Winning In The Healthcare Generative AI Landscape

The Four Steps To Winning The Next Decade Of AI Transformation

When you look at the big picture role of generative AI in our health systems we see the start of a decade-long transition that will transform the market landscape.

Such a technological shift catalyses the opportunity for value migration, even in healthcare.

We will see new value moves in Gen AI as value migrates away from the foundational model layer.

Organisations that exploit this value migration to their advantage will need to follow a four-step process:

1. Leveraging The Horizontal To Go Vertical (Unbundling Begins)
2. Developing The Right To Win Vertically (Unbundling Works)
3. Developing The Right To Win Horizontally (Rebundling Begins)
4. Leveraging The Vertical To Go Horizontal (Rebundling Works)

Let’s break these down

1) Leveraging The Horizontal To Go Vertical (Unbundling Begins)

In the dynamic landscape of healthcare, a groundbreaking foundational model in AI has captured widespread attention, achieving horizontal dominance in the realm of medical data interpretation and patient care optimization.

At this transformative juncture, a myriad of startups begin to emerge, focusing on specific healthcare workflows to tailor the broad capabilities of this horizontal AI model to niche medical fields. This trend mirrors the recent surge in AI-driven platforms designed to enhance diagnostic accuracy, patient engagement, and personalized treatment plans. Despite the proliferation of these startups, the core value remains predominantly entrenched in the horizontal capabilities of the AI model, which serves as the backbone for various healthcare applications.

Unbundling starts: These startups are now embarking on their initial efforts to dissect the horizontal foundational model, aiming to create specialized vertical solutions. For instance, one startup might focus on leveraging AI for early detection and personalized treatment plans in oncology, while another might concentrate on optimizing patient flow and resource allocation in hospitals. This phase marks the beginning of a journey to transform a generalist AI model into targeted applications that address specific challenges in healthcare, enhancing patient outcomes and operational efficiency.

2) Developing The Right To Win Vertically (Unbundling Works)

A select few startups begin to carve out a unique vertical advantage, which may stem from a variety of factors such as a bespoke AI model fine-tuned for specific medical applications, exclusive access to specialized healthcare datasets, or a user experience uniquely tailored to healthcare professionals’ needs. This differentiation allows them to harness and redirect the value from a horizontal to a vertical trajectory, focusing intensely on particular healthcare challenges.

Successful unbundling: At this juncture, the market witnesses the rise of successful vertical specialists within the health-tech landscape. These innovators earn their stripes and establish a dominant presence in specific healthcare niches, whether it’s in predictive analytics for patient care, AI-driven diagnostic tools in radiology, personalized treatment planning in oncology, or digital health platforms for chronic disease management. On the contrary, those startups that merely wrap the foundational model in a healthcare context without any distinct vertical innovation or proprietary edge find themselves facing commoditization. They struggle to differentiate in a market that increasingly values depth and specialization in healthcare solutions.

The victors of this phase are the ones who not only understand the vast potential of AI in healthcare but also successfully align their technological prowess with the nuanced demands of healthcare providers and patients, thereby securing a firm foothold in the verticalized healthcare domain.

3) Developing The Right To Win Horizontally (Rebundling Begins)

This pivotal step marks the transition from vertical specialization to horizontal expansion in the health-tech industry.

Having established a vertical stronghold, a handful of these successful firms now possess a key control point within their specialized healthcare domain. This control point — be it a groundbreaking AI diagnostic tool, a unique patient data platform, or an innovative telemedicine service — grants them a dominant position in user relationships within that niche. The intricacies of building and leveraging these control points in healthcare are crucial, as they dictate the firm’s ability to expand its influence.

Armed with this vertical advantage, these exceptional firms begin the process of rebundling. They extend their reach ‘over the top,’ integrating their specialized solutions into broader healthcare ecosystems. They aim to create a seamless, interconnected experience, offering comprehensive solutions that transcend individual health domains.

Rebundling starts: At this juncture, a few visionary startups are poised to redefine the healthcare landscape. They leverage their vertical success to orchestrate a broader suite of healthcare services, aiming to create an integrated platform that addresses multiple facets of patient care, healthcare administration, and medical research. These firms are now not just vertical specialists but are evolving into influential horizontal players, capable of delivering value across the entire healthcare continuum.

4) Leveraging The Vertical To Go Horizontal (Rebundling Works)

As the rebundling phase advances, the startup, now seasoned with vertical expertise, transforms into a central hub in the healthcare ecosystem. It becomes the nexus point for various healthcare services, leveraging its control point to foster an integrated, ‘over-the-top’ layer that orchestrates a multitude of healthcare capabilities.

Successful rebundling: This stage heralds the emergence of a new leader in the health-tech space. Value consolidation occurs around this new axis, as the rebundled entity becomes the go-to platform for comprehensive healthcare solutions, effectively addressing the diverse needs of patients, providers, and healthcare systems.

This cyclical journey of unbundling and rebundling is a fundamental dynamic in the healthcare industry, particularly when revolutionary technologies like generative AI come into play. It underscores the transition from niche specialization to industry-wide influence, delineating the path from a focused service provider to a pivotal industry player.

While this narrative focuses on the ascension from a specialized service to a platform leader in the healthcare domain, it’s important to recognize that the broader generative AI landscape will see its champions across various sectors, including low-level model operations and computing infrastructure. These areas will also crown their victors, determined by their prowess in engineering, scalability, and talent acquisition.

AI will be an inevitable power grab within the health sector as incumbents work to sustain their market dominance while startups target weak points and penetrate the market with maximal effect.

Owning the foundational models is not the guaranteed pathway to success and incumbents know that. They have constraints startups don’t which will make their moves slow and often too late.

AI isn’t just a technology change, it's an entire disruption catalyst for an industry that has long forgotten the golden rule is keeping customers happy. Those that can facilitate better patient outcomes will be the winners and we’re about to see a completely new materialisation of what this means for the sector.