Guest Contributor | May 14, 2013
Healthcare costs are soaring – the US spent ~$2.7 trillion on healthcare in 2011, and it costs over $1 billion to bring a novel drug to market. Yet digital health companies can innovate faster and demonstrate their proof of concept with comparatively little money, which is creating new and exciting opportunities for healthcare entrepreneurs.
I recently sat down with Abhas Gupta, MD a partner at Mohr Davidow Ventures to discuss the opportunity for digital health, changes in medicine, and his advice for entrepreneurs. (Mohr Davidow Ventures is a Limited Partner in the Rock Health Fund).
Here are a few highlights, and the full interview is after the jump:
- Digital health companies – in the eyes of a venture capital investor, are characterized as software-driven, capital-efficient, quick to fail, and able to scale. Investors look for passionate, strategic thinkers when evaluating potential investments.
- The single biggest change in the US healthcare market is the shift in business models from a fee-for-service system to an at-risk system. Simply put, doctors are paid today for the number of lab tests or procedures they perform irrespective of patient need or outcomes. In the future, physicians and healthcare systems will be accountable for managing the health of patients with a fixed sum of money (capitation); therefore, healthcare organizations will bear the financial risk. The most attractive digital health opportunity today is to enable physicians and case managers to identify, track, and manage their potential high-cost patients and prioritize cost-effective interventions thus reducing the level of financial risk.
- Gupta’s advice for first time entrepreneurs is to find a niche where you can directly take on soaring health care costs, familiarize yourself with venture math (the mentality of a VC investor) before pitching, and think about the right investor fit for your venture when you raise money. (more…)