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GPs offer tips on digital health investing

Here are two questions every digital health startup needs to answer about its product or service:

  1. Is it reimbursable by health care payers?
  2. Does it answer a doctor’s question on which medicine or treatment to prescribe?

Today’s health care market is a complex labyrinth of medical providers, insurers, vendors and service organizations. Yet simple questions like these might be the best guide for finding the next big thing, according to investors active in the space.

The healthcare market is undergoing what could be a 10-year transition to a more efficient, more connected and more integrated care delivery system. This could create enormous opportunities for disruptive companies. But knowing which sectors to pick will make the difference between handsome returns and stagnant portfolios.

“I think it’s the most exciting and significant period in healthcare in America in the last 50 years,” said Ann Huntress Lamont, a managing partner at Oak HC/FT.

But any GP examining consumer-focused companies could easily fill a 50-hour week with pitch meetings. Understanding where to look is key.

Lamont said she is focused on employer solutions that sell into the enterprise and on behavioral health, such as a telehealth. There is a lot more to do on the infrastructure side, she added.

“I’m thinking medicine is all becoming a big data question. It’s all information.”

Ted Driscoll

Director

Claremont Creek Ventures

Other VCs are looking to analytics.

One area of promise for Ted Driscoll, a director at Claremont Creek Ventures, is genomics and its application to direct medical care, providing general practitioners with advanced knowledge of patient predispositions and drug vulnerabilities.

Another is the use of big data analysis to aid in the better targeting of drugs, for instance. “I’m thinking medicine is all becoming a big data question,” said Driscoll. “It’s all information.”

Efficiency is a theme for Amir Nashat, a managing partner at Polaris Partners. Nashat said he is attracted to patient behavior initiatives, similar to what former portfolio company Free & Clear does by helping people quit smoking through telephone coaching.

One investor in no hurry is Stephen Krupa, a managing member at the Psilos Group. He said his portfolio is oriented to infrastructure and enabling technologies, and that at present he is focused on working it.

“We’re really taking our time,” Krupa said. “We’re not jumping into new things.”