Investors in Healthtech are still Sipping the Snake Oil

Investors in healthtech are still sipping the snake oil

From 2017 to 2018 Investment into healthtech nearly doubled, from $12.2 billion to $22.8 billion. 2019 broke all records in this space, according to Hampleton Partners, with more than 4,500 fundraises, compared to 4,395 in 2018’.

In healthtech the stakes are being set ever higher. However, behind the headline spends are also quiet (and not so quiet) failures. The Theranos saga may be a hyperbolic example but other once headline-grabbing startups have also faded into quiet failure. Zeo, an AI-empowered sleep tracker raised over $30m only to wither within a few years. Theranos of course was brought down by lies, cover ups and misdirection. Others however, are falling at the very simple hurdle of need.

Take the fact that studies are increasingly questioning the benefit of sleep trackers showing they can in fact lead to sleep-depriving anxiety. The issue – just because we can have a sleep tracker, do we really need one? Is time, resource and brainpower being wasted creating solutions that simply aren’t based on patient need?

A recent article from the University of Warwick goes further and asks if technologists should undertake a hippocratic oath, comparing the issues posed by new technologies to that of the moral question posed in the hit movie Jurassic Park;

“Your scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should.”

There is of course a difference between wilful harm and simple waste. However with patients hoping for cures and limited resources available to support them, any technology that wastes that resource is ultimately damaging.

Having suffered from Crohn’s Disease for over 15 years my involvement in healthtech is personal. The lack of support services I encountered as I battled with a diagnosis of chronic bowel disease was the impetus for Nori Health.

Along with my co-founders (all of whom have experience of either living with or treating chronic illnesses) we knew that sufferers need psychological support to manage their lives, which is sorely lacking. Crohn’s & Colitis UK and IBD UK recently recognised the increasing shift to self-management for bowel disease sufferers and that personalised support is just not possible otherwise.

Healthtech can help fill the gaps in specialised care that self-management creates. Further, technologies such as AI can offer personalisation that current services can’t. If this is done smartly these technologies can also gather valuable insight into patient behaviour to inform future innovation – based on evidence of need.

The point is that we started with a very human problem and hunted for the technology that would help solve it – namely AI. We didn’t devise a technology and then find a reason why the world needed it. This is an important distinction when considering that healthcare is a complex and regulated industry with its own set of rules, specific workflows and complicated landscape of stakeholders. Patients, doctors, regulators and insurers all influence whether a technology is adopted. They also all have differing needs.

A technology may deliver great time saving gains for healthcare staff, but is it at the cost of patient welfare? An AI, data-based solution clearly comes with a raft of potential privacy and security issues, not to mention DNA-based services such as 23andMe. At what point does potential impact trump privacy? These are questions that are becoming ever more pertinent.

Of course, these questions firstly assume that a given technology actually provides demonstrable impact. Unfortunately some of the public examples of expensive failure show that evidencing impact isn’t always the primary concern. It’s obvious to say, but treating healthtech as a playground is inappropriate – lives are at stake! ‘Failing fast’ and other startup jargon doesn’t work in a patient care setting. This is an industry setting sights on long-term  impact not flash-in-the-pan hype.

When you consider the fact that 40% of ‘AI startups’ don’t actually use AI it’s clear that the scientific community must have a larger scrutinising stake in healthtech’s claims – and investors must engage in evidence-based strategies. In August, CNBC reported the launch of MDisrupt, “the world’s first medical diligence company for the healthtech industry… to help investors with the vetting of health-technology companies by determining if there’s evidence to backup the founders’ scientific claims.” It’s clear there is a need for an evidence-based investing that seems to be lacking.

If they don’t already, healthcare startups now need to have one eye totally focused on demonstrating impact through empirical evidence and transparent research. At Nori we’ve publicised our smaller-scale successes but are equally concerned that we have a way to go to prove our worth. We want to be scrutinised, challenged and questioned – and crucially we are in it for the long term. For that reason we’re keen to engage stakeholders in the UK to become partners to improve patient outcomes together.

While the rapid innovation we’re experiencing in healthcare is incredible and will likely deliver longer, happier and healthier lives, we need to be increasingly wary of hype. Unlike the snake oil salesmen of old I have no doubt that the vast majority of health startups hold the best of intentions. Intention must now be matched by evidence. This takes time, transparency and collaboration. Investors must understand that this is the first place their money should be directed and that they too will be in it for the long term return, not short term gains.

By Roeland Pater, Founder and CEO, Nori Health