Inflation fears and rising costs may seem to threaten progress in healthcare innovation in the coming year, but the trends toward digitization and consumer empowerment are moving too quickly to slow down.
For more insight, we asked the Healthworx team for their input.
Below, Soo, Laura and Emily from our Venture Capital and 1501 Health teams and Ash, Maicie and Guy from our Venture Studio team share their ground-level perspective on the healthcare innovation market for 2023, hitting on key themes including value-based care, health equity, remote care, social determinants of health, and more.
Q: What trends or shifts do you see impacting the healthcare innovation market as it heads into 2023?
Emily: In the overall venture capital market we’re seeing a constriction, with funding drying up and valuations dropping.
In the healthcare customer space, there’s also a constriction driven by increased labor costs, which will affect the amount healthcare providers and payers are willing to spend on innovation and solutions. Because of this, I believe the focus of customers and revenue will shift to short-term opportunities.
However, I hope we see a parallel track of healthcare innovations: short-term solutions that address the immediate pain points people are experiencing, and longer-term solutions that shift the system dynamics in healthcare over time.
For Healthworx, we want to have investments that improve the way CareFirst BlueCross BlueShield (CareFirst) cares for its members right now and at the same time, invest in longer term solutions that can address systemic issues.
Ash: Reducing costs is going to be a priority and a challenge in the market this year.
On the development side, we’re seeing innovators who are focused on individualized metrics and health outcomes, and programs and products designed to encourage behavioral and lifestyle modifications, adherence and accountability.
Laura: Over the course of the pandemic one of the main focuses of healthcare innovation was to deliver care virtually. Like other industries, the healthcare ecosystem was compelled to explore virtual methods of providing care when possible. However, as the world returns to in-person activities, we have realized the virtual modality alone is insufficient to fulfill the needs of patients and providers. There is a growing need to implement hybrid models that can optimize the assets of both the brick-and-mortar and the virtual landscape. This shift will continue to change how innovators think about their business models and seek out ways to integrate a hybrid model into their respective solutions.
Guy: The shift to value-based care and adoption of digital health solutions is driving remote monitoring that will focus on longitudinal care.
I also believe the patient journey will include a duality of specialty and ancillary services, and providers will maintain flexibility to meet diverse patient needs and preferences.
Maicie: Something interesting to note is that the Payer Price Transparency Data was submitted in July 2022—payers were required by the federal government to publish in-network negotiated rates for healthcare services with all their providers.
We should start seeing an impact from the availability of this data in 2023, definitely among payers and providers, but potentially in the start-up community as well.
Q: Anything specific you noted at the 2022 HLTH conference?
Maicie: Yes! At HLTH, I attended a panel called “Doom or Boom? Digital Health’s Financial Future”.
The panelists believed that 2023 is going to be a year in which digital health companies will need to be able to prove their value to continue to receive funding. They also believed it would be a time of industry consolidation, in which we see companies with overlapping or similar value propositions merging with one another.
Guy: At HLTH, the hot trends seemed to be a focus on virtual care, meaning telehealth combined with remote diagnostics or monitoring, either for general care or focused on specific populations or diseases.
Laura: It was interesting to see large pharmacy retailers’ interest in innovative care delivery up close. Watching Walgreens’s CEO Roz Brewer share her perspective on the future of healthcare delivery was particularly enlightening. Walgreens has a wide-spread presence across the US which puts them in a unique position to serve as a one-stop-shop for care. Paradigm shifts such as this is indicative of a growing trend where patients get their care at their local retail pharmacy in addition to their medications.
Q: With the rise of telehealth, digital apps and member-focused employee benefits, healthcare is increasingly moving towards a consumer-centric model. Do you see this continuing in 2023, and do you think it’s working well?
Emily: We need to continue to lean into this trend of focusing on the member’s journey through the healthcare system. Single-point solutions aren’t sufficient to help people navigate the complexities they experience in their healthcare plan. Between social determinants of health, chronic conditions, acute episodes and coordination between different providers, we’re going to need plan consolidation to continue.
Ash: One thing that will never change is that insurers and employers are always looking for ways to reduce costs and improve health outcomes. And that means evidence-based, digital health applications are going to continue to be very appealing, especially ones that can be integrated quickly.
Soo: To me, this is a double-edged sword. Consumer-centric does not always mean high engagement. Companies will have to continuously think about how to keep engagement levels up while many people are dealing with virtual fatigue and isolation.
Guy: I wouldn’t necessarily equate more digital health and apps as being more “consumer-centric.”
It’s possible for the digital health experience to be as fragmented and confusing for patients as is navigating “real-life” health settings. And to some degree, digital care can never fully replace in-person care, though it can hopefully help facilitate the process.
We need to start tackling the question - can we build an interlinked digital health ecosystem that actually guides the patient along in their care journey?
Then, can we make that ecosystem flexible so that diverse patients can effectively start their care journey from different points, make personalized choices along the way and still arrive at a high-quality, cost-efficient outcome?
Q: Speaking of digital apps, what growth areas do you see in the digital healthcare market in 2023?
Ash: I’m very excited about virtual care teams for individuals with specific chronic conditions, and the push to incorporate both western and alternative medicine perspectives into consumers’ holistic health plan.
These solutions look at the whole person instead of, for instance, just the digestive tract or the cardiovascular system or a specific disease or condition.
Emily: Harnessing data in a way that makes sense and helps people is the key. I don’t think that will be absolutely solved this year, but we'll continue to see strides in the underlying data interoperability that helps individuals, and can drive concrete valuable actions.
Soo: We will continue to talk about social determinants of health, virtual care, femtech, physician burn-out, among many other topics. Healthworx will continue to diversify the themes we look at and continue to learn and evolve about the growing themes to make sure we stay creative and continue to support innovation within the healthcare space.
Q: Health equity has been a major focus and force at the HLTH 2022 conference. How is Healthworx focusing on health equity?
Emily: We're supporting multiple companies whose mission is deeply rooted in health equity. We’ve also found opportunities to collaborate with other teams across CareFirst, including our community health and social impact team, to work on holistic approaches to solutions.
Ash: Our 1501 Health startups are chosen in large part because health equity is a driving priority for them. We’re resourcing these companies, and helping them grow, develop and find additional funding. We’re focused on companies that would typically be overlooked and under-resourced, and that’s because our business model is not just focused on profit but social impact.
We’re not just talking about equity, we’re investing in it, and we’re showing other investors that it’s possible to do both.
Laura: When we speak to founders and assess potential investments, we’re not just looking at future financial returns. We also focus on how these companies are improving health outcomes and ways in which they seek to create a more equitable healthcare system. This emphasis is represented within our portfolio companies, and it will continue to be a priority for future investments.
Have a question or comment about the thoughts above?
Chat with the team on LinkedIn:
Emily Durfee | Connect on LinkedIn
Soo Jeon | Connect on LinkedIn
Ash Asher |Connect on LinkedIn
Laura Gomez Cadena| Connect on LinkedIn
Guy D’Andrea | Connect on LinkedIn
Maicie Jones | Connect on LinkedIn
Healthworx operates at the intersection of healthcare and innovation by creating, co-creating and investing in companies that are improving healthcare quality, accessibility, affordability and equity. As the innovation and investment arm of CareFirst, Healthworx envisions a healthier future for all people by changing the way health works. To learn more about Healthworx, visit https://www.healthworx.com.
About LifeBridge Health
LifeBridge Health is one of the largest, most comprehensive providers of health services in Maryland. LifeBridge Health includes Sinai Hospital of Baltimore, Northwest Hospital, Carroll Hospital, Levindale Hebrew Geriatric Center and Hospital, Grace Medical Center and related affiliates. For more information, visit www.lifebridgehealth.org.