Smart Investing in Digital Health

Feb 8, 2021 | Blog

The current investor push in digital health is rooted in the fact that the U.S. spends way too much money on healthcare by any measure, and consumers get very little value for it. Healthcare expenditures are quickly approaching an unsustainable tipping point, exacerbated by the COVID-19 pandemic.

A recent McKinsey study [1] dives nicely into the issues surrounding digital health investment and examines nine “value pools” ripe for innovation. All of the digital health value pools identified are expected to grow by at least 8 percent annually through 2024.

As pressures to improve health outcomes and reduce health expenditures mount, established healthcare companies are more enthusiastic than ever before to participate in the digital health market. Another key takeaway I would note from the McKinsey piece [1]: considerations for those wanting to invest in the future of digital health (summarized below):

  • Continually refresh and evolve value definition. Digital health players should continually evolve their definition of value pools and potentially reevaluate where to play. A nimble attitude is critical to success.
  • Don’t go it alone. In digital health, companies have increasingly shifted from a competitive mindset to a collaborative one, recognizing the potential to unlock value with complementary capabilities and operational efficiencies through M&A activity, joint ventures, alliances and partnerships.
  • Commit and take action. To succeed in digital health, players must be flexible and fast. In an environment where external disruption has players from all sides reevaluating how they can add or find value, the ability to act quickly and decisively is even more important.

For investors looking for the powerful returns possible from early stage digital health investing, be sure you have knowledgeable people guiding you. Though there are tremendous opportunities in digital health, there are significant challenges that few people outside of the industry can understand. At Caduceus Capital Partners, LLC, we know the precise obstacles that can get in the way of healthcare innovators and are prepared with our deep bench of seasoned leaders to guide them through these challenges toward success.

Dave Vreeland is a well-known national expert on healthcare IT and the future of the healthcare industry. Building on more than 25 years of experience in healthcare management consulting, Dave is an active leader and advisor in early stage digital health strategies. He serves as senior managing partner at Caduceus Capital Partners, LLC, investing in early stage digital health companies poised to make a difference in shaping the way healthcare is accessed, delivered, and paid for across the country.