The healthcare industry may see some pivotal changes in 2025, whether it’s in regards to digital health, prescription drug costs or healthcare coverage.
That’s according to three executives from LRVHealth, a healthcare venture capital firm. They shared five predictions for 2025 with MedCity News:
1. Digital health investing market: A significant amount of dollars have flowed into digital health companies over the last decade, but this will “slowly burn itself out,” predicted Keith Figlioli, managing partner of LRVHealth. This means that many venture-funded companies will go away by either shutting down or merging with other companies, which is “a result of the fact that most of these companies were more product centric than company centric,” he said.
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Figlioli added that he anticipates the healthcare M&A market to “wake up” in 2025, with many announcements at the JPM healthcare conference.
“After that, we’ll see a big pickup throughout the year, and we may even have the IPO market open up during the second half of the year for healthcare companies too,” he said. “This movement on the M&A front will begin to see dollars flowing back to LPs.”
2. Artificial intelligence: Figlioli expects the reality of AI in healthcare to set in, with many pilot projects falling short in 2025, while only a few sustainable use cases succeed and scale. Ambient scribing and prior authorization are two areas where there may be a lot of traction for AI.
“We will also begin to see a few true clinical decision support use cases come to light and more pilots will begin to test the augmentation of clinicians and the support they truly need to deliver high quality, safe care,” he said. “It will take time, but these early signs on the clinical decision support side will suggest a possible path forward on healthcare workforce burnout and shortage issues over the long term.”
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3. Less focus on value-based care: In 2025, care delivery innovators will shift their focus from value-based care solutions to emphasizing clinical efficiency, predicted Ellen Herlacher, partner at LRVHealth. However, she noted that she believes the healthcare industry will still eventually move to value-based care, but that will take a long time.
“Clinical efficiency innovations – including top-of-licensure plays, site-of-care optimization, virtual care, and clinical extenders – are interesting in the near term because they create new points of access, they address clinical shortages, they appeal to patients, and they are reimbursable in a fee-for-service environment,” Herlacher said. “And incidentally, the improvements in access, patient experience, unit cost, and throughput set clinical enterprises up for success when it comes time to negotiate value-based care contracts.”
4. Shifts in healthcare coverage: Herlacher also anticipates seeing changes in the ACA exchange. There may be a shift to more small and medium sized employers offering Individual Coverage Health Reimbursement Arrangement (ICHRA) programs. ICHRA allows employers to offer employees a monthly allowance of tax-free money that they can use to buy healthcare services for their needs.
In addition, the incoming Trump administration may lower Medicaid funding, “leading to a separate wave of migration from populations previously covered by Medicaid,” she said.
5. Pharmacy spend: Prescription drug pricing will become a greater focus in 2025, particularly with costs rising due to the new therapeutics for treating diseases, said Josh Flum, managing partner at LRVHealth. There will especially be scrutiny when it comes to PBMs and 340B programs. Policies like the Medicare Drug Price Negotiation Program will be closely watched as well.
“All these factors will continue to put pressure on traditional pharmacy business models, but they also provide fertile ground for innovation in new pharmacy pricing, distribution, and fulfillment models that focus on access and transparency,” he said. “The desire to get more therapeutics to patients will spur a new wave of investments from pharma on access and patient services, resulting in more direct and creative partnerships between these companies and the providers who ultimately influence patients’ medical and therapeutic care.”
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