Four for 2024: Uncovering the bright spots in digital health as we navigate a down market and global challenges

My predictions are rosier than most, driven by both my proclivity to see the glass half full and my confidence that the $4.3Tn US healthcare market and $10.5Tn international healthcare market are not in danger of contracting… nor are the buyers driving this market going to stop seeking opportunities to increase efficiency and scale.  

1. More consolidation… and prior large-scale M&As will feel pressure to demonstrate value

In a market where raises and exits continue to be difficult, the appeal of acquisition will only increase. Increased acquisition activity will lead us to a less fragmented healthcare innovation landscape in 2024, and less fragmentation means more successful integrations that render complete solutions and a more functional hybrid care delivery system. 

However, consolidation means that there will be winners and losers. For digital products and services, the ones that can’t demonstrate value will be winnowed out, and strategic decisions will fully shift from ‘should we embrace digital modalities?’ to ‘how can we optimize access and outcomes through a hybrid model?’

The big consolidation plays from 2023 like CVS’s acquisition of Oak Street and KP’s move to acquire Geisinger (still pending regulatory review) will be forced to show early signals of success or risk the judgment of impatient markets. More mature moves, like Walgreens’ heavy stake in VillageMD, will need to quickly deliver clear and compelling indications that new integrated care models, powered by well-established players outside of traditional healthcare systems, can deliver. 

2. DE&I will become a greater differentiator for digital health solutions providers 

I disagree with the school of thought that progress toward a more diverse, equitable, and inclusive healthcare system, driven by the racial justice protests that followed George Floyd’s murder and the disparate impact of COVID-19, has stalled. 

Chief Diversity Officers have been appointed within corporations across our industry, sometimes with no mandate and no budget, but the transformations we will see in health equity in our generation are just beginning and will grow significantly in 2024.

There is not a single payer – or HTA in the international markets – that I've spoken to this year that has not categorically stated that digital innovators must be able to demonstrate the performance of their solutions in all members of the population of intended patients. 

Healthcare systems now have plenty of experience and are not purchasing solutions that don’t work with their patient data and patient populations. They are not partnering with early-stage innovators who cannot point to a plan for inclusion. 

Employers are still finding their way in a new, post-COVID labor market. They are realizing that retaining talent requires offering fundamentally different values to their teams. Benefits packages must include culturally competent healthcare options to attract and retain talent. 

3. New investments at the intersection of healthcare, social justice, climate justice, and political violence

Investing in women’s health tech has historically been low, ignoring the direct benefit to 50% of the population and indirect support to the entire population. We saw funding begin to increase even before the Dobbs decision and since then, impact investors have identified women’s and reproductive health as a high-need, growth market. This will be a sector to watch for new funding, start-ups, and talent next year. 

At the same time, the health implications of global crises are being recognized, unlocking new sources of funding. 

The global economy loses over $1Tn a year due to reductions in productivity due to depression and anxiety. Of the 10M+ people in prison around the world, one in seven has a diagnosis of a serious mental illness. The recent COP28 conference hosted its first health day highlighting the negative impact climate change is having on human health. Wars in Ukraine and the Middle East are displacing populations needing care and pockets of persecution and economic crises around the world are driving the migration of vulnerable populations with complex healthcare needs. 

Digital innovators with health solutions that address the fallout of other global crises can now access impact investment dollars that have previously excluded healthcare.

4. AI innovation in healthcare will be a global affair 

Generative AI’s promise to address some of the biggest challenges facing the healthcare industry cannot be overstated. 

AI solutions that have immediately reduced administrative burdens for clinicians are improving rapidly and are here to stay. 

As more sophisticated clinical AI offerings can optimize the patient experience of their care, they will be quickly embraced. However, the skills gap at the intersection of healthcare and technological innovation will inhibit broad adoption in the year ahead. Fast forward to a time when (1) clinicians are sufficiently trained to evaluate and implement clinical solutions and (2) developers better understand the clinical workflows and evidence necessary for their solutions to deliver and demonstrate value, and we will see fundamental changes to care pathways based on AI. 

In 2024 we will likely see significant advances in clinical AI coming from markets and healthcare systems that are not encumbered by the clinical workflows, payment models, and incentives that can stifle transformational innovation in high-income countries. 

In low and middle-income countries the use of generative AI solutions to support community-based health workers isn’t encumbered by patients and procedures being viewed as sources of revenue to preserve brick-and-mortar care facilities. Tethering digital healthcare strategies to economic imperatives worldwide will drive progress in AI utilization and improved patient care.