Following a record year for M&A transactions in both the Australian and global health care sectors, MinterEllison has flagged continued activity in health care deals in 2019 and beyond.
“Health care is currently in a state of exponential change and disruption, with deal activity aligning with this. We are likely to see the current strong activity continue, with the focus on consolidation by existing large providers, new entrants to our market with a global footprint, and investment in technology and service delivery to meet future demands and consumer expectations," said Shane Evans, Head of MinterEllison’s National Health Industry group.
Mr Evans expected good activity in medical and digital technology, start-ups, home care, aged care and medical imaging. In addition, he expects that all market segments within the health industry will have M&A activity driven by factors such as the need to build scale, exiting the market altogether or drawing together different market segments to achieve a seamless experience for the consumer. He highlighted the emergence of digital health care solutions as a key sector driver.
“The market should expect further upturns in the health care sector off the back of R&D investment and innovation developments drawing on trends such as AI technology and “virtual care,” he said. “We are on the cusp of a new frontier in the health care sector as digital service delivery to patients and care recipients becomes a much bigger day-to-day reality.”
Indeed, Shane Evans said a key trend dominating Australian health care in the next twelve months and beyond will be the focus on patient centric services – due to technological advances and changes in consumer expectations.
Top Five Health care Sector Predictions for 2019
1. Precision health and medicine is the way of the future
There is a perfect storm of an ageing population, with associated massive increase in chronic disease and illness, and exponential increases in health care costs that are becoming unsustainable. This makes it imperative to focus on prevention and wellness to keep people healthier longer, as well delivering personalised health care that is targeted to the specific individual.
“Precision health and medicine requires a combination of interlinking medical research into areas such as genetics and genomics, with big data so that the existing huge but separate repositories of information can be brought together, and the use of advanced technology to provide data analytics and artificial intelligence,” Mr Evans said.
Mr Evans said that each of these areas is complex in itself, but drawing everything together is the real challenge. Investment in these areas and connectivity between them is imperative, with huge pay-offs for the organisations involved, as well as to the overall health of our population.
2. Internet of Things (IoT) continues to grow
Internet of Things is revolutionising the health care industry with interconnected devices that can access, collect, track and share data.
“Some analysts (Forbes.com) have said that by 2019, 87% of health care organisations will have adopted some form of “Internet of Things” technology. That includes developments such as smart pills, smart home care, personal health care management, electronic health records, management of sensitive data and a range of related care solutions,” Mr Evans said.
Every day there is a multitude of mobile health apps that come onto the market. These started out tracking personal health, but now extend to diagnostics, aides to medical decision-making, sharing with health care professionals and to ensure safety such as detecting falls for vulnerable individuals who may be home alone.
3. Disruptors who will take the patient experience to the next level
A new wave of care providers will enter the market and compete at a sophisticated level, such as the international technology and retail giants. These organisations have a huge competitive advantage with a massive amount of information about what their clients want, sometimes even before their clients know it. They have the ability to deliver a convenient and exceptional personalised service.
This may start with supply chains for health products such as medicines, but can easily extend to the provision of health and care services, including access to health care professionals.
For example we have already seen chatbots used in the travel and retail sectors. MinterEllison says that 2019 will be the first wave of chatbots in health care. This will be focussed on utilising advanced analytics to provide seamless interaction with patients for services such as diagnostics.
“This form of AI technology is already available. It’s ideally suited to many of the non-sensitive outcomes of patient testing and so is an area with enormous potential to be extended in doctor/clinic/patient interaction.”
Blockchain has significant potential to disrupt, as it will inevitably be applied to health, with numerous potential applications such as digital hospital records, supply chain management, monitoring of devices and drugs, as well as management of data such as that generated during clinical trials.
4. Why go to a hospital or doctor? Virtual care at home
MinterEllison predicts that, like the changes seen in bricks and mortar bank branches along the supply chain to online banking, private health insurers, as well as health and aged care providers, will ramp up their research and investment in the virtual care in the home. In general this is a cheaper method of delivery of care, but also most consumers prefer the convenience and comfort of care at home, where at all possible.
Technology will enable the connectivity required to send and receive vital information, as well as to access where required specialised health care professionals. This will be one of the big areas of investment and will reshape the health care sector.
“Virtual care will become crucial for acquiring and retaining patients,” said Mr Evans. “In health care, the customer is increasingly in charge - demanding personalised, convenient care. They not only want to move away from unnecessary and time-consuming health care appointments; they want the doctor or even the health care provider in their home. And they can – because technology is an enabler.”
“Customers will have a real time doctor patient experience on line,” said Mr Evans. “It can include “face time” type experiences that will bring doctor and patient together offsite and online. In turn that will give rise to a new way of thinking about medical infrastructure, clinics and the like.”
5. Consolidation of market segments to a few big providers
MinterEllison predicts the emergence of “mega providers” from “mega mergers” in the healthcare sector.
Economies of scale and the investment required to keep up with rapid changes, will favour the large players. In addition, some sectors in the spotlight, already grappling with the changes and financial sustainability, with see this as a trigger to exit or sell. For example, the Royal Commission into Aged Care Safety and Quality will be one such trigger point for aged care.
Mr Evans said “Although needing to account for competition regulation, the Australian care sector will see large, sophisticated, technology enabled providers looking for market reach and access to consumers. Alongside this there will be a large number of traditional providers who are struggling with the changes and decide the time is right to get out of the market or to seek a partner.”
