Digital health as well as health technology adoption went on to advance quite rapidly in the wake of COVID-19, as investor dollars flooded into the landscape and providers went on to quickly pickup telehealth capacities.
However, the funding has gone on to slow down quite predominantly from its pandemic boom in 2021, with some companies shutting their doors in 2023. Nevertheless, interest in emerging technologies happens to be quite high this year, especially as AI promises to make sure to streamline operations and also lessen administrative burdens in case of clinicians.
It is well to be noted that as organizations go on to digitize, cybersecurity happens to remain a significant challenge, with breaches in healthcare data exposing umpteen patients’ sensitive personal and health info.
This year may go on to prove a development period when it comes to the health technology sector, as said by experts. Providers as well as payers will work in order to integrate digital tools all across their organizations, and industry watchers may as well see efficacy and outcomes data after years of investment in digital health.
2024 can also include more evolution of the present levels of technology instead of earth-shattering new inventions, remarks the lead analyst in healthcare IT at market intelligence company CB Insights, Alex Lennox-Miller.
The speed at which change is taking place with technology in healthcare across the last couple of years has been really rapid, Alex opines. If one can go on to maintain that kind of pace even without something that is completely game-changing as well as revolutionary, that would indeed be a huge win when it comes to the healthcare industry as a whole.
Mergers & acquisitions may pick up as digital health funding goes on to normalize
Investment when it comes to digital health companies has gone on to reach year-low levels in 2023, following a dip that started in mid-2022. Higher interest rates, which happened to limit venture capital’s capacity in order to raise funds, lower valuations, and a frozen IPO market went on to further decrease the available cash in the case of startups.
However, this decline is not a complete collapse when it comes to this industry. Instead, it goes on to reflect a normalization after the investment explosion that took place in 2021, say experts. Digital health funding levels in 2024 are all set to look very familiar to 2023 and may as well begin to increase, especially in the latter half of 2024, although the floodgates are not just opened entirely.
It is well to be noted that even consolidation may go on to pick up in 2024, a trend that sector enthusiasts have been eyeing for months since the funding ticked down and even potentially pushed startups when it comes to dealmaking. Digital therapeutics, mental health providers, and weight loss companies could be attractive targets of acquisitions, experts opined.
High-quality products that go on to solve narrow healthcare problems happen to be potentially the best opportunities when it comes to consolidation, opines the CEO of the Digital Medicine Society, Jennifer Goldsack.
Buyers when it comes to digital health products are indeed tired in terms of managing plenty of point solutions; hence, the quality offerings that could be brought as more of an integrated tool are indeed valuable, specifically in the case of healthcare giants such as CVS Health or startups that can very well raise heavy Series D rounds. Apparently, this can also go on to force the cream to rise.
As per Goldsack, what they are really looking forward to seeing is consolidation, picking out the best practices, usage when it comes to the very best in tech, and the best teams being together in order to really offer complete solutions to the issues in healthcare instead of individual tools.
Now that some digital health startups that have been funded during the height of the investment boom are functional for several years, the industry can see data on how efficient these solutions can be when it comes to improving access as well as quality of care, said founder of venture capital firm Vive Collective, Cheryl Cheng.
She added that this is where one can see a little bit of that kind of separation between wheat and chaff with regards to the companies that have built really strong clinical models along with good unit economics and can scale, as opposed to the ones that may have been still drafting off of pandemic tailwinds.
Building the AI infrastructure in healthcare
The buzz on the potential for AI in healthcare touched a fever pitch in 2023, specifically when it came to generative AI technology, which can very well create new content like text or images. Tech giants such as Google, Oracle, Microsoft, and Amazon went on to announce new products in 2023 that were aimed at tackling functional tasks and, at the same time, decreasing administrative burdens.
However, all this is still early with regards to generative AI. The sector is still in the exploration phase in terms of how it could be best made use of, said partner at digital health venture capital firm GSR Ventures, Sunny Kumar.
If one looks at the mobile phone as a platform, Kumar opines that no one would have predicted in 2009, when the iPhone was launched, that the sectors the iPhone would disrupt most would be the taxi industry with apps such as Uber or even the mapping industry, for that matter, with things such as Google Maps.
The infrastructure when it comes to AI needs to be developed, including tools that will be efficiently integrated within the healthcare system, how to set as well as follow appropriate safety along with compliance standards, and how buyers of such products will go on to learn what data they happened to be trained on.
In 2024, there may as well be less hype along with money flowing into the space as developers nourish the seeds they planted in 2023, remarked Cheng from Vive.
It is well to be noted that transparency will become exceedingly significant this year, specifically in the case of clinical decision support tools or even algorithms that go on to assist with claim appraisals, said Lennox-Miller from CB Insights.
Lawmakers went on to hear the testimony last year in the case of algorithms used by insurers so as to predict how much care patients may go on to need, which advocates argued pushed the coverage denials and got patients to self-pay or manage the appeals process. The likes of Humana, Cigna, as well as UnitedHealth were sued in 2023 over their usage of algorithms to process claims.
Lennox-Miller added that, for lack of a better way to put it, the transparency needs to be more transparent, and if one is showing that the algorithm works, and if it is another math equation or an extremely complex set of documents, it really does not help at all.
Regulators eye cybersecurity benchmarks
Healthcare organizations will need to be serious when it comes to cybersecurity this year, and they may as well face some growing regulatory pressure in order to tamp down the breaches in data, said experts.
It is worth noting that breaches when it comes to healthcare organizations have gone on to become very common in the past five years. The HHS’ Office for Civil Rights discovered a 93% surge in large breaches that were reported to the agency in just a matter of 5 years from 2018 to 2022 and a 278% spike when it came to breaches that involved ransomware during the same period.
Partner at law firm Morgan Lewis, Amy Magnano, opines that cyberattacks initially went on to aim larger healthcare systems, but smaller providers as well as business associates now happen to be the targets, with attackers becoming more sophisticated too, by way of using AI and machine learning tools so as to hone their strikes, which include crafting compelling phishing emails, all the more.
Apparently, more states may very well go on to create their very own healthcare cybersecurity regulations in 2024, Lewis said. To name a few, New York has already proposed its own rules for hospitals in November 2023, which look to safeguard facilities and at the same time keep them functioning even when cyberattacks take place, with funds allocated in the state’s budget so as to help hospitals elevate their technology systems.
States such as California, Washington, or even others that already have more robust medical record requirements may as well be interested in regulation, Magnano remarked, but the providers will likely consider improved infrastructure, funding, or even guidance as compared to a regulatory approach that’s fragmented.
The HHS has gone on to signal interest when it comes to boosting cybersecurity needs for hospitals by way of Medicare and Medicaid, thereby coming up with a concept paper in December 2023 that outlined a strategy in order to receive new authority as well as funding.
Although the intent happens to be good, numerous hospitals have already started operating on slim margins, specifically rural facilities that require to stay operating in order to preserve access to care within the communities they serve, said Goldsack from DiME’s. It is well to be noted that the risk calculus may have already been edited for providers, as they face penalties and damages from lawsuits due to data breaches.
Apparently, to make matters worse, cybersecurity experts are not as easy to find, said partner and U.S. healthcare leader at Deloitte, Tina Wheeler. Some health systems have gone on to move to outsource their cybersecurity teams, specifically if they happen to be small and cannot afford expansive staff.
Whatever the thing is, healthcare organizations will need to be very sharp when it comes to upskilling their entire workforce in cybersecurity practices since only one weak link can lead to a data breach.
