As with many other industries, the past few years have been challenging for
the healthcare sector. But a panel at the recent Australian Investment
Conference found that while there’s been issues, such as supply chain
disruptions, there’s also been great opportunities thanks in part to
technology.
Current challenges
One of the main issues for the healthcare sector, is the big demand for
GPs. Steven Rubic, CEO, Healthscope, says this shortfall is holding back
the number of patients coming through hospitals. “As a country, this is a
problem both on the public and private side,” he says. “We’re confident
that next year we’ll have more work than ever – the challenge is how do we
manage this. We’re a big employer of nurses but we have 800 nursing
vacancies and as the theatres get busy, this will become more of an issue.”
Rubic adds that the industry needs to make places like hospitals a more
desirable place to work. “We’re speaking to the government about bringing
more overseas nurses into this country,” he says. “We used to employ 2000 a
year and that has stopped. However, we’ve spoken to universities and know
that there are enough being trained, so we need to encourage trained nurses
to stay in the system.”
Costs are another challenge in an inflationary period such as the one we’re
in now. Matt Muscio, CEO of EBOS Medical Technology (formerly
LifeHealthcare), says as a medical devices provider, there is a supply
chain issue affecting the business, which is definitely a challenge. “The
cost of freight has more than doubled and being able to operate warehouses
has been challenging as well,” he says. “The silver lining through the
pandemic is that the industry came together to solve the shortages. It was
phenomenal how organisations worked together to get what we needed.”
He adds that another recent positive is that despite revenue dropping off,
his organisation focused more on scale. “Going forward there will be a
slowdown in the number of start-ups, which may mean that some of the
technology out there now doesn’t get consolidated,” he says. “This gives us
opportunities that we’re looking to cement.”
How will technology help the sector evolve?
During the pandemic, the healthcare sector demonstrated its ability to
innovate and use technology to improve patient care. Stephanie Newey,
Partner, L.E.K Consulting says one thing she’s excited about, is the
potential of AI. “Every decision will likely be informed by AI in the
future,” she says. “Even now there’s a COVID AI app that predicts if you
have COVID by coughing into it.”
Rubic agrees the pandemic led to new opportunities using technology, and
the growing demand for services will continue to drive efficiencies. “We
have 43 hospitals and 20,000 staff,” he says. “The use of technology is so
important to our hospitals. For us and our funding partners, the big thing
at the moment, is how to improve clinical models for our patients.”
He adds, like Newey, he’s excited about AI, especially for activities such
as diagnosing X-rays. “Regulators haven’t caught up on this yet but it’s
happening quickly so we expect they will before too long,” Rubic says.
“What we’re also seeing in intensive care units, is using AI software that
can identify vulnerable patients. Once we are able to do this on scale, it
will deliver more time to nurses and save money for the patient.”
But there are many more technological developments emerging, according to
the panel. “Technologies such as data analysis, AI, robotics, automation,
3D printing, have already created exciting changes,” Rubic says. “The
future is coming faster than you think. We now have tiny devices that can
retrieve clots, for example. And in some ambulances, we have CT scanners.”
Rubic says the sector is moving into spaces where what was funded
previously is changing. “We need to ensure we’re doing adequate data
capture so these technologies and their benefits can be made available to
patients,” he says. “Personalised medicine and treating patients based
around their needs will become more viable. Data sets can help predict
outcomes for patients, and then work out the most appropriate forms of
rehab.”
Role of private equity
The healthcare sector is one in which private equity is taking a bigger
role. Rubic says it is the growth mindset that attracts him to the idea of
PE. “At Healthscope, we use data to assist with all our decisions; it helps
us deploy our capital,” he says. “And crunching numbers to efficiently
deploy capital is a wonderful attribute of PE investment.”
Muscio agrees that if you’re privately backed, you’re able to move more
quickly with decisions. “We’re a medical devices company and having PE
brings greater discipline around decisions,” he says. “Our cost of capital
was an issue and meant we had to work harder with what we had, but we
couldn’t achieve what we have without private backing.”
He adds, with PE, his organisation has been able to achieve its
aspirational goals, such as moving into Asia. “We can do things we couldn’t
do in a public landscape,” he says. “Public markets can be scared off by
the involvement of stakeholders. We’ve found it’s easier to get a private
investor across what we want to do – so it’s a good fit for us.”