After a year of significant turbulence and resiliency, 2024 will present new challenges and opportunities for digital health companies. To kick off the new year, our team spent time thinking about what we expect to see in the year ahead. As seen in Forbes, MedCity News, Modern Healthcare and Healthcare Innovation, check out our team’s predictions for what’s to come in 2024. We cover generative AI, value-based care, the Medicare Advantage program, and many other trends we’re following closely.
1. Generative AI Moves from Hype to Reality, and Exposes Challenges: The hype cycle for generative AI in healthcare is at a place where it’s more than just hopes, dreams and pilot programs. We’ll see real use cases put into practice in 2024 and will get a glimpse into generative AI’s ability to deliver on the promises we’ve been hearing so much about. But this will expose challenges too. We’ll see at least one event around bias or misuse of generative AI in clinical delivery. Most healthcare companies aren’t applying generative AI to personal health information (PHI), but this event will expose the fact that there might be a few who are. This will force the industry to examine the appropriate clinical delivery use cases for generative AI in the future and may set the movement back by a few years. – Keith Figlioli, Managing Partner at LRVHealth
2. Innovative Payment Models Emerge to Address New High-Cost, Curative Therapies: In 2024, our healthcare system will begin to truly grapple with the challenges of providing access to and paying for ultra-high-cost, potentially curative, drug therapies. As more of these therapies are approved, and awareness around these drugs grows, payers and employers will be challenged to manage the tradeoffs between the high one-time costs and long-term benefits of these drugs under our current insurance model. As a result, 2024 will be a turning point in the development of new innovative models – where drug payments could happen in installments or be based on achieving specific outcome milestones – requiring collaboration across employers, insurers, and pharmaceutical manufacturers. – Josh Flum, Managing Partner at LRVHealth
3. Value-Based Care Narrows its Focus on Cost Management: 2024 will be a year of transformation for value-based care companies and healthcare organizations whose reimbursement is tied to value. They will begin planning for a world that relies less on risk-adjusted topline expansion, and more on true medical cost management. Many will realize that there are limits to what can be accomplished in an advanced primary care setting, leading to investments in referral management and site of care optimization, as well as the development of lower-cost healthcare workforces focused on access, care navigation, and healthcare literacy. – Ellen Herlacher, Partner at LRVHealth
4. Medicare Advantage Grows Despite Rising Concerns: More dark clouds will begin to surround the Medicare Advantage program, but it will not slow the overall transition of more senior patients from traditional Medicare to Medicare Advantage. We will begin to see more health systems create their own separate senior-focused clinical delivery arms / networks to manage Medicare Advantage patients in a higher margin approach. These new health system entities will compete regionally and nationally in time against the likes of Oak Street and ChenMed. – Keith Figlioli, Managing Partner at LRVHealth
5. 2024 Demands Scalability and Strong Leadership from Digital Health Companies: We entered 2023 with significant turbulence and looking back now, we have seen more resiliency in the digital health market than we expected. In 2024, companies with scalable business models in large markets and with great leadership will continue to attract capital. Others will struggle and if they get capital at all, it’ll be at significant down rounds. Despite the fervor over generative AI in the investment community – or the temptation for startups to put it someplace in their decks to attract investment – it’s going to be a difficult year for most as the market normalizes. – Tripp Peake, Managing Partner at LRVHealth
Heading into 2024, we are excited to watch how these trends evolve throughout the year and how they impact the healthcare space. No matter what 2024 throws at us, we will remain deeply committed to driving transformational change in healthcare. We look forward to another year partnering with inspiring entrepreneurs, as well as our strategic limited partners and co-investors.