Over the next 20 years, Canada’s seniors population is expected to grow by 68 per cent. That means demand for healthcare is set to grow exponentially.
Aging populations will require specialized medical care, and their expectations are high, says Maria Pacella, managing partner of Pender Ventures in Vancouver. “We’re becoming, as a population, more knowledgeable,” she says. “We have more data at our fingertips, and we’re more demanding when it comes to personalized healthcare.”
At the same time, there will be a decline in workforce availability with fewer qualified employees available, necessitating better healthcare solutions to retain staff and a need to tackle disease complexity. The likely result will be a greater demand for healthcare solutions that can deliver reliable data quickly, like DNA sequencing data, medical imaging and accelerated drug discoveries, says Pacella.
Everything points to healthcare remaining a very attractive sector for innovation and investment.
“These are good things from an investor standpoint, because if you find that kind of breakthrough solution, all of those things that we just talked about are actually what makes you durable,” she says.
Healthcare technology
Returns on healthcare technology have traditionally been slower than in fast-moving sectors such as fintech. Often, cumbersome regulations bog down approvals, and integration and workflow issues slow down the path to market.
That’s changing, says Pacella, who adds that certain areas in healthcare are seeing a lot of capital and are quicker to create return on investment. These include decision support, ambient documentation (medical scribes), revenue cycle and administration automation, drug discovery and precision automation, mental health platforms, women’s health and hormone optimization, and remote patient monitoring. She says solutions that deliver cost savings, lead to productivity gains and speed up medical processes are increasingly being seen as delivering the most rapid returns to investors.
One example is the rise of AI-powered knowledge platforms that physicians can access to read peer-reviewed research in real time.
“It’s really a decision support tool, and it saves them from needing to search across multiple sources for the relevant data and research,” says Pacella. Doctors can ask a complex question in plain language and then receive evidence-based answers immediately. Currently, adoption is high, with 40 per cent of physicians currently using this tool.
The ROI story is really about efficiency, faster time to evidence and decisions for better workflows.
Maria Pacella
Start-ups driving innovation
Start-ups continue to be instrumental in driving healthcare technology solutions forward, she says, adding that even industry leaders began as niche players. “Epic is a very large electronic healthcare record company in the U.S.,” she notes, but the firm, which developed a scribe tool for medical records, started small once upon a time.
“Now, many different hospitals use it, and it became that key solution for everyone.”
Pacella says that firms that develop a solution to a particular problem—a way of reducing doctors’ administrative burdens, for example, or providing more accurate healthcare information—will be the ones to watch going forward. Equally attractive will be companies that understand or have overcome regulatory pathways and compliance integration—and built that into their solutions.
Right now, a key focus is on women’s health. Pacella says there has been a surge in hormone and functional health focused platforms that integrate diagnostics, virtual care consultants, nurse practitioners and pharmacy fulfilment.
“These programs are for perimenopause, menopause, fertility and broader functional care,” she notes—areas that have long been neglected in traditional healthcare systems. “Insurers and employers really care about that meaningful care gap as it impacts absenteeism.” Ultimately, investors in the healthcare technology space might have to play the long game, given that so many successful solutions could yield big returns far down the road.
“As an investor, you have to find those unique opportunities,” says Pacella. “Once you find them, you have to be patient. If it’s a product that delights the customer and earns their trust, that will pay off over the long term.”
This story was created by Canadian Family Offices’ commercial content division on behalf of PenderFund Capital Management, which is a member and content provider of this publication.