Healthcare Technology Industry Report

The multi-billion-dollar healthcare technology industry continues to thrive at impressive compound annual growth rates (CAGR) year after year. There is an increasing number of investments and initiatives supporting digital health, healthcare IT infrastructure, big data analytics, artificial intelligence (AI), electronic health records (EHR), and several other areas of advancement.

Ease of use, cost-effectiveness, and time efficiency are major drivers of the rapid adoption of healthcare IT. There are also continuous improvements and evolution of services provided by industry players that cater to changing consumer preferences. Rising government initiatives in growing economies have also been driving expansion in the market.

The healthcare technology space includes software, hardware, and other tech services and is comprised of categories such as:

• Telehealth and telemedicine
• Mobile health
• Electronic health records
• Computerized Provider Order Entry (CPOE) systems
• Electronic prescribing systems (E-prescribing solutions)
• Medical imaging information systems
• Laboratory informatics
• Clinical decision-making software
• Regulatory Information Management (RIM) systems
• Population Health Management (PHM)
• Revenue Cycle Management (RCM)
• Clinical alarm management
• eClinical solutions
• Digital healthcare supply chain management
• Healthcare Customer Relationship Management (CRM)
• Technology solutions in healthcare payers and healthcare analytics
• Wearable devices
• Personalized medicine
• Mobile medical applications
• Clinical decision-making software
• Monitoring analysis software
• Radiology information systems
• Picture Archiving and Communication Systems (PACS)

The growing emergence of AI is expected to continue playing a significantly larger role in the improvement of healthcare technology services.

Key Market Trends

The increasing adoption of smartphones by clinics and hospitals worldwide is driving the healthcare tech market. Digital tools offer providers a more complete picture of patient health, and give patients more control over their health. Investment in this space is growing, as digital health has the potential to improve outcomes and boost efficiency.

The majority of healthcare providers now offer telehealth options that enable patients to meet via video conferencing or phone call. A healthcare provider’s telehealth options can be a major determining factor in how they gain new patients and retain existing ones. Today, patients are more willing to develop relationships with their physicians via video or phone than in the past. Telehealth has also eliminated some of the stigma around behavioral and mental healthcare. Further, access in rural areas has improved significantly thanks to telehealth capabilities, opening up a wider range of physicians in various specialties for patients who were once more isolated. It also eliminates the time and money needed to travel to and from appointments.

Digital Therapeutics (DTx) is a category of medicine that delivers evidence-based therapies through software, such as mobile health apps, that either replace or complement the treatment of a condition or disease. They help to eliminate gaps in healthcare by improving patient access and supporting value-based care initiatives. DTx products are clinically tested and approved by regulatory bodies just as any prescription pharmaceutical. The global DTx market is continuing to grow as the prevalence of chronic conditions continues to grow, and companies are using their technology to treat these conditions. In recent years, there has been more activity in mergers and acquisitions (M&A) among DTx companies and pharmaceutical companies.

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The integrated medical technology space is another area that is changing how hospitals and various healthcare providers communicate with each other and their patients. These technologies include the following innovations:

• Health records are more accessible and easier to organize thanks to cloud-based, online records that allow doctors to access a patient’s medical records easily.
• Healthcare professionals have more streamlined workflows due to faster Internet speeds and increased connectivity.
• The medical side of the Internet of Things (IoT) is growing quickly and includes wearables that can be monitored and integrated with applications.
• AI and machine learning are enhancing traditional medical devices by allowing physicians to obtain more accurate information in a timely manner and better manage crises that emerge when patients can’t reach a facility immediately.
• Remote monitoring allows caregivers to easily check in on a patient’s condition using all of the previously mentioned innovations.

Today, more people are seeking more personalization through a variety of vehicles as they become more interested in finding ways to actively better their own mental and physical health. These include:

• Physical health applications such as step counters, calorie trackers, and other exercise and nutrition apps. These types of applications collect more quality data with each use and can be easily shared with caregivers.
• Doctors can use this data to create a comprehensive care plan with preventative measures that lower the risk of emergency procedures.
• Mental health applications, such as video chatting.
• Gamification techniques are bringing video-game-style operations to healthcare-related applications. They track performance and compare the data to that of other users, which many individuals find motivating.

M&A

Transactions are happening broadly across all healthcare technology sectors, from diagnostics to cardiology to remote patient monitoring. Specialty and elderly care continue to draw investor interest thanks to value-driving opportunities in the realm of automation and the implementation of digital solutions. Companies that specialize in cosmetic surgery and other elective medical procedures, such as laser eye surgery, are expected to continue to see additional demand. Many market players are also engaging in M&A activities to enhance their capabilities and expand their geographic reach.

Healthcare IT companies have lofty aspirations for enterprise-grade artificial intelligence platforms that can predict pandemics, forecast patient volumes, authenticate reimbursement, and enhance drug management and self-care. Big data in healthcare also continues to draw interest and grow at a high CAGR.

Private equity is also expected to become more involved in the healthcare tech space, upping the competition for deals. Thanks to a rise in home care, companies with consumer-facing solutions and technologies, such as remote diagnostics, should remain attractive targets. There is also an expectation of sustained momentum of previous carve-outs and life science deals, as buyers vie for strong category leadership across the industry. In the more competitive segments, sector depth and operational capabilities will remain vital in capturing valuable assets.

M&A activity is also being used as a strategy to expand reach and the spectrum of care. More consolidation is happening in various digital healthcare spaces. For example, women’s healthcare is seeing more investment around fertility, pregnancy, and postpartum care, and employers are revisiting their benefits for new parents. There is also an emergence of more companies that offer health tech opportunities for consolidation and product/service portfolio diversification. Investment in behavioral health has also been growing. Companies that did not scale fast enough or raise capital at high valuations will need to pursue deals. Additionally, major players may be keeping a closer eye on digital tech firms and how they can offer solutions. In any case, the healthcare technology space is rapidly advancing, opening up plenty of opportunities for investment, growth, and consolidation through M&A strategies.

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