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

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

In a latest report, consulting agency West Monroe laid out three tendencies for the healthcare business 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 circumstances for payers and suppliers in 2024 embrace customer support contact facilities, supplier administration, supplier credentialing and utilization administration.

However in an effort to be efficient with AI, “foundational investments in information infrastructure and operations are important,” in accordance with West Monroe.

“Generally the pure place to begin isn’t a lot the actually cool and stylish deployment of a compelling use case. …  In actual fact, it really will get again to, what are the controls? What information are you gathering that isn’t ruled, and what information must you be gathering while 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 value pressures

The healthcare business is dealing with important value challenges, partially attributable to 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 accordance with 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 relating to value 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 method to ease these value pressures, in accordance with West Monroe.

“We see rising prices being an enormous, huge theme. How do you utilize AI? And the way do you begin to streamline inner operations to cut back your working expense? There are methods of doing that, AI is certainly 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 strategy of buying at decrease costs and constructing worth for a profitable payoff, has grow to be an simple pressure shaping the dealmaking panorama,” the report said. “Strategic patrons, extra targeted on constructing property that may generate worth over time, are additionally making an impression.”

Trying forward, M&A method will likely be extra targeted on “steady, mature, and worthwhile companies,” significantly whereas there’s an unstable financial setting. There will 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 sensible guess. I believe we’re beginning to see a little bit bit extra necessity of healthcare firms with confirmed buyer backlogs, happy prospects, lengthy tenured prospects. The funding is trying extra at steady healthcare firms.”

Picture: lerbank, Getty Pictures

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