The Healthcare Sector Continues to Sizzle for Switched on Software Tech Vendors

By Isabel Ross-Edwards, Editor, Boss Insights

Transformative Effect of Disruptive Tech on the Global Healthcare Sector

Over the past few years, reports have proliferated about the influence of disruptive technologies on the healthcare industry. Some years back, Forbes reported the US Government was providing $29 billion to encourage its healthcare providers to embrace the digital age – with a flip side that, those who didn’t take advantage of this support and go digital by September 2014, would face penalties. After initial hesitancy, widespread adoption of such technologies has ensued, and medical staff testify to the benefits across a broad spectrum of applications; these include digitising patient records (EHR & MHR), logging prescription data and tracking patients and equipment between locations. It is clear that digitalisation is transforming the way healthcare is delivered - and, according to a later report by 1Forbes, cost savings are likely to be around the $300 billion mark annually.

Back in 2013, Price Waterhouse Coopers reported that VC companies were channelling $955 million into healthcare technology – a threefold increase on the previous 3 years. In the ensuing 4 years, interest from VC companies has continued to rise and accelerate as investors recognise that the healthcare sector will continue to flourish, regardless of economic peaks and troughs. An ageing, global population, political and popular pressure to offer better, more cost-efficient patient care - particularly for the elderly - are all elements which combine to make the healthcare sector a 'safe bet' for investors over the coming decades.

Accelerating Adoption of Digital Solutions in UK Doctors' Surgeries

As uptake of digital solutions accelerates, the clamour for medical and health-oriented apps, gadgets and gizmoscontinues to increase. From wearable tech to hand held/mobile devices, Software Tech vendors providing solutions for preventative healthcare are also witnessing a staggering increase in adoption rates. Monitoring patients’ sleep rhythms, tracking their diet and exercise regimes, remotely monitoring vital signs are now common place examples of what digitised healthcare means. Physicians can now collaborate remotely to discuss best treatments in addition to offering virtual consultations to establish diagnoses. Wholesale implementation of some of these applications is still very much in its infancy and has not yet been exploited on a global scale. However, it is obvious that technology already plays a hugely significant role in monitoring and maintaining individual health as well as in reducing cost per capita of providing healthcare.

In its report, “Personalised Health and Care 2020”, the UK Department of Health details its 5 year plan for the adoption of solutions and technology to improve delivery of services by the NHS. Established by the Department of Health, the National Information Board (NIB) has been briefed to oversee the implementation of technology and harness the use of patient data for the good of all service users – patients, carers and care givers alike.

High Quality, Cost-Effective Care Sought

Against a backdrop of burgeoning need and the stringent financial restraint in place since the 2008 financial crisis, the NIB has been commissioned to ensure that healthcare in the UK is cost-effective, sustainable and, in addition, is of high quality. It wasoriginally anticipated that, by 2018 clinicians in primary, urgent and emergency care would be operating without paper records. This was to have been achieved by aligning national technical and professional data standards with regulatory and commissioning requirements.

It was also intended that all patient and care records would be digital, real-time and interoperable by 2020, though this is looking increasingly unlikely to be the case. In the UK, GP surgeries are almost 100% digital, with patients benefiting from the increased transparency this offers. Digitisation of hospitals however, is a different story, with minimal uptake of technology solutions and the process additionally hampered by a lack of IT skills.

Indian Healthcare BPO Companies spent $1.2 Billion in 2016

Over the past few years, the story of investment and adoption has been similar in India, where, according to research firm, 2Gartner, healthcare providers spent $1.2 billion on IT products and services in 2016 - an increase of 3.4 per cent over 2015. However, with the advent of the Trump administration, Obamacare is now under threat and, after seven years of buoyancy, it is anticipated that the need for specialist Business Process Outsourcing (BPO) could radically decrease. However, according to 3D D Mishra, Research Director, Gartner, Indian IT companies await the outcome of the latest round of US rhetoric, to see how it is "executed on the ground. It is difficult to predict at this stage whether or not the new healthcare law will be old wine in a new bottle and the exact impact on the industry can only be ascertained when further details are available.", he said. Despite the uncertainty, the Indian mood is positive. According to 3Nitish Mittal, Senior Analyst, Everest Group, impact on the IT-BPO services demand, based on what’s known at this point, is likely to be low in the short term. Nitish also believes a complete reversal is a near impossibility, given the complexities.

BPO Companies Positive About Outcome of Trump Obamacare Repeal

Dr Rainu Kaushal, Chair of the Department of Healthcare Policy and Research and the Frances and John L. Loeb Professor of Medical Informatics at Weill Cornell, states, "Electronic health records are vital, not only because of their ability to efficiently provide physicians with a comprehensive portrait of and decision support for their patients, but also to drive new healthcare delivery models that can improve the value and quality of clinical care.” Since December 2013, some 340,000 US healthcare providers have received $19 Billion. Further, with Obama's implementation of the Affordable Care Act, around 30 million, previously uninsured Americans, entered the healthcare space, which created an enhanced opportunity for recurring revenue. - a genie which may prove difficult for Trump et al to 'put back in the bottle'.

Further, Dr Halee Fischer-Wright, CEO of MGMA, has stated, “As technology continues to evolve, medical practices must likewise, also evolve. The way patients ask for and receive care is changing. The increased use of technology can improve the quality of patient care by improving records management, optimizing workflow and meeting HIPAA compliance requirements.”

Buoyant Healthcare Sectors in New Zealand and Australia

In New Zealand, the story is similar. In 2013, Ernst & Young conducted a survey of the New Zealand health technology sector on behalf of New Zealand Trade & Enterprise association. The report identified significant opportunity for investment in both the medical devices and health IT sectors with 54 percent of respondents looking to raise funds, resulting in a projected capital raise of $66 million over the following two years. Jodi Mitchell, Chairman, New Zealand Health IT Board, commented “Information technology is already a central part of our healthcare system and the report highlights its role is only going to grow.” In 2013, ICT expenditure by the New Zealand healthcare sector was estimated to be US$156.8 million (~EUR147 million). IDC Health Insights forecasts that this will grow to US$183.1 million (~EUR172 million) by 2018. Accrding to IDC Health Insights, the New Zealand healthcare sector's focus on investing in technology demonstrates the most mature pattern in the Asia Pacific region. Top priorities include upgrading to newer technologies and introducung mobile devices. Health Minister, Jonathon Coleman, has also declared (October 2015) his intention to establish a single, national electronic health record system for the country in the next 3-5 years. All of which bodes well for the future of their healthcare sector and its users.

Australia - Healthcare Digitisation Making Progress

Over the past few years, in neighbouring Australia, government initiatives have driven investment in innovation such as electronic health records (EHR) as, like other countries, they acknowledge their ageing demographic will place a heavier burden on healthcare resources in years to come. 4Australia's healthcare digitisation is currently making good progress, with organisations continuing to implement new systems. In 2014, Queensland Hospital, St Stephens, received $14 million in funding from the federal government to create an integrated digital hospital and in New South Wales, mobile, point-of-care devices are being employed in remote areas where there is no access to laboratories. The Australian Government estimates a fully functioning, national e-health system has the potential to save taxpayers $2.5 billion per year within a decade, an additional $1.6 billion in annual savings is expected to be passed on to the states.

Big Opportunity for Software Tech Vendors

So, how does all this affect the Software Tech solutions providers? Historically, they avoided engaging with the medical profession as the sales process was excessively long and laborious. However, in the current climate of governments worldwide, desperate to reduce mounting healthcare costs, whilst also being seen to deliver better care, there has never been a better era for supplying solutions to the healthcare industry.

The Software Tech niche has already witnessed significant healthcare tech acquisitions as the big IT players seek to avoid being left behind. IBM’s acquisition in October 2015 of Merge Healthcare for $1 Billion - was its 3rd healthcare sector acquisition that year as they aggressively pursued a large stake in the healthcare niche, in combination with seeking to exploit the cognitive technology of their so-called, supercomputer, Watson.

Big Players Vie for Pole Position

It is no coincidence that companies such as Perficient, Cognizant, Accenture and others, have all made healthcare sector acquisitions over the past few years, while, back in 2014, GE Electric's Head of Healthcare, John Flanery, stated that he had no intention of divesting any of its healthcare portfolio - reputed to be worth $18 Million. 5Having recently been promoted to CEO at GE Electric, John Flanery seems keen to maintain the strength of the healthcare unit he has built up, saying 'digial efforts' would be at the heart of his plans for GE.

Set against this somewhat frenzied acquisitive behaviour, Google’s parent company, Alphabet, has also entered the fray with extensive plans to revolutionise how we approach healthcare. They estimate the MedTech market alone to be worth $400 Billion and the next 3-5 years will represent a considerable opportunity for nimble start-ups in the Software Tech industry as Alphabet seeks to acquire technology, products, services and IP to secure a large segment of the healthcare market.

From Fiction to Fact

From advanced electronic health records to attachables, implantables and more, healthcare technology is rapidly bringing to life ideas that were once pure fantasy. It is clear though, that the real challenge lies beyond the technology, necessitating rigorous reforms that will cut to the very core of the way the healthcare sector has always operated: a new business model is unfolding, which is being fashioned by entrepreneurs and innovators who are challenging the accepted status quo in a bid to move forward towards better healthcare provision, monitoring and maintenance - a so-called “brave new world” of healthcare, where prevention is better than cure.

The opportunity for Software Tech solution providers is NOW!

Innovators and solution providers in this sector need to act now to build on the comprehensive infrastructure already available in the global healthcare industry to extract, collect, store and transmit data and use it to create better, long term patient outcomes. Looking forward, technical innovation, geared to diverting and preventing illness, will be a key factor in the sustainability of medical services.

Collaboration will be Crucial to success

For all those who wholeheartedly embrace IT as the saviour of healthcare, there are undoubtedly some who have reservations - And they make some valid points. In Ross Koppel’s book, “First, Do Less Harm”, 12 practitioners and 2 patients examine patient safety and conclude that there are gaps in healthcare IT, which have not yet been plugged. Interestingly, these revolve around the need for teamwork of all stakeholders in a patient’s care and the need to improve communication across the board to ensure patient safety and wellbeing. They conclude that, although IT has improved certain aspects of patient care, much remains to be done and, more specifically, collaborative IT solutions must be fostered. This incidentally, concurs with an article, published by senior Boss Equity executives, John Symon and Mark Edwards, in which they discuss the “4th Age of Computing” and the need to harness the power of technology in moving towards a more collaborative workplace. Whatever the pros and cons, the digitised healthcare sector is here to stay and will bring many benefits - It remains to be seen where the innovative minds of this sector will take us all next in their quest to prevent and cure the world's ailments with their pioneering solutions.

By Isabel Ross-Edwards, Editor, Boss Insights
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Bibliography:

1 https://www.forbes.com/sites/danielnewman/2017/03/07/top-five-digital-tr...
2 http://www.gartner.com/newsroom/id/3352217

3 http://www.thehindubusinessline.com/info-tech/obamacare/article9503187.ece

4 https://www.mirusaustralia.com/aged-care-blog/aged-care-management/the-n...

5 http://www.reuters.com/article/us-ge-moves-ceo-/blog/healthcare-sector-continues-sizzle-switched-software-tech-vendorsidUSKBN19313Z