Global Augmented and Virtual Reality in Healthcare Market: Poised for Rapid Growth

The Global Augmented Reality (AR) and Virtual Reality (VR) in Healthcare Market is projected to grow at a remarkable CAGR of 30–35% over the next five years. This surge is fueled by continuous technological advancements, accelerating digital transformation, supportive government policies, a rising number of startups, and strong funding activity. As AR and VR technologies evolve, their transformative impact on medical training, surgical procedures, patient care, and therapy continues to expand—making them essential tools for the future of healthcare delivery.

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AR and VR: Redefining the Medical Experience

While Virtual Reality (VR) offers immersive, computer-generated environments, Augmented Reality (AR) enhances real-world settings with digitally overlaid information. Initially popularized by the gaming industry, these technologies are now gaining significant traction in healthcare due to their ability to improve visualization, precision, and patient engagement.

Today, AR and VR are increasingly being applied across multiple medical areas—ranging from surgical simulation and planning to pain management, mental health therapy, patient education, and emergency care. Emerging research also highlights VR’s potential in the early diagnosis of neurological conditions such as Alzheimer’s and schizophrenia.

Key examples include:

• October 2023: Surgical Theater enabled Stanford Medicine to perform the world’s first spine surgery using its AR-powered SyncAR® Spine integrated with Microsoft HoloLens, advancing extended reality (XR) surgical care.

• March 2022: CAE Healthcare launched an upgraded CathLabVR simulator with mixed reality-based PCI modules, offering over 31,000 unique cardiac intervention scenarios for physician training.

• Rey (founded 2020): Provides VR-based mental health therapy sessions, demonstrating how immersive digital environments can support behavioral healthcare.

Transforming Healthcare Through Immersive Innovation

AR and VR are revolutionizing medical training, diagnostics, and treatment. Surgeons can now visualize complex anatomy in 3D during procedures, while trainees can practice in risk-free, lifelike virtual environments. In diagnostics, 3D medical imaging and real-time overlays are enhancing precision and reducing procedural errors.

The integration of AI and machine learning with AR/VR technologies is paving the way for personalized healthcare, particularly in telemedicine, remote care, and chronic disease management. Wearable AR devices will further enable continuous monitoring, real-time intervention, and guided rehabilitation for patients at home.

For instance:

• December 2022: Microsoft expanded its HoloLens 2 ecosystem, introducing immersive collaboration tools tailored for medical and industrial metaverse applications.

In mental health, AR/VR therapies are showing promise in treating PTSD, anxiety, addiction, and depression by providing controlled yet realistic environments for exposure therapy. These same technologies are also making fitness and rehabilitation more engaging through gamified virtual experiences.

Investments, Regulations, and Market Acceleration

The COVID-19 pandemic significantly accelerated the adoption of AR/VR in healthcare, driving increased VC/PE investments and regulatory approvals. Recent funding rounds underscore strong investor confidence:

• July 2023: Proprio raised $43 million (Series B) to commercialize its AI-based surgical navigation platform.

• February 2022: MindMaze secured $105 million to expand its neurotherapeutic VR solutions.

• November 2021: AppliedVR’s EaseVRx received FDA approval for chronic pain management, marking a milestone in prescription VR therapeutics.

• May 2021: Heru, Inc. raised $30 million (Series A) for its AI-driven, wearable vision diagnostics platform.

Regional Insights: North America Leads, Europe Gains Momentum

North America currently dominates the global AR/VR in healthcare market, supported by advanced healthcare infrastructure, extensive R&D funding, and early technology adoption. U.S. agencies such as the National Institutes of Health (NIH) and the FDA’s Center for Devices and Radiological Health (CDRH) are actively funding XR research and ensuring regulatory pathways for safe implementation of AR/VR medical devices.

Europe is emerging as the next growth hub, with increasing adoption across France, Germany, the U.K., Sweden, and the Netherlands. The European Commission’s “Virtual and Augmented Reality Industrial Coalition” aims to strengthen collaboration among policymakers, academia, and industry stakeholders. Additionally, Germany’s ERDF-funded “Healthy Reality” project is exploring AR/VR’s role in improving treatment outcomes and medical training.

Application Outlook: Expanding Across Healthcare Ecosystem

• Surgery: AR/VR technologies enable real-time guidance and 3D visualization, enhancing surgical precision and efficiency.

• Medical Training & Education: Simulated environments provide realistic, risk-free training for students and professionals, now a cornerstone of modern medical education.

• Patient Care & Therapy: Used in chronic pain management, PTSD treatment, rehabilitation, and remote patient monitoring.

• Fitness & Wellness: VR-based interactive workouts promote preventive care and engagement.

Surgical and training applications currently lead the market, while patient care and fitness segments are witnessing rapid expansion with growing consumer and institutional adoption.

End-User Insights

Hospitals, clinics, and surgical centers dominate as primary adopters, leveraging AR/VR for surgical navigation, treatment planning, and enhanced patient interaction. Diagnostic laboratories utilize these technologies for improved imaging and pathology analysis. Pharmaceutical companies are increasingly adopting AR/VR for drug discovery and patient education, while research institutions employ immersive simulations for clinical and experimental innovations.

Competitive Landscape

The market is highly competitive and innovation-driven, with major players and startups alike focusing on technological differentiation. Prominent participants include:
CAE Healthcare, GE Healthcare, Philips Healthcare, Microsoft, Siemens Healthineers, Intuitive Surgical, Psious, MindMaze, Virtualis, Oxford VR, Augmedics, Surgical Theater, Medivis, Health Scholars, Vicarious Surgical, Proprio Vision, ImmersiveTouch, OSSO VR, SentiAR, XRHealth, and Karuna Labs, among others.

These companies are continuously investing in AI integration, platform interoperability, and cloud-based medical visualization to shape the next frontier of digital healthcare.

Conclusion

The convergence of AR, VR, and AI is setting the stage for a new era of healthcare innovation—one defined by immersive learning, precision treatment, and personalized patient experiences. As technology continues to mature and costs decline, AR and VR are expected to become mainstream clinical tools, redefining how medical professionals train, diagnose, and care for patients worldwide.

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About Medi-Tech Insights

Medi-Tech Insights is a healthcare-focused business research & insights firm. Our clients include Fortune 500 companies, blue-chip investors & hyper-growth start-ups. We have completed 100+ projects in Digital Health, Healthcare IT, Medical Technology, Medical Devices & Pharma Services in the areas of market assessments, due diligence, competitive intelligence, market sizing and forecasting, pricing analysis & go-to-market strategy. Our methodology includes rigorous secondary research combined with deep-dive interviews with industry-leading CXO, VPs, and key demand/supply side decision-makers.