How to be successful in healthcare in spite of current economic uncertainty
In the latest episode of the Chilcast, host John Moore interviews Keith Figlioli, a Managing Partner at the healthcare-centric VC firm LRVHealth. Keith draws on his deep experience founding, operating, and investing in healthcare technology companies, along with consistent candid discussions with C-suite leaders. He provides unique perspectives on how different healthcare stakeholders approach assesssing the value of technology implementations.
“There are not many discernible trends that are consistent right now. The next 18 to 24 months are going to be some of the most difficult times for the earlier stage side of the ecosystem than we’ve seen over the last 15 years.”
Key Takeaways:
- The digital health sector is entering a crucial inflection point driven by clinical scarcity and consumerization. The next two years will squeeze out weaker players as they fold or are acquired. This is true for pretty much all organizations in healthcare from clinical delivery to tech startup.
- Key opportunities include automating operational tasks that add to overhead, vastly improving scheduling, integrating knowledge – not just data – into EHRs, and streamlining workflows (particularly administrative).
- Health systems need to clarify their differentiation and actively pursue partnerships to compete with aggressive new entrants that are eating at their margins. Identify what your org excels at and can be profitable providing, and then look to partner with others for high-quality care services. This will only become more true with the continued advancement of VBC models.
- After a period of irrational exuberance, the market is resetting to drive real healthcare transformation over the next decade. This is when we (society) will really start to see the benefits of all the investment in this space over the last 15 or so years.
Listen to the podcast by using the embedded player below, or on your favorite podcasting app via this link.
The Digital Health Inflection Point
Keith sees the industry entering a “second wave” of digital health transformation focused on fundamentally changing how and where care is delivered. This shift is driven by clinical scarcity and consumer demand. However, the next 18-24 months will be rocky for many early-stage digital health companies as capital flows tighten. Incumbents must maintain their focus on innovation despite economic challenges. The technologies that succeed in this period will demonstrate clear value in the form of cost reductions or revenue growth.
Key Areas of Opportunity
In terms of specific high-impact areas, Keith points to automating administrative tasks, improving patient scheduling, integrating medical evidence directly into EHRs, and streamlining dysfunctional processes like prior authorizations. He believes digital tools can unlock substantial savings by reducing healthcare’s labor-intensive overhead, which has grown steadily for decades. Maturing or new virtual care and hybrid care models will continue to improve access and convenience for consumers.
Defining Differentiation and Partnerships
For health systems defining competitive strategy, Keith advises clearly articulating their differentiation – both to employees and to the community – and resisting the urge to overextend capabilities. With many new entrants targeting higher-margin opportunities, partnerships will only grow in importance. Health systems need to determine what they can confidently own vs. areas ripe for collaboration. For example, Keith sees specialty care facing disruption much like the shakeup in primary care, with private equity becoming more active in acquiring practices to carve out specialization in specific areas of care delivery.
The Next Era of Healthcare Transformation
Looking out longer term, both John and Keith agree the market is resetting after a period of excessive capital and corresponding hype cycles around digital health. But even in the current climate, billions continue to flow into companies driving real change that have shown a realistic, sustainable business model. The foundations have now been laid with widespread EHR adoption, progressively more standardized data, and an emerging national interoperability infrastructure. Keith posits the next decade will see accelerated returns as new technologies unlock value from clinical data and more intelligent automation reduces waste.
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