By Wayne Embree, Executive Vice President, Investments & Venture Acceleration at Rev1 Ventures, the startup studio that combines capital and strategic services to help startups scale and corporates innovate
The COVID-19 pandemic has severely affected the global healthcare system and disrupted our social fabric. However, it also catalyzed numerous innovations that hadn’t become as widely adopted as hoped. From telemedicine to home delivery for prescriptions and more, innovative companies are presenting solutions that enable new models of care. Different approaches, driven by automation and seamless processes, are addressing challenges that the industry has been battling for years.
Crises Change How People Think about Certain Things
Telehealth is a great example. Before COVID, telemedicine wasn’t widely adopted for multiple reasons. Then the pandemic re-shaped people’s thinking and changed the rules. A McKinsey & Co. report estimated that physicians saw between 50 and 175 times more patients via telehealth than they did before the pandemic.
In the Cares Act, emergency provisions improved provider payments (including Medicare), paying the same rate for telehealth as they do for in-person visits for all diagnoses. Physicians who are licensed in one state are allowed to see a patient in a different state. Patients do not have to have a prior relationship with a physician who is providing telehealth help.
Several states passed recent laws that would require commercial insurance plans to cover more telehealth services permanently. More states now require health plans to pay the same amount for telehealth as in-person visits. These provisions seem so normal and sensible now but think back to just a year ago. That’s how fast a disrupted industry can change.
The benefits to physicians and their patients are enormous. Patients can receive services via videoconferencing in their homes or where ever they are. Physicians and other medical professionals can leverage remote monitoring tools for chronic illness. They can share digital test results and facilitate consulting with specialists. It is no wonder that telemedicine is moving toward a “must-have” for many patients and physicians.
Changed Thinking Disrupts Inertia; Well-managed Startups Can Spring
We observed this phenomenon first-hand through our portfolio company, Updox. Long before COVID, Updox envisioned a platform to manage healthcare communications across both in-person and virtual care.
Founded in 2008, Updox had gradually and responsibly built a solid foundation with customers. With over 560,000 users and 100+ EHR integrations, Updox’s collaborative platform connected patients with their healthcare providers (doctors and clinics)quickly and securely.
When the pandemic hit, Updox was ready with sound business fundamentals in place, including a talented team, a well-managed business, dozens of strategic partners, and a business model that was sufficiently adaptable to scale. Updox has facilitated over 3.5 million telehealth visits since March. The company was acquired in January by Ever Commerce, a leading software company transforming the service economy.
Crises Change Market Conditions as Consumer Behavior Shifts
During COVID, businesses with direct contact with consumers have modified their business practices and operations seemingly overnight. I don’t expect any retailer to move back away from that, including brick-and-mortar pharmacies.
According to PitchBook, in 2019, only 4.9 percent of prescriptions were ordered via mail delivery, so the opportunity for e-pharmacy is significant. The second area of substantial opportunity is for prescription delivery to direct the consumer—whether the medication is ordered over the phone, in person, or via the Internet from an e-pharmacy source.
The pandemic has fueled the practice of BOPIS (buy online, pick up in-store) across retail. Enterprising startups with technologies and platforms that support last-mile logistics applications may find a sweet spot in the alignment of last-mile delivery in the healthcare market’s prescription delivery segment.
ScriptDrop, a pharmacy-integrated prescription delivery service, has been building a customer base of “in-grocery” pharmacies, retail pharmacy giants, and health care pharmacies.They were laying the groundwork with national chains and strategic partners. Their model and customer base were ideally aligned with the market conditions created by COVID. With multiple points of industry contact and scalable infrastructure, they didn’t have to pivot. They did have to scale, but that was in their business plan anyway. Script Drop launched nationwide delivery for consumers. In 2020, they experienced a 170 percent increase in delivery volume.
Crises change market conditions and people’s views of certain products and services. A problem—especially a health crisis–bends bureaucracy and cuts through red tape. Emergencies disrupt the most significant barriers to innovation—inertia and the status quo.
Technology companies that know their industry, build loyal relationships with customers and strategic partners, and create a sufficiently adaptable business model can take advantage of an opportunity in a crisis.
Think of the operational challenges the healthcare industry has been battling for years.
- Reducing emergency room visits by improving preventive care;
- Helping medical professionals treat more patients while improving patient care;
- Reaching geographically remote locations or communities that don’t have ready access to medical care, and
- Making sure patients, especially the elderly, take their medicine.
The pandemic’s challenges created an urgency and willingness to try new solutions that didn’t exist before. These solution opportunities in healthcare generate a ripple effect in other industries driving technologies to converge to create end-to-end solutions for the betterment of people everywhere.
About Wayne Embree
Wayne is an experienced seed-stage investor with a track record of fueling startups with guidance and venture capital. He’s been involved in over 200 investments, including sitting on over 50 boards and taking more than 60 businesses through exits. Throughout his career, he has maintained his passion and enthusiasm for helping entrepreneurs change the world. Wayne has a BS in Natural Sciences from Western Oregon and an MS in Urban Planning from the University of Oregon.
Executive Vice President, Investments & Venture Acceleration