What excites us in consumer healthcare IT?

Last December, we published our thoughts on the healthcare market in a VentureBeat article: “The health-tech booster shot: bringing health care into the 21st century.”

That was December 2013, and digital health funding for the year exceeded $19B with 195 venture deals (where over $2M was raised). These numbers were up 39% compared with 2012, and a staggering 119% compared with 2011. If you’re interested in more facts and figures, check out Rock Health’s annual report where statistics are segmented by stage, geography, and more.

Now that we’re halfway through 2014, we continue to see venture capital pour into the healthcare sector.  Large raises in recent months include Doximity ($54M), One Medical Group ($40M), and Omada Health ($23M).

So what has Version One been up to amidst this whirlwind of VC activity? While we have yet to invest in a second healthcare startup since Figure 1, we have actively refined our thesis to focus on two key opportunities:  1) patient-to-expert networks, and 2) patient health data.

1)  Patient-to-Expert Networks

When we get sick or feel pain, the first thing we do is Google our symptoms. After all, self-diagnosing with a few keystrokes is faster, easier, and cheaper than heading out to the doctor’s office. Traditionally, Google has returned search results from WebMD, Mayo Clinic, and other websites where the medical information is delivered from the “top-down.” The content is static, non-personalized (i.e. everyone typing in “I have a headache” will get relatively the same results), and can be inconsistent.

This traditional online “diagnosis” is being disrupted by a wave of crowdsourced communities.  More and more, we are seeing patients connect with other patients for support and information sharing (i.e. Crohnology and PatientsLikeMe). We’re also seeing platforms that connect physicians in an effort to democratize medical knowledge (i.e. the photo sharing app, Figure 1).

But what about a platform that connects patients with doctors?

To date, we have seen crowdsourced communities like CrowdMed and HealthTap gain great traction with both parties.  Patients are able to receive opinions free-of-charge and doctors are happy to share their knowledge for both altruistic and lead generation purposes.  We have also seen a rise in marketplaces from search and booking engines like ZocDoc and BetterDoctor, which help grow a doctor’s pipeline of patients, to on-demand general practice like Doctor On Demand (via video) and First Opinion (via text) as well as specialists – namely dermatology (via images) and psychology. In addition, there are concierge services like Medicast (an “Uber” for doctors) and destination healthcare marketplaces that focus on dental surgery, plastic surgery, LASIK, and joint replacements.

These examples are a few of many that validate how technology can increase affordability of care and provide more accurate diagnoses without a loss in quality.  It will be exciting to see if there will be one company that “wins it all”, or whether there will be many winners.  And how will the winner(s) look?

We feel that the leader in this category will be capable of scaling triage or diagnosis much faster with machine learning and/or the unlocking of shared medical knowledge from the network that would have to be built into this platform.

2)  Patient Health Data

When it comes to patient data, there are two trends at play. First, with the Quantified Self movement, data is being gathered for anything and everything from caloric intake to number of steps taken, oxygen levels, REM sleep, and much, much more.

At the same time, the industry is also starting to move away from the data silos that have historically locked patient data within a hospital or practice. The government and its Meaningful Use initiatives is a key driver behind this.

With all this new data, there’s an enormous opportunity for someone to become the “Mint.com” of health data. However, the key questions are how do we get data collection to cross over into the mainstream? How do we encourage people to track their health data, whether it’s self-collected or doctor-collected? To date, we have seen two “forcing functions”:

a) Hospital/Enterprise-driven: physicians, hospitals, employers, and insurers are encouraging patients to look at their lab results and share their self-collected data on their patient portals. Validic and HumanAPI sit on the backend of these portals, connecting clinical and fitness wearables, apps and in-home devices to an EMR.

b) Patient-driven: There is a growing number of web and mobile apps that give patients a secure and convenient way to collect, consolidate, analyze, and store information on medications, allergies and lab results, across and from all different EMRs.

Given that we have a better understanding of business models that sell directly to the end user, we naturally gravitate towards companies taking the second approach.  So far, we have seen that people with chronic diseases and health concerns are quick to adopt technology: having all of your medical information digitized and accessible through your smartphone or tablet is far more convenient than carrying a physical binder of lab results from one doctor’s office to another.  We look forward to seeing these users champion these apps and ultimately inspire everyone to own their health data.

Final thoughts

As the population ages and healthcare costs continue to grow, there will be a greater emphasis on technology’s role in managing health and wellness. While patient-to-expert networks and patient data are the two areas we are currently focused on, our thesis is ever evolving. Are there any other areas or companies that should be on our radar? What do you think the go-to health app will be?

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