Digital Opportunities Boom as Healthcare Spends Additional $750 Billion

Nardev Ramanathan, Ph.D., Analyst

The healthcare industry today is more challenged than ever before. Healthcare costs are becoming unsustainable, developed economies are facing rapidly aging societies, and developing economies are seeing a rapidly growing middle class and subsequently shifting expectations of the healthcare system.

Increasing prevalence of these challenges are combining to push the growth in global healthcare expenditure from 2.4% in 2015 to an estimated 7.5% by 2020. This would make next year’s growth alone an additional $750 billion.

For many countries, this growth in healthcare expenditure will exceed annual GDP growth, making it challenging to support national health budgets. New ways to manage this unsustainable growth are needed and digital technologies can offer ways to tackle this challenge. In fact, a wide range of digital technologies are already being deployed today. In our new report, “The Digital Transformation of Healthcare," we applied a digital framework to identify core outcomes and digital use cases impacting major stakeholders. 

Lux Research - Challenges in the Healthcare Industry Today - Infographic

As outlined in the infographic above, individuals over 65 years of age will increase from 0.5 billion in 2010 to 1.5 billion by 2050, putting pressure on a system already spending $3 trillion annually on chronic disease. Additionally, the global middle-class segment is expected to increase from 27% in 2009 to 59% in 2030, with 90% of that growth coming from China, India, and Southeast Asia alone.

Our new report analyzes how digital technologies are being used by the major stakeholders in the healthcare ecosystem today, namely healthcare providers, solutions providers, payers, and patients, to not only reduce healthcare costs but also improve health outcomes and combat challenges like those outlined above. Digital tools can impact different stakeholders to reduce the cost of conditions like diabetes, which already has a global cost of $1.3 trillion and is expected to double over the coming decade.

New and innovative approaches are needed to rein in costs and scale the provision of care to keep pace with globally changing healthcare demands. Technologies like health IoT, blockchain, artificial intelligence, robotics and virtual reality will all impact the healthcare ecosystem. Today the right technologies are in place, such as smartphones and the internet of things, to meet those demands. Through the application of our digital framework, we highlighted the nine key digital use cases within healthcare.

We found that digital transformation has the greatest impact on areas like clinical trial management within R&D and decision support within provision of care today. However, other areas, such as digital therapeutics for the provision of care and interoperability of electronic health records (EHRs) for hospital operations, while seeing a relatively low impact today, will play a bigger role in the near future.

Digital transformation is poised to transform the way the entire healthcare industry operates. The role of the patient or consumer becomes more than just a passive recipient of care but rather an active player whose decisions and quality of life influence product development. The healthcare system is shifting toward a more patient-centric decentralized model, where the healthcare provider’s role is shifting toward more of a control center, deploying resources as needed to optimize models rather than being the central node of care.

For more information about the near-term and long-term business opportunities to consider in the healthcare space as a result of digital transformation, download our executive summary or our infographic about the challenges in the healthcare industry.

 

 

 

FURTHER READING:

- Blog: Can AI Make Innovation Any Easier?

- Press Release: Digital Opportunities Increase as Healthcare Plans to Spend Additional $750 Billion by 2020

- Tech Page: Digital Therapeutics (Members Only)

- Executive Summary: The Digital Transformation of Healthcare

- Infographic: Challenges in the Healthcare Industry Today

- Report: Lux Executive Summit Global 2019: Digital Transformation of X (Members Only)

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