HealthTech: the fastest growing sector and a haven for investments.
New ERA: The “Digital Darwinism” in healthcare
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change” once said Charles Darwin.
The world is undergoing a significant shift in the fast-paced 21st century, driven by the unrelenting advancement of technology. Darwin's insight serves as a reminder that adaptability to change, rather than physical prowess or intelligence, is what ultimately determines survival and success in this dynamic environment.
The story of innovation and health coming together in this digital era, could be the salvation for the current healthcare model and for the provided healthcare services. While “Digital Darwinism” (1) is widely observed in e-commerce, digital photography, music and other fields, it is not completely there yet in the healthcare field, although the spread of wearable medical monitoring gadgets, the introduction of the artificial intelligence (AI) into the big data analysis and the latest developments in telemedicine suggest that the near future of health technology will fundamentally alter how we view and handle healthcare and will be the core attraction for immense investments in the healthcare digital sector .
The nexus of digital expertise and healthcare holds the potential to not only improve but radically transform people's and society' journeys toward wellbeing in this age of ubiquitous connectivity and
data dominance. Throughout this article we will explore the burgeoning realm where cutting-edge technology meets the imperative of human well-being, and as a healthcare expert and a health consultant, I will highlight the needs of the market and the expected growth areas within the digital healthcare sector.
The unsustainable current model of the health sector.
A recent report by The Lancet Global Health Commission on High Quality Health Systems (2), found that 5.7 million people die in low and middle-income countries every year from poor quality healthcare compared with the 2.9 million who die from lack of access to care. In other words, in many countries, a person has a greater chance of dying from receiving poor quality care than from going without care entirely. On the other hand, and according to the world health organization “WHO” (3), in some countries, only 35% of patients receive the correct diagnosis and 14% of the patients worldwide are harmed while receiving healthcare during their hospital stay.
The growing costs, the disparities in access, the inefficiency and the care quality are some of several reasons why the current healthcare system cannot continue in its current format. The system's capacity to satisfy the changing healthcare demands of people everywhere is put in jeopardy by the following problems:
1- Demographic Changes: the decline in birth rates and the increase in the life expectancy of our societies is leading to a greater demand on healthcare systems.
2- The constant increase in healthcare costs: the older the society, the higher the ration of elderly patients with chronic diseases and
the higher are the associated costs of therapy which includes surgeries and pharmaceuticals administration.
3- Chronic Disease Burden: According to an article published earlier this year, the estimated cost of chronic disease is expected to reach $47 trillion worldwide by 2034 (4).
4- Health Workforce Shortages: WHO estimates a projected shortfall of 18 million (figure 2) health workers by 2035 (5).
Figure2: the global healthcare workforce crisis
5- Climate change: high temperatures have been proven to be associated with the spread of fungal infections as well as zoonoses and food-, water- and vector-borne diseases, which could lead to higher requests for healthcare services.
Health technologies: here to save the healthcare model.
Health technologies can solve major issues and change the way healthcare is accessible, managed, and provided, revolutionizing healthcare as we know it.
Case Example: Digital Solutions in Chronic Disease Management
In recent years, several healthcare systems have implemented digital platforms that enable patients with chronic conditions, such as diabetes or hypertension, to actively manage their health. These platforms often include wearable devices that monitor key health metrics in real-time, coupled with personalized insights and reminders that guide patients in their daily decisions. The approach empowers patients to adhere better to treatment plans and encourages proactive health management. Early reports indicate that these patient-centered tools are leading to improved treatment adherence, fewer emergency visits, and overall reductions in healthcare costs. This example highlights how digital health solutions, when designed to support patient autonomy, can reshape the healthcare experience and address some of the most pressing challenges in chronic disease management.
Health-tech could contribute to saving the current healthcare model through:
1- Enhancing Access: Through telemedicine and virtual care platforms, patients can obtain medical services remotely which could help people in underserved or rural areas to get quicker access to healthcare services.
2- Increasing Efficiency: By automating repetitive jobs, streamlining administrative procedures, and streamlining healthcare workflows, health tech solutions save operating costs and boost productivity in healthcare institutions.
3- Empowering Patients: according to the World Economic Forum (WEF) (6) the new digital healthcare model should be “patient centered” making patients actively participating in the healthcare service through self-monitoring tools, education, and personalized health insights, which could result in a higher adherence to the treatment plan.
4- Promoting Preventive Care: Big data analysis will be soon playing a crucial role by identifying people who are at risk for chronic diseases, and assisting in the early diagnosis of health issues, digital health technologies encourage proactive health management and preventive interventions.
5- Cost reduction: The potential reduction of direct costs of healthcare delivery achievable through digitization discussed in the following section.
Three categories of the healthcare technologies are potential sources of revenues:
According to a report study by the McKinsey & company (7) the benefits/costs savings generated from digitizing a healthcare system could be through three categories of healthcare related technologies:
- 49% of savings based on digital health: Solutions that directly involve patients in the health management activity. These digital health solutions include online interactions, patient self-care, and self-services, which could free up time for both patients and doctors and encourage the use of more cost affordable alternatives.
- 33% of savings based on E-health: Solutions that are mostly focused on healthcare professionals and provider efficiency.
- 18% of savings based on Enablers: Solutions and systems that support all stakeholders and processes in the healthcare ecosystem.
Health-tech: a haven for investments
o Forbes voted number 1 sector for investments.
According to an article published by “Forbes” in 2024 (8), both Technology (#1) and Healthcare (#2) are the top leading sectors for investments, making of their combination” HealthTech” the haven for investments. The revolutionary AI, the gene editing, and machine learning techniques combined with the needed of the healthcare system suffering of all the limitations mentioned above, make, according to “Forbes”, these two sectors a perfect opportunity for investors.
o One trillion euros globally by the digital health sector by 2026
Public expenditure on health and long-term care has been increasing over the last decades in all EU Member States and is expected to rise even further. In 2015, it accounted for 8.5% of GDP in the EU and could reach up to 12.5% of GDP in 2060 (9). A substantial part of the increase has been attributed to the introduction and funding of new technologies in health care, including digital ones. Several sources indicate that the upcoming years will mark a significant turning point in the constantly changing healthcare sector. From 2021 to 2032 (figure 3), and during this forecast period, the worldwide healthcare industry is expected to expand at a compound annual growth rate (CAGR) of 18.7%. By 2026, the worldwide digital health sector is expected to generate revenues of one trillion euros. It is estimated that the European Union will contribute 239 billion euros to that amount, with Germany accounting for 59 billion euros of that total.
• Market wise: while North America and Europe currently lead the market with healthcare solutions, studies indicate that Asia Pacific is estimated to witness the fastest growth rate during the forecast period.
• Technology wise: the telehealth care segment (including telemedicine, teleconsulting…) which currently dominate the market with a revenue share of 41.9% is expected to show the fastest CAGR of 23.7% over the forecast period.
• Component wise: Services which accounted for the largest revenue share of 45.11% in 2022, are expected to lead the market with CAGR taking over software and hardware.
Why investing in the right startup/innovative HealthTech solution is key for the growth of the market?
o Criteria of a successful HealthTech solution:
The growth of the HealthTech market relies not only on investments in this sector, if not on the “Right investment”, in solutions that appeal to the healthcare market, patients, and the healthcare workers. As a health consultant and expert in health services, I would consider the following criteria as essentials for a successful solution:
1. Effective and improve health outcomes.
2. Safe, and prevent avoidable harm related with health care.
3. Appropriate and comply with current professional knowledge as well as ethics and standards.
4. Patient-centered and involve patients/people as key partners in the process of care.
5. Efficient and equitable, and lead to the best value for the money spent and to equal access to available care for equal need, utilization, and equal quality of care for users.
o 10 Factors to be considered for a successful investment in HealthTech solutions:
As when it comes to investments in these solutions, various factors should be considered:
1- Market Opportunity: assess the size and the growth potential of the target market.
2- Innovation and Differentiation: evaluate the uniqueness and how innovative is the healthTech solution.
3- Clinical Validity and Evidence: evaluate the clinical validity, safety, and efficacy of the solution.
4- Team Expertise and Experience: assess the founding team, management team, and key staff of the startup for their experience, expertise, and track record.
5- Business Model and Revenue Potential: analyze the business model, revenue, and the strategy of pricing.
6- Market Traction and Customer Validation: assess the solution/startup's market traction, user adoption.
7- Regulatory and Compliance Considerations: assess the startup's regulatory strategy and its compliance with healthcare regulations.
8- Financials and Funding: study the financials, funding history, and the fundraising plans.
9- Exit Potential: evaluate the startup's potential for exit opportunities, such as acquisition by larger healthcare companies or strategic partnerships, or initial public offerings (IPOs).
10- Partnerships and Collaborations: consider the startup/solution's partnerships, collaborations, and strategic alliances with healthcare providers, academic institutions.
Conclusion: it takes more than an investment for the successful growth of the HealthTech sector
It's believed that technology and medicine are developing in previously unheard-of ways. Tech trends are driving advancements in healthcare, from robotics and medical gadgets to telemedicine and predictive data analysis. Artificial intelligence has the potential to fundamentally alter every aspect of healthcare, including patient care, medical research, and business. Healthcare experts are ready to help, whether they work in hospitals, clinics, counseling services, or other settings. The quality of the process, the involved stakeholders and the investors will have a significant impact on the outcomes and results of the digital transformation of the health services. This involves governments, healthcare providers, developers, and end users of digital health services (such as citizens, caregivers, or professionals). A thorough grasp of the two fundamentally interdependent elements—"the health service" and "technology"—at all these many levels is necessary for the success of the digital transformation. In this context, the entire process of their creation, production, funding, implementation, and evaluation needs to be carefully considered.
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References
1- Economist impact: https://impact.economist.com/projects/the-new-disruption/digital-darwinism/ 2- https://www.thelancet.com/commissions/quality-health-systems
3- https://www.who.int/news-room/fact-sheets/detail/patient-safety
4- Hacker K. The Burden of Chronic Disease. Mayo Clin Proc Innov Qual Outcomes. 2024 Jan 20;8(1):112-119. 5- https://www.who.int/health-topics/health-workforce#tab=tab_1
6- https://www.weforum.org/publications/digital-transformation-of-industries/
9- European Commission's Joint Report on Health Care and Long-term Care Systems and Fiscal Sustainability (7 October 2016
Driving Business Automation & AI Integration | Co-founder of Devstark and SpreadSimple | Stoic Mindset
10moHealthTech’s potential to revolutionize healthcare through digital tools like telemedicine, predictive data, and AI is unmatched. The future of healthcare depends on well-chosen investments in this space.