The Current State of HealthTech

While Healthtech investment slowed down in 2023 and early 2024, the industry holds incredible promise moving forward, especially given the rapid advancement of data-hungry generative AI models. In fact, applications of generative AI in healthcare were one of the main drivers of healthtech investment in the first quarter of 2024. Hospitals alone generate 50 petabytes of new data every day but only use 3% of it, adding to a health data goldmine.

Trend #1 - Generative AI Healthcare Solutions

1. Foundation models & physician copilots - The healthcare industry is overflowing with data from electronic health records, wearables, radiology information systems, EKGs, EEGs, and more. This massive supply of multimodal data, coupled with the increasing specialist shortage in fields like vascular surgery, neurosurgery, urology, ophthalmology, and cardiology, makes physician copilots an exciting investment. Fine-tuning medical foundation models for different specialties could empower understaffed and rural care teams at a more affordable price point than maintaining multiple classical models that each evaluate a different disease.

Source: Multimodal AI in Modern Healthcare

1. Automating physician operational workflows - Since the onset of COVID-19, physician burnout has increased sharply, contributing to the healthcare professional shortage. Alarmingly, around ⅕ of remaining hospital staff want to stop practicing within the next two years. This problem is most pressing in specialties like emergency medicine, internal medicine, and pediatrics, potentially costing the healthcare system upward of $260 million annually due to excess emergency care facility visits and quality of care concerns. Nearly half of physicians believe that reducing administrative burdens–and clinical caseloads–would prevent burnout. Generative AI tools that automate long administrative processes like prior authorization, EHR data logging/management, and appointment ordering, could lift this burden. Soma portfolio examples: Enzo Health, Quadrant Health
   

Source: The Best Practices to Avoid Physician Burnout

1. Drug design - Since the release of AlphaFold in 2021, there’s been intensifying excitement around AI-enabled drug development. Generative AI can create new compounds for clinical endpoints, especially compounds that are smaller and structurally complex for hard-to-treat or poorly understood diseases. It can also create compounds capable of performing specific functions, like carbon capture. DNA foundation models like Evo and genomic LLMs like OpenCRISPR, which is trained to produce novel gene editing complexes, have enormous potential. With the rise of multimodal AI interaction, generative models for genomics may leverage relationships between multi-omics data. Soma portfolio example: Haplotype Labs

Source: Evo: DNA foundation modeling from molecular to genome scale, Arc Institute

1. Therapy - Over ⅕ of adults have a mental illness and talk therapy, or psychotherapy, is often the first-line treatment. While effective, with 75% of participants reporting positive benefits, traditional psychotherapy gets expensive fast. Therapy sessions can range from $65 to over $250 an hour, with an average rate of $100 to $200 per session across the US. Unlike human therapists, AI therapists can routinely access and synthesize the latest research findings and diagnostic guidelines available online. Appointments don’t need to be scheduled in advance, eliminating time pressure. Soma portfolio examples: Manifest, Thyself

Trend #2: Root cause medicine & wellness

The US healthcare system is moving away from fee-for-service models and toward value-based care models. The surge in online searches for value-based care highlights the system’s shifting interests. The Center for Medicare and Medicaid Innovation has an aggressive goal of transitioning 100% of Medicare beneficiaries into value-based payment structures by 2030.

Today’s fee-for-service system creates an environment where providers make money by ordering more tests, medications, and procedures for active diseases. Value-based reimbursement plans like shared savings and capitation models realign patient, provider, and payor incentives so that the goal is improving overall health and avoiding costly complications down the line. This makes preventing diseases through root cause medicine financially feasible and even lucrative, particularly because 85% of US healthcare spending stems from chronic diseases that are largely preventable.

The biggest barrier to lifestyle medicine has historically been lack of reimbursement–55% of these providers currently can't get paid for spending time coaching patients on nutrition, exercise, stress management, and other behavioral factors. The rise of value-based care models will remove this reimbursement obstacle, making room for:

• Scaling up lifestyle medicine practices and providers, like NYC Health + Hospitals' new lifestyle medicine clinics across their municipal system.
• Technology-enabled lifestyle medicine solutions like digital root cause coaching and food as medicine platforms offering medically tailored meals (MTMs). Soma portfolio examples: Mighty Health, Flair Health
• Building infrastructure to enable lifestyle medicine, such as specialized food suppliers, meal delivery logistics, and outcomes data tracking.

Source: Tufts True Cost of Food is Medicine Report 2023. Model Simulations of One-Year Medically Tailored Meal (MTM) Policy Costs and Potential Change in Health Care Expenditures Associated with MTM Receipt by Health Insurance Status.