related organizations.  Topics discussed included consumers’ role in driving health and wellness products and solutions; how healthcare providers are changing their health and wellness offerings; and how consumer demand as well as broader public health challenges including the coronavirus pandemic are driving changes to healthcare infrastructures.

Consumers driving health and wellness developments

First, the survey found that consumers have become primary drivers of health and wellness products and offerings—and that consumer demand is also driving how the sector continues to evolve in an healthcare environment defined by COVID-19 and the pandemic’s associated challenges.

Survey participants noted increasing consumer interest in health and wellness activities for mental as well as physical health, along with a strong preference for remote or at-home delivery and accessibility of these products and services. Although the COVID-19 emergency has clearly amplified this preference, survey participants noted that consumer interest in virtual and home-based health and wellness offerings has been increasing over the past several  years.

Cost considerations have also fueled consumers’ interest in health and wellness, according to survey results: As more and more consumers directly incur more healthcare costs via high-deductible health plans (HDHP) and similar programs, they see health and wellness products and offerings as a way to potentially mitigate risks of serious, expensive diseases and conditions.

Holistic approach to healthcare service and delivery

Healthcare providers have also begun incorporating health and wellness components into their products and services as they recognize the need for a more holistic approach to addressing consumer and patient needs. Survey respondents suggested that providers have taken this approach not only to help some consumers mitigate risks of potentially developing illnesses, but also as a way for people with chronic conditions such as diabetes to more effectively manage their existing illnesses.

Focusing more on health and wellness may also have pricing and reimbursement implications for these providers:

“According to the investors interviewed, more favorable economic outcomes generated by a proactive approach could eventually support the broad adoption of value-based pricing of health and wellness services,”  UL writes in its survey results. “Adopting such a pricing structure would potentially allow heath and wellness providers to move away from the legacy ‘fee for service’ model and be reimbursed instead on the quality of healthcare outcomes.”

Changing healthcare infrastructures

Increasing consumer demand for virtual health and wellness, telemedicine and remote healthcare delivery has prompted more and more providers to shift their infrastructure resources from massive healthcare complexes and facilities to smaller community centers and clinics. Smaller facilities embedded more closely to targeted communities help expand access to health and wellness services and offerings, according to survey participants, especially in rural and other areas previously underserved by urban, centralized healthcare systems.

While the coronavirus pandemic has accelerated consumer and patient demand for new healthcare delivery models, survey respondents expect these changes to outlast the current public health emergency due to the clear benefits to patient populations.

Challenges ahead for health and wellness sector

As the health and wellness ecosystem evolves in terms of consumer interest, provider offerings and delivery infrastructures, the UL survey also cited several challenges for providers, patients and investors:

  • Pricing: Lack of consistency and transparency in pricing for healthcare services including health and wellness offerings requires more work, particularly from insurance carriers. Insurers traditionally have focused on reimbursement and financial issues, which may need to change as providers shift to more holistic service models.
  • Employer communication: As employers serve as primary health insurance providers for millions of Americans, they must do more to encourage greater employee utilization of health and wellness benefits. Survey participants recommend active education efforts from employers to achieve higher utilization, beyond directing employees to online portals and resources.
  • ROI: Because the adoption of health and wellness offerings by healthcare providers moving to more holistic service and delivery approaches remains very much a work in progress, investors have a difficult time accurately measuring returns on investment (ROI) for these models. Quantitative data necessary to gauge long-term effectiveness may take years to generate, requiring leap-of-faith investment strategies for the short term.

Additional survey insights and results are available via the full UL Ventures report.

Related health and wellness resources from Emergo by UL:

 

Author

  • Stewart Eisenhart

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