Digital Health: How Technologies Are Changing Treatment and Care

Innovative digital health solutions are bringing about fundamental changes, so that, in just a few years, treatment and care could look completely different than they do today. Health technologies in particular are leading to major growth opportunities. 

All over the world, healthcare costs are rising steeply. This is not only due to society's increasing prosperity and average age. We are also spending more because health has moved up individuals' lists of priorities. Digital health, also known as eHealth, is playing a crucial role in the pursuit of more successful treatments for patients and cost optimization.

Digital Health Solutions Offer Many Treatment Options

The current situation is good. First, it is a pivotal time for drug and therapy development. Novel forms of therapy allow diseases to be treated in a more targeted manner with fewer side effects.

Second, digital technology has become a pervasive element throughout the healthcare system and is having a major impact on diagnosis, monitoring and treatment. At the same time, societies are going through seismic shifts with regard to their age composition.

As societies grow older, their healthcare needs and expenditure increase significantly. Taken together, these three fundamental trends make for a compelling industry growth case.

Care Using Digital Technologies Is the Way Forward

The emergence of health apps, health management portals, and wearable sensors to measure things like blood pressure is reshaping the current standard of care. With these new tools at their disposal, people are increasingly assuming responsibility for their health, well-being and disease management.

Innovative digital health solutions are also being developed in order to achieve improved treatment outcomes. Here, a sensor-based solution that dramatically improves patients' quality of life stands out. Thanks to a small wearable sensor connected to a smart device, diabetes patients can monitor their blood sugar levels continuously, day and night.

The key benefit for patients is that it allows them to identify potentially dangerous episodes early and take immediate action. Alongside the significant savings potential it offers due to reduced emergency room visits, this technology is – most importantly – already reported to have saved lives.

Digital Healthcare Is Particularly Effective in Remote Monitoring

Of the numerous digital health products, telemonitoring seems to offer the greatest added value because it is of special benefit in caring for chronically sick patients, whose treatment puts a major strain on health insurers.

For example, in a pilot project conducted by Vivify Health with patients suffering from cardiac insufficiency, the use of telemonitoring enabled the number of monthly inpatient stays per patient to be reduced from over three to less than 0.4. In addition, expensive emergency room visits fell by as much as 70%.

Patients Improve Quality of Life through eHealth

Compared to traditional treatments, digital health solutions thus lead to a significant decline in dangerous situations. At the same time, they noticeably improve patients' quality of life.

In principle, therefore, all the elements in the healthcare value chain gain from digital health solutions – patients, doctors, nursing staff, hospitals, and insurance companies. However, digital health solutions should be used as part of simultaneous treatment and following consultation with a doctor.  

Demographic Changes Stimulating Demand

Currently, there are slightly more than 900 million people worldwide aged 65 and over, a four-fold increase compared to 1960. Going forward, the United Nations expects the addition of more than one billion senior citizens by 2050.

Many chronic illnesses such as arthritis, heart disease, and Alzheimer's increase with age. It is therefore clear that an increase in the proportion of elderly people will be accompanied by a disproportionately sharp rise in demand for healthcare services.

For example, the Swiss Federal Statistical Office estimates that the average annual healthcare expenditure for a person aged 86 or over is close to CHF 48,000. This is three times as much as the average of CHF 16,000 for a person in the 66–85 age bracket.

 Potential for digital health healthcare costs increase dramatically with age

Healthcare spending in Switzerland per capita and age band 

in CHF (2014) Source: Swiss Federal Statistical Office, Credit Suisse

Positive Outlook for Healthcare Technologies despite Price Pressure

It is likely that political pressure on drug prices and regulatory requirements will continue, but little will dampen the sector's growth prospects. This is because the far-reaching trends will inevitably continue to drive up demand for health care solutions and services. At single stock level, however, selectivity is key as healthcare companies will need to demonstrate genuine innovation to retain pricing power and be successful in the long run.

The transformation of the healthcare sector with eHealth offers interesting opportunities for investors. However, the biggest winners remain the patients, or those who – thanks to health innovation – avoid becoming patients in the first place.