Digital Health Insurance Trends 2024

Understanding the Digital Health Landscape

Digital health companies want to imbue technology into health services to make them more accessible, efficient and accurate. Thanks to technological advancements, healthtech is ripe to thrive, help address unattended issues and enhance existing practices. Last year, the industry took a rough hit, with funding nearly halved from $25.5 billion in 2022 to $13.2 billion in 2023.

But this doesn’t mean growth is completely stalled. Last year, the healthtech market saw $180.2 billion in revenue. And it is expected to reach $549.7 billion by 2028 — a 25% yearly increase. This is because digital health has provided the healthcare space with indispensable solutions it can no longer go without, further embedding technology in critical parts of the industry.

In fact, the vitality of technology in healthcare is recognized by some of the biggest players in both industries, like health retailer CVS and tech giants Google and Samsung. These three companies funded rounds for 8 companies in 2023 as per CB Insights, backing wearables, primary care services and AI-powered healthtechs.

Their investments also align with the rising trend of value-based care (VBC), which rewards outcome-based services instead of volume-based ones. This is a stark shift from the fee-for-service (FFS) model, where providers receive reimbursement based on the volume of services. VBC is taking it upon itself to address the declining quality of the US healthcare system by focusing on quality instead of quantity. For health programs such as Medicaid, VBC is currently only 25% of its service initiative, which poses operational obstacles for startups targeting this segment.

Moreover, 2023 was a record year for cyber attacks in healthcare. The average data breach cost companies a whopping $10.93 million last year, becoming the most targeted industry due to the large amount of sensitive patient data it handles and its increasing reliability on digital services.

Trends That Dominated the Digital Health Market in 2023

We must first look at the past to understand the present and future. Many digital health trends from last year will continue to develop into 2024 as emerging technologies keep capturing the space to create meaningful impact. AI took a big chunk of the attention while cyber attacks tried their best to steal the spotlight.

AI and Machine Learning

AI was undeniably the star of every show in 2023, and digital health wasn’t spared. Almost daily, AI made the rounds with a new application to its name in the industry. Some of the most recognized healthtech solutions that emerged in the past year implemented AI in one way or another due to its ability to quickly process large amounts of data and make sense of it.

Startups began using AI and machine learning to identify patients with rare diseases and pair them with pharmaceutical companies, take notes for more accurate EMR, and automate tasks to reduce clinician burnout. The next frontier for the technology is increased regulation to secure sensitive patient information and targeting uber-specific sectors like clinical trials.

Efforts for Universal Healthcare

Rather than turning technological advancements into a thing of the elite, leaders have aspired for healthtech to level the playing field by delivering quality healthcare for all. For example, the OECD, in its latest Health at a Glance report, dedicated a section to the importance of digital health to enable timely and affordable access to high-quality health services.

The pandemic and its lingering effects also highlighted the importance of digital solutions to reach patients in remote and underserved regions. Since then, and especially during 2023, healthtechs have aimed at equipping healthcare providers with tools to service the entire spectrum of patients. A notable example is Kenya’s recent launch of a digital health tool to provide every community health worker with an electronic community health information system (eCHIS) to centralize access to health data.

Growing Cyber Attacks

Unfortunately, as digital health technology advanced, so did the sector’s cyber attack count. The industry fell into a deep cybersecurity crisis last year when it hit a record high in cyber attack incidents, with 541 reported data breaches in the US, as per the Department of Health and Human Services (HHS). The 11 biggest breaches, which spanned entire hospital systems, affected over 70.3 million people.

The HHS recently took further measures by releasing updates to its cybersecurity plans for healthcare providers. This strategy calls for hospitals, clinics and practices of all sizes to beef up their system security in an attempt to decrease incidents in 2024, including disclosures for software vendors.

What’s Next? What To Expect from Digital Health in 2024

Technological developments to serve the underserved will surge in 2024. As tech evolved at neckbreak speeds last year, leaders are applying these innovations to provide better services for those who have historically had less access to healthcare. The gift of AI will also keep on giving as processes are simplified for healthcare workers.

Virtual Wards

The NHS in England has pioneered the widespread adoption of virtual wards nationwide, with 10,000 beds currently available. This means patients recovering from illness can recuperate at home through wearables, mobile apps and virtual ward rounds carried by nurses and doctors elsewhere. That way, hospitals free up space for other patients with urgent needs while patients with a lower priority level can still receive prime care at home. Scotland, Northern Ireland and Wales are also planning to expand their current virtual ward services.

Last year, McKinsey published a report on the advantages of virtual wards, citing that they can improve patient satisfaction, reduce costs and minimize disease spread at hospitals. As for this strategy in the US, as cutting-edge tech keeps disrupting the health industry in the country, many expect virtual wards to become more popular in 2024.

AI-Driven Billing Processes

Healthcare is one of the most disputed topics in the US, and it’s clear why. Americans pay around $4 trillion every year for their healthcare services. With that steep amount comes billing, which takes time, effort and often grave inaccuracies and malpractice.

Private companies, insurers and providers alike are rooting for AI to solve their billing issues due to its ability to organize, summarize and automate data in a fraction of the time it takes humans. It will also help boost transparency in the billing process, a growing problem insurers and patients have grappled with when reimbursing expenses. As AI begins taking over vital operations in the industry, the billing process is at the top of the list for what’s next.

Tailored Innovations for Women’s Health

Women face a different set of challenges when it comes to healthcare. Historically, they have been underserved and understudied in a field tailored mostly by and for men. Recently, these inequities have been highlighted by the growing number of female voices in the health industry, placing women’s health at the forefront of issues technology can tackle.

From menstruation to pregnancy, birth control, menopause and other health-related matters, women need specialized care throughout their entire lives that digital platforms can help bridge. In 2024, investor attention will be placed on startups serving women’s needs, like fertility control apps, pre and postnatal support services and overall personalized digital care solutions.

How Insurance Responds to the Shifting Landscape

The digital health landscape is rapidly evolving, and the insurance industry is doing its best to keep up with these fast-paced trends.

1. Embracing Telehealth and Virtual Care

Reimbursing for Telehealth and Virtual Visits for a Wider Range of Services and Providers

Insurance companies have recognized the increasing need for treatments that are accessible remotely. A solution taking the reins has been expanding policies to cover a wider range of services delivered through telehealth and virtual visits.

And growth it has seen. In the first half of 2023, 34.5% of mental health visits were virtual ones. Because of this steady demand, insurers are looking to reimburse remote visits with specialists, therapists, and other healthcare professionals not previously covered. This goes beyond traditional medical consultations that include other health services, such as chronic disease management, and types of preventive care.

2. Integrating Wearables and Health Data

Partnering With Wearable and Health App Developers To Collect and Analyze Patient Data

Insurance companies are looking to gain insight into their policyholders’ health behaviors and wearable technology is an effective way to do this. Partnerships are being formed with manufacturers who are dominating the space of smartwatches and other accessories. Giving insurers direct access to heart rates, sleeping patterns and overall daily activity.

3. Offering Innovative Insurance Products

Developing On-Demand and Subscription-Based Insurance Models

Technology has paved the way for the on-demand and subscription-based insurance model. Creating more flexibility, accessibility and affordability, through plans that can be activated and deactivated as needed, giving coverage only when required. Giving the policyholder more control to personalize their coverage as they see fit.

Exploring Micro-Insurance Products for Specific Health Needs or Populations

Micro-insurance products are designed to provide affordable coverage with lower premiums. Essentially making it more accessible to those who may not have access to traditional insurance options. Commonly geared to segments of the population with lower income or freelance work, the coverage can target specific health concerns, like mental health services and chronic conditions, for example.

4. Utilizing Predictive Analytics and AI

Using AI To Identify High-Risk Individuals and Proactively Manage Their Care

AI technology is being used by a variety of industries to analyze large volumes of data, including insurance companies. Analyzing factors like medical history, data from wearable health technology and lifestyle behaviors, AI can identify who is at a higher risk of developing certain health conditions. A tool that allows insurers to focus on tailoring coverage and incentives so the policyholder can better manage their health.

Developing AI-Powered Claims Processing and Fraud Detection Systems

More than half of insurers already use AI to combat fraud and that number is expected to grow. The tools are built to review and process claims, while simultaneously identifying suspicious claims. Alerts that prompt an investigation. The goal is to escalate efficiency by passing along the task of identifying suspicious claims to a virtual assistant. So more time can be spent on expediting legitimate claims and investigating potential fraud.

5. Collaborating with Digital Health Stakeholders

Partnering With Hospitals, Healthcare Providers, and Tech Companies To Develop New Solutions

These partnerships have historically been beneficial in streamlining payment, communication and rates. With emerging technologies revolutionizing the industry, there are more resources to co-develop future digital health solutions. Virtual appointments are a perfect example of how collaboration efforts have given way to more accessible healthcare. We can expect more innovative solutions like this in the near future.

Challenges and Concerns

While the insurance industry is making progress in adapting to the digital health landscape, some obstacles remain.

Regulatory Frameworks

When digital health technologies evolve, so should existing regulatory frameworks that govern them. The challenge lies in the speed at which the technology is progressing. Regulatory bodies must keep up to address the new sets of obstacles that come from its use. By modernizing the legal mechanisms that work to prioritize ethical medical care. The degree of each impact continues to be studied. As we learn more, insurance companies must navigate these evolving regulatory frameworks to ensure compliance. Finding the synergy in advocating for regulations that promote innovation and protect consumer interests.

Data Privacy and Security

Digital health platforms funnel through massive amounts of sensitive data and information. Making it appealing for hackers to target healthcare providers and their vendors. So much so that in 2023, one in three Americans were affected by a health-related data breach. It hasn’t prevented the digital healthcare system from evolving. It’s instead shifted attention to areas that need to be strengthened. Like creating stronger security measures and codes of conduct. It’s an investment that mitigates financial loss and the loss of personal health data.

Equity and Access

Digital technology does improve healthcare access, but the same system brings attention to the continued disparities that exist. Equitable access to these technologies across different populations presents a challenge. One that needs to be addressed to create solutions that reach marginalized and underserved communities. Insurance companies have to be innovative in tackling issues of disparity by creating new products and solutions that serve different segments of the population.

Interoperability

You’ve heard the saying that “there’s no one way of doing something,” and in the case of emerging technologies, that holds true. In terms of digital healthcare platforms, this approach has been revolutionary while simultaneously creating a macro-challenge — a lack of standardization.

Insurance companies need interoperable systems to access accurate health data for the purpose of underwriting, processing claims and coordinating care. With so many players creating different types of digital health platforms, insurers may struggle to access what’s required as efficiently as the data has been collected.

Despite these challenges, the insurance industry’s response to the digital health revolution is significant. By embracing innovation and collaboration, insurers have begun playing a crucial role in transforming healthcare delivery and making it more efficient, personalized, and accessible.

At Founder Shield, we’re always reviewing growing market trends, especially in such a critical and evolving industry as digital health. Our specialists understand exactly what emerging businesses need today and have realized it involves more personalization than ever before. Request a customized insurance quote for your healthtech today — it only takes a few minutes to submit your information and start shopping for better coverage and pricing.