**Australia**: The local digital health landscape is hindered by fragmented public hospital systems, despite significant investments like the $32 million backing for Harrison.ai, raising concerns about reliance on overseas markets and the need for strategic procurement reforms to support homegrown innovations.
Australia’s health system, known for its excellence and marked by a vibrant research sector in health and medical sciences, is currently facing significant obstacles in supporting and scaling local digital health innovations. This is largely attributed to the fragmented nature of the public hospital system, which has left many promising homegrown digital health companies struggling to establish a solid footing within the local healthcare landscape.
A notable recent development is the $32 million investment by the National Reconstruction Fund Corporation (NRFC) into Harrison.ai, a leading Australian firm specialising in artificial intelligence solutions for healthcare. This investment not only acknowledges the potential of Australia’s digital health industry but also raises critical questions about the prevailing trend where local companies often find it necessary to scale their operations overseas before gaining recognition at home.
Despite Australia’s commendable global ranking in healthcare, with the Commonwealth Fund’s Annual Report placing it first for healthcare system performance, significant barriers remain. Public hospitals, which account for about one third of Australia’s $270 billion health expenditure, continue to exhibit a reliance on cost minimisation strategies, often at the expense of fostering innovation and long-term value. Research from the Australian Medtech Manufacturing Centre indicates that as little as 5% of total procurement spending from some Victorian public health services is directed towards locally manufactured solutions.
The risk-averse procurement practices within the public health sector limit opportunities for local health technology start-ups and inhibit the adoption of cutting-edge technologies. Harrison.ai, while successfully integrating with private health providers – its technology serving one in two radiologists in Australia – has managed to gain only three public hospital contracts within the country. This instance exemplifies the broader challenge faced by many digital health partners who often find greater success beyond Australia’s borders, leading to potential sovereignty risks due to over-dependence on multinational technology companies.
A recent report by Insight Economics underscores the need for a strategic shift in procurement policies, highlighting how Australian tech procurement practices lag behind global best practices. To cultivate a competitive digital health sector, it is essential for government spending to serve as a strategic investment that enhances not only healthcare quality but also industry development, innovation, job creation, and economic resilience.
Key recommendations have emerged to rectify this situation. Firstly, procurement processes must align with national health priorities, establishing a coordinated landscape that supports strategic investment in digital health solutions tailored to future healthcare needs. Secondly, transitioning towards value-based procurement will allow for a more thorough evaluation of the long-term economic and clinical benefits that digital health solutions offer. Furthermore, creating clear pathways for local innovators and offering structured opportunities for small to medium enterprises (SMEs) to present their solutions is pivotal, along with fostering a dynamic and innovation-friendly procurement environment encouraging early-stage investment in emerging technologies.
Recent initiatives, such as the new Commonwealth Procurement Rules which aim for higher sourcing targets from SMEs, reflect a step in the right direction. Additionally, the NSW Procurement Board’s directive for local suppliers to be engaged before tendering for projects exceeding $7.5 million signals a recognition of the importance of homegrown innovation. However, many assert that progress has been slow, and considerable work remains to be done to create an ecosystem conducive to local digital health firms.
Australia’s case exemplifies a crucial moment – the convergence of talent, technology, and research expertise that offers potential for the nation to establish itself as a leading force in digital health. Optimising government purchasing power could represent one of the most effective strategies to elevate local innovations and maximise the health and economic benefits for all Australians.
Source: Noah Wire Services
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