Meet You in the Healthcare Metaverse…?

This is going to be huge, right? CB Insights says that the metaverse will be a $1 trillion market by 2030, just over a mere seven years from now. It is the buzzword of the day, right up there with crypto, EVs, and NFTs (both two words, actually). Unfortunately, all of those buzzwords seem to have run right into the cold hard reality of the real world after the last few months so what might we expect for the metaverse, in particular, how might it reveal itself in healthcare.

It still is not entirely clear that people are yet actively looking for the metaverse. According to a recent Axios analysis, 60% of the respondents could not describe what it is and nearly 90% of all respondents were either indifferent or scared by the metaverse with only 7% excited. Only 22% of Gen Z’ers (less than 25 years old) were excited about the future of the metaverse.

Data: Momentive; Chart: Thomas Oide/Axios

In general, it appears that the metaverse plays out between two ends of the spectrum: functional versus frivolous. Clearly, there are a number of very obvious, practical and perhaps even valuable activities enhanced by or extended into (is that the right preposition?) the metaverse, such as entertainment, education, commerce, and business gatherings. One might debate how satisfying or enduring this modality would be if 100% of our entertainment was conducted in the metaverse, but it is very conceivable that this will be an important venue for many activities once the technology is robust enough (and omnipresent, inexpensive, etc). Last October, Accenture purchased 60k Oculus Quest 2 headsets to facilitate virtual socializing among its employees.

It is not yet clear what the enduring economic models will be in the metaverse. Meta (a.k.a. Facebook) has indicated that its Horizon World metaverse platform will charge third-party developers upwards of 47.5% to transact on the platform as compared to the 15% – 30% in more traditional app stores. It will be fascinating to see how successful the “host” of the space in which to transact can extract such significant economics, which is frankly antithetical to Web3 (more on that in a moment).

Virtual real estate is big business in the metaverse. According to Parcel, the Zillow of the metaverse, 2Q22 will see $800 million of “real estate” transactions in the metaverse. A quick review of Parcel’s listings shows approximately 100k “properties” for sale, many of them having been listed for about three months. A leading virtual gaming company called Illuvium recently offered something called “Tier 5 Land Plots” for a mere 80 Ethereum (or ~$120k). In March 2022, CVS filed trademarks to sell goods and healthcare services in the metaverse while the company recently announced plans to shrink its physical store count by 900 locations – likely unrelated.

A number of announcements point to an emerging set of more frivolous use cases for the metaverse. Of course, many of the frivolous activities could well have powerful economic business models that would drive more practical use cases. Many brands (Coca Cola, Wendy’s, Chipotle) have set up a presence in the metaverse which are meant to drive awareness and engagement, and are often dressed up as gaming applications, likely directing users to more commercial activities. In addition to digital pet stores and virtual church congregations, it appears that dating and sex are a thing in the metaverse, raising real questions as to whether that is considered infidelity for those married in the real world. A notable case unfolded when a British couple divorced after the husband’s avatar was found to be having sex with another avatar in Second Life, an early incarnation of the metaverse. 

Creating virtual people may lead to a similar but distinctly different use case (hopefully) when a start-up called Somnium Space develops a metaverse populated by the deceased, enabling those living in the real world to continue to engage with passed loved ones’ avatars. The blurring of life and death in the metaverse at first appears confusing, maybe even creepy, but starts to hint at potentially interesting healthcare applications.

Life in the metaverse will be complicated, certainly in the early days. Given the enormous number of stakeholders (regulators, participants, technologists, academics, etc.) with often conflicting objectives how such a decentralized and unmanaged world should evolve is far from clear. But that is one of the core tensions: many believe there should be no organizing body – by design – which will make it particularly challenging in healthcare. Other very important and complicated concerns that will need to be addressed include security, privacy, bad boorish behavior, mis/disinformation.

Arguably, there may be two dimensions that emerge to define some of the ground rules and frameworks of the healthcare metaverse: one involves the venue, and the other is time-based. Does one “go to” the metaverse or is it brought to you? Facebook and certain other technology vendors envision a world that is delivered via increasingly smaller formats: headsets, goggles, glasses, contact lenses. Wherever one looks, the metaverse will be delivered right in front of your eyes. Other wearables may complete this experience. The other approach is that one goes to the metaverse in a more immersive environment – the participant is in a room or space equipped to put you in an environment that surrounds. Perhaps this is an approach plays to the inherent strengths of hospitals and other providers with virtual waiting rooms, operating rooms/ICUs, recovery rooms – either on the main campus or in new satellite facilities.

The second issue around timeframe will be, in part, addressed by how quickly hardware costs come down and increased functionality improves. In the near to medium-term, it is quite clear that there are interesting therapeutic use cases (VR, digital therapeutics), many of which are already in early stages of commercial release. Similar tools are in active use in the classroom and operating rooms to improve outcomes.

Perhaps more provocative are possible use cases in the longer term that the metaverse may enable. The ability to exquisitely create a digital twin for synthetic clinical trials or to interrogate how one might respond to a particular therapy. Imagine being able to accelerate the digital twin’s aging process by 10x, 100x, 1,000x to see the effect of certain clinical approaches. The ability to distort linear time in the metaverse opens up fascinating other applications. The potential for advanced biometrics begins to bridge the metaverse back to the real world for more appropriate clinical decision support at the individual level. At the most recent ATA (American Telemedicine Association) conference, the phenomenon of virtual reality and digital twins was a central theme.

Notwithstanding the fanfare the metaverse is receiving in other sectors, healthcare investors seem intrigued, yet the interest is arguably quite muted. According to Rock Health data, venture capitalists invested $198 million in 11 metaverse companies in 2021; for some context, overall digital health saw $29.1 billion invested in 729 companies (less than 1% of digital health investing was in metaverse companies). In 2020 those amounts were $93 million in 8 companies. Over the last dozen years, Rock Health has identified a handful of interesting start-ups in the healthcare metaverse.

Technology in healthcare is the great democratizing force. The ability to extend world-class care to disenfranchised populations via innovative technology platforms is compelling, yet still illusive. While the metaverse may bolster this potential, the reality is likely to be quite expensive and may, in some circumstances, exacerbate issues of affordable access (not everyone can afford an Oculus). Will those in the metaverse be afforded priority access? There will be pressure (or incentives) for providers to build brand in the metaverse, but might that come at the expense of quality. Or does the metaverse offer an on-ramp for non-healthcare entities to disrupt legacy providers? All important issues to be debated.

A word on Web3, the decentralized internet paradigm that shifts economic value to the users and away from the central gatekeepers of the current internet. The Web3 hype cycle is in overdrive now, notwithstanding problematic technical performance issues and an uncertain regulatory framework – and even in light of losses in excess of $1 trillion in crypto valuation in 2022 alone ($40 billion of which was attributed just to the LUNA token/Terra USD stablecoin debacle last month).

An intriguing use case though may be to envision personal medical records and data as our own NFTs – proprietary virtual assets that each of us controls via established property rights such that we can track, trace, and monetize our own healthcare data. These novel business models start to establish fundamentally different rules around access and equality. A Flare Capital portfolio company – HealthVerity – directionally enables some of these capabilities.

Now the reality: in a recent Center of Connected Medicine survey, 80% of providers reported that less than 20% of all appointments are booked directly by patients (“self-scheduling”) due to poor implementation of those tools. Feels like the healthcare metaverse is still some years away…

Meanwhile back on (the real) earth, as part of NASA’s Artemis missions back to the moon by 2025, the German Aerospace Center will include two “identical phantoms of the female body” loaded with over 10k sensors and 34 radiation detectors to study the effect of space radiation. This starts to clearly blur the metaverse with the universe and may even have virtual dating implications. All very complicated still.