As we proceed into 2024, there are three pivotal trends that the healthcare industry needs to keep a keen eye on. These trends revolve around the increasing influence of Artificial Intelligence (AI), rising cost pressures within the industry, and the evolution of merger and acquisition (M&A) strategies. These insights are laid out in a recent report by West Monroe.
Firstly, according to the report, data strategy, advanced analytics and generative AI could potentially improve workflows and streamline administrative tasks in healthcare. However, for AI to be effective, foundational investments in data infrastructure and operations are essential. This could involve examining what data is currently being collected, what needs to be collected, and how this data is being governed, stated Trevor Jones, managing director of healthcare and life sciences at West Monroe.
The second trend to observe is the industry’s struggle to combat cost pressures. Distinct challenges have risen partially from increased demand post-Covid-19 and provider labor shortages. For instance, the U.S. currently requires approximately 1.1 million new registered nurses according to the Bureau of Labor Statistics and may face a shortage of 54,100 to 139,000 physicians by 2033. To alleviate these cost pressures, AI and technology could be employed, suggested the report.
The final trend to watch out for is the changing landscape of dealmaking. M&A activity is predicted to rise in 2024 with private equity being a significant influence. The forces driving these deals are altering, with more focus on buying at lower prices and building value over time for a profitable payoff.
Looking forward, M&A strategies will likely be centered on businesses that are “stable, mature and profitable”, particularly in a volatile economic environment. There will also be a move away from “unproven digital health solutions”, a sector that saw a flurry of investment in 2021 due to low-interest rates. Instead, investment is expected to trend towards stable healthcare companies with proven customer backlogs, satisfied and long-tenured customers.
For a closer look at these trends and the full report, visit West Monroe’s website.