The sheer volume of innovations in the healthcare technology sphere in recent years has been something to behold.  Whilst there is undoubtedly a large degree of variance in the quality of these technolgies, it’s also fair to say that there are many incredibly useful technologies sitting on the sidelines whilst healthcare systems ignore their potential.

A recent study, from researchers at the University of Montreal, explores why valuable technologies fail to be adopted.  To explore the issue, the researchers tracked five healthcare companies to try and understand how venture capitalists picked projects to back.

“We wanted to understand how venture capitalists pick and ‘coach’ technology entrepreneurs. What value do they see in these entrepreneurs and the technologies they are trying to develop? We also looked at the decision-making power that capital investors gain in terms of the technological and strategic choices of these companies,” the authors say.

Picking winners and losers

The study reveals that most of the technologies backed by venture funds are done so purely for their commercial potential rather than any health benefits they may provide.

Now you might say that financiers will clearly want a return on their investment, but what is perhaps surprising is the extent to which invaluable technologies are ignored if they don’t have commercial potential.

An unhealthy influence

The study also revealed the kind of influence financiers place on the technology development process.  The authors contend that the innovation process needs to be looked at by policy makers because of the influence backers have on which technologies make it into healthcare systems.

“It’s worrisome,” they say, “because there are lots of missed opportunities to develop innovations that could help us, for example, to better manage chronic disease or better meet the needs of an aging population. But it is difficult to convince capital investors to invest in these areas.”

As such, if we wish to ensure the best technologies make it into our health systems, we need to rethink the commercial factors involved in health technology development.

With financiers also appear to influence the development of technology they back so that work focuses more on commercial aspects than necessarily on aspects that can benefit health the most.  What’s more, it can also lead to some sectors being almost completely devoid of any new technologies.

Bound by the rules

So what causes this unhealthy situation?  The authors feel that the rules most investors have to abide by often hinder rather than help useful investing.

“We think that if they’re ready to do it, then it must be a good idea,” they say. “But they’re more concerned with protecting corporate value and, ultimately, their return on investment than developing health technologies that can better meet the needs of healthcare systems.”

A prime example of this was a piece of software that was designed to bolster the diagnostic capacity of obstetrics.  It emerged that investors were lukewarm about initial sales so changed the target market from obstetricians to insurance companies.  As such, the software was largely lost to the healthcare sector.

The recent INSEAD/Wipo survey of innovation in countries highlighted the value governments can bring to the innovation process, and this study reminds us that this is certainly the case in healthcare.

It reminds us that we need to create the kind of upstream mechanisms that support the development of innovations that have huge health implications, even if the commercial aspects of the technologies are not so well advanced.

“I may seem stubborn at times, but I’m not. I love innovation. But I believe it is possible to invest in health technologies that are socially relevant, especially in creating sustainable employment and reducing and eliminating inequality,” the author concludes.