Hospital venture capital leaders told Becker's that despite a cooler funding environment than in previous years, they are still excited about artificial intelligence's capacity to change healthcare.
"Overall, generative AI's potential has been an area of significant interest and discussion," Andy Lozier, head of new ventures and business incubation at Columbus-based OhioHealth, told Becker's. "While healthcare-specific new company formation and investment hasn't yet gained momentum, we are seeing more mature startups working to incorporate these technologies into their core businesses. The velocity of progress and opportunities for novel applications are massive."
Even before the rise of generative AI tools like ChatGPT, healthcare AI investment was starting to take off. During the COVID-19 pandemic in 2020, healthcare AI companies raised a record $6.6 billion. In 2021, healthcare AI companies surpassed the previous year by raking in $8.5 billion.
"Investment in the development of comprehensive digital health ecosystems has become essential for integrated delivery networks seeking to remain at the forefront of patient centricity and play a role in engineering the next generation of tech-enabled care delivery," said Richard Mulry, president of New Hyde Park, N.Y.-based Northwell Holdings. "There has been a wellspring of new interest surrounding healthtech innovations underpinned by AI, with an increasingly diverse array of solutions emerging.
"This surge in AI-enabled solutions harbors immense potential to enhance both operational and clinical efficiencies and improve early disease detection and clinical decision-making. However, for organizations to fully leverage this potential and the associated benefits, significant investments are concurrently needed across workforce education, cloud infrastructure, workflow redesign and care navigation, producing solutions that are truly integrated into the system."
In May, Northwell Holdings partnered with Aegis Ventures to launch Optain, an AI-powered ocular health company. Through the partnership with Aegis, Northwell has also piloted joint ventures such as Caire, a virtual care ecosystem, and Ascertain, a company creation platform focusing on AI.
"Our experience to date has demonstrated that effective collaboration with peer systems and the tech and venture ecosystems is the best way to reduce these risks and advance AI's significant benefits to the system — clinically, operationally and financially," said Mr. Mulry.
Even with overall advances in AI, the digital market has significantly slumped. The industry brought in $2.5 billion in funding in the second quarter, putting 2023 on track to be the lowest funding year since 2019.
"It has been a tale of two worlds. In traditional healthcare, life sciences, med tech and even health tech investing, it's been a really difficult environment to raise capital for companies," said Cleveland Clinic Ventures Partner Todd Schwarzinger. "But AI has been a completely different story. You've got this dichotomy of some companies that are really struggling to raise capital and then some newer platforms shifting into leveraging AI in their solution."
Despite the buzz around AI in 2023 so far, Mr. Schwarzinger said Cleveland Clinic is taking a more cautious approach and focusing on tools that can actually be implemented.
"The pace of innovation has exploded. It seems like every company we're coming across today has some AI element in their story, or they should," he said. "We're very much 'wait and see' for a lot of these AI-driven models. The pace of innovation might be accelerating quickly, but in digital health and health tech, you come across the issues of reality and implementation of these solutions.
"It may be really interesting, you may be applying AI to really improve a process or delivery of care, but integrating that into the existing paradigm of care and getting those systems adopted within provider networks like ours is just really difficult. It's going to take time to see how this ecosystem plays out."