The healthcare industry is one rife with dissatisfied customers, confusing paperwork, and uneven coverage. It’s also, for better or for worse, an unavoidable necessity. Taking these facts into consideration, it’s no surprise that venture capital firms are pouring money into various solutions in the hopes that one, if not many, will catch on. In a multi-trillion dollar industry, even a moderate success can mean better service, happier customers, and of course, huge financial returns.
Technological solutions designed to empower healthcare customers have gotten a lot of VC attention, and for good reason. These user-driven approaches bring to mind recent disruptions in other industries, from Uber’s impact on transportation to the changes in food delivery brought about by Seamless. Consumer needs are driving business strategies more than ever before, and the healthcare field is seeing yet another iteration of this trend.
Putting power in the customer’s hands often means putting it in their mobile phones. Mobile apps accounted for over 25% of Healthcare IT funding in 2016, a $1.3 billion piece of the pie. Especially in developing countries, smartphones have become a lifeline for people underserved by traditional healthcare. New and upcoming applications allow direct connection to medical providers for people who might otherwise have trouble getting quality care. Long waits and inconvenient appointment times are just a couple of the problems that new VC funding is poised to help solve.
Behind-the-scenes components of the industry are attracting VC attention as well. Medical record-keeping is an essential aspect of healthcare, facilitating information flow between patients and providers—and while it might not be the most obvious opportunity for improvement, it hasn’t stopped prominent firms like Founders Fund and others from investing millions in startups to streamline the documentation process.
All the hallmarks of venture capital are being applied to the industry. Innovation accelerators, a Silicon Valley standby for the last decade or so, have popped up across the country to support young businesses in this field. It’s estimated that there are nearly 100 in the U.S. alone, each hoping to fuel the next game-changing healthcare startup. Many specialize in discrete areas such as IT or aging issues, and bring an additional level of sophistication to their approach.
Although growth potential is massive, the healthcare industry has its own unique set of hurdles that creators have to overcome. For one, the field is heavily regulated. Any new technology dealing with patient care must be thoroughly vetted and put through an approval process that can take years. Any firm hoping to score big returns on healthcare must be willing to see things through, and be prepared for the possibility that a multi-year investment can be a failing one.
There’s also the fact that existing healthcare entities are deeply entrenched. Making headway in the health field often means making compromises or potentially navigating conflicts with powerful insurance companies and hospital networks. Taking on these institutions can be a risky proposition, and allowing them to buy out your property can diminish returns.
Even with these potential risks, the medical field has too much promise for investors to ignore. Venture capital has already made huge impacts in other major industries, so it’s hard to imagine that healthcare won’t look radically different in a few years as a result of this massive influx of cash. We’ve already seen the ways that infusion of funding has altered long-established industries; the future of healthcare may just be waiting for the right investor.