Digital health innovators held back by investment gap and reimbursement roadblocks, despite government vision

Digital & Innovation: The lack of specialised investors and limited access to capital are major roadblocks impeding the commercialisation of new digital health technologies in Australia. The absence of a dedicated pathway for digital health technologies to be reimbursed in the Australian market is another another key challenge faced by local innovators.

Bronwyn Le Grice, CEO and Managing Director of ANDHealth, emphasised the pressing need for increased options for digital health investment in Australia to support the future commercialisation of the country’s most promising technologies.

“The core issue identified by the industry is Australia’s lack of dedicated digital health investment options,” Ms Le Grice stated.

The survey conducted by ANDHealth identified the top five challenges faced by digital health companies in terms of commercialisation: limited access to capital and investors with digital health expertise, scarcity of dedicated grant programs, implementation and uptake issues, and difficulties in accessing customers.

Assistant Minister for Health and Aged Care, The Hon Ged Kearney MP, delivered an intriguing keynote address at the Medinfo23 conference this week, shedding light on the future of healthcare models. In her speech, she emphasised the growing global trend of utilising digital health technologies to revolutionise health systems and facilitate the exchange of vital health information. She underscored the transformative potential of these technologies in reimagining healthcare service delivery, benefitting both patients and healthcare providers alike.

Drawing attention to the absence of a dedicated reimbursement pathway for digital health technologies in the Australian market, Ms Le Grice warned that Australia’s failure to keep pace with the global trend of tailored reimbursement schemes will result in the loss of innovative entrepreneurs to overseas markets that already have such systems in place.

“The emergence of new digital health technologies, products, and services requires a paradigm shift in policymakers’ approach to digital health, which has historically centred around medical records and telehealth,” Ms Le Grice explained. “A majority of respondents to our sentiment survey strongly agreed that access to reimbursement would accelerate growth in their business.”

ANDHealth is advocating for a bipartisan House of Reps committee inquiry into digital health, with reimbursement as a top priority for the industry.

“We support any dialogue about policy change on reimbursement that will result in better access for small and medium enterprises (SMEs) looking to commercialise digital health products for the Australian market. A broadening of existing reimbursement pathways, that are focused primarily on pharmaceuticals, hardware based medical devices and direct human to human interaction, is needed to create fresh incentives for patients and clinicians and drive uptake of new digital health products which are the future of our health system,” Ms Le Grice told Health Industry Hub.

Regarding funding sources, ANDHealth’s data indicates a shift in the preferences of companies seeking capital. A growing number of companies are now turning to grants, angel investors, high net worth individuals, and accelerator/incubators, while venture capital funding is becoming less popular.

While the study shows that confidence in local investors is improving, it remains relatively low overall, with only 20% of respondents expressing confidence in local investors compared to 38% for international investors.

Despite these challenges, 85% of companies surveyed expressed their intention to raise further finance in the future, with 31% planning to seek larger funding amounts within the next 12 months. The United States continues to be the top priority for both near-term and future international expansion, as reported by 30% and 65% of companies, respectively.

Sanji Kanagalingam, the founder and CEO of startup WeGuide, shared his experience, stating that “digital health-specific funding and expertise is not always easy to find in Australia.” WeGuide has developed a global self-service platform that enables healthcare providers, clinical trial sponsors, and medical research institutes to create their own customised digital health tools. The platform has achieved significant success, generating over $1 million in annual revenue across Australian, UK, and US health networks, and enabling faster and more cost-effective development of new solutions.

Mr Kanagalingam added, “There are not many funds out there that offer the advice and expertise we’re looking for in terms of digital health, particularly the connectivity that we seek globally, which has the potential to create massive upside for us as a startup.” He also acknowledged the impact of the COVID-19 pandemic on the digital health sector, stating that it had brought about significant transformations in healthcare delivery that are here to stay.

According to the survey results, the digital health sector foresees substantial growth opportunities in remote monitoring (up 28%) and wearable technologies (up 58%), aligning with the trend of shifting care from clinics to homes.

The findings of ANDHealth’s survey shed light on the challenges faced by the Australian digital health sector and underscore the urgent need for increased investment options, improved reimbursement pathways, and policy support to foster innovation and drive the future of healthcare in the country.

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