We've made it to 2024. Now what?
Last year, we made strategic investments in growing companies like SafeRide and EvolvedMD, both of which authentically align with our efforts to improve healthcare. 1501 Health welcomed its third cohort of innovative startups, which were selected from the most competitive application pool yet. And Healthworx Studio launched as an independent entity, partnering with promising entrepreneurs to tackle gaps and untapped opportunities in our healthcare system.
Taking a moment to reflect and look towards 2024, we asked our Healthworx Ventures team what trends are top of mind. Below, we share an overview of key observations and opportunities.
The State of Artificial Intelligence
“Whether it’s in pitch decks or conferences, artificial intelligence has been the dominating topic of conversation,” said Maurice Russo, Venture Capital Manager. From his personal experience managing a chronic condition, he believes in the short term, AI could help maintain patient engagement and ensure continuity of care in chronic condition management.
“With an infallible memory, around-the-clock availability, inexhaustible empathy, and the ability to tailor conversations to the patient’s circumstances, it promises a coach-and-concierge level of support at a fraction of the cost. While there are significant societal and technological hurdles before the delivery of automated clinical care, the lighter-touch consultation and navigation tasks are likely to transition quickly.”
It’s very likely that AI will be more directly beneficial in some areas over others. In the short term, diagnostics, treatment planning, and clinical decision support are areas where we see AI adopted more readily, while AI-led care delivery is a bit tricky and potentially longer term, especially in areas like mental health therapy where human connection and trust is required for a successful treatment experience.
Another significant roadblock to implementing AI? Data silos.
Interoperability is a complex issue, as data is often siloed in different segments, whether it's by health systems, payers, pharmacy benefit managers (PBMs), or others. There isn't necessarily a continuous stream of data connectivity across the industry. Often, companies try to partner with a health system to get the right data.
For example, let's say a company is building an AI-powered solution that analyzes imaging data to improve the detection of cancer. They would likely have to connect with a major cancer treatment center for the correct data to run their algorithms on. Luckily, some hospital systems like the Mayo Clinic are working on making their data available to advance such work.
Apart from data collection being a challenge, one longstanding issue remains: trust.
Getting people to adopt AI will take time, but the undeniable efficiency will help people warm up to the idea, tying back to Russo’s point. “Physicians have been the primary individuals to make diagnoses in the past. While AI is unlikely to truly replace a physician, it will accelerate their review process and make their time much more productive.”
Government regulations will help to build this trust as well. In a parallel example, Russo cited the FDA’s decision to release official guidance to designate software as a medical device. Similar to this, Russo believes that AI will go through many of these regulations as it continues to approach the emerging field of precision medicine and clinical decision support.
The Promise of Value-Based Healthcare
More companies are leaning into the power of value-based care. Solutions that prioritize value-based care are designed to focus on the quality of care, provider performance, and individual health outcomes.
It’s worth noting that in the current market, the uptake of value-based care is slower than expected, so startups that focus on care delivery will need to have positive unit economics on a fee-for-service basis as they slowly transition to this model.
The good news is that there is a policy tailwind. Forty-six states, DC and Puerto Rico, have implemented some type of state-backed value-based reimbursement programs – whether through postgraduate mental health (PCMH) programs, all-payer Accountable Care Organizations (ACO) models, or others.
There are also encouraging signs in the private sector, with retail pharmacies are seeking to implement value-based care programs by providing PCP-related health services.
This is good news for health equity, as more high-quality solutions for wider populations are being created and launched.
This can be particularly beneficial for underserved populations, such as individuals living in rural regions that typically have limited access to physical care locations. The broader deployment of technology-enablement solutions backed by appropriate value-based arrangements can empower community doctors and physicians to align their work and compensation with longer-term outcomes.
Areas of Opportunity in 2024
With daily uncertainty about the state of the economy and the aftermath of the COVID-19 pandemic, the healthcare ecosystem remains tumultuous.
Having spent the year working with emerging healthcare companies, the team is eager to share some of their thoughts for entrepreneurs looking to build up their companies in 2024.
Looking at the current startup landscape, there are large opportunities to address the core challenges facing healthcare with a clear focus on impact and ROI. Managing drug spend, especially in specialty pharmacy, supporting earlier diagnoses in oncology and driving adherence to preventative healthcare are a few of the areas that come to mind.
It also believed there is an opportunity in the neurology space for early diagnostic and ongoing management of neurodegenerative diseases. This market remains underserved due to the aging population in the United States and the lack of viable treatment options.
There is also belief in focusing on maintaining capital efficiency independent of market dynamics. Russo shares, “The startup and VC ecosystem certainly learned a lot in the last few years. The most important lesson? Basic financial principles always matter in the long run, regardless of the state of the current market. I’ve found that one of the most attractive qualities of a startup between Series A and C, is their ability to have grown sustainably, without needing too much capital to do so. Beyond this, we are seeing that companies and investors who managed to maintain this discipline through the recent venture hype cycle are likely to outperform in the long run. Thus, companies that can quickly iterate their solutions and find a sustainable customer base early on have an advantage.”.
Another thing to keep in mind? The strongest founders tend to have a deep understanding of their competitive landscape. They seem conscious, respectful, and fearful of existing solutions in the market but can confidently leverage why their company will go the distance or coexist well with others.
To learn more about the Venture team’s work, or get in contact with them, visit https://www.healthworx.com/ventures
About Healthworx
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 BlueCross BlueShield, Healthworx envisions a healthier future for all people by changing the way health works. To learn more about Healthworx, visit 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.
