The Future of Digital Health

The health care market has focused in recent months on how to navigate a post-COVID-19 world. During the pandemic, digital health options led to great opportunities for physicians to reach patients through telemedicine and remote monitoring, and paved the way for new approaches to providing better care. Unsurprisingly, investments flowed into digital health care as the pandemic spread. They began to slow in the second half of 2022, however, as investors’ focus gradually shifted from exciting new ideas to demonstrated outcomes and evidence, with startups being asked to show value and a business model out of the gate. Even as the flow of investment into startups decelerated, several nontraditional players made significant moves into the health care market in 2022 (as we anticipated), partnering with traditional players in an effort to create new channels and markets and to advance the new hybrid health care environment.

As we enter 2023, many trends in digital health that the pandemic inspired and spurred on continue to gain traction, but other developments are beginning to play a role as well. In this latest edition of “The Future of Digital Health,” experts across BCG and BCG X—BCG’s new tech build and design unit—delve into what will define the space in the year ahead.

Home-based health care will keep gaining momentum after strong growth in 2022, due in part to the aging baby boomer population and to powerful technological advances—especially as the industry moves toward more “patient-led” delivery. We also expect alternative care models and new entrants in the health care space to emerge (watch for Microsoft and Apple), while retailers such as CVS, Walgreens, and Walmart further develop their health care strategies.

The women’s health arena will continue to attract attention, investment, and innovation in 2023. We see exciting trends in fertility options, community-based care, and support for the underserved, among others. Femtech products and solutions (technology that specifically addresses women’s health needs) will grow at a rapid pace, and femtech businesses will compete to develop hybrid, one-stop shops.

Tech advances in general will unlock many new opportunities in digital health. Virtual reality will offer new approaches for treating mental health conditions, and the health care industry will embrace more use cases for digital twins in clinical trials, hospital operations, and disease modeling. We see a push for smarter clinical development, and organizations are already testing ChatGPT, the generative AI technology, in developing therapeutic ideas, analyzing medical data, and identifying patterns. We also expect more tech-related advances to focus on reducing consumers’ required out-of-pocket spending for health care.

Meanwhile, digital tools will improve health equity over the coming year by helping to bridge care gaps, expand access, enable more personalized treatment, and eliminate geographic barriers. Mental health services, in particular, will benefit, with more options becoming available to those seeking care. Still, the industry must contend with a cloud of economic uncertainty—and even though health care is typically resilient in this type of climate, we can expect some important shifts, including the following.

• The focus of digital-health investments will move from top-line growth to profitability, following the number of big bets made in recent years.
• Pharma IT will become more attractive to healthtech companies, given the current need for more comprehensive and industry-specific digital solutions.
• Strategic investments and M&A in the healthtech arena will increase even as financial investors pull back somewhat.

We are extremely excited about the ongoing evolution of digital health and—given the following developments and trends highlighted by our global team of experts—expect 2023 to be a transformative year.