Sheppard Mullin’s High 10 Takeaways from HLTH 2023

At HLTH 2023, we noticed a concentrate on sure themes, together with the shift in investments and M&A exercise, hospital and well being system innovation and transformation, the implementation of AI, and healthcare administration. Beneath are our high 10 takeaways from what we heard, and didn’t hear, at HLTH 2023.

1. Capital and the Coming Well being Startup Reckoning. Corporations elevating capital and the investor group proceed to battle with valuation expectations primarily based on the outlier valuations that appeared in 2021. Issuers might want to increase capital or go to market in 2024, and there might be a reckoning when it comes to the valuations they can assist. Stakeholders anticipate that this shift in valuations and tightening of capital will result in an uptick in M&A exercise as soon as there’s a “assembly of the minds” amongst consumers and sellers. Many anticipate consolidation to be notably energetic within the digital well being sector.
2. Hospital and Well being System Innovation and Transformation. Stakeholders are centered on the transformation of hospitals and well being programs, that are in a fragile state and squeezed by the transfer to outpatient companies, rising labor prices, dropping Medicare payment for service reimbursements, and high quality prices. These stakeholders look to rework the present fashions by adopting progressive applied sciences, together with knowledge analytics and AI, and aligning incentives to make value-based care extra profitable.
3. A Want for Holistic Care and Coordination. As mentioned in our prior weblog publish, many healthcare firms are centered on care coordination and administration for particular situations and specialties, however few are tackling holistic care coordination throughout the varied sectors in healthcare and within the care supply and cost vertical. Stakeholders want to “wellness by design” and the “quantified self.” “Tremendous apps” had been mentioned as a method to resolve the coordination deficit, by aggregating the large quantities of data being generated in a multi-faceted wellness house.
4. Diabetes and Continual Situation Care. Diabetes continues to be high of thoughts for payors and suppliers alike, with diabetes in America worsening regardless of elevated funding in diabetes care. Fourteen % of all 2022 medical visits associated to diabetes. Virtually 1 / 4 of all people with diabetes are unaware that they undergo from the illness, additional illustrating the necessity for prevention on the pre-diabetes stage via inhabitants well being administration, alignment of incentives, and the creation of incentivized care coordination.
5. Early Testing and Diagnostics Modalities. Corporations are growing and launching early testing and diagnostics modalities, each for supplier and shopper at-home use. With care coordination, the worth of those merchandise to the general care supply system could possibly be enhanced.
6. Stakeholders Are Discovering AI’s Position in Healthcare. AI was a pervasive subject at HLTH 2023, and it appears nearly-settled that healthcare stakeholders see AI as a device, somewhat than a substitute, for suppliers. It’s also extensively accepted that growing belief is as vital as growing the software program and algorithms to run AI in healthcare. For now, AI’s function is more likely to be extra operational than medical in nature, however as belief in AI builds via elevated transparency and eliminating inherent biases, AI could make its method to the purpose of care.
7. Bias, Well being Fairness and Checks on AI and Giant Language Mannequin (LLM) Instruments. The speedy tempo of adoption of digital well being options, AI and LLM instruments are inflicting well being fairness considerations as some stakeholders lean on these instruments to resolve for inherent bias and enhance well being fairness. Nonetheless, it’s value noting that these instruments themselves typically have the identical biases constructed into them; due to this fact, it’s paramount that applied sciences incorporate safeguards to mitigate such biases.
8. Heightened Enforcement within the Medicare House. There continues to be concern over enforcement exercise regarding the Medicare Benefit program, whether or not because of Medicare Benefit threat adjustment, ACO REACH, underutilization or in any other case. We anticipate that this can proceed to be an space of focus for DOJ enforcement within the subsequent couple of years, pushed each by current high-value recoveries in addition to the continued enhance in authorities spend on the Medicare Benefit program. Potential options to reign in exploitation had been debated, with a minority of stakeholders proposing a return to a payment for service mannequin coupled with an enlargement of the ACO REACH program, which can be underneath assault, as evidenced by the September decision of the California legislature calling on President Biden to finish ACO REACH.
9. Meals is Medication. As a part of a concentrate on the social determinants of well being, we noticed a concentrate on addressing meals insecurity and wholesome meals/meals high quality to drive value financial savings and improved outcomes throughout the board.
10. Few Audio system Mentioned Healthcare Skilled Shortages. Few audio system and presenters at HLTH centered on the rising infrastructure deficiencies that would contribute to or worsen shortages of nurses and different important suppliers. If the trade doesn’t remedy this difficulty, suppliers will proceed to be stretched skinny and can have little-to-no bandwidth to study and undertake the progressive applied sciences and options which are supposed to enhance these suppliers’ talents, general affected person care and whole value of care.

Along with the above, we anticipate elevated concentrate on extra focused and efficient affected person engagement, in addition to developments in behavioral well being, oncology, and musculoskeletal care to drive the trade ahead as we head into 2024.