Tag: digital health

2025 Trends Shaping the Health Economy

Posted on by Jason Barry

Trilliant Health just released its 2025 Trends Shaping the Health Economy Report, delivering a uniquely holistic perspective on the healthcare market through the lens of supply and demand.

Here’s the state of play. Health expenditures are growing faster than the rest of the economy, and they’re projected to represent 20.3% of GDP by 2033. 

  • The U.S. spends more and gets less than peer nations, which might have been tolerable when our federal debt was at $800B in 1980, but definitely isn’t now that it’s at $37T.

What levers can we pull? This year’s 115 page analysis looks into six macro trends driving the healthcare economy, and underlines each of them with concrete stories from real-world data.

  • 1) Affordability concerns are reshaping demand. Medical prices are up 54.5% since 2009, and they’re pressuring patients and employers to weigh their options – especially when rates for an inpatient procedure can vary as much as 7x within the same facility depending on the payor (p. 19).
  • 2) Stakeholders are slow to adapt to demographic trends. Mortality rates among adults aged 18-44 have been rising as the fertility rate falls, shrinking the share of Americans with employer-sponsored coverage (p. 22).
  • 3) Specialty care intervention is incentivized over primary care prevention. In 2024, behavioral health visits rose 11.4%, while primary care visits declined 5.6%, marking the first time behavioral health utilization surpassed primary care (p. 43).
  • 4) Fraud, waste, and abuse are pervasive. The share of high-complexity ED visits has risen sharply, increasing from 36.6% to 47.8% of visits between 2018 and 2024, underscoring the financial impact of upcoding (p. 57).
  • 5) Alternative therapies are accelerating. GLP-1 utilization increased 745% from 2018 to 2023, while bariatric surgery volumes were flat to declining, illustrating how high-margin procedures face growing competition from medications (p. 86).
  • 6) If the industry won’t deliver value, the government will. Federal programs have consistently failed to bend the cost curve (MSSP savings are less than 1% of Medicare spending), and there’s mounting political pressure for top-down structural reform (p. 89).

The Takeaway

The U.S. healthcare system is at a crossroads. As Trilliant put it so nicely, the choice for all health economy stakeholders is whether to implement “radical change from the inside” or “to be subjected to such change by external forces.”

Bain & Company: Top Healthcare IT Priorities

Posted on by Jason Barry

Payors and providers are fighting different operational battles, but they’re using the same two-letter weapon to come out on top: AI, you guessed it. 

A joint report from Bain & Company and KLAS found that 80% of payors and 70% of providers now have an AI strategy in place, up from just 60% last year.

  • Providers are up against structural workforce shortages and rising patient volumes, while payors are contending with higher medical loss ratios and more regulatory scrutiny.
  • Bain and KLAS’ survey of 228 U.S. healthcare execs suggests that all signs point to one solution, and that’s deploying tech to improve margins.

Where are payors investing? Care coordination (57%) and utilization management (55%) were the top IT investment priorities for the second straight year.

  • Payors place total cost of ownership, functionality, and scalability ahead of suite convenience, so best‑of‑breed is still the default buying motion.
  • Plans are leveraging AI for everything from member engagement (35%) and enrollment (26%) to risk adjustment (26%) and prior auth automation (20%).

Where are providers investing? Revenue. Cycle. Management.

  • Half of providers ranked RCM among their top IT priorities, placing it above clinical workflows (34%) and EHRs (32%).
  • RCM = ROI. Accurate documentation and coding results in cleaner claims and fewer denials, which directly translates to higher revenue and lower expenses.
  • It’s also a match made in heaven for AI automation, and RCM currently represents the four most common AI use cases: ambient documentation (62%), clinical documentation improvement (43%), coding (30%), and prior authorization (27%).

Here’s the kicker. Providers cite EHR integration and interoperability as their biggest pain points, so most of them prioritize their EHR vendors for new solutions.

  • Only 20% of providers are primarily best-of-breed buyers, and two-thirds of Epic customers would choose an Epic option that’s “good enough” over a better competing product.

The Takeaway

It’s getting pretty hard to not be bullish on AI. There’s still plenty of uncertainty, but both payors and providers now seem to agree that inaction is the riskiest action.

Rock Health Q3 Overview: Signals Out of Sync

Posted on by Jason Barry

Rock Health’s always-excellent digital health market overview painted an interesting picture for Q3, with venture funding continuing to climb despite several “signals out of sync.”

We’re steady on the surface. Digital health startups raised $3.5B across 107 deals in the third quarter, outpacing last year by a decent margin and bringing the year-to-date total to $9.9B across 351 rounds [Chart: Q3 Funding].

  • Deal volume continued to slow, but fewer raises yielded larger checks. Q3 saw 107 funding rounds, down from 120 in Q2 and 124 in Q1.
  • The average raise in 2025 now stands at $28.1M (up from $20.4M in 2024), and we’ve already seen 19 mega-rounds above $100M – surpassing last year’s total with a quarter left to go.

The middle is murky. Rock Health rolled up its sleeves and calculated widely variable trends in mid-market funding.

  • Series B deal flow has thinned, with just 30 raises through Q3, compared to an average of more than 60 annually over the past three years.
  • As fewer startups reach Series B, those that do are stretching the range of what a B round can be. Series B deal sizes so far in 2025 spanned $11M–$210M ($199M) – the widest spread since the boom of 2021.
  • Pair that with the persistent prevalence of unlabeled raises, and the thinning Series B pipeline suggests that startups are traveling increasingly winding roads to reach scale.

Activity is concentrating around workflows. The biggest theme of the Q3 report was that Clinical Workflow and Non-Clinical Workflow are now 2025’s two most-funded value propositions, capturing a combined 42% of the total funding [Chart: Value Propositions].

  • A $1.3B lead separates these value propositions from the rest of the pack, and workflow tools now appear to be in a league of their own.

Startups are heading horizontal. The report also highlighted a growing group of startups pushing into adjacent workflows, such as Abridge’s partnership with Highmark Health (expanding into prior auths) and Judi Health acquiring Amino (moving into patient navigation).

  • M&A volume is up 37% from last year, with 166 acquisitions through Q3 (already topping 2024’s 121 total), in large part due to these horizontal moves. 

The Takeaway

The numbers look steady, but the market is also steadily splitting in half. That means that the real story going forward won’t be whether digital health startups can attract investors (they can), but whether companies can demonstrate the impact needed to land on the right side of the divide. 

Particle vs Epic: The Lawsuit Moves Forward

Posted on by Jason Barry

For the first time in history, Epic will have to face antitrust claims in court after it failed to dismiss Particle Health’s allegations that the EHR giant has been wielding its monopoly power to stifle competition.

Here’s the overly-simplified version. Particle combines health data from 270M+ patients’ medical records by aggregating “thousands of sources”… sources like Carequality.

  • Carequality is effectively one of the largest health information networks, facilitating data exchange between network members (like Particle) who agree to only query patient data for “Permitted Purposes” such as Treatment, Health Operations, or Public Health Activities.
  • The problem at the heart of the lawsuit arises due to the fact that Treatment is the only purpose that organizations like Epic are actually required to respond to, causing all sorts of companies to warp their true purposes to Treatment-shaped requests.

Particle vs. Epic. Particle’s case alleges that Epic used its EHR monopoly to hamstring competition in the market for “payor platforms,” which allow payors to retrieve patient data to make decisions about care and coverage.

  • Last spring, Epic said that Particle was allowing its customers to inappropriately label their Carequality data requests as Treatment, then proceeded to stop responding to EHR requests from 34 Particle customers.
  • Particle’s lawsuit alleged that Epic trumped up the Carequality accusations in order to block it from serving its payor platform customers.

Epic filed to dismiss all nine of Particle’s claims. On Friday, the judge sided with Epic on five of the nine claims, dismissing the allegations that Epic maintained a conspiracy to uphold its market dominance, as well as claims of defamation and trade libel.

  • However, the court declined to throw out all three of Particle’s federal monopolization claims, as well as a state claim that Epic had interfered with a business contract.
  • Those claims will move forward into discovery, and Epic will now have to turn over documents that can shed light on whether its practices withstand legal scrutiny.

The Takeaway

Get the popcorn ready. Epic’s motion to dismiss was only partially successful, meaning it will now have to actually admit, deny, or qualify Particle’s remaining allegations. That deadline is quickly approaching on September 16th – then the real legal fireworks can get started.

Microsoft MAI-DxO and the Path to Medical Superintelligence

Posted on by Jason Barry

In an action-packed week to kick off the second half of the year, no story grabbed more headlines than Microsoft’s MAI-DxO proving four times more successful than human doctors at diagnosing complex diseases.

Microsoft is on the path to medical superintelligence… at least according to their excellent blog post outlining its new MAI Diagnostic Orchestrator, better known as MAI‑DxO.

  • MAI-DxO acts like a “virtual panel of physicians” collaborating on a case, orchestrating multiple AI agents with specific roles like forming diagnostic hypotheses, selecting tests, and interpreting results. 
  • It then applies a “debate chain” to arrive at an explainable diagnosis, all while avoiding over-testing to keep costs under control.. 

New breakthroughs require new benchmarks. As AI gets to the point where it’s breezing through multiple choice benchmarks like medical licensing exams, Microsoft decided to introduce SDBench to better simulate routine clinical practice.

  • SDBench deconstructs 304 of the most diagnostically complex NEJM cases, requiring LLMs (and physicians) to begin with an initial presentation, ask follow-up questions, order tests (each with assigned costs), and agree on a diagnosis.

Here’s how MAI-DxO stacked up:

  • MAI-DxO: 85% diagnostic accuracy / $7,200 estimated cost per patient
  • OpenAI o3: 79% / $7,850
  • Gemini 2.5 Pro: 69% / $4,800
  • Claude 4 Opus: 68% / $7,000
  • Llama 4: 55% / $4,000
  • Human Physicians: 20% / $2,950

What’s the catch? The human physicians weren’t allowed to use the internet or any outside help, which probably simulates a deserted island workflow more than routine clinical practice. Each of the participants also happened to be generalists as opposed to specialists, giving another edge to the LLMs. 

The Takeaway

MAI-DxO might have the potential to deliver superhuman diagnostics in constrained settings, but that doesn’t mean it’s ready to replace doctors. As Microsoft pointed out in its own blog post, “clinical roles are much broader than simply making a diagnosis. They need to navigate ambiguity and build trust with patients and their families in a way that AI isn’t set up to do.”

Catching the Right Wave in Digital Health

Posted on by Jason Barry

The ocean of digital health innovation seems to have a wave of new trends breaking every year, which is why Rock Health teamed up with LG NOVA to give enterprises a framework for “discerning promising currents from passing swells.”

Riding the wrong hype cycle can strain health systems’ limited resources with costly implementations or investment mistakes, so Rock Health divided the digital health landscape into 50 segments to see which show the most promise based on:

  • Value potential (VP) – share of total digital health venture funding, disease burden (degree of economic cost), and addressable population size.
  • Capturable opportunity (CO) – funding velocity, funding concentration (share of capital already held by large companies), and market maturity.

The “Goldilocks” waves include segments that are big enough to support a large market and ripe enough (but not too ripe) for new entrants to gain traction. [Chart: Strongest DH Segments]

  • High VP, High CO: Weight Management stood out with the highest scores in both VP and CO. The disease burden and funding levels don’t get much higher, and the balance of early- and late-stage companies signals a strong market with room for new entrants. 
  • Low VP, High CO: Patient Adherence was docked for its smaller share of overall digital health funding, but stood out for its favorable funding concentration and market maturity.
  • High VP, Low CO: Disease Monitoring had the opposite mix. The segment enjoys a large slice of the funding pie, but most of that is getting eaten by a few mega companies.
  • Low VP, Low CO: Dermatology received the low marks across the board, with poor scores for funding velocity, disease burden, and overall share of funding.

To complement its framework, Rock Health analyzed over 70 digital health unicorns to find other success signals from waves that the industry is already riding. Unicorns tended to:

  • separate from the herd with larger Series C rounds (ex. Abridge)
  • support care delivery or access and are often consumer-facing (ex. Wheel)
  • be therapeutic area agnostic w/ broad addressable markets (ex. Included Health)

The Takeaway

Timing the digital health market is no small feat, but Rock Health’s framework provides a helpful tool for those looking to catch the best wave with their investments and implementations.

The Healthcare AI Adoption Index

Posted on by Jason Barry

Bessemer Venture Partners’ market reports are always some of the best in the business, but its recent Healthcare AI Adoption Index might just be its finest work yet.

The Healthcare AI Adoption Index is based on survey data from 400+ execs across Payors, Providers, and Pharma – breaking down how buyers are approaching GenAI applications, what jobs-to-be-done they’re prioritizing, and where their projects sit on the adoption curve.

Here’s a look at what they found:

  • AI is high on the agenda across the board, with AI budgets outpacing IT spend in each of the three segments. Over half (54%) are seeing ROI within the first 12 months.
  • Only a third of AI pilots end up reaching production, held back by everything from security and data readiness to integration costs and limited in-house expertise.
  • Despite all the trendsetters we cover on a weekly basis, only 15% of active AI projects are being driven by startups. The rest are being built internally or led by the usual suspects like major EHRs and Big Tech.
  • That said, 48% of executives say they prefer working with startups over incumbents, and Bessemer encourages founders to co-develop solutions with their customers and lean in on partnerships that provide access to distribution, proprietary datasets, and credibility.

The highlight of the report was Bessemer’s analysis of the 59 jobs-to-be-done as potential use cases for AI. 

  • Of the 22 jobs-to-be-done for Payors (claims, network, member, pricing), 19 jobs for Pharma (preclinical, clinical, marketing, sales), and 18 jobs for Providers (care delivery, RCM) – 45% are still in the ideation or proof of concept phase.
  • Providers are ahead in POC experimentation, while most Payor and Pharma use cases remain in the ideation phase. Here’s a beautiful look at where different use cases stand.

Bessemer topped off its analysis with the debut of its AI Dx Index, which factors in market size, urgency, and current adoption to help startups map and prioritize AI use cases. One of the best graphics so far this year.

The Takeaway

Healthcare’s AI-powered paradigm shift is kicking into overdrive, and Bessemer just delivered one of the most comprehensive views of where the puck is going that we’ve seen to date.

Rock Health Q1 2025 Funding Recap, Late-Stage is Back

Posted on by Jason Barry

In a first quarter packed with uncertainty and policy shifts, digital health didn’t skip a beat.

Rock Health’s Q1 Digital Health Market Update counted $3B in venture funding across 122 rounds (up from $2.7B in Q1 2024), and it sounds like there’s finally some optimism in the air again.

Early-stage startups dominated the deal count, with Seed, Series A, and Series B raises comprising 83% of labeled rounds in Q1 (in line with 86% last year).

  • Those included some extra-large investments like Achira’s $33M Seed, Open Evidence’s $75M Series A, and Hippocratic AI’s $141M Series B.

The bigger story was the triumphant return of late-stage mega-rounds, headlined by Innovaccer’s $275M Series F and Abridge’s $250M Series D.

  • While Q1 only clocked five raises that were Series D or later, this cohort lifted the quarter’s median Series D+ round size to $105M – almost double the $55M median Series D+ size seen in 2024.

Success in this climate requires “leapfrogging.” Rock health devoted a large section of the report to its four strategies for leapfrogging over market shifts using their unique circumstances.

  • Tapestry Weaving – using M&A to integrate new features and offerings into your capability mix. Of the 46 M&A deals tracked in Q1, 67% involved digital health startups acquiring other digital health startups, up from 53% across 2024.
  • Modular Tech Stacks – designing flexible infrastructure that reduces dependencies and allows for new integrations. Lumeris’ newly introduced Tom AI platform is a perfect example, leveraging capabilities of 60+ LLMs depending on use case.
  • Platforms and Channel Partners – building platforms that can plug in channel partners and key experiences. Q1 was brimming with good examples, including Eli Lilly bringing GLP-1 partners onto Lilly Direct and Teladoc expanding its Connected Care Program.
  • Engaging Disruptors – embracing solutions that challenge the status quo. Rock Health highlights Labcorp’s participation in Teal Health’s $10M raise, which proactively aligned it with an in-home cervical cancer screening startup that’s disrupting traditional pap tests.

The Takeaway

Following a year of valuation corrections and down-rounds, digital health VCs are showing signs of life, but we’ll have to wait until Rock Health’s next report to see if the momentum can stand up to a trade war.

DispatchHealth Acquires Hospital-at-Home Provider Medically Home

Posted on by Jason Barry

DispatchHealth is acquiring fellow hospital-at-home provider Medically Home to give more patients access to their preferred hospital bed: the one they already have at home.

DispatchHealth delivers full-service high-acuity care to patients across the country by sending clinicians directly to the patient’s own bedside.

  • The company’s tech platform supports diagnostics and treatment, as well as care coordination with health systems and payors.
  • Since being founded in 2013, Dispatch has treated over 1.2M people in 20 states, reportedly resulting in 58% ED avoidance and a 98% patient satisfaction rating.

Medically Home has a similar value proposition, with technology, logistics, and support services that “are unmatched in making hospital-level care possible outside of a hospital’s four walls.”

  • It also boasts an impressive list of health system investors like Cleveland Clinic, Mayo Clinic, and Kaiser Permanente.
  • The financial terms of the agreement weren’t disclosed, but Medically Home appears set to be folded into DispatchHealth when the acquisition closes mid-year 2025.

The combined company – AKA DispatchHealth – will provide in-home care across 50 major metropolitan areas through partnerships with nearly 40 health systems.

  • The move brings both companies’ tech and clinical expertise under one roof, which is expected to open up over 62k bed days and reduce total cost of care by up to 30% over a 30-day period (unclear how much of that is offloading work to family members).
  • The merger also reflects a growing trend toward consolidation in this space, where scale is crucial for reaching sustainable growth, even if it means joining forces to get there.

The clock is ticking. The acquisition arrives as the future of the federal hospital-at-home program hangs in limbo. Congress extended the program just a jew weeks ago, but only for another six months.

The Takeaway

The U.S. population isn’t getting any younger, and aging patients have been vocal about preferring care from the comfort of their own homes. In that context, DispatchHealth’s acquisition of Medically Home makes a lot of sense, and a successful merger could support the case for a long-term extension when the current hospital-at-home waiver expires in September.

Dr. Oz Sheds Light on Potential Priorities at CMS

Posted on by Jason Barry

Dr. Mehmet Oz appears to have passed his Senate testimony with flying colors, and the surgeon-turned-TV-personality’s confirmation as CMS administrator seems all but locked in.

The nearly three hour testimony wandered through a range of topics with a direct impact on digital health, giving us a first look at what might change – or get axed – in the years ahead.

  • Prior auth topped the hit list. The most concrete policy idea that Oz offered was limiting the number of procedures subject to prior auth in Medicare Advantage to 1,000, a steep reduction from ~15,000 today. Oz said the “pre-approval process is expensive and wastes time,” especially when we have AI that can “pretty quickly adjudicate whether you should have to wait even a day to have the medication that will get you out of pain.”
  • AI was a major theme throughout the testimony. Oz plans to use AI to help doctors “optimize care” and focus on their patients, making several references to its ability to augment treatments and cut down on paperwork. He also said “we should be using AI within the agency to identify [fraud] early enough so that we can prevent it.”
  • Medicare Advantage was another big focal point. Oz cited MedPAC research showing that MA is more expensive than traditional Medicare, but attributed much of the cost to upcoding from payors. He promised to hit the problem head-on with an AI hammer.
  • Medicaid was a mixed bag. While Oz said he fully supports the program, he also agreed that spending has gone off the rails since the ACA, and was in favor of implementing work requirements. Oz sidestepped questions about potential cuts by saying “the way you protect Medicaid is by making sure that it’s viable at every level,” which includes having enough practitioners, compensating them fairly, and improving patient access.

The Takeaway

It’s hard to take the other side when a charismatic doctor vows to fix a broken healthcare system, but it’s also tough to tell the difference between empty promises and real reform until action backs it up. Part of that will have to wait until the actual confirmation, but as Oz put it, “part of this is just recognizing there is a new sheriff in town.”

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