A Reflection of the 2017 JP Morgan Healthcare Conference

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Scott Hoch

Scott Hoch

Partner

January 24, 2017
Thought Leadership

It has been said that investors don’t like surprises, and I tend to agree, so there is something oddly comforting about the predictability of the annual JP Morgan Healthcare Conference.  Having just returned as one of the 30,000+ over-scheduled, over-charged, over-tired people crammed into a few city blocks in San Francisco, I can definitively say that the conference delivered as expected. 

Prior to this year, I believed that one of the most consistent aspects of the conference was an emergence of “The Next Big Thing” in healthcare.  The Next Big Thing is a central theme, trend, or problem that dominates meeting discussions, sparks semi-and miss-informed debates, and drives industry technology vendors to claim that they have the solution .    

As I reflect on this year’s conference, the biggest surprise was the conspicuous absence of the Next Big Thing.  Alternatively, the Next Big Thing of years past (Value-Based Care, Population Health, and Healthcare Consumerism) have become immutable trends in healthcare.  These themes have matured and their implications to providers, payers, and employers are becoming better understood.  After meeting with many interesting growth-stage software CEOs, it’s clear that the solutions are maturing as well.  As a growth-stage investor investing in software and services companies, the combined maturation of these themes and companies should provide a strong investing environment in 2017.  The absence of the “Next Big Thing” was a pleasant surprise this year, so who said investors don’t like surprises? 

Value-Based Care is Here to Stay

Last year providers started value-based care programs (reimbursement for taking risk in delivering better care at a lower cost).  Although a small piece of the revenue equation today, we strongly believe that this transformation will accelerate in 2017 regardless of any changes to ACA.  For providers to make this shift to delivering higher quality, lower cost care they must invest in technology to accommodate these changes.   

Population Health Is Real

We came away thinking that the healthcare industry is in the third or fourth inning of getting their arms around Population Health.  Data is starting to be integrated and analytics are applied in order to better manage groups of patients. Care Management Software, Clinical Decision Support, and Data Analytics solutions are helping providers segment patient populations and deliver specific care plans to meet an individual’s needs.  We believe a technology transformation to enable population health is a necessity and will accelerate in 2017. 

Healthcare is a Consumer-Driven Industry

It feels official that healthcare is now a consumer service.  Consequently, we see providers expressing the necessity to build real relationships with consumers.  Having to build a relationship with a patient is a completely novel concept in healthcare and not a change that providers can achieve on their own.  As one entrepreneur that I met with put it, “What retail store, hotel or other consumer-industry defines the checking-out process as discharge?" His comment cemented the size of the gap that providers face in transforming their business models to build a relationship with a consumer.  We believe healthcare providers will have to leverage third-party software and service vendors to deploy consumer-focused strategies to survive.  This reality is driving significant investment and innovation in patient engagement solutions, patient portals, patient experience software and reporting with the goal to improve the experience of the healthcare consumer. 

ACA The Election / ACA / Concluding Thoughts

Another surprise of the conference was the lack of conversation centered around the imminent scaling back or repeal of the ACA.  As we all know President Trump ran on a platform to repeal or drastically reduce the ACA.  Before traveling to San Francisco, I envisioned the election results and the seemingly imminent change to ACA would be “The Next Big Thing”.  I believe that there is a takeaway in the absence of this conversation in that the immutable themes of value-based care, population health, and healthcare consumerism will continue.  At Frontier Capital, we are enthusiastic to support growth-stage software companies with capital and guidance as they help providers, payers, and employers respond to these three immutable industry trends.

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