Health technology is at an important moment, with innovation, funding and expansion creating new opportunities and challenges for start-ups and established companies. In 2024, health technology investment will reach $10.1 billion, a slight decrease from last year but still above the epidemic. Much of this funding has been targeted at start-up businesses, particularly in areas such as informal employment, mental health and obesity care.
Eliminate End-Point Funding Drives M&A Activity
However, the subsequent decrease in funding indicates that large companies are facing more difficulties in securing capital, which may be leading to mergers and partnerships.
“Many of the older players spent a lot of money developing and testing their solutions but were unable to clear the hurdles needed to drive implementation at scale,” said Lawrence M. Chu. , chairman of Global M&A at Goodwin, in Rock Health’s 2024 Health Technology Report launched in Monday (Jan. 13). “The current reduction in investment may lead to more M&A in the near future. These purchases may not be ‘champagne popping’ events, but they will simplify work and free up founders to eventually start a new crop of digital health companies.
As Chu noted, the reduction in old expenses may spur more mergers and acquisitions as companies struggle to create sustainability. These purchases, although not high-profile, will facilitate operations and allow founders to innovate, contributing to the power of “David and Goliath”, where startups and large players must find ways to work together and benefit from each other.
New startups are “attracting investors despite a more volatile financing environment,” according to the report, and “their growth path will depend on how well they manage.” It’s a Goliath-rich environment. Later ventures struggling with budget deficits or fundraising failures may fold or seek acquisitions in the year a. come – it may restart the health digital M&A activity, which fell in ten years in 2024 to 118 prices.”
AI and Emerging Technologies in Digital Healthcare
Digital health companies are building technology stacks on platform-based models, with players like Epic , Cerner, Microsoft and startups like Commure and Abridge are competing in this space. These companies develop artificial intelligence (AI) models for many healthcare providers, address many use cases, ensure compliance and often partner with each other.
“While there are many companies in healthcare AI, the seemingly low barriers to entry are an immediate obstacle,” said Shivdev Rao, MD, CEO and founder of Abridge. , in the report. “Similar to how there are clear leaders in the field of clinical practice, there are select players who can provide AI solutions specifically for healthcare organizations. The bar for success is as high as ever. often, with special needs and improvements beyond the basic capabilities of the product. That said, the effort and investment is worth it – an opportunity This is the best way to create historical effects.
The development of healthcare technology companies like TriZetto, founded by Jeff Margolis in 1997, shows the potential of integrated technology solutions. Margolis’ vision, which he discussed in a recent podcast, is to create a unified platform that combines computing power, software and data storage – three pillars that remain important in healthcare today. now.
“Innovation is a key theme,” Margolis said in the podcast. “The whole idea of ​​what we call today the cloud didn’t exist. So, there were people putting down software on their own computers in their own data centers. TriZetto was based on a structure that I derived from a musical term, which refers to a composition for three voices. If one of the three parts is not done, it is not complete the composition. We felt Healthcare customers must be able to achieve three things: have the power of computer networks and infrastructure to run their business; have software to run their day-to-day business and carry Every day it is obtained from business processes and turned into useful information for decision-making, management, clinical and planning.”
Its approach to organic and traditional growth, including the $2.7 billion acquisition of Cognizant, underscores the importance of scale in the health clinic. As digital health advances, especially with the use of AI and machine learning, we continue to hear lessons from development pioneers.
“The health care industry is huge and if you don’t speed up the scale, you’re going to have a hard time,” Margolis said.
Growing Demand for Healthcare Equipment
Consumers, including older generations, are looking for digital tools to manage health care tasks such as scheduling appointments, test results, and payments, according to PYMNTS Intelligence data.
According to a PYMNTS Intelligence report, “The Digital Healthcare Gap: Streamlining the Patient Journey,” a collaboration with Experian Health, two-thirds of consumers use patient portals, including millennials and seniors. -higher to be with them. Additionally, 32% of non-users expressed interest in using a gateway, if available. In health care visits in the past year, 1 in 5 patients scheduled computerized appointments, with urgent care patients often using digital methods. technologies such as patient portals (17%) and websites (16%).
This shift toward digital healthcare is also evident among older generations, as evidenced in the PYMNTS Intelligence report, “The Digital Platform Promise: What Baby Boomers and Seniors Want From Digital Healthcare Platforms,” ​​​​in collaboration with Lynx.
According to the report, 78% of baby boomers and adults are satisfied with receiving test results online, and 64% participated in at least one number of health activities in the last year. Their satisfaction with digital health is higher than the general population, with 72% expressing satisfaction with online scheduling. In addition, 65% of baby boomers and adults express interest in health technology advertising, with 24% expressing high interest.
The Age of Evidence in Digital Health
What will be the theme for digital health in 2025?
“I would say this is going to be a year of evidence,” said Jared Augenstein, senior director of Manatt Health, in an interview with PYMNTS. “There is continuing importance and increasing demand for disease-related, health care financing that moves the needle on patient outcomes, cost of care, or both. But there are many technology, although it received a push to the Seed or Series A level, there was no news incentives, certifications, or financial ROI dollars. Health technology companies that place great value on their customers have a promising future and those that don’t. They need to prove their worth quickly or they will struggle to do so.”
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