Healthcare innovation is an excellent example of an oxymoron.

And it is not just in South Africa. I know – if I say healthcare in South Africa, your first thought is probably “NHI” and “here we go again with another rant about the NHI”.

But that is for another day – yes, all of us healthcare professionals are watching things unfold with raising concerns but that is not the focus of the case study today.

I want to talk healthcare innovation.

Or rather, healthcare AND innovation.

And I’m using the example of of Astarte Medical (the website is currently still live), a company that dissolved just a couple of months ago.

As a previous NICU nurse and a mother of NICU babies a few years ago, this case study was close to home because I absolutely believe in the vision that they had, but the reality and their vision ended up never crossing paths.

This startup was operational for 8 years and focused on nutrition for premature babies in Neonatal Intensive Care Units (NICU’s) through digital software solutions. The vision was to optimise health outcomes for premature babies by focusing on getting the correct nutrition to them. A noble cause and something that could truly save lives.

So how does Astarte Medical and innovation in healthcare in South Africa add up to a single newsletter?

The struggles and ultimate closure of Astarte was not as much a startup problem as a systemic problem. And we have the same problems here, and some more.

The fall of Astarte Medical

Okay, that sounds bad. It isn’t as much a fall as a decision to close down before the fall. The company ceased operations in February 2024, laid off staff and is in the process of selling its assets and returning money to investors. But the decision came after the CEO, Tracy Warren, realised that they wouldn’t be able to sustain another year without incurring massive losses.

After 8 years, the company only signed contracts with 4 hospitals. With all the hope and technology to scale, they were cut off by the knees due to a lack of commitment from their clients. To put it bluntly, they didn’t have a product-market fit even though they kind of did. If you were to ask the NICU parents, they would probably all say yes to optimsied feeding of their vulnerable babies. But in the end, it came down to the wallets they needed to open and these were the hospitals, and not the parents.

Why exactly did the hospitals not buy in?

And this is the focus of this discussion today. For Astarte Medical, the biggest reason the hospitals did not buy in was due to financial constraints.

Or so they say.

By all means, the company took a big knock during the COVID-19 pandemic when hospitals faced increased financial burdens and cost-saving activities.

But the deeper reason is the oxymoron I spoke of before. Hospitals don’t need innovation. And I am not stating this as a fact so don’t take it the wrong way. What I mean is that the systems and processes don’t need innovation.

They need replacement.

But that requires change and people fear or don’t like change.

In many of our SA hospitals, specifically state or public hospitals, the systems have been used for decades, but it was also built decades ago and the challenge to get old systems talking or integrating with new ones is not something every healthtech startup wants to take on.

The second reason is back to finance. With increased burdens on the hospitals during the COVID-19 pandemic, their margins were significantly impacted and any reserves for potential innovation were either depleted or used as buffers.

Combined with a poor (back to the wallets) product-market fit, despite millions of venture backing, Astarte Medical couldn’t sustain itself.

So now you’re wondering what the other healthcare innovation obstacles are that you didn’t know about?

The state of innovation in healthcare in SA

If you are operating or considering a business in healthcare innovation, these are the factors you need to consider as they can be your downfall:

The obvious ones that you will read about in the news are most probably these (and the list is not exhaustive):

• Shortage of healthcare professionals
• Weak or poor management of facilities and budgets
• Lack of infrastructure and access to healthcare
• Poor governance
• Inequity between public and private hospitals

What about the rest?

Let’s take one step back. There is a huge difference between public and private hospitals in this country. I know it sounds obvious but hear me out. Besides all the other differences, in terms of healthcare innovation the public sector has the need, but the private sector has the money. And although they sometimes collaborate, the private sector has no intention to fund services for the public sector at their expense and with no return on investment.

Just think about TB treatment. There is a massive need in public hospitals, facing a high burden of seriously ill patients. But the best innovations in diagnosing or treating TB are dependent on:

• The financial health of each institution. One contract with a public hospital has no bearing on another hospital. Each manages their own budget and has a different appetite for investing in new solutions.
• Tenders. If you want to supply to the public hospitals, you have to be awarded a tender. That can take months to obtain and even longer to get paid. Some of the wards have dozens of broken equipment lining the passages, waiting to be repaired but the service provider had not been paid for previous services and therefore no new services will be provided. Understandably so, these companies also have cash flow and margins to manage. Not to mention that you have to be BEE compliant to tender. If you are not, you better make a plan to obtain compliance, and not all startups are prepared to reorganise their shareholder structures and decision-making processes to accommodate for this requirement.
• Existing systems and the ability to integrate. No one is going to duplicate their work. Also, there is no time for that. So if your system requires patient data to be entered every time instead of feeding the information from the existing system, you will struggle to get buy in. Private hospitals on the other hand are operating as businesses and have a much bigger appetite for technology innovation and automation of processes and procedures. But the need is not always there and if you are dependent on the usage of your technology to make money, you are looking at a significantly smaller patient pool than in a public hospital.
• Patient privacy. There is a reason that the systems used by public hospitals are so ‘outdated’. The process to change or update will be complex, time-consuming and expensive, with the risk of losing or leaking confidential patient data. That risk is enough to make people close the door in the faces of hopeful healthcare startups.
• And then the one aspect that many ignore, is the appetite for change among healthcare professionals and the willingness to accept new ways of doing things. Ultimately you can have the best digital solution that is affordable and can save thousands of lives. But the implementation usually falls on administrative and clinical personnel – your doctors and nurses. Yet they are so often overlooked during the research phase and then months and millions down the line, executives ask themselves “How did this project fail? Everything seemed perfect.”

It is not that people don’t want to change or just that they fear change. It is much more than that. The workload is intense and with any new technology there is a learning curve. The more complex, the longer it takes. Obviously.

But what might be your fantastic idea to change things for the better and improve patient outcomes, is often yet another admin burden or additional workload for staff that are often overworked and resource constrained. New equipment or processes are perceived in two ways:

• Does it make my work more?
• How difficult is it to learn?
• How will it help me?

Many startups in healthcare focus solely on patient outcomes and I have seen many pitches with something like “It only takes 2 minutes for the doctor or nurse to record” and while this seems very reasonable to an outsider, those 2 minutes is multiplied by at least 30 (patients in the ward) which is immediately a whole hour of work in addition to the normal duties. (Or yes, eating into lunchtime which most people working 12 or 24 hour shifts would really like to have. Pun intended 😊)

So sometimes ‘just 2 extra minutes’ is simply impossible. But you won’t know that if you are not familiar with this environment.

And this is why it is so difficult to innovate in healthcare in SA. The people who understand the problem don’t have the time or knowledge to come up with solutions. And those with the solutions, often carry on without truly understanding the dynamics and intricacies of the healthcare industry.

My takeaway

The healthcare industry is ready for innovation and in such desperate need. There are a multitude of startups in this space but they struggle to get facetime. As I am doing research, I rarely come across startups that I have heard of before. Yet they have been around for 3 – 5 years.

A large amount of startups in the healthcare space focus on wellness and fitness. Tracking exercise and sleep patterns or encouraging healthy lifestyles. Monitoring health at home such as blood pressure or telehealth where they can access healthcare remotely. But none of these focus on hospital innovation. Because of the barriers.

So we keep coming up with ideas to stay fit and healthy but the need is for solutions when we are sick and the barriers for startups are immense. It will take grit, patience, and definitely time to break through these barriers.

One of the recent examples of successful startups is a company called Vula, a medical referral app where doctors can refer patients between hospitals and units via an app, instead of spending hours on a phone listening to an unanswered ring on the other end. But by no surprise Vula, as one of the few successful startups, was founded by a doctor himself. Initially intended for patients with poor vision to consult remotely, the app developed into a heavily relied on resource for medical practitioners in SA and beyond, to refer patients.

So we need more healthcare professionals with an understanding in tech and business or we need more tech experts to engage with the healthcare industry. Or we need better bridges or ‘translators’ to connect the two sides and facilitate conversations to drive change and innovation.

We have a long way to go but we have the knowledge and we have the solutions, it is just a matter of finding better ways to communicate between these industries.

And then of course some change management. (Actually a lot but let’s keep things positive for the week ahead 😃)

I am soft-launching my consulting services here as I am in the process of setting up my business and website but if you want to chat some more in the meantime, read more and fill out this form or reach out to me at lizfuzy@gmail.com and I’ll get back to you.