healthcare it is the new black

SXSW

Healthcare IT is the New Black

Lisa SuennenPsilos Group

March 9, 2012

SXSW Conference: Lisa Suennen 3-9-12

Healthcare IT in Perspective2

Once Upon a Time

Not ThatLong Ago

Today

Banking Industry



Once Upon a Time

Not ThatLong Ago

Today

Manufacturing Industry



Once Upon a Time

Not ThatLong Ago

Today

Healthcare Industry


Why HIT is HOT Right Now

Without change, costs will grow from $2.7 trillion now to $4.5 trillion in 2019

Healthcare inflation is a crushing weight on the economy Healthcare adds $1500 to cost of every GM car Starbucks spends more on healthcare than on coffee Companies with the highest healthcare costs grow the slowest* Every 10% increase in “excess” healthcare costs the economy

120,000+ jobs and $28B of lost revenues*The cost shift from employers to individuals has begunAlmost 10,000 people per day are aging into Medicare

2/3 of Americans over 65 have 2+ chronic illness Chronic illness accounts for 75% of all healthcare costs

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*Rand Corporation


Consumers Are Feeling The Pinch6


Is This Just 1990s Deja Vu?Haven’t I Seen This Bubble Before?

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It was all about the new kid on the block: the Internet

Products focused on disintermediation, not cost/quality: Content portals, such as WebMD, DrKoop.com Ecommerce portals: PlanetRx, Drugstore.com Group purchasing websites, such as Medibuy

E-prescribing—the only thing that was more physician workflow oriented; Epocrates, PocketScript, Allscript


Why It’s Different This Time

PPACA and HITECH Act are driving technology throughout a previously low tech system

• Near-universal access to Internet, broadband and wireless technologies at every significant U.S. clinical organization;

• Ubiquity of smart phones & iPads put cheap computing power in the hands of physicians and consumers

• Cheap and widely available software enables mass customization at affordable cost with real ROI

• Recognition that the healthcare system can no longer avoid the information age if we are serious about cost-containment

• Investors turning to HIT as biotech/medtech has become a money-losing proposition

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And Furthermore, The Times, They are a’Changing

Providers facing new risk management and cost-cutting realities Complex new delivery system models emerging (ACOs)

Employers desperately trying to exit the healthcare business

Advent of HIX changing payer industry dynamics and consumer branding requirements Payers diversifying their businesses

through healthcare IT acquisition If consumers are going to pay

they need: Information transparency to

make Financial tracking systems Anytime/anywhere access Personalization

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Payers

OutpatientProviders

InpatientProviders

OthersConsumer

Where Are the Big Opportunities?10


HIT is HOT: Venture Investments Up, Up, Up11

2011 Biopharma Med Devices Health IT

Investment ($ billion) $3.9 $3.3 $0.6

2010-2011 $Growth (%)

- 27% 22%

% G

row

th in

Inve

stm

ent A

ctiv

ity

Biopharmaceuticals Medical Devices Health IT

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-6%

-3%

26%

2010-2011 Healthcare IT Deal Growth (# Deals)

2010-2011 Growth (# Deals)

Source: Dow Jones VentureSource


HIT is HOT: The Proof is in the Payments

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There is ton of HIT development money out there from non-traditional sources: CMS ONC and a myriad of Other Challenges, Grants and

Incentives Return of the Accelerators/Incubators

Robust exit environment for HIT companies 100 acquisitions 2010-2011 compared to 76 in 2009-2010 Acquisition checks getting larger

Suddenly everyone’s a healthcare company 38 of the 2011 Fortune 50 are in the healthcare business

compared to 5 of the 2001 Fortune 50 Even Merck and Pfizer now have HIT-focused funds


What to Watch Out For

Doctors and consumers don’t like to pay for things

Lives are short and sales cycles are long, especially in the payer and hospital worlds

If you can’t explain your economic value, you will lose

Nothing ever happens in the timeframe you think it’s going to happen

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

-Bill Gates

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What to Watch Out For: The Curse of the Underpants Gnomes

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But If You Have a Good Thing, Money Abounds15

Incubators/Accelerators

AngelInvestors

CorporateInvestors

VentureCapitalists

Rock HealthBlueprintHealthBox

StartUp HealthMore to come

HopefullyNot Your

Parents

United HealthcareHumanaWellpoint

AetnaSiemens

Merck, PfizerBest Buy

Walgreensand many more

Psilos GroupChrysalis, Venrock

Cardinal, HLMPhysic, Kleiner

Aberdare, LemhiCamden, ExcelMohr DavidowMorgenthaler


Thanks and Have a Great Meeting16

Lisa SuennenManaging MemberPsilos [email protected]

Read my blog at http://venturevalkyrie.com

healthcare it is the new black

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