In developed countries aging populations and an increase in life expectancy is driving up the cost of healthcare for governments and consumers alike.
While these budgetary pressures create challenges, they are also generating new opportunities to improve healthcare and when combined with technology, HealthTech or eHealth, which includes electronic medical record software, telemedicine and remote monitoring, clinical decision support, radiology artificial intelligence, among others, could be transformational.
Managing the burgeoning cost of healthcare
Healthcare spending in OECD countries is currently 8.8 per cent of GDP, up from 5 per cent in 1970 and projected to reach 10 per cent by 2030 with further increases beyond. And, when it comes to rising healthcare costs, few countries can compete with the United States.
According to a report by the American Healthcare Initiative, in the 1970s major health programs made up just five per cent of the budget. This had increased to 20 per cent by 2000 and 28 per cent by 2017.
If spending continues to rise at the same pace, one-third of US federal money not spent on interest repayments will go towards healthcare by 2028. By 2040, it will be 40 per cent.
This means that unless action is taken, the cost of providing healthcare will eat into the government's capacity to pay for other essentials such as education and welfare.
Optimizing spend and performance
Perhaps most striking is that as much as 31 per cent of healthcare spending goes to administration. This makes it an obvious starting place for technology to reform existing practices.
“At the moment, you'll find that many clinicians have to input different information into different systems and if these systems do not “speak” to each other, if access by other stakeholders is difficult, if one is incomplete or there is an error, it can lead to real inefficiencies," says Dr Julian Feneley, Head of Healthcare in Europe, Macquarie Capital.
But for all the cost savings HealthTech could bring to the administrative side of medicine, Feneley is more excited in the role it could have in bringing greater efficiency to the diagnostic side.
Here, he sees technology such as automation being used to bring down the cost of healthcare because it can help perform the more mundane tasks currently still carried out by doctors.
“Already, for example, machines are looking at chest X-rays and mammograms and making a diagnosis, so that the radiologist is free to concentrate their energy on other challenging clinical decisions."
The way we allocate resources is also vital to reining in costs, Feneley argues. After all, two of the most expensive items in any healthcare system are usually the medical professionals and the equipment - such as the latest MRI and radiotherapy technology.
"There are real opportunities in making sure both are continually used in an optimal way so that governments and private participants in the healthcare sector receive better value for every dollar they spend," he says.
How big data could mean big savings
Bo Crowell, Head of US Healthcare Services, Macquarie Capital, explains that adopting technologies could lead to superior preventative health and improved early intervention, as well as helping eliminate misdiagnosis. While these will importantly lead to improved patient outcomes, they will also help to ease budgetary pressures and significant long-term costs of healthcare.
“A lot of medicine currently relies on a physician identifying a likely illness based on symptoms, but even the most adept and experienced doctor won't have seen every rare disease and condition."
Using big data, we could potentially compare someone to millions of people instantly and know when they're developing a disease at a very early stage, even before they experience symptoms.
Crowell says that so long as privacy concerns can be navigated, the possibilities for HealthTech in transforming detection are enormous - particularly when it comes to some of the more common diseases such as diabetes or hypertension.
“This won't just mean we are likely to see substantially better health outcomes, it also means we reduce the high costs associated with misdiagnosis and late-stage intervention."
Playing the long game
While Crowell sees very real opportunities in HealthTech, he cautions investors against looking for quick wins, noting it is a very different sector to FinTech or others that technology has already transformed.
“The nature of healthcare means things take time to happen, and you often need to be prepared to look at a time frame of 10 to 20 years for major changes to work their way through the profession," he explains.
“But for those who take the right mindset into it, they won't just be helping solve an economic problem, they'll be having a real societal impact that can dramatically save more lives."
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