The Evolution of Healthcare: Trends to Watch in 2024


Healthcare delivery is undergoing a transformation as services previously confined to acute care settings are now available in ambulatory, home, and virtual environments. Facilitating the vitality of this trend are advances in technology, the need for cost control, and value-based changes to reimbursement. Stakeholders in the market are responding with investments and mergers to address changing utilization patterns and keep pace with consumerism driven technology and data advancements. As we continue into 2024, the healthcare and life sciences sectors stand at a critical juncture impacted by a complex mix of economic, technological, and political factors. With these factors in mind, FTI Consulting’s Healthcare Business Transformation leaders have shared their perspectives, key areas of focus, and outlooks for the year ahead across these specific healthcare spaces: private equity (“PE”) and mergers and acquisitions (“M&As”), digital health for providers and improving the patient experience, and changes in diagnostics.

Commercialization of Healthcare

Over the past decade, private equity’s presence in the healthcare sector has significantly accelerated, with annual deal values soaring from $41.5 billion in 2010 to $119.9 billion in 2019.1 This rapid increase has drawn increased scrutiny from lawmakers and researchers, particularly concerning inflated pricing, limited competition, and decreased quality of care linked to private equity-backed organizations.2

Key Areas of Focus for Private Equity

In response to these developments, it’s critical for PE firms to strategically focus on areas that will maintain quality of care and mitigate regulatory and compliance risk:

  • Invest more in staffing and training: Ensure adequate staffing and continuous training to maintain high care standards and reduce adverse outcomes such as patient falls and infections.
  • Strengthen operational efficiency: Streamline operations without compromising patient care. This includes efficient use of resources and adopting new technologies to improve healthcare delivery and optimize shared administrative service departments.
  • Maintain transparency and ethical practices: Uphold transparency about changes and adhere to high ethical standards in all business practices.

By honing in on these strategic areas, PE firms can succeed in elevating the quality of healthcare delivery while generating value at their portfolio companies. A significant trend is the optimization of administrative operations, which includes centralizing or outsourcing functions such as revenue cycle management. This is complemented by efforts to consolidate IT and finance systems, aiming for a streamlined management services organization (MSO) model that enhances efficiency. Moreover, an emphasis on digital transformation is increasingly central to reducing overhead costs. This approach not only improves patient care but also simplifies operations, enabling cost reductions across the board. By adopting these focused strategies, PE firms improve the quality of healthcare delivery and strategically position themselves as they prepare for their next move.

Key Areas of Focus for Healthcare Mergers and Acquisitions

In 2023, the M&A landscape was significantly impacted by high interest rates and reduced credit flows, leading to a noticeable decrease in deal activity, including in the healthcare sector.3 As financial sponsors adapt to these changing economic conditions, 2024 is poised to see a strategic shift affecting where dollars are invested within the healthcare sector. Key aspects of this shift include:

  • Decreased focus on providers: Last year saw a sharp decline in Physician Practice Management roll-up deals owing to several headwinds, including higher interest rates, higher labor costs, staffing shortages, and competition for commercially insured patients.4 Current portfolio company owners do not want to sell at a loss and would prefer to extend their holding periods through at least 2024.5 Therefore, these PE-firms are likely to continue deploying capital into their existing portfolio companies and middle-market platforms while considering and evaluating the occasional carveout.
  • Growing interest in healthcare IT and pharma: In an effort to manage the interest rate environment, PE firms are expected to increasingly target areas like healthcare IT and pharma services.6 One of the factors driving this shift is the increasing potential of artificial intelligence (“AI”) technologies in healthcare IT and innovation.7 Healthcare IT and pharma anticipate benefiting from AI in the following ways:

    — Utilizing traditional AI for improving operational efficiencies, data analysis, and process optimization.

    — Leveraging generative AI in pharmaceutical research and development to discover new drugs, design molecular structures, and optimize clinical trials.


For financial sponsors, the healthcare sector is poised to adapt to the shifting economic and technological landscapes in 2024. The year ahead will introduce key shifts for PE firms as they optimize their current portfolio companies in the provider space. In doing so, they are strategically positioning themselves for their next move, with a focus on the potential for significant innovative advancements and strategic growth in areas like healthcare IT and pharmaceutical services.

The Status of Digital Health

Digital patient engagement is already a $200+ billion market and is expected to grow by over 18% annually through 2032.8 Though the healthcare experience is improving for patients, the pace of that improvement continues to lag behind other consumer-driven industries. Patients are still met with phone calls, paperwork, delayed responses, and frustrating or ineffective technology interfaces.9

Frustrations with the healthcare delivery system and associated technologies are not unique to patients. Inadequate training leads many providers to have poor perceptions of the efficacy of digital health technologies. Additionally, evidence suggests that providers face a range of other technology adoption hurdles, including time- and workload-related barriers, financially related feature limitations, and lack of supervisory support.10

Organizations seeking digital health advancement often face adoption challenges as well, and are confronted with concerns regarding:

  • Data governance, security and privacy: Recent years have seen significant healthcare cybersecurity breaches.11 Ensuring that data access is restricted, secure, and complies with local and federal regulations can be a significant lift.
  • Ease of Use: User-friendly solutions require an intuitive interface to ensure ease of use, which is not always easy to implement. Training gaps may also inhibit a solution’s effectiveness.
  • Scalability: Cost and practicality often dictate that a solution’s scope must span a portfolio of value, not a single offering. The evolving landscape of capabilities in digital health, especially related to automation and machine learning, makes it difficult to confidently deploy solutions at a target opportunity with the appropriate timing and efficacy.

Key Areas of Focus for Digital Health

Despite organizational challenges and evidence of patient and provider frustration, thoughtfully deployed technologies supported by the appropriate infrastructure and training can deliver both clinical improvement and financial value to an organization through:

  • Improved quality of care via clinical decision support systems that help inform treatment decisions while communication is improved through technology, promoting better adherence to care guidelines.
  • Expanded reach of providers and improved patient experience through telemedicine, which is making healthcare more accessible. Additionally, digital health has increased the availability of patient-driven data and provides opportunities for prevention before treatment, as well as an improved patient experience.
  • Cost reduction and workflow efficiency facilitated by remote patient monitoring improves communication between patient and provider and will ultimately help better manage a patient’s condition, reducing reliance on expensive treatment interventions.


Understanding digital health needs can be difficult for healthcare organizations due to the rapidly evolving nature of technology and the complexity of the healthcare ecosystem. Alignment and partnership between clinical, technical, and business leaders within an organization will drive a successful digital health transformation and create value by improving care outcomes, care optimization, revenue collection and access to care. To be successful, organizations should thoughtfully evaluate their existing operating model and establish a desired future state that addresses current shortcomings. Engaging stakeholders to document business needs is critical to making the appropriate choice during the period of vendor evaluation. A technology roadmap rooted in business needs and the operating model framework should be supported through well-documented implementation plans and project management structure.

Changing Dynamics in Diagnostics

The COVID-19 pandemic led to greater adoption of both molecular diagnostics and point-of-care solutions, and drove greater reliability and increased usability of diagnostic testing. In broad terms, the diagnostics market is divided into in vitro diagnostics (“IVD”), point-of-care (“POC”) diagnostics, and diagnostic services.

  • IVD refers to tests based on a sample derived from a human body (e.g., blood, urine, saliva, breath), and does not include medical imaging.
  • Molecular diagnostics, a technology included in IVD, refers to analysis based on genetic material (“RNA” and “DNA”) and is generally used for diagnosing genetic disorders, infectious diseases and cancers.
  • POC diagnostics are a subtype of IVD that provide rapid results and can be conducted outside of a laboratory.

In addition to changes in the diagnostic testing space, the lab segment of the diagnostics market has faced the staffing shortages experienced by the wider healthcare market, particularly for phlebotomists. The shortage concern is not new, but extensive training and qualification requirements provide no simple solution to the challenge.12 Inflation and wage pressure constrain lab profitability, as a facility-facing lab model requires a fleet along with courier and phlebotomy staff, which represents 50% of workforce costs. Reimbursement challenges provide an obstacle to all players in the market. Reimbursement varies depending on the type of test, with routine tests having low levels of reimbursement.13 Finally, regulation has increased, with ordering physicians now required to sign each requisition form, adding to the administrative burden.

Key Areas of Focus for Diagnostics

Early detection and personalized medicine are benefiting from technological advancement spurred by a high prevalence of chronic conditions and growing demand for earlier disease detection and prevention.14 Technology advances are leading to a wider array of conditions or diseases that can be diagnosed via IVD testing. The increased focus on personalized medicine will drive further demand for IVD, including use of companion diagnostics and testing for antibiotic resistance.15 The direct-to-consumer shift in healthcare and availability of at-home tests reduce barriers to care through increased accessibility. As a result, significant amounts of capital are being invested to develop commercial viability of these products. The current market is highly fragmented, but widescale M&A is underway as labs look to gain geographic scale and reach through acquisitions.


During COVID, clinical labs, hospitals and individual practices entered the market, leading to high levels of market saturation. M&A activity will address market saturation, where players look to acquire smaller, regional labs to gain scale and geographic reach. Key players in clinical diagnostics are focused on introducing portable, handheld instruments that can be used easily outside of a laboratory setting. The increase in the number of chronic conditions and diseases will continue to drive demand for diagnostics, with high growth anticipated for the oncology space. The diagnostics market will continue to grow, and molecular diagnostics will account for an increasingly larger share of the market over time.


1: “Private Equity Issue Brief.” AHIP (15, Sep 2022).

2: Becker, Scott, Gamble, Molly, “12 healthcare trends and issues we are following for 2024”, Becker’s Hospital Review (2, Jan 2024).

3: Morse, Susan, “Expectations for lower interest rates to spur healthcare investment in 2024”, Healthcare Finance (02, Jan 2024).

4: “Takeaways From the 2024 J.P. Morgan Healthcare Conference”, PitchBook Data, Inc. (12, Jan 2024).

5: ibid.

6: Mullin, Rick, “Private equity ramps up in pharmaceutical services”, c&en (15, Oct 2023).

7: Davenport, Thomas, Kalakota, Ravi, “The potential for artificial intelligence in healthcare”, Future Healthcare Journal (Jun 2019).

8: “Digital Patient Engagement Market Outlook 2022-2032″, Fact.MR (January, 2024).

9: Israel Junior Borges do Nascimento, Hebatullah Abdulzaeem, Lenny Thinagara Vasanthan, Edson Zangiacomi Martinez, Miriance Lucindo Zucoloto, Lasse Ostengaard, Natasha Azzopardi-Muscat, Tomas Zapata, David Novillo Ortiz, “Barriers and facilitators to utilizing digital health technologies by healthcare professionals”, NPJ Digital Medicine (9, Sep 2023).

10: Orchard, Chris, “8 Challenges to Customer-Driven Health Care”, Harvard T.H. Chan (20, February 2015).

11: “Healthcare Data Breaches Statistics”, The HIPAA Journal (2024).

12: Wang, Yaoyao, “Market Trends in the Diagnostics Industry”, William Blair Thinking (13, Dec 2021).

13: “In Vitro Diagnostics Market by Product and Service (Instruments, Kits, Software)”, MarketsandMarkets (January, 2023).

14: “Point of Care Molecular Diagnostics Market by Product”, MarketsandMarkets (June, 2023).

15: ibid.


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