In brief 7 min read
A review of the key trends in the healthcare sector throughout 2019 provides a clear picture of what to expect in the year ahead.
On the investment front, opportunities abound across multiple and diverse asset classes, ranging from MedTech, clinical trials facilities and AI, through to more established assets such as real estate investment trusts and hospital operators. With growing focus on personalised, patient-centric healthcare, an ageing population and the rising interest in disruptive technologies, sector leaders are increasingly seeking to partner with sponsors and innovators to provide premium healthcare and help solve the problems of the future.
At the same time, though, heightened regulatory activity, restrictions on advertising and the ever-increasing scrutiny of data governance procedures offer timely reminders to investors, owners and legal and compliance teams for the rigorous and ongoing assessments of their existing practices and policies.
The healthcare team at Allens reports on some key trends and sectors to look out for in 2020.
Key trends
> Increased regulatory activity
Post the Royal Commission into Aged Care Quality and Safety, we expect an increase in class actions and patient litigation, as well as Australian regulators taking more of an enforcement role in the healthcare sector. Significant increases in compliance costs should be expected. Separately, other regulators such as the ATO will remain active in the sector.
> Increasing private equity investment in healthcare
PE sponsors have been, and are continuing to, invest more heavily in the healthcare sector. This interest stems from the belief that aspects of the existing healthcare delivery system are not adequately addressing changing consumer preferences and demand for quality, as well as increasing costs. There is also the belief that attractive returns can be maintained throughout the economic cycles.
> Healthcare REITs - supply to exceed demand by 2021
There is increased interest in healthcare real estate investment trusts (REITs) as an alternative asset class, in part due to the slowdown in residential and retail activity, with healthcare assets considered safe and offering dependable, long-term leases. Australia's growing and ageing population is also fuelling demand for new healthcare assets.
> Data governance is a critical enabler of decision making
Healthcare is transforming from 'one size fits all' to personalised healthcare – data and technology are key enablers of this. The use of data to predict health outcomes can occur at a population health level and at a more granular level (eg on a personalised basis). Privacy and health information laws, ethical principles and societal expectations all shape how health data is used.
> Rapid growth of AI research, development and implementation
AI applications are revolutionising how the healthcare sector gains efficiencies and improves patient outcomes, with potential for Australia to have the fastest AI growth in the Asia region due to increased investment. The increasing availability of data is facilitating adoption of AI.
> MedTech marketplaces
Consumers are increasingly focused on quality of healthcare interactions and speed and efficacy of support, leading to an increase in tech-based marketplace solutions.
> Augmented workforce
Globally, the number of healthcare workers is dropping; with the potential for an integrated system of workers straddling – with technological support – health, social care and human services.
> Increased scrutiny of the promotion of therapeutic goods
Since early 2018, following the implementation of recommendations from the independent Review of Medicines and Medical Devices Regulation, the regulatory scheme governing the promotion of therapeutic goods has changed significantly. Further changes are expected through to the end of 2020. Together with the criticism the TGA is receiving from activists and consumer groups, the TGA is taking a more proactive approach to enforcement.