In its inaugural State of Well being Tech file introduced at HLTH 2023, Bessemer Undertaking Companions famous that in spite of a “best possible hurricane” of a marketplace downturn coinciding with the trough of disillusionment within the well being tech innovation lifestyles cycle, there are many causes to be inspired via the development era firms are making in healthcare. The file additionally shared predictions for well being tech traits in 2024. Sofia Guerra, vp with Bessemer Undertaking Companions, introduced the file’s findings at HLTH.

“Like all innovation hype cycle, there are peaks and troughs, and we’re now in a trough, and everybody’s feeling gloomy. It came about to be that the trough coincided with the marketplace downturn, so it’s been doubly difficult. I believe numerous persons are gloomy, and there are causes to be gloomy.” mentioned Steve Kraus, a spouse with Bessemer Undertaking Companions, in a telephone interview forward of the file’s e-newsletter. “However I believe you need to upload some viewpoint. We simplest began 10 years in the past. We’ve were given a protracted approach to run. So we wish to additionally level to how a ways we’ve come and the place we expect we’re going…which is why we’re nonetheless tremendous constructive concerning the long term.”

Kraus stated that whilst there are numerous overrated firms in healthcare, these days, there are many firms offering actual worth, serving to to scale back prices and toughen affected person results. Amongst them are bodily remedy industry Hinge Well being, a part of Bessemer Undertaking Companions’ portfolio, and psychological well being improve apps similar to Headspace and Calm.

The firms that may be successful and make it out of the trough of disillusionment could have 5 main traits in not unusual, consistent with the file:

1. Hair on hearth downside: Remedy a mission-critical downside on your buyer.
2. Onerous ROI and scientific results: Show transparent and speedy go back on funding on your buyer.
3. Massive and rising marketplace: Make the most of tailwinds and systemic shifts for adoption and law to articulate a powerful ‘why now’ on your alternative.
4. Sexy unit economics: Focal point on prime margins and habitual revenues, which might be sturdy indicators of horny and enduring industry fashions.
5. Robust multi-disciplinary groups: Construct a workforce that marries business and technical wisdom to boost up distribution, and construct best-in-class product.

Having a look forward to 2024, the Bessemer Undertaking Companions file makes a couple of predictions for 2024 well being tech traits. Amongst them are:

The upward thrust of Products and services as Tool

Developments in generative AI and massive language fashions (LLMs) are spurring a brand new technology of device programs offering a carrier as the overall product. Those tendencies have flipped the standard SaaS fashion, developing a brand new “Products and services-as-Tool” paradigm. It supplies a chance for founders to achieve marketplace percentage via reimagining how they are able to supply answers that weren’t imaginable prior to now. One instance of Products and services as Tool cited within the file is bills workflow automation, the place AI/device studying merchandise lend a hand patrons force income expansion and make knowledgeable selections in response to scientific and monetary information.

Income cycle control firms aligning incentives

The present problem of income cycle control is that it’s characterised via inefficiencies and misaligned incentives. The file notes that there’s an excellent chance for device to change into the connective tissue between payers and suppliers, enabling a extra clear and environment friendly fee machine.

“As a way to be successful at this job, industry fashions should intricately observe the cash and align incentives between the stakeholders. We’re eager about firms that may harmonize and deduplicate adverse techniques, similar to prior authorizations and usage control, claims adjudication, fee integrity, and high quality audits.”

The file additionally sees promise in firms facilitating the transition to extra risk-based fee fashions, similar to payers exploring person protection well being repayment preparations, and shopper directed healthcare.

Well being tech companies leverage oblique monetization for a distribution merit

Corporations that may earn a distribution merit supply affordable or loose device and repair to their shoppers, shortening their gross sales cycles. Those firms are situated to leverage oblique monetization methods. Some of the firms illustrating those traits cited via the file are Verse Clinical, Rupa Well being, HouseRx (a Bessemer Undertaking Companions portfolio corporate) and Doximity.

Making the biopharma worth chain extra environment friendly

Tool and AI may just grow to be drug discovery and commercialization. Some of the firms that exemplify those traits are Peptone (a Bessemer Undertaking Companions portfolio corporate), Seismic Healing, Generate Biomedicines, Evozyne and Profluent.