UK Extended Reality Mental Health Market Assessment & Deep Dive Report
Commissioned by the University of Liverpool’s Civic Health Innovation Labs (CHIL), this UK-wide landscape mapping study explores the role of extended reality (XR) in healthcare, with a dedicated focus on mental health. Building on the recommendations of the 2021 XR Health Alliance report “The Growing Value of XR in Healthcare“, this study examines the breadth of XR adoption across the NHS, universities and industry, and benchmarks the UK’s competitive standing globally.
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Executive Summary
Commissioned by the University of Liverpool’s Civic Health Innovation Labs (CHIL), this UK-wide landscape mapping study explores the role of extended reality (XR) in healthcare, with a dedicated focus on mental health. Building on the recommendations of the 2021 XR Health Alliance report “The Growing Value of XR in Healthcare“, this study examines the breadth of XR adoption across the NHS, universities and industry, and benchmarks the UK’s competitive standing globally.
Key Findings
Sectoral Adoption
XR is transitioning from early-stage research to more clinical adoption. Universities are leading, with over 60% reporting XR use, compared to roughly 30% of NHS Trusts. Private sector activity, driven mainly by micro-companies, is focused on therapeutic and training applications, but faces challenges scaling into healthcare systems.
Technology Trends
Advances in standalone headsets, AI-driven personalisation, and biofeedback integration are expanding opportunities. New applications are emerging in neurodivergence, creative health and palliative care.
Global Positioning
The UK is internationally recognised for its strengths in combining creative industries with research and innovation. While adoption levels remain uneven, the trajectory indicates growing maturity and influence in the XR healthcare field.
Clinical Applications
The most prevalent uses of XR are workforce education and training, followed by mental health, physiotherapy and rehabilitation. Strong evidence is emerging in depression, anxiety and cognitive rehabilitation. However, conditions such as dementia, psychotic disorders, PTSD and substance misuse remain underrepresented despite promising research.
Market Drivers & Barriers
Targeted funding, such as the £20 million Mindset XR programme, is accelerating adoption. Yet key barriers persist, including limited procurement pathways, regulatory uncertainty, fragmented evidence generation and lack of sustainable funding models
Recommendations
Develop a National XR Strategy for Healthcare
Establish a unified national XR strategy to reduce fragmentation in funding and adoption. Ensure alignment with NHS strategic priorities, including the 10-Year Plan and upcoming digital strategies.
Update the NHS Dynamic Procurement System and/or G-Cloud Digital Market Place to include XR solutions.
Build on existing standards and evaluation frameworks working closely with regulators and the NHS to provide a clear roadmap for industry, SMEs, and NHS adoption.
Deploy XR to Advance NHS Strategic Priorities
Support the shift from hospital to community-based care by embedding XR into "Virtual Wards" and "Hospital to Home" models for rehabilitation, monitoring, and therapy.
Use XR to enhance preventive health and wellbeing, from physical activity to mental health resilience, reducing long-term demand.
Drive the shift from analogue to digital interventions, ensuring XR becomes a core part of modern, technology-enabled care pathways rather than an add-on or pilot initiative.
Deploy XR for clinical accuracy (e.g., diagnostic simulations, professional training), improving patient adherence and outcomes while lowering per-patient costs.
Strengthen Evidence Generation and Trust
Invest in rigorous clinical trials, health economic analyses, and real-world studies to demonstrate not only clinical efficacy but also cost-effectiveness, safety, and patient experience.
Encourage companies to publish evidence of cost-saving and productivity benefits for NHS providers to strengthen the business case for XR adoption.
Develop a platform to accelerate compliance, evidence generation, and commercialisation by:
Offering tools for instant gap analysis against regulatory and compliance standards, showing innovators what is missing and how to address it.
Supporting teams to create documentation and evidence tailored to relevant standards, reducing reliance on expensive consultants or academic staff.
Automating the design, execution, and reporting of randomised controlled trials in line with HRA guidelines, producing regulator-ready evidence more efficiently and at lower cost.
Expand XR Infrastructure and Ecosystems
Develop XR Labs and NHS XR Centres of Excellence concept, drawing on successful academic and healthcare models to foster co-design, evaluation, and implementation across sectors.
Support innovation in underrepresented clinical areas (beyond anxiety and depression) and in mental health resilience, chronic condition self-management, and preventive care.
Encourage Public - Private collaboration across industry, academia, and the NHS to accelerate deployment and scaling.
Improve Funding and Scaling Pathways
Introduce phased or iterative funding models that support long-term sustainability.
Ensure funding and reimbursement pathways are standardised NHS regional bodies to streamline adoption.
Continue investment for XR solution providers to support their navigation of the complex challenges presented when scaling in the NHS.
Policy Integration, Regulation, and Scaling
XR adoption should be supported by clear policy frameworks, regulation and governance.
Ensure XR adoption is supported by robust governance: data protection, clinical safety, and evidence standards.
Align deployment with Integrated Care Boards (ICBs) and local services to address population health needs and reduce inequalities.
Embed XR within NHS operational planning (e.g., 2025/26 priorities) to reduce avoidable admissions, strengthen out-of-hospital care, and deliver productivity gains.