Call for a German digital health and medtech deal

As Merkel’s fourth legislative term comes a to close this September, let’s take some time to reflect on the past four years from an e-Health (digital health) and medical technology (MedTech) perspective. What has been accomplished? Why is it so important for Germany’s digital health and MedTech industry to succeed? Looking ahead, what’s needed to improve? These are all questions, which I intend to answer in the fourth installation of my LinkedIn series.

It took more than 102 pages for one to find a mention of Germany’s MedTech ambitions in the last coalition agreement. On page 102 it says:

“We will continue the e-health initiative and the medical technology strategy process in order to make Germany a sustainable and future-oriented location for the healthcare industry. We will also continue the Pharma dialogue involving the government factions of the German Bundestag."

Unless you’re a political aficionado, chances are you haven’t read this passage. While it’s reasonable that the grand coalition’s rather vague MedTech ambitions are not that well known, it’s surprising that few are aware of the overall healthcare industry’s economic importance.

Healthcare is Germany’s largest sector by revenue and employment. The MedTech and digital health subsegment alone employs a total of 7.6 million people, contributing more than €370 billion to Germany’s GDP. On top of that the industrial healthcare sector (incl. MedTech, pharmaceutical & wholesale) employs around 1 million people, rivalling Germany’s automotive industry.

This fact alone should underline the importance of Germany setting course on succeeding in the digital revolution that is currently impacting the healthcare sector. More importantly this revolution is largely driven by digital healthcare and MedTech. Innovation is our economy’s fuel. It will dry up if we don’t support it, especially against the backdrop of intense global competition.

Yet the process of launching a digital health start-up still suffers from two main problems: shortage of funding & bureaucratic hurdles.?

A recent study by Commerzbank revealed that 9/10 German start-ups are financially bootstrapped – with 25% of all start-ups having seed capital of less than €20,000 at their disposal. In a cost-intensive field, such as digital health we shouldn’t be surprised that so few digital health start-ups are thus founded. The field is associated with significant R&D costs. Especially, the development cycles tend to be lengthy and regulatory processes often imponderable. Not only given the sector’s economic importance but also given healthcare’s societal importance (which the pandemic has cast into limelight once again), it’s crucial for the government to set the right incentives and steer capital into the sector. Last month’s launch of the government’s “Future Fund” is already a step into the right direction. More needs to follow.?

The same study by Commerzbank also confirmed the widespread impression that founders in Germany spend too much time on fulfilling bureaucratic requirements. More than 45% of all founders stated that regulatory and legal requirements represent a significant obstacle. More importantly, the bureaucratic jungle unnecessarily diverts attention away from the innovative aspect of founding. I have heard from many Berlin-based founders who have become disillusioned by the sheer volume of bureaucratic requirements. One of them summed it up succinctly, stating:

“I thought all it required were a garage, a coder and a great business plan. I wasn’t expecting the need to have a full-time lawyer onboard.”?

Contrast this with Estonia, where it’s possible to set up a company in little more than five minutes. Don’t get me wrong: many regulations have their use and are important to protect patients and their data, but we shouldn’t overwhelm founders, disincentivising them even before they have pulled their sleeves up. Let’s try to be more pragmatic.

If there is a silver lining to COVID-19, it’s likely going to be that the pandemic has acted as a stimulus to more decisively digitise the healthcare sector set course for the future. In a way, the pandemic served as digital health litmus test, as it enabled companies, like our own Caresyntax, to show its powerful potential in managing scarce resources better.

For instance, amidst the first wave of the pandemic, caresyntax offered its software to hospitals all over Germany to better manage scare resources. The software enabled hospitals to increase capacity utilisation by up to 15%. Many other more established MedTech players, like Dr?ger and Siemens Healthineers, have made very meaningful contributions over the past year.

It’s time that the sector receives the rightful recognition and means to ensure that the next wave of success stories such as Dr?ger, and Siemens Healthineers will come from Germany. Encircled by the Big Tech giants, the US and China, we shouldn’t leave the future of healthcare to chance. We will need decisive and bold action by Germany’s next government to strengthen digitalization of healthcare in Germany.

Or as Christoph Keese summed it up recently:?

“A country cannot move forward if it only sees shadows, problems and dangers everywhere. Sometimes you have to put your heart in your hand.”

Learn more about surgical trends during COVID-19 and how Caresyntax supported hospitals: https://caresyntax.com/covid-resources/

Or reach out to me directly to find out more!