Last month, I attended the J.P. Morgan Healthcare Conference, an annual event that attracts the top healthcare technology investors, public companies and startups. It is the most important event of the year from a health investor point-of-view and featured keynote presentations from Bill Gates, Dr. Sanjay Gupta and Jamie Dimon. During the conference, I had the chance to interact with many participants and gauge their level of interest and expectations for the industry.
Takeaway #1: Investors will continue to make digital health investments.
My first big takeaway is that investors will continue to invest significant money into the digital health sector. While there were a very limited number of healthcare tech IPOs in 2017, it was another record year for investment.
Startup Health, who had a big presence at the conference, reported that there was $11B of capital invested in the healthcare sector in 2017, surpassing any other year. Healthcare Growth Partners (HGP) further bolstered this point by stating that $26B has been invested in the US healthcare market alone since 2013. HGP also reported that Data Analytics, Mobile Health Applications, Patient Engagement Solutions, Telemedicine, Appointment Booking, and Clinical Decision Support were the top funded areas in healthcare last year.
Takeaway #2: Opportunity for Healthcare Innovation & Efficiency
My second takeaway is that there are still incredible opportunities for innovation and efficiency improvements in healthcare technology, which was reinforced shortly after conference with the major announcement that Amazon, Berkshire Hathaway and JPMorgan Chase would form an independent healthcare company for their US employees and CEO Tim Cook announced that Apple is also eyeing the space.
It is becoming increasingly apparent that consumers, employers and the government are the true “payers” in the US healthcare system and the buzz at the conference revealed a strong inclination by investors to make big bets on companies who have products with the potential to make a real difference for these audiences.
Investors and strategic buyers will both ask hard questions about how companies can thrive in this marketplace and put higher expectations on companies to demonstrate their value. Many of the growth strategies an investor will want to see were covered in my previous blog post, The Key to Keeping Your Investor Happy, however, the following questions are ones you should plan to address in your pitch.
- How is your product differentiated from your competitors?
- How does your offering truly lower cost for healthcare providers or payers?
- What are you doing to protect your recurring revenue base?
- Explain and defend your approach to winning new customers?
- Who is the business champion for your solution?
- Who will sign the check for your offering and how do they want to pay?
- How do you manage around, or partner with the big players in the space like Epic and Cerner as well as the rapidly emerging presence of Amazon, Apple, Google and Microsoft?
The net of my conference learnings is that investors remain bullish on healthcare technology, yet at the same time, they are more sophisticated and realistic in how they view companies and their market opportunities.
This sentiment was perfectly expressed by HGP during the conference “…..the selling point is not the technology itself, but the value that it delivers to customers”.
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