Market watchers say 2023 is setting up to be even tougher than 2022 for digital health executives and investors.
Health systems, which represent a major segment of digital health buyers, are losing billions of dollars and looking to cut expenses. Digital health companies that cater directly to consumers face the dual challenge of inflation and a potential recession, which has led to a shift in strategy toward targeting enterprise customers.
But optimism isn’t completely out the window. Pharmaceutical corporations, insurance companies and self-insured employers are still active digital health adopters, and health systems aren’t going to cut back entirely. Here are three areas of health technology that generated buzz among industry stakeholders this year and could withstand economic turbulence in 2023.
Virtual and augmented reality
After years of hype, virtual reality—which creates an immersive environment—and augmented reality—which overlays digital content into the real world—have found use cases in healthcare due to the industry’s staffing challenges. Some health systems facing an employee shortage have turned to the technology to help educate and train clinicians.
“Virtual reality can really increase our capacity in training,” Dr. Wendy Wilcox, NYC Health + Hospitals’ chief women’s health service officer, told Digital Health Business & Technology in June.
The 11-hospital system announced this summer it was rolling out virtual reality systems to aid obstetricians in preparing for maternal mortality scenarios.
“If you can get a realistic training course into the hands of the provider that they can access whenever they want, it can be cost effective,” said Wilcox.
Texas A&M’s College of Nursing & Health Sciences in Corpus Christi is using a grant from the Health Resources and Services Administration to invest in VR for simulating clinical experiences and assisting instructors.
Lisa Snell, manager of the simulation and clinical learning center at Texas A&M, said COVID-19 pushed the medical education industry into accepting more virtualized learning environments, and the technology will help bring more students into the program.
“Our students benefit from it,” Snell said. “This is the environment they grew up in. We’ve been behind the curve and we’re not doing them any favors if we don’t invest in it.”
Venture capital invested more than $250 million in virtual and augmented reality startups in 2022, according to Digital Health Business & Technology’s database. In March, virtual reality training platform company OssoVR secured $66 million in funding, one of the largest VR startup rounds this year.
“While the sector is still in the early part of the adoption curve, we see these technologies as revolutionizing how surgeons train, how information is delivered in the operating room, and how patients are treated,” said Dr. Sunny Kumar, partner at GSR Ventures, one of the venture capital firms that invested in OssoVR.
There were 17 deals totaling nearly $300 million in 2022 for digital health companies developing clinical trial technology, according to Digital Health Business & Technology’s database.
Scott Barclay, managing director of healthcare at venture capital firm Insight Partners, invested in Trialjectory, one of the trial-focused tech companies that received funding this year.
“We need to bring software and appropriate data liquidity to trials,” Barclay said. “Trials need to be better, faster, more expansive and more inclusive.”
Decentralized trials use remote technology platforms to cast a wider net for participants. The tools could increase diversity in trials, according to a study published in JAMA Network Open focusing on cancer patients.
This potential has drawn the interest of pharma companies like GSK, the Brentford, England-based pharmaceutical giant, which signed a four-year deal in September with Medable, a clinical trial software unicorn.
Companies such as Walgreens and CVS Health have also entered the fray. Walgreens launched a clinical trial business in June, saying it would create a decentralized platform and in-person locations to recruit for and conduct clinical trials. CVS Health started a clinical trial division in May 2021, and in February this year it teamed with Medable for a virtual component.
“In order to conduct research in a more representative area of the general population, you have to use community settings and technology,” said Josh Rose, CVS’ head of decentralized clinical trials. “This way you can reach out to patients who either live too far away or don’t have the economic means to travel to a [research site].”
The increasing use of artificial intelligence in healthcare has sparked debate, as some experts believe algorithms aimed at improving clinical outcomes should be more thoroughly vetted.
But money talks. In 2022, which saw a sharp reduction in overall digital health investments, clinical AI startups like Cera ($320 million), Cleerly ($192 million) and ConcertAI ($150 million) still received hefty funding rounds.