Ahhh yes, my obligatory look back and forward post.
(For anyone writing a newsletter, it’s in the fine print to write one of these a year.)
I’ve done my best to write how concrete changes this year will tangibly impact next year.
Let’s dive in.
The typical three-year contracts digital health companies signed during the COVID-19 boom are entering the renewal phase.
As Hinge contracts reach a pivotal renewal stage, careful navigation is required to address internal changes and market skepticism.
I predict 2024 will be rocky for Digital MSK companies. Heightened demand for profitability while contracts are contracting do not mix.
A note on the insights above.
Each point is backed by conversations with brokers, clinicians, and Hinge sales reps, but I’ve intentionally generalized them to incorporate them authentically.
Payors like United are increasingly acquiring primary care groups and other practice types, a trend I expect to continue due to favorable market conditions.
The acquisition trend among payors signifies a shift in the healthcare landscape, emphasizing the need for new patient acquisition strategies.
Fee-for-service models and traditional payor relationships will not drastically change in 2024 but the events of the last 12 months, spurred by the winds of COVID-19, demand that practices think differently about their growth plans over the next decade. A reliance on FFS or traditional referral streams will leave many out of business or gobbled up by larger entities.
Rising labor costs and declining physician fee schedules in 2023 are set to further compress margins in 2024, necessitating revenue diversification. One customer mentioned their labor cost per capita had gone up 18%.
Facing tightened margins, healthcare providers must explore diverse revenue channels to sustain growth and financial stability.
PE activity slows in 2023. 2024 looks to ramp up.
As the market conditions evolve, 2024 could mark a significant uptick in PE investments, with well-positioned practices likely to attract attention.
Of course, I’d be remiss not to mention it’s an election year. Regardless of the economy or international turmoil, healthcare is always a key issue for voters.
Each party has done a poor job showcasing its healthcare policy, instead focusing on a questionable economy, immigration, and international conflicts. As the race heats up, healthcare will, as it always does, take center stage.