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DSA webinar: How healthtech startups retain the human touch while creating digital solutions

Clockwise from the top: DealStreetAsia’s Joji Philip; Milvik Bima’s Reynold D’Silva; Allianz X’s Nhi Huynh; Medici’s Duc Anh Ngo and HealthQuad’s Dr Pinak Shrikhande

The COVID-19 pandemic has played a massive role in the adoption of healthtech-driven solutions, agreed panellists at a DealStreetAsia webinar titled ‘Healthtech with a human touch’.

Duc Anh Ngo, CEO and co-founder of Medici, described the trajectory of his firm that started in the telemedicine space and but later expanded its ambit to provide insurance as well as an e-pharmacy service. Duc Anh said, “Healthtech has evolved greatly during COVID-19. Even among the low economic tier and working classes, people are increasingly willing to pay extra for quality credible healthcare services. As Vietnamese grow tech-savvy, they are more interested in teleconsultation and e-pharmacies.”

In 2019, Allianz X, the venture capital arm attached to German insurance giant Allianz, had increased the size of its fund to a little over €1 billion. Nhi Huynh, manager platforms and acquisitions at Allianz X said, “We have a lot of investments in telehealth and looked at the numbers pre-pandemic to where they are today. Consumer behaviour has changed but the big question is whether it is here to stay? We can confidently answer this question with a clear yes. Consumers are used to the convenience of virtual solutions, especially for chronic diseases, as well as preventive healthcare. A trend that was in the works for the last two years has been spurred by the pandemic.”

The sector has drawn in massive investments. Speaking about the India market, Dr Pinak Shrikhande, director of healthcare VC fund HealthQuad said, “Over the last 6 months, $1.1 billion was invested in India in healthtech.” Some of the trends observed by Dr Shrikhande included consolidation, fields like telemedicine getting overcrowded and a shift towards companies trying to harness data and analytics. He also saw an opportunity for startups to tackle mental health issues and said, “The social stigma associated with it in the region makes it difficult for people to approach psychiatrists. In that context, telehealth for mental health provides a very important solution: breaking the taboo by keeping this absolutely confidential.”

Amid this impressive growth, a few fundamentals of the business remained unchanged. Reynold D’Silva, managing director -Asia at Milvik Bima said, “When it comes to healthcare, people want the human touch. This is especially true for specialist care, for children or themselves as they grow older and have chronic ailments. They want better services, access to insurance, doctors and specialists. But not from a robot or a chatbot.”

The webinar was sponsored by Milvik Bima, and the session, moderated by DealStreetAsia’s Joji Philip.

Here is a video link to the session and a transcript edited for brevity and clarity.

The pandemic has changed the narrative for telemedicine. Can healthtech startups step in to take the load off a country’s healthcare system?

Dr Pinak Shrikhande (PS): When we first started investing in digital in 2016, people were quite sceptical. We tested waters with the first fund which did remarkably well. But what the pandemic did was crunch a 3-year to 4-year timeline into 6 months, especially in India. The fillip to telemedicine, e-pharmacy, e-diagnostics and point of care testing is going to stay.

As for whether this can take the load off an overburdened system, the point of care will move closer to home. Digital or telemedicine will replace chronic treatments. The hospital OPD load will decrease. And an overall ecosystem will be created to seamlessly facilitate payments for all of these services. It’s still a work in progress, but will happen over a 5-year horizon. Telemedicine will probably follow a pattern similar to digital platforms after demonetisation in India: a peak and then a comedown but not a return to the baseline. From there, it will continue its linear growth.

Duc Anh Ngo (DAN): The doctor-to-patient ratio in Vietnam is one of the lowest in the region – 1:1,000. Healthcare quality is inconsistent from rural to urban areas. A patient has to travel for 45 minutes, and wait for another 45 minutes, just to have a short checkup in a tier 1 hospital. So, in tier 2 and tier 3 cities, doctors and hospitals are always a last resort. On one hand, COVID-19 has placed more pressure on hospitals, with many of them overwhelmed. On the other, it makes people, even those in rural areas, more open to digital health solutions. As health concerns rise, people are getting more familiar with teleconsultations or buying drugs and supplements online.

A related question for Milvik Bima: does telemedicine offer a chance to reinvent virtual and hybrid personal care models?

Reynold D’Silva (RD): We’ve seen people adopt telemedicine and understand the relevance of insurance at rates much higher than that in the past. However, one thing which we must be cautious about is that, when it comes to healthcare, people want the human touch. This is especially true for specialist care, for children or themselves as they grow older and have chronic ailments. When it comes to COVID, our chief medical officer in London developed a clinical pathway, taking the best knowledge from across the world. This was codified using our technology which in turn has augmented our doctors and nurses in the frontline across Asia.

In Indonesia, the Ministry of Health selected us as one of the telemedicine firms to provide COVID care for those who tested positive and were isolating at home. It’s a recognition of the quality of care that we have been able to bring.

How has COVID changed the investment thesis for Allianz X?

Nhi Huynh (NH): I wouldn’t say that the pandemic has changed our investment thesis, it has rather reinforced and confirmed it. We are investing primarily into digital growth companies. The focus is business models that are tech-based and digitally delivered, which have a connection to hardware or link to offline solutions.

This investment thesis has proven very successful throughout the pandemic. The need for and rise of digital solutions has increased significantly, thereby increasing the need for capital. The increase of our fund, right before the pandemic, was a very timely move.

Did the pandemic bring more companies into the healthtech space, looking for funding?

PS: Over the last 6 months, $1.1 billion was invested in India in healthtech. PharmEasy was our first unicorn that emerged within this year, and its valuation has tripled in less than 3 months. There is consolidation in the e-pharmacy space. Companies like PharmEasy are rolling up much larger firms than itself, like Thyrocare.

It has impacted how people view digital health and investments. We see early-stage companies — at least two or three— regularly reach out to us for funding. A lot of them are in telemedicine which is unfortunately getting crowded. Unless you have a differentiated model, it’s very difficult to pick a winner. There are also companies looking to leverage data, analytics and real-world evidence for utility by multiple stakeholders. A lot of chronic disease management is being supplemented by digital therapeutic apps. What is happening in the western world will probably recur in the Indian context. Large pharma companies will partner with digital therapeutic firms to create co-branded products.

The last trend is health financing with multiple products. These include crowdfunding platforms, digital lending for healthcare financing, and bite-sized affordable insurance products.

Medici launched in 2019. How has the journey been over the last 18 months, since the pandemic?

DAN: We started off as a telemedicine service provider. We partnered with the Ministry of Technology and Communications, in the National Digitisation Programme, to pilot telemedicine in rural areas in the very early days. That partnership built our credibility and set the cornerstone for Medici’s penetration in our targeted market – rural areas. Soon after, fuelled by our corporate health screening service, mostly from factories and industrial zones, we expanded to second and third-tier cities, moving to 31 cities and provinces in Vietnam. In early 2021, we rolled out a marketplace for drugs and supplements. We also entered the insurance market with our very own broker licence. When we started two years ago, telemedicine seemed uncertain and futuristic, even to my own family members!

From an investor’s perspective, where are we in terms of virtual health solutions?

NH: We have a lot of investments in telehealth and looked at the numbers pre-pandemic and where they are today. Consumer behaviour has changed but the big question is whether it is here to stay? We can confidently answer this question with a clear yes. A consumer has got used to the convenience of virtual solutions, especially for chronic diseases, as well as preventive healthcare. A trend that was in the works for the last two years has been spurred by the pandemic.

There’s also a big gap between consumer interest and actual usage. What can be done to bridge the gap?

RD: Our approach can be summarised as ‘reduce the barriers and increase the relevance’. If you consider the emerging middle class, it’s about $300 billion of disposable income in Southeast Asia alone. About 10% of this gets spent on healthcare.

But we are also looking at consumers in the emerging middle class who have an irregular income and financial risks. Put together, they create barriers. When a person spends 10% of their income, it’s often not enough, and a health crisis can become a financial one. If you systematically take away these barriers, you make it easier for people. The adoption of mobile wallets and fintech gives them a way to subscribe to a combination of insurance and telemedicine products. Making it flexible, allows them to customise payments based on income — weekly, monthly, or even irregular. We use technology learning systems that are flexible enough to adapt the subscription frequency.

The pandemic has certainly increased relevance. But there needs to be a sustained effort to increase awareness of health risks. In South or Southeast Asia, some risks come with the territory. Any parent, no matter what the income strata, is looking for specialist paediatric care. We know there is a preponderance of women’s health issues. Almost all of us are at risk of diabetes or heart disease and this is not helped by our diet, which gets worse as you go down the income levels, towards the emerging middle class.

Our approach has been to offer people relevant specialist care. In the earlier panel, they said we need a doctor to do the job of multiple doctors — we need the same for specialists. One needs to become 10,000 specialists and that is possible with technology while still retaining the human touch. So, that’s our approach and as a result, we have seen our fintech business grow by over 100% year on year.

One of the areas that sees very little attention is mental health. What is the opportunity for startups in this space?

PS: Mental health will emerge post-pandemic as one of the important and challenging areas. People are under a lot of psychological stress, having been locked at home, and with children not going to school or interacting with their peers. More than the availability of psychiatrists in the Indian and Southeast Asian context is the fear, or hesitancy to approach doctors or psychiatrists. The social stigma associated with mental health makes it difficult for people. In that context, telehealth provides a very important solution: breaking the taboo by keeping this absolutely confidential. A couple of companies in India — Inner Hour and Wysa —  have received an initial set of funding. But this will grow over the next few years and become a very big market. My guess is that these companies will become a part of a platform play rather than being standalone.

The other issue we need to examine is substance abuse, and how telemedicine solutions can help solve these problems, especially given what Pear Therapeutics has done in the US. We don’t see these companies here as yet, but it’s a huge opportunity that can be leveraged by technology.

Is mental health an area that Medici plans to address?

DAN: Especially during the pandemic, telehealth not only takes care of physical health, but also brings a sense of security and peace of mind. For instance, a 65-year-old patient from a third-tier city in Vietnam, during teleconsultations, spent 1/5th of the time asking doctors about her diabetes symptoms, and the rest speaking about her loneliness, with her children far away; how she was missing her grandchildren and why she couldn’t sleep.

She called us every day for two weeks. Our responsibility is to take care of patients, no matter if it is telehealth or mental health. Our doctors and medical teams were asked to listen and consult. After 10 days, she was able to sleep well and her blood sugar decreased. So, we really see a strong synergy between telehealth and mental health and are excited to explore that avenue further in the future.

Before Medici, you worked for Grab and have seen the gig economy in action. Across markets, big questions are being asked about the welfare of gig economy workers. How do you view this?

DAN: The situation is improving. We provide B2B services, and many of our corporate customers work with us to design special care packages for employees and partners. We offer health checkups, COVID tests, teleconsultations, and health and accident insurance. These services are available even to part-time employees and partners like delivery workers to ensure that all of them are in good health, especially during the pandemic.

At Medici, we have our own insurance agents at work, who are our partners. Engaging and taking care of them are our top priority. Thanks to our healthcare ecosystem, we are the first and only company in the Vietnamese insurance market that can offer annual health screening and telehealth to agents. Many of them for the first time in their life have a personal doctor to reach out to 24/7. The situation is improving.

What is the potential for gig economy workers and even the rural population, for virtual first plans in Asia?

RD: Gig economy workers are also a part of the emerging middle class. With investments going to not just super apps, but ride-hailing firms as well, gig economy employment is growing. We are also seeing regulations being discussed across the region. This will improve their income. Their needs and aspirations will rise. This group is extremely aware of the financial and health risks which go with the profession. They want better services, access to insurance, doctors and specialists. But not from a robot or a chatbot.

For instance, we found that in Indonesia, often the first source of primary care was the neighbourhood chemist or pharmacist. When people want a specialist, they can’t even access a good one. By codifying knowledge of global specialists, and bringing it to the people, we’ve been able to serve them at scale. Last year, we saw a 63% increase in uptake in these services across South and Southeast Asia. The bigger picture is a seamless ecosystem of healthcare services, and insurance on the same platform.

PS: We have seen a spate of corporate wellness companies coming up in the last few months. To some extent, they all partner with companies and focus on gig economy workers. While there is huge market potential, there are new-age models coming up with bite-sized insurance to cater to these workers. The overall opportunity is humongous, and it is just a matter of time before it is exploited. Since most gig economy workers are already on apps, their ability to interact with other apps is also very high.

What roles do public-private partnerships play when it comes to healthtech with a human touch?

DAN: There is a growing demand for digital health solutions, even with people in poorer areas. However, it is not easy. The consumer issues could be as simple as a phone lacking enough storage to install an app. Or internet speed not being good for a video call to access telemedicine. There are also more complex issues: how can we trust a doctor on an app?

That’s why we need public-private partnerships. At Medici, we have been working with local authorities to bring our service to each and every family. We have to optimised the app and work with top doctors and hospitals and a newer network of doctor influencers.

On the other side, local government officials work closely to ensure the population is telehealth-ready. To spread awareness of our services, they visit each family to install the app, and provide a place where people can reliably connect to the internet. The model has been working since people trust the government.

Has the pandemic made governments more inclined to forge partnerships?

RD: We are in talks with government bodies in Indonesia and Bangladesh as well as NGOs such as Access Health, which operates in South and Southeast Asia. The models we are looking at are public-private partnerships. From the point of view of governments, we can complement their services. We can serve as a buffer overflow in cases like the pandemic, but in the long term, we can have a positive impact on people’s health.

The bigger point is about private-private partnerships. What a consumer needs in this space today is not only insurance and telemedicine, but access to labs for blood tests, pharmacies, delivery services and hospitals. We are now seeing home health kits that can be used by people for chronic disease management. Our approach has been to curate these partnerships and offer them to consumers through our health platform.

On the regulatory front, what were the changes that you have seen in India as a result of the pandemic? Are they likely to be rolled back, with the easing of restrictions?

PS: Regulatory changes from the government are more or less systemic. It is very unlikely that they will roll back, given the focus on digitising healthcare. The government is in the process of building the National Digital Health Mission with a full stack digital platform. They have solicited help from private players — e-pharmacies, telemedicine companies and data management firms are participating. During the pandemic, the regulatory framework on telemedicine was regularised by the government removing a lot of the ambiguity that existed for almost a decade. For instance, on who can prescribe on such telemedicine platforms, the methods of prescription, and whether it could be considered valid.

These are fundamental well-intentioned changes, that will continue to be in place in the near future. The government’s own programmes, including the (contact-tracing) Arogya Setu app and CoWin for vaccination can actually help people get on to app platforms. That has been a huge trend towards digitising the way people access care. The numbers are humongous — almost 300 million people registered on the platform to get the vaccine – a game-changing number for the ability to access healthcare digitally.

One area where the government has not been able to have clarity is data protection and privacy. It is still not clear who owns the data. The providers hold it as of now, but it’s a matter of time before patients own data.

Not many companies do full-fledged health services such as telemedicine along with insurance. Is the integration of microinsurance and doctor services more suited for emerging markets?

DAN: Not many telemedicine companies provide insurance products. However, we observed that many insurtech companies add telehealth to their services. There is a strong synergy between insurance and healthcare, especially since health has become a top concern, post-COVID-19. A medical assistant can support insurance customers with health concerns, as well as recommend suitable insurance products via teleconsultation.

RD: The initial issues that consumers face in this space are access and affordability. If you are trying to do only telemedicine or insurtech, you are solving one, without the other. They are separated only because historically they have been two different industries.

In the digital space, if you’re trying to solve a consumer problem of access and affordability, it is easier to bundle them together — 75% of our customers are buying insurance, and 100% of them are using telemedicine for the first time.

Medici recently got a permit to offer insurance. What other pain points can you address?

DAN: Only companies that passed very high requirements from the government, received the licence and it demonstrates our commitment to the market. We can now legally distribute insurance products from different companies across our platform. We can also legally support customers with claim management, and create products that fit their needs. There are three main pain points: lack of transparency; lack of trust in the market due to insurance scams especially in rural areas and finally, lack of customisation. To address the first of these, we have a team to support customers with claim management. Customers can check the progress of their claims on the platform. To address the second issue, customers trust Medici’s influencer doctors. Since we own data and distribution, we work with insurance companies to customise products to fit our customer needs.

Healthtech companies can’t grow in isolation. How do you get them to partner?

PS: Both the parent fund Quadria and we at HealthQuad already have a large ecosystem of healthcare companies across India and Southeast Asia where we help our portfolio firms leverage and partner. But because of our premier status in this space, we can also help our portfolio companies access partnerships outside our ecosystem.

Companies must first abandon the mindset of doing everything under the sun, because that limits their ability to grow at a fast pace. Creating a platform play and adopting other startups is one of the ways to rapidly build scale. The other is partnering with established players like insurance and pharma companies to create niche products. We will have to see how startups can evolve and partner with larger groups. Of course, such partnerships can be more strategic in nature — larger companies could potentially buy startups.

What happens when some of the larger startups – in e-commerce, or ride-hailing – begin to offer these services?

NH: Neither GoTo in Southeast Asia nor SafeBoda, which operates with a similar business model on the African continent, believe that their expertise is healthtech solutions. Larger players have realised that healthtech is a very specific area that needs expertise from the regulatory side and human touch from healthcare providers. It needs laser focus to grow and to scale. That’s why most big players prefer partnerships; like GoTo with Halodoc in Indonesia.

From a consumer perspective, they don’t care who the provider is, as much as they want a seamless journey, offline or online.

Are some of the trends that you see with your portfolio companies in Europe coming to Asia?

NH: One of the trends is on the data protection side for e-health records. Especially when you are based in Germany, the data protection laws are notorious across the globe for their strictness. That’s something that will create trust for consumers and a differentiator for healthcare players in Asia.

Secondly, working together with the governments in creating e-health regulation is something that we see moving towards Asia. In France, the government has chosen to outsource the whole vaccination programme to Doctorly, a healthtech company. Working with the government is a testament to a sector’s maturity.