Key Takeaways: Digital Health – What’s on the Horizon for 2023 and Beyond at the 2023 J.P. Morgan Healthcare Conference

Leaders in digital health innovation joined McDermott and EY during the 2023 J.P. Morgan Healthcare conference to discuss the business, operational and transactional issues impacting the future of care delivery, including what they anticipate on the digital health horizon for 2023. We summarize their insights on how digital health organizations can forge ahead in today’s challenging market.

Key Takeaways

1. In the current market, entrepreneurs need to serve immediate needs and show impact immediately. Opportunities will be at the center of the established healthcare system, where companies will need to engage with providers, payers and employers to create value.
2. There is particular interest in how digital mechanisms can help with issues surrounding provider shortages, provider utilization, and the efficiency of healthcare teams and the healthcare system as a whole.
3. Regarding the outlook for deal activity, there is predicted to be a wave of consolidation on bigger platforms, consolidating smaller startups that have received funding but have not yet made back distribution costs.
4. There is excitement for deal activity around complex diseases, improvements in efficiency and clinical workflow, enabling technologies for the transition to value-based care, and artificial intelligence-driven patient navigation.
5. Motivated both by lessons from the pandemic and the current market, focus has shifted to partnerships and collaborative models. In particular, the focus on value-based care will present digital health companies with more of an opportunity for collaboration with providers and payers, as well as opportunities to play matchmaker between partners.

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Areas of Opportunity in the Current Digital Health Market
In light of the constrained market, the panelists observed that the same companies that could have been funded just a few years ago are facing a lot more scrutiny today. This means that, in the current market, entrepreneurs need immediate-use cases: ideas that that can serve immediate needs, can be monetized very quickly, and can show impact and identify cost-savings right away . Innovation on the fringes without established-use cases is less viable in a constrained capital environment. Companies will need to engage with providers, payers and employers, and work within the established system to create value.

Panelists also discussed how digital mechanisms can help with issues surrounding provider shortages, provider utilization and efficiency of the healthcare system. Digital literacy needs to be built amongst consumers, as well as professionals and administrators within the existing health system, so that they can effectively implement the kind of innovation that will result in a better allocation of resources and more availability of providers. The panelists discussed how entire healthcare teams—not just physicians—can be empowered through technology to better coordinate services, perform triage and allocate resources, thus improving the efficiency of the healthcare system. There was also recognition that regulatory policy-driven solutions are needed to support certain providers, such as rural hospitals. These kinds of providers need policy solutions that will allow them to take advantage of digital infrastructure.

Deal Activity in the Current Market
Panelists predicted a wave of consolidation on bigger platforms, helping smaller startups that with value creation. Panelists also discussed their excitement for opportunities around complex diseases, improvements in efficiency and clinical workflow, enabling technologies for the transition to value-based care, and AI-driven patient navigation.

Uptick in Partnerships and Collaborative Models
The session closed by discussing the ways digital health companies can work in partnership or in collaboration with other organizations. Driven both by lessons from the pandemic and the current market, significant focus has shifted to partnerships and collaborative models. This includes an increase in digital health startups whose business model is payer- or employer-facing, as well as other collaborative models.

The panelists also predicted that the focus on value-based care will present digital health companies with more of an opportunity to play matchmaker between partners. In particular, these collaborative opportunities may come with small- to medium-sized companies, who are often more willing to take on risk and be more flexible with their systems compared to incumbent health system companies.

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