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How Data And AI Will Continue To Change Healthcare In 2021

General Partner & CEO at Pegasus Tech Ventures | Chairman of Startup World Cup.

Healthcare is a bright light in the economy, given its significant growth over the past several years. The Covid-19 pandemic has accelerated the importance of healthcare technology, especially as pharmaceutical companies race to develop better testing protocols and vaccines. As a healthcare technologies investor, I expect these changes will continue to evolve the world of healthcare and the technology startups that thrive in it.

The growth of data, artificial intelligence (AI) and machine learning (ML) has had a particularly strong impact on healthcare. Let’s look at their impact in 2021 and beyond.

Why The Growth Of Data Is So Impactful

There’s an increasing amount of data collected about patients, though with this comes privacy concerns. This trend is accelerating as telehealth becomes more popular. Doctors are using two-way technologies more than ever to provide healthcare remotely.

The growth of telehealth means that providers, and consumers, have increased access to data. Analyzing this data is challenging and requires advanced technologies, but it also creates opportunity. Doctors can develop more personalized patient treatments after analyzing clinical data. Radiologists, with the right tools, can analyze data to diagnose patients better. Drug development speeds up with the use of advanced data analysis.

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Healthcare tech companies are more visible than ever in 2021 because the pandemic has made innovative solutions involving data top of mind. For example, Tempus is advancing precision medicine through the practical application of AI in healthcare. The technology startup has created a large collection of clinical and molecular data to help healthcare providers make precise medical treatments. In May, the company announced it is expanding into infectious diseases and will begin with Covid-19.

The company 23andMe, one of our firm’s portfolio companies, focuses on genetic testing and brings data analysis directly to the consumer’s doorstep. The company is conducting a Covid-19 study to help scientists search for genetic links to the disease. The company’s goal is to understand how genetic differences might explain why symptoms of the illness range from mild to severe and help empower the scientific community to address this public health crisis.

The Rise Of Artificial Intelligence And Machine Learning

In 2021, I expect to see major growth and rapid demand for artificial intelligence and machine learning (a key segment of AI) in healthcare. In fact, even before the pandemic, the market value of health AI was estimated to reach $6.6 billion by this year, according to a 2017 report by Accenture. 

Hospitals have recently taken advantage of AI and ML to improve diagnoses, boost patient outcomes and increase revenue. By using AI technology to improve disease predictions, they can better predict serious conditions, including cancer. Hospitals can u see AI to predict the risk of osteoporosis and anticipate which patients will get cardiovascular disease.

As Covid-19 disrupted the world, AI became more important as a tool to develop predictive models for cases spreading across the country. Predictive tools started tracking the virus and estimating the likelihood of serious symptoms developing. Machine learning has helped immunologists make new discoveries and develop Covid-19 vaccines.

Artificial intelligence startups are innovating to the benefit of patients. For example, Lark, one of our portfolio companies whose platform has served roughly 2 million patients, uses conversational AI to help those suffering from or at risk of chronic disease. Babylon Health is a digital startup that uses AI to provide accessible health services via telehealth.

There’s little doubt that AI and machine learning will grow in importance in treatment protocols and clinical research. I believe data scientists will become more important members of the medical community as it aims to capitalize on data to improve patient results.

The Healthcare Tech Investment Outlook For 2021

Despite 2020 being a massive year for investments in the healthcare industry, I anticipate there will still be sufficient investment opportunities for investors in 2021. I recommend investors do their due diligence to differentiate companies with value propositions that will enable them to be successful beyond the short-term Covid-19 environment. For example, just because the pandemic has forced many people to adopt telehealth solutions doesn’t mean that the majority of people will continue this behavior once they are able to go back to their normal appointments in the office. Some companies might exaggerate the extent of broader market trends that make their business opportunity look more compelling, perhaps to justify a higher valuation.

A tremendous number and variety of financing options are available for mid-to-late-stage companies via private equity (seed to growth), special purpose acquisition vehicles (SPACs), direct listings, acquisition offers and more. Given this and the fact that healthcare is one of the sectors with the greatest investor appetite, most of the top companies will likely already have secured financing or will be in discussions for opportunities that may include generous valuations given their recent track record. Therefore, investors could start to look for earlier-stage companies with strong teams that are targeting markets that have long-term cyclical staying power and growth prospects.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.


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