Scarcity In Digital Health Innovation For Medicaid Populations: Is Help On The Way?
I write about health and healthcare in underserved populations
According to Rock Health, in 2018 the digital health sector enjoyed investments of over $8 billion with nearly $1 billion invested thus far in 2019. However, despite nearly $600 billion spent annually in Medicaid programs, investment to spur digital health innovation for Medicaid patients is sluggish and pales in comparison to those for self-paying and privately-insured health consumers. Why is this?
Conversations with health tech investors highlight rampant misperceptions about the Medicaid population and the financial opportunity for return on investment (ROI) from Medicaid innovation. Education in this sector is needed to address common misperceptions which include: 1. The risk isn’t worth the reward. Medicaid programs are overly-bureaucratic with little opportunity to realize an ROI, 2. Socially-driven companies are best supported by grants from foundations and non-profit organizations and 3. Underserved communities lack sufficient access to the Internet and technology.
It’s true, Medicaid programs can be stifled by bureaucracy because unlike Medicare--which is also quite bureaucratic--it is administered by states and thus, can dissuade investors from pursuing individualized, time-consuming, state-by-state approaches to innovation. Even so, every year these companies forego billions of dollars in ROI opportunities because they perceive the risk and required effort are too great.
The notion that innovation for Medicaid patients should be primarily funded by grants allocated to non-profit organizations is myopic and stifles the ability to create sustainable, root cause-driven impact. Grant funding is also inappropriate for supporting long-term health systems transformation because it is time-limited and unsustainable. Furthermore, the burden to secure and manage grants detracts from program implementation. Companies with socially-driven missions require capital to build and implement sustainable revenue models that endure beyond a grant cycle. As Dan Pallotta compellingly relates in a TED talk about social innovation and entrepreneurship, we are undermining our ability to address social causes by conflating socially-driven missions with non-profit status.
The pervasive perception that the poor lack access to technology is inexplicable. A wealth of research data from reputable organizations like Pew Research and Commonwealth Fund highlight why mobile phone, including smart-phone, access is no longer a barrier to innovation for the underserved. Nearly 90% of Americans have access to public Wi-Fi and a mobile phone. Additionally, smartphone ownership is at an all-time high, even among the poor.
These gaps in knowledge and understanding among investors about innovating for the underserved are discouraging.
Fortunately, a new Medicaid-focused health policy organization, HealthTech4Medicaid (HT4M), has emerged to help address these disconnects between investors and Medicaid patients. Abner Mason, visionary and Founder of HT4M, was compelled to establish the organization in 2018 after discovering the scarcity of investments and interest in Medicaid programs at the annual JP Morgan Healthcare conference in San Francisco. HT4M has become a consortium of 44 venture-backed companies who have raised over a cumulative $1 billion to support Medicaid programs and patients. Mason believes the collective efforts and successes of HT4M will produce a surge in investments and innovations for Medicaid patients. He says, “Our collective success proves investors have begun to understand the importance of the Medicaid program. We are bringing together CEOs from across the country who are building the latest health tech solutions for poor people and together we can scale solutions more quickly.” Mason also says their hope is that the poor will no longer be required to wait 10 years for tech solutions that can help improve their health today.
Here’s to hoping the work of HT4M can convincingly and effectively bridge the gaps between health tech investors and the Medicaid population. If they are successful, more for-profit investors will pivot toward facilitating social good and become educated in the process.