If you’ve got anything to do with the healthcare industry in Australia, you’ve probably heard of healthtech. It’s almost impossible to spend any time on LinkedIn without encountering hype about a new startup or technology. But what is it? What are the biggest barriers to the industry’s growth? And what might the emergence of Australia’s healthtech industry mean for incumbent firms, professionals and consumers?
Healthtech usually refers to any technology-enabled healthcare product or service which can be delivered or consumed outside of a normal healthcare setting such as a clinic or hospital. It spans technologies as diverse as wearable devices that monitor a person’s sleep or physical activity, tele-medicine platforms that connect doctors and patients, home tests that allow for reliable self-diagnosis and “digital pharmacies” that fulfill prescriptions. Its true believers say that technology in healthcare will enable patients to take more control over their own health and have more of a say in how services are delivered. Investors, meanwhile, see opportunities for healthtech to disrupt everything from aged care, mental health and health records to even drug discovery and beyond.
What does the healthtech landscape in Australia look like today? According to Peter Birch, Founder & CEO of Talking HealthTech, it depends which part of the (broad) industry you’re talking about. Partly because of market and regulatory dynamics which don’t favour riskier startups, the hospital management space is dominated by large incumbent players like Epic and Cerner. Smaller and medium-sized companies are better represented in the GP and Allied Health markets, although recent acquisitions suggest that larger companies are watching the space closely. Peter sees the consumer healthtech sector as the most susceptible to innovation and disruption of existing care models.
According to Peter, there “is no doubt” that Covid-19 “has been the catalyst for change when it comes to adoption of technology in healthcare.” The pandemic has made people everywhere more familiar with digital services, especially in health – almost everyone now knows how to link a vaccine certificate to a check-in app. That new comfort, combined with record investment in early-stage companies, has resulted in huge increases in valuations. According to data from CB Insights, global investment in digital health startups jumped to US$57 billion in 2021, while at last count there are now 90 digital health “unicorns” (private startups valued at US$1 billion or more) around the world – four times as many as five years ago.
But, says Peter, it’s not just Covid-19 and social habits driving change. Policies matter too. He cites changes in Medicare funding to allow GPs to bulk bill for tele-medicine consultations as an example of beneficial policy-making. That suggests that companies and industry bodies will be watching closely for the updated edition of the National Digital Health Strategy, expected for release in mid-2022.
Beyond behavioural changes created by the pandemic and lockdowns, there are other factors which suggest there is a need for the potential solutions offered by healthtech. For example, according to Peter, healthtech is likely to emerge as an important part of solving the challenge of providing quality care in rural and regional communities.
Healthtech clearly has big potential. The Medical Technology Association of Australia (MTAA) estimates that the total market for medical devices – just one part of the overall healthtech picture – is worth almost $5 billion. But, according to Dr Terry Sweeney, CEO of the Digital Health Cooperative Research Centre, Australia hasn’t yet seized the opportunity. “Australia’s digital health market is worth about $2 billion, which is just one per cent of the $200 billion global market,” she says.
Part of the reason is that companies are facing a skills shortage. In research commissioned by the MTAA, Deloitte found that local med-tech firms face significant skill gaps in product development, product research and regulatory affairs. According to Peter, “awareness of data security and responsibilities around data” will be some of the most important skills to learn for people seeking employment in the local healthtech industry. For individuals and companies interested in healthtech, the message seems clear: invest in programming, data analytics and cybersecurity.
Data security is closely related to what Peter sees as the single biggest barrier for the industry: public trust. Almost everything is downstream of increased trust: more trust will provide companies with easier access to capital, encourage governments to create new rules that provide greater certainty. It also explains why, relative to so many other industries, the disruption of healthcare has been a long time coming. The typical tech approach of “move fast and break stuff” isn’t as applicable when the “stuff” in question is our own health and wellbeing.
Australia’s healthtech sector still has room to grow and challenges to overcome. But between a dynamic entrepreneurial scene and a government that seems to understand the opportunity in front it, there are many reasons for optimism. To make sure you’re ready for the opportunity, we recommend reflecting on how you (as an individual) or your company can improve your data science and programming skills, and subscribing to leading Australian health industry sources, such as the Talking HealthTech podcast and the What the Health? newsletter to stay up to date on the latest news and emerging trends.