In the healthcare industry, the new year begins with two meetings that together convene inventors and investors, marketers and buyers of technology: CES, the largest global meetup focused on consumer electronics, and the J.P. Morgan Annual Healthcare Conference (in its 41st year).

Taking a bird’s-eye view over these two important conferences, I saw two converging themes coined by Owen Tripp, CEO of Included Health in his STAT column on JPM2023.

  1. There are too many “digital front doors … that lead to nowhere.”
  2. “Integration is the innovation that counts now.”

Anatomy of Two Digital Health Meetings

At CES, digital health has been a growing category of consumer-facing technologies. This year, situated on the Las Vegas Convention Center’s showroom floor, not far from shiny new cars, big-screen smarter TVs and clever refrigerators (one of which can generate recipes based on the foodstuffs stored within), were dozens of sensor-embedded digital health tools.

CES 2023 press releases touted launches for digital health products that would generate more metrics about our individual health, from head (e.g., a headband from Alphabeats to monitor brain activity and channel music to the user to help them enter a “flow state”) to toe (e.g., 3D-printed orthotics from Aetrex to bolster foot health), and every other physical bit of human real estate in between.

What these various consumer electronic offerings have in common is they generate data that measure and track health metrics—from heart rate the biofeedback loops via EEG of the brain and urinalysis from the privacy of our home bathrooms, to menstrual period tracking via Movano’s Evie, a potential competitor to the category-defining Oura ring.

It’s clear we’ve moved well beyond digital pedometers and sleep tracking apps when it comes to consumer-facing digital health products.

Shifting from Vegas to the rain-soaked Bay Area, at JPM 2023, conversations focused on declining investments in the field, quantified in a range of studies including a collaborative report from FINN Partners and Galen Growth on the global state of digital health; Silicon Valley Bank’s annual healthcare investments and exits report; and, Rock Health’s 2022 year-end digital health funding analysis (more on that, below).

These reports’ top-lines concurred that funding for digital health innovations fell in the latter part of 2022 from historic heights of investments in 2021.

Is this a backlash to the irrational exuberance of high valuations for new medical things that lacked proof-points and user-centered and user-informed design?

As GSR Ventures noted in their forecast, “ROI and clinical validation will be the greatest markers of success in 2023.”

The Battle for Primary Care Primacy

Meanwhile, the real healthcare world was happening outside of venues charging $10 for a cup of coffee—for both providers and patients.

In her summary of things observed at JPM 2023, Caroline Hudson of Modern Healthcare pointed to several trends, including health systems’ need to cut costs and service integration as a growing priority.

And so as the two big healthcare industry meetings were convening in Las Vegas and San Francisco, hospitals and health systems continued to face financial pressures and labor and supply shortages.

Kaufman Hall’s monthly “Flash Reports” have been tracking hospitals’ finances from the start of the pandemic; the company convened a Healthcare Leadership Conference in October 2022 discussing how to prepare for risk-based contracts and value-based care. Max Timm, SVP at the firm, summarized that, “If 2022 has taught us anything, the traditional economic model of care delivery is not working. … That’s partly because of rising expenses, and a slower than expected rebound of patient volumes.”

Now consider Timm’s point about patients’ slow return to healthcare settings. There remains a residual impact of patients continuing to “medical distance” and postpone necessary care, which compels providers to re-engage with local communities and clinicians to rebuild relationships that might have eroded during the public health crisis.

At the same time, in the current financial downturn felt by most patients’ households, patients’ medical bill experiences are integrated into their overall budgets competing for basic needs like food, utility payments, and gas for the car.

Facing too many digital front doors—how to access care, whether at the doctor’s office, the specialty practice, or get triaged via retail urgent care or telehealth—can create further confusion, stress and reason to delay care due to a friction-laden customer experience.

Kaufman Hall’s Dan Clarin asked, “Who will help consumers put the pieces together?”

This is the existential question healthcare providers and systems must confront entering 2023, with the growth of novel entrants, tech and retail players entering the fray of the battle for primary care primacy.

Look to “Slow, Steady, Even Boring” Strategies

Boston Consulting Group convened a panel at JPM, which focused on life science industry trends. BCG moderator Romney Resney, managing director, was quoted as saying, “We all hear you on the slow pace of fast change.”

In this case, turn to the words of Navid Farzad, partner, Frist Cressey Ventures: “Health systems are looking for digital solutions that are easy to understand, can be deployed relatively quickly, and deliver tangible cost savings and efficiencies. We need to find ways to help health systems reduce admin burden and free up clinician time.”

While this sounds like a no-brainer, in fact, this seemingly simple advice hasn’t been the leading M.O. in the so-called macro-funding cycle as quantified by Rock Health in its report.

The Rock Health team concluded that “2023 will be built up on slow, steady, and maybe even boring strategies for healthcare startups and enterprises alike: managing cash, restructuring to accommodate revenue volatility, and investing in technology infrastructure.”

Of note were many health systems’ pivoting to shift care to hospital-at-home programs. As a result, Rock Health noted that “on-demand” healthcare investments landed the top-ranked digital health value propositions with DispatchHealth and Homeward Health in the lead of innovators serving this shift.

From Point Solutions to Integrated Care

Both clinicians and consumers are overwhelmed with point solutions, which exacerbate fragmentation. Thus, the imperative for integration, which is sought by both clinicians and consumers alike.

On the CES 2023 panel on Big Tech in Health: What It Gets Right and Wrong, Jennifer Goldsack, CEO of the Digital Medicine Society (DiMe), discussed the reality that many consumer-branded technologies already sit in peoples’ homes, outside of the clinic—with novel flows of data. Big tech can bring to bear nudging and behavior change, she explained—a competency that hospitals and health systems lack.

That calls for collaboration and the tough job of rebuilding relationships and trust which is easy to lose, and hard and painstaking to earn back.

Integration—slow, steady, and sometimes “boring”—will be the winning innovation for healthcare in 2023.

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