A large venture capital firm focused on supporting early-stage healthtech companies has a tip for AI startups targeting the healthcare sector.
“The winners in this space will be those who can balance healthcare’s methodical approach to innovation with the unprecedented speed of AI advancement,” the firm states in a new report. “Success will come from delivering solutions that are both transformative and trustworthy, at a pace that matches the technology’s rapid evolution.”
The firm is San Fran-based Define Ventures. The report presents findings from surveys and interviews with 63 executives at provider and payer organizations.
While the report is primarily aimed at healthcare AI vendors, its analyses should interest provider and payer leaders who are—or will be—investing in AI.
Among the report’s key takeaways:
1. A gap persists between AI ambition and AI adoption.
“With 53% of respondents saying AI is an immediate priority, it’s clear that provider and payer leaders recognize AI’s near-term potential to create a more efficient, scalable and patient-centric healthcare system,” Define Ventures remarks. More:
‘Some 73% of organizations are expanding their financial commitments, which indicates payers and providers are transitioning from early pilot successes to enterprise-scaled solutions.’
2. AI adoption progresses along a foreseeable curve.
“Our research indicates that healthcare organizations are proceeding thoughtfully within their complex organizations while laying a foundation for responsible, effective adoption.”
‘Payers and providers are progressing through three distinct phases in their AI adoption journey: 1.) Lay the groundwork. 2.) Test and iterate. 3.) Go all in.’
3. Operational efficiency is a standard strategic focus.
Most healthcare organizations are focusing on projects that offer near-term wins in operational efficiency, the authors note. “This sentiment reflects a pragmatic approach in balancing visionary AI goals with the realities of current organizational needs.”
‘Provider and payer leaders recognize that achieving quick, practical wins is essential for gaining buy-in, building credibility and establishing a sustainable foundation for more transformative applications in the future.’
4. Build vs. buy is a common conundrum.
Determining the right buy vs. build approach for each element of an increasingly sophisticated technology stack involves weighing factors like an organization’s internal expertise, IT infrastructure, need for customization, and compatibility with existing workflows, data and tools, Define reports.
‘For many leaders, the decision to build or buy isn’t merely a question of capability; it’s a balancing act between what they could build versus what they should build.’
5. Trust, value and strategic alignment: Qualities that healthcare leaders prize in industry partners.
For providers, the same factors that have proven especially challenging—ROI for the chosen use case (45%), workflow integration (38%), and data security and compliance (38%)—are top considerations when evaluating AI vendors, the authors found. Meanwhile, 86% of payers cite data security and compliance, followed by 38% for data access and ownership and similarly 38% for ROI for the specific use case.
‘Only 39% of leaders across both camps said they’ve had a somewhat positive, mostly good ROI with their external partners. And for those who had negative or neutral experiences, 87% said vendors overpromising and underdelivering was one of the top reasons for dissatisfaction.’
The report is available in full for free.
