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Home » 3 things AI startups and investors need to know to clear hurdles in the healthcare technology market
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3 things AI startups and investors need to know to clear hurdles in the healthcare technology market

adminBy adminOctober 8, 2024No Comments3 Mins Read
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As 2024 draws to a close and the number of FDA-approved AI-powered medical devices approaches 1,000, with the FDA tally at 950 as of August, the industry finds itself at a “critical tipping point.” I feel that there is.

Bessemer Venture Partners made this observation in its report, “Roadmap: Healthcare AI,” published late last month. (AIin.Healthcare briefly mentioned the report released last week.)

“Today,” the Bessemer authors write, “each new advance in research has the potential to solve real-world problems, and founders and investors[of AI startups]are This should be an opportunity to encourage them to become more involved in new developments.”

After explaining some of the details unique to this opportunity, Bessemer highlights some of the challenges. Below is an excerpt from the second half.

1. Traditional market forces do not apply to medicine, but physics does.

Although the U.S. health care system may defy classical market economics, Bessemer said it strictly adheres to Newton's third law, which states that for every action there is an equal and opposite reaction. Point out. more:

“Founders of healthcare AI need to recognize that their companies are not immune to these dynamics, and that resistance to change can emerge faster and more intensely in the age of AI. there is.”

2. Regulation is both a barrier to entry and a permanent moat.

The authors point out that health care is a highly regulated industry, and laws tend to protect the status quo. “The barriers to entry for startups to enter the market can be very high. This is even more true for companies operating in healthcare areas where regulation is uncertain or gray, such as AI. ” they add.

“The dense regulatory environment that poses an obstacle to new entrants creates a permanent moat for the old guard, a small group of deeply entrenched healthcare industry incumbents that wield immense power and influence over the industry. It also functions as

3. The market is smaller than it looks.

Healthcare is one of the largest industries in the United States, with spending accounting for 17% of GDP and employing one in ten American workers. Bessemer analysts also said that “$1 trillion a year is spent on administrative costs, which is highly inefficient.”

“While healthcare is technically a $4.5 trillion market, the industry is far from monolithic. We have come to view the healthcare market as a container for approximately 4,500 different markets, each with its own The total available market is close to $1 billion, or there are approximately 1,000 unique markets, each with a total available market of $4.5 billion.”

The authors add that for success in any market, “fully unlocking the entire available (or addressable) market is essential, but this can be particularly difficult in the medical field.” There is. “Yet, we are already seeing a new generation of healthcare AI companies moving forward.” More:

“We have adopted innovative techniques and business models to help our team leverage larger budgets and multiple buyers, allowing us to not only survive, but thrive, with available markets unimaginable in previous waves. We're seeing them make the whole thing more accessible to healthcare IT.

Read the full report.



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