West Monroe’s 3 Healthcare Outlooks for 2024: AI, Value Pressures, Dealmaking

There are vital challenges and alternatives forward for the healthcare trade, whether or not it’s the rise of synthetic intelligence, rising price pressures or M&A exercise.

In a current report, consulting agency West Monroe laid out three traits for the healthcare trade to be careful for:

Knowledge technique, superior analytics and AI

Generative AI has nice potential to enhance workflows and simplify administrative duties in healthcare. Some particular AI use instances for payers and suppliers in 2024 embody customer support contact facilities, supplier administration, supplier credentialing and utilization administration.

However with a view to be efficient with AI, “foundational investments in information infrastructure and operations are important,” in response to West Monroe.

“Generally the pure place to begin isn’t a lot the actually cool and stylish deployment of a compelling use case. …  In reality, it truly will get again to, what are the controls? What information are you gathering that isn’t ruled, and what information must you be gathering once you look 5 years, 10 years down the road?” stated Trevor Jones, managing director of healthcare and life sciences at West Monroe, in an interview.

Battling price pressures

The healthcare trade is dealing with vital price challenges, partially as a consequence of elevated demand after the Covid-19 pandemic, in addition to supplier labor shortages. For instance, there’s a want for 1.1 million new registered nurses within the U.S., in response to the Bureau of Labor Statistics. As well as, the Affiliation of American Medical Schools expects a scarcity of 54,100 to 139,000 physicians by 2033. 

Healthcare additionally lags behind different industries in terms of price points, famous Ben Baenen, associate of healthcare and life sciences at West Monroe.

“The healthcare system is getting what different industries have been dealing with in 2019 and 2020,” Baenen stated in an interview.

Leveraging expertise and AI is one option to ease these price pressures, in response to West Monroe.

“We see rising prices being a large, large theme. How do you employ AI? And the way do you begin to streamline inside operations to cut back your working expense? There are methods of doing that, AI is considered one of 100 other ways,” Baenen added.

Altering dealmaking panorama

West Monroe anticipates seeing an uptick in M&A exercise in 2024, and personal fairness is a significant affect. 

“The driving forces behind these offers are altering: Personal fairness, with its method of buying at decrease costs and constructing worth for a profitable payoff, has change into an simple power shaping the dealmaking panorama,” the report said. “Strategic consumers, extra centered on constructing belongings that may generate worth over time, are additionally making an impression.”

Wanting forward, M&A method might be extra centered on “secure, mature, and worthwhile companies,” notably whereas there’s an unstable financial setting. There may even be a shift away from “unproven digital well being options.”

“There was a flurry of pleasure in 2021 on digital well being,” Baenen stated. “Rates of interest have been tremendous low. So that you noticed tons of funding as a result of it was a wise guess. I feel we’re beginning to see just a little bit extra necessity of healthcare corporations with confirmed buyer backlogs, happy clients, lengthy tenured clients. The funding is trying extra at secure healthcare corporations.”

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