Healthcare IT is the New Black
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Transcript of Healthcare IT is the New Black
SXSW
Healthcare IT is the New Black
Lisa SuennenPsilos Group
March 9, 2012
SXSW Conference: Lisa Suennen 3-9-12
Healthcare IT in Perspective2
Once Upon a Time
Not ThatLong Ago
Today
Banking Industry
SXSW Conference: Lisa Suennen 3-9-12
Healthcare IT in Perspective3
Once Upon a Time
Not ThatLong Ago
Today
Manufacturing Industry
SXSW Conference: Lisa Suennen 3-9-12
Healthcare IT in Perspective4
Once Upon a Time
Not ThatLong Ago
Today
Healthcare Industry
SXSW Conference: Lisa Suennen 3-9-12
Why HIT is HOT Right Now
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 begunAlmost 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
5
*Rand Corporation
SXSW Conference: Lisa Suennen 3-9-12
Consumers Are Feeling The Pinch6
SXSW 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, Allscript
SXSW Conference: Lisa Suennen 3-9-12
Why It’s Different This Time
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 proposition
8
SXSW Conference: Lisa Suennen 3-9-12
And Furthermore, The Times, They are a’Changing
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 Personalization
9
SXSW Conference: Lisa Suennen 3-9-12
Payers
OutpatientProviders
InpatientProviders
OthersConsumer
Where Are the Big Opportunities?10
SXSW Conference: Lisa Suennen 3-9-12
HIT is HOT: Venture Investments Up, Up, Up11
2011 Biopharma Med Devices Health IT
Investment ($ billion) $3.9 $3.3 $0.6
2010-2011 $Growth (%)
- 27% 22%
% G
row
th in
Inve
stm
ent A
ctiv
ity
Biopharmaceuticals Medical Devices Health IT
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-6%
-3%
26%
2010-2011 Healthcare IT Deal Growth (# Deals)
2010-2011 Growth (# Deals)
Source: Dow Jones VentureSource
SXSW Conference: Lisa Suennen 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 funds
SXSW Conference: Lisa Suennen 3-9-12
What to Watch Out For
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 Gates
13
SXSW Conference: Lisa Suennen 3-9-12
What to Watch Out For: The Curse of the Underpants Gnomes
14
SXSW Conference: Lisa Suennen 3-9-12
But If You Have a Good Thing, Money Abounds15
Incubators/Accelerators
AngelInvestors
CorporateInvestors
VentureCapitalists
Rock HealthBlueprintHealthBox
StartUp HealthMore to come
HopefullyNot Your
Parents
United HealthcareHumanaWellpoint
AetnaSiemens
Merck, PfizerBest Buy
Walgreensand many more
Psilos GroupChrysalis, Venrock
Cardinal, HLMPhysic, Kleiner
Aberdare, LemhiCamden, ExcelMohr DavidowMorgenthaler
SXSW Conference: Lisa Suennen 3-9-12
Thanks and Have a Great Meeting16
Lisa SuennenManaging MemberPsilos [email protected]
Read my blog at http://venturevalkyrie.com