J.P. Morgan 2023 healthcare conference live updates, Day 3

J.P. Morgan 2023 healthcare conference live updates, Day 3 unknown

A panel of health tech investors shared advice with a familiar refrain: Digital health buyers are looking for a return on investment and more comprehensive solutions.

“If you're selling to health systems, they're struggling. They don’t have enough budget,” said Hemant Taneja, CEO of General Catalyst. “If you're selling to employers…many of them are struggling. They're trying to figure out the impact of inflation on their businesses. In these cases, the emphasis on ROI becomes far greater.”

The importance of ROI amid economic uncertainty has been a common theme across multiple sessions at the conference, shared by health system, health insurance, digital health and investors alike. Another widely shared thought: that companies offering tech services and products that only focus on only area of medical care may need to find acquisition or merger targets.

“There is consolidation that needs to be thought about,” Taneja said.

Amy Raimundo, managing director of Kaiser Permanente Ventures, said having too many single software solutions is expensive for systems and requires too much change management.

“There have been a lot of narrow [tech solutions] that have proliferated where the juice isn’t worth the squeeze,” Raimundo said. “We can’t justify the cost of putting those into place.”

Dr. Cheryl Pegus, managing director of Morgan Health Ventures, part of J.P. Morgan’s employer-focused health company, said the market will create opportunities for digital health companies, health systems, employers and health insurance companies to collaborate.

“Survival and ROI requires data-sharing. I think that we will see a lot more of that and we're already seeing it occur,” Pegus said.

Taneja said it will be a “tricky year ahead” for digital health companies. The focus has shifted from revenue growth at all costs to generating a profit, he said. There were also a lot of wildly inflated valuations where healthcare services startups were getting valued at around 20 times their funding total, compared with the current rate of three times their total.

“Startups have to be creative in how they navigate these next couple of years in terms of figuring out how to grow into their valuations at normalized multiples,” Taneja said.

—Gabriel Perna