Healthcare IT is the New Black
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Healthcare IT is the New Black

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Presentation by Lisa Suennen (Psilos Ventures) at the Social Health Startup Bootcamp @ SXSW 2012 (see: http://www.venturevalkyrie.com/2012/03/11/sxsw-woodstock-for-geeks/3728)

Presentation by Lisa Suennen (Psilos Ventures) at the Social Health Startup Bootcamp @ SXSW 2012 (see: http://www.venturevalkyrie.com/2012/03/11/sxsw-woodstock-for-geeks/3728)

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  • P.S. I was reading something about how EHR allows docs and hospitals to easily select and charge for tests they don't perform!
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  • Hey Shwen. You going to SXSW next year? They wouldn't give me a press pass!
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  • Or perhaps it’s the stupid economy In psychology there is a thing called the “operational diagnosis” The idea is that despite all of the problems you have had in your life like your parent not loving you enough, there is some particular issue that brought you in TODAY. In healthcare, the economy is the operational diagnosisThe only thing inflating at a comparable rate to healthcare is higher education“Excess healthcare costs is defined as the amount by which growth in healthcare costs exceeds growth in GDP
  • Content portals, such as WebMD, the original Medscape, Adam.com, DrKoop.comEcommerce portals: PlanetRx, Drugstore.com and a host of other online pharmacies and consumer-focused shopping channelsGroup purchasing websites, such as Medibuy
  • And the promise of software as a service and the cloud amplifies the possibilities
  • Bullet one points:Reimbursements heading downPay for performance and other “creative financing”Financial penalties for readmissions, medical errorsSignificant market drive to force pricing transparencyBeing asked to act manage care like insurersBullet one subpoints:Retail clinics, Concierge practices, Worksite medicine, TelemedicineBullet two points:Healthcare makes profitable companies unprofitablePercentage of employers offering health benefits at lowest point in 12 years (60%) and droppingEstimated that 30% or more will drop health insurance when PPACA is fully implementedHIX leads to need for consumer personalization, service responsiveness and branding
  • HIT M&A Valuations in last 18 months-Allscripts bought Eclipsys for $1.2 Billion-Aetna bought Medicity for $500MM-Harris bought Carefx for $155mm-Optum bought everything else: Axolotl, Picis, QualityMetricAnd of course there are many moreBig companies now in the Healthcare business include Apple, Best Buy, Dell, Salesforce.com, Oracle, and a myriad of othersYes, it is possible that there will be too much money chasing after HIT and that can lead to a lot of lemons, but also clear there is also ample opportunity to make lemonade, even if it is cloud-based lemonade, by investing in those enterprises that can truly move the needle on healthcare system quality and cost.
  • I cannot tell you how many people I talk with who don’t really have a business model.Here is a real quote I heard in the last few weeks from an entrepreneur who came to pitch me: “Right now we’re focused on finishing the product and getting pilots done and after that we’ll figure out how we will make money?” That’s when I started reading my email.

Healthcare IT is the New Black Healthcare IT is the New Black Presentation Transcript

  • March 9, 2012
  • Healthcare IT in Perspective 2 Banking Industry Once Upon Not That Today a Time Long AgoSXSW Conference: Lisa Suennen 3-9-12
  • Healthcare IT in Perspective 3 Manufacturing Industry Once Upon Not That Today a Time Long AgoSXSW Conference: Lisa Suennen 3-9-12
  • Healthcare IT in Perspective 4 Healthcare Industry Once Upon Not That Today a Time Long AgoSXSW Conference: Lisa Suennen 3-9-12
  • Why HIT is HOT Right Now 5 Without change, costs will grow from $2.7 trillion now to $4.5 trillion in 2019 Healthcare inflation is a crushing weight on the economy  Healthcare adds $1500 to cost of every GM car  Starbucks spends more on healthcare than on coffee  Companies with the highest healthcare costs grow the slowest*  Every 10% increase in “excess” healthcare costs the economy 120,000+ jobs and $28B of lost revenues* The cost shift from employers to individuals has begun Almost 10,000 people per day are aging into Medicare  2/3 of Americans over 65 have 2+ chronic illness  Chronic illness accounts for 75% of all healthcare costs *Rand CorporationSXSW Conference: Lisa Suennen 3-9-12
  • Consumers Are Feeling The Pinch 6SXSW Conference: Lisa Suennen 3-9-12
  • Is This Just 1990s Deja Vu? Haven’t I Seen This Bubble Before? 7 It was all about the new kid on the block: the Internet Products focused on disintermediation, not cost/quality:  Content portals, such as WebMD, DrKoop.com  Ecommerce portals: PlanetRx, Drugstore.com  Group purchasing websites, such as Medibuy E-prescribing—the only thing that was more physician workflow oriented; Epocrates, PocketScript, AllscriptSXSW Conference: Lisa Suennen 3-9-12
  • Why It’s Different This Time 8  PPACA and HITECH Act are driving technology throughout a previously low tech system • Near-universal access to Internet, broadband and wireless technologies at every significant U.S. clinical organization; • Ubiquity of smart phones & iPads put cheap computing power in the hands of physicians and consumers • Cheap and widely available software enables mass customization at affordable cost with real ROI • Recognition that the healthcare system can no longer avoid the information age if we are serious about cost-containment • Investors turning to HIT as biotech/medtech has become a money-losing propositionSXSW Conference: Lisa Suennen 3-9-12
  • And Furthermore, The Times, They are a’Changing 9 Providers facing new risk management and cost-cutting realities  Complex new delivery system models emerging (ACOs) Employers desperately trying to exit the healthcare business Advent of HIX changing payer industry dynamics and consumer branding requirements  Payers diversifying their businesses through healthcare IT acquisition If consumers are going to pay they need:  Information transparency to make  Financial tracking systems  Anytime/anywhere access  PersonalizationSXSW Conference: Lisa Suennen 3-9-12
  • Where Are the Big Opportunities? 10 Outpatient Providers Payers Inpatient Providers Consumer OthersSXSW Conference: Lisa Suennen 3-9-12
  • HIT is HOT: Venture Investments Up, Up, Up 11 2010-2011 Healthcare IT Deal Growth (# Deals) 30% 26% % Growth in Investment Activity 25% 20% 15% 10% 5% -6% -3% 0% -5% -10% Biopharmaceuticals Medical Devices Health IT 2010-2011 Growth (# Deals) 2011 Biopharma Med Devices Health IT Investment ($ billion) $3.9 $3.3 $0.6 2010-2011 $Growth (%) - 27% 22%SXSW Conference: Lisa Suennen Source: Dow Jones VentureSource 3-9-12
  • HIT is HOT: The Proof is in the Payments 12 There is ton of HIT development money out there from non-traditional sources:  CMS  ONC and a myriad of Other Challenges, Grants and Incentives  Return of the Accelerators/Incubators Robust exit environment for HIT companies  100 acquisitions 2010-2011 compared to 76 in 2009-2010  Acquisition checks getting larger Suddenly everyone’s a healthcare company  38 of the 2011 Fortune 50 are in the healthcare business compared to 5 of the 2001 Fortune 50  Even Merck and Pfizer now have HIT-focused fundsSXSW Conference: Lisa Suennen 3-9-12
  • What to Watch Out For 13  Doctors and consumers don’t like to pay for things  Lives are short and sales cycles are long, especially in the payer and hospital worlds  If you can’t explain your economic value, you will lose  Nothing ever happens in the timeframe you think it’s going to happen “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” -Bill GatesSXSW Conference: Lisa Suennen 3-9-12
  • What to Watch Out For: The Curse of the Underpants Gnomes 14SXSW Conference: Lisa Suennen 3-9-12
  • But If You Have a Good Thing, Money Abounds 15 Incubators/ Angel Venture Corporate Accelerators Investors Capitalists Investors Rock Health Hopefully Psilos Group United Healthcare Blueprint Not Chrysalis, Venrock Humana HealthBox Your Cardinal, HLM Wellpoint StartUp Health Parents Physic, Kleiner Aetna More to come Aberdare, Lemhi Siemens Camden, Excel Merck, Pfizer Mohr Davidow Best Buy Morgenthaler Walgreens and many moreSXSW Conference: Lisa Suennen 3-9-12
  • Thanks and Have a Great Meeting 16Lisa SuennenManaging MemberPsilos Grouplisasuennen@psilos.comRead my blog athttp://venturevalkyrie.comSXSW Conference: Lisa Suennen 3-9-12