Healthtech and the pandemic: bigger appetite, but smaller stomachs are stifling innovation
As Featured in Med-tech innovation
Michael Niddam, managing partner Kamet Ventures, examines the disconnect between the growing demand for innovation in healthcare and the capacity of institutions, organisations, and systems to adopt and integrate that innovation.
The healthtech sector has been steadily growing over the last decade. Pre-COVID, 2018 was a record-breaking year, with $8.2 billion invested into healthtech start-ups in the US alone. Much of this technological innovation has focused on new applications of artificial intelligence (AI) and data platforms to automate regular tasks for medical professionals and allow consumers access to medical advice from the comfort of their own homes. Since entering 2020, the demand for these remote services has increased exponentially, as people heeded advice to stay at home to help prevent the spread of COVID-19.
The impact from COVID has caused a shift in patients wanting smoother user experience with technology, practitioners needing digital tools to ease the burden on staff and investors looking for the ‘next big thing’ in tech. 2020 has already surpassed the previous record of funding, reaching $10 billion in the first three quarters for both the US and Europe, with the UK securing €1.4 billion on its own.
Demand has boomed, but development suffers
While there has been a pull for more adoption of healthtech, this has broadly helped the companies that have already established IP within this space. New companies that are looking to take advantage of this situation are going to struggle more than their established competitors. This is because the same conditions that have driven the increase in demand are also stifling the processes needed to bring new medical technology to market.
As Beahurst data shows, 33% of healthtech start-ups in the UK have had to limit the physical services they might deliver. This has mainly affected conducting trials of new technology on patients, as many potential volunteers are staying at home. As well as this, doctors that could run those trials have been focused on handling the COVID-19 pandemic, which has reduced the time they could spend trialling new procedures.
New companies looking to take advantage of the sharp increase in interest in healthtech are finding it takes longer to reach key stages in their product development than it usually would. Considering that even in normal times life science and healthtech companies have a slower growth rate than other technology companies, this additional squeeze on the development chain is beginning to impact innovation.
It is also affecting hospitals’ ability to adopt new technologies, as they are unable to give guarantees to patients about safety and security, unless the technologies have been tried and tested pre pandemic. While this is good news for the digital transformation projects within healthcare institutes, it does mean that claims healthtech innovation is ‘booming’ need to be taken with a pinch of salt.
How do we ease the pressure?
In the long term many of these issues will begin to resolve themselves, as vaccines and knowledge on best practice for COVID-19 patients continue to develop. However, it is important to remember that the developers of these vaccines have warned that ‘normal’ life might still be many months away. Finding a solution in the meantime is easier said than done, as many problems facing countries are unique to their own situations, so there is no one-size-fits-all solution. However, there are steps that can be taken to at least begin the process.
One issue confronting new healthtech companies is access to data. This often requires a high amount of regulation on access and usage. An alternative route is the use of synthetic data sets. These data sets are created by AI, eliminating the problem of needing approvals from patients and other data regulators. It can also be shared instantly and can be tailored to test whichever solution they are building. This will greatly speed up a normally laborious process. This second-order of innovation in this space can reduce the pressure on already stretched hospitals and allow companies to continue to innovate.
Another route to reducing the pressure is to streamline processes between hospitals and start-ups, requiring less time from the doctors who might be needed to run trials or provide feedback on platforms. Reducing the need for healthcare staff on the administrative side, for example sending finance requests or submitting proposals for approval with regulatory bodies, will mean they can focus on caring for patients and still help the innovation process.
However, entrepreneurs work out how to get their product through these times, it is clear that there is a wave of innovation coming for the health market. The record year in fundraising means that businesses have the means to invest in R&D and develop new IP to bring to the market. The appetite is also there, with institutions ready to accept changes such as teleconsultation after seeing the positive impact through this pandemic. It is just a matter of time before the most curious and intelligent minds bring even more innovation to the sector.