Health spending takes up 10% of the global economy: How can tech help reduce costs and improve lives?

Most observers recognise that increasing healthcare costs are putting immense strain on households, governments, insurers and healthcare providers – and that the money spent isn’t translating into better health outcomes.

In 2021 alone, global spending on health reached a staggering $9.8 trillion, accounting for 10.3% of global GDP. Yet, over the last decade, life expectancy has stagnated in many countries, including the United States (US), which alone spends over $4 trillion annually on health.

We know that change is imperative, yet progress has been slow. The impediments to change include low levels of general awareness about the need and ways to maintain health, concerns of insurers and the public about the high short-term costs and delayed benefits of preventative care, and insufficient incentives for providers to shift their practices.

International organizations are actively stepping up their efforts to focus the global community on the issue. The United Nations has set Sustainable Development Goals for Health, and the World Economic Forum founded the Centre for Health and Healthcare to define and advocate for a path forward. These efforts have supported research and amplified global discussions about the various factors that make health costs balloon: an ageing population; the increased prevalence of chronic conditions (particularly obesity, cardiac disease, cancer, musculoskeletal conditions and mental illness); higher prices for healthcare products; administrative inefficiencies; and health inequity.

With increasing awareness, we must shift the attention of all the stakeholders toward new ways of addressing today’s healthcare challenges – specifically, towards using technology and artificial intelligence (AI) to:

Excellent examples of the effective use of technology to drive sector-wide change are starting to emerge in fitness, musculoskeletal and maternal health. Those applications give us clues on how to design successful digital interventions in the health sector.

Exercise outperforms drugs in successfully treating mental health conditions. Multiple studies link exercise to prevention or delay in onset of heart disease, some cancers and diabetes.

Several companies have designed and scaled tech solutions that help increase consumer engagement in exercise. One of the global leaders in this space is Vitality, a health and life insurance company. Their wellness solution, grounded in the science of behaviour change and habit formation, provides a variety of rewards for regular exercise—from a cup of coffee to a lower insurance premium.

Instant rewards help rebalance the equation of short-term cost vs. long-term rewards and have resulted in sustained engagement by over 60% of Vitality members and a 15% drop in healthcare costs. The company continuously tracks and analyzes its wellness data to ensure a clear link between exercise, health outcomes and costs. Health and life insurers have adopted Vitality’s tech solution in over 40 countries.

Another company, Sency, built an AI model that yields expert insights into human movement. This model allows people to track their fitness level and benefit from personalized exercise plans with an AI coach. Consumers using this AI coach triple their engagement in exercise. Sency’s solution is also highly popular with private trainers, who can expand their practices by using the AI coach to track improvements in their customers' physical condition and to reduce costs.

One in two adults in the US suffers from musculoskeletal pain, with treatment amounting to about $380 billion in costs per year. Addressing such pain would lead to a major reduction in healthcare expenses.

Companies like Hinge, Omada and Sword offer a new way to deliver physical therapy: remote physiotherapy guided by AI under the supervision of a physiotherapist. Their approaches have provided patients with a 70% reduction in pain, a 35-45% decrease in depression and anxiety (often linked to pain), and a 53% decrease in the use of pain medication. A recent report from the Peterson Health Technology Institute (PHTI) provided independent confirmation that virtual musculoskeletal solutions offer clinical benefits comparable to in-person physical therapy.

Proven outcomes and a quick decrease in costs due to medication reduction have led to high insurer demand for the new generation of physiotherapy tech solutions.

In the US, maternal death rates have increased by 85% between 2017 and 2021. Black women have three times the mortality rate as compared with white women. Women across minority groups also have much worse outcomes in infant mortality, postpartum mental health and premature births.

Health-tech companies like Maven and Ovia have developed solutions aligned with value-based care principles to address maternal health challenges. By using remote monitoring, telehealth services and data-driven insights, these companies have achieved a 30% reduction in premature births, an 18-28% decrease in the rate of C-sections, and a 32% decrease in neonatal ICU admissions. In addition, 85% of their customers reported reduced anxiety and depression symptoms. A few independent studies confirm the effectiveness of tech solutions in promoting maternal health.

Improvements in medical outcomes and quick cost reduction due to fewer complications have led to high demand for innovative maternal health solutions among insurers.

The above examples are encouraging and show that technology solutions that achieve high customer engagement can lead to a reduction in healthcare costs due to improved medical outcomes. As more tech companies engage consumers in healthy behaviours and partner with providers and insurers to scale their solutions, we will start to see positive change in the trajectory of the health sector: a reduction in healthcare costs, better health outcomes and longer, more active lives.