Digital health stakeholders need to refocus on getting back to basics, including improving access to care, outcomes, costs and workforce retention, says Holly Maloney, Managing Director, General Catalyst. says Mr.
Maroney joins Mobi Health News We discuss the most notable events of 2023, the use of AI in healthcare, and predictions for digital health funding in 2024.
Mobi Health News: What is your biggest takeaway for 2023?
Holly Maloney: 2023 has been an exciting year. I think one of the big takeaways for me is that I really need to focus on getting back to basics. As we think about the fundamentals of health care, there are still many things that need to be fixed. I think we need to reaffirm and emphasize the basics.
So it's access. Indeed, how can we most effectively engage and treat people and families with the least resources? result. As such, it will likely take years before digital health companies begin to prove that they can achieve results that are at least as good, if not better, than alternative approaches. As you know, the issue of cost reduction remains at the forefront.
McKinsey recently released several facts related to the following facts: The system faces a 200 basis point gap between reimbursement rates and cost inflation. And, you know, employers are expected to face premium increases well above his usual 4%. So we need to tackle this issue head on.
And finally, this is like empowering the provider. In a similar study, 200,000 to 450,000 nurses So by 2025, on the current course and speed, so, you know, new companies will be formed and obviously there's been a lot of money in this space for years, but we still has to be recovered. Basically. Build with these basics in mind. Without solving these basics, innovation around the edge will become less important.
MHN: Do you think there is a role for AI there?
Maroney: i will do it.
MHN: In what ways do you expect AI to actually help in getting back to basics?
Maroney: Yeah. AI will help in many ways. Clearly, given the renewed focus on administrative overhang associated with the cost structure of delivering care within health systems, there is no doubt that AI will become useful at scale. there is no. Some of the early iterations of AI focused on non-clinical use cases. So, certainly, as these companies get bigger and we start to see more widespread adoption, that should help change things at some point. I have no doubt that we can get there.
But beyond the administrative automation part, there's also the clinical empowerment part of how we give healthcare providers the tools and resources to focus on what they're supposed to do: provide the highest quality of care to patients and their patients. It is clear that there are parts of Delivering the best results in the lowest cost environment.
I said that digital health companies are reaching scale where they can achieve results and cost savings, and proving them will be meaningful and useful.
For technology-enabled services companies, AI can play a critical role in their continued progress and viability towards becoming a public company, demonstrating real revenue growth and an attractive profit profile, making it even more Increase access to many public companies and pools. Increase the capital of these businesses over the long term.
MHN: AI is seeing waves in the healthcare sector, not only by reducing the administrative burden faced by healthcare providers, but also by helping companies realize how they can scale. Are you doing it?
Maroney: absolutely. And the last thing I want to say is that AI has the potential to make real progress towards truly personalized solutions. We've been talking about personalization in healthcare for quite some time, but we haven't really gotten there. So I think we've seen more and more consumer healthcare applications that haven't gone that far and haven't reached their full potential. So I think we're going to see a resurgence of consumer health applications with truly personalized experiences.
MHN: Where do you think digital health funding will go in 2024?
Maroney: Regarding the funding environment next year, I think we will still see a fairly healthy pace of investment in the early stages, as there are still a lot of unresolved issues in the healthcare space.
I think the founders are still serious about that mission. So I think we're going to continue to see a wave of really good founders who want to start companies in healthcare. So I think we'll see a healthy pace of fundraising in the early stages. As you know, COVID-19 has put a significant amount of tourism capital into the medical sector, so while there may be fewer funds participating, I think the pace will be healthy.
And while it may seem obvious that at a later stage there will be a flight to quality, I actually think that the number of companies that fall into that quality category will probably increase from where people are with us. I'm optimistic that there will be more people than I imagined. Because today we realize how some of these business models have changed and how big these market opportunities really are.
I think a significant amount of the funds will be used to fund creative integration. In that case, the combination of entities greatly exceeds the possibilities on an independent basis of the sum of the parts. If you think about some mergers, especially scenarios like mergers of equals, that doesn't necessarily mean failure. It may just mean that the gravitational pull from a commercial perspective of co-offering makes a lot of sense. And there we can get tremendous insight from his partners at 20 health systems about what's really attractive in terms of time-to-market cycle timelines. So where does the budget actually sit today? That can influence how you think about which companies logically should be merged. Because, again, there are valuable techniques and valuable problems to solve. However, a joint value proposition will increase the commercial urgency and therefore create more value for everyone. employees, shareholders, etc.
MHN: Announced by General Catalyst. I plan to purchase What more insight can we gain from the healthcare system?
Maroney: From 2023 onwards, transformation efforts were particularly noteworthy. There is a perception in the industry that times are getting tough, often with tight budgets and an uncertain funding environment, but to get people to understand that, there is a need for long-term change. Efforts are important. This funding is here to support long-term innovation. We are really excited about what we will learn, the potential of HATCo, and the great leadership of Mark Harrison and the team under him. I think 2024 will be a really exciting year.
MHN: Is there anything else you'd like to add that wasn't covered?
Maroney: Perhaps another surprise this year was the massive increase in GLP-1 adoption. If you think about the number of companies within the health tech ecosystem that have been impacted in some way by the introduction of a single drug, we have certainly never seen anything like it. Again, these are just touchpoints. If you add up all the companies that have seen some kind of meaningful change in their business as a result of implementing GLP-1, I think the numbers are quite staggering.
And I think we're still in the early stages of understanding the potential impact on other sets of conditions. So one of my particular focuses in 2024 is to think about these huge drug pipelines as they relate to specialty medicines and try to understand how they are priced effectively. That is to say. And if the math equations are so difficult for insurance companies and self-insured employers, how does access actually work? There's a lot of work to be done there. Again, all of this for very compelling reasons, as it benefits the lives of so many people. But as we know, at some point the math equation breaks down if we don't rethink our pricing and financing mechanisms.