Emerging Healthcare Technology and Funds

Human driven design for unmet needs?

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Since leaving my corporate career after working for a European public pharmaceutical company, I have remained active in the Healthcare and Life Science sectors stateside for the past 16 years.? The combination of early stage investing, advising founders of healthcare companies, and serving as an independent board director in Healthcare and Life Science companies in Europe and the US, makes 16 years feel like a lifetime.??

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Why???

I have had “to learn” the system from getting health insurance when moving back to the States as well as deal with a bit of cognitive dissonance with my “biases” of working within the framework of European National health systems and bringing a unique perspective to the founders I serve in the US healthcare system.??

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Despite the differences between the European and US health systems, the challenge for the adoption of new products and services remains to demonstrate efficiency, safety and cost against the prevailing standard of care for a condition.??

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This blog explores new businesses, that despite their modest size in addressable market (based on traditional VC/PE standards), are making a dent in the whopping $4.5 trillion-dollar sector where annually there is over $800 Mn dollars in waste. These businesses are built by and for the underrepresented populations including women and children.?

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By 2045, based upon the most recent census of 2018, and according to a Brookings institute report: “The new statistics project that the nation will become “minority white” in 2045. During that year, whites will comprise 49.7 percent of the population in contrast to 24.6 percent for Hispanics, 13.1 percent for blacks, 7.9 percent for Asians, and 3.8 percent for multiracial populations (see Figure below reproduced).?

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I always ask the founders in their pitch sessions the following question:? how can the “standard of care “ be built back better with different solutions by creating new standards of tech enabled care? They often respond, “the group I represent or I identify with is not represented in the treatment(s) in the prevailing standard of care and I want to fix that.”?

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My “drill” when I speak with a new client for Next Act Advisors, is to ask how advisory services can accelerate the growth of the company. Some of my questions are about the market size; is it a large enough market to attract external investment? Is the sector ripe for disruption through addressing:?

- affordability/price- is it overpriced??

-speed to market/time- Does it take too long to buy??

-Efficiency/effectiveness- Is it over or under engineered, can I have less or more features??

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a new attribute: “underrepresented population”- are we leaving anything on the table in terms of addressable market in the long term??

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?The underrepresented populations in the US will by 2045 no longer be underrepresented. They are today building things to address their unmet needs.??

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And that is what this blog post is about.?

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These founders are building things, and they are combining the human + technology that today’s science and representation in the sciences, and in academia by developing solutions for “their “unmet needs. Vignettes from the Femtech, Pediatrics, Tech enabled devices SaMD Software as a medical device, follow.?

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2022 statistics reveal that the US healthcare system amounts to $4.5 trillion dollar annual spend across payors, providers and patients, which translates to 17% of GDP and $13,493 per capita spend. Healthcare revenue in 2020 was $1.27 trillion across providers, pharma, payers, MedTech, healthcare IT and distribution and pharmacies. 65% of industry’s revenue comes from patient care.??

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With an ostensibly expensive US health system for the healthcare outcomes obtained,??

I am one to seek those players who are, at all costs (no pun intended) seeking to address unmet needs.???

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The capital required, unlike other sectors that are digital forward, needs to be patient (no pun intended) and with expertise in areas that touch patient’s lives and that of their families, the providers‘ workflow and the payors including public and private entities.??

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The adoption of new products and services not only must challenge the standard of care for a condition but also the cost of care.??

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Case study #1?

Femtech company in the pregnancy space; female founder?

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Situation:? health outcomes for women in childbearing age in the US are some of the worst in the developed world. For example: 47% of annual births are with providers receiving Medicaid and women of color die at disproportional rates while giving birth.?

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Problem statement:? Why can I not wear a wristband with a small device to gather my vitals and those of my fetus while also informing my Health Care practitioner and learn more about choices in my daily care to improve our health outcomes???

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Founder paid over six figures for the engineering of the prototype of a device with medical grade standards vitals including blood pressure and fetal heartbeat during the 1st, 2nd and 3rd trimesters of pregnancy.??

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Complication: Founder was informed by HCPs that they would not use self-reported vitals and they had to see the patient, (since when pregnancy is an illness).?

Founder pivoted to an application with self-reported symptoms and questions through a chat bot that runs on clinical grade answers provided by HCPs. While too soon to the market, more proof was being built into the business model when the pandemic began.???

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To be continued….. Questions on monetization: who to pay? Mother/ Doctor/Payor/??

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Case study #2?

Remmie Health, ear nose and throat (ENT) diagnosis clinical grade for in home, telehealth and physicians; female and Asian founder??

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Situation:? founder was often in the ER with her children under the age of 10 with easily treatable ear infections; repeated visits, time off work and exposure to other illness while in the clinic.?

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Problem statement:? 120 million ENT exams in the US annually. Current diagnosis is manual and subjective with 40% misdiagnosis in primary settings and unnecessary ER visits.??

Why can’t I use an off the shelf otoscope, take a picture of my son’s inner ear, and send the picture to a pediatrician for a diagnosis in a virtual telehealth setting?? I also am creating a large databank of images of inner ear, nose and throat conditions to create the world’s largest proprietary, high quality and growing ENT data set to better predict the treatment???

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Complication and resolution: The ENT Diagnosis Assistance platform promises to be one of the first SaMD (Software as a Medical Device Class II) of its kind with FDA approval.??

The combination of a device and software is a new class of drugs and requires the conventional path of safety, efficacy (higher efficacy) and affordability–??

The challenge and the promise of device +software has cost savings as well as substitution effects of expensive provider care at lower accuracy.?

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Through a combination of non-dilutive funding by the NIH and other public private initiatives the company now has three different pricing models being tested: reimbursement for cpt codes; Medicaid and Medicare class patients and Direct to consumer.?

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To be continued…. Any private capital awaiting reimbursement may have to invest at higher prices as the valuation of the company continues to rise.??

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Case #3?

Emerging Funds:??

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According to Pitchbook, Q1 2024 funding for telehealth and digital therapeutics was $1bn for the quarter, similar to the prior three quarters. I find interesting that the smaller VCs are the most active. Alumni Ventures was the most active digital health VC investor in the first quarter with four deals, followed by Connecticut Innovations with three deals. Since 2020, General Catalyst, Alumni Ventures, Gaingels, Optum Ventures and City Light Capital have led digital health VC investments. ? ?

They can make a dent in the US healthcare system that amounts to $4.5 trillion dollar annual spend across payors, providers and patients.??

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Nurture Ventures:??

Shashi Triphati discovered in a recent podcast for my? listeners??

that “the healthcare system is the only industry in which by improving the quality; the cost is reduced.” He goes on to compare with other industries like the high-end hotel industry with high quality and the cost is higher. Ultimately patient care is impacted across the care continuum and his passion “is to create products to make a change in peoples’ lives”?

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Suncoast Ventures? ? Genevieve LeMarchal, fund manager for Suncoast Ventures, describes the parallels of journalism with early stage investing “I was always looking to dig past what I was being told on the surface and get down to the truth. And that is something that you must do every single day as a venture capital investor, because unlike investing in...later stage deals or even like public markets or things like that, the information is not readily available. So you have to dig for it and you have to look for it. And you're also making bets on really nascent things that don't really exist yet. So you're always looking for information to piece together to try to determine whether or not an area of investment is viable.?

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Is it a gap we should be focusing on? Is it not a gap we shouldn't be focusing on? And that doesn't just come from one person's single observation of what they see on the surface. It comes from lots of information gathered and aggregated over time to create a story. And then we hope, as investors, that the story is true. So I would say those are the parallels.”?

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In 2045 I will be 81 years of age. It is my hope to see these emerging business models as the new standard of care in a relatively smaller market because we live in a healthier society.?

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At Next Act Advisors, my mission is to work with company owners to accelerate growth in enterprise value. If you enjoyed learning about emerging healthcare solutions developed by and for the underrepresented populations, please sign up for more articles and consider subscribing to the Founder’s Sandbox podcast released monthly here.?

Signing off for this month,?

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Brenda A. McCabe, MBA ?

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#healthtech?

#emergingfunds?

#femtech?

@Remmiehealth?

@Nurtureventures?

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