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Why digital health will weather a recession

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Digital health recession

Prices are up, supplies are low and stocks are down. There is real talk of a recession on the brink, with a close eye on the performance of the economy. 

But a recession, defined as a period between a peak economic activity and a subsequent trough, doesn’t always prove detrimental to every industry or sector.

The growth of digital health, and its widespread adoption, may prove to immune to recession fears as the industry continues to achieve new innovations, deliver record profits and gain greater support from patients.

According to financial analysts, certain data points suggest economic fundamentals are worsening and this has stoked fears of an imminent recession.

In fact, there are three key elements to watch to determine whether a recession is around the corner, or if the global market is just balancing amid outside factors. These three points are:

  1. Increasing stagflation – Stagflation is characterised by a combination of high inflation, slowing economic growth and steadily high unemployment.
  2. Declining consumer confidence – Consumer spending makes up roughly two-thirds of the U.S. GDP growth, and measures how confident consumers are about current and future economic conditions.
  3. Declining real income – Real income measures the purchasing power of consumers and how much of the consumers’ earnings are available for spending.

But these measurements of a waning economy and changing in spending habits don’t always portend doom for all businesses, especially those that provide critical services such as health care.

And throughout the pandemic, we’ve seen that digital health has flourished as lifelines to medical access. As such, there are many reasons why the digital health industry is poised to weather a recession better than others.

Digital Health protects costs, reduces spend

For health care leaders, digital health offers a new opportunity to connect with patients, which supports greater adherence, better outcomes, and reduced costs. In a time of economic uncertainty, having a digital platform that works to better manage costs is a risk-free investment.

And when health care systems are shifting to an outcomes-driven model, being able to deploy digital programs that engage with patients and support their needs toward positive medical outcomes, digital health becomes a value add.

In fact, this value is a key reason why more health systems are implementing telehealth and virtual care options, as it allows for increased profit margins with minimal cost investments.

Funding is down, collaborations are up

Throughout 2022, there has been ample coverage of reduced funding in digital health startups in addition to reduced outlooks and employee layoffs in the health IT sector. But dig a little deeper and the story is a bit more complex.

While the economy may be slowing, in the digital health arena we see spending shifting from new digital health startups to more established solutions that have extensive results and clinical evidence that prove their effectiveness.

Venture capital firms are still investing but are opting to be more strategic with their funds to support digital health solutions that are gaining traction in the market.

Funding may be reduced, but some of that comes from an increase in collaborations among health care systems, pharmaceutical organisations, and key players who are securing major deals with digital health solutions.

As the larger health care industry starts to galvanize around the use of digital health as an essential tool, more money is being invested into comprehensive digital solutions.

Opportunities for patients and pharma

It’s important to remember that digital health holds a unique position compared to other industries such as retail or travel. Digital health solutions aren’t strictly B2B nor B2C. They offer a unique element to connect both the provider and the patient within one single solution.

This advanced connectivity makes them an essential tool by multiple stakeholders, and therefore providing greater energy to drive investment than items that may be considered ‘luxury’ amidst a declining economy.

Advanced digital health solutions help to close the gaps among patient, provider, payers, pharma, and specialists. This interaction produces valuable data on the outcomes of treatment, diagnosis, drug therapy, and overall patient health.

These points are key drivers for the future of the health care. As long as reimbursement is tied to outcomes, having a digital solution to help track these metrics will prove fertile ground for the growth of digital health.

Advancing, improving an existing industry

In cases where a new product or a new segment is introduced, companies can face strong pressure or competition from legacy leaders who have long dominated a segment. But for digital health, its services and solutions are advancing an existing industry.

The role of digital health is not to replace providers and care, but to make it more efficient, effective, and streamline processes to support both those who provide care and those who receive it.

Throughout the pandemic, digital health became a lifeline for providers to stay connected to their patients, with nearly 80 per cent of patients indicating they would continue to use it in the future.

The ease of use, effectiveness, and efficiencies that digital health offers have become a mainstay in modern medicine and will continue to reimagine how we think of the health care experience.

In a time where choices become paramount to savings, personalization trumps the standard offering and ease of use is the new standard, smart business leaders are increasing their investment into digital strategies.

Given the focus of digital health, and its strong growth throughout the health care industry, it’s likely able to weather a downturn in the economy better than others who rely on a direct-to-consumer model or those than can be considered a luxury.

Omri Shor is co-founder and CEO at Medisafe

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2 Comments

  1. Pingback: What a UK recession could mean for health tech | Health Tech World

  2. Pingback: Medtech is “not immune” to the coming recession of 2022

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