5 Takes from J.P. Morgan Healthcare Conference

It was a wet week in San Francisco, but that didn’t stop the Belong Health team from sharing their hot takes from the J.P. 摩根 Healthcare Conference. Hear from Gen Gillespie , J. Patrick Foley , Maura E. McGinn , and Caroline Ririe on what they learned from this year’s high-energy event.

1. Most difficult investing climate since the dot com bust in the early 2000s. Venture firms still have money to put to work, but face increasing scrutiny on valuation markups in their existing portfolio and round size in seed and series A. While investment is still happening, it’s chasing too few high quality assets. There was chatter of late night meetings and phone calls with investment committees to debate whether to invest in “stretch valuations”. Overall, the focus has shifted from growth to portfolio optimization and showing a clear path to profitability. Without big and frequent funding rounds will early stage companies with longer sales cycles survive?
2. We are in the midst of an AI boom in healthcare. Much like the boom of the early 2000s when healthcare and tech-enabled services were on the rise, we’re seeing new companies (like Biofourmis ) being valued over $1B. This valuation is being fueled by a hunt for outsized margins (SaaS vs services).
3. Large investor focus on augmenting workforce, up-skilling staff, and delivering workflow tools that make health systems more efficient (or less human capital intensive). Staff augmentation and improving productivity continue to be a major focus for health systems who have a critical need to improve their margins and reduce staff burnout.
4. ACO REACH is a puzzle to be solved. Investor and operator views on the program range from skeptical to bullish. The consensus view is not to build a standalone business case on a CMMI program. Companies who adopted ACO REACH as part of a larger strategy have been rewarded,?while those who made it a core strategy have been punished.
5. Value-Based Care has yet to drive the quality and efficiency improvements?we’ve?been promised. Thirty years after the concept was introduced,?the industry has grown tired of waiting for results. Many are asking “what does value-based care even mean if everyone has their own definition?” The overly broad and unspecific objective has failed to drive meaningful results. Companies that have long touted delivering VBC are incrementally better at things like coding and risk adjustment. This is driving top line improvements, but not necessarily value. The industry needs to reframe the discussion around specifics, like providers taking risk under new programs like ACO REACH.