New technological advances are about to transform the global healthcare industry as we know it, says the US-based advisor and entrepreneur Aaron Schildkrout.
"I believe we are at a true juncture in healthcare, in which we are just at the beginning of seeing how deep technology companies are driving what is going to be a very disruptive cycle. One that is reminiscent of cycles we have seen in many other spaces," he says in an interview with MedWatch, adding:
"And because healthcare is so big and so complicated with so many entrenched players and systems, it's happening more slowly than in other spaces. But in my opinion it is absolutely happening and it's going to be radically transformative to the entire space."
Aaron Schildkrout knows a thing or two about disruption of huge and highly entrenched industries. From the beginning of 2015 until early 2018 he was an executive for the transportation company Uber with shifting responsibilities for data, global growth and marketing, rider product, and driver product.
Prior to that, he co-founded the company behind dating app HowAboutWe in 2009 and worked as CEO for the company until 2014 when it was sold to IAC, the company behind Match.com and Tinder.
He believes that these types of tech-focused and online and mobile-based companies are bound to also bring about drastic changes in several aspects of the healthcare industry in years to come.
"I think the world's next game-changing healthcare companies are being built right now by small teams of highly technical and relentlessly innovative entrepreneurs," says the former Uber executive.
I believe we are at a true juncture in healthcare."
On the board of obesity and diabetes player
After leaving his position with Uber earlier this year, Aaron Schildkrout has worked as an advisor for a number of startups in various industries, and he has also joined the boards of two of these. The first is Jump Bikes, an electric bicycle sharing system, which has also teamed up with Uber, and the company Noom, which is staking out a new path in the healthcare space.
Noom has developed an app and online-based solution, offering people a customized plan to help them change their habits and achieve lasting weight loss. While that might sound like every other weight loss program out there, Noom's solutions are far more than that, according to its new board member.
"I think they have finally found a product that can actually transform the obesity epidemic in America and globally," he says and continues:
"It's really about the little things, and Noom is an amazing example of a solution that solves the little things. Internet and mobile, new ways of interacting with customers and patients, can have an impact in this kind of preventive, behavioral way that will result in huge medical outcomes and massive costs savings."
A study published in Nature's Scientific Reports has shown that 78 percent of users achieve lasting weight loss after a year of using Noom's model, and another study published in British Medical Journal Open Diabetes Research & Care showed that 64 percent of people in the company's diabetes prevention program lost at least five percent of their body weight.
Noom now has a total of 45 million users.
Looking to branch out
In April 2017, the US Centers for Disease Control and Prevention (CDC) recognized Noom's solution as a part of its diabetes prevention program. That paved the way for potential reimbursement of the solution under the public Medicare program, which covers people over 65 years of age and some people with disabilities.
A few months later, Center for Medicare and Medicaid Services (CMS) proposed a rule for a diabetes prevention program, but it did not opt to include virtual providers like Noom.
It offered an example of the heavily regulated industry the company operates in where new and radically different approaches are often stifled. But Aaron Schildkrout thinks it is merely a matter of time before changes will begin to be seen in the regulatory system as well.
"Regulatory systems are a reflection of the status quo, partly because they create the status quo. That's the case in every single industry. But when there's disruption, it always puts the existing regulatory infrastructure into question and creates all sorts of interesting dynamics. That's absolutely going to happen in healthcare. That's healthy and normal, and the result is always some process of transformation, in which a new status quo is created to align with the innovation that entrepreneurs are driving," he says.
He does concede that there are a number of regulatory barriers to players moving in the healthcare space that are difficult to break down over night. These could also affect Noom's ambitions to advance its solutions to even more therapy areas, largely in the cardio-metabolic space where the connection between diseases such as obesity, diabetes and cardiovascular disease is becoming clearer.
"Noom is very focused on weight loss and the medical conditions that surround obesity and overweight, however, the platform they have built could apply to any number of conditions. And making a shift from a focus on weight loss to a focus on other behaviorally related conditions will be fairly trivial, and it's an exciting opportunity the company has in front of it. But the regulatory part will be non-trivial," says Aaron Schildkrout.
When it comes to the broader transformation underway in the industry, Aaron Schildkrout points to genuinely data-driven AI products and increased automation and robotics as things that will affect everything from clinical studies to production and supply chain.
Moreover, new players will contribute to a rethinking of entrenched systems by offering new solutions to age-old problems, which could help to cut out the middle men that abound in modern healthcare, especially in the US.
"This is the exact list that you could give for any industry, but I think of all industries it is most applicable to healthcare," he says.
He stresses that innovation is already taking place around the pharmacy sector and the delivery of medicine in the US, where companies such as PillPack are challenging traditional pharmacies. PillPack helps patients, especially those taking medicine for more than one condition, to fill in prescriptions, just as they sort patients' medicine and deliver it to their doorsteps.
Earlier this month, a number of media reports, for example in Bloomberg, indicated that Walmart, which is already moving into healthcare, was in takeover talks with PillPack.
I know that there is going to be radical transformation and my guess is that it will come from many different directions."
Human nature to protect interests
A number of the industries where traditional players have come under pressure from new, innovative approaches have previously been characterized by something resembling a market monopoly, according to some critics giving them freedom to do largely as they pleased. This could be said for the hotel and taxi sectors, which have come under pressure due to new players like Uber and Airbnb.
Has the healthcare industry been too slow to react to changing times and adapt to them?
"I think anyone who has an entrenched, deep interest works inherently to protect that interest. They do that across all industries and the bigger the industry, the harder they work to protect that interest. That's human nature. In healthcare, which is one of if not the biggest source of spending in every single country in the world and possibly the most important, of course you are going to see this," says Aaron Schildkrout, adding:
"But just to be clear, I don't think all the transformation is going to come from new companies. I believe and hope that a lot of it will come from inside from existing players, both through their own innovation and through M&A activity."
There are many signs that innovation in drug development is largely coming from smaller biotech companies nowadays and not major pharma groups. Do you think biotech and tech players might team up to define the new healthcare space?
"I think it's very unclear how it will play out. I would be hesitant to opine on what the outcome is going to be. But I know that there is going to be radical transformation and my guess is that it will come from many different directions," predicts Aaron Schildkrout.
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