MedTech

Transformative MedTech industry trends are reshaping the way we approach patient care and medical research. MedTech companies continue to leverage AI to improve care delivery and streamline workflows, while also navigating a complex regulatory environment to ensure safety and compliance.

The accelerated development of regulatory frameworks is being driven by concerns about the lack of oversight and potential harms arising from AI and data-driven technologies, including increased cybersecurity threats and attacks that jeopardize patient health data and the systems meant to safeguard such data.

This, in turn, puts the pressure on companies operating in the space to implement the technologies as part of a larger strategy that optimizes for consumer demand while prioritizing compliance with the latest regulatory guidance, as evidenced by some of the key trends observed in Q3, along with the associated legal considerations.

A new normal in the virtual care market

The past few months witnessed a number of shake-ups in the telehealth market, with Walmart shuttering its health centers and virtual care services, Optum shutting down its virtual care division and Teladoc posting an $838m loss in the second quarter. The COVID-19 pandemic had accelerated the acceptance of virtual care in the healthcare industry; however, since 2021, telehealth has largely been on the decline. According to a recent update by healthcare analytics group Trilliant Health, telehealth visits have fallen from their peak of more than 60 million in 2020 to less than 30 million in the third quarter of 2023. The decline in telehealth demand may indicate that, with the exception of behavioral health, consumers do not view telehealth as an appropriate substitute for in-person care.

As the virtual care market evolves and moves away from commoditized models, such as virtual urgent care, healthcare providers may need to learn to use telehealth to complement, rather than replace, in-person care. Similarly, digital health companies that serve specific patient segments such as fertility and diabetes management would be well-advised to reevaluate their business strategies to adapt to current and future supply and demand. More generally, we are seeing many traditional inpatient procedures shifting to outpatient settings and increasing engagement in the direct-to-consumer setting, such as through new sleep and hearing health features in broadly-used consumer technology, and greater access to continuous glucose monitors.

New U.S. regulation of tech, data and AI with proposed HHS rule and reorganization

Following the finalization of the Health Data, Technology, and Interoperability: Certification Program Updates, Algorithm Transparency, and Information Sharing (HTI-1) Rule, earlier this year, the Health and Human Services (HHS) Office of the National Coordinator for Health IT released its proposed HTI-2 rule. HTI-2 introduces new standards and updates to enhance healthcare interoperability and data sharing. Specifically, the rule establishes certification criteria designed to enable health IT for public health, as well as health IT for payers to be certified under the ONC Health IT Certification Program. Both sets focus heavily on standards-based application programming interfaces to improve end-to-end interoperability.

In addition to its ongoing work in health IT, HHS announced a reorganization of its technology, cybersecurity, data and AI strategy and policy functions under the newly named Assistant Secretary for Technology Policy and Office of the National Coordinator for Health IT (ASTP/ONC). The ASTP/ONC will establish an Office of the Chief Technology Officer to oversee department-level and cross-agency technology, data and AI strategy and policy, as well as an Office of the Chief AI Officer, Office of the Chief Data Officer and an Office of Digital Services.

Together, the offices will have increased responsibilities to ensure the safe and appropriate use of technology, data and AI, which has been an ongoing concern in light of the rapid adoption of AI in the healthcare industry. A recent study published in Nature Medicine revealed that approximately half of the tools authorized by the U.S. Food and Drug Administration lacked reported clinical validation data. The reorganization further highlights the department’s awareness of cybersecurity as a key pain point at a time when cybersecurity outages and ransomware attacks have repeatedly severely impacted hospitals and health systems.