Homepage / Technology / Now is the time to bullish about digital health, according to this investor
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election

Technology

Now is the time to bullish about digital health, according to this investor

Earlier this month, my friend and industry colleague Rob Coppedge wrote a thoughtful post on the death of digital health, a space associated with too much hype and too little substance.

We agree that health care is really broken. It bankrupts our families, exhausts government discretionary spending, and leaves American industry at a global disadvantage.

However, here are a few divergent reasons for digital health’s (seeming) underperformance, which explains why early-stage investors aren’t getting the kind of returns they’re looking for:

  • Incrementalism: Hundreds of startups produce enterprise dashboards, online symptom checkers, and evidence-light apps. Many of these are flippant and those that are worthy often offer only incremental progress. By nature of their modest impact and the barriers to scale, many expectations are not being met.
  • Invisible unicorns: An aside, but there are many quiet successes in digital health that didn’t produce PR-driven Silicon Valley exits. How about CoverMyMeds? This team in Ohio used tech, network effects, and empathy to solve a real problem, reducing dispensing time for medications requiring payer prior authorization from an average of 14 days to 30 minutes. How? By embedding tech in the pharmacy, doctor’s office and payer — all while getting pharma to foot the bill. The result: a $1.3 billion exit to McKesson. Start-up land barely noticed.
  • Late bloomers: There may be many sleeping giants, as solving certain problems with scale sometimes takes longer in health. Just look at Pear Therapeutics, which this week received FDA clearance after a years-long process for its app to help treat substance abuse. Investors will need to think very hard to discern what can scale quickly versus what will need to bake slowly for longer.
  • Poor execution: The underlying issue with many failed or struggling digital health companies is poor execution. The excitement of the mission seems to slow down the need for timely product feedback. Most CEOs suffer from wishful thinking on the imminence of product-market fit, and defensible distribution has too often been an afterthought.
  • The “O” word: Oligopoly. As providers seek local market monopoly in the name of “scale and efficiency” or to pay for expensive medical record systems, costs soar and innovation falters. Likewise, the pharma supply chain makes money because of a lack of competition and transparent data, and payers are swimming in record profits. A special team of founders should not turn back form these challenges, but they should know the treacherous waters into which they sail.
  • Lack of ambition: Where is the Elon Musk of care provision? Why hasn’t anyone actually taken on the hospital? Hundreds of medication adherence apps entered the market in recent years, but only one start-up I can find is directly taking on the pharmacy benefits manager. In other verticals, we are seeing massive incumbents falling to data-driven, disruptive companies. We need some bigger bets in health care.

I try to imagine how investors and founders felt in 2004. The bubble had burst, forcing the posers to depart. Meanwhile, a much smaller group of entrepreneurs kept building things, believing full well that the promise of the Internet from 1997 was not a false mirage but would take two or three rapid ecosystem iterations to actualize. And I believe some VC vintages in the following years ripened quite nicely.

This is where we are with digital health. We still need better real-time informatics that surround all that touch the patient. We still need to move data, remove silos, reinvent primary care and elder care, and bring genomics to the clinic at scale. We need to do this while taking on new models for risk and improving outcomes for populations.

First, so many of the best ideas from the past 10 years were just too early. But with dependencies removed, lessons learned and chess boards realigned, it’s time for the bigger second acts. Napster and MySpace and AOL paved the way for some much bigger platforms.

Secondly, the quality of some entrepreneurs starting ambitious companies in health and data is breathtaking. The advances in health research, design thinking and technology stack capabilities are helping a new class of health-technology founding teams. The talent and the tools are improving.

And then there’s the data. Deep computation is transforming how we live and work, and how we make human progress in areas like space, agriculture, manufacturing, transportation and retail. This deep compute has yet to truly make its mark on how we provide health care, and one or two large organizations dressing up buzzwords as marketing doesn’t count.

Make no mistake, the advances in computational power and data science are rapidly arriving in health provision. In the next ten years, we are going to create massively-valuable companies using deep compute to improve and QA decision-making, better enable empathetic health providers, and impact systems of care to create more personalized experiences for patients at every stage of their journey.

In fact, at some point it will no longer be called “digital health” because all aspects of health care provision will be built upon and infused with data and intelligence, from the optimized patient to a “learning” system of care.

In addition to jumping through the aforementioned hurdles, we also need to address the assertion that there’s no clear path to make money in digital health.

There are many models, but here are three that are proven::

  1. 50X better: Yes, you can sell into the belly of the beast of our health system, but you do so with a product that solves a very specific problem and is 10 or even 50 times better than what was offered before. You still face speed bumps in validation, regulation and adoption, but you persevere.
  2. Full-stack: Rather than convince a huge number of stakeholders to adopt your technology, you identify the one that has to say “yes”, like a large self-insured employer. And you then go “full stack” as a tech and health business. Take Virta Health, a start-up that aims to reverse Type 2 diabetes. Rather than convincing thousands of providers and other groups to adopt new software and guidelines, Virta sells to the employer to become the “full stack” for the patient and builds a holistic provider-led clinic around this patient.
  3. Network effects: Creating a virtuous cycle where your product gets more valuable to users as more people use it is incontrovertibly powerful. And yet, there have been very few network effect platforms in U.S. health care. Network effects don’t solve every problem, but in solving problems like moving data, delivering new networks of caregiver support, and deep areas of research, we need to see more of these.

In sum, we need to be more ambitious, invest more heavily in our best entrepreneurs, and rebuild every use-case with our best data and computation. The first chapter is behind us, and now is the time to be bullish.

Scott Barclay is an entrepreneur and operator who has worked in health care for 20 years and is now a Partner at Data Collective, an early-stage investment fund focused on deep tech and compute.

Source: Tech CNBC
Now is the time to bullish about digital health, according to this investor

Comments are closed.