AI in Healthcare — A Casualty Case
Amidst all the discussion, contention and existential fears underpinning the impact of AI on our lives, there is at least one area in which most agree that the promise is positive — healthcare. The potential for tech to take over some of the heavy data lifting thereby allowing skilled professionals to focus their time on patients looks to be a big win across the board. It is therefore a cause for some alarm that several early adopter organisations — Pear Therapeutics, Olive AI, Sensyne Health and huge names including Google Streams and IBM Watson Health — have struggled or disappeared.
One of the highest profile examples is Babylon Health. After spectacular growth fuelled by investor enthusiasm (it was briefly one of the fastest growing healthcare start-ups in history; its funding rounds broke European and world records; backers included the founders of Google DeepMind and Peter Thiel’s Palantir), the company fell from a valuation of £3.1bn in 2021 to collapse in 2023, ten years after its formation. In-between it had expanded across seventeen countries including Rwanda (in partnership with The Gates Foundation) and China (via Tencent on WeChat.) In an effort to justify the big promise of commensurately big funding, its product and service range had expanded from GP video consultations via its GP at Hand app and a symptom checking chatbot to encompass appointment booking, referrals and workforce management.
Lessons clearly need to be learned by the sector (private and public.) They’ll be critical for all of us. As an outsider, they look to me like this –
1 Healthcare Is a Complex Market So Seller Beware
Although in Britain some of its services were funded by subscription, pay-as-you-go or insurers like BUPA, the company was nevertheless reliant to a degree on NHS payment structures. The GP at Hand service proved to be popular both with some GPs who swelled their registration lists (largely with younger fitter people) and with patients who used it rather more than had been expected — both remotely and for face-to-face GP appointments. The result was that the NHS flat payment structure failed to keep up with Babylon’s variable GP costs; the service lost money. Changes to NHS rules on surgery catchment area payments in 2020 were likely to exacerbate the problem and make it (in Babylon’s words) “financially unsustainable.” When in 2022 the company’s CFO stated that Babylon cannot “continue to fund the NHS forever”, it betrayed for many of us a whiff of illogical outrage at its own inability to understand what it had got itself into.
This was no doubt one of the reasons that the business decided to ‘pivot’ toward the private based US system (by 2022 most of its revenue came from there.) However it found that to be a market already served by experienced companies that knew the landscape and challenges (established suppliers of symptom checkers for instance include Symptomate, Healthily and Mediktor.) Babylon’s ultimate demise suggested that it had made no better assessment of that market than it had of the UK.
2 Silicon Valley Is Not Real Life
Babylon isn’t the first company to have hit barriers by focussing on living up to its own hype. ‘Move fast and break things’/’fake it till you make it’ sound fine in the playground of valuation races but not when companies deal in lives.
Babylon made contentious claims that its app was a diagnostic rather than triage a tool — two very different things. It also claimed that its chatbot had passed a medical exam with a significantly higher score than the average doctor. This was widely questioned and The Lancet found no evidence that it performed better than a doctor and suggested in fact that it may be worse.
Babylon wore the fact that it was the first company of its kind to be registered with the Care Quality Commission as a badge of honour. However when a CQC report was mildly critical of the company, it changed tack and mounted a High Court legal challenge to the report’s publication — and lost.
The company’s marketing of a Covid antibody finger prick home testing kit generated a rebuke from the regulator (MHRA) as well as advice by its actual manufacturer (Abbot) that the product was not to be used at home.
Insiders were troubled by some of the company’s products being standard decision trees presented as AI. This is an established business game that many of us will have encountered — dress up basic functionality with the fashionable term du jour. Other ‘products’ presented to the media were merely mock ups cobbled together for the cameras but with little substance behind them.
In the same way that Theranos’ Elizabeth Holmes was driven by an obsession with Steve Jobs’ approach, Babylon founder Ali Parsa was an acolyte of Jeff Bezos as well as the principle of ‘blitzscaling’ as espoused by LinkedIn Co-founder Reid Hoffman. Scorching a path to market valuation is one thing (business is business after all) but healthcare is different (a social platform for personal branding is not business — let alone life — critical.)
3 Cheerleaders in High Places and Nice Mission Statements Don’t Equal Success
The appearance of success isn’t the same as delivering on a promise. When Matt Hancock was appointed Secretary of State for Health and Social Care in 2018, it was no surprise that, given his previous role as Minister for Digital Culture, he had a keen eye on tech in healthcare. For Babylon in particular it was a real bonus to have the new Minister describe it as the future of the NHS. At the same time, the company employed Dominic Cummings as a Consultant and met with 19 ministers over 7 years including PM’s May and Johnson. Individuals and companies with shares in Babylon also made a quarter of a million pounds of donations to the Conservative party. The company clearly cultivated friends in the right places.
Babylon’s ambitious mission statement was characteristically lofty and headline grabbing — “to put affordable healthcare in the hands of every human on the planet.” In its combination of doing good and making big profits, Babylon’s professed ambitions echoed the ‘impact investment’ mantra of companies like Arif Naqvi’s Abraaj Group which, as it turned out, was no great recommendation. Babylon founder Ali Parsa — an ex Goldman Sachs man — was the originator of the vision and the front man attracting the money and support. As co-founder of Circle Health he also had eight years real world experience of running a private hospital business.
Awash with funding and the backing of the great and the good, all seemed set fair.
4 Delivery Is All; Failure Has Consequences
Both the University Hospitals Birmingham NHS Foundation Trust (UHB) and the Royal Berkshire NHS Foundation Trust signed deals with Babylon for its A&E triage app but both deals were cancelled (the former because the Trust had developed its own 111 based approach after the Babylon service delivered no advantages.)
The Royal Wolverhampton NHS Trust (RWT) was sufficiently happy with a 2020 Covid app project by Babylon that in 2021 it signed a ten year digital primary care service agreement. The deal lasted just two years though before Babylon pulled out because it said that service take up had been too low to justify its investment.
In August 2022, Parsa described these contracts and others like them as merely “marginal” and “a distraction.” In the same month he told employees that almost half the workforce was being made redundant — clearly desperate cost cutting was the focus from which he was not to be distracted. That pile of investor money had been burned through and the off-site meetings in Antigua and flash Kensington offices now looked rather sick — particularly to onlookers from the cash strapped NHS.
Whilst pulling out of unprofitable contracts makes good business sense it also leaves a people shaped hole. Babylon emphasised that it was not ‘cutting and running’ but clearly the loss of services required Trusts to find direct replacements. Other problems were indirect but, if anything, even bigger. As a consequence of so many patients registering with one of the London practices offering the GP at Hand app, referrals for treatment in that practice’s local health area (Hammersmith & Fulham CCG) skyrocketed at an estimated cost of £35m between 2017 and 2020. An unintended consequence maybe but not an unforeseeable one — more consultations likely equal more referrals for treatment and the costs of those hit the NHS without impacting Babylon at all.
Moving On
In August 2023, eMed acquired the Telehealth and GP at Hand services from the remains of Babylon. The former is supplied as a service to Bupa rather than to the NHS. Indeed, when Babylon disappeared it is estimated that only 6% of its business came from the NHS.
It seems that the NHS itself solved the issues addressed by Babylon’s two core services — the home grown 111 triage service and remote consultations which are now widespread within the NHS (a development accelerated by COVID.) This surely suggests that we should be more selective about where private companies and ‘revolutionary technology’ are necessary and used. The failure of Babylon may not therefore be seen as a bad bellwether in general. It may well be that big, complex, advanced and resource hungry areas will benefit from private R&D resources, expertise and budgets that supplement those of the NHS.
The complexity of these more ambitious areas — especially with vast and unstructured datasets in diagnostics — cries out for AI machine learning approaches so a private sector success story would be heartening.
It’s very likely around the corner too but it will almost certainly be in a specific area of need in which the technology is ideally suited to solving a defined problem. For many observers, Babylon’s business was the very opposite of this — plans seemed grandiose and undisciplined, the manifestation of a strategy of visible growth at all costs. Maybe this resulted from an evangelical — but foolish — belief in tech being able to solve everything at once and on its own.
Whatever shape success will take, it will also have to fit into the financial landscape of UK healthcare. When Babylon closed one of its GP at Hand branches in Birmingham, the company’s CFO said that that it would “work with the NHS to try and change the way that they fund” the service “so it’s more viable.” At the risk of stating the obvious, it’s unlikely that the NHS will be moulded into a shape that is convenient for Silicon Valley investors to further their fortune; the NHS rightly has other priorities.
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Sources — Wired/TechCrunch/Forbes/Sifted/BBC/NHSforsale.info/Pulse/ERP Today/Computer Weekly
