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1.Introduction
India, a nation brimming with diversity and dynamism, grapples with a multitude of healthcare challenges. With a huge population, limited healthcare facilities in rural areas, the relentless surge of communicable and non-communicable diseases, economic and educational disparities, and lack of infrastructure, the Indian healthcare landscape stands at a crossroads.
Amidst these challenges, one force emerges as the potential savior: technology. Technology, as the harbinger of change, is addressing the three fundamental pillars of healthcare: Access, enabling healthcare services to reach even the remotest corners of the nation; Affordability, making quality healthcare more economical and accessible; and Quality, elevating the standards of healthcare delivery.
Moreover, health tech startups in India are on a mission to tackle these complex healthcare challenges head-on. These innovative companies are at the forefront of using technology to find solutions for the intricate health problems faced by our nation. They are driven by the vision of making healthcare more accessible, affordable, and of higher quality for all Indians.
However, despite their rapid growth and innovative approaches, these health tech startups are not immune to their own set of challenges, including funding constraints and regulatory hurdles. This paper talks about challenges faced by health tech startups in India and unveils actionable insights to empower their growth.
2.Healthcare Model of India
India primarily follows a Fee-for-Service healthcare model, where healthcare providers are paid a fee for each service they deliver. Patients pay directly for the medical services they receive, which can include consultations, tests, treatments, and procedures. This model provides patients with flexibility in choosing healthcare services and providers but can lead to high out-of-pocket expenses, especially for those without insurance. India is in the process of transitioning towards more outcome-based and insurance-driven models to address cost concerns and improve access to quality care. In India, healthcare is a blend of public and private providers.
United States - Pay for Performance (P4P) Healthcare Model:
In the United States, the Pay for Performance (P4P) healthcare model is designed to incentivize healthcare providers based on the quality of care they deliver. This model links reimbursement to the achievement of specific performance measures and outcomes. Providers are rewarded for meeting or exceeding predetermined benchmarks related to patient outcomes, preventive care, and efficiency. P4P aims to improve the overall quality of healthcare by encouraging providers to focus on patient health outcomes rather than just the quantity of services provided. It's often seen as a way to enhance healthcare accountability and efficiency. In the US, healthcare is mainly private, supplemented by programs like Medicare and Medicaid.
These models reflect fundamental differences in how healthcare is financed and delivered in the two countries, with the U.S. focusing on quality-based reimbursement, while India traditionally relies on a fee-for-service approach. The startup landscape in India demonstrates the opportunity to improve healthcare access and affordability whereas faces challenges to data privacy concerns and competition. On the other hand, the startup landscape in the USA demonstrates opportunity in a vast market and technological infrastructure whereas it faces challenges to regulatory hurdles and competition. Both India and the USA have vibrant health tech startup ecosystems, but they differ in terms of market dynamics, regulatory environments, and technology adoption. The differences are evident in terms of generated revenue and the number of connections related to IOT healthcare services. Both countries present unique opportunities and challenges for startups aiming to transform healthcare delivery and improve patient outcomes.
3.Need for health tech in India
India, with its burgeoning population expected to reach 1.64 billion by 2047, faces a distinctive healthcare challenge compounded by the vast urban-rural divide. The United Nations reports that 75% of healthcare infrastructure, including medical specialists, is concentrated in urban areas where only 27% of the population resides. This leaves approximately 716 million people in rural areas with limited access to primary healthcare facilities, exacerbating the disparity in quality healthcare. Private hospitals, often synonymous with quality healthcare, are predominantly situated in urban centers, leaving the majority of the population in rural areas without adequate services.
For example, the distribution of treatment costs in outpatient hospital care is skewed with the wider distinction between the public vs. private sectors as shown in Figure 4. With a hospital bed density of only 0.7 per 1,000 people in 2011, significantly below the World Health Organization's guidelines of 3.5 beds per 1,000, India faces the urgent need to provide world-class care at affordable rates to its citizens. In light of these challenges, health technology emerges as a transformative solution. Health technology, or health tech, addresses this deficit by serving as a crucial bridge, connecting health organizations and streamlining processes for practitioners and hospitals. This technological evolution goes beyond mere information-sharing and diagnostic capabilities; it stands as a beacon of progress in healthcare accessibility. Healthtech facilitates remote patient consultations, making healthcare services accessible even in the remotest rural areas through telemedicine. Its impact extends beyond the immediate realm of patient care, influencing societal advancement as a whole.
The key considerations in deploying healthtech involve building harmony, selecting systems that meet clinical needs affordably, implementing plans tailored to the healthcare industry, ensuring proper infrastructure availability, offering staff training, conducting follow-ups and evaluations, and maintaining systems efficiently. Healthtech, therefore, plays a pivotal role in addressing the pressing healthcare needs of India's diverse population.
3.1 Indian Health Tech Startup Landscape
Health tech start-ups are revolutionizing the healthcare sector by designing and creating innovative medical technologies that optimize patient care outcomes and healthcare delivery systems while reducing costs. The number of ventures in this sector has grown exponentially, from 452 in 2016 to nearly 90,000 in India today.
There are over 8,000 health tech start-ups in India, valued at around $2 billion and growing at a rate of almost 40%.The Indian health tech industry is predicted to grow to $5.5 billion by 2025. A variety of causes, like increasing demand for innovative health care services, fast-paced technological advancements in the country, government initiatives and policies, etc., are driving this expansion, including the rising frequency of chronic illnesses, the expanding middle class, and the increased penetration of cell phones and the internet.
3.2 Indian Health Tech Startups – Segmentation
Indian healthcare sector start-ups emerged among India's top four start-up sectors, contributing to 8% of all start-ups, and have shown high growth. In 2030, there will be an increase in market distribution in healthtech startups compared to others (Figure 5). In terms of funding, there is huge scope in fitness and wellness.
While comparing the distribution of value chain components, it has been predicted that a large share is invested in healthcare treatment (58%), diagnostics (20%), and less share in prevention (10%).
By March 2022, healthcare start-ups have emerged as the second-largest start-up sector registered in the Start-up India portal (over 5000 registered healthcare start-ups). Health and wellness (28%), medical devices (15%), pharmaceuticals (13%), and biotechnology (7%) categories currently contribute to over 60% of the healthcare start-ups in India (Figure 7). The start-up India portal classifies a healthcare start-up into four stages - ideation, validation, early traction, and scaling.
These stages can be considered the equivalent of emergence (ideation and validation), adoption (early traction), and diffusion (scaling) of the healthcare innovation lifecycle (Mukherjee 2022).
4.Challenges of Indian Health Tech Startups
Entering the healthcare industry isn’t the same as starting an IT or technology company. There has been great progress in India in the past decade in logistics, e-commerce, and online consumer services, but one area that’s lagging considerably is healthcare. The Indian healthcare sector is largely unorganized and the market is mostly out-of-pocket expenditure (unlike developed markets where insurance companies and the government fund healthcare).
Startups must navigate high customer acquisition costs, ambiguous regulations, especially in new-age delivery models, trained staff, and inadequate infrastructure. These challenges can make it difficult for startups to survive, let alone scale. Indian health tech startups have been on the rise, but they face several challenges in their journey to transform the healthcare ecosystem mentioned below:
Challenges in raising Funds:
Low returns, lack of innovative products, and long lead times of the startups working in health tech pose serious challenges in procuring funds for the startups. Domestic startups currently lag behind their global peers in terms of innovation and business offerings, which could be the primary reason for muted investor interest within the domain. Product-focused startups in health tech have a long gestation period, it takes years for the final product to see the light of day. Unlike IT/tech companies, in healthcare the upfront investments are high and product cycles are long. Thus, the path to revenues is longer. The start-up ecosystem is young in India and primarily IT-driven; in contrast to the West, India lacks “patient capital” which poses a significant challenge for health tech entrepreneurs in India.
Lack of Mentorship:
Right mentors are an essential aspect of any start-up that is mostly unavailable. India’s competitive advantage lies in its large group of well-trained medical professionals, and as a place that is growing for high-end diagnostic services; the number of mentors and investors is very low. With most startups failing in this space, existing investors are also very apprehensive about investing.
Lack of Doctors and Staff:
The calculated doctor-patient ratio in India is as bad as 1:1700, and it goes down to 1:60,000 in the rural areas. In a country like ours where the number of doctors is insufficient, they become very hard to acquire. Numerous specialists are new to healthcare software on computers or mobile devices. They tend to stick to traditional strategies and are reluctant to adapt to new technology. Skilled talent is also a challenge as the health tech industry requires a skilled workforce that is sparse and comes at a premium.
Infrastructure & Digital Divide:
The issue of accessibility is very much present and is linked to the issue of acceptability. Not only does the digital divide firmly exist with great variation in digital literacy across the spectrum but the acceptability of and consensus around seeking traditional healthcare remains prominent. Many patients across the country remain committed to in-clinic consultations and the grind of acquiring medicines in person. This is linked to the fact that comfort and familiarity with digital tools are widely unequal throughout the country and beyond and that several vulnerable communities outside metropolitan urban centers might find it hard to avail quality digital healthcare due to a lack of infrastructure and trained professionals in their locations. Despite technical developments, India still has connectivity and infrastructure issues, particularly in rural areas. For health tech businesses that depend on internet access, this can be a major obstacle.
Patient’s Data Privacy:
The other issue is linked to data management, integration, and ultimately, privacy. Consolidating the medical data of patients seamlessly from various sources is a process we are still getting used to, and doing it on a large scale will require a lot of technological intervention. The world also has a major data protection problem directly linked to health tech anywhere— as per the HIPAA Journal’s Data Breach report, 50 healthcare data breaches of 500 or more records were reported in January 2022.
Growth: A Frustrating Process:
You may have noticed the swift ascent of tech firms like Dropbox or Amazon, but healthcare operates on a different timetable. Healthcare, renowned for its gradual progress, requires rigorous testing for unproven ideas. Since healthcare directly affects people's well-being, it often takes months or even years to establish the scientific validity of a potential solution. Consequently, growth in the healthcare sector can be unpredictable. Considering Practo, who received their first funding after 3 years, it still took them a long time of 7 years to reach where they are today. The competition may not be tough but very few startups can survive the sluggish pace of growth in the industry.
Monetization :
The growth of the sector is slow which makes it hard to monetize. With very few startups in the healthcare space today, there are very few business models to draw reference from. Hence the monetization plan would be trial and error. Health tech startups, whether as doctor–patient platforms, doctor-doctor, lab aggregators, have found it tough to break even or even find a sustainable revenue model. Because the industry deals with the lives of patients, people generally think it is the right of the providers, enablers, and suppliers to save them. The social angle associated with the industry is one of the major root causes that it's tough to monetize in healthcare and education.
Navigating regulations:
Healthcare is also a highly regulated market to ensure that patients get the best possible outcome and in today’s times, their privacy is protected. The amount of verification and validation that healthcare products need to undergo can be a massive and prohibitively expensive undertaking for a startup. The quality and regulatory approvals needed not only to run your business but also to give you a competitive edge, can spell difficulty for many startups. The process of knowing, navigating, and abiding by these regulations is challenging and expensive.
The Indian medical device regulations have undergone a lot of changes over the last couple of years and this has not been easy for start-ups to navigate. Considering this retrospectively, certain healthcare startups may not survive their initial years. Their expenses and budgets could be so substantial that they desperately require rapid growth to offset their financial losses.
5.Major reasons for the failure of health tech startups
Thematic analysis of perspectives from the expert KIs involved in the STIP consultation process focused on understanding gaps. The analysis revealed three dominant or core themes as gaps across the health innovation lifecycle and its ecosystem. These were awareness and access to information, mentoring and networking, and funding. Table 2 provides the key thematic areas identified as gaps and their relative intensity and distribution across the lifecycle.
Other factors involve a lack of understanding and collaboration with established players, overreliance on technology without addressing user needs, insufficient regulatory compliance and ethical considerations, and lack of sustainable business models.
6.Case Study - CureFit: A success story.
We have examined the case study of startups: Curefit is a prime example of a successful startup.
Mukesh Bansal and Ankit Nagori co-founded Cure.Fit in 2016. This health tech and fitness startup has set its sights on the primary healthcare sector. Cure.Fit adopts a unique approach by combining customer engagement, coaching services, and product/service delivery through a blend of online and offline channels. As of now, Cure.Fit operates under four distinct verticals:
1. Cult.fit: These are brick-and-mortar workout centers accessible to its members, offering fitness services.
2. Eat.fit: This vertical focuses on delivering nutritious food on a subscription basis.
3. Mind.fit: It offers wellness programs aimed at stress prevention techniques, accessible through a mobile app.
4. Care.fit: The latest addition to their portfolio, this vertical provides healthcare solutions through in-house physicians.
Cure.Fit has demonstrated its growth potential by securing a total of $624.6 million in funding across 11 investment rounds. Their most recent funding round, Series F, was completed on November 9, 2021.
Cult.fit's success can be attributed to its ability to transform ordinary workouts into engaging experiences through innovation and the gamification of fitness routines. Their commitment to professionalism ensures that workout centers are not overcrowded, and equipment is consistently maintained to high standards. Additionally, they've set themselves apart by offering hassle-free parking, further enhancing the overall customer experience.
7.Recommendations
To fortify the Indian health tech ecosystem and tackle its challenges, a concerted effort between startups and investors is crucial. Startups should redirect their focus towards innovation, differentiated product offerings, and building sustainable business models. Simultaneously, investors need to shift their mindset, adopting a patient approach and actively participating in the long-term growth of these startups. Below are some of the recommendations to address the challenges and harness the opportunities in the Indian Health tech startup space.
Comprehensive Infrastructure Development:
To ensure equitable healthcare access, a two-fold infrastructure development strategy is essential. First, the establishment of user-friendly telemedicine platforms caters to remote and underserved areas, breaking down geographical barriers. Second, the creation of state-of-the-art health data centers not only prioritizes data privacy and security but also provides a backbone for AI-driven health solutions and digitized lab results, promoting efficiency and innovation.
Effective Policy and Regulation:
Clear and standardized policies form the bedrock of a thriving health tech ecosystem. Implementing unified health data protocols, akin to FHIR, facilitates seamless data interoperability, enhancing collaboration among diverse health applications. Simultaneously, providing unambiguous guidelines on digital health applications and data usage establishes a regulatory framework, instilling confidence and ensuring ethical practices within the digital health landscape.
Focused Skill Development and Training:
Empowering healthcare professionals with digital literacy is paramount for the successful integration of healthtech tools. Digital training programs tailored for medical practitioners enhance their proficiency in utilizing cutting-edge technologies. Additionally, introducing specialized health tech courses in universities contributes to a future-ready workforce, adept at leveraging data analytics and digital solutions in healthcare delivery.
Strategic Public-Private Partnerships:
Collaboration between the government and the private sector is pivotal for holistic development. Encouraging joint initiatives for research, infrastructure development, and implementation of health tech solutions ensures a synergy of resources. Simultaneously, supporting health tech startups with financial aid, mentorship, and networking opportunities fosters innovation and entrepreneurial spirit within the industry.
Promotion of Technological Innovations:
Investing in technological advancements forms the nucleus of a progressive health tech ecosystem. Prioritizing research and development in artificial intelligence and machine learning for diagnostics and predictive analytics revolutionizes patient management. Simultaneously, the integration of blockchain for health records ensures decentralized, secure, and transparent data management, laying the foundation for trust in digital healthcare.
Holistic Financial Investments:
Sustaining motivation and fostering innovation require strategic financial investments. Increasing funding for research and development initiatives propels the industry forward. Furthermore, offering grants and subsidies for innovative health tech projects not only supports entrepreneurial ventures but also catalyzes widespread implementation, creating a ripple effect of positive change.
Patient-Centric Awareness and Engagement:
A patient-centric approach is vital for the success of digital health services. Launching digital health campaigns raises awareness among the public about the benefits of embracing digital healthcare solutions. Establishing feedback mechanisms where patients can actively contribute insights ensures a continuous cycle of improvement, aligning health tech services with the evolving needs and preferences of the end-users.
Data Security and Privacy Measures:
The foundation of any digital health system is trust, built on robust data security and privacy measures. Implementing strong encryption techniques safeguards patient data, instilling confidence in the system. Additionally, formulating and enforcing health data privacy laws further ensures that patient information is handled ethically, mitigating concerns and fostering widespread adoption of digital health solutions.
Enhanced Interoperability:
Interoperability is the linchpin for efficient and effective healthcare delivery. Creating a unified digital health record system ensures seamless access to patient information across various platforms. Concurrently, promoting the use of open APIs fosters integration among diverse healthcare tech applications, creating a cohesive healthcare ecosystem where information flows seamlessly for improved patient outcomes.
Addressing Local Needs and Strengthening Ecosystem:
Recognizing the diverse landscape of healthcare, addressing local needs is imperative. Ensuring health tech solutions are available in regional languages enhances accessibility. Strengthening links between academia and industry through internships and sabbaticals facilitates mutual understanding and collaboration. Simultaneously, regional policies focusing on funding, digital literacy, and talent recruitment bridge gaps in the healthcare ecosystem, ensuring inclusivity and relevance across diverse communities.
8.Conclusion:
The health tech startup ecosystem in India is at a crucial juncture, poised for significant growth and impact. While facing a multitude of challenges, from funding constraints to infrastructure gaps, these startups are driven by a shared vision of making healthcare more accessible, affordable, and of higher quality for all Indians. To unlock the full potential of India's health tech startups, a multifaceted approach is necessary. This includes strengthening the link between academia and industry, ensuring access to funding, promoting digital literacy, and addressing infrastructural shortcomings. Collaboration between startups, government bodies, and established healthcare providers will be pivotal in overcoming these hurdles.
In the ever-evolving landscape of healthcare, India has a unique opportunity to harness technology as a catalyst for transformative change. By implementing the recommendations outlined in this paper and learning from both successes and challenges, we can pave the way for a healthier, more accessible healthcare future for all.
Meet The Thought Leader
Ashray Gupta, BCG consultant and SRCC alumni with a passion for leadership development. In addition to his professional work, he also dedicates time to mentoring individuals and helping them unlock their true potential. Through this experience, he has honed his abilities to provide guidance, encouragement and support to those seeking to accelerate their growth.
Meet The Authors (GGI Fellows)
Dr. Greeshma Sharma, a project consultant at IIT Delhi, is an expert in behavioural UX design and data analytics. With a PhD in cognitive neuroscience from Delhi University and a postdoc in User Experience from IIT Delhi, she seamlessly blends academic rigor with practical expertise. Greeshma Sharma is primed to bring innovation, leadership, and a deep understanding of human behavior to any professional setting.
Shubhendu Chaudhary, graduate of IIT(ISM) Dhanbad and presently Deputy Manager at Coal India Limited, is driven by a passion for social impact. His diverse journey includes pursuing UPSC CSE due to his keen interest in public policy.
Beyond his professional pursuits, Shubhendu expresses creativity through writing and has a deep love for the
performing arts, believes in the power of storytelling to engage and raise awareness. With a long-term vision of establishing an NGO focused on education and health, he aims to make a lasting impact on the lives of underprivileged children across the country.
I am Saravanan Chandran. With bachelors in Statistics from Loyola College of Arts and Science, Chennai, I have 2 years of work experience at athena health technology (US Healthcare
Technology & IT Consulting Firm) as Clinical Quality Analyst. Apart from my profession, I am an aspiring public speaker with 2 years of leading my toastmaster club in different leadership positions.
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