Healthcare: No clear AI winner yet, say experts at HLTH conference
LAS VEGAS — More than 10,000 individuals descended on Las Vegas this week as health and tech companies ranging from startups to Fortune 500 juggernauts showcased their latest digital health chops at HLTH 2023.
Last year's big takeaway focused on moving away from single-point solutions. This year, artificial intelligence was the topic on investors' minds as they search for the next big bet in digital health.
But it's unclear what use case for AI in healthcare will ultimately win.
With big tech players like Alphabet (GOOG, GOOGL), Microsoft (MSFT), and Amazon (AMZN) building out their individual strategies — and all with a presence at this year's conference — startups are pitted against well-resourced titans in proving they can provide meaningful change in healthcare.
That thought was top of mind for Prateesh Maheshwari, a managing director at Maverick Ventures, a venture capital firm based in San Francisco.
"Are we making a difference in digital health? I don't want to undermine all the people that I work with, but ... is the size of the industry making the impact that we want?" Maheshwari said.
That includes supporting value-based care, an idea that has been around for more than a decade that dictates that health systems and professionals should have a financial stake in keeping patients healthy and be penalized if interventions don't work.
That would differ from today's largely fee-for-service world, where every time a patient gets a blood test or goes to see the doctor, they incur a bill with line items for each additional service. This is especially a problem in specialty care — services such as cancer care or dialysis — which require specialized doctors rather than primary care physicians.
“We know it's so much more of the [healthcare] spend, so it feels like it's a problem that has to be solved. I don’t know if we have the answer," Maheshwari said.
AI's potential
Experts like Vineeta Agarwala, general partner at Andreessen Horowitz, are bullish on AI unlocking the potential to solve the value problems, as well as relieve the growing administrative burden that technology has placed on clinicians.
"All of those use cases we think are going to be powered by new and next-generation AI models and are going to be impactful," Agarwala said.
In the past several years, a significant amount of capital has been invested in digital health, peaking during the pandemic — especially for AI.
Rock Health, which tracks health tech investment in the US, recorded a total of $21.4 billion in digital health using AI since 2020. Almost half of that was in 2021 alone, with a reported $10.1 billion that year.
The average total investment is less than half that amount annually. However, as a percentage of total digital health investments, AI has been holding steady.
In the first half of this year, only $2.2 billion had been invested, according to Rock Health. As a percentage of total digital health, however, the investments have remained relatively flat, at around 30%.
In 2021, it rose to 35%, but in the first half of 2023, AI in health investments were only 29% of total digital health investment.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.
