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Venture Capital Firms Are Increasingly Investing In Clinical Care
A physician checks a medical record.gettyCare delivery has never been an easy task. For decades, it was seen as a function of society delegated solely to hospitals and clinicians. However, over the years, care delivery has also become increasingly more complicated, begging for more innovation and change as a means to improve quality of care, increase access to care and ultimately, optimize health outcomes.With the emergence of these changes, players that have not traditionally been involved in healthcare have taken it upon themselves to shape the future of the industry.One interesting trend has been the increased presence of venture capital and private equity players in the clinical care business. The National Institute for Health Care Management (NIHCM) indicates that in 2021 alone, there were nearly 1,013 private equity backed healthcare transactions, followed by nearly 863 in 2022. Another report by Guidehouse indicates that between 2019 and 2023, nearly $47 billion dollars in healthcare related deal flow took place, represented by an array of transactions ranging from hospital system purchases to investments in new care delivery models.Indeed, the amount of capital investment across these deals is immense.However, one must ask why exactly are there so many deals being made in healthcare? What is the incentive to enter such an incredibly complicated industry one that is riddled with intricate regulations, razor thin margins, siloed frameworks and ever-changing expectations.One of the key reasons is because healthcare is ripe for innovation, and investors are keen to be the catalysts for this disruption. In the US, healthcare is by and far one of the largest sources of national spend. This is due not only to an increasingly growing aged population, but also because of growing health complications across communities and an overall lack of access to care for millions of Americans. Investors are hoping that they can utilize their networks and business acumen to better scale care models and discover new opportunities to improve care outcomesall the while capturing social and financial returns on their investments.Take for example Summa Health, one of Ohios largest integrated healthcare systems. Earlier this year, famed venture capital firm General Catalyst (GC) announced that it would be acquiring the healthcare system as a step towards its mission to undertake a fundamentally different approach to yield a fundamentally different and better outcome one that helps to realize the promise of health assurance care that is more proactive, accessible, and affordable to people everywhere.Read More: Big Data Unicorn Innovaccers Latest Report Indicates 87% Of Healthcare Providers Want AIThrough its new Health Assurance Transformation Company, or HATCo, the firm is interested in a three fold mission with its healthcare acquisitions: 1) assist health systems in their transformation journey, 2) help optimize technology and interoperability, and 3) operate these systems in a way that can provide an example of transformation for the healthcare industry as a whole.However, GC isnt the only one interested in this thesis. Big technology companies are also entering the arena with a charge to transform healthcare for the better. One of the primary examples of this is Amazon, which has invested billions of dollars to build a robust healthcare delivery service ecosystem. From virtual care visits to primary care and rapid medication delivery, Amazon is hoping to inspire better processes, optimize the system and ultimately, improve patient outcomes.Another example is Walgreens. Although traditionally a retail pharmacy chain, the company made a play in recent years to enter the primary care service market with its VillageMD platform. However, despite immense efforts, the pharmacy giant announced recently that it would be shutting down many of these clinics and will instead be diverting its resources into more valuable assets.Despite the momentum and the unprecedented investments, one thing is certain: healthcare is not an easy nut to crack. Undoubtedly, only time will tell just how successful these disruptors will be.
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