Deloitte report finds record growth in health technology investment

Spurred by the pandemic and digital health innovation, healthcare organizations are spending more money than ever on health technology, both to update what they have and to prepare for a new future in the delivery of care.

New report from Deloitte reveals investment in health technologies is reaching new levels, spurred both by the pandemic and expectations that the industry will adopt new tools and platforms to improve post-COVID-19 care .

“Building on key technical advances and mass adoption of smartphones as well as incremental improvements in back-end healthcare and IT infrastructure, health technology platforms have proliferated across a wide variety of niches, raising major funding rounds to continue to scale rapidly to meet growing consumer demand,” highlights the company’s Road to Next report, authored by analysts Heather Gates and Peter Micca. “The continued consumerization of healthcare, coupled with macroeconomic trends such as the aging population, has ensured that there is no shortage of market opportunities for healthcare technology companies.”

According to Deloitte, nearly $23 billion has been invested in the health technology landscape through 556 completed deals, surpassing the record growth of the past two years.

This growth can be linked to several factors. The pandemic has forced healthcare organizations to update and, in some cases, replace their technology infrastructures to accommodate new care platforms, including telehealth and digital health, as the industry transitions from healthcare to virtual care person. It is also fueling a boom in new innovative technologies.

“While challenges remain given the dominant market positions held by legacy software companies in many systems that vendors rely on, innovative care models from start-ups deploying new local systems have begun to hijack consumers of hospital chains,” the report noted. “These challenges, coupled with increased spending, have resulted in continued hospital mergers, leading to highly concentrated markets across the United States. Large healthcare organizations are often slow to renew tech stacks – but they will have to, eventually – which could provide incredibly lucrative opportunities for healthcare tech companies looking to tackle parts of this global value chain.

Additionally, healthcare organizations are outsourcing new digital health programs by attracting smaller, more innovative, and more agile companies.

“From appointment logistics to virtual care to home testing kit development, many such niches have seen a significant increase in funding as a result of the pandemic,” the report said. “Many of these companies’ products and services have only become truly viable in the last decade, thanks in large part to the increasing reliability and ubiquity of wireless communications and high-quality video, the reduced routine testing costs and lower IT costs, among others.Health-tech companies are now tapping into the flood of funding to scale quickly under favorable market conditions.

Finally, as the industry shifts towards a post-COVID-19 hybrid healthcare landscape, more attention is being paid to the consumer-facing technology market, particularly technology that enhances healthcare tracking and behavior modification at home. Healthcare organizations have always had an eye on the consumer market, but were hesitant to trust data from these platforms for clinical use. Now, with the proliferation of remote patient monitoring programs, they are looking for ways to make these new tools and platforms work for them.

Eric Wicklund is the technology editor for HealthLeaders.

Comments are closed.