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Has the JP Morgan HealthCare Conference ecosystem gone out of control?

For the last 30 years, I have been attending the Healthcare Conference started by Hambrecht and Quist that is now hosted by JP Morgan. Honestly this year I had very mixed feelings about its value!

In the early years private and public companies were being hosted in one centralized hotel, The St Francis in San Francisco, the first working week in January. The ecosystem under one roof of Wall Street banks, analysts, entrepreneurs, corporate CEOs and investors was awesome and we could get a great impression of healthcare trends for the new year in just 4 days, see quality vetted deals... and meet a lot of interesting value-added people!

Bruce Booth from Atlas venture wrote an article in Forbes “The Game Isn't Worth The Candle: Reflections On The JPM Healthcare Conference” that got me to write down my own mixed feelings on how the conference has evolved into a manic series of events:

  • After its acquisition by JP Morgan, the Healthcare conference evolved into focusing mostly on large cap public companies. Most entrepreneurs, venture capitals and early stage players can no longer get an invitation to the conference. This created a vacuum that expanded the event into a ten-block radius around Union Square into competing conferences for the private sector with venture capitalist holding court in their hotel rooms.

  • In 2019, there were so many parallel events like Startup Health, RESI, Biotech show case, Digital MedTech Innovators that it was impossible to have quality meetings... running around Union Square and Market street in the rain to catch a glimpse of each event... doing my 15,000 steps marathon per day!

  • The other disappointment is that the quality of the deals has gone down. Most of the HealthTech/digital health companies pitching on stages had ideas or business models that failed in the past and seemed to have little presentation or business model coaching. Honestly, the overabundance of venture investment in the space, called it a bubble or not, is enabling half-baked companies to present, creating a bad impression that may be hard to recover.  Being one of the few that has built successful HealthTech companies with great exits, my heart hurts to see entrepreneurs spending 4 years of hard work with false promise… with an acqui-hire exit! This has evolved into a numbers game... high volume of presenters... to find a good one! Remember the dot com hype… the most successful outcome was Athena Health that recently sold for $5 billion 20 years later!

  • The hotel industry is taking advantage of the event by quadrupling their hotel room to over $1,000 per day and renting cocktail by the hour... and Lyft and Uber supercharge by 2X more than a normal taxi!

  • The homeless in the street were the worst in the last 30 years: aggressively hustling for money and insulting us otherwise.  SF Citi hall needs to step up and we need better mental health solutions!

  • The parties circuit has evolved into a manic circus with most events being between 6 to 8pm in the evenings... so I had to create a mapped printout to optimize my route! Most networking encounters have evolved from deal related conversations to showing your face in unproductive conversation at noisy parties.

  • Hopefully 2020 will bring back some sanity to the hell week!


Anne DeGheest pioneered the HealthTech or Digital Health space as a healthcare executive, an entrepreneur, angel investor, corporate advisor and mentor capitalist.

She is the founder of HealthTech Capital and MedStars venture

Anne DeGheest | 14 January 2019

Anne DeGheest, entrepreneur, business angel, mentor, conseillère et professeur invitée à Stanford. Fondatrice de HealthTech Capital et MedStars

Anne DeGheest est une femme appréciée et respectée dans le Silicon Valley. C'est une pionnière et, très probablement, l'une des Belges qui connaît le mieux l'écosystème de la Vallée puisqu'elle y vit depuis 1979.

Etudiante brillante à l'ULB, où elle décrochera un diplôme d'ingénieur commercial à l'école Solvay, elle fit un premier stop en 1977 sur la côte Est des Etats-Unis. Elle passe deux ans à Cambridge, où elle obtient un MBA à Harvard. Deux ans plus tard, elle met le cap sur la Californie. Elle va d'abord travailler comme marketing manager chez Raychem, société technologique de Menlo Park. Mais Anne DeGheest va assez rapidement bifurquer vers le secteur de la santé, en rejoignant d'abord Nellcor (qui a lancé l'oxymètre de pouls). Elle va alors être l'une des pionnières d'un nouveau secteur, baptisé "health tech", où les technologies de l'informatique sont utilisées dans le domaine de la santé.

Plusieurs grosses entreprises vont progressivement émerger dans ce nouveau secteur. Elles vont conduire Anne DeGheest à intervenir comme « advisor » et « business angel ». En 2010, elle finira par créer son propre fonds d'investissement (HealthTech Capital) sous la forme d'un groupement d'investisseurs privés (avec des médecins et des multinationales comme Johnson&Johnson ouPhilips). «L'idée du health tech, ou digital health, est d'aider les personnes, notamment celles qui souffrent de maladies chroniques, à se prendre en charge depuis leur domicile ». En sept ans, le fonds HealthTech Capital a vu passer près de 1500 dossiers et investi dans 26 d'entre elles.

Anne DeGheest | 22 November 2017

Digital health is dead, says this health-tech investor

Excellent article  by Rob Coppedge, CEO of Echo health Ventures, on the reality check hitting hard the overhyped digital health sector!

There are a LOT of unmet needs and opportunities to start new HealthTech companies, but it takes time, hard work and understanding of the workflows, who will pay and who will use the new product…and why!.

Monetization is key! Entrepreneurial team need to spend more time on the pain points, business model and market creation to scale up at the historical market adoption rate.. not the wishful thinking of tech entrepreneurs or unknowledgeable investors still pouring into digital health as the new Gold Rush.  

Rob Coppedge is CEO of Echo Health Ventures in Seattle and has been investing and working in health care for 20 years.

Let me be clear: I believe strongly in the need for substantive, consumer-centric transformation of the health care system and have been a long-term proponent of the power of entrepreneurs to catalyze and drive these difficult changes.

Despite this, I truly struggled to prepare for a recent presentation on the future of venture capital investing in the "digital health" space. The group I addressed expected another digital health pep rally – but, after much reflection, the best I could bring them was an explanation of why, despite the countless blog posts and questionable survey data to the contrary, I believe the digital health party is over and why those of us focused on long-term systemic transformation should be happy to put this hype cycle behind us.

Winter is coming

Since 2014, roughly $16 billion in venture funding has been invested across 800-plus companies in the digital health space. If the investors of these companies were to generate the returns they are expecting, we would need to triple the public market cap of the health IT space by 2021. These are unrealistic expectations that have created an unhealthy environment for tech-enabled health care start-ups and the entrepreneurs that lead them. Only recently have the VC unicorn watchers across the blogosphere begun to question we aren't seeing the billion-dollar success stories from other industries replicated in HCIT (health care info tech), exposing underlying concerns that threaten the return profiles of overcapitalized digital health portfolios.

The only thing that has grown faster than dollars invested in digital health has been the hype surrounding it – with conferences, blogs, incubators and Twitter handles springing up everywhere. While primarily differentiated from stodgy HCIT by the average age of its practitioners, digital health has brought two important developments to the industry: a pervasive optimism that health care services problems could be solved with better technology and a keen proficiency at venture capital fundraising.

This is not all bad. Without question, the cynical HCIT space needed optimistic visionaries and has deserved more venture investment than had been the historical norm. But when the ungrounded aspirations of well-meaning digital health entrepreneurs and venture capitalists collided, it created an explosive environment where considerable capital was burned without building truly sustainable businesses. Many of these have quietly failed and others are - or soon will be - seeking strategic alternatives.

This did not have to be the case. The macro-trends, industry challenges and consumer needs still exist – in fact most have gotten worse during the ramp up of digital health investment. And without question, innovators, entrepreneurs and investors will be critical developers of solutions to these endemic challenges. We just need a new way forward – to support the development of the next generation of great healthcare companies that our industry, and our country, needs.

What went wrong

There's no argument here that our health care system demands fixing. Digital health entrepreneurs have approached many of these challenges with robust enthusiasm, a long-term vision, and ample access to capital. However, many have lacked expertise, underappreciated health care specific workflows, misunderstood the full health care consumer journey and seriously underestimated what it takes to break through enterprise health care sales cycles. This led to numerous, expensive business lessons:

  • Better mousetraps are not enough: Considerable resources were deployed developing better technology, apps and analytics. Unfortunately, inadequate attention was paid to solving how to go to market. Better mousetraps are useless without mice – and many digital health companies ended up chasing target markets and were unable to get to scale.
  • Ill-equipped for enterprise health care: Many early-stage solutions weren't able to overcome challenges targeting large established payer and provider clients that have cultural and operational antibodies that repel risky and disruptive solutions. Even those that survived the 18-month sales cycle often found that successful piloting and implementation once inside required subject matter expertise, outcomes measurement capabilities and political savvy that is rarely necessary in start-ups targeting other industries.
  • Consumers aren't impressed (yet): Many digital health companies have declared themselves platform solutions, staking their business models on "owning the consumer" and integrating parts of their health care experience. Despite this, most digital health consumer engagement solutions still struggle with abysmally low engagement rates.
  • Overvaluing and overcapitalizing: Health care services and IT have not historically bred unicorns. Sales cycles are slow and adoption is more measured. Still, many digital health companies raised capital at exceedingly high valuations, expecting technology-like exits. With a few exceptions, realizations have lagged and many companies are facing tough decisions made even more difficult by valuation overhang from their last rounds.
  • Don't blame D.C. for killing digital health: There is a lot of talk that the uncertainty in D.C. is strangling digital health innovation. At best, this is an opportunistic explanation. While there is no lack of regulatory and policy uncertainty, we are instead at a critical point in investment life-cycles where investors are looking for their early digital health investments to demonstrate performance. With a few notable exceptions, the story isn't great.

The Path Forward

Despite all of this, solutions are needed more than ever. Entrepreneurs and investors need to take a step back and focus on how they can survive and thrive, driving the industry transformation that will play out over the coming decade. We need to rededicate ourselves to the fundamentals of building great, lasting companies in our unique industry. While we are constantly updating it, here are the First Principles for the post-digital health world we have on top of our desk at Echo Health Ventures today:

  1. In this market, distribution is more valuable than capital.
  2. Quality allies and partners are often more valuable than capital.Expect that the digital health market will rationalize over the coming 18 months – driven by consolidation and attrition. Make sure you have partnered well – and position for optimal scale while you can still drive your own destiny.
  3. Make sure you are watching the right scoreboard. Earnings and a rightsized cap table drive returns. VC mega-rounds drive press releases.
  4. Make sure you're asking the right questions. "Who pays?" and "LTV>CAC?" are probably your best leading indicators of success.
  5. No matter what race you think you are running – prepare for a marathon, not a sprint: Realistic valuations and investor expectations remove barriers for downstream fundraising or exit options. Expect the mismatch of investor return timelines vs. long sales cycles.
  6. Proactively plan for your exit (and "strategic alternatives") before you plan for your raise.
  7. "Who benefits" isn't necessarily "Who pays." Following the money – especially difficult at times in health care. Getting real about who pays you and what they value has been a shockingly overlooked step amidst the digital health hype.
  8. Know your enemy. Entrepreneurs need to understand the context for the "disruption" they plan to bring to market. Understanding the gory details of the underlying production systems, workflows, financial flows, etc. that underpin the broken system will better position them for success. Respect the complexity of your clients.
  9. "Don't believe the hype…" especially your own. A healthy dose of humility is essential. Or said differently, many companies with thousands of Twitter followers and copious name-drops in the WSJ have gone out of business for lack of revenue and margin.

10. Most importantly, if you're just launching, be realistic. Don't lose your passion or enthusiasm, but filter the noise by focusing it through the experience of your investors, partners, and board. Don't over-capitalize or over-commit.

Digital health Is dead - now the work begins

If digital health is dead, then what? I am hopeful that my venture capital and investment banking colleagues will not rush to replace it with yet another buzzword. Without question, buzzwords help us sell companies – but they certainly don't help us build, run and sustainably grow them. Instead, we need to get real, going deep to build the connections between new technologies and the legacy health care enterprises consumers work with daily and entrust with their care and finances. Disruption is sexy, but given the complexities of the market, cooperation is more likely to move the needle for transforming health care.

Most of all, I hope that entrepreneurs, technologists, designers and others drawn to health care by the allure of digital health stay in the industry. While the promise of easy, near-term transformation may have been unfulfilled, the experience you have gained is invaluable. As veterans of this hype cycle, you are well positioned to make a big impact as this work moves forward. From a social and economic perspective, it will be some of the most important work any of us can do over the next 25 years. We need you with us. No matter what hashtag we use.

Anne DeGheest | 11 September 2017

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