Is digital within the healthcare sector truly profitable or just a marketing trick?
It is said that digital transformation in healthcare is the apple of investors’ eyes. Is it true? In this blog, we gaze the digital healthcare through the lens of economists and dive deeper into the investors’ decision factors.
In the era of new technologies, digitalization has become a viral topic that numerous experts discussed throughout different industries. Our previous blog pointed out that digital can unblock a great pool of benefits for the healthcare industry. However, those arguments haven’t pictured all advantages as well as the profits of digitalization yet. Is digital transformation in healthcare the apple of investors’ eye? We answer it in this blog by gazing the digital healthcare through the lens of economists and dive deeper into the investors’ decision factors.
The current digital healthcare landscape
According to the Global Market Insight, the market should see the six-fold, counting from 2020 to 2026. Additionally, in 2020, CBInsights reported USD 10,2 billion in digital healthcare funding, the most outstanding amount so far.
Thus, digitalization in healthcare is not merely a temporary fever. Digitalization! Its monetization holds good for healthcare.
How profitable is digital for healthcare?
Increasing customer experience
Speaking of financing, digital transformation in the facilities of hospitals and clinics is a costly investment. But little do we know how much this investment is going to pay off. In principle, a business investment reflects on both tangible and intangible values, for example, patients’ experiences and prognosis’s quality. Regardless of which form, digitalization mostly appears as a part of the solution.
One of the undeniable advantages of digital is the convenience it brings to both caregivers and care receivers. In addition, once implemented and well-adapted, digitalization carries many current healthcare burdens, such as reducing burnout for medical specialists and improving patients’ access to care. Consequently, it is an excellent relief for medical workers who need more air in this far over-charged industry. Besides, digitalization solves service issues caused by medical facilities’ overcrowding and improves the patient experience through telehealth and other applications.
Case study
Doctolib is one of the leading e-health companies in Europe, founded in France in 2013 and started in Germany in 2016. As its mission, Doctorlib has been supporting doctors and hospitals with an intelligent cloud-based software solution. Thanks to this solution, doctors and other medical specialists work more efficiently, freeing up more medical time to improve their patients’ reach and experience to provide better care and better collaborating with peers.
Doctorlib accomplishments:
- 96 percent of patients are satisfied and recommend Doctolib.
- The reminder functionality has reduced cancellations by up to 58 percent.
Optimizing clinical process
Process optimization has proven its effectiveness in theoretical (Marketing -Mix: 7Ps by Booms and Bitner, 1981) and practical aspects among ways to grow business.
For such industry like healthcare, which has been facing an efficiency crisis, a process optimization solution is essential. In reality, inefficiency is the main issue that most digital healthcare applications are aiming to solve. According to Deloitte: Medtech and the Internet of Medical Things (2019), medical devices can help staff work more effectively and productively as well as improve the speed of diagnosis. Additionally, the staff can deliver more targeted precision treatments, enhance medication adherence and support virtual patient monitoring.
Case study
ePatient is a clinical and real-time information management system developed by Deloitte. This system supports real-time patient monitoring and communicating between clinicians and patients.
ePatient accomplishment:
- More than 20 percent reduction in the average hospitalization time.
- More than 75 percent reduction in the average shift handover time.
- Efficiency gains in accessing and handling information by freeing resources for other uses.
Not only limited within clinician-patient practices, but digital healthcare is also able to help the healthcare sector in training and adapting to new technologies, and thus, in handling technologies more efficiently. Indeed, we can find many training applications, especially those implementations of immersive technology that accelerate medical training.
Reducing costs
By digitizing the system, health services can be provided at lower cost and higher quality.
— McKinsey&Company
The once-optimized medical process can alleviate some unwanted costs in the healthcare industry. Let’s take Germany as an example. According to McKinsey’s study in 2019, German healthcare could have saved up to EUR 34 billion (12 percent of its total projected costs) if it were entirely digitized. In addition, Healthcare digitalization increases automation in the healthcare system, therefore lifts the burnout workload and personnel burden, which has long existed in this industry.
Case study
Medthings-PAUL is a German web-based patient calling system developed by Vibentec-IT and bmade. This system helps call patients in the necessary room, hence saving time and workforce in the clinic.
— PAUL
Does digital healthcare benefit in the long run?
On the one hand, by applying digital in clinical practice, medical suppliers can save costs and enrich the customer experience. On the other hand, it helps doctors have more time for their patients, therefore gaining more patients. All of these improve healthcare’s business landscape.
It sounds as if digital were undoubtedly a savior for healthcare. Nevertheless, digital healthcare is still in the infancy stage after a decade of investment. Additionally, we can hardly point out any massive healthcare system’s huge systematic impact due to digitalization. Neal Khosla, the co-founder of two digital health startups, namely Curai and Koko, once in 2019, pointed out that digital health had been one of the most disappointing investment areas of the last two decades.
Let’s face it: digital health has been one of the most disappointing investment areas of the last two decades.
— Neal Khosla
Apparently, the investors are running out of their patience. In fact, the global funding to digital healthcare has experienced a 25% drop-down from 2020 last quarter to 2021 first quarter.
However, expecting digital to restructure a complex and varied system such as healthcare in such short decades is impractical.
Although process digitalization is one of the main drivers in increasing healthcare spending, digital healthcare can comprise innovative solutions which are more cost-effective in the long run than other medical devices and drugs.
Furthermore, digital has been gradually reshaping the population’s behavior towards healthcare, especially in the current Covid-19 pandemic situation. According to Deloitte’s study in 2020, consumers are increasingly willing to use digital technologies to engage in new ways. In addition, real-time big-data analysis can also help develop effective treatments in the future.
On this account, we will have confidence in digital healthcare in the long term. Yet, we can’t expect a massive and dramatic change instantly. But it is worthy of considering each small change as a push factor that can transform healthcare.
Digital healthcare has proven its mettle in the business sense. Nonetheless, digital in healthcare is meanwhile a sensitive topic regarding ethical aspects. Indeed, one’s health profile is as close as one’s identity and is fairly simple to violate once digitalized.
In our next blog, we will mention some social aspects of digital healthcare by answering the questions: What is the social mission of digital healthcare, and how can we together make digital healthcare better?
Global digital health market size in 2019 and a forecast for 2026
Deloitte: Digital transformation: Shape the future of European healthcare
Medtech and the Internet of Medical Things
Digitizing healthcare — opportunities for Germany
Why digital health has been such a disappointment, and how to change that
