Our HealthTech Team’s Perspectives From J.P. Morgan 2020
With over 20,000 participants and hundreds of sessions, presentations and meetings, there was hardly a dull moment at this year’s J.P. Morgan healthcare conference, which took place in mid-January. There were several themes at JPM that we found relevant to the healthcare entrepreneurial ecosystem, each with implications for both founders and investors. Here we share our thoughts about three of these themes: Social Determinants of Health (SDoH), genomics and interoperability.
1. Who will pay for ‘whole person care’ — and how much?
Social Determinants of Health (SDoH) were a big conversation topic, as the industry increasingly understands that demand for (and spending on) healthcare is influenced by factors like housing, nutrition, food access, transportation and financial stability (among many others).
Companies like Unite Us — which is squarely focused on SDoH and provides ‘coordinated care networks of health and social service providers’ — took center stage at JPM. Others — such as patient engagement solutions provider Welltok — discussed how they are looking to integrate SDoH into their existing clinical programs.
For the innovation community, this is the tip of the iceberg in an emerging field with plenty of white space ripe for disruption. The biggest challenge for startups trying to demonstrate healthcare savings by addressing social factors will be finding the stakeholder(s) in the value-chain to pay for services upfront. For this, companies will need to create collaborations (for instance between payors and other community service providers), leverage new business models (for instance shared-savings or delayed earning) and align the often conflicting incentives in the system. This is no easy task, and investors will likewise have to get comfortable with these new, non-traditional business models and the resulting new revenue trajectories that come along with them.
2. Genomics is gigantic
Genomics — the segment of molecular biology concerned with genetics and how genetic code is structured and manifests itself in our body — has exploded. The rise of genomics is fueled by two inter-linked trends: the availability of increasingly cheaper and better DNA sequencing technologies, along with advances in computational power and methods that allow researchers to analyze genetic data in previously unthinkable speed and depth.
On the first, Illumnia — one of the leaders in the sequencing space, announced that it is partnering with Roche and launching a variety of new products aimed at continuously lowering the cost of sequencing (with the ultimate objective of reaching the “$100 genome”). On the second, everyone from tech giants Google, Microsoft and Amazon to smaller upstarts are trying to build engines to power smart exploration. 10X Genomics, for instance, announced a variety of new software platform products aimed at allowing users to run analyses and find linkages across a larger number of cells, or to link epigenetic signals with gene expression data.
At Pitango, we strongly believe in this space. As Bryan Roberts from Venrock put it, we now have the ability to practice ‘non-hypothesis driven experimentation’ in genomics — validating or rejecting theories we don’t even identify in advance. We think the strongest implication of this trend is the enablement of creative scientists and founders to uncover new connections — within the genome, and across genomics and other data (from gut microbes to blood and urine biomarkers).
This exploration requires upfront investment, and genomics companies will need to raise significant amounts of capital to mature and grow. But the rewards in the space will be enormous, as genomics could unlock secrets to countless diseases (and treatment options) — and create unparalleled value in the process.
3. Is interoperability finally in close sight?
Talk of interoperability — the push to make health data ‘liquid’ and available across sources to users from across the healthcare continuum — started more than a decade ago, with the Obama-era rules on digitization of patient medical records. But over the last year or so, the push to make different parts of the American healthcare system truly ‘talk’ to one another has really gained traction.
Driven by the 21st Century Cures Act, industry consortiums like CommonWell Health and the Sequoia Project have brought most players in the system to sit around the table and develop standards and APIs that allow for easier exchange of medical data. Forthcoming rules from the CMS and NCO (National Coordination Office) — expected in the early months of 2020 — will further catalyze the opening up of medical records and make additional clinical data widely available.
From the healthcare innovation perspective, interoperability poses unprecedented potential on two fronts: in both the infrastructure and the application layers. On the infrastructure side, identifying, seamlessly aggregating and updating health information from multiple sources is a technological challenge requiring complex engineering solutions. Companies that will be able to do this well, and to build value-added services on top of the infrastructure, will become winning platforms on top of which healthcare transaction data will flow. On the application side, there are myriad potential use cases of what could be done with the data — from deidentified population health focused research, to individual personal health records empowering patients. Here, succesful applications will be those that build good products, acquire and retain users and scale quickly.
As interoperability becomes a reality, the question for us as investors will be how to capitalize on the trend and place the right bets in what is bound to be an extremely competitive space. Given that seamless, integrated clinical data is the holy grail of healthcare, this will no doubt be a good problem to have.
There were many other trends, announcements and news at JPM, but these are a few of the ones that caught our eye. We’ll continue sharing others, and additional themes we are excited about, in our future HealthTech fund editions.
We are thrilled to be back home in Israel and start the year meeting with entrepreneurs, founders and other friends across the Israeli healthcare ecosystem — and we are looking forward to a great 2020 in the healthtech industry.
