This text is a part of a sequence sponsored by HLTH highlighting matters that will likely be mentioned on the HLTH conference November 13-16 in Las Vegas.
For those who have been to sum up healthcare funding developments in 2022, behavioral well being, healthcare on demand and automation can be among the many most lively areas of funding. Though digital health funding fell in the third quarter, traders attributed it to elements such because the rise in rates of interest, restricted marketplace for preliminary public choices, and preparation for the danger of a recession.
Different noticeably enticing areas embody pharma tech and well being fairness. Right here’s how some traders are healthcare funding. They every responded to emailed questions.
Steve Kraus is a companion with Bessemer Venture Partners which invests throughout phases seed to development. He described the agency’s funding technique as taking “a roadmap-driven strategy to funding”. He mentioned they like to grasp the place developments in know-how, and regulation are driving change and adoption of latest services and products in healthcare.
“We’ve additionally spent the final yr revamping our views and in addition finding out key developments of how well being tech companies scale over time throughout enterprise fashions (initial report here)… Within the final two years we invested earlier in seed and A [stages], given froth and valuation disconnect with fundamentals of scalability of enterprise fashions, however we need to make investments extra round A, B and C phases extra within the coming quarters.”
Every year, the healthcare trade sees extra consolidation. Though this has occurred on an institutional scale amongst hospitals and well being techniques in addition to payers —it’s occurred at a a lot better quantity in well being tech, particularly in sure sectors.
“We are going to possible see consolidation of care supply level options treating particular situations throughout particular channels or throughout specialties e.g., psychological well being or employer platforms for higher navigation,” Kraus mentioned.
This yr has additionally seen appreciable workers cuts within the healthcare sector, significantly in well being tech. Kraus noticed that the cost of capital has elevated throughout cloud, healthcare Software program as a Service (SaaS) and tech-enabled providers companies. He additionally identified that entrepreneurs might want to prolong runway and be extra diligent on making investments that drive environment friendly development.
“It will really feel extra acute on tech-enabled providers companies given the capital depth of early stage fashions however those who perceive the drivers of enchancment for scaling their fashions will likely be profitable at elevating capital in any market,” mentioned Kraus.
Dennis Depenbusch, director New Ventures Initiative with Company Enterprise Capital at BlueCross BlueShield of Kansas and president of Mid America Healthcare Investors Network (MHIN) additionally shared his tackle well being tech layoffs this yr.
“There’s been so many market entrants to some verticals, the market can not maintain all of them (you probably have 10 firms assuming they may take 10% of the market, what can the opposite firms get in the event that they hit their projections?) – as soon as they hype settles down and actuality to make income and develop it intelligently involves the market, then change will occur.”
Kraus additionally highlighted a number of rising funding developments he’s watching in healthcare. He highlighted drug pricing but additionally referred to the profitable evolution of risk-bearing fashions in main care but additionally famous that his agency is beginning to see innovation throughout specialty care centered on suppliers “who act as quarterbacks for particular high-cost affected person teams, comparable to kidney care, cardiology and oncology”.
“The success in fashions in public market will assist speed up adoption and sharpen the concentrate on the best way to scale these companies. Growing knowledge liquidity pushed by regulation is driving adoption of latest use instances the place the buyer has entry to their very own knowledge, suppliers are empowered to interrupt siloes and monetize datasets. For the primary time, we’re seeing motion round drug pricing which can push numerous stakeholders to develop novel pricing fashions, higher accessibility to sufferers, and many others.”
Girls’s well being has additionally been within the highlight due most just lately to the overturning of Roe v Wade but additionally in recognition of the inequities in maternal health. Kraus mentioned his agency has invested in girls’s well being firms, pursuing a roadmap throughout classes together with maternity, fertility, main care in addition to specialties that have an effect on predominately girls.
Requested if there are any areas of healthcare the place they haven’t invested or have invested little that they plan to spend money on subsequent yr, Hubert Zajicek, the CEO, companion and co-founder of Dallas-based accelerator Health Wildcatters, mentioned they might allocate funds to “extra predictive and genetic drugs startups”.
“We’re additionally able to spend money on extra, new and non-invasive sensor know-how.”
In the case of bullish bets in healthcare, Kraus highlighted technology and platforms that allow clinicians to take extra threat and carry out care on the high of their license. He additionally pointed to modernization of the healthcare funds stack to align incentives between payers and suppliers and scale back administrative prices of the (fee-for-service) system
For his half, Depenbush mentioned he’s bearish about “all issues value-based care (besides Medicare Benefit)” and bullish concerning the pharmacy sector.
“Pharmacy appears to have nice alternative since this value sector is rising dramatically. New options will likely be fascinating and there’s house to be value efficient by means of adherence and substitution – and higher pricing of specialised medicine.”
He added: “There’s no digital resolution that replaces the human contact and human accountability. There’s extra approaching an built-in technique, however it prices gross margin and VCs typically don’t like that regardless that these opponents are rising income quicker.”
Picture: Who_I_am, Getty Photographs
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