To help HealthTech founders make sense of the health economics landscape, the HealthTech Activator sat down with Abbas Al-Murrani from Health Economics Consulting NZ. In this Q&A, Abbas shares practical insights that early-stage founders should keep in mind as they navigate the early stages of their health tech journey and build their business.
Conveniently, most healthcare systems are transparent about the problems they are trying to solve.
Health technology developers can better align their value proposition by focusing on the real-world problems identified by payers, reimbursement bodies, and healthcare systems. Countries often publish these priorities through national health strategies and need assessments.
Strategic documents like the New Zealand Health Plan, Primary Health Care Strategy, and Pae Ora (Healthy Futures) Act highlight key focus areas such as equity, aging populations, chronic disease, and digital health.
Health technology developers should also study how value is assessed by agencies like Pharmaceutical Management Agency (NZ), National Institute for Health and Care Excellence (UK), and Pharmaceutical Benefits Advisory Committee and Medical Services Advisory Committee (Australia), and tailor their approach accordingly demonstrating clear economic and clinical benefits that match these priorities.
It's essential to be pragmatic, rigorous, and flexible, adapting the value narrative to different stakeholders and thinking globally from the start. This helps ensure the technology is relevant, fundable, and scalable across different health systems.
Healthcare systems use health economics to balance costs and outcomes when making decisions and can be made up of both public and private entities or sectors.
When a new health technology is introduced, policy makers assess its value by weighing the additional benefits the technology will bring against the additional cost associated with introducing it. Their willingness to pay for and adopt the technology often depends on how favourable this balance is.
Countries like Australia, New Zealand, and the United States tend to be implicit about what they’re willing to spend on new health technology, while in the United Kingdom, policy makers are more explicit about what they are willing to spend or invest by defining their spending thresholds.
Choosing which country to enter first is a complex decision for any HealthTech company. It depends not only on the potential economic and clinical benefits, but also on factors such as the clarity and efficiency of regulatory pathways, the ability to establish strong clinical partnerships, and the resources required for meaningful market penetration.
It’s important to recognise that investment decisions are influenced by more than just value. Several additional factors play a critical role and should be carefully considered, including:
These elements can significantly affect whether new technologies receive investment.
That the concept of value makes up 100% of the decision-making process for policy makers. While important, value is not the only factor that should be considered when making healthcare investment decisions.
There are other important factors to consider including,
Additionally, it should be noted that no healthcare system will cover the cost of everything, usually only paying or investing into treatments or technologies that will directly reduce the all-important health budget.
For example, if technology helps someone return to work faster, it might not be reimbursed by the healthcare system because the cost of someone being off work is paid by a different part of the system, not healthcare.
Another misconception I see is this idea that just because technology is more affordable, it does not mean it will always be funded or used. Sometimes the per unit cost of a solution is affordable, but it doesn’t scale well or becomes expensive when combined with other delivery factors. In this instance, if it costs more overall, it is unlikely to be adopted.
All these factors affect whether a new technology will be adopted in healthcare.
There are three essential ingredients you need when developing healthcare technology that will enhance the case for its long-term adoption.
It’s also helpful to work with health economic experts. They can help you think about things like how your technology fits into the patient care journey, what it costs, and what health outcomes it delivers. This is especially useful when you're planning a clinical trial.
Doing an economic evaluation (a study of costs and benefits) alongside your clinical trial is considered the ‘gold standard’ in many healthcare systems. It shows not only that your technology works, but that it’s worth paying to increase overall value.
Health economic considerations can be initiated at any stage of the product life cycle, but as with most things, the earlier, the better.
Looking at the economics in a later phase of a product's life cycle often means you will need to make more assumptions because there is less data associated with your technology. These assumptions can weaken your case when you're trying to prove the value of your product to reimbursement agencies around the world.
The journey to securing reimbursement is long and complex but if you plan for these early and build them into your strategy from the start, you’ll be in a much stronger position later.
There are groups and individuals who’ve already navigated the challenges you're likely to face as a startup. Learning from their experiences can save you time and effort.
There are many valuable programs and organisations early-stage health technology innovators can tap into early, such as engaging with organisations like the HealthTech Activator, Te Tītoki Mataora and MedTech-iQ. These organisations are all a part of a growing and supportive health tech ecosystem in Aotearoa New Zealand that is responsive and collaborative.
Remember, you are not reinventing the wheel! There’s a well-worn path, and part of walking it successfully includes understanding and applying health economic thinking, particularly when it comes to shaping a strong value proposition for your product.
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