AI, value-based care are growing sectors in digital health but lack large-scale adoption

In 2023, two prominent trends in healthcare are the development of AI applications and the emphasis on value-based care. However, challenges in scalability persist for these trends. Big box retailers entering the healthcare sector and increased efforts toward data interoperability have shown substantial activity and are on a trajectory for long-term growth.

Rock Health's report highlights notable activity in research, funding, and partnerships related to AI in healthcare and value-based care enablement. For AI developers, addressing issues such as algorithm bias, ethics, and transparency is crucial for transitioning to clinical use cases. Providers, payers, and life sciences companies are urged to establish effective AI governance and carefully evaluate tradeoffs between platform-level integrations and best-in-breed solutions to create successful long-term AI strategies.

Digital obesity care, caregiver solutions, and companies focusing on food as medicine, like Instacart, have gained increased market awareness. Medicare Advantage plans are expected to continue adopting food as medicine, and the caregiving market is predicted to grow due to escalating challenges faced by caregivers.

Looking ahead to 2024, it is anticipated to be a period of recalibration and adjustment in the digital health space. Market leaders are urged to consider the necessary capabilities and partnerships to keep up with innovation, leverage early mover opportunities, and position existing businesses and assets for further growth in challenging market conditions.

Several AI-enabled companies received substantial investments in 2023, such as Hippocratic AI, Elucid, and Genesis. Major retailers, including Amazon, CVS Health, and Walgreens, made significant moves in healthcare through acquisitions. On the value-based care front, General Catalyst's plan to purchase a health system focusing on technology-driven prevention and healthcare delivery, along with Aledade securing $260 million in Series F funding, indicates the growing importance of technology in advancing value-based care solutions.