The healthcare industry has long been on the list of industries slated for digital disruption and transformation.
Despite its supposed maturity in Australia this is yet to happen with any significant momentum and the furor over the privacy and data sharing aspects of the Government’s My Health Record initiative has emphasized the extent of consumer distrust.
A raft of bureaucratic barriers, archaic regulation and a lack of venture capital are holding back the industry, even as a Royal Commission into Aged Care and Quality singled out on the poor record keeping as one of its terms of reference.
No Lack of Interest
The digital health market is tipped to grow rapidly, however, and reach a value of USD 206 billion by 2020, driven strongly by mobile and wireless business uses.
The Asia Pacific region is tipped to become a major center for digital health, but although Australia is creating plenty of startups in this space they are increasingly looking offshore for growth because of an uninspiring local market.
Digital health business accelerator ANDHealth, an industry-funded not for profit, recently released a report on this, entitled Digital Health: Creating a New Growth Industry for Australia. It argued that while Australia has major potential, many startups are leaving because of a “perceived lack of capital.”
“The opportunity for Australia to capture significant investment, become a destination for inbound digital health research and development, alongside becoming a world leading exporter of digital health products, is significant,” the report said.
The authors noted that in the third quarter of 2018, digital health attracted record high funding of USD 5.4 billion.
That sounds encouraging. So, what is the problem in Australia?
Market Appears Disinterested
There appears to be a disconnect between the initial idea, of which there are many, and bringing the ideas to maturity and a point at which they can be implemented at scale.
There’s a lot of talk; much of it is big. However, the startups lack meaningful links with providers and the providers, in turn, lack the commitment and capability to implement.
There is also the basic issue of getting paid. The government and insurer reimbursement systems have not developed sufficiently to accommodate paying for many of these new innovations. It means they run the risk of withering away because even though their ideas may be good, the market is not yet able to support their business models.
According to the ANDHealth chief executive Bronwyn Le Grice, one of the issues is focus. Digital health is not a subject of the medical devices sector; it encompasses more than electronic medical records and health software.
“Our report makes the case that Australia has the opportunity right now to develop an internationally competitive digital health industry which would complement and leverage our traditionally strong biopharmaceutical and medical device sectors.”
Out there in startup land, at least, this is well understood. A look at 10 medical startups selected by health insurer HCF for their Catalyst accelerator program in 2018, shows an impressive range of innovation and diversity.
There is, for example, a company called Vantari VR, which is developing “new ways to visualize, interpret, and understand medical images using virtual reality.”
There is also Boundlss, which connects members with their health and life insurers directly through a conversational, AI health platform. SleepFit is another startup which is developing digital sleep health programs for employers, insurance companies and health providers to improve employee sleep patterns.
All these are niche ideas, and the danger is that the uptake of applications will be too fragmented to drive a strong overall digital ecosystem which can make really transformative change.
The ANDHealth report makes this precise point. It identifies that despite significant investment so far by all levels of Government in Australia there was still a need for “strong infrastructure to contribute to a viable platform for digital health technology for commercialization and implementation.”
This was despite Australia already having supportive public policies and some fit for purpose regulation.
This, however, is not enough according to the ANDHealth report. Success means combining better and more streamlined investment, updating regulation to provide easier implementation pathways which will also derisk investment, and connect digital innovators with health professionals.
Otherwise, the opportunity could be squandered, in Australia at least. Good ideas could sink to the bottom and disappear, or be picked off piecemeal by other larger companies, most likely from offshore.
The digital world is about enhanced connectivity, and what is hampering digital is its isolation from industry and commercialization pathways.
The ideas are moving faster than the industry which needs them, and that is a developing problem.
Perhaps 2019 will see some progress.