Digital Healthcare

A survey among German digital healthcare start-ups and investors on digital healthcare solutions

Will COVID-19 jumpstart the digital healthcare revolution?

Start-ups have been hit especially hard by the economic crisis resulting from shutdowns due to COVID-19. Globally, investors are increasingly wary of putting their capital into young companies, which applies to even those recently celebrated as rising stars, leading to a careful selection of supported projects. In Germany, for example, more than 80 percent of start-ups across all sectors believe their future is endangered as a result of the economic consequences of the pandemic, according to a survey conducted in March by Germany’s start-up industry association.

Yet for digital healthcare start-ups, the social distancing required by governments to contain the virus’ spread offer opportunities for growth. In April, we conducted a study among 27 German digital healthcare start-up entrepreneurs and investors, which produced the following key findings:

  • 82% of respondents see COVID-19 as a business opportunity
  • 72% expect year-on-year investment in their industry to increase in 2020
  • 80% have seen an increase in how frequently customers use their products, as well as a strong increase in new customers

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We chose Germany as a case study for digital healthcare start-ups during the pandemic for two reasons. Firstly, Germany is one of the world’s fastest-growing digital healthcare markets. Based on research for our 2019 “Driving the Future of Health” report, we believe annual digital healthcare spending in Germany will rise to around $40bn by 2030, representing eight percent of national healthcare expenditure. Secondly, German digital healthcare start-ups have benefited from new regulations for the sector at the end of last year which allows doctors to prescribe digital health solutions and outlines a process on how to qualify for reimbursement from public health insurances.

What is digital healthcare?

Digital healthcare solutions connect and ampower people to manage and improve their health, using digital tools and technologies. These solution largely fall into three categories which are not mutally exclusive.

Process Enabler

Aims to improve care delivery by making healthcare processes more efficient or by offering new channels. Examples: Drug adherence management systems, telemedicine.

Ecosystem Enhancer

Breaks down healthcare system silos better collaboration, data sharing and a seamless experience. Examples: Personal medical assistants, electronic health records.

Outcome Booster

Uses new modes of treatment to measurable improve medical outcomes, quality of life and health economic benefits. Examples: Cognitive behavioral therapy, digital biomarkers.

At a time when COVID-19 has left start-ups in other sectors fearing for their future, we were struck by the optimism of most of our respondents about their medium-term prospects on a two-year-plus horizon. Three business opportunities in particular were highlighted by our respondents:

  1. Increased public awareness of digital healthcare
    Almost all respondents anticipate a major business opportunity as the pandemic makes people more conscious of the need to self-manage their health, in a “new normal” context where it may not be possible to have personal contact with providers. At the same time, the severe impact of COVID-19 has heightened the public’s awareness of the shortcomings of healthcare systems under pressure. Both sources of concern are prompting doctors and patients to consider digital tools as an integral part of delivering healthcare in the future. As a consequence, digital health solutions already see a significant increase in new users
  2. Demonstrating medical value
    Doctors and patients have proved more open to trying digital healthcare products and services during the COVID-19 lockdown, when most direct face-to-face consultations have been impossible. The increasing number of new users has enabled digital healthcare providers to capture more data that can be processed and analyzed to demonstrate that their solutions deliver positive medical outcomes and health economic benefits.
  3. Pressure on healthcare budgets
    Public and private healthcare payers will need to make substantial savings, given the financial burden that COVID-19 has imposed on their already-pressured budgets. In some cases, digital healthcare solutions have proved more cost effective than conventional treatments. 

 

Seizing the opportunities: Key actions to take

Our survey suggests that many digital healthcare start-ups are already implementing or planning to implement COVID-19-related changes to address the challenges resulting from the pandemic, as well as exploit potential business opportunities.

Drawing on our study, additional interviews and global cross-industry experience, we have identified a series of actions to enable digital healthcare entrepreneurs and investors to build on their initial, timely response to COVID-19 in order to emerge stronger from the crisis.

Areas where the start-ups already have to plan to implement COVID-19 related changes

About this study

This study was conducted by Strategy& in collaboration with the Spitzenverband Digitale Gesundheitsversorgung e.V. The results are based on a standardized survey among digital health entrepreneurs, complemented by selected interviews with digital health experts from the start-up, public health insurance, investor and advisor community. All interviews were conducted based on a standard questionnaire in which the experts were asked about their perspective on the implications of the COVID-19 pandemic on digital healthcare start-ups.

Contact us

Dr. Thomas Solbach

Dr. Thomas Solbach

Partner, PwC Strategy& (Germany) GmbH

Stephan Danner

Stephan Danner

Partner, PwC Strategy& (Germany) GmbH

Patrick Grünewald

Patrick Grünewald

Manager, PwC Strategy& (Germany) GmbH

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