Advanced technologies moving into large sectors such as finance have seen exponential growth in recent times, and the same trend is transforming the healthcare sector. A regionally focused government and NHS combined with further focus on Small & Medium Enterprises (SMEs) and the tech and digital sector means HealthTech will be a hot sector for 2017. But what does this environment currently look like? And what are some of the main hurdles facing important disruption of legacy processes and systems in the sector?
The Nabarro report, ‘HealthTech 2017: A Case for Greater Connection’, surveyed 202 NHS physicians, procurement managers, health tech investors and SMEs to examine the UK HealthTech market. (The full report can be read here).
The research found heavy criticism of current NHS procurement practices, with many (including purchasing managers) stating that it is not as efficient as it could be. Further, only 25% of doctors believe that current practices secure the best equipment available. The survey also examined the regulatory environment which was also criticised – 40% SMEs stating that it hindered product development and the introduction of new products. Both these areas require government intervention to review current policy to open up opportunities for health-tech providers.
The current disconnect between NHS procurement processes and opening up HealthTech innovation opportunities is a concern for multiple stakeholders. The best way around this, may be for SMEs to go direct to engaging with clinicians to spur support and pressure procurement systems from both sides. Structural changes in the NHS require each region to have dedicated innovation hubs – through these, tech providers may be able to engage with their user market.
Interestingly, when examining views on innovation in this sector, the survey found a disconnect between how SMEs/investors and doctors view ‘innovation’. SMEs and investors tended to take a technical view and favour large, big ticket medical equipment (e.g. the MRI scanner) as the most important health innovations, whereas actual a clinician’s definition of innovation focused much more on workflow and maximising patient benefit overall. Wearable technology is a highlighted area of demand and enthusiasm with clinicians as they look for tools that provide easily accessible, real time data on patients. Interestingly, investors ranked the wearable technology sector lowest for attractiveness. Here we see a further need for open communication and interaction between tech providers and clinicians.
In the private investment environment, the research showed positive growth; 82% of those that currently hold investment in the health or tech sector have seen an increase in value, with only 2% saying these holdings had decreased in value. However, the research also shows a strategic disconnect between investors and SMEs. SMEs tend to want to continue to serve the NHS in the long term, as a privately owned business, with conservative approaches to raising capital such as overdrafts and loans. In contrast, investors are looking to realise their investments by exiting at a profit after a 4-5 years. This disconnect could mean SMEs are missing out on investor opportunities. With a generally low investor portfolio share in HealthTech – around 1%-10% of investment capital, there are growth opportunities here to tap into.
The survey also examined concerns around Brexit, and found generally positive opinions. Most SMEs expected their sales to remain unchanged or to grow in the next 12 months, with 48% expecting growth to come from the UK market against 30% expecting growth from the EU. Although the media may paint a fragile picture of the UK economy following Brexit, forecasts for the UK’s health tech space look optimistic. Additionally, Brexit has created opportunities to review and renegotiate regulations that would be useful to keep or change for the benefit of the UK HealthTech sector.
“Businesses that grew last year are more willing to adapt and be flexible, as well as understanding how to access the market and potential customers. Therefore, having a clear vision and strong leadership will be important in ensuring the continued growth of the health tech sector post-Brexit.” – Nabarro Report, 2017.
The survey overall did show positive growth in this sector. There are new and innovative products and services being developed, but still major hurdle in the lack communication and collaboration between multiple stakeholder interactions; regulation/procurement and SMEs, clinicians and procurement systems, clinicians and SMEs, SMEs and investors. The need here is for a higher degree of collaboration across the whole sector that opens doors for HealthTech innovation opportunities that can really transform and modernise public healthcare.