Takeaways from the 2019 HLTH Conference

This fall, the Providence Ventures team traveled to Las Vegas to join hundreds of entrepreneurs, investors, and healthcare innovators at the second annual HLTH conference. After four long days of stimulating conversations, panels, and networking sessions, we left with some anecdotes and key takeaways to share:

Growing Investor Interest in Alternative Care Delivery Models:

While it has been a long wait for the healthcare industry (and early investors in the space), the evolution and traction of alternative care delivery models was prominent at the conference. Companies in the space have begun to specialize, tailoring their models to meet the needs of specific patient populations, such as Medicaid or Medicare. With significant capital raises of companies like Cityblock Health and Unite Us, focused on meeting the needs of Medicaid populations (which historically has been a population largely unaddressed by innovations in care delivery), we believe investors are turning a deeper focus to this growing space. Additionally, there appears to be a shift in many of these models to leveraging lower certified clinicians (or even non-clinician community-based providers) for in-home and remote telehealth care and patient engagement.

Formalization of Innovation Efforts within Industry Incumbents:

Consumerism continues to be a buzz word at healthcare conferences. Incumbents now have tangible evidence of the growing threat from Big Tech with the entrance of Amazon, Apple, and Walmart, all heavy-hitting companies with strong consumer relationships. Many health systems have responded to these threats by creating formalized “Innovation” or “Digital” teams to shift patient experiences to a consumer strategy that meets patients “where they are”, and make sense of the proliferation of exciting but complex new healthcare technologies. These digital organizations are focused on not only providing market insights but also on creating frameworks for the organization to review, implement and track the ROI of emerging technologies. While this trend has mostly been seen in larger health systems and integrated delivery networks, smaller, regional health systems are following suit as the existential threats of new competitors has become tangible. The PV team was particularly excited by how this trend may help to accelerate the implementation of innovations and reduce the long sales cycles that many entrepreneurs face.

Increasing Prevalence of New Companies Utilizing VR/AR Technology:

One noticeable aspect of this year’s HLTH was the increasing prevalence of Virtual Reality / Augmented Reality companies focusing on healthcare. This was evident the moment you walked in, as the conference area had a VR Lounge, right next to the main registration. Although immersive technology saw a lot of hype in the consumer landscape in the past, it is starting to gain traction and acceptance in the healthcare ecosystem for enterprise applications. Low hanging fruit lies mainly in the learning and development realm. VR/AR solutions can be implemented at hospital simulation centers empowering training for both complex and non-complex procedures. In addition, VR/AR can also provide a new potentially more effective modality for compliance training and the myriad of other training modules that caregivers must attend for compliance and continuing education credits. The PV team will be monitoring this space closely over the next 12–18 months as these technologies become more mainstream in the health system market.

Ballooning Valuations are Driving Alternative Ways to Build “Rationally-Priced” Assets:

Through conversations with investors and entrepreneurs alike, PV noticed that the market is responding to the historically high valuation trends by exploring new ways to generate more “rationally-priced” assets. Within this trend, we’ve noted three distinct emerging strategies:

1. Early-stage investors are generating deal flow by partnering early with forward-leaning organizations (typically healthcare incumbents), as both an operational partner and down-stream investors.
2. With the recognition that, as the HCIT segment has matured with loads of capital invested, there are likely distressed assets (overpriced, underperforming) in the market that may be attractive assets to recap and infuse with better management.
3. Finally, several investors expressed interest in incubating companies from the ground up, allowing them to get in at the “ground floor” at attractive valuations.

While healthcare IT conferences have come and gone over the years, the growing consensus among attendees this year is that HLTH is here to stay. Many attendees, PV among them, now hold the conference in the same regard as the JPM Healthcare Conference or the HIMSS Conference. With that said, the PV team is already counting down the days until we head back to Vegas next fall!