The digital health world has found itself in a “probably historically bad financing and funding environment,” noted Michael Greeley, partner at Flare Capital Partners, during a panel held last week at the HIMSS conference in Orlando.
“In 2021, our sector saw $30 billion of capital come in. We were creating a little over 1,000 companies, which was probably three times what those ten-year trend lines had been. Now, we’re in this really awkward phase — we probably created way too many companies. Many of them had kind of narrow offerings, and they’re struggling to just get traction in the market,” he explained.
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Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
In Greeley’s view, two main qualities stand out among startups that have been able to successfully fundraise in this new environment.
The first is the ability to quickly prove ROI for customers.
“They can take credit for cost reduction in the near term. That has always been an important attribute, but in this environment, that ROI really needs to be hard and measurable within a year,” Greeley declared.
The ability to demonstrate improved outcomes is also incredibly important, he pointed out.
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He said that the second attribute is the ability to point to data that shows the product is making a difference — whether that be in terms of boosted operational efficiency, reduced clinical burnout or enhanced patient outcomes.
“For instance, a lot of patients are getting touched by a lot of different vendors. And so for us, we really hone in on the attribution that startups really need to get credit for their impacts,” Greeley said.
Another panelist — Robbie Freeman, chief nursing informatics officer at Mount Sinai Health System — agreed with Greeley’s comments, saying that “ROI is paramount” for today’s health system leaders.
Freeman said that once his health system decides to try out a product, it immediately establishes success metrics for the pilot and tracks them closely. If the system finds there isn’t ROI in the product, the partnership with the vendor simply cannot move forward, he remarked.
He added that health systems can think about ROI in a few different ways. Obviously, they often frame ROI in terms of cost savings, but systems can also think about ROI in terms of improved patient health and enhanced safety, Freeman said.
He also agreed with Greeley’s comments stating that many recently launched startups have quite narrow offerings. Freeman said that because of this, most hospitals aren’t too keen on point solutions and are looking for “broader platforms that can deliver on many of our use cases.”
Photo: Dina Mariani, Getty Images
