Weekly Business Insights 10/30/2024
2024 healthcare services outlook: Challenges and opportunities. 2024 Global Health Care Sector Outlook. 2024 Outlook; Global M&A Trends in Health Industries.
2024 healthcare services outlook: Challenges and opportunities
Interest in data analytics and artificial intelligence (AI), especially generative AI, is accelerating in the healthcare sector, though applications remain in the early stages of development. Health systems and payers who have already invested in data infrastructure and robust governance are beginning to distinguish themselves by implementing
In response to financial pressures and a growing need for specialized capabilities, many healthcare providers, particularly not-for-profit organizations, are increasingly turning to outsourcing. Although some are cautious due to the local impact on employees, outsourcing offers a compelling financial solution, especially for handling scalable and automatable legacy functions such as human resources and finance. At the same time, specific healthcare processes, like revenue cycle management, are seeing new, specialized outsourcing solutions tailored to healthcare needs.
Alongside outsourcing, programmatic mergers and acquisitions (M&A) provide opportunities for strategic and private equity (PE) investors to acquire undervalued healthcare services and technology firms, which have recently faced sharp valuation declines. Many of these companies, grappling with limited R&D budgets and customer acquisition challenges, offer investors favorable terms for acquiring valuable talent and new capabilities, allowing health systems to diversify their service portfolios and fortify their competitive edge in a changing market.
2024 healthcare services outlook: Challenges and opportunities | McKinsey
2024 Global Health Care Sector Outlook
While workforce expenses are a major driver of rising health costs, other factors also contribute. The cost of maintaining care facilities is one factor. Health care organizations globally are beginning to implement innovative technologies such as virtual wards and AI-enabled diagnostic tools to reduce costs of age-related care. Providers also are investing in technology to accelerate diagnoses and reduce treatment costs for chronic diseases. Medical tourism has become increasingly popular among businesses and insurance providers as a means of bringing down health care costs. This is particularly true of patients in the US.
Lingering COVID-19 effects are still contributing to widespread labor shortages and escalating costs, while the adoption of artificial intelligence (AI) presents possible solutions. Predicted to play a pivotal role in streamlining health care processes, AI promises precision and efficiency from administration, to operations, to supply chain and to patient care. Sustainability takes center stage as health care organizations adopt eco-friendly practices, addressing both environmental concerns and cost savings. Remote technologies are reshaping care delivery, extending beyond medical services to holistic social care, recognizing the link between social determinants and well-being.
2024 Global Health Care Sector Outlook (deloitte.com)
2024 Outlook; Global M&A Trends in Health Industries
Hospitals face significant financial and operational challenges stemming from decreased pandemic-related government funding, rising national interest rates, and persistent clinical workforce shortages. As these pressures mount, private equity (PE) firms see opportunities to acquire distressed hospitals, with plans to enhance patient care quality and manage costs more effectively. Additionally, these constraints push healthcare providers to adopt digital solutions to fill gaps left by staffing shortages and inflation. Telehealth, health tech, and analytics companies are particularly attractive assets in this digital shift, allowing providers to acquire these efficiencies quickly rather than build them in-house.
In parallel, consumer healthcare demand is growing, driven by factors like an aging population and rising healthcare costs, leading many to seek alternatives such as over-the-counter (OTC) medicines, vitamins, and supplements. These products, often more affordable than professional healthcare services, are increasingly favored by consumers, especially in the U.S. Companies specializing in consumer health and recently spun-off OTC businesses are therefore prime acquisition targets for 2024, as they aim to transform and expand within this growing market.