NEWS

Report: AI, value-based care are growing sectors in digital health but lack large-scale adoption

AI in healthcare and value-based care enablement are top developing trends in healthcare but lack scalability so far, while big box retailers as providers and data interoperability have shown a high volume of activity in 2023 and are scaling with long-term trajectories.

Rock Health’s report, which utilized data to determine the sequence of developments in the digital health space this year, shows there has been a great deal of activity in research, funding and partnerships pertaining to AI in healthcare and value-based care enablement in 2023. 

“For AI builders, questions around algorithm bias based on non-diverse datasets, ethics, and transparency are key to making the leap to clinical use cases. For providers, payers, and life sciences companies alike, solidifying an approach to AI governance and thoroughly assessing the tradeoffs between platform-level integrations (e.g., EMR plugins) and best-in-breed solutions (e.g., applications for specific features) will be central to establishing a successful long-term AI strategy,” wrote the report’s authors Irene Golden, Mihir Somaiya and Sari Kaganoff. 

Digital obesity care, caregiver solutions and companies focused on food as medicine, such as Instacart, are areas gaining greater awareness in the market.

Medicare Advantage plans are projected to continue as early adopters of food as medicine, and the caregiving-focused market will continue to grow as macroeconomic conditions increase the challenges faced by caregivers.

“If 2023 was a year of transition as digital health moved into its next era, we expect 2024 to be a period of recalibration and adjustment. Major market developments will continue their trek along the innovation maturity curve, and leaders will need to answer questions like: Which capabilities and partnerships do we need in order to keep up with table-stakes innovation? How can we take advantage of nascent opportunities to be an early mover? As we evolve existing businesses and assets, how do we position them for further growth within tough market conditions?” the authors’ wrote. 

THE LARGER TREND

Several AI-enabled companies have garnered significant investment this year, including generative AI company Hippocratic AI, which develops safety-focused large language models for healthcare. It has raised $65 million in funding since its launch in May. 

Elucid, which offers AI-enabled imaging analysis software for cardiovascular disease, announced it scored $80 million in Series C funding last month, bringing its total raise to $121 million.

In August, California-based AI drug discovery startup Genesis announced it scored a whopping $200 million in an oversubscribed Series B funding round, bringing its total raise to $280 million.  

Numerous retailers made headlines this year, including Amazon, which closed its $3.9 billion acquisition of primary care provider One Medical in February, and CVS Health, which acquired Medicare-focused primary care provider Oak Street Health in a deal worth approximately $10.6 billion.

Walgreens’ VillageMD finalized its acquisition of primary, specialty and urgent care provider Summit Health in January in a transaction valued at approximately $8.9 billion. 

On the value-based care front, in October, venture capital firm General Catalyst announced its plans to purchase a health system that will put technology at the forefront of healthcare prevention and delivery and run through a value-based care model. 

In June, value-based care company Aledade scored $260 million in Series F funding. The Maryland-based public benefit corporation works with primary care providers to build tech-enabled accountable care organizations. It noted it would use the funds to acquire and improve technology and services to support its value-based care solutions. 

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