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Health tech spending in the NHS: What to expect in 2023

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Tola Sargeant, managing director of analyst firm TechMarketView, examines the outlook for health tech spending in the NHS in 2023 and beyond…

Looking to the year ahead, you don’t need to be an expert to see the immense pressure that the NHS is currently under. Workforce issues, the Covid-19 backlog and rising costs adding to the challenges the health and care system was already facing as demand from an ageing population outstrips supply.

But what does this mean for the future of health tech in the NHS? Will we see spending on tech, including software and IT services, come under pressure as budgets are squeezed?

Or will tech be seen as part of the solution, and spending increase? If so, which technologies are likely to be in most demand?

Continued growth in tech investment

Analysis of NHS spending over the last few years suggests that the answer will be continued growth in tech investment, with tech and digital increasingly seen as part of the solution to the challenges faced, whether that is combating workforce shortages, improving patient flow, or keeping people out of hospital in the first place.

Strong growth in tech spending

Our research confirms that the pandemic response led to strong growth in tech spending in the UK health sector in 2020 and 2021. 

A rapid shift to remote consultation and triage technology during the pandemic helped to drive double-digit growth in NHS spending on software and IT services in 2020.

This growth accelerated in 2021/2 as we saw a shift from reactive spending towards investment in strategic data platforms, which are intended to enhance the country’s resilience to future pandemics and address ongoing challenges in the NHS.

In fact, growth of more than 21% led to a UK health software and IT services market worth more than £2.6 billion last year, according to the latest data.

Perhaps most striking, however, is the growth in the newer areas of technology, as opposed to heritage or legacy tech.

Spending on these ‘new’ technologies – such as cloud, digital and cyber – was up by nearly 50% year-on-year and now accounts for over a third of total UK health tech market.

Health tech growth “not as strong” as previous years

Whilst TechMarketView forecasts show that the health tech market has continued to grow in 2022, and will do so over the next few years, that growth won’t be as strong as it was in either 2020 or 2021.

Nevertheless, the health sector will remain one of the most resilient parts of the UK public sector with a predicted compound annual growth rate (CAGR) for Health tech spending of nearly 6% through to 2025.

And, not unsurprisingly, growth is set to remain strongest in newer areas of the market with the scale of technical debt in the NHS helping to ensure that spending on platform, digital and cyber technologies, grows at 16-17% per annum over the next few years.

Given the scale of the challenges facing the NHS, there will be particular opportunities for tech suppliers that can demonstrably improve efficiency and enhance productivity in healthcare, such as intelligent automation, and solutions for workforce and referral management. 

We will also see increased demand for tech that can boost effectiveness and enhance patient outcomes, including remote monitoring, virtual wards and digitally supported diagnoses. 

Future of Integrated Care Systems

Integrated Care Systems (ICS) are also expected to use digital and data to deliver more seamless working between the NHS, local government and other partners to address long-term challenges across health and care.

This drive towards integrated care and the ambitions of the Data Saves Lives strategy, should result in a continued focus on trying to realise the potential that exists in the huge quantity of patient data. 

Of course, this will only be possible if further progress is made in establishing interoperability across the health and care sector.

Whilst this has been challenging to date, we expect embedding interoperability to remain a focus for the NHS with the goal of more informed clinical decisions, richer data for research, better transfer of care, improved patient experience, reduction of duplication, and a more efficient health service with better health outcomes.

Deteriorating economic situation & health tech

In short, whilst spending on health tech will inevitably be impacted by the deteriorating economic situation and mounting pressures on health and care budgets, the sector will remain more resilient than most.

In particular, we foresee fresh opportunities for a wide range of health tech products and services that can support the NHS in its drive to improve efficiency and enhance productivity at this challenging time.

Tola Sargeant, 2023

  • This opinion piece draws on analysis from TechMarketView’s 2022 healthcare-focused market trends and forecast analysis. For more detail on their latest research in the area see here.

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