Software Eats Care Delivery | Summary and Q&A

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July 31, 2019
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a16z
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Software Eats Care Delivery

TL;DR

The healthcare industry is currently experiencing a transformative moment, creating opportunities for tech startups to make a significant impact.

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Key Insights

  • 🏑 Healthcare's complexity and inefficiency make it an ideal field for technological advancements.
  • 🧑‍⚕️ The laying down of electronic health records creates opportunities for data interoperability and liquidity startups.
  • 🥺 The unbundling of hospitals leads to more convenient care options and specialized services for specific patient populations.
  • 🪛 Consumerism in healthcare is driven by increased financial burden and the disparity between healthcare experiences and experiences in other sectors.
  • 💁 Startups should consider their form, potential for scalability, and distribution edge when entering the healthcare market.
  • 🎏 Recurring revenue streams and a focus on patient-centric solutions are crucial for success in the healthcare industry.
  • 🧑‍💻 The current state of the healthcare industry presents significant growth opportunities for tech startups.

Transcript

hi everyone this is Julie you I'm a partner on the a 16 Z bio fund and after several years of being a health care entrepreneur myself I am very excited to be here at the firm to partner with the next generation of great entrepreneurs going after the massive problems that currently exists in the healthcare space we think right now is a particularly ... Read More

Questions & Answers

Q: What is the main reason healthcare is a promising field for technology companies?

Healthcare is a highly complex and inefficient industry that lacks transparency, making it well-suited for technological solutions that can improve patient experience and operational efficiency.

Q: What opportunities are created by the laying down of electronic health records?

The establishment of electronic health records creates an opportunity for startups to focus on creating interoperability and data liquidity solutions, such as API-based platforms, to improve the sharing and accessibility of healthcare data.

Q: How is the unbundling of hospitals impacting healthcare delivery?

The unbundling of hospitals allows for more convenient and accessible care options, such as virtual care and community-based clinics. It also enables the shift of certain services from hospitals to home settings, improving patient comfort and potentially reducing infection risks.

Q: Why is consumerism an important factor in the healthcare industry?

Increasing out-of-pocket expenses for healthcare, coupled with advancements in other industries, have created consumer expectations for better experiences and quality in healthcare. This has put pressure on healthcare providers to compete and led to the entry of tech companies and retail giants into the market.

Summary

In this video, Julie Yoo, a partner at a16z Bio Fund, discusses the unique moment in the healthcare market for tech startups. She highlights the tailwinds that are creating opportunities for innovation and the specific areas where companies can have an impact. She also provides insights into what investors look for when evaluating healthcare startups.

Questions & Answers

Q: What makes healthcare a conducive environment for the application of technology?

Healthcare is a complex and stressful environment with information asymmetry, inefficiency, and lack of transparency. These characteristics create opportunities for technology to improve patient care, provider efficiency, and overall healthcare experience.

Q: How do tailwinds in the healthcare market contribute to the opportunity for tech startups?

The laying down of electronic health records and core systems on the payer side has created a layer of infrastructure that enables startups to focus on higher order use cases. Startups can now create liquidity around clinical data, administrative data, and transactional interactions, acting as the connectivity between service providers and stakeholders.

Q: What are the major tailwinds for startups in the healthcare market?

One major tailwind is the unbundling of the hospital, where care services are being made more accessible, convenient, and affordable through novel access points and home care. Another tailwind is the shift towards consumer-centric healthcare driven by increased financial burden on consumers, unsatisfactory experience compared to other industries, and competition from new entrants.

Q: What areas of the healthcare market are ripe for transformation by startups?

Three major areas are transforming the way we access care, pay for care, and deliver care. Startups are focusing on creating new front door experiences to healthcare, transforming healthcare payments with FinTech solutions, and improving the actual care delivery experience for both patients and providers.

Q: What factors do investors consider when evaluating healthcare startups?

Investors look at the form of the company, its potential to become big, and its business model. The form of the company affects growth and capitalization strategies. High-volume transactions and clear return on investment potential are indicators of a company's potential to become big. Additionally, a strong distribution edge and recurring revenue streams are important considerations.

Takeaways

The healthcare market is experiencing a unique moment for tech startups to make a significant impact. Tailwinds such as infrastructure development, the unbundling of hospitals, and consumer-centricity are creating opportunities for transformation. Access to care, payment solutions, and care delivery are the key areas ripe for innovation. Investors focus on the form of the company, its growth potential, and strong business models. The early stage of the digital health market provides immense growth opportunities for entrepreneurs.

Summary & Key Takeaways

  • The healthcare industry is ripe for technological advancements due to its complexity, inefficiency, and information asymmetry.

  • Tailwinds such as the laying down of electronic health records and the unbundling of hospitals create unique opportunities for startups.

  • Consumerism and the increasing financial burden on patients are forcing healthcare stakeholders to adopt a more patient-centric approach.

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