Israel invests in medical innovation — but struggles to adopt it
Israel is a global leader in Health-Tech investment, yet its domestic healthcare system faces significant bureaucratic and financial hurdles in adopting these local innovations.
For decades, Israel has built one of the most advanced life sciences and Health-Tech industries in the world. In 2024 alone, approximately $2.7 billion was invested in Israeli life sciences companies, an increase of about 25% compared to the previous year, and the Innovation Authority provided about half a billion shekels in grants. The state understands the industry's potential and invests resources to ensure Israeli companies develop the next generation of medicine.
However, a paradox arises. While the state encourages innovation and global market expansion, the path for new medical technology into the local healthcare system remains long and complex. Even after development and regulatory stages are complete, implementation challenges persist: hospitals and HMOs operate under tight budgets, procurement processes are lengthy, and introducing new treatments requires pilots, proof of economic feasibility, staff training, and adaptation to existing pathways.
A significant barrier is that the entity paying for the technology is not always the one benefiting from the resulting savings. A hospital may bear the upfront costs of a new treatment, while future savings on readmissions or long-term care accrue to the HMO's budget. Consequently, even high-value technologies struggle to reach widespread use. This leads to a situation where an Israeli technology is used abroad while remaining inaccessible to the Israeli patient.
This is both a medical and an economic issue. Israel spends about 7.6% of its GDP on health, compared to an OECD average of 9.3%, while operating under manpower and infrastructure constraints. In this reality, medical technology should be evaluated not just by its cost, but by the cost of not using it.
The significance is clear across many fields: early detection saves on expensive future treatments, home monitoring reduces hospitalizations, and minimally invasive procedures shorten recovery times. Innovation must be measured by the total cost of the patient pathway it changes.
The solution is a more orderly and faster track for evaluating new technologies, allowing hospitals and HMOs to conduct pilots and collect real-world data. This is also vital for the future of the Israeli biotech industry; the local healthcare system can serve as a research and validation environment. A country that invests in innovation but fails to adopt it at home misses out on its full return on investment. Medical innovation should be an engine for efficiency in a healthcare system required to do more with less.
Alon Kushnir is the CEO of the Israeli biomed company RedDress.
