In general, healthcare consists of detecting, diagnosing, and treating diseases and other conditions. The wearable Health Tech revolution promises to save money and lives by helping collect more data — on individuals and communities as a whole — that will help make these steps more effective and less expensive. But it can also help power another revolution in healthcare: one based on prevention.
As described in an article on SustainAbility, author Elvira Thissen makes an excellent case for a new business model for healthcare. The current system relies on individual companies investing in certain technologies, such as a prescription drug. This is a costly undertaking with no guarantee of success, so the business plan must cover the costs of multiple failures out of the profits from the few successful projects. This leads them to target diseases that affect large populations that have money to spend on expensive medication programs. As a result, “orphan” diseases go untreated because there’s not enough money in them to recover the costs. Since there’s no profit to be had in preventing the disease in the first place, that responsibility typically falls to government agencies and non-profits.
Thissen describes Social Impact Bonds (SIBs) that turn prevention into a financial incentive. Investors buy the bonds, which typically target a narrowly defined specific intervention, with the hope that these preventative efforts will lead to a reduced demand for medical services due to secondary complications. (For example, a program that reduces the incidence of diabetes would lead to a reduction in the cost of limb amputations for diabetic patients.) If the program succeeds in reducing costs, the investors share in the savings. According to the article, there are 16 SIBs active in the U.K., and a few have started in the United States.
With wearable Health Tech devices making it possible to monitor individual biometric data more closely, they may well help track the benefits of preventative measures, and thus attract more investment funding for SIBs to bring these programs to more people. This could provide the incentives needed to make prevention a more central part of healthcare delivery, and in turn, help fuel the rapid growth of the wearable Health Tech market.