What a difference a year makes. Anyone standing in the HLTH 2022 exhibit hall would have been struck by the exuberance — perhaps irrational exuberance — expressed by many of those present. While the impact of the pandemic could still be discerned in dismal provider balance sheets, workforce pressures, and quality and access challenges, a wide array of new and exciting technology solutions were on the horizon, which could ultimately resolve these. What's more, incumbent tech companies, many of which already dabbled in healthcare, appeared to be fully committed. It seemed like every tech company was on the verge of reinventing itself as a health solutions company.
Hints of this exuberance persist, but the mood at HLTH 2023 felt considerably more cautious. It is true that the financial pressures on incumbent hospitals, health systems, and provider groups have alleviated, as have workforce challenges. In both cases, however, what was an acute crisis has been replaced by a chronic condition that will likely require large-scale structural changes to the ecosystem to fully resolve, not just point solutions. On other fronts, like patient outcomes and access to certain clinical services, we seem to be moving in the wrong direction entirely.
At the same time, we've seen a considerable retraction in the capital available for new and existing ventures. Put simply, the era of loose money in health ventures is over. This is the case across the entire venture space, but it feels more palpable in healthcare in part because of the huge infusion of venture dollars we saw during the pandemic years. Smart ideas and promising solutions — many of which are driven by AI — will still be funded, and incumbent tech companies still appear fully committed to healthcare. But the era of irrational exuberance is over, and the pressure is now on for health ventures to demonstrate the value of their vision.
With this in mind, here are some specific insights into our present challenges, and how the market seems to be responding (or should respond), based on the conversations we had at HLTH 2023. Many of the insights below emphasize the persistent mismatch between our technological ambitions and the realities of our industry — a mismatch we must address on all fronts to resolve.
Recent data shows that GLP-1 agonists currently used for the management of type-2 diabetes and obesity may also have significant benefits for CV patients. This data, however, underscores the cost pressures currently experienced in the pharmaceutical space. Taken in conjunction with other high-cost and ultra high-cost drugs, it is clear that the industry must work together to develop financial solutions that allow patients appropriate access to these drugs without breaking the bank.
In addition, our rapidly aging population will likely require more procedural care and more drugs going forward, in a time when we can hardly afford it. Unsurprisingly, discussions at HLTH often turned towards strategies and solutions designed to remove excess cost from the system, with many companies touting the cost-saving and revenue-generating potential of their products.
Given the emphasis on cost control, it is hardly surprising that value-based care was widely discussed at HLTH 2023. While many panelists and participants emphasized the tough grind it has taken them to make modest progress, there was still an overarching sense of optimism. This sense can be attributed to the payment transformation that has helped organizations better identify opportunities for alignment. As such, there is a deeper understanding of the incentives and operational constraints of other sectors, allowing for the development of better solutions.
In the past few years, conversations around how best to address healthcare's core challenges have tended to exclude the life sciences, either intentionally or unintentionally. Given the cost pressures we are now witnessing from the life sciences space, notwithstanding the apparent benefits of their products, the status quo is no longer viable. A great deal of conversation therefore concerned the role life sciences companies can play in better identifying patients, generating evidence, and ensuring high-value care, in conjunction with other players within the healthcare ecosystem.
Progress against our cost, quality, or access challenges will not only require the engagement of all stakeholders, it will also require a different approach to workforce. It’s therefore no surprise that we have seen a precipitous rise in tools for greater digital enablement, often taking the form of point solutions. While such bolt-on innovations were as present in the exhibit hall this year as they were last year, we saw much more attention being paid — at least in conversation — to how digital solutions will impact the clinical end-user. This suggests that the crisis around the healthcare workforce may have finally popped the techno-optimism balloon. To adequately enable the workforce, it will be essential to better align incentives so that digital solutions can deliver full value.
Since HLTH is naturally a forward-thinking venue, the emphasis was on emerging approaches to better meet the care of individual patients through technological improvements. We thus heard several comments like “medicine will increasingly be precision medicine.” Very broadly, this seems correct. However, it ignores the realities of our current care delivery system.
At present, we are not providing precision medicine at scale, and despite our increasingly powerful technological capabilities, this goal seems far off. This is especially true in communities that healthcare has historically underserved or ignored. Simply overlaying new approaches to clinical care across our existing delivery system will likely exacerbate inequities unless we devise coherent strategies to redesign care delivery itself.
Many conversations at HLTH rightly pointed out how generative AI allows us to glean insights and make sense of unstructured data. However, the practical specifics of how clinicians will work to enrich the data or benefit from these insights were often lacking. AI has the potential to improve bedside delivery considerably, whether through reducing unwarranted care variation and disparities, or by garnering better adherence to the latest guidelines. Indeed, a central benefit of AI is its consistency and resistance to stress. But without a focus on bedside practice improvements, models will likely replicate existing patterns of poor practice.
The participants at HLTH made a concerted effort this year to foster trust across sectors of the industry that are often "frenemies" at best. But provider and patient trust will also be essential to future success, and this is in short supply. Data shows that patient trust of health technology and health manufacturers is hovering in the teens as of 2022, declining from around 25% in 2020 . Few of the solutions offered at HLTH will be of much value if we are not trusted to deliver them. Finding ways to match our technological ambitions with grounded realities will help us regain that trust.
AI is essential to healthcare’s future, but the key to success isn't a new AI strategy. Read our blog post to uncover three different ways organizations are approaching AI and which pitfalls to look out for.
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