Health IT Snapshot – Formation of Digital Health Platforms

In December 2021 Oracle Corporation, an enterprise software giant, announced that it entered into an agreement to acquire Cerner Corp., a US-based provider of digital information systems for approx. EUR 27bn. This positioned Oracle as one of the major players in the health technology world. In the past, patient protection and data confidentiality concerns had long delayed the digitalisation of the healthcare industry. Today, however, large IT companies are entering the market in full force and the significant potential of digital applications is becoming more apparent.

Changing regulatory frameworks are facilitating the emergence of new digital business models. The Digital Care Act (DVG) for example, which took effect in 2019 in Germany, entitles digital health apps, once registered as digital application (‘DiGA’) to be reimbursed by insurance companies. Consequently, this promotes digital innovation and the use of telemedicine as valuable treatment options. This unique legal framework is putting Germany at the forefront of the digitalisation of the care sector in Europe.

Covid-19 has further accelerated this development. Most social interactions and contacts were put to halt, forcing the industry to adopt digital approaches to patient communication and treatment. Virtual consultations and remote patient monitoring only become a necessity but also a preference. Digital technologies are transforming business processes, operations, and the culture within hospitals. Over the past years, hospitals and other healthcare institutions have begun to integrate electronic health records (EHR), big data, function-specific software, and other digital initiatives into their daily operations. Digital transformation is improving clinical decision-making, as well as allowing for patient-tailored precision medicine based on computational science and machine learning.

There is high M&A traction observable in the digital healthcare market. Companies strive for technological leadership and seek to consolidate to form large platforms that cover a wide range of digital healthcare products and services. This is also an attractive strategy for Private Equity investors who are entering the market or adding to their existing portfolio, with the aim to participate in the value creation generated by
innovation and digital transformation in the industry.

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