Generative AI technology could deliver industry-changing improvements in healthcare delivery and life sciences productivity, efficiency and patient outcomes and presents a massive untapped opportunity for entrepreneurs and investors, according to a new market analysis by Justin Norden of GSR Ventures, Jon Wang, and Ambar Bhattacharyya of Maverick Ventures.
These health technology focused VC firms analyzed 145 startups across healthcare delivery and life sciences with generative AI solutions and highlighted their innovations, challenges, and market potential. Collectively, the startups have earned more than $20 billion in funding and have 47,000 employees.
“Generative AI innovations have not merely leveled up to human performance on numerous benchmarks, but astonishingly surpassed it, instigating a watershed moment in technological evolution,” said Justin Norden, MD, MBA, a partner at GSR Ventures and adjunct professor at Stanford Medicine where he teaches a new course on the subject to medical students. “We hope this report familiarizes founders, operators, and investors with the generative AI field, helps them identify potential opportunities, and fosters ideas for creating a better healthcare system.”
Generative AI Treats What Ails Healthcare
In the report, Norden and co-authors Jon Wang, healthcare AI scientist and entrepreneur; and Ambar Bhattacharyya, managing director at Maverick Ventures, describe how generative AI technologies such as OpenAI’s ChatGPT have captured the world’s attention due to the ability to produce new seemingly original content, ranging from text and images to audio and video.
The authors point out that now is the ideal time for generative AI in healthcare considering the ongoing clinician burnout and shortage crisis, progress with data interoperability between enterprise platforms and receptive regulatory environment concerning AI algorithms. Generative AI has the potential to significantly reduce the technology and administrative burden on healthcare organizations—which even today still rely on fax machines for communication. Generative AI built on large language models (LLM) can automate time-consuming non-patient care tasks while speeding the time to decision and discovery through faster analysis and content generation.
“Rarely have we seen a technological advancement that has engaged so many of the stakeholders in the healthcare ecosystem as fast as generative AI,” said Ambar Bhattacharyya, Managing Director at Maverick Ventures. “Health systems, life sciences companies, and payors are examining, and in many cases already working with, innovative generative AI companies.”
The authors analyzed the 145 startups across five market sectors and interviewed founders from both established and emerging AI companies—particularly those leveraging the latest tools to enhance their capabilities. Sectors profiled in the report, as well as the funding and age of the companies, are:
- Life Sciences ($6.5B raised, nine-year median age, 22 companies)
- Patient-Facing ($2.3B raised, eight-year median age, 12 companies)
- Clinician-Facing ($6.0B raised, seven-year median age, 49 companies)
- Administrative ($2.7B raised, five-year median age, 43 companies)
- Analytics & IT ($2.5B raised, six-year median age, 19 companies)
Across each sector, authors describe different categories of solutions that are currently being developed as well as the market outlook. Some notable companies in the solution categories are also presented when relevant.
The report closes by describing the challenges that generative AI startups in healthcare may face, including a slow sales cycle—typically 12 to 24 months for large healthcare organizations—as well as growing competition as the ease and speed of programming and copying AI solutions accelerates. Trust in AI among healthcare organizations is also a challenge for startups considering the potential risks to patients’ safety and health, as well as the huge technology investments these organizations have made in enterprise electronic health record (EHR) systems.
The report concludes on an optimistic note by detailing a few of the opportunities ahead for startups with the right solution, especially when companies can move and change faster than large, established incumbents.
“We are in the earliest innings of the world turning its attention to the abilities, potential, and complications of using generative AI on every task imaginable,” Norden said. “In healthcare, while there are many issues to overcome, we believe generative AI has the potential to deliver transformational positive impacts on the lives of patients and providers and finally bring meaningful and lasting technological progress to an industry where it is long overdue.”
To see the full report click HERE.
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