The longevity economy
It is only in Washington DC that serving the needs of over 115 million people is viewed as an unacceptable cost and financial burden. In the private sector and for entrepreneurs, serving the needs of over 115 million people is called an opportunity. But what is that opportunity and how big is it?
In 2018, there were 117 million people 50+, comprising 35 percent of the U.S. population. By 2030, when the last Baby Boomers turn 65, there will be 132 million people 50+, with 1 in 5 Americans 65 and older. The number of Americans aged 65 and older is projected to grow from approximately 46 million today to more than 70 million by 2030.
Despite the common wisdom in Washington that this population is an economic drain, the data show otherwise. In fact, this is a population that provides a positive, disproportionate benefit to the U.S. economy and drives demand in most industries. Today, this 35 percent of the population spends 56 cents of every dollar in the U.S., generating $8.3 trillion in economic activity, or over 40 percent of total U.S. GDP. If this Longevity Economy was a stand-alone national economy with a GDP of $8.3 trillion, it would have the third highest GDP in the world after the U.S. and China.
This is a population that provides a positive, disproportionate benefit to the U.S. economy and drives demand in most industries.
That said, as noted by the CDC, age brings a higher risk of chronic diseases, such as heart disease, type 2 diabetes, arthritis, and cancer, which are the nation's leading drivers of illness, disability, deaths, and health care costs. Alzheimer's disease and other dementias are most common in adults 60 and older, and the risk increases with age.
The World Health Organization notes that common conditions in older age include hearing loss, cataracts and refractive errors, back and neck pain and osteoarthritis, chronic obstructive pulmonary disease, diabetes, depression, and dementia.
All of these health issues are increasingly being addressed by innovative startups. And we have seen growing levels of venture investment across digital health, with the pandemic further amplifying investment in various types of virtual care through multiple telehealth platforms.
Rock Health’s analysis of digital health venture investment trends shows strong growth in the first half of 2020. Despite the COVID-19 pandemic, Q1 2020 set a record with total quarterly investment of $3.1 billion with 105 deals. Q2 2020 continued to show strength with additional investment of $2.3 billion and 109 deals, resulting in a total of $5.4 billion in investment and 214 deals in H1 2020. Deal size also continued to set a record, with an average deal size of $25.1 million.
We have seen growing levels of venture investment across digital health, with the pandemic further amplifying investment in various types of virtual care through multiple telehealth platforms.
Against this investment background we have seen multiple trends that are all individually and in combination leading to a change in the location of care, moving from hospitals and physicians’ offices, to activities in and around the home – all presenting additional investment opportunity.
Medicare Advantage plans have added more virtual and home-based services and gym memberships.
Hospitals have expanded virtual visits, ramped up their digital transformation strategies, and pushed to create and rollout Hospital at Home programs.
Physicians have increased virtual visits allowing patients to be attended at home, with the expectation that telehealth will continue to be a significant share of their care visits.
CMS has removed regulatory barriers to expand telehealth and digital health within Medicare, taking steps to make these changes permanent.
Technology is getting smarter, cheaper, less invasive, enabling better aging in place experiences, as well as providing broader health and lifestyle applications.
Congress is pushing forward with bipartisan legislation to expand the use of telehealth.
Social Determinants of Health (SDoH) are in and around the home, and now recognized as key to one’s health and demanding solutions.
Consumers are expecting more virtual care, use of digital tools that leverage ubiquitous technology like smart phones – all from the comfort of home.
Reflecting this movement to compete for the home as the site of care, is significant venture investment. Since January 2019, VCs invested at least $4.3 billion in startups either explicitly focused on providing tools and services to patients at home or enabling home-based care as part of a larger offering. Of this total investment, $1.4 billion was closed since February 2020 when the COVID-19 pandemic first blew up. This included 17 deals since February 2020, out of a total 27 deals since January 2019.
The above is only part of the investment opportunity presented by our aging population. We haven’t addressed the lifestyle, leisure, travel, education, human improvement/augmentation and other opportunity areas. When all boiled down, the takeaway is simple. The opportunity to have impact and improve people’s lives is huge and too big to ignore. It’s time to get started!
