With our fundraising complete for Venrock 7, Bryan Roberts and I are looking forward to putting more capital to work in the healthcare IT space. We believe now is the time for our clunky and expensive healthcare system to be reimagined and we’re seeing some of the most talented entrepreneurs flock to this sector, bringing much needed creativity, brain power and passion to address this massive challenge.
Finally, this market is getting serious about attacking the 30% of healthcare spending that is wasteful and unwarranted, providing transparency around cost and quality, and improving patient experiences so hospitals can stop duking it out with cable TV and airlines for the worst customer satisfaction. Now that the Affordable Care Act is no longer a politically uncertainty – we can get on with helping the market respond to significant incentives changes. Incentive changes like Medicare’s bundled payments in 2015, expansion of the ACO program, stage 3 of meaningful use, the employer mandate, and the Cadillac Tax in 2018. Furthermore, the longstanding opportunities to attack negative labor productivity across the sector, a payment system that even Rube-Goldberg could not have imagined, and IT systems designed in the 1980s, all present tremendous opportunity for entrepreneurs.
At the same time, the adoption of narrower provider networks among consumers on public and private exchanges, availability of information to enable shopping by patients, and greater cost sharing, will make the commercial market more competitive. As this happens, large employers and commercially insured individuals will soon realize that they are the high margin customers for healthcare providers and suppliers. The days of unmanaged spending to hospitals and doctors and uncertainty around value for money will be over. All of the approaches used by employers to manage non-healthcare spending categories will be ripe for translation by entrepreneurs to healthcare.
Venrock has a long history in this space that began in the late 1990’s with companies like athenahealth, which is a $5 billion company today. In the following decade, we invested in RelayHealth, Vocera and Castlight Health, among others. Today we have the pleasure of working with some amazing entrepreneurs who want to make healthcare better. These companies are helping give everyone “insider” access to top specialists in the country (Grand Rounds), giving consumers mobile access to excellent doctors to resolve everyday issues (Doctor on Demand), and our newest investment (Aledade) is helping physicians transition to the ACO model so they can spend more time with their patients delivering better outcomes at lower cost.
But there’s so much more to do. We want to partner with the next generation of Todd Parks’, Jonathan Bushs’, and Gio Collelas’ to make companies that, at first, may seem crazy and a few years later seem common sensical. As this happens, many more billion-dollar successes will be created and value will be delivered to all of us through better healthcare sooner.