"Innovative, system-level thinking will be needed from both private- and public-sector voices," to drive digital innovation in healthcare in 2025 and beyond, healthcare industry consultant Rita Numerof recently wrote for Forbes.

There is no shortage of areas in which emerging technologies can be employed in healthcare today, including:

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• Artificial intelligence and machine learning. From aiding with radiology and pathology image and object analysis, to quickly analyzing and summarizing medical histories, AI and ML continue to improve the way health systems operate and care for patients.

• Advanced wearables. These game-changing devices can help practitioners monitor patients in real time to keep tabs on their heart rates, blood pressure, and glucose levels and even predict future medical events and emergencies like asthma attacks.

• Big-data analytics. Collecting data and using advanced analytics enables providers to optimize patient 'flow' (more intelligently schedule appointments), reduce readmissions, and better manage and forecast population health for specific communities.

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The rapid evolution of this tech and increasing number of use cases to leverage them make it as good a time as ever for major healthcare incumbents to renew their corporate innovation focus and drive the sector forward.

Specifically, it's an optimal time for health systems in the United States to double down on developing innovations — including those that improve healthcare outcomes by helping doctors better treat diseases, reduce costs for providers and patients, and enhance practitioner and back-office productivity.

Instead of waiting for a startup to develop new solutions that may not even address the above issues, health systems can proactively innovate to tackle a number of persistent healthcare industry challenges.

Innovation in healthcare: 3 strategies health systems should focus on in the coming years

We've identified three specific healthcare industry tailwinds and innovation opportunities related to them that prove there's a viable path for health systems to build new HealthTech startups and solutions that solve big problems facing their organizations, patients, and partners.

1) The HealthTech funding environment is steadily improving

"The HealthTech sector is experiencing a recalibration in valuations, as the industry is showing signs of early recovery with investments stabilizing and artificial intelligence ... driving new growth," according to Silicon Valley Bank's (SVB) 2024 Future of Healthtech Report.

The research discovered a quarterly funding "trajectory" between $4 billion and $4.5 billion for the development of new healthcare technology ventures in 2024. This level surpasses pre-pandemic investment levels.

Despite the positive momentum, SVB stated private investors are fixated on scalable growth and getting to profitability quickly when deciding to back companies working on new healthcare innovations.

Opportunity area: Explore new business models that could attract VC firms.

Major health systems know the developing and ongoing issues that plague their companies and the industry at large. This awareness presents a unique opportunity to launch their own HealthTech startups that not only solve these problems but also have strong product-market fit and growth potential to secure VC backing.

Carta research shows the health sector accounted for nearly one-third (32%) of all VC investment in 2024, a big increase from 21% in 2018. But it's not just venture funds backing early-stage startups with cutting-edge solutions. It's also established industry players allocating innovation budget to build their own startups.

‍Consider Wellstar. The leading U.S. health system empowered its innovation arm, Catalyst by Wellstar, to explore business concepts that could transform the way medical professionals working in its healthcare network operate day-to-day.

One such concept Wellstar brought to market with help from our team was vflok, a shift-scheduling solution that arranges in-system coverage for nurses and frees up their time to focus on patient care, not admin tasks.

Solving a big problem like this in the healthcare arena helps differentiate vflok and its AI-powered workforce optimization solution in the market and, in theory, make it more attractive to investors looking for early-stage startups with the potential to disrupt a niche area of the industry.

2) Few HealthTech solutions built alongside incumbents

It takes healthcare organizations about 12-18 months to select, vet, and onboard a new HealthTech vendor, due to stakeholder approvals, due diligence, and reviews tied to product safety and efficacy and patient privacy.

Add in the fact there's no way to guarantee the efficacy of these platforms until implementation, and it makes it somewhat risky for healthcare companies to allocate a lot of their budget to invest in these tools.

"It's not hard in the healthcare space to identify challenges," Blue Venture Fund Managing Director Dan Phillips shared in our Alloy 2024 session on healthcare transformation. But he noted it does require "some level of humility around the complexities and the realities of the system" to try to disrupt healthcare.

"The prospect of coming in from the outside and trying to disintermediate some large part of the healthcare system can be incredibly daunting and expensive and time-consuming for entrepreneurs," Dan continued.

Despite efforts by startup founders outside healthcare to bring innovative solutions to market, Dan said it's more ideal for these companies to partner with health organizations to co-execute on venture creation (and ensure solutions industry players would actually use and benefit from are built).

Microsoft for Startups Worldwide Lead, Health & Life Sciences Sally Ann Frank, who spoke on the same Alloy 2024 panel, added the things that make it hard for outside startups is the lack of a track record.

"You're trying something that's new and innovative, hopefully," Sally said. "And you don't have, in some cases, clinical validation. That can be really hard [for startup founders] to overcome."

Opportunity area: Blend internal access and external expertise to build tech.

Whether it's working with entrepreneurs with an appetite to solve big industry problems or partnering with an external venture builder with a proven startup-creation playbook, healthcare organizations can capitalize on outside expertise to guide their company-building efforts.

Venture builders, in particular, can help define dedicated themes for startup creation. This ensures healthcare organizations pinpoint one Job to Be Done to tackle at a time and avoid engaging in innovation theater.

OSF HealthCare is a not-for-profit Catholic healthcare organization that operates a medical group, hospital system, and other facilities in Illinois and Michigan.

The organization recently wanted to create startups tied to its mission of eliminating inequity and injustice in healthcare by facilitating care access for underserved communities.

So, OSF HealthCare partnered with us on a venture-build program tied to a focused theme: finding a way to provide more comprehensive care coordination among medical professionals who diagnose and treat sickle cell disease (SCD) so they can better support those dealing with it.

The result of our work was Marti Health, which brings access, literacy, and transparency to SCD patients and caregivers. Marti Health reduces the admin time SCD care coordinators and doctors spend on outreach, scheduling, and basic education, allowing them to focus instead on care delivery.

3) More AI use cases are emerging, leading to more AI tech needs

Artificial intelligence has disrupted almost every industry. Healthcare is no different.

‍Thanks to health innovations tied to AI:

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• Back-office tasks, like billing and health records management, can be streamlined and better structured to deliver more high-quality patient experiences.

• Healthcare professionals can improve patient outcomes (e.g., using advanced AI learning algorithms for early detection and to provide personalized patient care).

• Predictive analytics can be used as a life-saving, cost-effective solution to identify high-risk patients, suggest preventive measures, and reduce hospital admission.

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"Providers will deploy more AI applications to optimize revenue and volume and to help fill clinical labor shortages and assist doctors in making diagnoses, contributing to better clinical outcomes," per PwC's 2025 healthcare industry trends forecast.

The real-world applications of AI are many. But not all such applications exist today. Enter startup creation.

Opportunity area: Find AI gaps to address widespread healthcare challenges.

Recent McKinsey research found AI could produce $370 billion in value for the healthcare sector in the years ahead.

Many cutting-edge AI HealthTech platforms have already been brought to market in recent years. In fact, a number of early-stage startups' AI solutions have already sold large health systems, who have collectively spent roughly $23 billion from 2014-23 on these tools, recent Healthcare Dive analysis found.

Yet this market adoption doesn't mean there aren't still problems that can be solved through new AI HealthTech development.

Consider a top-five pharmaceutical company that recently wanted to bring a new AI solution to market that could help one or more of its business units streamline operations and produce cost savings for them.

Working with us ultimately enabled the pharma company to co-create a new startup that addressed a big pain point: the need to streamline medical, legal, and regulatory (MLR) reviews for marketing teams.

Our collaborative venture-building initiative led to the launch of Revisto, an AI-powered platform that uses terabytes of the pharma company’s proprietary data to reduce the time and cost tied to the MLR review process.