By: Dexter Braff
Define Digital Health, or Health Care Information Technology in a 100 words or less.
How about a thousand words or less.
Or how about at all.
Challenging as it may be, references to Digital Health and HIT are so ubiquitous that they go down as easily as Red Bull and Doritos during an all-night programming session.
And the investment community is right there with you.
At private equity conferences, you can’t go more than two feet before you bump into a blue blazer- white shirt-skinny slacks/pencil skirt-wearing Streeter on the lookout for investment opportunities in HIT.
But what exactly is Health Information Technology?
As it turns out, there are as many definitions as there are people answering the question.
But as a health care mergers and acquisitions advisory firm that covers the space, in order to understand a market, identify the health care and other economic variables that drive the who, what, why, and for how much that characterize the players in it, and to begin to plot out a growth trajectory that is a critical element in getting the timing right in a deal, you’ve got to have a taxonomy to break it up for meaningful use (see how we got a reference to MACRA in the mix?).
So, we examined association websites, scoured industry publications and analyst reports, and consulted Siri, Alexa, and Cortana, to see how the industry segments itself. And what we found was a taxonomy that divvied up the sector like a gathering of CPAs divvying up a lunch check – with so much precision that the sheer volume of sub-segments was, well, taxing.
So where a discrete, easily identifiable categorization was not apparent, we decided to reverse engineer the question from a mergers and acquisitions standpoint. In questioning buyers, we found that rather than identify specific companies they were interested in acquiring, they articulated problems that providers were trying to solve.
“We’re looking for companies that take expense out of the system,” they said. “We like companies that play a role in population health management.” “Find me a company that can turn data into something actionable.” “We’re interested in products that streamline claims processing.”
There are lot’s more, but you get the picture. And it makes sense. In technology, there are so many different ways to attack a problem or a need. The common element is not necessarily the solution. It’s the problem or need it addresses.
And perhaps most important of all to a mergers and acquisitions advisory firm, it is along these lines that the market will consolidate.
Problem solved – or so we thought.
Here’s the thing: with respect to the problems the market is trying to address, the digital solutions themselves are so diverse in nature, they just don’t fit under a single umbrella – or within a likely consolidation strategy.
Consider the big one – taking expense out of the system. This can cover data analytics, telehealth, electronic medical records, care coordination, clinical decision support – too many bits for a buyer to byte.
So, we volleyed back and forth like a game of pong, and concluded that in such a creative, innovative, and rapidly evolving market, we needed to be equally creative, innovative, and flexible in how we slice and dice it.
So, within a mergers and acquisitions context, we are segmenting the market with a combination of common themes and key words – a taxonomy that both reflects how buyers will strategically target and integrate acquisition opportunities, and accommodates the extraordinary overlap of digital products and solutions.
While a work in progress, here’s a sampling of what we’ve come up with so far (at least until some new technology, health care economic policy, or reimbursement initiative(s) reboots the way the market will consolidate).
Data – Predictive analytics, health information exchange, interoperability, personal health records, storage and collection, cyber security
Revenue Cycle Management – Electronic medical records, claims processing, compliance, practice management, clinical decision support
Patient Engagement – Mobile health, remote patient monitoring, clinical informatics, content, patient satisfaction
Population Health Management – care coordination, consulting, conveners
Telehealth – B2C and B2B telemedicine
Sure, we can quibble whether remote patient monitoring is really an application of telehealth, or if clinical decision support falls under data analytics, or even if population health management is merely (merely?) what you get when you expertly deploy elements from each of the other categories.
But that’s precisely the point.
We’re in the Matrix here.
And as Morpheus would say, “No one can be told what the Matrix is. You have to see it for yourself.”