The October 7 massacre devastated Israeli society, leaving deep physical and mental scars. But according to healthcare experts, it also became a catalyst for healthcare innovation. Israel was already a world leader in healthcare technology, but the turmoil has driven the development of groundbreaking tools to aid its citizens and inspire solutions worldwide.

“The unique position of Israel as a beacon of healthcare innovation to the world has not changed,” said Ran Balicer, chief innovation officer and deputy director-general at Clalit Health Services, Israel’s largest health service organisations. “As a matter of fact, the necessity brought by the last year’s events has actually driven innovation massively more forward than before.”

One area that highlights this shift is mental health – a domain Balicer admits was somewhat neglected in Israel for decades. After October 7, there was an unprecedented surge in demand. Suddenly, attention turned to translating innovative, meaningful ideas from theory into large-scale practice.

Clalit was already a global leader in data and artificial intelligence (AI)-driven healthcare. The organisation has been leveraging advanced approaches to move from reactive care to predictive, proactive and preventive healthcare across multiple domains. For example, Clalit has applied these methods to areas such as diabetes, fall prevention, fractures and the identification of diseases including hepatitis C. Its work has been published in the prestigious New England Journal of Medicine and is being evaluated by healthcare systems worldwide.

Following October 7, Clalit expanded its digital focus to include mental health, using its established tools in a new context. “We understood that those who seek care for mental health needs do not represent everyone in need,” Balicer explained. “Sometimes, the most silent segments of society are the most in need.”

To address this challenge, Clalit rapidly developed a digital tool to facilitate proactive mental health screening for tens of thousands of people. This initiative targeted groups most likely to need support, such as residents in conflict zones in the north or south or those displaced by the war.

“We approached them proactively, screening them with a tool that identifies mental health challenges and closes the digital loop,” Balicer said. “A mental healthcare professional contacts individuals who cross a threshold to provide care –even if they never approached a clinic or helpline.”

Yael Pomerantz, health tech sector lead for Startup Nation Central, said the health funds have been working to harness innovation to improve healthcare outcomes. Despite the challenges Israel faces, she, too, expressed optimism about the industry’s state.

Startup Nation Central recently published a report, the “Top 100 of 2024 Landscape Map”, for the health tech sector. The report provides an overview of the market’s current state.

According to the report, private health tech funding reached $1.2 billion (£0.95 billion) last year, declining from $1.6 billion the year before. However, the average funding amount per deal soared to $4.6 million across 102 rounds – more than double the median of $2.16 million across 150 rounds in 2023. Digital health led the sector, attracting $545 million, followed by medical devices at $380 million and pharma/biotech at $262 million.

“There is a reason to be optimistic,” Pomerantz told the JC. “That the average number of deals was higher means we are growing and maturing, especially in digital health, biotech, and pharma.”

She also noted that Israel saw significant involvement from multinational companies and numerous exits, especially in the medical device sector, where international firms acquired Israeli companies. This activity, she explained, demonstrates that “larger companies still believe in Israel. They see the potential here. They see we have good minds here, good ideas.”

Pomerantz highlighted Israel’s unique ecosystem, where tech, bio, investment, and business stakeholders collaborate to generate innovative ideas.

“They all come together, and they create new ideas that work, and we are able to deliver,” Pomerantz said. “That is still happening even though we are facing such a challenging time.”

Every HMO and most hospitals in Israel now have innovation centres, which underscores the country’s focus on research and innovation in healthcare. However, many health tech investments surged after the Covid-19 pandemic, leading to a “bubble in digital health”. The slight decrease in total funding this year likely reflects this adjustment and aligns with global trends. “The most important thing is we are like other places in the world,” Pomerantz said. “We follow the same trends.”

Startup Nation Central’s report spotlighted several notable companies. For example, Insightec received $150 million for its MRI-guided focused ultrasound technology.

Another company, Exsilio Therapeutics, raised what the organisation called a “record-breaking” $82 million in a Series A funding round for its genomic medicine approach to developing redosable therapies for a wide range of diseases. There were also significant acquisitions, such as Johnson & Johnson’s purchase of V-Wave, a Caesarea-based medical device company. According to its website, V-Wave’s Ventura Interatrial Shunt System is designed to ease symptoms, reduce hospitalisations, and improve the quality of life for people with chronic heart failure. Innovalve Bio Medical, which originated at Sheba Medical Centre, was acquired by Edwards Lifesciences for its advanced, minimally invasive heart valve treatments.

Digital health remained the most funded area in the health tech sector. Digital health companies develop platforms or software to improve health outcomes. Many founders or founding teams transition into health tech from other high-tech industries, such as multinational R&D centres or large tech companies. This shift is often driven by personal stories or a desire to make a meaningful impact.

Pomerantz also referenced another Startup Nation Central report that found Israel has a higher percentage of companies based on AI and other advanced technologies than most places in the world. She cited examples such as CytoReason, a leader in AI-driven precision medicine, which recently raised $80 million in a Series C round with investments from NVIDIA, Pfizer, and Thermo Fisher. Another standout is AISAP, a digital health company using AI to develop point-of-care ultrasound tools. These tools allow less experienced doctors to diagnose heart disease on the spot, particularly in rural or underserved areas, helping prevent severe cases in locations without major cardiac centres.

Like Balicer, Pomerantz observed an increased emphasis on mental health technology over the past year due to heightened demand and a limited number of specialists, including psychologists, social workers, and other care providers.

She highlighted companies addressing these challenges, such as Eleos Health, which specialises in automatically summarising mental health visits and sessions.

According to its website, Eleos Health’s AI-powered tools reduce providers’ documentation time by more than 70 per cent, enabling them to focus more on their clients. Another company, NeuroKaire (formerly Genetika+), has developed a personalised medical tool that uses a blood test to predict which depression medication will work best for a patient, allowing for faster and more effective treatment.

Rehabilitation technology has also advanced significantly, driven by the urgent need to support people recovering from physical injuries. “Unfortunately, we have a lot of wounded, and there is a need to recover physically,” Pomerantz said.

One example is 6Degrees, which creates wearable AI devices that convert motion into digital commands, giving individuals with amputations complete control of smart devices. Other companies have developed communication tools that allow non-verbal individuals to express themselves through eye movements or other signals, providing communication before verbal recovery is possible.

“There is a lot out there, and many processes are ongoing to incorporate it into treatment. We already see it and are seeing it more and more,” Pomerantz said. At Clalit, Balicer explained that in the early stages of the war, the health service organisations relied heavily on its internal development infrastructure to create solutions. Now, it is increasingly integrating startups and external tech solutions to enhance its efforts.

This approach has been particularly crucial for evacuees, many of whom live far from their usual general practitioners. These individuals face not only immediate, war-related health challenges but are also at high risk of neglecting their chronic illnesses. Clalit has been leveraging AI to proactively address these vulnerable subgroups, identifying gaps in treatment continuity and instances of worsening chronic conditions.

“Clalit has the advantage of being ahead of the curve in utilising AI in healthcare practice.

“We have been introducing AI-driven models for over 15 years,” Balicer said.

“We have taken this long-standing experience and created a globally unique tool, which is virtually like a checklist that allows healthcare organisations to understand whether AI-driven solutions they are considering are indeed appropriate and can be considered ‘responsible AI.’ It deals with issues such as bias, hallucinations, privacy maintenance and data drifts. This tool called “OPTICA” is now being adopted by other organisations nationally and globally.”

Balicer’s expertise in AI has earned him a seat on the United Nations High-Level Advisory Body on Artificial Intelligence, where he contributed to developing frameworks to balance the benefits and risks of AI across various domains, including healthcare.

“The leading scholars in Israel still provide their experience and share it globally, to help promote better health globally, including the experience gained in providing care to those detrimentally affected by the war,” Balicer said.

Pomerantz echoed this sentiment but cautioned that the health tech sector must remain diligent as the war continues on multiple fronts. “There is a lot of stress on resilience, how we have managed to snap back to routine and keep operating,” she said.

“Our economy has bounced back in the past, and hopefully it will again. But we need to work hard to make it happen.

“We cannot become complacent.”