AI Doctor

CHAPTER 14How to Build and Invest in the Best Health AI Companies

IF THE METHODOLOGY WORKS and the customers have a need for an artificial intelligence (AI) technology, then all systems should go for AI in healthcare, right? Well, not quite! Those two requirements are a great place to start and mean that someone will eventually figure out the right business model. I spent a few years doing just that for various healthcare companies at McKinsey & Company—figuring out the best business model in light of market dynamics, technological innovations, and the competitive environment. I also built a company that sold care management software to providers, which isn't an easy set of customers to sell to. AI‐based solutions will face skepticism and have a tough road ahead before they gain adoption, even if they're solving clear, unmet needs. That's just how it is in healthcare. Changing the practice of medicine isn't easy, but changing the business of healthcare is a little easier. So, what are the right business models for companies that are innovating in healthcare AI? How can the investors separate the winning companies from the pack.

First, there are several business models that could work. Successfully commercializing these technologies to providers, consumers, or life science companies will probably require different business models. Within the healthcare delivery system, business models are notoriously complex and not for the faint of heart. The end users of healthcare products ...