Measuring Health Impact: Quantifying the true value of health enterprises
Executive Summary
The U.S. patient population is undergoing a dramatic shift due to its aging population and increased non-communicable disease burden. Patients, particularly those that are diagnosed with multiple chronic diseases, are suffering physically and economically, as they often have to undergo expensive services. “Super users,” who frequently visit hospitals and suffer from chronic and mental health conditions, comprise 5% of the patient population but drive 50% of U.S. healthcare costs, as traditional healthcare delivery models cannot meet their needs.
Despite these challenges, there are ample opportunities in the U.S. and global healthcare system for investors looking to make a positive difference in patients’ lives. Emerging technologies and analytics helping redesign healthcare delivery are healing cracks in our global healthcare system in order to deliver superior clinical care at a significantly lower cost. Digital technologies like Calm.com and Pear Therapeutics with cognitive-behavioral and on-demand features have been shown to improve mental health outcomes in scalable, cost-effective ways. Investors allocated billions in 2018 toward digital health startups and millions toward preventive and treatment solutions to mental illness.
Healthcare is a high-touch industry, and high-impact companies are expected to succeed because their products have durable social value. Patients depend on emerging health solutions to treat minor and serious health concerns, and solutions that do well by patients are also poised to perform well in the market.
While healthcare innovation abounds, investors struggle to distinguish which solutions are most valuable to patients and are most likely to scale. The financial industry currently lacks a rigorous system to assess the public health impact of market-based solutions. Existing frameworks examine whether companies serve low-income populations, but not whether they improve population health outcomes. The Sustainable Accounting Standards Board (SASB), a body that works to quantify companies’ non-financial value, developed an initial set of health impact metrics, but there is potential to extend this approach and conduct a more nuanced dive into company-level metrics.
Investors would benefit from a model that assesses companies’ public health value in order to point them toward the best investments. This paper presents a Data-Driven Healthcare Impact Framework that describes six pillars of public health impact and metrics that can be used to benchmark companies. This investor-friendly framework is designed to add technical investment insight with respect to measuring the healthcare impact of market-based solutions to leading chronic diseases. Each pillar represents an important way in which market-based health solutions can positively affect patients, including:
Saving Lives
Treating Life-Threatening Diseases
Lowering Costs
Improving the Lives of the Elderly
Care Coordination
Embracing Value-Based Care
This paper discusses health impact metrics that can rigorously assess and benchmark health companies. While the paper’s discussion focuses on U.S. health issues and companies, the framework can be applied to global companies as well. Three case studies are presented to illustrate practical health impact measurement at the company level.
Boundless and EntryPoint believe that this paper could be the first in a series of analyses concerning company-level healthcare impact. Emerging companies are disrupting traditional care models and investors can now invest in best-of-breed companies with validated approaches to reducing mortality, lowering costs, and improving patients’ quality of life. To this end, directing investment capital toward the best companies is key. Data-driven health impact could allow investors to identify which companies have the greatest impact on human health and are also most likely to scale.