Healthcare sector ripe for transformation

The digital revolution taking place in the healthcare industry has some of the world’s largest companies pushing into what’s becoming an increasingly crowded space.

The digital revolution taking place in the healthcare industry has some of the world’s largest companies pushing into what’s becoming an increasingly crowded space. The likes of Google, GE and IBM are all pumping money into digital health, and with good reason. The growing prevalence of chronic illnesses and servicing the burgeoning needs of the baby boomer generation means that the healthcare sector is ripe for disruption.

Australia spent $154.6 billion, or 9.8 per cent of GDP, on health in 2013-2014, according to the Australian Institute of Health and Welfare. About 68 per cent of that was funded by both the Federal and state governments and territories, with the remainder paid for by patients, health insurers and accident compensation schemes.

For diversified technology company Philips, the opportunities within the health and consumer technology space are enough to split the company into two. CEO Frans van Houten recently set out the details of the planned split, with the lighting business to be spun off in an IPO next year as the company ramps up its investment in medical technology. The health and consumer-electronics divisions will be merged into a single entity.

“From a health technology perspective the goal is to look at a continuum of care from healthy living to home care and look at how we at Philips can play across that continuum in an integrated fashion,” managing director of Philips Australia and New Zealand Kevin Barrow told The Australian.

“We believe that our brand presence in the home, combined with our knowledge from a patient monitoring and diagnostic imaging perspective, can provide a different benefit and perspective from some of the other players in the market.”

One issue that will become increasingly important as different players compete in this space is the question of interoperability.

Philips, at least, isn’t tying users only to its devices.

“We are device agnostic. Our vision is that we should be able to integrate with any device out there,” Shehaan Fernando, director, Philips Hospital to Home ANZ, told The Australian.

Part of Philips’ focus within the ‘continuum of care’ lies in telehealth and the use of devices to enable real-time monitoring of vital signs from the home.

The company last month announced a partnership with West Moreton Hospital and Health Service in Queensland on a four-year trial of a new model of care that will see 200 patients with chronic illnesses take their own measurements from home and send the data back to clinicians via an app. The clinicians can then monitor and assess any risks or required treatment for each patient. The trial is expected to start early next year.

While Philips is optimistic the trial will transform healthcare in the area, outdated funding models in Australian hospitals pose the biggest challenge to such programs, Mr Fernando said.

“Hospitals are still running on activity-based funding levels, where the more people get admitted, the more funding you get. What these programs are doing is reducing admissions, so that’s a challenging space to be in. So, funding models are the biggest barrier to take-up of this program.”

Philips is hoping that the results of the trial will drive a change in funding models.

“We need to bring the proof-point to the politicians and say ‘Look we’ve proved that it works in Australia, it works in a rural area and we really think you should consider a funding system that will allow this to continue,’” Mr Barrow said.