The COVID-19 pandemic accelerated the adoption of healthcare technology, reshaping the foundation of American medical operations and delivery. However, as 2022 came to a close, several factors indicated that technology adoption was slowing, including a cooled funding landscape for digital health and a drop in virtual care utilization.
In addition, a flurry of cyberattacks and concerns over the privacy of sensitive medical data highlighted the hazards of new technology adoption. Despite this, experts remain upbeat about the potential of technology to improve U.S. healthcare in 2023.
According to predictions from industry stakeholders, this year could represent an inflection point for real-world utilization of artificial intelligence, and standards could raise for health data privacy and cybersecurity. In addition, though investors are more cautious, funding will continue to be available for startups this year, and the telehealth industry will be held to higher clinical standards as it’s used more frequently in care delivery.
Digital health goes back to basics
After a volatile few years of record digital health funding followed by a painful market correction, health tech is going back to basics this year as investors prioritize safety over risk, experts predicted.
Digital health funding may still experience a slight drop compared to past years, but funding levels should stabilize in 2023, according to Credit Suisse analyst Jonathan Yong. Companies that have a pathway to profitability or are already operating in the black should attract the most interest as venture capitalists — with valuations down compared to the highs of the past two years — become more discerning.
“While growth is still important, there has to be a much stronger balance between growth and path to profitability,” Yong said. “VCs are going to be much more selective in their investment choices.”
That trend should benefit public companies with track records of stability, mature business models, steady growth trajectories, and fair valuations, according to SVB Securities analyst Stephanie Davis. Such companies include data analytics company Health Catalyst, patient intake software provider Phreesia, and revenue cycle management company R1 RCM, along with EHR companies like Veradigm, née Allscripts, and Nextgen, Davis said.
