These health tech buzzwords are out; cost control is in, so say investors

fitness-trackerWellness apps. Wearables. Middleware. Big data.

These buzzwords circulating around the health tech world are out, so declared a panel of health investors last week.

Products that reduce costs and/or improve efficiencies are in, they said.

The shift was striking after years of direct-to-consumer and wellness applications taking center stage at tech confabs and in the media.

Health reporters get pitches on digital health products all the time. Keeping up with what investors are looking for in new products and technologies can help us gauge the value of the pitch.

The group of investors assembled at WinterTech, a day-long conference hosted by Health 2.0 and held in San Francisco on Jan. 11. They offered some insights for journalists on the health beat.

Namely, that new political and economic realities are setting in.

Some key quotes from investors:

“We are focusing in on cost reduction rather than value-based care. We want companies that can increase operational efficiencies.” – Casper de Clercq, general partner, Northwest Venture Partners.

“We are looking at companies that can improve capacities and reduce costs.” – Carl Bouthillette, senior program officer, California Health Care Foundation Innovation Fund.

“The number one area of interest is helping the self-insured [large employers] manage their costs more efficiently.” – Ambar Bhattacharyya, managing director, Maverick Capital.

“Cost is about the burden of chronic conditions. For folks in my business, there is a ton of innovation that can be done in managing difficult chronic conditions.” – Busy Burr, head, Humana Health Ventures.

Lisa Suennen, managing partner at Venture Valkyrie, who moderated an investor panel, asked what health segments are no longer hot.

Old hat and undesirable investments named included:

  • Anything that helps the payers access clinical data (middleware)
  • Direct-to-consumer wellness applications
  • Niche big data applications (“They are four years too late,“ said one investor.)
  • Wearables and other trackers. “I don’t want to see more wearables,“ said another investor.
  • Prevention products, mostly because the timeframe for financial results is too long, several investors said.
  • Any digital tech with capabilities that can be “homegrown“ by hospitals themselves.

Areas the investors were excited about included:

  • Geriatrics
  • Workflow automation
  • Home-based care
  • Opioid and other substance abuse
  • Integrated care

Naturally, opinions differ on investment trends. Check out others for 2017 in  MedCityNews and Forbes.

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