As 2023 comes to a close, Jay Rughani, investment partner at Andreessen Horowitz, joined MobiHealthNews to discuss his takeaways from the year, noteworthy events, recommendations for regulators forming rules around AI in healthcare and projections for digital health funding in 2024.
MobiHealthNews: What are some of your biggest takeaways from 2023?
Jay Rughani: It’s been a tough year on many fronts across our healthcare system. We’ve had broadly documented health worker burnout. We wrote about this a little bit in our piece, but physicians actually have one of the highest rates of suicide of any profession. And there was a recent study that 10% of physicians have reported suicidal thoughts. There are staffing shortages, and half of our health systems across the country operated at a financial loss last year.
We’ve also got broad health disparities in the way that healthcare is delivered. And so there are pockets where wonderful care is delivered, but then, unfortunately, we’re facing a system where not everyone has access to the best care that they should. And so that’s the reality that we look at in healthcare in 2023.
Yet, we are extremely optimistic about the opportunity for digital health and modern healthcare technology companies to come in, help alleviate the burden that we put on clinicians and healthcare workers, number one, and number two, do that a lot more efficiently to reduce a lot of the administrative waste, which hopefully will help the financial outlook and broad sustainability of a lot of our healthcare companies.
Then, number three, help expand access to the very best care through virtual care models, and we’re seeing a number of new digital health companies that can offer wonderful care, but do it virtually, monitor patients passively. A patient doesn’t have to live in downtown San Francisco or New York City to get access to the best clinicians across the country, and that leaves us with a lot of optimism.
MHN: Where do you anticipate AI making waves in healthcare next year?
Rughani: 2023 was the year where the latest capabilities of generative AI were made available to consumers – think ChatGPT, a number of generative AI applications for generating new images in the fields of art and entertainment – and we’ve seen a lot of that adoption in the creative side of our economy.
2024, I think, is about improving these generative AI capabilities in an enterprise context, thinking about security, privacy and what it takes to implement some of these technologies in a large, complex enterprise and in a highly regulated industry like healthcare. And so 2024 is all about getting AI enterprise-ready for healthcare.
What do I mean by AI being enterprise-ready for healthcare? I think you’ll start to see the adoption of AI-specific tools throughout healthcare that are enterprise-ready. One example that I’ll give is what I expect health systems and providers to start using – “AI teammates” – fully autonomous, large language model agents that can aid and enable our clinical and nonclinical staff across our healthcare system to do their best work.
One way to think about this is almost an AI physician assistant. These are software products that can serve effectively as teammates and can help bridge the workforce gap, can help eliminate a lot of the mindless administrative work that many of our healthcare workers are burdened with and that will all allow providers to spend more time with their patients, number one, and then spend a lot more time supporting the personal needs of their patients.
My hope is that with more doctor visits that your readers have, their clinicians will be spending more time looking at them and not looking at their computers. There are a number of companies developing large language models that have dazzling capabilities, and our view is that at the infrastructure layer of AI, there’s going to be a number of companies developing large models and that’s going to raise the tide of capabilities for all companies building applications for specific industries, including healthcare.
MHN: What were some of the most noteworthy events that stood out to you this year?
Rughani: I think the two noteworthy events that captured the narrative of 2023 in regard to healthcare are AI and GLP-1 [drugs].
On the AI side, again, as consumers, we all got to experience and be dazzled by the remarkable capabilities of what large language models can do. It really feels like you’re able to ask any question and get a very intelligent and thoughtful answer that’s data-informed. And so we can’t help but imagine what that can do in our healthcare system, where the stakes are so high, the impact is so high, the waste is so high and so on.
GLP-1s, you know, the number of these medications that are now being approved for obesity are still early, and there’s a lot more longitudinal studies that need to be done to understand the safety and efficacy of these medicines in a broad range of patient populations. Nevertheless, they seem to melt fat, curb addiction, and have a number of other benefits that patients are looking forward to and can look forward to. I think that captured the headlines, and 2024 will be about getting those drugs approved and seeing them used in a broader population, as well as new formularies and new modalities being issued. Right now, the approved GLP-1s are injectables, but there have been some interesting late clinical trials looking at oral formulations.
MHN: Regarding AI, what advice or suggestions would you provide regulators configuring rules around its use, particularly in health care?
Rughani: What I would say is, number one, there are a number of AI-based technologies that are already regulated under HHS and other departments of HHS. So, for example, the FDA has a pathway called Software as a Medical Device, where they regulate a number of technologies that use ML- and AI-based algorithms to deliver certain capabilities.
So my first recommendation would be that these agencies should continue to think about when a new capability comes to market or becomes available to our system and understand what existing regulations already cover this. The concern might be that if you overregulate certain technologies and put too much of a regulatory burden on these new companies, then there’s a risk that you stifle innovation. So, I think agencies should continue to be very thoughtful about what new capabilities are already covered by existing regulatory bodies.
Then, I think these agencies should continue to work very closely both with emerging digital health companies and the broader industry to study the safety and efficacy of these new AI capabilities that are coming one by one – study the costs associated with adopting them into our healthcare system, the most effective ways to integrate these AI capabilities into our healthcare system, and then, once they’ve done all of that, then we can get to the point of starting to make recommendations on how we should additionally regulate, if at all, some of these capabilities.
MHN: Do you think regulatory bodies will have difficulty keeping up with the pace of technological change for established rules to stay relevant? AI evolves very quickly compared to the time it takes regulators to solidify rules.
Rughani: It is unquestionable that the pace of progress in the field of AI right now is practically unprecedented. It is such an exciting time to see and observe how quickly the capabilities of these technologies are improving. So, I think it’s important for the professionals who are thinking about policy and how our society will adopt and distribute these technologies to businesses and consumers to continue to stay on the cutting edge and work with the innovators to understand the broad range of the capabilities of these tools. They need to spend time with not just the large technology incumbents, but also the startup companies actually at the front line building these.
Secondly, the responsibility is both on safety and efficacy. For safety, they need to continue to study and prioritize clear ethical guidelines, patient privacy and transparency, so that we ensure responsible adoption of these technologies while also balancing the fact that these things are moving so quickly, and we don’t want to slow down innovation, because there are other countries that are going to regulate less.
We have to recognize that there are countries all around the world that are competing in the AI race for innovation, and it’s a national imperative for the U.S. to continue to be at the forefront of technological innovation and policy. To slow that down would be an incredible missed opportunity for our citizens.
MHN: What do you foresee for 2024 regarding digital health funding?
Rughani: I’m optimistic that we’ll see truly tech-native digital health companies in 2024 continue to earn the privilege of serving more patients and having much broader deployments across our healthcare system to enable technology-first care. And so that’s number one. I expect many more companies to earn that right.
I think they will be recognized in the public markets, both for the sustainability of their business model and the impact that they’re having on patients’ lives. And I think that will elevate the brand and the recognition of a lot of these companies for the work that they’re doing.
Also, I expect that we’ll see in the growth markets, late-stage private capital markets, an increase in their capital allocation to digital health companies, mirroring the trends that we’ve seen, you know, frankly, in the early-stage markets a few years ago. I think there’s been an increase in digital health funding over the last several years. A lot of that capital has gone to early-stage companies building on a lot of these new technologies that we’ve seen, and I think that will play out in the late-stage markets as well.
Editor’s Note: To watch a video interview with Jay Rughani discussing Andreessen Horowitz’s paper entitled “AI: The Teammate Clinician’s Need,” click here.
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