Like the Internet in 1999: Andreessen Horowitz‘s Julie Yoo on Investing and Modernizing Healthcare
Feb 21, 2022
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Julie Yoo, General Partner at Andreessen Horowitz, discusses opportunities in digital healthcare, their approach to healthcare investing, and her journey from operator to investor. Topics include the market for patient data, the value of robust patient data, unbundling hospital systems, and the mindset shift from operator to investor.
Digital health companies leverage patient data to compete with legacy providers.
Sharing patient data facilitates referrals and enables digital health companies to manage their own economics.
Digital health companies are challenging traditional providers in negotiation power, incentivizing investment in novel digital health solutions.
Deep dives
Digital Health Companies and Data Interoperability
Digital health companies are leveraging technology to compete with legacy providers in novel ways. One advantage of these companies is their sophisticated use of patient data. Current regulations, such as HIPAA, protect personal health information, but de-identified data can be sold without explicit patient refusal. However, there are concerns about the adequacy of de-identification rules. Patient data is sold to various entities, including pharma companies and analytics companies. Providers also spin out companies to improve clinical diagnostics and develop AI algorithms on patient data.
Incentives for Sharing Data
The market for sharing patient data is driven by alternative revenue streams for traditional providers and the need for referrals. Traditional providers sell patient data responsibly to create value for both sides. Sharing data also facilitates referrals between providers. In the digital health space, data sharing is driven by the need for context in value-based care models. Digital health companies want access to patients' full context to manage their own economics. Referrals and closing the loop of care are key incentives for sharing data.
Changing Power Dynamics in Healthcare
Digital health companies are challenging traditional providers in terms of negotiation power with payers. Digital health companies can offer lower prices and increased access to care through virtual-first models, attracting payers who want to bend the cost curve and improve access. Traditional providers are realizing the need to invest in digital health solutions to diversify their revenue and mitigate staffing risks. This shifts the power dynamic in the industry and incentivizes investment in novel digital health solutions.
Unbundling of Healthcare Systems
There's a growing trend of unbundling healthcare systems, with providers focusing on specific segments of the market. This allows for better service and care tailored to individual populations. It benefits both underserved populations and those receiving subpar care. Unbundling presents opportunities for digital health companies to deliver more specialized care and extend their reach to previously underserved populations.
Building an Operating System for Digital Health
Digital health companies are building the operating system layer of healthcare. This involves creating shared infrastructure for virtual-first, patient-centric, and value-based care models. Companies are focused on developing capabilities like patient relationship management systems, billing and revenue cycle systems, communication platforms, and supply chain software. By building this operating system layer, digital health companies aim to provide better and more efficient care delivery.
Julie Yoo is a General Partner at Andreessen Horowitz where she leads investments in healthcare technology. Prior to joining a16z, Julie was the co-founder, Chief Product Officer, and Board Director at Kyruus, a venture-backed health tech company recognized as a market leader in patient access. She speaks with us about opportunities in digital healthcare, Andreessen Horowitz’s approach to healthcare investing, and her journey from operator to investor.
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