Inflation has arrived. The Benefits of Deflationary Healthcare


Inflation is at levels we haven’t seen in forty years in almost every sector of the economy. Health care is one sector that hasn’t (yet) seen it, but it’s coming. Fortunately, the same pandemic that has spurred inflation in virtually every other sector of the economy has also sparked developments in digital health that may provide us with the means to reduce the cost of healthcare.

However, for this to become a reality, investors would need to make wise choices, the government will need to make substantial expenditures, and there will need to be an open dialogue about the future of health care inside the sector.

Digital health professionals have had a lot to worry about over the past two years, including quickly accelerated changes to the field, absurdly high valuations, underwhelming stock performance, and regulatory obstacles. However, the impending inflationary wave may have a more significant effect.

According to the US Consumer Price Index, recent inflation was 9.1%, which is the highest level since the early 1980s. Only 44% of American adults have enough money saved to handle an unforeseen $1,000 bill, according to a recent poll, indicating that Americans who have historically lived on the brink of financial calamity are still doing so. This is particularly concerning when it comes to medical debt, which the American Bankruptcy Institute lists as the top reason for bankruptcy in the US.

The risk of a financial emergency is already high for American families; growing healthcare prices are the last thing they need. Unfortunately, a recent McKinsey analysis found that healthcare prices will eventually catch up to those in the rest of the market.

There won’t be much of a buffer surrounding healthcare. This sector depends on a demoralised workforce that is experiencing a labour scarcity and increasing wages. The postponed care crisis has many expecting a tsunami of expenditures, and logistics and supply chain issues have an impact on everything from test kits to medicine components. Future contract terms and reimbursement rates will take all of this into account.

It is already incredibly difficult to develop clinical-grade digital health advances that are available to everyone, not just the wealthy few. It will be even more crucial in the next months or years to concentrate on innovations that help the entire public control inflation rather than just wealthy individuals’ access to better healthcare.

Clinical-grade goods and services that make use of consumer-owned goods like smartphones and video conferencing systems are examples of health technology advancements that will have a deflationary effect. These developments open up new care pathways that are less vulnerable to price increases. The Apple Watch Afib notification and FreeStyle LibreLink, which allows users to monitor their blood sugar using a smartphone app and Libre CGM, are two other examples.

It’s crucial to remember that not all digital tools are deflationary. Solutions that target last-mile problems will still have to contend with growing staff and petrol prices. Furthermore, costly wellness technologies that don’t offer therapeutic solutions to problems with population health won’t have a deflationary effect.

Healthcare costs may decrease if existing items are used to move diagnostic testing from hospitals to our homes. It can help with early diagnosis of chronic diseases, which are far more expensive to treat when discovered too late. It also takes fewer people to administer.

Investors and politicians should be identifying elements that can make tests that still require the creation of physical kits or devices that are paired with the technology used on smartphones more supply-chain robust. In our industry, initiatives like the CHIP Act might offer significant incentives for businesses to relocate their manufacturing operations here, thus reducing inflation in the future.

If we pursue investments, goods, and trends that exacerbate inflationary pressures, everyone involved in healthcare will fail in our goal. We’re running out of time. Before it’s too late, we must resolve this issue.

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