My HealthTech 2024 Predictions

My HealthTech 2024 Predictions

This is my first predictions article. And hopefully the start of a new yearly tradition. Here are my takes on what will happen in the healthtech and healthcare industry:

1. A VC-Backed HealthTech Company Will IPO?—?And It Will Be Rocky

The digital health IPO winter these last 2 years has been downright frigid. 2024 will start to warm. Waystar has already filed (and delayed), while Hinge Health is shooting for profitability in 2024 with an anticipated IPO right after. Rumors have previously swirled Komodo, Included Health, Sword, Omada, and Aledade. Expect the thawing to be uneven at best with the first company to take the plunge likely in for a rude awakening.

Public market volatility shows no signs of abating, while economists are still mixed on whether a mild recession will (finally?) hit next year. A commercial real estate crisis by the summer of 2024 looms large while global geopolitical tensions, sticky inflation, and a U.S. presidential election year can throw any number of wrenches into a company's IPO timing.

2. Fundraising Boom in Medicaid, Senior-Care, Women’s Health and Infrastructure 2.0

Medicaid - 90M Americans are on Medicaid. ~70% of all Medicaid beneficiaries receive their care through risk-based capitated managed care organizations (MCOs) which can pay providers and startups a PMPM to manage traditionally high-cost beneficiaries in creative ways. We will see more funding go into interdisciplinary care teams paired with CHWs or CBOs gaining access into hard to-reach communities to build trust, manage social and medical needs, and keep highly complex and underserved patients out of the hospital. Bonus points for identifying dual-eligible Medicaid / Medicare patients and providing care for them.

Senior Care Meets Senior Living? - 1 in 5 Americans will be 65 by 2030 and people want to either a) age in place to plan their last chapter of life b) live in next-generation facilities powered by new tech/amenities. Seniors (and their family and caregivers) spend more on healthcare than non-seniors and as a % of overall consumer spending, seniors have had the largest rise in the last 20 years compared to any other age group. Providers, health plans, and every flavor of risk-bearing entity will look to integrate more closely with Senior living facilities (SNFs, ALFs, CCRCs, LTACHs) and get patients out of the hospital quicker to enable at-home care (and keep them out of the hospital). Expect more investment in higher acuity senior primary (and specialty care), serious and advanced illness care, SaaS, care coordination, and care transition services plays into post-acute, rehab, and senior living entities.?

Women's Health - It's about damn time. It's also time to go beyond fertility, pregnancy, pelvic health, and menopause. Look for new funding in disease and condition-specific spaces where women experience health issues differently than men like obesity, diabetes, heart disease, dementia, oncology, autoimmune conditions, and chronic pain. The first-ever White House Initiative on Women's Health Research is long overdue and is a much-needed tailwind that can spur advancements in data collection, diagnostics, and precision therapeutics.

Infra 2.0?- B2B SaaS deals from VBC Enablement and Specialty Care Enablement (especially in Oncology, Cardiology, GI, Ortho/MSK, and Post Acute) will continue to be hot. Solutions for staffing shortages, platforms that reduce administrative burnout, and tools that provide clinical decision support and automate clinical workflows will get lots of funding in 2024 as clinician workforce challenges continue to be the #1 macro problem for health systems and providers.

Fintech - I also expects lots of deals in Fintech infrastructure aiming to modernize the financial rails of healthcare especially in regards to medical coding, billing, payments, RCM, claims adjustment, price transparency, payor contracting, and financial forecasting.

3. Startup M&A At Scale Will Not Happen

“There will be mass consolidation” was repeated ad nauseam by virtually every pundit the last 2 years. By and large, this did not happen. And it will likely not happen in 2024. Yes, we saw a few notable acquisitions and roll-ups and there has been a recent uptick in M&A activity. But, we also saw startups sell for their parts whether it was a) IP/product b) customer contracts or c) team.

The Fed’s rate hikes along with plunging stock prices have soured investors and virtually dried up late stage growth investing. The era of cheap money and loose unit economics are long gone. Neither later-stage private companies or public healthcare companies have gone on the buying spree that was breathlessly anticipated. Expect quiet startup shutdowns and more rounds of layoffs to be the new norm into Q1 and Q2 of 2024. ?

However, expect both national payvidors and regional enterprise payors and health systems to continue horizontal acquisitions to stave off competition. Hospital consolidation will continue to be healthy. While Cigna-Humana M&A drama captures the current spotlight, keep an eye on other heavyweights like Kaiser/Risant, Elevance, Centene, Molina, Health Care Services Corp (HCSC), and SCAN Group that may attempt their own follow-on acquisition moves.?

4. Beginning Convergence of Climate and Health Tech Ecosystems

Climate change will have devastating impacts on human health. We are starting to see ramifications from bushfire babies in Australia to the futuristic depiction of “Summer Heart” in Apple TV’s Extrapolations. The COP28 UN Climate Conference is hosting the first-ever Health Day where the long-term health ramifications of extreme heat stress, wildfires, air pollution, and infectious disease will finally take center stage.

Climate x Health Tech will start to enter the general tech lexicon and founders & funders (and policymakers) will be busy building a new community, organizing events and panels, developing investment theses, and elevating this nascent space. Shout to the Climate Health Innovation and Learning Lab (CHILL) team for serving as one example.

5. Healthcare Macro Conditions Worsen

Physician suicide is up. Clinician burnout is at an all-time high. Up to 24M people will lose Medicaid coverage giving the unwinding happening now. More nurses will strike. Medical residents and physicians will continue to unionize. More rural hospitals will shut down. Expect another hospital bailout to be on the horizon as the CARES Act money runs out. Operational challenges around staffing and inflation continue to compress provider margin profiles. Enterprise provider and pharma innovation budgets have been slashed.

I could list another 5-10 demoralizing trends here and no one would dissent. We are headed down an unsustainable path unless there is serious legislative, regulatory, and structural change on how care is financed and delivered.

6. AI Sees Uneven Adoption (And Continued Heated Debate)

Even pre-ChatGPT, AI adoption in healthcare was a tough slog. Enterprise buyers more clearly understand the use cases now, but problems still abound with adoption at scale, especially with LLMs and generative AI.?

2024 will see more industry debate around identifying bias in training data (hello health equity), responsible and safe use, liability, algorithmic validity, reimbursement, and more. ChatGPT wrappers will quickly become commoditized?—?but data ownership, data modeling, data processing or generative AI that makes clinical workflows more sticky may be more defensible plays. There's a divergence of thought on which strain of AI (marginal improvement or transformative change) will see earliest adoption at scale - the jury is still out.

We'll certainly see more funding in ML/Predictive, NLP, Computer Vision, and Generative AI / LLMs as we're still in the early innings here.

7. Another HealthTech Bankruptcy or Scandal Will (Unfortunately) Emerge

I’m not rooting for this one. But given what we saw in 2023 with Babylon, Bright, and Cerebral, there is likely another big (really negative) story that is brewing right now.

From overprescribing to clinically (unrigorous) care practices, tech-enabled care delivery startups have had a bumpy history. The heat is also getting turned up from regulators and journalists alike searching for the next offender or the next big story. Should venture dollars be in care delivery in the first place has become a hotly debated topic.

8. Verticalized Payvidors Will Keep on Buying

United/Optum, CVS/Aetna, and Elevance/Carelon will continue to tap into uncapped services profits and keep on buying provider, brick-and-mortar, and data/technology assets.

My 2 hot takes - Fresh off blocking John Muir and Tenet, the FTC blocks Cigna and Humana's $150B+ merger, and Walmart ends up buying Humana (they tried in 2018, why not try again?). If i'm wrong and Cigna/Humana gets through, they will be a behemoth in the PBM and MA spaces especially.

9. Private Equity (PE) Will Have A Record Year of Healthcare Dealmaking

Valuations have come down. PE firms have record amounts of dry powder. This is a generational opportunity to add technology and services assets to their portfolios. For example: ~10% of all GI docs are employed or partnered by a PE-backed firm . That number could be 20% in the next 5 years.

PE is looking intensely into every area of healthcare services, especially higher margin specialties like orthopedics and cardiology. PE also owns ~9% of all private hospitals (and this shows no signs of slowing down). Long-term ramifications for healthcare cost and quality will be profound.

10. Chapter 2 of The GLP-1 Wave Ensues

The easy prediction - Zepbound (the newly approved GLP-1/GIP duo) overtakes Ozempic as the most used GLP-1 by the end of 2024.

VC funds will invest in startups looking to provide wraparound services and peer support along with solutions to mitigate the side effects of these soon to be ubiquitous drugs. Companies will pop-up providing gut microbiome surveillance to suggest nutrient deficiency supplementation. Off-label GLP-1 use for addiction (i.e. opioids, cigarettes, alcohol, cocaine, gambling) will skyrocket.

Big Pharma will continue to acquire obesity drug candidates from smaller biotech startups and experiment with drug administration (easer to take a pill vs. self-injection).

11. Congress Will Pass Meaningful PBM Reform

This is a feel-good, bipartisan election year story that makes electeds look good as they shill for votes from constituents. "We lowered your drug prices!" will be a winning campaign issue come November 2024. Also, this is one of the only healthcare policy issues that the most dysfunctional Congress ever can agree on.

It seems there is more lawmaker support for budget-neutral policies like banning spread pricing or transparency and reporting requirements - spanning drug price and rebate information, and formulary and benefit design.

Also, by the end of 2024 the 3 major PBMs - Caremark (CVS Health), OptumRx (UnitedHealth Group), and Express Scripts (Cigna) - will adopt a "cost plus" prescription drug pricing scheme. Chef's kiss to Mark Cuban. CVS already started , and the other two will follow suit, or risk further scrutiny and regulation from the FTC and Congress.

12. The Prove It Era of Digital Health Reigns

Startups that achieve clinical and financial ROI with unit economic discipline, responsible growth, and eventual profitability will be rewarded. Real businesses with actualized revenue, scalable GTM, usable tech, and clinical rigor will get more attention.


If you enjoyed this article, follow me on LinkedIn and @RMFnyc1 on X (Twitter). Also, see what our team at Guaranteed Health is building in the value-based serious illness and end-of-life care space.

As always, I welcome your feedback. Email me at [email protected] !

Dana Sun

Principal @ Laerdal Million Lives Fund | Healthcare Investor

10 个月

Definitely need to see more innovation in Medicaid and in women's health -- and that intersection like maternal health for Medicaid families!

Awesome list Raihan Faroqui, MD I would love to feature your post in my Newsletter pulsedisruption.com/subscribe

Jessica McGlory

Founder and CEO at Guaranteed | End-Of-Life Healthcare

11 个月

Sheesh Raihan - leave some ??predictions for the rest of us! Great read ??

Matthew Sakumoto

Virtualist & CMIO at Sutter West Bay Region

11 个月

My rapidfire reactions: Medicaid boom (yes! Dr. William Cherniak Rocket Doctor) HealthTech IPO (ballsy - maybe?) ClimateTech/HealthTech (absolutely Chethan Sarabu, MD, FAMIA, FAAP Stefano Leitner, MD, MPH) AI Adoption (inevitable) Scandal (also inevitable) Payvidor (I'm thinking buy, but then bust - maybe not in 2024, but scale won't be sustainable over the next 2-5 years) PE (unfortunately yes, probably not for the better overall. Once patient care is reduced to spreadsheets and P&L, we loose a lot of nuance) GLP-1 (I think this may be a boom and bust within the 2024 time span) PBM reform (not holding my breath, but will be pleasantly surprised if it happens) Prove it/Show me the evidence (definitely! Ruby Gadelrab Tudor MDisrupt)

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