Healthcare SaaS Set To Grow Fastest Within Healthtech At 45% CAGR

India’s healthtech ecosystem is expected to become a $21 Bn market opportunity by 2025, spurred on by the growth of digital health initiatives during the COVID-19 pandemic. Amid the various verticals within healthtech, healthcare SaaS is set to become the fastest-growing vertical.

According to Inc42’s ‘The State of Indian Startup Ecosystem Report, 2022’, healthcare SaaS is set to become a $3.5 Bn market opportunity, growing at a three-year compounded annual growth rate (CAGR) of 45%. 

Suki.ai, Innovaccer and Carestack are among the notable startups in the emerging sector. Innovaccer became India’s first healthtech unicorn last year, with its latest valuation being $3.2 Bn. Along with this, Suki.ai has also raised significant funding over the years, with its latest round being a $55 Mn Series C late last year.

From building AI assistants to streamlining workflows for doctors, healthcare SaaS has seen a lot of use cases within healthtech as the importance of technology rose amidst the pandemic in India.

The need for digitisation due to the rapidly rising volume of critical data further increased the need for adopting cloud-based solutions to support clinical as well as operational efficiencies.

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The Government’s Healthcare SaaS Innovation

One of the most important developments in healthcare SaaS has come from the government – the introduction of the Digital Health Stack under the Ayushman Bharat Digital Mission (previously known as the National Digital Health Mission).

The current digital infrastructure of the country that identifies and connects people while simplifying their day-to-day life through digital means includes Aadhaar, JAM trinity (Jan Dhan-Aadhaar-Mobile) and Unified Payments Interface (UPI). 

This strong digital infrastructure base acted as the launcher for the Ayushman Bharat Digital Mission (ABDM) to further develop and enhance healthcare in the country through digital management.

Digital Health Stack is a set of three different technology stacks (like UPI) which have been developed by the National Health Authority (NHA). It aims to provide healthtech startups with technology to build new products and services under ABDM.

• Ayushman Bharat Health Account (ABHA): ABHA, launched in September 2021, allocates a 14-digit unique identification number to a user, akin to an Aadhaar number, which serves as an identifier for all digital medical records. Once obtained, this unique id helps the users in maintaining their health record history by linking their personal health records to ABHA mobile app. As it is built on a decentralised network, it also allows users to link all their healthcare benefits, ranging from public health programmes to insurance schemes. As of August 30, 2022, 23.63 Cr ABHA numbers have been created. Further, 1,38,200 health facilities have been registered, along with 47,783 healthcare professionals.
• United Healthcare Interface (UHI): Launched for use in April 2022, the UHI allows doctors to offer their services on a single platform. Patients can assess their options according to their requirements and budget and accordingly avail the services of a doctor. More importantly, using the UHI, doctors can cover far more regions. In March, the NHA claimed that it has data to show that urban doctors can serve rural patients as well, using telemedicine. The stack will also have a payments infrastructure to allow doctors to receive payments.
• Health Claims Exchange (HCX): HCX was launched in April 2022. It is a user portal to access health insurance claims digitally.

Being part of the Digital Health Stack, HCX also allows insurance companies to access the information required for the claim independently from the users, making the process smoother. 

The Digital Health Stack will allow improved interoperability between healthcare stakeholders, ensuring that there are fewer points of failure. The government has been encouraging healthcare SaaS providers to use the Digital Health Stack to create more products and services, and invited applications for the same in April.

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Challenges Ahead

With AI set to be at the forefront of healthtech over the next few years, the Digital Health Stack will become a mainstay for many startups working in healthcare. The government has been planning to launch the Digital Health Stack by 2023 and will provide all the APIs from the stack free of charge. However, it is likely to face some implementation challenges.

According to NHA CEO Ram Sewak Sharma, the implementation of ABDM is ‘more difficult’ than building Aadhaar.

While the undertaking is similar to Aadhaar, the latter only had two stakeholders, the government and the citizen. ABDM, in comparison, will have multiple stakeholders with many levels of involvement.

The Digital Health Stack will see the involvement of doctors, hospitals, insurance companies, diagnostic labs and patients on several different levels in terms of consuming and processing data.

Despite the challenges, healthcare SaaS startups have the requisite expertise to bring a paradigm shift like the way UPI did for fintech. Come next year, healthcare SaaS may emerge as a major sector within the healthtech ecosystem.

With the evolution of Web3, the Indian healthcare space may also see the use of blockchain and decentralised networks, push towards community networks, and use of tokenisation for further innovations.

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