Emerging Markets Digital Health Outlook 2023.pdf

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K8B6-48
April 2023
Emerging Markets
Digital Health
Outlook 2023
Staff Sh ortage an d
Workflow Efficiency
Solu tion s Will L ead to
Tran sformation al
Growth of Digital
Health
Transformational Health
Research Team at Frost &
Sullivan
*This global report has been especially designed for EMIS readers, with unique focus on Emerging Markets.
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*This global report has been especially designed for EMIS readers, with unique focus on
Emerging Markets.
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intending to provide comprehensive, reliable and high-quality industry insights on emerging
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to offer forecasts, metrics and analysis impacting the industrial sectors with unique focus on the
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Section Slide Number
Growth Environment 7
 Key Highlights 8
 The 2022 Digital Health Market—Forecast vs. Actual 9
 Top Digital Health Predictions for 2023 10
 Growth Environment 11
Strategic Imperatives 12
 Why is it Increasingly Difficult to Grow? 13
 The Strategic Imperative 8™ 14
 The Impact of the Top 3 Strategic Imperatives on the Digital Health Industry 15
 Growth Opportunities Fuel the Growth Pipeline Engine™ 16
Market Trends 17
 Market Segmentation 18
 Segment Definitions 19
 Key Trend 1—Shifting Focus Toward Home Health 20
 Key Trend 2—Corrections in Digital Health Investment 21
Contents

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 Key Trend 3—Expanding AI Adoption in Healthcare 22
 Key Trend 4—Mergers & Acquisitions Gains Momentum 23
Macroeconomic Factors 24
 Top 5 Economic Highlights of 2022 25
 GDP Growth Snapshot 26
 Economic Impact on Digital Health, 2023 27
 Inflation and Recession—Investment Impact Analysis 28
Revenue Trends, 2022–2027 29
 Forecast Methodology and Assumptions 30
 Segment Performance—Revenue Forecast 31
 Revenue Forecast Analysis 32
 Revenue Forecast by Region 33
Top 5 Predictions, 2023 34
 Prediction 1—Retail Health Clinics Will Double Their Market Share in the Primary Care Market
in 2023
35
Contents (continued)

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 Prediction 2—70% of Healthcare Providers Will Engage With the Patient Through a Digital 36
 Prediction 3—10% of Brick-and-mortar Retail Pharmacies Will Shut Down and Go Digital 37
 Prediction 4—Home Health Will Grow Slowly in 2023; Big Insurers and Retailers Will Remain
Active in the Home Health M&A Space
38
 Prediction 5—Investment Will Increase by 15% in Healthcare IT Tools Used in Value-based Care 39
Healthcare IT Segment Outlook, 2023 40
 Healthcare IT—2023 Market Snapshot 41
Telehealth Segment Outlook, 2023 42
 Telehealth—2023 Market Snapshot 43

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Growth Opportunity Universe 44
 Growth Opportunity 1—Care at Home 45
 Growth Opportunity 2—Growing Payer-Provider Collaboration 46
 Growth Opportunity 3—Conversational AI and Chatbots 47
Conclusions 48
 Key Concluding Thoughts 49
Next Steps 50
 Your Next Steps 51
 Why Frost, Why Now? 52
 List of Exhibits 53
 Legal Disclaimer 54

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Growth Environment

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Key Highlights
Source: Frost & Sullivan
Project
Scope
Study
Period
2022–2027
Segment
• Healthcare IT
• Telehealth
Geographic
Scope
• Latin America
• Asia-Pacific
• Rest of World
Base Year 2022
Forecast
Period
2023–2027
The Year 2022 for
Digital Health
Prediction Highlights Growth Opportunities What Lies Ahead
Frost & Sullivan's predictions
for 2023 revolve around
primary care, home health,
value-based care,
conversational AI and
chatbots, and digital
pharmacy that will improve
convenience and experience
in patient care. While
immersive technologies, such
as AR, VR, metaverse, and
extended reality (XR), pave
the way for healthcare
delivery transformation,
healthcare cybersecurity will
be critical for providers with
increased patient data
exchange.
Vendors will leverage growth
from interoperability
solutions and services with an
investment boost from health
systems. Demand for payer-
provider collaboration digital
tools will rise as the focus
shifts to value-based care.
Health equity initiatives will
make way for additional
revenue growth opportunities
by extending healthcare
access to the underserved
population. Big tech and large
vendors will benefit from
inorganic growth through
M&A strategies.
Inflation, high energy prices, and
looming economic recession will
influence investment and
purchase decisions. Scalability,
capital allocation, profitability,
and efficiency will be primary
metrics for digital health
investments, as investors are
vigilant in making decisions. The
new business model
transformation, PayVider, will be
seen across major payers and
providers while retail giants
ramp up their strategies to enter
and expand into the primary
care market. AI will be part of
mainstream digital health
operations moving from basic to
advanced healthcare use cases.
Digital health maintained
consistent growth, creating
growth opportunities from
challenges in front of
healthcare providers. The at-
home care segment observed
significant attention with some
big value acquisitions. Virtual
care and telehealth saw solid
growth, with provider and
payer solutions following a
similar trend. In the wake of
declining digital health
investments, mergers and
acquisitions rose.

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The 2022 Digital Health Market—Forecast vs. Actual
Our Predictions for 2022 What Actually Happened: Highlights of 2022
Chatbots will become the first point of contact for
80% of primary care interactions, and conversational
AI will find better use cases.
• Administrative tasks in healthcare used chatbots across the world. In first-
world countries, the usage of chatbots in primary care grew.
• ChatGPT was launched on 30 November 2022. By 4 December, OpenAI
estimated ChatGPT already had more than 1 million users, strengthening the
positive. perception of conversational AI.
Platforms targeted at virtual care management will
gain wider acceptance among providers across the
world to support patients throughout the care
continuum.
Virtual care delivery has seen increased adoption across consumer groups and
majority of providers consider virtual care providers as their competitors.
Behavioral health solutions will focus on quality
outcomes as they move toward value-based
healthcare in the depression segment.
• CMS final rule expands the types of behavioral health providers eligible for
reimbursement under Medicare Part B.
• To support primary care practices in integrating mental health and whole-
person care, securing VBC contracts, and receiving technological support, the
California Advanced Primary Care Initiative has combined 5 health plans and
provider organizations.
Shifts in the care delivery models will prevail with
the aim of healthcare equity.
Members of the CMS Value-Based Insurance Design (VBID) model added a
voluntary Health Equity Incubation Program for CY 2023. The program's goals
include maximizing the design and application of best practices for health equity-
focused interventions.

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Top Digital Health Predictions for 2023
Retail health clinics will double their market share in the primary care
market in 2023.
70% of healthcare providers will engage with the patient through a digital
interface/platform, of which 10% of large healthcare systems will use
conversational AI and chatbots.
10% of brick-and-mortar retail pharmacies will shut down and go digital.
Home health will grow slowly in 2023; big insurers and retailers will
remain active in the home health M&A space.
Investment will increase by 15% in healthcare IT tools used in value-based
care.
Top
Predictions
for 2023

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Growth Environment
• Digital health market has retained the pace of consistent growth with attention focused on at-home care, value-based
care, health equity acceleration, healthcare workforce shortage, and rising healthcare costs. Burning challenges across
these areas have led to lucrative growth opportunities for healthcare IT and telehealth market segments.
• While investment in digital health start-ups has reduced from the boom generated due to COVID-19 pandemic response,
there remains a huge financial commitment from providers and payers for piloting and deploying new solutions and
expanding and scaling existing capabilities.
• Providers and payers will continue to invest in and dedicate resources toward expanding voice conversational artificial
intelligence (AI) in text chat and voice solutions to obtain benefits, such as patient and clinician satisfaction, better patient
outcomes, and lower costs. Physician overload and fewer physicians in the job market are primary drivers.
• The digital front door in healthcare has emerged as a term in the healthcare vernacular to capture the solutions digitizing
and virtualizing healthcare operations across the continuum of care, into the back office, and events extending to
marketing and patient acquisition plus retention.
• Competitive threats from big tech and start-ups will continue from previous years' robust activity in healthcare IT and
digital health. Strong emphasis on AI-based solutions included:
o ChatGPT by OpenAI has emerged (with immense hype) as an artificial intelligence (AI) tool with potential healthcare
applications yet to be seriously explored and measured.
o Google and Deep Mind have launched MedPaLM to develop and commercialize conversational AI.
o These will serve as market drivers to a limited extent, as healthcare may not be the primary focus of ChatGPT and other
semi-automated conversational AI solutions already dominate the sector, especially Microsoft's Nuance, which has an
almost 50% market share.
• The consumerization of healthcare trend will remain strong, with patients placing expectations on healthcare organizations
for seamless user experience and on-demand information and care services much like consumer companies provide. The
convergence of telehealth and remote patient monitoring will be efficient tools for healthcare providers to address these
dynamic consumer demands.

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Strategic Imperatives

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Why is it Increasingly Difficult to Grow?
The Strategic Imperative 8™: Factors Creating Pressure on Growth

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The Strategic Imperative 8™
Customer Value Chain
Compression
Innovative Business
Models
Transformative Mega
Trends
Customer value chain
compression as a result of
advanced technologies,
internet platforms, and other
direct-to-consumer models
that enables reduction in
friction and the number of
steps in customer journeys
A new revenue model that
defines how a company
creates and capitalizes
economic value, typically
impacting its value
proposition, product offering,
operational strategies, and
brand positioning
Global forces that define the
future world with their far-
reaching impact on business,
societies, economies, cultures,
and personal lives
The internal organizational
behaviors that prevent a
company from making
required changes
Internal Challenges
Geopolitical Chaos
Competitive Intensity Disruptive Technologies
Chaos and disorder arising
from political discord, natural
calamities, pandemics, and
social unrest that impact
trade, collaboration, and
business security
A new wave of competition
from start-ups and digital
business models that
challenge the standing
conventions of the past,
compelling established
industries to re-think their
competitive stance
New, disruptive technologies
that are displacing the old, and
significantly altering the way
consumers, industries, or
businesses operate
Collaboration between
previously disparate industries
to deliver on whitespace cross-
industry growth opportunities
Industry Convergence

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• With rising preference from consumers
for convenient and flexible healthcare
services, providers should consider
integrating virtual or hybrid care models
in their care practice.
• Seamless integration, patient data
privacy, and cybersecurity are critical
focus areas for providers.
• While health systems are highly focused
on the impact and ROI of the
implemented solution, the vendor
should focus on an impactful value
proposition.
• Investors’ focus on profitability alerts
vendors to work on sustainable and
profitable business models in digital
health.
• Amazon started the acquisition of
OneMedical at big value, with the
rising popularity of virtual health and
promising growth.
• The trend of major M&A deals will
continue leading to consolidation in
this space.
The Impact of the Top 3 Strategic Imperatives on the Digital Health
Industry
Innovative Business Models:
Hybrid Care Delivery
Geopolitics Chaos: Inflation and
Investment Drought
Industry Convergence: Rising
M&A for Consolidation
SI8
Why
Frost
Perspective
• Increasing healthcare demand and a
limited workforce have compelled
healthcare providers to utilize digital
health solutions.
• Virtual and hybrid care delivery models
are gaining popularity and effectively
address provider workforce and
healthcare cost issues.
• The Russo-Ukrainian War and imminent
economic recession influence
investment and purchase trends across
industry sectors.
• Purchasers and investors are highly
diligent with their decisions, and the
focus on justification and returns is high.
• Venture investment has reduced, but
investors have been targeting their
high-growth digital health segments
through mergers and acquisitions.
• Big techs, insurers, and retail giants
are investing in digital health markets,
such as home health, and pharmacy
participants are expanding into
telehealth.

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Growth Opportunities Fuel the Growth Pipeline Engine™
The Growth Pipeline Engine™
The Innovation Generator™
Analytical
Perspectives

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Market Trends

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Market Segmentation
• Some technologies, such as cloud, 5G, IoT, blockchain, robotics, and data and analytics (AI/ML), are crucial enablers for segments of healthcare IT and telehealth.
• For quantitative analysis of the above segments, Frost & Sullivan considered products, software, and services. Hardware, IT support, predictive maintenance, and managed and
professional services are not accounted for in the sector-wise market forecast.
Market size and forecast are provided up to the healthcare IT and telehealth segment level.
• Provider
Transformation
• Payer
Enablement
• Patient
Engagement
Non-clinical
Clinical
Digital Health
Healthcare IT Telehealth
Virtual Visits
mHealth
Remote Patient Monitoring
Personal Emergency
Response Systems (PERS)

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Segment Definitions
Frost & Sullivan defines digital health as data application for healthcare delivery using computational and
telecommunications technologies to support business process workflow, clinical workflow, and patient data management.
The goal of digital health is to achieve better patient outcomes while improving efficiency and containing costs through
provider and payer transformation and more robust patient engagement.
The digital health sector consists of solutions, such as infrastructure, platforms, software suites, IT services, cloud-based
solutions, telecommunications, sensors, telemedicine, and Big Data. Digital health technologies, such as cloud, 5G, IoT,
blockchain, robotics, and data and analytics (AI/ML), are crucial enablers for healthcare IT and telehealth.
Healthcare IT
• This includes enterprise IT infrastructure and several evolving solutions that permit healthcare professionals to offer a
more efficient and personalized workflow for operational, clinical, and patient-centric solutions.
• It can be sub-segmented into clinical and non-clinical solutions based on their application across the care continuum.
o Clinical IT includes vendor products and solutions, such as electronic medical and health records (EMR/EHRs),
clinical decision support systems (CDSS), clinical documentation improvement (CDI), data and analytics (AI/ML)
solutions, using patient datasets, such as population health management (PHM), social determinants of health
(SDoH), and patient clinical data.
o Non-clinical IT includes vendor products and solutions, such as revenue cycle management (RCM), hospital
operational efficiency and workflow management solutions, inventory management solutions, clearinghouse
solutions and services, enterprise resource planning (ERP), business intelligence, and analytics solutions.
Telehealth
These solutions enhance virtual care capabilities by creating network-based solutions for all stakeholders. It comprises
remote patient monitoring (RPM) that includes products and services in chronic care, critical care, and transitional care,
virtual visits that include audio/video conferencing (telecare/telemedicine), mHealth (mobile apps and consumer-facing
health apps), and Personal Emergency Response Systems (PERS).

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Key Trend 1—Shifting Focus Toward Home Health
• Healthcare providers and consumers are shifting their focus from traditional hospital-based healthcare to at-home healthcare.
• Patients prefer home health due to the convenience, flexibility, and cost savings. In addition, home health is a highly suitable
alternative for the rapidly growing elderly population across the world.
• Such a shift toward home health has attracted attention from insurers and retailers, leading to major M&A deals in this sector in
the last few years.
• Increasing healthcare burden
• Rapidly growing geriatric population
• Poor inpatient access
• Rising healthcare cost
• Clinician burnout and limited healthcare workforce
Factors Driving Home Health Adoption by Providers
• Home setting convenience
• Cost effective
• Reduced risk of hospital-acquired infections
• Reduced traveling, saves time
• Suitable for the elderly and disabled population
Factors Driving Home Health Adoption by Patients

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Key Trend 2—Corrections in Digital Health Investment
• The COVID-19 pandemic intensely highlighted the importance of digital health in healthcare practices. During the
pandemic, when healthcare practices faced the most challenging time dealing with patient care, digital health played an
impactful role.
• As a result, there was a surge in innovation activities and venture funding in the digital health segment.
• Digital health funding during the pandemic accelerated its adoption and technology transformation by more than a few
years.
• This investment trend started its downward trajectory in 2022 with the subsided pandemic and the effects of looming
economic recession and inflation. In 2022, venture partnership funding across regions decelerated, closing at 30% to 50%
on average and lower than in 2021.
• The declined investment in 2022 is still almost double the pre-pandemic investment values. Although 2023 will be tricky
and challenging for digital health, this market holds the potential to sustain this momentary setback and will show
promising growth in the coming years.
Source: Statista; Frost & Sullivan

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Key Trend 3—Expanding AI Adoption in Healthcare
• AI has been extensively used in workflow efficiency improvement and care delivery enhancements across healthcare systems
and will continue to witness expanding applications in healthcare processes.
• Healthcare systems are adopting AI solutions to automate business processes and provide accurate diagnoses and treatment
plans.
• AI-based results enhance preventive care, quality of life, and patient outcomes, improving customer satisfaction.
• AI implementation in healthcare drives innovation and creativity and enables organizations to enter new markets with AI-
based solutions.
• Workflow efficiency and care
coordination improvement
• Predicting events in the future, such
as hospitalization and mortality
• Diagnostic assistance
• Clinical decision support
• Personalized comorbidity
management
• Pattern identification, such as
phenotypical clusters
• Chatbots (e.g., ChatGPT) application
for services, such as symptom
checking, triage, and scheduling.
Clinical Use Cases for AI-based
Solutions
F&S Survey on Purpose of AI Implementation in Healthcare
Organizations
26%
23%
27%
32%
26%
26%
30%
20%
31%
30%
35%
0% 20% 40%
Rapid response to market demand & disruption
Launch new products and services
Improve operational efficiencies
Improve customer experience and satisfaction
Hire and retain talent
Grow revenue
Expand to new markets—segments or regions
Enhance sales and marketing effectiveness
Boost creativity and innovation
Data analytics
Automate business processes
Respondents
Healthcare Artificial Intelligence Growth Opportunities,
Q. For what purpose is your organization implementing or planning to implement AI technologies? Multiple
answers. Base: n = 81. Source: Frost & Sullivan

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Key Trend 4—Mergers & Acquisitions Gains Momentum
• While digital health investments dropped in 2022, mergers and acquisitions (M&A) deals regained
momentum.
• There was consistent growth in the number of M&A deals in 2022. While the number was lower
compared to M&A deals in 2021 (COVID-19-driven boost), it outnumbered M&A deals in 2020.
• The M&A trend will continue in 2023 as a suitable alternative to drying investment rounds and IPO
challenges.
• Rising M&A trends are supported by start-up exits driven by unfavorable IPO markets, shrinking
investment sources, and substantial demand from buyers to leverage opportunities enabled
through M&A.
• Some big tech and other digital health companies are acquiring competitors to consolidate the
market.
• While the acquisition is a graceful exit option for companies struggling to raise capital, it is an
opportunity for established and big tech companies to enter or expand their presence in the
digital health market.

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Macroeconomic Factors

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Top 5 Economic Highlights of 2022
Soaring inflation saw rapid monetary tightening as the Russo-Ukrainian War further exacerbated inflationary pressures.
Supply chain disruptions had already seen commodity prices trending upward. With Russia’s leadership in crude oil
and precious metal exports and Ukraine’s agricultural exports strength, the war’s impact on the commodity price
levels was significant. In March 2022, the fears of Russian sanctions saw nickel and copper prices increasing 250%
and 90%, respectively. Oil prices reached record highs as countries cut dependency on Russian imports, with the
price of Brent crude oil reaching $123 per barrel in early March 2022 and continuing to average above $100
through October 2022.
Recovery from the effects of the COVID-19 pandemic drove growth in major economies, but Russia’s invasion of
Ukraine in February 2022 dampened the pace of growth, exacerbated food and fuel inflation, and weighed heavily
on growth prospects. Emerging markets and developing economies, which grew by 3.9%, faced record-high
inflation levels and tighter credit conditions.
3.9% for emerging
markets and
developing
economies1
1
Supply-side shocks to food and fuels in light of the Russo-Ukrainian War warranted rapid rate hikes as nations
experienced inflation spiking to double digits in a matter of a few months. Aggressive monetary policy tightening
was a norm in 2022 as interest rates rose across Latin America, the Middle East, and Asia.
2
Supply chain disruptions continued in 2022 as the Russo-Ukrainian War and nationwide lockdowns in China led to
severe shortages of raw materials, especially industrial equipment, machinery, and agricultural raw materials, in H1
2022. Delayed and cancelled cargo shipments, increases in one-way pickup rates, and port shutdowns led to price
surges that seeped into production costs and inevitably transferred to consumers.
4
Energy costs increased manifold, equally impacting demand-side and supply-side participants. As transport costs
rose across the globe, variable costs shot up for production and trade, weighing on profit margins across industries.
As households experienced a surge in the cost of living, purchasing power was constrained, weighing on consumer
spending sentiments.
5
3
Steep interest rate
hikes amid historic
inflation levels
Further upward war-
induced commodity
price pressures
War and lockdowns
further disrupted
supply chains
Energy price increases
added to household
cost of living pressures
and business transport
costs
Note: Data and analysis stands updated as of December 2022.
1Emerging markets, and developing economies as defined by the International Monetary Fund
(IMF)
Source: IMF; OPEC; World Economic Forum; Frost & Sullivan

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GDP Growth Snapshot
Note: Data and analysis stands updated as of 3 January 2023 for India, and China and as of 15 December 2022
for the others. Negative data is in red. Data for India and Egypt are presented for fiscal years. For example,
India’s 2022 data refers to fiscal year April 2022 to March 2023; Egypt’s 2022 data refers to fiscal year July 2021
to June 2022. All 2022 figures are estimates and 2023 figures are forecasts, unless otherwise noted.
GDP Growth Rate, Selected Economies, 2022–2023
Legend
2022 (estimate)
2023 (forecast)
Unit: %
Brazil
Egypt
China
India
Indonesia
Saudi Arabia
2.6 1.3
6.6
4.4
3.1 3.5
6.8 5.8
5.1 2.2
9.7 3.0

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Economic Impact on Digital Health, 2023
While smaller rate hikes and potentially even some rate cuts are expected in 2023, interest rates will remain
elevated.
1
Growth concerns and
easing inflation will
warrant smaller rate
hikes.
• Lower inflation rates could result in reduced pricing pressures for healthcare products and services, including digital health solutions, which may
cause increased demand for these products. In addition, a reduction in interest rates could make it easier for digital health companies to access
financing and invest in R&D, leading to the development of more innovative and effective solutions.
• However, it is important to note that the impact of interest rate changes on the digital health industry is not straightforward. If interest rates remain
high in some regions, it could reduce investment and growth opportunities for digital health companies operating in those areas.
• Economy-wide layoffs could reduce the talent pool available for the digital health industry, particularly for roles requiring specialized skills or
experience, making it more difficult for digital health companies to attract and retain top talent.
• However, job gains in different industries can cause an increase in demand for healthcare services, including digital health solutions, as people
return to work and require healthcare support and coverage.
• Finally, if the professional and business services segment experiences weaker job gains, this could cause reduced demand for digital health solutions
that serve this sector. However, digital health companies that prove solid ROI can have the advantage of offering company employees some cost-
effective healthcare solutions due to reduced business budgets.
Economy-wide layoffs should be avoided, given the challenges in sourcing talent and the need to re-staff in
the post-recession/slowdown period. However, white-collar industries, such as tech and banking, will remain
susceptible to job losses given the deleverage of work-from-home models and business cost pressures.
2
Avoiding deep, cross-
industry layoffs;
white-collar workers
are at higher risk.
Note: Data and analysis stands updated as of 3 January 2023 Source: Frost & Sullivan

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Inflation and Recession—Investment Impact Analysis
Description
Russia’s invasion of Ukraine in February 2022 dampened the pace of growth, exacerbated food and fuel inflation, and weighed heavily
on growth prospects. Emerging markets and developing economies, which grew by 3.9%, faced record-high inflation and tighter credit
conditions. China’s Q1 2023 slowdown will restrain economic growth.
Broad Impact on Healthcare and Digital Health Sector
The digital health investment trend has corrected across key geographies after the COVID-19 pandemic. Inflation and looming
recession further impacted the flow of investment. In 2022, the venture partnership funding across regions decelerated, closing at
30% to 50% on average and lower than in 2021. However, investors will be more diligent while making investment decisions, focusing
more on business model profitability than overall growth.
Digital Health: Impact of Inflation and Recession, 2022–2023
Stakeholder Description Impact
Start-ups
Digital health start-ups must ensure profitability
and minimal risk in their business models.
High
HealthTech
Vendors
Digital health vendors should present a strong
case and solid value propositions for their
solutions, demonstrating substantial ROI.
Medium

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Revenue Trends, 2022–2027

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Forecast Methodology and Assumptions
• The forecast presents a comprehensive analysis of the digital health market with respect to market potential
and key market dynamics.
• Secondary research sources, such as the in-house Frost & Sullivan database, Frost & Sullivan’s Decision Support
Database, company annual reports, scientific journals, and industry-related articles, have been utilized.
• Regional estimates are provided. For the forecast, additional factors that impact the market have been
considered. These include:
o Regional policies, practices, and regulations
o Overall market potential and regional trends
• The forecast methodology considers supply- and demand-side dynamics, pricing and willingness to pay for the
solutions, and the presence or absence of a policy that promotes the adoption of new digital technologies in
healthcare as a whole and within payer and patient segments.
• The forecast methodology considers the historical performance of regions in different segments to arrive at
forecast sales.
• The revenue depicted includes new software licenses, software upgrades, annual maintenance contracts,
revenues from professional services, and usage-based revenue, such as OPEX models.
• Additional assumptions include vulnerability of market numbers and forecasts to risks, such as technological,
regulatory, legal, and geopolitical uncertainties, and any currency rate fluctuations.
• The study period is 2022–2027, with 2022 as the base year and 2023–2027 as the forecast years.

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Segment Performance—Revenue Forecast
• Healthcare IT solutions will be driven by increased healthcare demand, clinician burnout, and cost pressures on healthcare providers. The role of
healthcare IT solutions in hospital workflow management, administrative work automation, and AI assistance for physicians will be key factors
supporting this segment. Payer IT solutions will boost healthcare IT demand to improve claims and financial process outcomes and utilize patient data
analytics for health plan improvements.
• Telehealth adoption has declined compared to peak levels reached during the pandemic. However, current telehealth adoption is far better than pre-
pandemic and will gradually grow toward pandemic-level adoption in 5 to 10 years.
• With workforce shortages, changing patient demands, and rising healthcare costs, telehealth is witnessing growing preference among patients and
healthcare providers.
Note: All figures are rounded. The base year is 2022. Source: Frost & Sullivan

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Revenue Forecast Analysis
• The digital health market peaked during 2020 and 2021 with COVID-19 pandemic-driven investment and revenue growth.
This peak investment spree slowed down in 2022 owing to geopolitical chaos and economic recession on the corner.
• Digital health funding declined by more than 40% in 2022 compared to 2021. Digital health investment in 2021 was the
highest during the last decade.
• Amid the investment shrinkage, the digital health market has maintained promising growth, with big techs and established
players achieving consistent revenue growth in 2022. Most of these players have attained revenue growth, continuing their
focus on digital health sectors, such as EHR, remote patient monitoring, telehealth, and the healthcare cloud.
• Rising concerns related to staff burnout, shortage of professionals, and a large amount of healthcare data have continued to
drive IT adoption across healthcare providers. Healthcare payers emphasize collaboration with providers and payers aiming
at value-based care through care quality and decision-making improvements.
• The telehealth market, supported by strong convergence with RPM, will continue inching toward expansive adoption.
Remote patient monitoring (RPM) has seen promising growth with its critical role in chronic disease management and
overall healthcare cost reduction. With the rising popularity of at-home care and RPM's support, the segment will continue
to attract attention from health tech vendors and healthcare providers.

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Revenue Forecast by Region
Latin America
• Limited healthcare access and high cost are key challenges in Latin America.
• Increasing consumer demand for digital health services.
• Steady investment rise in the last few years focusing on digital health transformation.
Asia-Pacific
• Average physician-to-population ratio, high healthcare demand, and healthcare cost
pressure drove the digital health market in the region.
• Health equity goals and government initiatives will present growth opportunities for
telehealth technology vendors.
• Consumer health wearables, remote patient monitoring, and AI tools will see a surge in
uptake with their vital role in addressing healthcare equity and workforce challenges.
Rest of World (RoW)
• Digital health investment is rising consistently, with a focus on virtual care, remote
patient monitoring, and artificial intelligence.
• Awareness and interest in digital health services are rising in Middle East and North
Africa.
• KSA and UAE will be the frontrunners in the digital health market in RoW.
Digital Health Industry: Revenue Forecast by Region, 2022–2023
Latin
America
2.1%
$5.01 B
18.6%
RoW
1.0%
$2.29 B
13.4%
Asia-Pacific
13.8%
$34.83 B
22.5%
2022 Market Share
Projected 2023 Revenue
Projected 2022–2023 Growth Rate
Aspirational forecast is considered for the segment split. Note: All figures are rounded. The base year is 2022. Source: Frost & Sullivan

K8B6-48 34
Top 5 Predictions, 2023

K8B6-48 35
Prediction 1—Retail Health Clinics Will Double Their Market Share in
the Primary Care Market in 2023
Trends/Themes
• 2022 has been a year of M&A and partnerships from big retail pharmacies in the primary care industry and is expected to continue
to grow.
• Big retail pharmacies are defining their business model and role in the care continuum. They have seen a growth opportunity in
primary care as they leverage being the first point of contact with many patients while owning a distribution of brick-and-mortar
facilities across countries and an established brand among consumers.
• Competitive intensity among primary care providers will increase significantly. Competitors with higher patient engagement and
satisfaction will have the advantage. As this is a new strategy, small and medium-sized pharmacies will be vocally resistant to it.
• As a first-ever application of this model, big retail pharmacies will experience failures and successes throughout 2023 as they adjust
to their new venture.
• Digital health and healthcare IT companies expect a rise in partnerships from big retail pharmacy participants in primary care.
Implications
The primary care sector is among the top targeted ones by retail and tech giants and will continue to be so with further expansion
plans in 2023.
Source: Press Releases of the Discussed Companies; Frost & Sullivan

K8B6-48 36
Prediction 2—70% of Healthcare Providers Will Engage With the
Patient Through a Digital Interface/Platform, of Which 10% of Large
Healthcare Systems Will Use Conversational AI and Chatbots
Trends/Themes
• The pandemic made all healthcare providers across the world adopt a digital interface to filter appointments and schedules from
COVID-19 to non-COVID-19-related requests. This digital requirement for patients saved providers extreme pain during the pandemic
overdemand.
• 70% of providers worldwide will use a digital interface for basic and administrative requests, such as scheduling appointments,
selecting the closest brick-and-mortar facility, choosing a doctor of preference, pre-sending health administrative patient
information, triage assignation, or requesting a COVID-19 in-person testing.
• The ChatGPT phenomena of late 2022 will positively influence conversational AI acceptance and turn chatbots into an attractive tool
for patient engagement and healthcare provider assistance in first-world countries. Microsoft recently made a $1 billion investment
in ChatGPT, and according to recent statistics, ChatGPT has been used by more than 500 million people worldwide.
• Healthcare digitalization and consumerism push vendors to attract patients through digital platforms that provide convenience,
accessibility, and are user-friendly. As digital platforms become the patient's first point of contact, it is critical to have a robust
solution to support technology that guarantees a smooth patient experience.
Payers and providers now compete with on-demand and direct-to-consumer telehealth and primary care healthcare providers. They
must re-double digital transformation efforts and provide an engaging patient experience through a digital front door to foster
improved healthcare equity, patient care, and outcomes while reducing costs and remaining competitive.
Implications
Healthcare providers will prefer digital interfaces for patient engagement to reduce work burden and improve patient communication.

K8B6-48 37
Prediction 3—10% of Brick-and-mortar Retail Pharmacies Will Shut
Down and Go Digital
Trends/Themes
• Big retail pharmacies have all announced cutbacks in hours and closures as the industry refocuses on online delivery.
• CVS has chosen to shut down 900 facilities during 2021–2023 as part of its long-term business strategy betting on the digitalization
of care and depending on primary care facilities to expand their services.
• The pandemic has accelerated healthcare digitalization and consumerism, and it is here to stay. As regulatory bodies and patients
look for more accessible and affordable care, the healthcare system will change to a hybrid model of care, where virtual and in-
person care will cooperate to achieve better outcomes.
• Brick-and-mortar selection criteria will be mainly influenced by the possibility of providing primary care delivery in the facility. With
medication home delivery selected by an increasing number of consumers since the COVID-19 pandemic, having more than 2
facilities within walking distance from each other does not justify its economic costs anymore.
• The digitalization of care and healthcare consumerism are reducing the necessity of brick-and-mortar facilities in healthcare.
• Retail pharmacies, hospitals, and providers that relied on the number of facilities to reach out and engage with patients can now
reach out to more patients at a lower cost through digital platforms and tools without compromising quality.
• Health IT vendors will witness continuous growth in demand for their IT services, including cloud, AI, analytics, ML, and digital
platforms, for retail pharmacies.
Implications
With healthcare consumerism and consumer convenience, digitalization will be the long-term strategy for retail pharmacies.

K8B6-48 38
Prediction 4—Home Health Will Grow Slowly in 2023; Big Insurers
and Retailers Will Remain Active in the Home Health M&A Space
Trends/Themes
• Providers struggle with the ongoing issues of personnel shortages and burnout. The home care industry had significant investments
and product developments at stake, consequently not favouring CMS' final decision. 2023 will bring its share of opportunities and
challenges for the home health sector:
o Due to provider issues with worker recruitment and retention, there will be fewer home health agencies.
o Home health rate cuts are another aspect. The 30-day payment rate was adjusted by 7.85% permanently due to the home health
final payment rule, which immediately reduced the number of people who could get home health care.
• Reimbursement regulations will affect home health utilization deeply, and incentives will vary regionally. Most governments will
decide on final reimbursement regulation on home health care in 2023 after the COVID-19 pandemic emergency regulations end. In
addition, inflation and economic recession will continue to raise home care costs while understaffing continues.
• 2023 circumstances will not affect the industry's desire to integrate home health into the care continuum to achieve a hybrid model
of care.
• As stakeholders influence government institutions to make home care affordable and feasible, growth is expected to carry on
throughout 2023, albeit slowly.
Implications
Big insurers and retailers will leverage expansion opportunities through home health M&A driven by reimbursement and investment
challenges.

K8B6-48 39
Prediction 5—Investment Will Increase by 15% in Healthcare IT Tools
Used in Value-based Care
Trends/Themes
• Social Determinants of Health (SDoH) analytics, population health management, and value-based care contracting tools will be part
of healthcare IT companies' product development agenda.
• Healthcare organizations will be on the lookout for start-ups offering ad hoc solutions to either invest, merge, or acquire.
• Healthcare IT companies supporting value-based care will see a greater demand for their products and will prioritize product strategy
to be at the top of the competition.
• Care providers will make value-based care a long-term priority.
• Healthcare organizations will invest in technology tools and M&A to achieve value-based care goals and will consider it as a high
priority, with long-term strategic planning.
Implications
Increasing focus on value-based care and SDoH by healthcare organizations across the world will drive the demand for healthcare IT
tools for value-based care.

K8B6-48 40
Healthcare IT Segment
Outlook, 2023

K8B6-48 41
Healthcare IT—2023 Market Snapshot
Note: All figures are rounded and for aspirational scenarios.
• Although the pandemic is in control now, healthcare providers still face lingering challenges of professional shortages, employee burnout, and
increasing demand for services. Healthcare payers are tackling increasing losses and reducing margins, further fuelled by rising demand.
• As healthcare providers opt for healthcare IT (HIT) solutions to tackle these challenges, they emphasize return on investment (ROI) and cost
savings. With inflation, rising economic burden, and recession, healthcare providers are cautious toward their HIT investments and focus on
effective ROI assurance after adoption.
• EHR/EMR and CDSS will continue their momentum, while population health management and SDoH will gain attention with the increasing
importance of healthcare data in care improvement. There will be a focus on AI’s role in hospital workflow solutions, enterprise resource
planning, and patient triaging solutions that will ease the burden on healthcare professionals.
• Healthcare payers will pay attention to better operational efficiency and care improvement. Standardization and automation of payer
operations, including RCM and payment integration with cloud-based HIT platforms, can help payers save costs significantly and improve
operational efficiency.
• In addition, payers and providers must collaborate better by utilizing dedicated HIT solutions that enable efficient connectivity. Payer-provider
collaboration can improve entire patient care, save cost and time, reduce provider abrasion, and address claims management challenges.
With healthcare workforce shortage, rising healthcare costs, and
reduced payer margins, hospital workflow management digital tools
and payer process automation solutions will see a boost in adoption.
Focus on health equity initiatives to improve healthcare access
worldwide will drive the investment and growth of HIT solutions
targeting SDoH.
Looming economic recession and rising inflation may restrict the
budget of providers and payers for healthcare IT solutions.
A shortage of skilled IT workforce with digital literacy may restrain the
efficient utilization and outcomes of digital health solutions.
Drivers and Restraints

K8B6-48 42
Telehealth Segment Outlook, 2023

K8B6-48 43
Telehealth—2023 Market Snapshot
• Telehealth, highlighted during the COVID-19 pandemic, has introduced patients to the convenience and flexibility of care at home, making it
the preferable care option for many patients worldwide even after pandemic restrictions lifted.
• Providers reluctant to embrace telehealth adopted it during the pandemic and are now focusing on developing telehealth and virtual care
capabilities to combat healthcare workforce shortage and cost reduction and to cater to dynamic patient demands.
• After a dip followed by a pandemic-driven spike in telehealth usage, the market has now settled at a consistent usage level. Even though
telehealth usage has dropped, it is several folds higher than the pre-pandemic level. Kaiser Permanente reported that 38% of its ambulatory
visits are conducted virtually compared to 16% in the pre-pandemic period.
• At-home healthcare is gaining popularity and attracting significant investments from big techs, retail giants, and insurers, leading to notable
acquisitions.
• While the virtual care model is the most popular, saving cost and time for patients and providers, some providers are adopting a hybrid care
model with a combination of telehealth and in-person care. It involves primary consultation through telehealth and connects with physicians
for further needs, easing the burden of in-patient visits to some extent.
The popularity and efficiency of virtual and hybrid care delivery
models among patients and providers will drive the demand for
telehealth services and remote patient monitoring solutions.
A large proportion of consumers connected to digital health
touchpoints provides a strong platform for wider telehealth adoption.
With the increased adoption of virtual and hybrid care models,
seamless integration of virtual and in-patient care throughout the
organization is a major constraint.
Data privacy and cybersecurity may raise restraints to remote patient
monitoring with a large amount of patient data generated and shared.
Drivers and Restraints
Note: All figures are rounded and for aspirational scenarios.

K8B6-48 44
Growth Opportunity Universe

K8B6-48 45
Growth Opportunity 1—Care at Home (continued)
Context and Definition Call to Action
• The consumerization and retailization of healthcare
for cost-efficiency, quality, accessibility,
transparency, and convenience is driving the shift
from hospital-based care to care at home (home
health).
• Remote patient monitoring (RPM) and at-home
diagnostics tests boost care at home by supporting
remote access to patient health.
• Care at home is growing as big-tech companies,
insurers, and retailers continue to invest in and
acquire home health companies.
• To face competitive threats from non-incumbent
care-at-home providers, traditional healthcare
providers must understand and strategically pursue
opportunities to enter and grow their services in the
care-at-home market.
• Traditional providers and payers must rethink their
patient and member engagement and retention
strategies as they face fierce competition from non-
traditional participants.
• With growing emphasis on home care and telehealth
reimbursements, healthcare providers should work
on extending their care-at-home service offerings
with long-term growth objectives.

K8B6-48 46
Growth Opportunity 2—Growing Payer-Provider Collaboration
(continued)
• The pressure is rising on payers and providers due
to increasing healthcare costs, changing patient
demands, and government mandates.
• The increasing focus on value-based care drives
providers and payers to collaborate for improved
patient care, financial optimization, and better
member experience.
• A recent HealthSparq survey of 100 executives
found that more than 90% of providers seek greater
collaboration with payers.
• Providers and payers should seek new partnership
opportunities for mutual aims of reducing patient
care costs and improving healthcare outcomes.
• Insurtechs and health IT vendors offering an
integrated platform to support provider clinical and
payer claims data exchange for 360-degree patient
longitudinal records and a unified view should
leverage opportunities from these collaborations.
• Retail health participants must offer significant
opportunities to reach further into the community
and patient populations to perform preventive care
and catch major ailments earlier to decrease
incidences of severe illness and save hospitalization
costs.

K8B6-48 47
Growth Opportunity 3—Conversational AI and Chatbots (continued)
• Chatbots are primarily used to streamline patient
and provider processes and interactions across the
continuum of care, from pre- to at- to post-care.
• AI algorithms can assist patients through automated
channels, including chatbots, portals, and text
messaging.
• Clinically intelligent rules-based (machine learning)
chatbots are more sophisticated and provide utility
in triage and assisting clinicians with tasks, including
dictation.
• Healthcare organizations will focus on automation in
administrative activities, assistance for patient care
activities, and implementing AI to improve the digital
patient experience.
• Providers and payers should continue to invest in
and dedicate resources to expanding the reach of
chatbots for various benefits, such as improved
patient satisfaction and outcomes and lower costs.
• Vendors should focus on offering clinically intelligent
rules-based chatbots to advance patient triage and
assist clinicians with tasks beyond simple dictation to
meet higher-level provider and payer needs.
• Providers and payers should explore integrating data
from patient marketing and acquisition into the
patient record (not necessarily the health record) to
gain additional insights into patient retention (e.g.,
ongoing marketing) and care delivery.

K8B6-48 48
Conclusions

K8B6-48 49
Key Concluding Thoughts
Healthcare providers realizing the importance of virtual and hybrid care delivery models in
addressing workforce shortage, high patient demands, and cost challenges will propel the adoption
of telehealth and remote patient monitoring solutions.
Digital health vendors must ensure high-value propositions for their solutions, and start-ups should
focus on profitability and robust business models. Digital health consumers will be concerned
about ROI on solution purchases, while investors will fund the start-ups with profitability and a
robust business model.
Venture funding and M&A deals are inclined toward the home healthcare sector with strong
growth opportunities from healthcare challenges. The huge prevalent population and need for
dedicated digital health solutions have attracted major investment within oncology and
cardiovascular indications and will continue this trend in 2023. Big tech and retail giants’
investment patterns highlight the confidence in the growth potential of these sectors.
Healthcare payers and providers will collaborate to tackle economic pressure, create value-based
care strategies, and improve the digital patient experience. Reducing payer revenue margin and
provider workforce shortage will drive the adoption of digital payer-provider connectivity solutions.

K8B6-48 50
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K8B6-48 51
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K8B6-48 53
Exhibit Slide Number
F&S Survey on Purpose of AI Implementation in Healthcare Organizations 22
GDP Growth Rate, Selected Economies, 2022–2023 26
Digital Health: Impact of Inflation and Recession, 2022–2023 28
Digital Health Industry: Revenue Forecast by Region, 2022–2023 33
List of Exhibits

K8B6-48 54
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