We surveyed ~90 health tech nerds – including startup operators, founders, investors, corporates, and more – to get a collective perspective on what we can expect for healthcare in 2023.
TL;DR: 2022 has undoubtedly been a crazy year for the healthcare industry. From changing market conditions to Amazon acquiring One Medical to mass layoffs – the ecosystem is experiencing a reset in many ways. With all of that, it’s only natural to be wondering what is in store for us all going into 2023. So, we’re launching our first annual prediction survey to gather some data from the HTN community on what you all think might happen in 2023.
In the top section, you will find the most interesting takeaways from the survey along with our commentary. Of course, you can also view the full results in the appendix section below.
According to the HTN brain trust, the slowdown/halt in the 2022 IPO market will continue throughout 2023, with nearly two thirds of respondents predicting two or fewer health tech companies to go public in the new year.
It's crazy to think it wasn’t all that long ago when we were talking about the record-breaking digital health IPO market of 2021.
It seems that lots of uncertainty will follow us into 2023 with 16% of respondents predicting no private digital health companies are likely to go public, and another 23% being unsure entirely.
Of the handful of companies that folks do think can get things past the exit line are:
Looking at the middle of the pack, two digital MSK platforms, SWORD Health and Hinge Health, also garnered about 5% of responses each.
Other honorable mentions include Virta Health, Carbon Health, Cerebral, among others. You can see the full list of honorable mentions in the appendix below.
CVS was the most talked about acquirer for 2023, being mentioned in nearly 29% of responses. Notable acquisitions targets included Privia, Oak Street Health, Aledade, agilon, CanoHealth, Carbon Health, as well as a few nonspecific PCP targets.
Optum and Amazon followed CVS as predicted top acquirers, with 10% and 8% of respondents mentioning them in potential deals, respectively. Amazon targets included population health startup Color and retail giant Walgreens. Meanwhile, notable Optum targets included price transparency platform Turquoise Health, at-home care startup Dispatch Health, and mental health provider Headspace Health.
No matter what side of the Elon Musk Twitter acquisition debate you stand on, there is no argument that he has had a significant impact on the social media company in the past few months. With all the drama surrounding that deal, we were curious what company the HTN group would suggest he buy in the healthcare space…
Oscar Health came in as the #1 choice, with 12% of respondents suggesting the tech-enabled insurer. Further, Epic and Bright Health tied for second place, garnering 10% of votes each.
Of course, there was a good chunk of folks completely dismissing the idea or more importantly, asking for Elon to “Please stay away” from healthcare. Imagining the impact of Epic or UHG being blown-up in the way Twitter has is quite a thought.
Other honorable mentions include Wheel, WebMD, Transcarent, Moderna, Cano Health, among others. You can see the full list of honorable mentions in the appendix below.
As discussed above, we saw CVS mentioned the most as a predicted acquirer in 2023. With that, it’s not all that surprising to think of them here as taking a big leap forward with acquisition names like Privia, agilon, and Oak.
However, if we consider the various headwinds CVS has faced throughout 2022, it does start to feel like a pretty big leap forward as it relates to its broader strategic vision. From the loss of Centene’s PBM contract to Star rating decline to a lack of a primary care acquisition, it increasingly seems CVS is at a real risk of losing the momentum it’s had in previous years with executing on its broader healthcare strategy.
In either case, it seems like there is plenty of hope (and pressure) for CVS going into 2023.
The majority of the group predict that one of the large retailers and/or providers will acquire an insurance arm in 2023.
Of all of the options, Amazon was the lead selection with 32% of folks thinking the tech giant could acquire an insurance arm in the new year. The idea of Amazon going after an insurance company was certainly amongst the chatter following Amazon’s acquisition of care provider One Medical in 2022. In fact, in our Amazon / One Medical deep dive article (linked here), we discuss how incredibly bold it would be for the tech giant to acquire an insurance arm, as well as the implications it would have for potential future competitors like UHG and CVS.
According to the group, the biggest threat to health systems’ core business by the end of 2023 will be…drum roll please…Amazon, with 52% of folks saying so. This is particularly interesting given their recent launch at HLTH 2022 of Amazon Clinic – a virtual healthcare service to help individuals identify and connect with virtual services to treat a variety of conditions (a marketplace). In tandem with the launch, a couple of Amazon execs were very vocal on stage at the conference about how the company views itself as a partner to the broader healthcare ecosystem. However, it seems externally others don’t view them in that partner role quite yet.
Meanwhile, respondents predict Teladoc (48%), Walgreens (46%), and CVS (42%) will be viewed as the most likely partners to health systems’ business in the new year.
Interestingly, virtual care startup Ro is viewed by the majority of respondents (62%) as non-consequential to health systems’ business by the end of 2023. It will be interesting to see if this changes if/when companies like Ro start their foray into more hybrid models with a local brick and mortar presence. (We reflect on this idea, as well as Ro’s broader strategic vision in this deep dive article here).
Most folks (55%) believe that VBC will be on the “trough of disillusionment” slope of the Gartner hype cycle at the end of 2023. Although, given the lack of meaningful progress we’ve seen with VBC over the years, in many ways it feels like VBC has already been in the “trough of disillusionment” for some time now.
The federal public health emergency (PHE) related to Covid-19 has had incredible implications for the US healthcare system since its inception in January 2020. It has impacted a variety of things, including increased Medicaid enrollment, expanded telehealth reimbursements, and more.
The current PHE is in effect until January 11, 2023, with the Biden administration providing a 60-day notice before ending PHE. Given no notice was issued in that timeframe (November 2022), it is expected that the PHE will be extended yet again.
Considering the significant impacts PHE has had, in combination with the expected extension, it makes sense that 20% of respondents think the most impactful regulatory change in 2023 will be surrounding the PHE – more specifically looking at extension timeline and waiver permanence (14%) and Medicaid redeterminations (6%).
As we will see later in this section, it’s clear that fund raising is expected to be the biggest obstacle facing health tech startups in 2023. However, among the areas where respondents do still expect to see the most VC investment, the category that takes the cake is care delivery, garnering 50% of respondents' votes. Within the care delivery space, about 25% of total respondents said specialty care will see the most investment.
Infrastructure startups were the second highest choice area of investment overall with nearly 36% of respondents, with a particular focus on AI / ML / Data & Analytics.
On the consolidation side, there continues to be a lot of anticipated acquisition as we move further into the era of point solution bundling. Again, with 78% of respondent votes, care delivery is the clear favorite to see the most acquisition activity in 2023.
With all the buzz around care delivery, both from the acquisition and investment side of the story, we wanted to dig a little deeper into which categories within the care delivery ecosystem are seeing the most activity.
As discussed above, respondents predicted the most consolidation would take place in the specialty care space. Zooming in below on the types of specialty care, about 31% predicted that mental/behavioral health will be the area to see the most acquisition activity in 2023. This is rather unsurprising given the incredible proliferation of mental/behavioral health startups we’ve seen pop up in recent years that are seemingly pursuing very similar (and redundant) models.
Looking at the investment side, women’s health attracted the most attention, collecting 22% of respondents’ votes to the question overall.
As we and the broader industry have discussed ad nauseam by now, 2022 proved to be a difficult year for startups looking to raise fresh funding as the markets took a turn. We see in the chart below that most respondents (68%) expect that obstacle will continue with us into 2023.
What is more interesting here, is that 53% of respondents identified patient/customer acquisition as the top 2 obstacle for health tech startups.
Over the past few years, we’ve seen investors pour money into companies with grand visions of trying to fundamentally alter the healthcare ecosystem. However, along with the market reset, investors have quickly moved away from the days of limited diligence and heinous valuations, and have since returned to the business model basics – a couple of those basics being successful customer acquisition and profitable unit economics. (You can read more on this and similar thoughts we had regarding the recent market shift and what it means for startups moving forward in our deep dive article here.)
When coupling the customer acquisition obstacle data point with the finding below that the most valuable asset a care delivery startup can own at the end of the day being “profitable unit economics” – it seems that the broader health tech community has quickly caught on to the “getting back to the basics” narrative as well. We also recognize that “profitable unit economics” is more of an outcome than an asset, but the point of focus remains.
Speaking of it being challenging to acquire customers/patients in 2023…the natural follow-up question here is: where exactly might one find the most success in reaching those patients? Good question.
Well, according to respondents, care delivery startups will have the most success in acquiring patients through payor contracts, with 40% of folks thinking so.
While the past several years have hyped up employers as the best sales channel, only 20% of respondents think employer contracts will be a successful route moving forward. Of course, let’s not overlook that employer contracts appear to still beat out health system partnerships (13%), word-of-mouth (8%), and D2C (8%) channels. All of this aligns quite well with the second most valuable asset for a care delivery startup being an established B2B customer base - presumably to drive scale with profitable unit economics.
It seems the new(er) kids on the healthcare block are poised to most likely build trusted relationships with patients in 2023 – seeing next gen care delivery startups (like Tia, Ro, and Carbon) and retail/wellness companies (such as Walgreens and Walmart) taking the top spots, with 25% and 22% of the votes, respectively. Going back to the earlier question on threats/partners/non-consequentials to health systems, it is interesting to see next gen care delivery startups like Ro being thought of as the highest likelihood to win those trusted relationships, but being thought of as non-consequential.
On the opposite end of the spectrum, new entrant payors, which includes the Oscar’s and Bright’s of the world, lack much confidence in winning over patient trust in the new year, with just 1% of the respondent vote.
Meanwhile, the legacy healthcare stakeholders – such as independent providers, health systems, and incumbent payors – lag behind with building trusted patient relationships, landing in the middle of the pack. We can’t say this part of the finding is all that surprising given how many countless times the legacy healthcare system has let patients down over the years.
In general, responses covered a number of general categories in healthcare - we’ve highlighted a few responses that cover some of the broader categories where people expect to see positive impact:
Responses got much more specific here on what headlines might look like in 2023, and there were definitely some provocative ideas here. Here were a few of the more interesting ones:
Note the full list of honorable mentions here: Carbon Health, Cityblock Health, Cerebral, Eko, Headspace Health, Kyrus, Lyra, Noom, Tempus, and Virta Health.
Note the full list of honorable mentions here: Anthem, Cano Health, Carbon Health, chen med, Commons Clinic, Elevance Health, Forward Health, GoodRx, HCA, Hims & Hers, Intuitive Surgical, Meditech, Moderna, Teladoc, Transcarent, Truepill, WebMD, and Wheel.