/ en Fri, 25 Apr 2025 22:51:24 -0500 Tue, 18 Mar 25 06:15:00 -0500 /aha-center-health-innovation-market-scan/2025-03-18-walgreens-move-go-private-4-key-takeaways <div class="container"><div class="row"><div class="col-md-8"><img src="/sites/default/files/inline-images/Walgreens-Move-to-Go-Private-4-Key-Takeaways.png" data-entity-uuid="b8db2af7-9c46-4fb3-8202-f3f09a78e324" data-entity-type="file" alt="Walgreens’ Move to Go Private: 4 Key Takeaways. A Walgreens logo in front of a stock market prices board." width="1200" height="751"><p>While financial and retail analysts continue to evaluate the implications of Walgreens Boots Alliance’s <a href="https://investor.walgreensbootsalliance.com/news-releases/news-release-details/walgreens-boots-alliance-enters-definitive-agreement-be-acquired" target="_blank" title="Walgreens Boots Alliance: Walgreens Boots Alliance Enters into Definitive Agreement to Be Acquired by Sycamore Partners">recent agreement</a> to be taken private by Sycamore Partners, many important questions loom.</p><ul><li>What will become of the retail pharmacy’s health care assets and its apparently rapidly dwindling aspirations as an outlet for primary care?</li><li>How will Walgreens’ huge national footprint change once the deal valued at nearly $24 billion is expected to close?</li><li>Can Sycamore Partners successfully reposition Walgreens for financial recovery, and what role does the private equity firm foresee as to the retailer’s future in health care?</li><li>Does Sycamore Partners have the capital needed to transform Walgreens into a serious and sustainable competitor in the pharmacy and health care services space against companies like CVS Health, Amazon and others?</li></ul><h2>4 Changes the Walgreens Sale Signals</h2><h3><span>1</span> <span>|</span> This may be the end of Walgreens’ direct role in primary care.</h3><p>Just five years after its first $1 billion investment in VillageMD (another $5.2 billion investment followed in 2021) and co-locating the primary care company’s outlets adjacent to some of its stores in the Houston area, Walgreens is ready to turn the page on this business.</p><p>At one time, Walgreens anticipated having more than 600 VillageMD locations, but that optimism quickly faded. Last April, the retailer announced plans to close 160 of the clinics. Attempts to find a buyer for VillageMD and its related businesses so far have been unsuccessful. Sycamore now will try to accelerate these efforts, analysts suggest.</p><p>Walgreens estimates that it could get as much as $3.4 billion from a VillageMD sale, but some believe that the business, which includes more than 345 locations and related businesses Village Medical, Summit Health and CityMD, is worth far less. A more realistic figure might be $1 billion, Sandeep Dahiya, academic director of the Business of Health Initiative at Georgetown University 's McDonough School of Business, told Modern Healthcare.</p><h3><span>2</span> <span>|</span> Significant downsizing could be coming.</h3><p>Walgreens is facing crushing debt of about $9 billion as well as opioid-related liabilities and other items that Sycamore had to account for in the total $23.7 billion price tag, the Wall Street Journal reports. Shedding underperforming stores and sharply downsizing nonessential management and personnel to reduce costs could follow, some analysts suggest. Selling off assets like VillageMD also could help with the turnaround effort as Sycamore and Walgreens focus on long-term growth opportunities.</p><h3><span>3</span> <span>|</span> This represents Walgreens’ opportunity for rebirth.</h3><p>Some analysts believe that Sycamore’s experience in retail will help Walgreens regain its footing and give it breathing space to sort through its business difficulties without the glare of the financial media. With the retailer being taken private, it won’t face some of the pressures of achieving quarter-to-quarter growth and can focus on driving long-term growth and improvements in its businesses before selling off some of them.</p><p>Having a multiyear hold period will allow Walgreens and Sycamore to emphasize and drive the business evolution, Howard Gutman, private equity strategy and coverage lead for MorganFranklin Consulting, noted in a recent interview. After that, they can make some significant changes and then realize the results through whatever route they think is best.</p><h3><span>4</span> <span>|</span> High debt level could impact turnaround.</h3><p>Based on financing commitments Walgreens disclosed in a <a href="https://www.sec.gov/Archives/edgar/data/1618921/000119312525050097/d935649ddefa14a.htm" target="_blank" title="SEC: Form 8-K Walgreens Boots Alliance, Inc.">March 10 filing with the Securities and Exchange Commission</a>, 83.4% of the financing for Sycamore’s buyout is debt, notes the Private Equity Stakeholder Project (PESP). This is more than double the average debt level (41%) used by private equity firms to acquire companies last year.</p><p>The PESP is a nonprofit watchdog organization focused on growing private equity and the broader private funds industry.</p><p>“The amount of debt in the Walgreens acquisition is concerning, in addition to Sycamore Partners pledging capital that it does not appear to have. This leveraged buyout tactic saddles private equity-owned companies with substantial debt, often draining resources that otherwise could be invested in innovation, workforce development or adapting to market changes,” notes a <a href="https://pestakeholder.org/news/sycamore-partners-to-finance-walgreens-buyout-with-83-debt/" target="_blank" title="Private Equity Stakeholder Project: Sycamore Partners to finance Walgreens buyout with 83% debt">report on the PESP website</a>.</p><p>Nevertheless, more than a dozen parties already lined up to provide financing, according to people familiar with the matter, the <a target="_blank" title="Wall Street Journal: Walgreens Goes From $100 Billion Health Giant to Private-Equity Salvage Project" rhef="https://www.wsj.com/business/retail/walgreens-private-equity-sale-rise-fall-42ac5db6">Wall Street Journal reported</a>.</p></div><div class="col-md-4"><p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" alt="AHA Center for Health Innovation logo" width="721" height="130" data-entity- type="file" class="align-center"></a></p><p><a href="/center/form/innovation-subscription"><img src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png" data-entity-uuid data-entity-type alt width="360" height="300"></a></p></div></div></div>.field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } h2 { color: #9d2235; } Tue, 18 Mar 2025 06:15:00 -0500 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2025-02-18-4-signs-might-be-stronger-year-digital-health-funding <div class="container"><div class="row"><div class="col-md-8"><p><img src="/sites/default/files/inline-images/4%20Signs-That-This-Might-Be-a-Stronger-Year-for-Digital-Health-Funding.png" data-entity-uuid="0afaa22e-e387-4df8-8d30-862f9e65eadc" data-entity-type="file" alt="4 Signs That This Might Be a Stronger Year for Digital Health Funding. A tablet computer with a brain scan displayed on the screen and a stethoscope wrapped around it." width="100%" height="100%"></p><p>Investments in digital health startups have whipsawed in recent years. After record-breaking investments in 2020 and 2021, sharp dips followed the next two years. For 2025, a rebound may be in store, according to a recent <a href="https://www.summithealth.io/insights/digital-health-go-to-market-report-news-release" target="_blank" title="Summit Health Advisors: Digital Health Go-to-Market Report: Four-in-Five Companies to Raise Capital in 2025">survey report from Summit Health Advisors</a>.</p><p>The survey, conducted in September, of 103 senior leaders whose companies sell digital health products, found that 81% have a positive outlook or are cautiously optimistic about investment prospects for this year. Nearly the same percentage (79%) said that their organizations will pursue new investment capital in the next 12 months.</p><p>And if digital health company funding rounds early this year are any indication, it could be a bounce-back year for startups. Here are some of the more significant digital health funding rounds announced in Q1, according to <a href="https://news.crunchbase.com/venture/biggest-rounds-january-2025-ai-data-infinite-anthropic/" target="_blank" title="Crunchbase News: The 10 Biggest Rounds Of January: Infinite Reality Tops Busy Month">Crunchbase News</a>, which reports on the business of technology, startups and venture capital.</p><h2><a href="https://www.retro.bio/" target="_blank" title="Retro Bioscience homepage"><img src="/sites/default/files/inline-images/Retro-Biosciences.png" data-entity-uuid="8f88b5db-2df9-4823-bcf3-6849591a8b58" data-entity-type="file" alt="Retro Biosciences. Human cells." width="524" height="612" class="align-left">Retro Biosciences</a></h2><p>The biotech firm that focuses on cellular reprogramming, autophagy (the body’s process of reusing old and damaged cell parts) and plasma-inspired therapeutics designed to help people live longer raised a $1 billion round led by Italian financier Sandro Salsano. The capital will be used to back clinical trials for drugs that battle age-related diseases.</p><h2><a href="https://www.truveta.com/" target="_blank" title="Truveta homepage"><img src="/sites/default/files/inline-images/Truveta.png" data-entity-uuid="d14d0b1d-0612-4aeb-a744-0f4fbea295a4" data-entity-type="file" alt="Truveta. Strands of human DNA." width="524" height="612" class="align-left">Truveta</a></h2><p>The medical data research company scored a $320 million investment from Regeneron Pharmaceuticals, Illumina and 17 U.S. health systems as it continues to build what is billed as the world’s largest genetic data base. The deal values privately held Truveta at more than $1 billion. The company aggregates medical records data from its partner institutions to link treatments with outcomes and other health information.</p><h2><a href="https://www.kardigan.bio/" target="_blank" title="Kardigan homepage"><img src="/sites/default/files/inline-images/Kardigan.png" data-entity-uuid="2c75bacb-1f5e-461d-8138-f738b868809c" data-entity-type="file" alt="Kardigan. A scan of a human body with the cardiovascular system highlighted." width="524" height="612" class="align-left">Kardigan</a></h2><p>The San Francisco-based startup that develops cardiovascular drug treatments launched with $300 million Series A financing led by Arch Venture Partners, Perceptive Advisors and Sequoia Heritage. The company’s platform leverages a proprietary set of cardiac-specific tools that help analyze therapeutic candidates as well as patients’ individualized responses to treatment.</p><h2><a href="https://innovaccer.com/" target="_blank" title="Innovaccar Inc. homepage"><img src="/sites/default/files/inline-images/Innovaccer-Inc.png" data-entity-uuid="ac8b7119-cf3e-42e0-8c54-676c0c258ca8" data-entity-type="file" alt="Innovaccer Inc. A data cloud raining on a microchip." width="524" height="612" class="align-left">Innovaccer Inc.</a></h2><p>The health care data company that increasingly has been focused on artificial intelligence (AI) to support its value-based care programs announced a $275 million Series F funding round. The investment will fuel Innovaccer’s efforts to expand its collaboration with existing customers, introduce new AI and cloud capabilities, and scale a developer ecosystem on the platform. The company plans to add multiple co-pilots and agents to its offerings, including utilization management, prior authorization, clinical decision support, clinical documentation, care management and a contact center.</p></div><div class="col-md-4"><p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" alt="AHA Center for Health Innovation logo" width="721" height="130" data-entity- type="file" class="align-center"></a></p><p><a href="/center/form/innovation-subscription"><img src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png" data-entity-uuid data-entity-type alt width="360" height="300"></a></p></div></div></div>.field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } h2 { color: #9d2235; } Tue, 18 Feb 2025 06:00:00 -0600 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2024-04-23-can-hospitals-create-better-digital-health-startups <div class="container"><div class="row"><div class="col-md-8"><p><img src="/sites/default/files/inline-images/Can-Hospitals-Create-Better-Digital-Health-Startups.png" data-entity-uuid="2272187d-c875-4361-a4ef-0bcb6e6a0cce" data-entity-type="file" alt="Can Hospitals Create Better Digital Health Startups? A laptop computer with three rockets launching out of the screen behind a women holding a jagged red arrow going up an to the left." width="100%" height="100%"></p><p>The startup incubation studio <a href="https://aegisventures.com" target="_blank" title="Aegis Ventures homepage">Aegis Ventures</a> recently gained some important backers for its model to co-develop, invest in and deploy tech solutions that address health care’s most pressing quality, equity and cost problems.</p><p>Nine health systems, including Northwell Health, Novant Health, Ochsner Health and Stanford Health Care, recently joined the venture company’s <a href="https://www.prnewswire.com/news-releases/aegis-ventures-announces-partnership-with-nine-health-systems-to-build-and-deploy-healthtech-solutions-302104921.html" target="_blank" title="PR Newswire: Aegis Ventures Announces Partnership with Nine Health Systems to Build and Deploy Healthtech Solutions">Digital Consortium</a>.</p><p>Together, the health systems and the private equity (PE) firm that is the venture capital division of <a href="https://www.aegiscapcorp.com/" target="_blank" title="Aegis Capital Corp. homepage">Aegis Capital Corp.</a> will develop startups to address health system needs. Aegis believes that health system leaders are best suited to identify opportunities for innovation.</p><p>In partnership with entrepreneurs and technologists, consortium members will co-develop an ecosystem of synergistic companies built for health systems by health systems that address core operational pain points. John Noseworthy, M.D., former president and CEO of Mayo Clinic, will chair the consortium and work closely with health system partners to leverage the respective strengths and strategic plans of each system.</p><p>Northwell and Aegis have been collaborating on this concept for three years and already have built four companies spanning patient engagement, women’s health, artificial intelligence-based diagnostics, workflow automation and emotion analytics.</p><p>The new participants in the <a href="https://aegisventures.com/insights/putting-health-systems-first/" target="_blank" title="Aegis Ventures: Putting Health Systems First">consortium</a>, who were selected through a rigorous evaluation program, collectively represent more than $65 billion in operating revenue and more than 300,000 employees. The consortium likely will expand in the future, John Beadle, Aegis Ventures co-founder and managing partner, recently told Fierce Healthcare.</p></div><div class="col-md-4"><p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" alt="AHA Center for Health Innovation logo" width="721" height="130" data-entity- type="file" class="align-center"></a></p><p><a href="/center/form/innovation-subscription"><img src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png" data-entity-uuid data-entity-type alt width="360" height="300"></a></p></div></div></div>.field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 23 Apr 2024 06:00:00 -0500 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-12-05-3-firms-level-playing-field-health-equity-investing <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="3 Firms Level the Playing Field in Health Equity Investing. The cover of Leveling the Playing Field in Health Equity Investing. New Download!" data-entity-type="file" data-entity-uuid="47d25f30-bb7e-4274-9bfe-a7b83fb29aee" src="/sites/default/files/inline-images/3-Firms-Level-the-Playing-Field-in-Health-Equity-Investing.png" width="560" height="344"></p> <p>The path to accelerating innovation in health care to address issues like health equity can be difficult to navigate. As many hospitals and health systems look to partner with and perhaps help fund startups, they are experiencing no shortage of opportunities.</p> <p><img alt="The cover of Leveling the Playing Field in Health Equity Investing." data-entity-type="file" data-entity-uuid="5ad88084-fca0-4e55-9257-9ab35bfafb1b" src="/sites/default/files/inline-images/Leveling-the-Playing-Field-in-Health-Equity-Investing.jpg" width="313" height="406" class="align-left">And as studies have shown, it can be easy to overlook fledgling companies led by underrepresented Black, Hispanic, Asian or female entrepreneurs. A new AHA Center for Health Innovation report, <a href="/aha-center-health-innovation-market-scan/2023-12-04-evening-playing-field-health-equity-investing">“Leveling the Playing Field in Health Equity Investing,”</a> explores the challenges these entrepreneurs face, how some venture capital (VC) funds are expanding opportunities for underrepresented startups and how the field can benefit.</p> <h2><span>Diversity Gains Uneven</span></h2> <p>The historic challenges facing underrepresented company leaders are also an issue within the venture capital community, notes <a href="https://www2.deloitte.com/content/dam/Deloitte/us/Documents/audit/us-audit-human-capital-survey-report.pdf" target="_blank" title="Deloitte: VC Human Capital Survey. Fourth edition. April 2023.">Deloitte’s Venture Capital (VC) Human Capital Survey</a> released earlier this year.</p> <p>Deloitte and its partners, Venture Forward and the National Venture Capital Association, have conducted four VC human capital surveys since 2016 to benchmark and assess the state of diversity, equity and inclusion in the VC field.</p> <p>However, even with studies showing the benefits of diversity in the VC industry, progress has been uneven. For instance, in 2021, VC-backed startups raised more than $345 billion in funding, yet only 2.4% was invested in startups led by female founders, 1.3% led by Black founders and 2.1% by Hispanic founders.</p> <p>Results from the most recent survey conducted in 2022 by Deloitte and its partners show that the VC industry has made “significant but somewhat inconsistent progress” in increasing its gender, racial and ethnic diversity since 2016. Regardless, it’s clear that much work remains to level the playing field in health care for startups led by underrepresented groups.</p> <h2><span>Creating Opportunity</span></h2> <p>To ensure that this happens and that progress is fast-tracked, some VC firms have created health care innovation funds to provide capital to startups founded by Black individuals, women and other groups that historically have had difficulty accessing outside capital to fund their companies and innovations.</p> <p>Some firms are targeting their investments toward underrepresented communities in health care. The AHA has invested in three firms to support health care technology companies and entrepreneurs who too often are left out of early financing.</p> <h2><span>3 Venture Capital Firms Disrupting the Status Quo</span></h2> <h3><a href="https://jumpstartnova.com/" target="_blank" title="Jumpstart Nova homepage.">Jumpstart Nova</a></h3> <p>With $55 million in assets under management, the firm invests in Black-founded and -led health care startups offering tech-enabled services, biotech, diagnostic devices, health IT, digital health and consumer health and wellness. The firm’s strategic limited partners, including the AHA, Advocate Health Care, Eli Lilly, HCA Healthcare, Henry Ford Health System, LHC Group, Cardinal Health and Meharry Medical College, help the firm to understand the field’s challenges and how innovative companies can be successful in solving them.</p> <h3><a href="https://steelskyventures.com/" target="_blank" title="SteelSky Ventures homepage.">SteelSky Ventures</a></h3> <p>This female-led venture capital firm is laser-focused on improving access, care and outcomes across women’s health. The fund, one of the world’s largest focused on women’s health, has provided investments to 16 companies in the consumer health, digital health and medical device sectors, among others. With $73 million in assets under management across its platform, SteelSky continues to expand its commitment to improving women’s health while seeing a cascading effect from its investments. More than 2,000 jobs have been created across the portfolio of companies in which SteelSky has invested. About $500 million in annual recurring revenue has been achieved by the portfolio, which has a combined valuation of $5 billion.</p> <h3><a href="https://www.seaeventures.com/" target="_blank" title="Seae Ventures homepage.">Seae Ventures</a></h3> <p>This VC firm is committed to advancing equity by investing primarily in entrepreneurs who are women as well as Indigenous, Black, brown and other people of color whose companies seek to reduce the health disparities affecting traditionally underserved and historically marginalized populations. Founded in 2019, the fund has more than 30 investors representing both health care payers and providers, financial services companies, endowments and foundations, and major U.S. corporations. Seae has invested in 18 companies concentrated on women’s health, behavioral health, financial health, value-based care, diagnostics and digital health.</p> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <p><a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></p> </div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 05 Dec 2023 08:25:33 -0600 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-11-14-find-sweet-spot-now-growth-equity-investing <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="Find the Sweet Spot Now in Growth Equity Investing. Strategic Investment in Health Care Innovation Part 4: Why Growth Equity is an Increasingly Good Fit for Innovation Investors: Finding the Sweet Spot between Venture Capital and Buyout Investing. New Download!" data-entity-type="file" data-entity-uuid="3c2dd393-6708-4a37-a216-1b1d7bfd085d" src="/sites/default/files/inline-images/Find-the-Sweet-Spot-Now-in-Growth-Equity-Investing.png" width="620" height="381"></p> <p>Successful private investing involves far more than merely writing a check in return for a stake in a business. Investors play a key role in nurturing portfolio companies and helping them achieve their potential. But that role and resulting investment outcomes vary significantly based on the kind of investments the firm targets.</p> <p>The newly released fourth and final part of the Strategic Investment in Health Care Innovation series from Concord Health Partners and the AHA Center for Health Innovation explains <a href="/center/strategic-investment-in-health-care-innovation" target="_blank" title="Strategic Investment in Health Care Innovation series landing page.">“Why Growth Equity is Increasingly a Good Fit for Innovation Investors.”</a></p> <p>The report explains the growth equity “sweet spot” that exists in the middle of a continuum between the least and most mature private-company investments and analyzes risks associated with venture capital and buyout private-equity strategies.</p> <p><strong><a href="/system/files/media/file/2023/11/Concord-Investing-Part-4-Growth-Equity-Investing-in-Health-Care.pdf" target="_blank" title="Strategic Investment in Health Care Innovation Part 4: Why Growth Equity Is Increasingly a Good Fit for Innovation Investors PDF.">Download Part 4 of the series now.</a></strong></p> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 14 Nov 2023 06:30:00 -0600 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-10-17-6-keys-innovation-investing-success <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="6 Keys to Innovation Investing Success. Innovation investing in health care: Keys to success report page 1." data-entity-type="file" data-entity-uuid="86360e5c-53fe-4ed0-a175-6daa067a94bb" src="/sites/default/files/inline-images/Concord-Investing-Part-3.png" width="620" height="381"></p> <p>On the surface, clinical and administrative expertise and industry knowledge would appear to perfectly position health care organizations to underwrite startups developing new digital health solutions.</p> <p>Over the past decade, many organizations have tried this on their own without the help of professional investors. Some have succeeded while others have learned how complex and demanding it is to develop a successful private-investment program.</p> <p>A newly released report from Concord Health Partners and the AHA Center for Health Innovation, <a href="/center/strategic-investment-in-health-care-innovation">“Innovation Investing in Health Care: Keys to Success,”</a> covers six cornerstones to managing a private-investment program. The report addresses:</p> <ul> <li><strong>How to invest systematically.</strong></li> <li><strong>Why you should invest in what you know.</strong></li> <li><strong>Ways to maintain a deep and consistent investment funnel.</strong></li> <li><strong>How to create value to differentiate yourself.</strong></li> <li><strong>Why it’s important to commit for the long term.</strong></li> <li><strong>Whether to seek a partner or fly solo.</strong></li> </ul> <p>This report builds on Part 2, “A Private-Equity Primer for Health Care Organizations,” and Part 1, “Understanding the Keys to Successful Innovation Investing” of the <a href="/center/strategic-investment-in-health-care-innovation">series</a>.</p> <p><strong><a href="/system/files/media/file/2023/10/Concord_Investing_Part_3-Innovation-investing-in-health-care.pdf">Download Part 3 of the series now.</a></strong></p> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 17 Oct 2023 06:15:00 -0500 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-10-10-3-takeaways-general-catalysts-health-transformation-spinoff <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="3 Takeaways from General Catalyst’s Health Transformation Spinoff. A man sits on top of a tower with the General Catalyst log on it and looks through binoculars into the future." data-entity-type="file" data-entity-uuid="a58d3c27-04b4-4d56-8cb5-b6f197d9dbb3" src="/sites/default/files/inline-images/3-Takeaways-from-General-Catalysts-Health-Transformation-Spinoff.jpg" width="620" height="381"></p> <p><a href="https://www.generalcatalyst.com/" target="_blank" title="General Catalyst homepage">General Catalyst (GC)</a>, the huge venture capital firm that has been concentrating on how to help hospitals and health systems transform care delivery, is putting added muscle behind this effort. It is spinning off <a href="https://www.generalcatalyst.com/health-assurance" target="_blank" title="Health Assurance Transformation Corp. landing page.">Health Assurance Transformation Corp. (HATCo)</a> to be led by former Intermountain Health CEO Marc Harrison, M.D.</p> <p>Harrison and General Catalyst CEO Hemant Teneja wrote a <a href="https://www.generalcatalyst.com/perspectives/the-future-of-health" target="_blank" title="General Catalyst: The Future of Health">blog</a> about their self-described plan to create an “Amazon ecosystem of health care” to help health systems achieve a more affordable, accessible and proactive care system.</p> <p>As part of its goals, General Catalyst will look to acquire a health system within HATCo’s first year as a national blueprint to transform the field and to put the system on a platform where digital systems can scale across the enterprise without operating in silos.</p> <p>HATCo also will work with GC’s 20-plus health system partners to help them on their transformation journey and will help to catalyze the health assurance ecosystem by building an interoperability model with tech-driven solutions from a subset of health care portfolio companies.</p> <p>HATCo will operate as a for-profit, Harrison said, adding that, “We are unaware of any industry that is able to truly transform without the impetus of capitalism behind it.”</p> <p>In their blog, Teneja and Harrison emphasize their focus on stakeholder alignment and that transforming health systems will require a “decades-long time horizon.” In its work, GC will emphasize this latter point to investors.</p> <h2><span>3 Takeaways from the Launch of HATCo</span></h2> <h3><span>1</span> <span>|</span> The company will focus on platform innovation.</h3> <p>It sees the current private equity model in health care as having a maniacal focus on removing costs from the system. HATCo’s plan will involve giving health systems the chance to capitalize on new revenue streams, which should in turn enable them to invest more in technologies to service their communities.</p> <h3><span>2</span> <span>|</span> Radical collaboration will be the rule.</h3> <p>HATCo is committed to creating an open architecture platform and working closely with its health system partners by sharing best practices, new technologies and a transformation playbook.</p> <h3><span>3</span> <span>|</span> Value-based care is baked into the plan.</h3> <p>HATCo intends to work with the ecosystem to demonstrate that a model that is better for patients also can be good for business.</p> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 10 Oct 2023 10:03:21 -0500 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-09-12-private-equity-primer-health-care-organizations <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="A Private-equity Primer for Health Care Organizations. Strategic Investment in Health Care Innovation Part 2: Private-Equity Primer for Health Care Organizations." data-entity-type="file" data-entity-uuid="4860030b-eba5-4e58-ab12-c3673ccb5372" src="/sites/default/files/inline-images/A-Private-equity-Primer-for-Health-Care-Organizations.png" width="620" height="381"></p> <p>Health care costs, which account for about 20% of U.S. gross domestic production, are a major force in driving innovation in the field. And increasingly, provider organizations are exploring innovation investing as part of their strategy to transform operations.</p> <div class="row"> <div class="col-md-3"><img alt="Strategic Investment in Health Care Innovation Part 2: Private-Equity Primer for Health Care Organizations" data-entity-type="file" data-entity-uuid="00f62d16-bb94-41b7-8920-f797ea8e4225" src="/sites/default/files/inline-images/Page-1-Concord-Investing-Part-2-Private-Equity-Primer-for-Health-Care-Organizations-466x357_0.png" width="357" height="466" class="align-left"></div> <div class="col-md-9"> <p>A newly released report, <a href="/center/strategic-investment-in-health-care-innovation#part2">“Primer for private-equity investing for health care organizations,”</a> from Concord Health Partners and the AHA Center for Health Innovation explores what leaders need to know about private equity as they explore innovation investing. The report defines private equity as an asset class, describes how its strategies differ from one another, explains how private-equity firms can help health care organizations innovate and how to evaluate prospective partners.</p> <p>This report builds on Part 1 of the series, <a href="/center/strategic-investment-in-health-care-innovation#part1">“The Rise of Innovation Investing Among Health Care Organizations.”</a></p> <p>Future reports in the series will explore ingredients for success in health care investing and growth-equity investing in health care.</p> <p><strong><a href="/system/files/media/file/2023/08/Concord-Investing-Part-2-Private-Equity-Primer-for-Health-Care-Organizations.pdf">Download Part 2 of the Series Now.</a></strong></p> </div> </div> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 12 Sep 2023 06:30:00 -0500 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-08-22-digital-health-funding-may-be-down-ai-still-draws-interest-investors <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="Digital Health Funding May Be Down, but AI Still Draws Interest from Investors. A business man with a briefcase in his right hand looks through a telescope held in his left hand while standing on a giant robot hand." data-entity-type="file" data-entity-uuid="f0e11e02-0f17-41b2-a323-7a6051eb7224" src="/sites/default/files/inline-images/Digital-Health-Funding-May-Be-Down-but-AI-Still-Draws-Interest-from-Investors.png" width="620" height="381"></p> <p>The global digital health market, once the darling of venture capital investors, has taken a tumble.</p> <p>After remaining relatively flat for the last few quarters, Q2 2023 saw funding reach its lowest level — $3.4 billion — since Q3 2017, according to a recent <a href="https://www.cbinsights.com/research/report/digital-health-trends-q2-2023/" target="_blank" title="CR Insights: State of Digital Health Q2’23 Report">CB Insights report</a>. For the first half of this year, digital health funding totaled $6.9 billion, only half of last year’s total while the number of deals was the lowest since Q2 2015.</p> <p>The U.S. accounted for nearly two-thirds of the digital health funding in Q2, but that was down 80% compared with Q1, the report notes.</p> <p>Care delivery and navigation technologies by far drew the most interest from investors, recording 152 deals with $1.5 billion in investments followed by monitoring, imaging and diagnostics technology with 77 deals and $700 million in investments.</p> <p>Nevertheless, interest among investors and health care leaders continues to rise in artificial intelligence (AI), noted Alex Lennox-Miller, CB Insights analyst, during a recent <a href="https://www.cbinsights.com/research/briefing/webinar-digital-health-trends-q2-2023/" target="_blank" title="CR Insights: Digital Health’s Midyear Review and What to Expect Next">briefing about the firm’s first-half analysis</a>. Clinical support areas and diagnostic imaging continue to be the most promising applications of AI, but more novel uses of the technology for automating documentation are drawing interest. Still, much work remains to enhance the accuracy of these systems, Lennox-Miller said, adding that generative AI will play a larger role in more digital health systems going forward.</p> <p>One positive sign in the Q2 analysis found that mega-round funding and deals increased for the first time since Q4 2021. The U.S. accounted for four of the five mega-round deals in Q2.</p> <h2><span>The Top U.S. Equity Deals in Q2 Included:</span></h2> <ul> <li><strong><a href="https://www.aledade.com/" target="_blank" title="Adelade homepage"><span>Adelade</span></a></strong>, a startup that uses data analytics to help independent physicians’ offices transition to value-based care models, received $260 million in Series E funding.</li> <li><strong><a href="https://www.heartflow.com/" target="_blank" title="HeartFlow homepage"><span>HeartFlow</span></a></strong>, which developed AI-powered software that maps out the heart’s coronary arteries and any blockages through a 3D CT scan, received $215 million in Series F funding.</li> <li><strong><a href="https://strivehealth.com/" target="_blank" title="Srive Health homepage"><span>Strive Health</span></a></strong>, which provides value-based care to adults living with chronic kidney disease, received $166 million in Series C funding.</li> <li><strong><a href="https://authorhealth.com/" target="_blank" title="Author Health homepage"><span>Author Health</span></a></strong> banked $115 million for its new platform offering care for Medicare Advantage patients with serious mental illness and substance-use disorders.</li> </ul> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 22 Aug 2023 06:00:00 -0500 Venture Capital Funding/VC Firms /aha-center-health-innovation-market-scan/2023-08-08-general-catalysts-4-priorities-health-care <div class="container"> <div class="row"> <div class="col-md-8"> <p><img alt="General Catalyst’s 4 Priorities for Health Care. A man with a beard in half business suit, half T-shirt with suspenders looks through a telescope to see icons that represent the future of health care start-ups." data-entity-type="file" data-entity-uuid="019d1f6d-0f34-4b87-ae21-c1ebbfc48686" src="/sites/default/files/inline-images/General-Catalysts-4-Priorities-for-Health-Care.png" width="620" height="381"></p> <p>General Catalyst (GC), one of America’s largest venture capital firms, has raised about $15 billion since it launched more than two decades ago. It has backed companies that were once relative unknowns like Airbnb, Instacart and Warby Parker. It sees itself as an agent for change — working to transform companies, industries and the world.</p> <p>Over the past several years, however, GC has become increasingly focused on health care with its Health Assurance Ecosystem initiative, which is designed to create a more proactive, affordable and equitable system of care.</p> <p>In May, General Catalyst partnered with another tech-focused venture capital (VC) firm, Andreessen Horowitz, to co-lead a <a href="https://www.globenewswire.com/news-release/2023/05/16/2670039/0/en/Hippocratic-AI-Launches-With-50-Million-Seed-Round-Co-Led-by-General-Catalyst-and-Andreessen-Horowitz-to-Build-Safety-Focused-Large-Language-Model-for-Healthcare.html" target="_blank" title="GlobeNewswire: Hippocratic AI Launches With $50 Million Seed Round Co-Led by General Catalyst and Andreessen Horowitz to Build Safety-Focused Large Language Model for Healthcare">$50 million seed round</a> to bring a startup called <a href="https://www.hippocraticai.com/" target="_blank" title="Hippocratic AI homepage">Hippocratic AI</a> out of stealth mode.</p> <p>It is using the money to build its safety-focused large language model for health care that can help ease workforce shortages and burnout. It’s a text-generating artificial intelligence model designed for nondiagnostic, patient-facing applications with such use cases as explaining benefits and billing, providing dietary advice, delivering negative test results that indicate when nothing is wrong, onboarding patients and more.</p> <p>GC’s vote of confidence in Hippocratic AI’s technology fits with the VC firm’s mission: to invest in powerful, positive change that endures and to approach company building with responsible innovation.</p> <p>Hippocratic’s AI models were trained under the supervision of medical professionals. It only releases each role once the people who do that job in real life deem that the model is ready.</p> <h2><span>Transfixed on Transformation</span></h2> <p>GC increasingly has become focused on engaging and supporting startups like this and bringing together transformation-minded health care systems to reduce friction, inefficiency and cost while accelerating innovation, said Daryl Tol at the recent AHA Leadership Summit.</p> <p>Tol, former CEO for Advent Health’s Central Florida division, now heads GC’s Health Assurance Ecosystem, which includes 19 health system partners like HCA Healthcare, Intermountain Health and Jefferson Health. Health Assurance Ecosystem and its partners work together to identify opportunities to build lasting, innovative solutions that will transform health care.</p> <p>“There is no reason multiple health systems can’t work together to build a virtual nursing command center or a patient experience platform. There’s not enough of this happening in health care,” Tol said.</p> <p>Along with convening partners to address common challenges impacting the field, GC’s other top health care aims are to provide capital for innovative startups and to be an aggregator that builds some of the machinery and capabilities to help accelerate transformation.</p> <h2><span>4 GC Health Assurance Ecosystem Priorities</span></h2> <h3><span>1</span> <span>|</span> Bridge building is a must.</h3> <p>GC has hired a team of long-tenured health system executives like Tol, former Intermountain Health CEO Marc Harrison, M.D., and others to work hand in hand with health systems and innovators to create transformation that endures. GC’s leaders know that transformation is occurring in health care; they just don’t believe it’s happening fast enough nor is all the needed equipment in place yet.</p> <h3><span>2</span> <span>|</span> Transformation must become more digestible.</h3> <p>The GC team is helping its health system partners break transformation into pieces so they can demonstrate success quickly and hold ground while doing it, Tol explained. “How do we increase the momentum? How do we create scale so that health systems maintain their regional footprint and their strength and can still play on a national stage? These aren’t easy questions to answer, but we’re working on it,” Tol said.</p> <h3><span>3</span> <span>|</span> Health care needs better middleware.</h3> <p>Health care is fragmented and it is difficult, if not impossible, for a single health system to aggregate the technological capabilities of companies like Optum, Amazon or CVS Health, Tol said. And while health care has a solid, established infrastructure with electronic health records and enterprise resource planning tools to support operations, many other technologies today are merely point solutions that don’t provide interconnectivity, interoperability and the ability to plug in data. “We’re thinking about how to take combinations of point solutions and put them in a rational mixture with middleware. Who does it? How does it get built? We don’t have to do it all. We just need to find great partners, collaborate and put this together in a way that makes sense for health systems,” Tol said.</p> <h3><span>4</span> <span>|</span> Everyone needs to see the picture on the box.</h3> <p>Transformation is like a puzzle or Lego set. Health care is siloed and people are focused on their individual pieces of the puzzle, Tol said. Each piece may look great in isolation, but it’s tough to envision how it fits into the larger puzzle without seeing the picture on the box. “That’s what General Catalyst is trying to do,” Tol said.</p> <hr> <h2><span>See What You Missed at the AHA Leadership Summit</span></h2> <p>This <a href="https://www.youtube.com/watch?v=dS5pNO9mseA" target="_blank" title="YouTube: AHA 2023 Leadership Summit: Highlights from the Meeting">video</a> provides highlights from the recent conference in Seattle.</p> <hr> </div> <div class="col-md-4"> <p><a href="/center" title="Visit the AHA Center for Health Innovation landing page."><img alt="AHA Center for Health Innovation logo" data-entity- data-entity-uuid="7ade6b12-de98-4d0b-965f-a7c99d9463c5" src="/sites/default/files/inline-images/logo-aha-innovation-center-color-sm.jpg" type="file" class="align-center"></a></p> <a href="/center/form/innovation-subscription"><img alt data-entity-type data-entity-uuid src="/sites/default/files/2019-04/Market_Scan_Call_Out_360x300.png"></a></div> </div> </div> .field_featured_image { position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } .featured-image{ position: absolute; overflow: hidden; clip: rect(0 0 0 0); height: 1px; width: 1px; margin: -1px; padding: 0; border: 0; } Tue, 08 Aug 2023 06:15:00 -0500 Venture Capital Funding/VC Firms