Why is Australian Healthtech So Behind? - Part 1
Its not the tech or our talent...
Once, we were the world leaders in healthcare & research, yet somehow, we’ve fallen behind and failed to translate this into a thriving healthtech industry.
It’s not that we don’t have the tech or talent (despite the serious talent war in tech right now)...
So, why are we so behind?
We all know the system is a touch (*cough* very) complicated, and frankly, a minefield. But too often, we sit in our ivory towers and throw stones from our one-dimensional views. Leading to pointless arguments, idealist rants & subpar solutions.
So, to paint a bit more of a multifaceted picture, here’s my take on a few factors contributing to the barricade of other blockers that are standing in our way.
Compliance & Regulation
I’m sure these are nothing new to anyone. But for the sake of rounding things out, I’ve made the list obscenely long… you’re welcome
And, of course, it’s still far from complete …
But first… if you haven't already subscribed to stay up to date with the latest healthtech updates, rants & bants - join us! 👇
1) Funding & Capital
We all know it's a biggie, and always the first problem raised (no pun intended). But like everything, it’s a touch more complicated than meets the eye.
The Lack of it…
Without funds, how do we get things going? Especially given health’s highly capital intensive nature.
Endless reports like those by ANDHealth unanimously preach that there isn’t enough flowing into healthtech, especially the early stages. Our love of traditional business, policy and stability here in Aus has been reflected in investments.
Until last year, healthtech was a black box for many in the private equity world, largely untouched, and with good reason. Long timelines, regulation minefields, lack of successes, understanding, and a fair few failures. It’s a right slog to success.
Many Investors claimed they “did healthtech” and “early-stage”, but actions speak louder than words. Causing many to become cynical and cast their views abroad.
But, finally we've seen many change their stance, with big players adding more to their portfolios - or dipping in their toes. And increased interest from both the ecosystem and government - seen in uptake of health in early-stage accelerators like Startmate & Antler, and state governments funding of specific health tech initiatives like commercialisation programs & Angel syndicates.
There’s a long way to go, but we’re slowly seeing funds trickle in.
Hopefully, as Angel Investing continues to rise as a trendy alt investment stream, crowdfunding becomes more normalised and a serious funding option, and people start to just get it (the results/opportunity) we’ll see that momentum fly.
From little things, big things grow.
Sometimes it's not a lack of funds…
There’s money out there - but also the issues of awareness, management and/or misdirection.
Many government programs and tenders have been distributed both internally (looking at you My Health Record) and externally to big organisations. Often who don’t have proper understanding, capabilities, incentives or resources to appropriately address the problems at hand. Resulting in questionable results.
Some programs fail to get the word out, attract the right interest or address actual problems (yes this is highly subjective). But with the need to deliver KPIs, if a program is mandated to invest in 10 companies… they will.
The number of times I’ve seen program applications open and close without anyone aware it even exists, is astounding - both in government & startup land.
How can you get in the game if you’re not even sure it’s happening?
Your Network is Your Net Worth
In Startup world, unless you have direct warm intros, or hustle your heart out to get into the inner sanctum… it can be damn hard to get cut through.
But Vexev had an intro from a friend directly to Blackbird during their research phase, helping fasttrack entry into the commercialisation game. Whilst Harrison.ai’s Co-founder previously worked in PE/VC & Medical Innovation which I’m sure was a small advantage
This feeds into the greater connection, access and education problem, but more on that later…
When getting off the ground as a startup, it’s been “standard practice” to get a “friends, family & fools” funding round. But, as Jax, Principal Investor at Airtree recently tweeted, most people aren’t afforded that luxury.
The playing field isn’t even - hell most can’t even see it…
So how do they have a hope of getting in the game, or scoring goals?
Time to start levelling that field and showing people the doorway…
Australia’s Investment landscape is known for playing it safe. A reflection of our early-stage ecosystem, but also government and private priorities, including most VCs.
On the government side; Innovation wasn’t deemed important- seen in the supports rolled out during early COVID last year funnelling funds into keeping outdated businesses afloat, leaving many startups to flounder.
It’s only recently we’ve seen a large pivot into “digital strategy” and “upskilling for the future of work”. As well as the state innovation arms having their fates finally secured with proper funding.
Though VC’s have taken a few punts, they still tend to stick to solid business plans or tweaks of tried and true formats. Think scalable SaaS with low regulation and easy entry to international markets (Canva & Safety Culture) or areas where Aus already is known to dominate as world leaders (i.e. Fintech - Airwallex & Afterpay).
As health hasn’t been done in Aus, there’s not much to go off.
We need more VCs to take their true place as risk merchants & poker players.
“Temporarily Unpopular: Investing Lessons” by Niki Scevak, Co-founder of Blackbird VC, delves into his thoughts on how to win big in VC
As our infant ecosystem continues to grow, so too does the capital available, risk tolerance, types of investors in the game, and competition. We’re still a bit off the level of the US taking punts off napkins for $10M rounds, but it's slowly getting closer.
Investor Healthcare Understanding & Insight
Healthcare is complicated. Even for those in it for decades.
So outsiders trying to debunk what on earth is going on beneath the legacy systems, closed curtains, bureaucracy and deep niches is tricky… and can be a turn-off.
It’ll take time for people to become true “experts”. And proper support and education programs can help fill these gaps.
There's also the exciting emergence groups of ex medico consultants and investors, helping bridge this and accelerate uptake. As well as more channels for doctors & health experts looking to invest to get in the game with groups like Medical Angels, The Ageing Decelerator and more in the works… Watch this space 😉
With more “smart money” with insight into clinical operations, applications and systems entering the game and directing where tech goes… this can supercharge the whole ecosystem.
And get the ball moving in the right direction.
Healthtech’s time to market, sales cycles, regulation, trials and returns are a longggg ass game. Even the Big Tech Titans have faced endless trials and tribulations trying to execute, with almost unlimited resources… and often failing.
We’ll eventually see people come to terms with the whack timeframes with time… including wins on the board, education, regulation clarification, and more private equity flowing in as the industry continues to boom (and certainly won’t be going anywhere… well ever).
But the reality is until we get some more momentum and readjust these expectations for time to return amongst the big guys, or government, it’s still going to be a blocker.
Market Size & Metrics
The VC game is based on BIG returns.
In case you haven’t noticed, Australia isn’t exactly giant. And, most of our healthcare sits in the public realm, with private players like insurers losing power by the day.
That's not to say there isn’t big money to be made or opportunities, but based on numbers, historically speaking, it's not quite as appealing for those with their eyes on the big prize. Pushing big investor focus largely to those set for international scale.
Many of the big issues in Aus are uniquely our own and homegrown. So with most money directed at global opportunities, the niche problems in our home market have been neglected.
Every investor has their sweet spot and investment thesis. We may just need a few more home-focused investors… Or more government buy-in.
At the end of the day, business is business.
If you don’t have a great big vision with evidence of execution or a stellar business plan... Don’t expect to get buy-in.
This leads us to the other gaping hole…
2) Commercialisation… The Buzzword of the Year
Funding is important… but there is no point funding truly shitty companies.
Taking tech, research or products and actually turning them into profitable businesses is a big problem for Australia. And everyone knows it.
The number of companies with no feasible business model, or understanding of how the healthcare systems operate is maddening. And there’s a blatant disregard for basics like who will actually pay for your product and route to market.
You can have the best product or most “revolutionary” tech in the world, but it doesn’t mean you have people willing to pay or a business.
Tech ≠ Business
Problem ≠ Business
Idea ≠ Business
Pain Point + Solution + People Willing to Pay + Route-to-Market + Execution = Business
Which Comes First? The Chicken or the Egg?
Ah, you say, but there's not enough money going into early-stage companies so of course there isn’t enough quality coming through!
Now, this is true…
But, no one will give you money to just flush down the drain (unless you’re uber, but let’s not get caught up on the edge cases). But, it’s happened a lot. So we keep cutting ourselves off at the knees.
Which leads us to one of my BIGGEST Pet Peeves I know is shared by many - “Innovation Theatre”
This is when an idea, person or product is put on a pedestal and gets big hurrah. Only to disappear into the night. Why? Noble intentions, nice idea or fun tech… but there’s no actual demand, product-market fit, or commercial model.
Often the output of well funded, yet poorly structured accelerator programs.
Yes - We need ways for people to learn & get in the game, but perhaps we should be a bit pickier & ensure we provide the right supports and structures for them to succeed. Propping up poor quality on pedestals only damages the credibility of the industry as a whole.
For Every Big Winner, There Are Dozens of Losers
And we need to wade through the shit to get to the good stuff…
but it’s been a struggle to find it.
Still, we need some more quality seedlings and runs on the board before we see capital get its true confidence in the sector, and more areas receive funding.
In true healthcare fashion… siloing, segmentation, and you guessed it, connection, are BIG problems.
The different parts and players largely operate on their own - missing out on the magic mixture of skills, supports & pathways. Resulting in endless double-ups and waste.
Access to anyone or anything in health is damn hard. And staying in our bubble without exposure to other areas only hinders innovation. But yet we keep things barricaded and refuse to properly play together.
It’s not that people and programs don’t exist (though we undoubtedly need more quality ones). But we’re missing the clear pathways, processes and networks to bridge these gaps. So most end up going it alone. Making it stupidly, and unnecessarily, hard to find the right places or make actual progress.
Where’s the Connections Between All the Operators At?
Despite existing to “help others”, healthcare operators often function in a self-serving or “survival mode”. Well, we need to get over this.
More integration, interoperability and connection (I wince writing those overused buzzwords)… Not just of data and software. But EVERYTHING!
Our powers combined will lift everyone up.
Creating Clear Pathways
Unless you’re indoctrinated to the startup cult, you probably don’t even know it exists. We’ve talked about access and inclusion, but often finding that door is the biggest challenge. Many just stumble in by accident (🤚 me).
The same goes for health organisations, partners & programs… It’s all very unclear.
When I released what I thought was an “obvious” list of resources earlier this year, the feedback I got was insane… The fact that more things like this don’t exist is bonkers. As is the exorbitant paywalls by many organisations who often don’t even know what they are doing, but claim to, and act as gate keepers to subpar pathways.
We need to build the networks, partnerships and channels that extend beyond ourselves and our immediate remit to benefit everyone…
After all, isn’t that what health is all about?
Communication underpins everything.
Good communication is the foundation for success. Yet most are failing at it. To win we need to be on the same page, and willing, or able, to translate - but right now it seems we’re often not even in the same genre.
Until we address this - it's going to continue.
If you want to go deeper down this wormhole, read my piece on the communication problem.
5) Culture… It’s a People Problem
All change starts and ends with people.
Change can be scary. Especially when you’ve operated in a single way for your whole life… or in the systems case… its entire existence.
Naturally, people cling to the paradigms which define their world, worth and success.
But to succeed going forward, we need to encourage understanding and acceptance of everyone to address cultural resistance. COVID kickstarted it, especially for consumers, and then government started to get on board.
There's a long way to go, with a lack of understanding of what tech is, its true uses, operations and opportunities. Particularly amongst already overstretched clinicians and professionals.
Just because something has always been a certain way doesn’t mean it should be
But it’s hard to fathom any other way when its all you know
Change needs to start from the inside. Including empowering people to change their operating systems, embrace technology, and shift the old paradigms of the doctor-patient relationships.
This boils down to mindset and education… and embracing stepping outside the lines (which is something in health you are actively discouraged to do)
Cultural Blockers in Healthcare
1. “Traditional” Healthcare Culture
2. Resistance to “Outsiders”
3. Understanding the Role, Purpose and Possibilities of Technology
4. Patient Culture - Their Role in the System and Willingness to Change
5. Mindset - Being Open to Growth, Learning, and Opportunity
6. Remuneration & Incentivisation Structures
7. Doctor-Patient Paternal Relationships
8. Traditional Workflow Structure
On the Topic of Mindset….
Australia suffers from serious tall poppy syndrome - encouraging people not to stray too far from the beaten path or step out of line. Especially in healthcare.
We can see it in so many startups addressing “nice to haves” or minor problems, but going big is where we’re really going to see success and uptake.
In order to win big - we’ve got to think big, find the right problems, take them on (often foolishly), and fail once… or a thousand times. Cause we will. And that needs to be normalised.
There can be no success without failure.
But then again, there's a million other issues standing in the way of tackling these big issues, including…
6) Compliance & Regulation… and Clarity Around It
Just typing these words gives me a headache. The healthcare system is unclear at the best of times… But this is painfully hard.
Well, there’s a hell of a lot of layers, with many still being worked out.
Technology developed faster than regulation, including adoption, so now it’s struggling to catch up.
Previously it was another black box, exclusive for those in the know, keeping others out of the game. But now, it’s a matter of finding the right people and information... and they’re seriously hard to find.
Clinical Policy & Standards
Device Manufacturing Standards
The list goes on…
Every item with its own endless complexities and rules to try to follow. Like a maze of madness made (near) impossible to penetrate.
Yes, these things are designed to protect patients and people - but the current state of affairs is preventing innovation from moving forward and causing harm. Both on businesses and health outcomes.
Basically - we need the organisations setting these standards to sort their sh*t out, and provide clear reference points and pathways to help people who are trying to help healthcare succeed.
Time to take a breather 😮💨
I promised you an obscenely long list, so don’t worry, there’s more to come…
Check out Part 2 here!
What do you think is holding us back and how do we move forward?
Any cool things you’ve seen addressing these issues?
Drop a comment below and let us know!
Until next time