Money would be better spent boosting confidence

5 minute read

It ain’t what you spend but the way that you spend it, says health tech dubious about government support in the new budget.

The federal budget promises to improve Australia’s digital health ecosystem, but industry stakeholders question how much federal money will end up in offshore coffers.

The Medical Software Industry Association (MSIA) recently reported the results from their industry survey of medical software companies. The majority of companies believed that overseas companies were favoured in federal government contracts.

Graph 1: MSIA report Beyond the pandemic – Future proofing Australia’s health technology industry

Questions were now being raised about what tangible benefit the new budget would have for Australian health tech businesses.

Emma Hossack, MSIA chief executive, said that there were some positives for digital health generally but that there was “not a lot in it” for the medical software sector. Ms Hossack welcomed the $345.7 million to improve aged care medication management but questioned how much of that money would go into the technology.

“We’ve seen it before. Sometimes those allocations of huge amounts of money can go to consultants to do a lot of planning and then less than 5% actually reaches the people doing the work. That can be very deflating and also sends our companies overseas.”

Graph 2: MSIA report Beyond the pandemic – Future proofing Australia’s health technology industry

Although intergovernmental interoperability was allocated $64.5 million in the federal budget, Ms Hossack doubted its real impact in an area she said had been moving at a “glacial pace”.

“When you dig down, the funding is actually just to cover the states and the Commonwealth fundamentally agreeing that they’ve got to do something about interoperability. It’s not going to industry. It’s not actually moving interoperability forward,” she said.

Ms Hossack said that money could be better spent to shore up investor confidence, which is critical to the survival of the industry.

“If Australia put even 10% of that budget allocation into creating a really strong, robust business case for digital health, that would remove lot of the fear, doubt and uncertainty for investors,” she said.

Ms Hossack said a real positive in the budget was the $4.2 billion for ongoing covid support including for the frontline health workforce.

“I think Australia’s had the best technical response to covid in the world, as well as maintaining our economy. And I think that our industry has been number one in that,” she said. “Greg Hunt, the federal health minister, personally thanked all of our members for the extraordinary work that they did in March 2020. He said that in 10 days of frantic work we did a decade’s worth of work.”

Despite this, many medical software companies said they were inadequately consulted about legislation changes. An anonymous MSIA member commented in the survey: “Lots of discussions with government AFTER the legislation had passed – if they want a quick turnaround and engagement, then engage us at the idea stage where relevant discussions are still possible and advance notice (even if not final) can be used to plan roadmaps.”

Nearly three in four surveyed medical software companies didn’t feel supported by the government, according to the MSIA report.

Graph 3: MSIA report Beyond the pandemic – Future proofing Australia’s health technology industry

Ms Hossack said that the sector was exposed to substantial risk – the biggest of all being a lack of certainty about funding. More funding was needed to encourage software companies to innovate and develop solutions, as well as to incentivise future clients, she said.

“Successful projects and pilots, even if they had stellar results, are often are not assured of funding to make them extensible,” Ms Hossack said. “Even if you have developed a really good idea into software that could save lives, create efficiencies and be a great Australian export, it does not mean that that software will have a guaranteed rite of passage through to a consumer unless there is a provider that is incentivised to use the product.  

Ms Hossack reinforced the need for a robust business case to bring certainty for health tech investors, companies and clients. It was one of the five initiatives MSIA proposed to future-proof Australia’s health technology industry and support development of a world-class export industry:

  1. Development of a sustainable business case. MSIA suggests that costly errors, such as $1.4 billion dollars in medication errors could be largely prevented by their industry.
  2. Interconnected health care with empowered users interacting with their healthcare how and when they wish.
  3. Reduction of red tape and cumbersome requirements for selling to government and providers.
  4. An even playing field for small Australian companies competing with large multinationals who slash profit margins uncompetitively to win tenders.
  5. Upskilling a workforce in digital health capabilities including in cybersecurity.

Ms Hossack said that it was prime time for the government to act on these recommendations so as to capitalise on the recent boom of the digital health industry driven by the pandemic.

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