10 Health Tech Predictions for 2022
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By strategic procrastination I missed the holiday prediction rush. Luckily with the talent moving into health tech and $29B of 2021 startup funding behind them, there’s no shortage of interesting things poised to happen in 2022. While I won’t seize the opportunity to retroactively claim clairvoyance on Humana’s Medicare Advantage enrollment miss or the CDC’s about-face on Omicron isolation times, here are some predictions for 2022:
1. The focus on risk-based businesses will move to specialty care
The last few years have seen strong private and public market interest in risk-based primary care. Oak Street Health and Agilon have traded at over $6B in public markets, Iora Health was acquired for over $2B and Cano Health IPOed, trading above $3.5B. Private market interest has also been high with Cityblock and VillageMD both raising at large valuations. Additionally, major healthcare players have rushed into primary care. Walgreens invested $5.2B into VillageMD, CVS announced its plan to turn thousands of pharmacies into primary care Health HUBs and United/Optum continue to buy primary care practices. This is happening on top of independent primary care providers taking on more risk. This trend will continue as payers have shown an increased willingness to delegate risk.
These risk-based primary care companies first had to focus on creating their own care models, documentation optimization and scaling. Now that many have been around for a while, I expect the spotlight on finding value-based specialty care providers who manage high-spend conditions to increase.
Most venture funding in specialty-focused care to date has occurred in the employer space for companies like Livongo, Virta, Omada, Hinge, HelloHeart, Lyra, Spring Health, Modern Health and Sword Health. These companies largely exist alongside other specialty care a patient may receive for a condition. In 2022 we will start to see more funding flow into specialty providers that combine both physical and virtual care and can be value-based partners to the growing number of risk-based primary care companies. We’ve already begun to see this in nephrology with companies like Strive, Somatus, Cricket and Monogram, which are taking on risk for high-cost CKD/ESRD patients. This trend will accelerate in high-spend specialties like musculoskeletal care (Vori Health), oncology (Thyme Care, Jasper) and cardiology (Novocardia).
2. 2022 will see an explosion of digital health infrastructure
It’s no secret that selling into health systems and providers is difficult. In other industries like SaaS, data infrastructure and fintech many startups get started selling into other startups. But in healthcare there haven’t been enough digital health providers to get to meaningful scale selling to this segment. 2021 was the first year I began to see Series B pitch decks with customer logos that were a who’s who of digital health companies (and digital health companies only). It feels like the ecosystem has reached an inflection point where there are enough of these companies to rapidly accelerate the learnings and scale of new companies. It’s still unclear how common the needs will be across different digital health businesses but it’s exciting to see strong teams at companies like Zus Health, Tendo, Medallion, Wheel, SteadyMD, Truepill, Canvas, Capable, Ribbon, Garner, Flume, Particle, Redox, 1Up, Health Gorilla and others tackling this space.
As more entrepreneurs leave this first real wave of digital health unicorns to build their own solutions, I expect they will have great insights into some of these common painpoints. In particular, I’m looking forward to seeing common tools for data abstraction and patient engagement.
3. Social determinants of health will move from general population-wide interventions to targeted efforts
The last few years have seen an explosion in discussions around Social Determinants of Health (SDOH), the conditions in patients’ environments (housing, food, transportation etc.) that contribute to their health. It’s been a heightened area of focus for CMS and venture funding with companies like Unite Us and Papa becoming unicorns. It’s also become a way for Medicare Advantage plans to differentiate their benefits in an increasingly competitive market.
Today these benefits are broadly distributed and available without rigorous studies on which interventions for which patients meaningfully improve outcomes and lower costs. I expect this to change with the arrival of a whole new benefits infrastructure that will help insurers more precisely target their SDOH spend.
4. Large payers will dramatically expand their startup partnerships to counteract United
United has a higher market cap than all of its primary competitors (Aetna, Anthem, Centene, Cigna, Humana, Molina) combined. United has done a remarkable job staying a step ahead of its competition whether building Special Needs Plans or enhancing its own Optum provider, Pharmacy Benefit Manager (PBM) and analytics offerings. I expect other plans to increasingly look to partner with companies offering similar services to Optum, whether it be provider groups, data analytics companies or innovative virtual-first or Special Needs Plans.
Companies like Belong Health, which partners with regional health plans to help them offer the same Special Needs Plans for dual-eligible patients that United has typically dominated, should continue to prosper alongside companies like Patina and Heyday Health that are helping payers offer virtual-first plans. I expect these other payers to also make their own digital health acquisitions in 2022 as well.
5. Provider tech will take center stage
As solutions that help health systems improve patient experience and operations scale at unprecedented rates, provider tech will have a banner year.
Selling to providers has traditionally not been for the faint of heart thanks to long sales cycles and highly similar offerings. But as more direct-to-consumer providers emerge, health systems risk losing some of their most valuable commercial patients. These systems have the option to partner with players like One Medical and Tia. But maintaining lucrative commercial patients will require simplifying customer experience including scheduling, patient intake and ongoing communication in an increasingly competitive provider landscape. Companies like Dexcare, Notable and Memora Health are among several that have already emerged to help health systems offer these experiences and I believe health systems will increasingly flock to them.
Separately, new sets of companies are sprouting up that can improve provider operational efficiency through technology (rather than outsourcing these operations). This has been particularly true in revenue cycle.
Small provider groups are also finding partnering with companies like Stellar, Aledade, Pearl Health and Pair Team can help them take on risk.
Because of all this, I would not be surprised if 2022 produced a series of large funding rounds for these provider-focused companies.
6. Funding will flow into at-home care as its popularity increases
At-home care has increased over the past few years with companies like Dispatch Health and Landmark pioneering new venture-backed models. Patients love at-home care, visits provide opportunities for better coding and patients engage more frequently than they would if they had to travel for visits. In many ways at-home care has much clearer moats than traditional care models. These businesses have similar dynamics to companies like Uber or DoorDash. The companies that can offer healthcare workers the most visits with the closest proximity to each other have compounding advantages in their unit economics. There’s been a wave of innovation in this space with companies like Sprinter Health, MedArrive, Pine Park Health, Lightyear Health and Axle Health.
I’m particularly excited about models that expand the number of at-home visits that are ROI-positive by providing lower-cost labor or serving at-home settings where many people live together (for example assisted living and low-income housing).
7. With a more robust market to support, decentralized trial software companies will take off
The benefits of decentralized trials in increasing trial diversity and accessibility have been clear for a while. But while decentralized trials have been discussed frequently, it seemed there existed little incentive before COVID to try important assets on untried protocols. COVID, and the reticence of patients to go to in-person visits, changed this. Companies like Science37 have seen bookings increases of 342% YoY. Now decentralized trials have an increased number of proofpoints and substantial venture funding for companies like Trialspark, Medable, Reify, Vial Trials and Lightship. A real market opportunity exists to build software for the areas of decentralized trials (wider patient recruitment, home equipment, hybrid study structures etc.) that are novel to these types of trials and I expect to see many more of these companies in 2022.
8. Changes in data and manufacturing will drive a new pharma workflow stack
Veeva has dominated pharma workflow tools for the past decade. But as pharma companies increasingly use real-world evidence to guide commercial and marketing decisions, an opportunity exists to use this data to power new workflow tools. I’m particularly interested in how companies will apply this data to R&D workflows. Companies like Benchling, Causaly and BenchSci are already powering new R&D workflows, the latter two by more seamlessly incorporating data from scientific literature. I’m also curious to see how workflow tools might be better customized for international markets with different regulatory requirements.
On the manufacturing side, cell therapies and their individual vs batch production required, will continue to change the surrounding software needed. Cell therapy pipeline assets increased 38% in 2021 while trials increased 43%. As more of these therapies come to market, organizations will need a new set of production tools since each therapy is custom manufactured.
2022 will be the year we see the continued emergence of this new pharma workflow stack.
9. Ketamine and other psychedelic behavioral health treatments will be more widely adopted
More than 37M Americans take antidepressants but unfortunately they don’t work for up to 30% of patients with depression. The clinical literature behind ketamine/psychedelic effectiveness is impressive. It will of course be important to ensure these care models are safe and not addictive.
That said, I expect the stigma behind these treatments to continue to fade as more people experience their positive clinical impact. Companies are tinkering with the exact type of model (at-home vs in-clinic) and therapeutic design that will drive the best outcomes. Venture investors have entered the space, funding providers like Mindbloom and Field Trip (as well as startups like Osmind, which provide supporting infrastructure). In 2022, I anticipate much more experimentation in this exciting space.
10. A new set of hospice-focused startups will emerge
US Centers for Medicare & Medicaid Services (CMS) is carving hospice (end-of-life care focused on quality of life) back into private Medicare Advantage plans. Traditionally when a Medicare member enrolled in hospice they automatically went back to government-run, fee-for-service Medicare. This new transition means that hospice-focused startups will now be able to sell to a wider set of private plans. 2022 will see a 125% increase in counties where a private MA plan is in charge of hospice patients. While the hospice space has not seen too many venture-backed entrants since Anthem’s 2018 acquisition of Aspire, I expect this to change in 2022.
If you’re building in or interested in any of these themes - I’d love to chat! You can reach me at email@example.com.