Technology has placed health care services in the hands of senior living residents and patients at home with the touch of a button, but not all investors are excited by the innovative startup side of this advancement. Corporate venture capital partners (CVCs) are taking a hard look at whether the influence of technology in care models, referred to as the “Uber-ization” of health care, can be sustained.
While startup care providers and other businesses that offer health and wellness, transportation or in-home services are finding initial success in their fundraising, not all investors are seeing the same opportunities around these direct-to-consumer models. The expanded role of technology in health care is what some are referring to as the “Uber-ization,” comparing new technology advances with the popular on-demad ride-hailing app that has exploded in popularity over the past several years.
Industry groups have also taken a liking to up-and-coming digital health innovations that can improve the lives of seniors in all care settings, including serene living. Last fall, the AARP Innovation Fund established a $40 million venture capital fund to invest in these types of products and service lines.
With price points that are largely considered affordable for patients and consumers for home visits and other care services, some investors worry that these models are not likely to succeed in the long run. While the price range of home services can vary, higher price points are more viable and can offset the growing costs of labor, according to Robert Mittendorff, M.D., partner at Norwest Venture Partners.
“I’ve been very skeptical around the ‘summoned care’ market,” Mittendorff said during a panel discussion at MedCity Invest conference in Chicago in April. “Primarily, it’s because of the price point that many consumers are willing to pay. You can’t make that up on volume because of the amount of labor involved. …Uber for health care only works at $500 per visit.”
Kaiser Permanent Ventures, the venture capital arm of California-based health care giant Kaiser Permanente, recently backed Hometeam, an in-home care provider, with a $5 million investment. Specifically, Hometeam uses technology and software to match caregivers with patients in their own homes or other care settings like independent living. The direct support of Kaiser is a prime example of the significant value major health care players are placing on innovative startup businesses.
Another home care startup that has been likened to Uber, California-based Honor, is one that investors also see as an exciting company working within the technology trends of where health care models are going.
“Like Honor, caring for people at home is sort of a direct-to-consumer play and is a big one to warrant potential [for success],” Skip Fleshman, managing partner at Asset Management Ventures, said during the MedCity Invest conference.”
Corporate venture capital partners are also taking a hard look at where consumers want greater efficiency and accessibility. While some CVCs may be somewhat skeptical about investing directly in businesses that offer direct-to-consumer services, startups that incorporate telehealth and other in-demand components like scheduling and payment innovations are peaking interest.
“Consumers are asking for more transparency, more tools,” Mittendorff, M.D., partner at Norwest Venture Partners, said during the panel. “They’re looking for more scheduling. So, we think a lot about payments and how to make that part of the health care system more convenient and transparent.”
Written by Amy Baxter