Industry Q&A – Marc Cooper & Jon Pritti Discuss the Impact of AI in the Healthcare Sector
Solomon welcomed Jonathan Pritti as a Partner leading our Healthcare Technology Practice in April. This month, I sat down with him to delve into investments in Artificial Intelligence within the healthcare sector, the challenges and opportunities presented by interoperability, and the role of institutional investments in driving innovation. Jon shared his expert insights on the impact of AI on both the administrative and clinical sides of healthcare, the involvement of big tech companies, and the future of healthcare technology.
Jon, what trends are you seeing with Artificial Intelligence within the healthcare sector?
With AI’s increasing importance in healthcare, we see it playing a critical role in healthcare workflow from both an administrative and clinical perspective. We expect most of the investment in AI to be made by the tech-enabled service providers as they have both the data needed to make AI tools effective as well as the human capital that knows how to improve the effectiveness of the AI tools.
We’re seeing a big push from both payors and providers to improve administrative efficiencies, given the significant amount of inefficiency in healthcare. Healthcare has been slower than other industries to adopt technology, due to the multiple constituents (clinicians, administrators, payors and patients) that technologies must serve. The industry is finally starting to move away from outdated technology systems, and we expect AI to permeate healthcare over the next several years, especially around the revenue cycle and administrative workflow.
How do you see AI impacting the clinical side of healthcare?
The clinical side is more challenging for AI due to the prevalence of unstructured data. While electronic health records have automated structured data, there is still a significant need for human intervention to process unstructured data and normalize data across disparate systems. We expect AI efforts in healthcare will focus more on administrative efficiencies rather than clinical applications in the near term. As AI continues to evolve and become more sophisticated, we see opportunities for both clinical and administrative use cases.
Where are investment dollars coming from for AI-related innovations?
Investments in AI are coming from a number of different sources. We are seeing both large providers and payors make investments through their venture arms in emerging technologies and then use their respective networks and operating footprint to beta test the technologies. As the industry continues to scale, we are increasingly seeing significant investments in AI by private equity and venture capital into existing tech-enabled service providers, which have both the clinical and administrative data required to optimize the impact of AI in healthcare.
How does interoperability fit into the current healthcare landscape?
Interoperability has been a buzzword for years, but the reality is that healthcare providers often have multiple disparate systems that struggle to communicate with each other.
While interoperability sounds great in theory, it requires both additional technology and services to sit on top of Electric Medical Records and other technology systems to normalize the data across disparate systems, which is a significant challenge.
What role have large tech companies been playing in the healthcare sector?
While many big tech companies have launched healthcare verticals, they have struggled to scale their efforts in the sector. Healthcare requires solutions that interface with providers, payors, clinicians and patients, which creates significant challenges as the systems are neither direct to consumer or B2B. The traditional technology players have struggled selling into the healthcare ecosystem other than traditional Enterprise Resource Planning systems. We do expect more activity in healthcare technology from large tech on the M&A front, as healthcare is a significant part of the global economy. Also, as AI becomes more relevant, we believe it will increase synergies that large tech companies can bring to potential acquisition targets.
Jon, for someone with over 20 years’ experience in investment banking, partnering with clients across healthcare technology and tech-enabled services, what do you see next for this industry?
Marc, I think the future of healthcare technology will continue to focus on administrative efficiencies and improving interoperability. While clinical applications of AI will continue to evolve, the administrative side offers significant opportunities for automation and efficiency improvements in the near term.
