Investing in Healthcare Tech to Reduce Costs

The healthcare industry is under a lot of pressure to reduce the cost of care delivery while improving patient outcomes. This is because healthcare expenditures have become unsustainable. To address this challenge, payers, providers, and regulators are pushing for greater efficiency and value in healthcare. As a result, there’s growing investor interest in emerging healthcare technologies that can help reduce costs by improving efficiency, care coordination, automation, and utilization management. Here are some of the key technology markets that could reduce costs across healthcare:

Artificial Intelligence

The AI healthcare market has grown a lot recently, with investors excited about its potential for unlocking cost savings. AI can automate complex manual workflows, driving significant labour cost reductions. For example, AI can be used to automate patient communication, revenue cycle management, and other administrative processes. This frees up human staff to do more valuable work. AI-based precision medicine solutions can also cut costs by preventing unnecessary treatments or diagnostic tests.

Remote Patient Monitoring

Remote patient monitoring (RPM) tools can help with the transition from high-cost reactive care to continuous preventative care. RPM devices can alert providers early before acute episodes escalate into high-cost ED visits or hospitalizations. This has led to substantial savings for high-risk patients, with 20-50% decreases in hospital admissions. For patients with congestive heart failure alone, RPM use could result in $6.4 billion in savings nationally just from avoided hospital readmissions. Voice-enabled AI assistants are making RPM solutions more accessible and senior-friendly.

Surgical Robotics

Robotic systems enable less invasive types of surgery, which has proven to lead to fewer complications, shorter hospital stays, and reduced staffing requirements. While the initial capital outlay for surgical robots can be high, hospitals have seen returns on investment within 2-3 years from significantly lowered procedural costs. The global robotic-assisted surgery market is expected to surge towards nearly $15 billion by 2025.


During the pandemic, telehealth has become an important way to deliver virtual care more easily. It is predicted that up to 25% of care could be delivered via telehealth once fully normalized, creating cost efficiencies of $3 billion annually. The global telehealth industry is estimated to become a $560 billion market by 2027. Virtual visits can provide quality care at a lower cost compared to in-office services for minor conditions and medication management.


Automation in healthcare reduces manual work, making billing, coding, scheduling, and prescription management faster and more accurate. By using robotic process automation to speed up back-office tasks, providers can reduce labor costs and errors. Medical labs are using automation to become more efficient. Hospitals and pharmacies are other settings where automation can help. Robot-assisted surgery platforms also continue to evolve, allowing for less invasive techniques. The healthcare automation market is expected to expand at a 12% CAGR to reach $93 billion globally by 2025.

Healthcare Payers Investing in Tech

Medical claims put a big financial burden on insurers and self-insured employers, so they are investing in healthcare technologies. One survey of payers found that they planned to invest over $1.5 billion towards AI, data analytics, and automation over three years. Another 62% were investing in RPM programs. Some payers are directly acquiring health tech companies or partnering directly with startups to pilot new cost-saving care models enabled by technology. With modest success, these investments could translate into hundreds of millions in medical cost savings due to avoided services and hospitalizations.

Overcoming Adoption Barriers

Despite the potential for technologies to lower healthcare costs, there are still barriers to full adoption. The healthcare industry is notoriously slow to implement change. Tight technology budgets can prevent many small and mid-sized providers from acquiring new tools, even if they would recoup costs quickly from long-term efficiency gains. Furthermore, many promising health technologies lack definitive actuarial data proving cost reductions attributable directly to their use, which can discourage adoption. Privacy and cybersecurity concerns associated with data-driven tools may also make some organizations hesitant to invest.

In conclusion, investors and venture capitalists are noticing the potential for cost-saving healthcare technologies to provide outsized returns. With no single solution to rein in spending, investors have opportunities across automation, AI, telehealth, and remote monitoring to target their capital. As technology-enabled healthcare continues gaining traction, patients, providers, and payers stand to benefit from improved efficiency and greater value.

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