Digital healthcare will be key to access, workforce issues: Ziegler

The potential of artificial intelligence seems limitless, but the senior living industry must address several issues to reach a more person-centered, value-based care system, according to a new report on digital health and AI from specialty investment bank Ziegler.

In the new white paper, Ziegler highlighted the latest digital health trends, saying that the digital health industry is at an inflection point, with AI at the heart of its evolution. The paper, “Deconstructing the Digital Health & AI Industry: Part V,” builds on a series of white papers about the evolution of digital health. The most recent one looks at driving the effective and safe implementation of digital and AI solutions across the healthcare sector.

The digital health industry, according to the authors, is at a unique inflection point. The aging population is creating a shortage of caregivers, the incidence of chronic conditions is increasing, and rising costs are challenging access to affordable care. From a technology standpoint, algorithmic advances, large volumes of accessible data and an “exponential increase” of computational power is shifting AI from a niche tool  to a “groundbreaking democratized solution,” the paper states.

When used effectively, AI and digital health solutions can improve access to healthcare, reduce healthcare costs, optimize the workforce, guide individuals to appropriate levels of care, improve treatment and therapy adherence to reduce the strain of chronic diseases on the healthcare system, and increase empathy and patient engagement, according to the authors.

Among the favorable tailwinds pushing the industry forward are increasing AI adoption rates by consumers and providers, increasing investment in digital platforms, legislative support for provider reimbursement for virtual care, and growing data infrastructure.

Remaining headwinds, however, include inconsistent regulatory frameworks, tangible returns on investments, trust and adoption of clinical AI applications, and capital market turbulence.

The report comes at a time when senior living demand is outpacing new supply as occupancy rates continue to rise amid a rapidly growing aging population, the authors note. According to NIC MAP, the current pace of senior living development is expected to result in a 550,000-unit shortfall by 2030. Such a gap would lead to a $275 billion investment shortage, which could increase to $1 trillion by 2040. This shortage of new senior living options is driving the need for home healthcare solutions, Ziegler said. 

“The rapid adoption of trusted, evidence-based, clinical and operational AI-powered digital health solutions will be critical and potentially the only pathway to address the access and workforce shortage crisis, as well as the patient flow challenges that are entrenched in the US healthcare system,” the paper reads.

Expanding Medicaid access

The paper also highlights a growing segment of the older adult population: middle-income individuals referred to as “the Forgotten Middle,” who don’t qualify for Medicaid long-term care but lack the financial resources to afford private assisted living or in-home care.

Members of this group, according to the authors, are left without viable options for affordable housing and services. As a solution, the authors said Medical policymakers have a “unique opportunity” to expand virtual care coverage to include those middle-income older adults, favorably affecting care and Medicaid budgets. 

By 2033, the number of middle-income older adults will almost double to 16 million, with a significant portion experiencing mobility limitations (56%) and cognitive impairments (31%), according to research cited by Ziegler. Despite those care needs, 72% of middle-income older adults will not have enough financial resources to afford private-pay assisted living, that study, published in Health Affairs, found.

As those older adults continue to age and require increasing levels of medical and personal care, Medicaid’s role in long-term care will need to evolve, according to the paper. Policymakers, the authors said, should explore expanding Medicaid eligibility, creating alternative long-term care funding models and investing in home- and community-based services.

Part I of the white paper series, published in 2016, featured more than 200 companies and focused on the growing telehealth industry. Part II looked at improving access points of delivering virtual care. Part III focused on the ability of virtual care to help clinicians do more good for more people. Part IV, published in 2023, outlined technological progress in the wake of COVID-19, highlighting more than 830 digital health companies.