With the surge in digital health, there has been a proliferation of point solutions catering to very specific target populations. However, a shift has appeared in the landscape of health tech investment as venture capitalists seem to be less interested in these point solutions. This insight came from a recent panel discussion at the INVEST Digital Healthconference held in Dallas.
As Kerry Rupp, general partner of True Wealth Ventures and a panelist at the conference explains, these precise solutions pose a challenge for payers or employers who find it hard to contract with several different point solutions, each serving different population segments. From an economic standpoint, it makes more sense to Rupp to have a ‘roll-up’ platform to accurately match a patient with a culturally competent provider than to have a variety of isolated solutions catering to unique patient groups.
As an example, Rupp cited firms like Partum Health, offering a range of services from OBGYNS, doulas, lactation support, mental health support, and physical therapy. Rupp said, there are more individual companies focusing on and maybe delivering better results in areas like lactation support. However, for firms like True Wealth Ventures, it’s more desirable to offer a comprehensive platform of services.
Nonetheless, Rupp notes there is scope for niche point solutions through funding avenues such as grant funding, as venture capitalists will typically look for models that demonstrate scalable growth and promise significant returns. Gwen Watanabe, managing director of H.I.G. Capital, suggests that there could be instances where smaller point solutions may be incorporated into a larger platform, thus potentially differentiating that platform with the unique service offered by the point solution.
The discussion also saw viewpoints from entrepreneurial perspectives. Harsh Vathsangam, CEO of Movn Health, stated that in some cases, starting off niche can be advantageous, allowing for development of a strong evidence base for a smaller population segment, with scope for expansion over time.
An interesting question raised from the audience about the investor’s interest in care coordination companies prompted a reply from Kristen Torres Mowat, partner of Health Velocity Capital. Mowat responded that these integrated platforms do have a role to play particularly in reference to their investment in Health Joy, a care coordination platform. Although, challenges remain, she adds, primarily around member engagement and preventing or at least predicting high-cost events.
More on this discussion can be found here.