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Overcoming Barriers: The Legal Perspective on Scaling Digital Health Start-ups in Australia


The information presented in this post is derived from an article titled "Australia’s digital health innovators facing ‘viability gap'" authored by Brandon How and published on ‘
InnovationAus.com’ on October 23, 2023.

Digital health start-ups are rapidly gaining momentum in Australia, and for a good reason. In a world that's increasingly reliant on technology, digital health solutions have emerged as one of the fastest-growing sectors in the healthcare industry. However, despite their potential to revolutionise the way we manage health, these innovative start-ups still face significant barriers to scale. This post aims to shed light on some of these challenges and discuss the legal landscape in Australia, particularly in Melbourne, Victoria, where many of these companies are based. We'll also touch on the fintech aspect of digital health and the efforts needed to bridge the "viability gap."

The Growth of Digital Health

Digital health solutions encompass a wide array of technologies, including electronic health records, mobile health, health IT, wearable devices, and personalised medicine. According to ANDHealth, these innovations have witnessed a remarkable year-on-year growth of 163 percent. This surge in growth is indicative of the transformative power that digital health start-ups hold in the healthcare industry.

The Systemic Barriers

Despite their potential, digital health start-ups face systemic barriers that hinder their growth. ANDHealth's CEO, Bronwyn Le Grice, notes that securing investment remains a significant obstacle for these companies. However, even if they secure investment and demonstrate the benefits of their solutions to the health system, a "viability gap" still looms ahead.

One significant challenge lies in the reluctance of health systems worldwide to adopt new digital health solutions. The adoption of these technologies often necessitates fundamental shifts in how healthcare is delivered and funded. This unwillingness to change creates a barrier that even successful digital health companies must navigate.

The International Landscape

With a limited local market and a lack of dedicated investors, Australian digital health firms often look overseas, particularly to the vast US market. However, as Ms. Le Grice points out, it's not always a seamless fit for Australian founders. The complexity of the US healthcare system and the unique challenges it presents can be daunting. Additionally, US investors often demand that their management teams be physically close, which can lead to Australian innovation being moved offshore.

Shifting Focus

Ms. Le Grice encourages a shift in focus, emphasising that digital health commercialisation should extend beyond translating academic research. In fact, around half of the founders at ANDHealth works with are from the tech industry or are healthcare professionals themselves. This highlights the need for diversified expertise in the digital health sector.

The Call for Savvy Investment

For the digital health sector in Australia to thrive, Ms. Le Grice calls for "savvy, sustained investment" from both the government and the private sector. These investors should be experienced and understand the unique requirements of digitally connected health companies. This call to action stresses the importance of tailoring support to the specific needs of these start-ups.

Regulation and Reimbursement Frameworks

To further support the growth of digital health in Australia, Ms. Le Grice suggests that the government should develop "regulation and reimbursement frameworks" that incentivise new products. This proactive approach aims to prevent large tech companies from being funded to duplicate solutions that already exist.

Conclusion

Digital health start-ups have the potential to revolutionise the healthcare industry in Australia, but they still face systemic barriers. It's clear that the legal landscape plays a crucial role in navigating these challenges. The call for savvy investment and regulatory frameworks that encourage innovation is vital to ensure the success of these start-ups. Melbourne, Victoria, and Australia as a whole have a burgeoning digital health sector, and with the right support, these innovative companies can thrive, improve healthcare outcomes, and create opportunities for investors and entrepreneurs alike.

As start-up commercial lawyers at Allied Legal, we are well-versed in the nuances of the legal challenges facing digital health entrepreneurs. Our experienced team is dedicated to providing the necessary legal support and expertise to help these innovative companies overcome systemic barriers, secure investment, and thrive in the Australian digital health sector.

If you're in the digital health industry and require legal assistance tailored to your specific needs, don't hesitate to reach out to us at 03 8691 3111 or via email at hello@alliedlegal.com.au.  We're here to help you navigate the legal intricacies and ensure the success of your digital health venture.


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