The Rise of Digital Healthcare: An Economic Perspective

Over the decades, the healthcare landscape has undergone significant transitions through the integration of digitized medical care. From the increase in telehealth services, innovations in the field have allowed individuals from rural and underserved areas to receive the optimal care they need. As healthcare systems around the United States and the world continue to grapple with the rising costs of medical care and shortages in staffing, the understanding of the financial and economic implications of digital healthcare has been increasingly important. Due to an increase in market competition and the economic efficiency of telehealth services, the landscape of digital care is set to revolutionize healthcare and contribute to a more sustainable way to provide medical services. 

Investments in technology can lead to savings in long-term care costs and substantially increase the rate of return. Digital health evaluations have been driven by traditional financial-based models through which the cost per patient has been significantly reduced (Nguyen, 2024). Overhead costs, brought through administrative waste and traditional clinic visits, generally increase the costs of care and patient monitoring. With minimized operational costs, increased productivity, enhanced clinical decision-making efforts, and a reduction in hospital readmission rates, there are significant benefits associated with medical practices acquiring digital operations. While the initial costs of health information technology can be high, they are often offset by long-term savings and decreased administrative burdens (Gentili, 2024). Digital health interventions, such as telehealth services, electronic health records, and wearable health technology, have the potential to reduce healthcare costs and utilize resources that are scarce and limited. During the COVID-19 pandemic, digital healthcare was optimized for primary care improvement and communication between providers and patients (Gentili, 2024). Millions of Americans and individuals worldwide could receive the care they needed while avoiding contact and abiding by the isolation rules. 

The ability to receive quality care with reduced prices comes partially from the market competition associated with the rise in digital care. More providers — physicians or healthcare entities like hospitals — have entered the market, increasing advancements and growth in the sector. The main driver of computerized healthcare models is the penetration of smartphones, tablets, and computers in everyday life. More and more citizens are getting their hands on the internet, streamlining processes that would have taken days before. The market revenue of the digital health market in 2023 alone was $180.2 billion (MarketsandMarkets, 2023). With the widespread availability of devices, the technological convergence in society has allowed for a more proactive approach to healthcare.

Along with the increased prevalence of technology, in the past few years, there has been an increased prevalence of mental health disorders and chronic conditions that significantly boost the digital healthcare market by driving demand for continuous, accessible care (Yahoo Finance, 2024). Healthcare providers can meet with more patients and have direct one-on-one meetings for extended periods while unnecessary implicit travel time costs and inefficiencies in care coordination are mitigated.

The economic efficiency associated with decreased facility costs and opportunity costs of time and resources drives the adoption of digital healthcare entities. Resource optimization is sought out through the minimized need for extensive clerical staff, paperwork, and improved patient flow. Electronic health records allow for the reduction of errors and improve overall care quality. The environmental implications associated with reduced gas waste during travel time to and from the hospital for providers and patients benefit all. Digital healthcare solutions also allow for efficient scalability when meeting high patient demands. With an increase in populations globally and a reduction in the number of healthcare providers available, there is a minimized supply for a blatantly large demand. In turn, this should increase expenses, but costs are offset when providers can meet with more patients in a day through digital healthcare. 

A large portion of hospitals and private practices have transitioned to the use of computerized methods, whether in the form of telehealth, electronic health records, or clinical decision support systems. A rise in revenue and productivity has led to the rise of digital health solutions, creating an outlet to escape the cyclical cycle of overspending. 

Edited by Nora Ni

References

Research and Markets. (2024). Digital Health Market Competitive Landscape and Forecasts to 2030. Yahoo.com; Yahoo Finance. https://finance.yahoo.com/news/digital-health-market-competitive-landscape-133200125.html

Digital Health Market Size, Share, Trends and Revenue Forecast [Latest]. (2023). Digital Health Market Size, Share, Trends and Revenue Forecast [Latest]. MarketsandMarkets. https://www.marketsandmarkets.com/Market-Reports/digital-health-market-45458752.html

Gentili, A., Failla, G., Melnyk, A., Puleo, V., Tanna, G. L. D., Ricciardi, W., & Cascini, F. (2022). The cost-effectiveness of digital health interventions: A systematic r review of the literature. Frontiers in Public Health, 10(10). https://doi.org/10.3389/fpubh.2022.787135

Nguyen, K.-H. (2024). Cashing in: cost-benefit analysis framework for digital hospitals. BMC Health Services Research, 24(1). https://doi.org/10.1186/s12913-024-11132-7

Infinity Rehab (n.d). Telehealth: Clear use, questionable ROI [Photograph]. https://www.healthcaredive.com/news/telehealth-uncertainty-american-well-teladoc/520908/