Digital Health CRC calls for more coordinated approach to health procurement

The Digital Health Cooperative Research Centre (DHCRC) says the Federal Government’s investment in Australian AI healthtech company Harrison.ai demonstrates the strength of Australia’s digital health ecosystem. Importantly, it also highlights the need to ensure we support local health start-ups through smarter procurement by the public hospital sector.

This week the National Reconstruction Fund Corporation (NRFC) announced a $32 million equity investment in Harrison.ai, a Sydney-based pioneer of artificial intelligence (AI) technology for the health sector.

As a DHCRC participant, Harrison.ai has worked with partners Macquarie University and Sydney Local Health District to undertake a first-of-its-kind academic evaluation of its AI-assisted chest X-ray interpretation solution for clinical decision-making and patient management at the point of care.

DHCRC CEO Annette Schmiede said the investment by NRFC was recognition of AI’s potential to transform healthcare and the capability of Australian innovators to build globally competitive business models.

“Harrison.ai is an outstanding success story when we look at Australia’s burgeoning digital health sector,” Ms Schmiede said. “It is a medical-first company that is using advanced AI and technology to solve essential areas of need in our healthcare system, both here and across the globe.”

“However, while Harrison.ai is a positive demonstration of the local digital health technology sector, it is disappointing that it has had greater success scaling its business in overseas markets than in Australia.”

Leveraging government purchasing power for good

To this end, the DHCRC is calling on Federal and State Governments to use their significant purchasing power more actively across the healthcare sector, particularly in our public hospitals. Directing their spending to support local success stories like Harrison.ai would help drive local innovation and capability.

Australia is a world leader in healthcare and was ranked first in the recent Commonwealth Fund’s Annual Report. Health science research in Australia is ranked 7th globally, and Australia is ranked 5th in the World Index of Healthcare Innovation. Public hospitals account for close to one third of total health expenditures, which are close to $270 billion annually. Health, along with social security and defence, is one of the three largest areas of government spending.

However, the health sector remains fragmented, and poorly integrated with state-based health services. Procurement policy and processes are focused on cost minimisation and large-scale purchasing agreements. This limits opportunities for domestic businesses to compete and grow.

“Many of our partners tell us that they are unable to get a look in on local contracts and are often more successful offshore,” Ms Schmiede said. “This is not only stifling local innovation but creating sovereignty risk.”

“Harrison.ai’s technology, for example, is accessible to one out of every two radiologists in Australia, representing strong leadership by the private sector, but by comparison has only been adopted by three public hospitals in Australia.”

“We believe it is critical that public hospital procurement processes look beyond costs to other impacts of their spend – such as supporting innovation and the growth and sustainability of the local industry.”

This also aligns with current national policies, including the National Digital Health Strategy, which places people at the centre of a connected and digitally enabled healthcare system.

“Incorporating such value-based procurement considerations, which move beyond price as the priority consideration in evaluating benefits, is essential for promoting health innovation, ensuring value for money and enhancing community wellbeing,” Ms Schmiede said.

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