Healthcare predictions for 2024
My healthcare predictions for 2023 were on the money: Medicare Advantage faced pushback, retailers struggled to deliver primary care, and AI started to realize its potential. Here’s how I’m seeing 2024.
1. Pharma companies bypass physicians and pharmacies to sell products directly to consumers
FDA is preparing to approve a new framework called ACNU (additional condition for nonprescription use), which will allow patients to self-prescribe certain drugs. To qualify, patients must show the conditions have been met, e.g., that the drug is appropriate for their condition and that they understand potential risks.
Early applications may include drugs for chronic conditions like high cholesterol, disorders that are typically treated through telehealth like erectile dysfunction, and primary care complaints such as urinary tract infections.
FDA expects the ‘additional conditions’ to be met via an app or questionnaire. But I think pharma will act more aggressively, setting up telehealth programs with coaches and other non-prescribers to guide patients, encourage sales, and provide seamless access to financial assistance programs. Some of these offerings will include direct shipping to consumers, cutting the pharmacy and PBM out of the loop.
Companies like Eli Lilly are already laying the groundwork with traditional prescription products. LillyDirect is teaming with a telehealth provider to offer prescriptions and coaching for diabetes, migraine, and obesity. Once products are approved under ACNU, the need for physicians in these telehealth networks will drop considerably.
ACNU plus direct distribution has the potential to substantially increase access and reduce costs. But the long-term consequences aren’t yet clear. Payers will need to pay close attention to the impact on total costs and outcomes.
It won’t all happen in 2024 but I expect to see a meaningful start.
2. AI enables culturally competent care
AI often reinforces existing biases in healthcare and society. But I predict that in 2024, AI will also be used to remove bias and promote culturally competent interactions in healthcare.
Healthcare organizations have a lot of data about individual patients. For example, pharmacy chains can determine who would be eligible for specific clinical trials based on their pharmacy records and demographics. They should be able to help recruit trial participants who better reflect the diversity of those affected by the illness, and help sponsors live up to their FDA-mandated Diversity Action Plans. But pharmacies haven’t been able to turn those insights into better recruitment, because they don’t know how to communicate effectively and personally.
That could be fixed by using prompts in large language models. For example, if you tell ChatGPT to write an email using an empathetic tone for a co-worker who recently lost a loved one, it does a great job. The more specifics you give it, the better.
Now the challenge is to take the relevant data –such as that the individual is needle shy, dropped out of another trial, or lives far from public transportation –turn it into appropriate prompts, and then test whether this approach works well in practice. Of course it’s important, at least at first, for a human to review the outputs to make sure they’re on target and don’t result in blowback for cultural insensitivity.
3. Digital therapeutics gain traction by proving cost effectiveness
The 2023 bankruptcy of Pear Therapeutics, which pioneered the digital therapeutics field, was a big downer for the industry. The company received the first FDA approvals for digital therapeutics, had a tight partnership with Novartis, and entered into a value based contract with Prime Therapeutics. But it wasn’t enough. A lot of folks have written off the whole digital therapeutics space as a result of Pear.
But a new breed of digital therapeutics companies is developing products. They’re learning from Pear and banking on the increased interest in healthcare economics. Contract research organizations (CROs) that specialize in digital therapeutic development are promoting Health Economics and Outcomes Research (HEOR) programs to help digital therapeutics developers make the case that their products will lower the total cost of care. They’re using new data types, such as patient reported outcomes and moving beyond traditional cost-effectiveness analyses to more nuanced methodologies.
In a world of value based payments, that matters a lot to providers –who are just starting to learn how to prescribe and manage these digital interventions. If digital therapeutics succeed with this approach, the health economics emphasis in digital product development may eventually extend to traditional products, that have historically focused on efficacy and safety.
4. Providers and payers select AI solutions from established health IT and data vendors
Health care systems and insurers have built out their own AI teams and are excited about the potential for transformation. But they are starting to recognize that AI is not their core competency and are looking to outside resources for expertise and scalability.
Start-up AI companies have been investing aggressively, but incumbent health IT and healthcare data providers have significant advantages that will enable them to win if they execute effectively. The advantages include integration into clinical workflows, trusted relationships built over the long term, a demonstrated ability to scale, and the ability to maintain data safety and security. Patients are nervous about the use of AI in healthcare, so providers and payers know they must be careful.
In 2024, incumbent health IT and data vendors that move quickly to build and commercialize AI capabilities will be able to fend off or partner with upstarts to win major contracts. Expect the customers to use their internal AI resources for fine-tuning and implementation.
5. Private equity favors bolt on acquisitions of VC-stage companies
Venture capital raising has been hard for a couple of years and even some promising companies are running out of gas and looking for an off ramp. Meanwhile, private equity backed companies are also having trouble exiting at their desired valuations. They’re cutting costs and looking to expand margins.
But the weak VC market means PE-backed firms may acquire some of the more promising startups at reasonable prices. This can unlock innovation and get these smaller companies to scale faster, which should accelerate and expand their impact. There are VC-stage companies that have established product/market fit and are positioned to scale quickly, except that investors have become overly cautious and are not providing sufficient capital. Bolting them on to the right PE-backed platform companies will be synergistic.
There are challenges in identifying the right companies and integrating less mature players into PE platforms. But 2024 is the year we’ll see it happen.
Health Business Group is a boutique healthcare consulting firm that develops growth strategies and performs due diligence in healthcare and life sciences. Contact us to learn more.
