No Longer A Mythical Beast: Competitive Market-Driven Adoption of Healthtech Products
Most recent eras of tech adoption in healthcare have been propelled either by some top-down government mandate - both carrots (e.g. Meaningful Use driving EHR adoption) and sticks (e.g. information blocking penalties driven by the 21st Century Cures Act) - or an unexpected crisis (e.g. telehealth and RPM during the COVID-19 pandemic). In this sense, the vast majority of tech adoption in healthcare has been inorganic and "unnatural", versus driven by organic market forces, real competition, and actual supply and demand curve dynamics.
That makes the current wave of generative AI product adoption that we've observed since ~2023 unprecedented for two reasons: 1) it is completely organic and driven by genuine competition versus any top-down regulatory driver or other such manufactured intervention, and 2) the slope of the adoption and revenue curves of these products is steeper than we've seen in any other recent healthcare technology wave.
Moreover, one of the segments in which we’re seeing the most rapid growth is in the SMB provider market, which has historically been highly underserved (or overserved!) by clunky enterprise software requiring heavy implementation and maintenance. Amongst the traditional set of B2B end customers for healthtech companies (e.g. providers, payors, employers, life sciences companies), providers have also historically been the most sluggish in terms of uptake, whereas right now they appear to be at the head of the pack in several areas.
The main domain in which we observe this dynamic is in the administrative automation of back office and front office jobs (e.g. patient intake, scheduling, billing, claims processing, authorizations, referrals, etc). AI scribes have also taken off at a similar clip across both SMBs and enterprise provider organizations; in fact, they've shown as close to a product-led growth motion as we might ever expect to see in the enterprise health system setting, with individual physicians often having a direct role in evaluating products and making purchasing decisions with relatively low friction.
The fact that we now have healthy, market-driven competition in healthtech is one of the most positive changes that has occurred in this domain in the last few years - while it does create more noise for buyers, it also raises the bar on execution, and leads to higher quality products for all stakeholders, whether it be providers, administrators, or patients. Call this yet another reason why healthcare is the industry poised to be the biggest beneficiary of AI!
