How can one of the world’s fastest growing sectors reach its potential? Health Tech’s growth, drivers and challenges, explained by one of the leading investors in the space.
What is Health Tech and how will it continue to evolve?
Health Tech, or digital health, uses technology (databases, applications, mobiles, wearables) to improve the delivery, payment, and/or consumption of care, with the ability to increase the development and commercialisation of medicinal products.
Obtaining a definition for Health Tech is proving difficult for a sector that has a seemingly endless list of possible uses for technology within its many operations, services and stakeholders.
Subsectors include: hospitals and practitioners; insurance; consumer-facing services; pharmaceuticals; and government – and even as consumers and businesses alike are beginning to realise the potential of the partnership between technology and the health industry, reports suggest that its trajectory is brighter still.
Its growth trajectory
Many industries take decades to reach a level of maturity that can easily absorb innovative solutions and adapt accordingly.
The Health Tech sector has had no such time: in the past five years running up to the end of 2015 venture funding has grown 200%, allowing US$11.7 billion to flow into Health Tech businesses from over 30, 000 investors in the space.
The industry was valued at US$7.2 trillion in 2015 in the US alone.
The reason for this seismic shift in funding and modernisation is simple: it was necessary.
The healthcare industry was (and in some respects, is) one of the least receptive industries to technological developments – only in 2010, 50% of US doctors used pen and paper for patient records – and in Europe, Australia, New Zealand, and elsewhere, reports were similar: the health industry were too reliant on outdated and inefficient modes of working.
Digital health represents the disruption to the healthcare industry that founders, investors and consumers alike are extremely keen to see visualized.
Drivers of digital health adoption
There are several key reasons behind the growth, and continued evolution, of the Health Tech space.
One of the most important of the drivers has been behavioural, and it has arrived in two waves.
Firstly, consumers are used to seeing technology disruption in other sectors, like the sharing economy, that has emboldened them to seek a better experience in other sectors too.
Secondly, digital health has arrived just as consumers are beginning to take more interest in their health, particularly in the UK and Western Europe; people’s buying habits now reflect this new attention, as one particular vertical, Wearables, saw an explosive growth during 2014-15.
Regulatory changes in the US have also fuelled Health Tech’s growth in its largest market.
In 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act was created to stimulate the adoption of electronic health records and supporting technology.
Similarly, the Affordable Care Act has played its part in incentivizing the adoption of software in private healthcare in the US, and in the UK, the NHS are making strides to become more collaborative with technology startups and services.
Global health and population trends are also ageing, and as the stress this places on the medical world begins to appear, so too has innovative Health Tech evolved to meet these challenges, and more.
Health Tech industry challenges
Privacy protection is proving to be a major roadblock to Health Tech development: by preventing or limiting the sharing and distribution of data, the digital healthcare industry could be starved of the basis for future of technological development.
The proliferation of data is incredibly important for the future of Health Tech and it is vital to the continuation of solutions to disease prevention, patient communication services, consumer wearables technology.
And unlike other industries, the stakes are a lot higher in healthcare.
Many new industries become complacent on lean approaches to innovation, but the fail fast attitude which many have adopted cannot so simply apply to the healthcare industry and digital health startups.
In this way, ethics of Health Tech does not relate to ethics within other digital sections.
The final major challenge is how the Health Tech industry plans to grow beyond domestic or national borders.
Many companies have potential for their services or products to be utilized within hospitals across the world, or to deliver information to patients in distinct regions, but healthcare regulations differ from region to region.
Health Tech will become truly global only once it can manage the expectation set within each country.
To conclude, Health Tech as an industry is in an enviable position as its financial and consumer backing promises a strong and continued growth chart over the coming years.
The promise of technology to innovate and update comes at a time when healthcare needs to respond to the growing demand of resources, and the digital health revolution is in a strong position to not only create solutions, but deliver them as well.
The sector is still young, however, and fragmented, and for the current Health Tech industry to grow further, the regulatory environment in particular needs to evolve alongside digital health in order for them both to benefit the public which they have been designed to achieve.