Alberto Prado, Head of Philips HealthWorks, while attending Startup Village 2019 conference in Moscow, shared his views on the global healthcare prospects and understanding of multinational cooperation in addressing current healthcare challenges with Invest Foresight, setting out most encouraging and reachable targets.
As Mr Alberto Prado noted, Philips HealthWorks is a catalyst to accelerate breakthrough innovations and business models in healthcare. Healthcare is undergoing a major transformation driven by a number of factors, which include a massive increase in global population, a fast aging society and the rise of chronic conditions, due partly to poor lifestyle choices. In addition to this, healthcare systems have remained largely reactive and focused on curative care, rather than preventative. This is reflected in the actual healthcare spending, which is reaching a breaking point. As a reference, in the US healthcare spent represents about 18% of the GDP and translates into $3.5 trn. In most western geographies, the average healthcare spent reaches 12 to 13% of GDP. This trend has been steadily increasing since the 1970s. The challenge now to the healthcare industry is how to create a care delivery system that focuses on prevention, enables early and effective diagnosis, personalized treatment and at the same time is productive and patient centric.
New digital technologies can help solve many of these challenges, whether it is cloud, Artificial Intelligence, robotics or Augmented Reality. Much of the current healthcare paradigm is built upon standard practices and protocols, however we are all genetically different, with different metabolisms and different response to the same therapy. A key area of innovation is therefore precision diagnosis and medicine, where a combination of digital radiology, computerized pathology and genomics help build a complete picture to identify disease and suggest personalized treatments. In a world where healthcare is delivered by hardware economics, AI and other digital technologies powered by data allow us to adapt to each individual’s conditions. In order to be effective at tacking these challenges, we use the quadruple aim to guide all our innovation efforts: Improve clinical outcomes, productive, staff satisfaction and patient engagement.
Philips invests around 10% of its revenue in R&D, so with a turnover slightly over €18 bln, we invest between €1.8 and €1.9 bln in R&D every year, which is a considerable figure. There may be other companies that invest higher figures, but in percentage terms we are among the top R&D investors in our industry.
We have a strong focus on software platforms and AI. At Philips we use the term Adaptive Intelligence because we believe that technology needs to adapt to humans and enhance their performance for better outcomes. This transition towards a digital and solutions-oriented organisation has led also to a re-balancing of our skillset. Nowadays 60% of our R&D capability is software-based.
If we look outside, we see the care provide market also evolving fast towards a value-based model where hospitals are reimbursed on the basis of outcomes achieved, rather than on a procedure-basis. There is significant pressure to be able to do more with less, and this often leads to hospitals adopting innovation. This has also led to integration of single hospitals into large care delivery networks, and we have seen this trend in particular in the US. There is an implied opportunity for cost efficiency that underpins this trend. There is also a clear need to focus on out-of-the-hospital care, which does not only alleviate the healthcare system but also, if conducted effectively, can help increase patient satisfaction and outcomes. Once treated, patients can recover at home, being properly monitored on a real-time basis and enabling healthcare professionals to intervene before any significant deterioration occurs.
In emerging markets, such as Africa or India, some of these technologies can enormously improve access to care. The underserved populations that don’t have access or easy access to healthcare, can get the necessary medical care leveraging solutions such as tele-health. Ensuring equal access to care is one of the key challenges in healthcare today.
Possibly, the situation in Russia is a combination of both: The western part of the country will probably face similar conditions as in Europe or the US, driven by the quadruple aim, whereas in the East, where there is a lower population density – and predominantly rural, the care system could benefit from solutions based on tele-health. I do believe Russia could benefit from following a dual approach to increase the quality of the healthcare system, given its extensive geography and demographics.
With regards to entrepreneurial innovation, It is still too early for me to talk about results of Russian startups participation in Philips HealthWorks programs because it is relatively young. We started 4 years ago, but the first 2 years we were exclusively focused at accelerating organic innovation. Subsequently, we launched our startup program, which we operate globally. Philips HealthWorks is present in Cambridge (Massachusetts), Eindhoven, Bangalore and Shanghai and we leverage other Philips innovation hubs, such as the one in Skolkovo, in order to get access to specific ecosystems. We have around 45 startups that have come through our program for the last 2.5 years, from around 15 to 20 countries.
There has not been a strong presence of Russian startups in our program so far. I am taking the opportunity this year to connect better to this ecosystem by attending the Startup Village Festival in Skolkovo. Philips has already a presence in the Skolkovo Technology Park and we plan to intensify our collaboration to engage more effectively with the local entrepreneurial ecosystem, where we see interesting activities in the data science and Artificial Intelligence areas.
Moscow has a strong reputation in the areas of digitalization and provisioning of digital services to the population. At the same time, Philips has a long-standing presence in Russia, which now covers all aspects from the commercialization of innovative solutions all the way to R&D. Adding innovation competences to our footprint was driven by a deep belief of the quality of the education and the talent that is available as a result.
Innovating in Healthcare requires an ecosystem approach. The challenge is not just only technological – there is a need to bring all parties together to solve the biggest challenges, whether it is insurance companies, pharma, healthtech companies, governments, care providers, patient advocacy groups, etc. The most breakthrough solutions require a level of orchestration that is unprecedented. And we shouldn’t expect that it will happen by itself.
We envision a healthcare future that is connected, seamless and patient-centric. A future that is focused on prevention, precise diagnosis and personalized treatment. We will overcome big challenges such as – hopefully – cancer, diabetes, cardiac and respiratory problems, which today kill 40 million people every year. Innovative monitoring solutions will empower people to manage chronic diseases without trading off autonomy and quality of life.
Innovating in healthcare is challenging but there are great opportunities now by leveraging digital technologies. However, one thing is to solve a problem and a different one is how to create a solution that is commercially and technically scalable. Given the unique characteristics of healthcare systems around the world, whether it is different regulatory requirements or reimbursement models, we put significant effort along the innovation process to understand how we can scale a particular solution – the problem you are trying to solve might be the same everywhere but the market context is likely different, and this needs to be taken into account from the beginning.
We are convinced that no company has all the answers, because healthcare is complex. At Philips, we believe that we have answers to a number of key questions, but we need to collaborate with startups, pharmaceutical companies and other actors in the healthcare ecosystem in order to come up with solutions that can tackle the most serious problems. If we do this right, I do believe that this world will be a better place.