The idea is that by offering such a prize, it would stimulate development of diagnostic health devices that would, presumably, make the world a healthier place.
Very few methods exist for consumers to receive direct medical care without seeing a healthcare professional at a clinic or hospital, creating an access bottleneck. Despite substantial investment to improve the status quo, even average levels of service, efficiency, affordability, accessibility, and satisfaction remain out of reach for many whom the system was intended to help. A prize is thus sorely needed.
I’d rather see someone create a “cure-for-cancer” X Prize.