by the Healthcare and Life Sciences practices

In the few weeks since the HLTH conference, we continue to talk to clients that have raised capital and are looking at opportunities in front of them: whether in AI, platform as a service, or other tech-enabled services.  We see many legacy digital health companies at inflection points in need of transformational CEOs, COOs, Presidents and board directors. Finance leaders and innovative tech talent also remain red hot.

But as 2024 approaches, will these companies invest in that-much-needed talent?  No one knows for sure, but we are slowly seeing increased strategic investments in talent.  Financially strong healthcare and life sciences companies will have an opportunity to grab even more market share if they take action to put the right talent in place.

Artificial Intelligence Takes Center Stage

AI has taken the world by storm and there was a buzz and enthusiasm among industry professionals at HLTH 2023.  A multitude of groundbreaking applications and use cases were in virtually every conversation.  Some AI solutions will impact the healthcare market, while others will potentially revolutionize the entire ecosystem through enhanced diagnostics, personalized treatment, or administrative and operational efficiency.

There were also discussions about the challenges and ethical considerations that AI presents, especially in the tightly regulated healthcare industry.  Concerns were related to data privacy, the need for regulatory frameworks, and potential biases in AI algorithms.

Investors Eager to Deploy Capital

Investors were enthusiastic about deploying capital and were seemingly a year behind schedule.  Many expressed a sense of urgency, recognizing the immediate need to invest in innovative healthcare solutions.  This eagerness to back health tech companies demonstrated confidence in the sector's growth potential.

Financial Realities: Preparing for Possible Down Rounds

While some stronger organizations had quietly raised capital, many held off during the turbulent times of the pandemic.  However, there was a consensus that some companies might need to accept down rounds in the next two quarters.  While the idea of down rounds seems challenging, there was a sense that some investors were viewing it more as a strategic, forward-looking choice to position healthcare companies for more normalized operations and renewed growth.

Behavioral and Mental Health In Focus

Behavioral and mental healthcare was thrust to the forefront during the pandemic, due to an exponential increase in demand for services, and remains a central focus of investment for the healthcare industry.  The importance of addressing mental health and providing innovative solutions for all individuals — ranging from mild-moderate needs to those with higher acuity mental illnesses — was underscored in the HLTH 2023 sessions, with a clear recognition of the pandemic’s enduring impact on overall mental well-being.

Value-based Care Continues to Drive Healthcare Transformation

Value-based care, or VBC, the framework where providers, including hospitals and physicians, are paid based on patient health outcomes, continues to gain traction in the U.S.  HLTH 2023 featured discussions about pushing further into underserved areas such as Medicaid and specific patient populations, including women over the age of 65. Rural healthcare also gained attention, with some companies expanding high-touch VBC programs further into rural America.

The Era of Hybrid Care

Hybrid care, the combination of digital and in-person healthcare, is now a permanent fixture as a result of the pandemic.  Telehealth, remote patient monitoring and other related digital solutions are here to stay; however, the critical importance of brick-and-mortar facilities, particularly for older patient populations, remains evident.  A key concern within the healthcare industry is how to effectively bridge the gap between virtual and physical care as we settle into a post-pandemic normal.  The providers that successfully made that transition, especially at scale, are limited.  As more providers move toward the hybrid approach, there is a greater demand for the talent that makes that possible.

Now and Post-HLTH

Throughout the HLTH 2023 week, we connected with scores of investors and leaders who are purposefully shaping the future of the healthcare industry.  We recognize people remain cautious due to the uncertain nature of the market. There are plenty of “haves” and “have nots” – meaning clients are either flush with cash after raising a great deal of capital over the past 24 months or others just trying to survive.  There are few in between.