Editorial by Anish Sebastian, CEO of Babyscripts
The traditionally conservative healthcare landscape has undergone massive and rapid technological disruption in the past decade. The explosion of generative AI and Large Language Models (LLMs) outpaced any wave of innovation that we’ve seen.
While these innovations are being hailed as potential solutions to many of the challenges plaguing healthcare, the digital health industry faces a harsh reality check. The once-soaring sector is grappling with market corrections, leading to the shutdown of unicorn startups and raising questions about its future.
How does this situation resolve? Where do the market corrections stop? Here’s what I think we can expect to see from the intersection of tech and healthcare in the upcoming year:
All About AI
Let’s take a minute to acknowledge how generative AI has stealthily become a part of our daily lives. From autocomplete suggestions to voice assistants, we interact with these models regularly without giving them a second thought. It’s a testament to the seamless integration of technology into our routines, and a sign that the world of science fiction is now firmly our reality.
In healthcare, the integration of LLM and LMMs (Large Medical Models) holds promise, but safety concerns are a major obstacle. No regulatory body or model monitors AI implementation similar to the FDA, FCC or FTC, posing challenges to the legitimate use of these powerful tools in a sector where privacy is paramount. Where there are guidelines, they fall short of enforceable protections for patients and consumers. Further, experts in the space speculate that the rapid pace of AI innovation makes regulation impossible, which would severely limit its benefits for healthcare if not killing the technology on arrival.
On the health plan side, the adjudication of reimbursement is ripe for disruption, having previously benefited from the adoption of digital tools. As an example, plans could use AI to automate administrative pieces of the lengthy manual claims evaluation process. In the long term, applications of generative AI for payers could lower costs through conclusions based on data analysis.
It’s almost guaranteed that we will see more AI adoption in healthcare in 2024. While some optimists envision AI-powered predictive clinical models in the near future, it’s a more realistic bet that non-clinical applications, like documentation and education, will make the first inroads into a cautious sector.
Consolidation and Vertical Integration
In the face of a challenging financial landscape, mergers and consolidations have become survival strategies for healthcare players. Payers are becoming providers, health systems are expanding their roles, and employers are stepping into the healthcare arena. Even Venture capitalists are joining the game, contributing to the creation of large, fully integrated healthcare systems.
As these healthcare giants emerge, digital health companies will be forced to rethink their strategies, and attempt to carve out a role for themselves in the brave new world among a small group of healthcare behemoths.
Macro meets Micro
With AI taking up all the oxygen in the room, it’s hard to make space to address the financial and structural challenges that plague the American healthcare system like reimbursement, alternative payment models, and the larger economic duress of healthcare as a whole. As the largest sector of the economy and significantly service-oriented, healthcare cannot escape the broader angst Americans feel toward the state of the economy. Unlike Big Tech, which can ride the innovative AI boom to harness growth, healthcare transformation will follow a slow, winding road. Add in the end of government assistance for COVID-related expenses, halting Medicaid expansion in several states, and an unpredictable economy showing no signs of stabilizing in an election year, and it figures that financial barriers to adoption will be front and center for innovators in 2024.
Expect to see a continued focus on cost-effectiveness and proving return on investment as the industry cuts down on vendor sprawl. Value-based care will remain a hot topic of discussion as providers try to optimize their financial models, but unless reimbursement structures change dramatically, its feasibility remains questionable.
Don’t sleep on AR/VR
While AI has dominated the narrative of 2023, augmented and virtual reality technology has been quietly but rapidly making inroads into the healthcare industry. Meta recently rolled out its Oculus III, a more accessible and budget-friendly version of its revolutionary AR/VR headset, and Apple introduced Apple Vision Pro, a similar product with a higher threshold to entry.
Both of these companies have actively promoted healthcare use cases. With their massive user bases and existing infrastructure, they have the potential to completely revolutionize medical training ― potentially clinical and surgical care, too. While still in its nascent stages, and coming up against the same privacy and safety concerns surrounding AI adoption, AR/VR technology could be the sleeper hit of 2024 that outlasts the hype of volatile stars like generative AI.
The theme of 2024 will be tension: between the sweeping innovations of the tech sector and the hard realities of complex reimbursement structures, shifting infrastructure, and safety concerns in healthcare that threaten to slow progress. How will these tensions resolve? The answer might need more than a year to reveal itself.
Anish Sebastian is the co-founder and CEO of Babyscripts, an innovative maternal healthcare company focused on reinventing the standard of prenatal and postpartum care through the delivery of digital education and remote patient monitoring experiences.