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How Can Healthcare Technology Companies Thrive in Recession?

It's a recession when your neighbor loses his job; it's a depression when you lose yours–Harry S. Truman

Here's an unpopular opinion: Recession brings opportunity.

It is unpopular because recession brings fear, uncertainty, and hopelessness, along with budget cuts and major enterprise downsizing. People are forced to leave their jobs, and unemployment soars. During the 2008-09 financial crisis, around 22 million jobs were lost worldwide. Besides unemployment, inflation goes up, and the standard of living goes down.

But the recession has a silver lining. It is not the same for everyone.And it eventually ends, followed by a period of strong economic recovery and growth. For instance, one year after the Great Recession of 2007-2009, the S&P 500 stock market index recovered 68% of its value and 84% after two years.

As a forward-looking society with great technological advancements at our disposal, we must err on the side of opportunity that comes out of any adversity. The technology sector has the means to survive and thrive in a financial recession.

This article will discuss the overall state of recession in the tech industry with a focus on recession in healthcare technology and what measures can be taken to make this industry recession-proof.

Table of Contents

➥ Recession Worries Loom in The Tech Space

➥ Recession in Healthcare Technology–Is Everything Bad? Not Really

➥ 4 Recession Factors That Tech Companies Should Consider

➥ How Nextfiniti Can Help to Recession-Proof Your HealthTech

Recession Worries Loom in The Tech Space

Generally, a recession is defined as a period of negative growth for two consecutive business quarters. The National Bureau of Economic Research (NBER) defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months."

Normally this decline is visible in various macro and micro-economic indicators such as GDP, employment, industrial production, inflation, and wholesale-retail sales.

In the tech ecosystem, it is even easier to identify recession. Just look at the economic and employment trends in big tech companies like Google, Facebook, and Amazon.

Recently Google's Sundar Pichai wrote a memo to his employees in which he highlighted the "need to be more entrepreneurial, working with greater urgency, sharper focus, and more hunger." in the context of uncertain economic activity.

Moreover, Google, Apple, Tesla, and Meta plan on slowing down the hiring process through 2023 to consolidate their current investments. On the other hand, various tech job roles related to AI, data science, cloud, robotics, and renewable energy are expected to be in high demand these days.

The bottom line: With employment rates stabilizing after COVID-19, markets will eventually continue to recover and grow (with minor hiccups along the way).

Recession in Healthcare Technology–Is Everything Bad? Not Really

Some industries–particularly health tech, are doing relatively well during these uncertain economic times. Due to COVID-19, investors became interested in putting their bets on healthcare technologies. As a result, investors parked $29 billion into digital health in 2021, which paved the way for many innovative health tech products.

Moreover, the first quarter of 2022 saw a global investment of $10.4 billion in digital healthcare spending, as per the findings of CB Insights. But, the report also finds that the health tech funding is down compared to previous quarters. Investments, particularly health spending, may cool off as the world comes out of the pandemic and investors start to balance their portfolios. However, this is not a significant indication that health tech's growth will deteriorate soon because big tech companies are doubling down on digital health innovation.

Last week, Amazon announced to expand its health services as it plans to acquire One Medical–a company that provides subscription-based in-person, digital, and virtual primary healthcare services, for USD 3.9 billion. Recently, Apple also released a comprehensive strategy to advance Apple's healthcare technology to empower the personal health journey of its users.

Moreover, the US Bureau of Labor Statistics estimates a 16% increase in healthcare employment from 2020 to 2030. So healthcare jobs seem promising even during a recession.

This is just a glimpse of how the healthcare sector is doing despite indications of a potential recession. Other industries such as EdTech, food, legal, accounting, and insurance can also show better resilience in the wake of a possible recession.

4 Recession Factors That Tech Companies Should Consider

Disclaimer: The content in this section contains general guidelines and should not be considered legal or financial advice.

If a recession hits, technology companies should consider four key areas:

Reduce debt: While we are no experts in debt servicing, a general rule is that more debt means more financial troubles during a recession. You would need more cash to make interest payments. Otherwise, you are at risk of defaulting. Typically during a recession, funding dries up, and it becomes more challenging to fulfill financial obligations. Tech businesses should try to reduce their debt payments and refrain from massive financial lending.

Effective decision-making: Tech company executives and managers must be on their A-game if a recession hits. A suitable approach is to support decentralized decision-making, which means delegating authority further down the hierarchy. Managers or executives on the ground may have a better view of the changing situation. If the executives back their decisions, the company may have a better chance of survival during a recession.

Workforce management: Employees are the first to suffer during a recession. However, layoffs are harmful to the companies as well. Tech resources are highly skilled individuals. If a tech company goes on an unemployment spree of its skilled workforce, it can experience a massive productivity drop. Instead, companies can offer performance pay, reduce work hours, and offer furloughs to their resources for effective workforce management during a recession.

Digital transformation: That's our cup of tea. If technology companies prioritize automating their manual processes, they might be better positioned to survive a recession. With digital transformation, tech companies can monitor their business analytics, which can help them identify any revenue leakages during a recession. It can help them better understand their business and make operational improvements where necessary.

How Nextfiniti Can Help to Recession-Proof Your HealthTech

Recession affects the healthcare industry when patients postpone their non-emergency medical treatments or elective procedures or when supporting charities and funds cuts down on their generosity. Healthcare costs may also increase. Regardless of the recession, healthcare is a basic necessity worldwide, making it largely resilient to a recession, and healthcare technologies enhance the effectiveness of a health system.

Nextfiniti offers health tech implementation services to enhance digital transformation in healthcare. These include:

  • Unifying all of your health and administrative data in one place. Such as patient data, healthcare worker data, health coverage and insurance data, etc.
  • Extracting robust business analytics from unified data to help you identify areas of improvement. Also, unified data helps strengthen the healthcare provider and patient relationship.
  • Implement various healthcare and fitness features, such as virtual patient care, to improve end users' lives.
  • Implement third-party integrations with innovative health and fitness apps
  • Build components that enable healthcare privacy and security compliance
  • Build features that allow healthcare professionals and researchers to make new scientific breakthroughs.

Recession in healthcare technology is greatly minimized by the global demand for quality health services. Recession or not, Nextfiniti will be your one-stop-shop to drive digital transformation in your health tech. Talk to our health tech expert today to find out how we deliver innovative solutions.