Talking with the angel investor Anne DeGheest the other day was humbling. After all, I sweat out long days and nights digging up news and features on what I think often represents the leading edge in healthcare capitalism—new drugs, medical devices, diagnostics, etc.
All that innovation is worthy of attention—she apparently didn’t want to hurt this biotech scribe’s feelings too much—but if you really want to find where the action is heading in healthcare, DeGheest insists it’s in something she likes to call “healthtech.”
What DeGheest is talking about is sort of a catch-all for healthcare delivery technologies that used to be what venture capitalists considered the boring part of healthcare. New drugs and devices represent about 16 percent of the total $2.5 trillion U.S. healthcare market, she says, while the rest of the market is focused on the delivery side of healthcare, like the everyday transactions that happen at hospitals and clinics. Now that President Obama’s healthcare reform effort is the law, and most everyone agrees that healthcare costs need to be somehow corralled, it’s time for a wave of innovative new healthtech companies that are focused on improving care and reducing costs—not adding new costs like with all those innovative drugs and devices.
“Venture capital and entrepreneurship have been focused on drugs and devices for 20 years,” DeGheest says. “I want to look at the other 84 percent of the market. Several forces are coming together at same time, to change the way we practice healthcare in this country, in a way more cost efficient way.”
This idea is still in its pretty early days, but DeGheest is one of the founding Silicon Valley angels in a group that is seeking to define it at something called HealthTech Capital. This is a budding angel group that seeks to bring together people from tech, biotech, and the healthcare delivery system to find scalable business models that can “improve the efficiency of healthcare delivery from the hospital to the home,” as the group says on its website.
DeGheest, a managing partner at Medstars Venture Partners, comes to this effort having founded or advised companies that have raised $500 million in venture capital through her career. The original group at HealthTech Capital includes Don Ross, a board member of Sand Hill Angels, and Kathy LaPorte, a co-founder of New Leaf Ventures.
While “improving efficiency” of healthcare sounds like health IT and electronic medical records, that’s not what HealthTech Capital has in mind, DeGheest says. It’s really about the home. As healthcare gets extended to millions of more people, and the Baby Boomers continue to suffer from expensive chronic ailments as they age, something has to give in healthcare delivery. “Healthcare has to be moved out of the traditional hospital, and emergency rooms,” DeGheest says.
That means healthcare is going to be delivered in the home, via applications that are useful to physicians, nurses, home caregivers, and patients. Companies that figure out how to do this with a mixture of technologies will profit.
It’s not really a new idea to
