Payers and Providers as Value Adding Health Tech Investors

14 Sep

By Michael Quigley, VP of Investor Research, LSN

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Healthcare payers and healthcare providers alike stand to gain significant increases in cost efficiency as a result of the successful implementation of new technologies into their workflows and into the lives of the patients they care for and insure. As such it is no surprise that many of these groups have begun investing into early stage technologies, either through their own corporate venture vehicles or by sponsoring external venture funds.

Beyond simply providing capital, these groups represent a tremendous value-adding resource for the companies that they invest in.  Based on our conversations and experience in reaching out to these groups on behalf of companies, they are almost exclusively investing with a strategic mandate, targeting technologies where they can be a customer or help drive adoption in a meaningful way. This leads to them primarily focusing on healthcare IT, tech-enabled services and, to a lesser extent, low-risk medical technologies.

An interesting parallel can be drawn between these payer and provider linked funds in the digital health space and large pharma groups for therapeutics. Both bring significant expertise to the table in their respective sector and invaluable development advice; lower the risk of customer acquisition (for healthcare IT companies) or M+A/exit risk for therapeutics if the technologies do work and they provide a significant level of validation in the technology for other investors looking to co-invest or participate in later rounds. To put it simply, if I was a digital health entrepreneur, these kinds of funds would be at the top of my list when fundraising.

At RESI Boston on Sept 26th, the Payer & Provider Venture Funds Panel will feature 4 speakers from these funds, who will discuss the types and stages of technologies they are looking for, how they add value outside of capital, and where they see their space going in the next few years. Attendees of the session will hear from:

If you’d like to hear the advice of these investors, you can register for RESI now.

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