The US healthcare industry accounted for nearly 18% of the country’s annual gross domestic product in 2018. The massive system is antiquated though, making it ripe for disruption as people in the industry become more aware that traditional, provider-based medicine isn’t keeping pace with increasing demand for health services.

Healthcare technology—or healthtech—is a fast-growing industry vertical (also called a vertical market) within the broader healthcare sector. It aims to capitalize on this sea change by using technology to provide patients faster, cheaper and more accessible care; generally, outside of a clinical setting.

Here’s a closer look at how PitchBook defines healthtech, what makes the vertical different from medtech and insight into what the future may hold for this emerging space.

Defining healthtech

Healthtech includes any technology-enabled healthcare products and services that are primarily delivered and/or consumed outside of the hospital or physician’s office—one notable exception being hospital and practice management software.

The vertical includes companies that provide mobility and other information technologies to improve healthcare delivery while decreasing costs, like Outcome Health, which offers exam-room technologies that engage patients and caregivers as they wait to see their provider, and Oscar, an online insurance network that provides telemedicine consultations. It also uses technology and services to optimize patient-centric healthcare through things like cloud computing, internet services and social mobility.

The space has a wide-ranging suite of B2C and B2B offerings, such as preventative and monitoring tools for consumers, as well as analytic and administrative tools for healthcare administrators and commercial healthcare organizations. Healthtech also consists of products that enable the burgeoning “healthcare at home” movement, which allows patients flexibility and convenience in how they manage personal care. (Telemedicine, blood testing and genomics, for example.)

How healthtech is different from medtech

While healthtech is centered around optimizing personal and preventative care, the medical technology—medtech—vertical focuses on therapeutic technologies and medical devices that treat existing medical issues and diagnostic technologies that detect medical conditions (i.e. in-hospital care).

SPR Therapeutics, developer of a peripheral nerve stimulation therapy platform designed to be an alternative to addictive opioid medications, is a prime example of a medtech company. So is Auris, which creates robotic micro-surgical devices designed to help with ophthalmic (eye) procedures.

The future of healthtech

As consumers and industry participants become more aware that traditional, provider-based medicine isn’t keeping up with the increasing demand for health services, new and innovative healthtech companies will continue to gain market share. Americans’ growing awareness of the merits of universal healthcare and other regulatory mandates that incentivize the adoption of new technologies could also accelerate growth within the vertical.

Want to learn more about the healthtech space? Read our article on the highest valued VC-backed healthtech companies in the United States.

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