Looking ahead, though, health care technology companies that cater to the aging population are one of the predicted areas for potential investment opportunity. The aging effect will cause annual spending on home health care by seniors to balloon by almost $90 billion by 2070, according to an analysis commissioned by PGIM, the investment management unit of Prudential, and conducted by Oxford Economics. Spending on medicine and drugs, meanwhile, will climb by more than $40 billion annually over the next 50 years.
The so-called “Silvertech” market has spawned hundreds of new startups in recent years, attracting tens of millions of dollars in seed capital from venture capital investors and crowdfunding Internet sites. Most of today's innovations are focused on technology that helps seniors remain in their homes for as long as possible, says Laurie Orlov, an analyst and founder of “Aging in Place Technology Watch,” an online newsletter. “Home care is really hot right now,” she says. “It’s one of the booming job categories, and we are seeing more companies entering the market with tech-enabled home care.”
In the United States alone, health care spending is projected to reach $5 trillion by 2023, up from just over $3 trillion today, according to the centers for medicare and medicaid services.
Extra help around the house
One example is Honor, an app-based company that offers a new business model for in-home senior care. Funded with $20 million in venture capital, Honor connects homecare professionals with clients based on their individual needs. The company vets all its contracted caregivers so families can focus on other matters, and users can schedule a home visit on demand or on a continuing basis. For example, someone can come in regularly to help with housework and laundry, or users can schedule a ride to a doctor’s appointment. Using the app, remote family members can monitor who’s coming when, and can even request a same-day site visit if they are worried about a loved one.
Launched with more than $12 million in venture capital, Hello Alfred is another startup tapping into this market. Created by college students and originally designed for busy professionals, Hello Alfred manages a team of part-time “butlers” who do chores or run errands—tasks that are increasingly difficult as we age. Customers can choose either one or two home visits a week, ensuring that burned out light bulbs are replaced and the fridge is always stocked.
The next generation of wearables
Sensors are also garnering heightened attention from the capital markets as companies repurpose existing technology to fit the growing needs of seniors. The ubiquitous wristbands sported by fitness fanatics and health-conscious people are now beginning to connect the health and fitness data they collect with health care providers.
While seniors probably don’t need to track the intensity of their workouts, the data collected by the sensors can provide critical information to caregivers. UnaliWear, a Dallas-based startup, funded its Kanega Watch with a Kickstarter campaign. A self-contained unit that doesn’t require a phone or Internet connection, Kanega is a voice-activated system that can detect falls or long stretches of inactivity and ask the wearer if he or she is OK. If there is no response, the watch can call for help and alert caregivers. GPS functions track wearers’ movements and can help them find their way home if they are lost.
GreatCall’s Lively Wearable takes emergency alert pendants to the next level. The watch connects to a hub that constantly monitors sensors scattered around the home. A sensor attached to the medicine cabinet can help ensure that medication is being taken. Another can alert users if they leave the stove on. Other sensors monitor activities. For example, a refrigerator sensor can help keep track of meals. Wearers can also press a button to initiate a call with Lively’s monitoring center. If something is amiss, the watch will call for help.
Help with memory care
As many as 5 million people are living with Alzheimer’s disease, and by 2050 that number is projected to rise to nearly 14 million, according to the U.S. Center of Disease Control. And that doesn’t include the millions of seniors struggling with other types of dementia or cognitive impairment. Sensors can provide critical support in safeguarding patients.
For example, replacement insoles for shoes are being developed with GPS tracking built in, so if someone wanders off they can be found quickly and easily. Nursing homes and skilled-care communities are testing sensors in geofencing systems that will alert staff if a resident with cognitive disabilities wanders away from the building or the grounds.
Athletic wear that measures biometrics, such as heart and blood oxygen levels, is being redesigned for seniors. Airbags are being built into clothing, such as belts, for people who are susceptible to falling. Armed with sensors that can detect a fall, the airbag will inflate to protect against a broken hip.
Pulling it all together
Of course, stand-alone systems that collect data aren’t as effective as they could be without the means to integrate all the different input. That’s why established companies such as Qualcomm are focused on leveraging existing cloud technology to create digital platforms that connect medical devices to remote monitoring systems. Qualcomm Life’s 2net™ captures the biometric data collected by wearables and integrates it with other health-related data to deliver better health care remotely.
For investors, it’s hard to overestimate the market potential for these types of products. In the United States alone, health care spending is projected to reach $5 trillion by 2023, up from just over $3 trillion today, according to the Centers for Medicare & Medicaid Services. Governments, insurance companies and consumers alike are actively seeking technological solutions to help rein in health care costs.
Another consideration: These types of technology don’t face the regulatory hurdles and delays to market that drug makers and biotech firms typically face. That means bringing these promising new innovations to market is faster and easier for the companies leading the way.
PGIM is the primary asset management business of Prudential Financial, Inc. (“PFI”) and is a registered investment advisor with the US Securities and Exchange Commission. PFI, a company with corporate headquarters in the US, is not affiliated in any manner with Prudential plc, a company incorporated in the United Kingdom.