The potential to disrupt health care with innovative solutions and technology at scale is huge. It just takes an astute venture capital partner who can help you navigate the complexities. Join this webinar to learn how a VC partnership can help you navigate the complicated nature of health care, and get your startup thriving.

Access on demand right here.

“Digital health has been a backwater, quite frankly,” says Daniel Galles, a partner at Providence Ventures.

But now the industry is booming, and tech entrepreneurs are coming out of the woodwork, excited to tackle the unique challenges of the industry. Why now?

“It’s societal and information-driven,” says Mike McSherry, CEO of Xealth. “If providers are not capturing consumer and commercial customer need, they’re going to have an incredibly hard time at their financial operations level, staying solvent against the government’s reduced reimbursement levels.”

Ten years ago, only a small minority of health systems were operating on electronic medical records. And then, the ACA reform funneled $30 billion in an initiative toward providers adopting digital EHRs.

From a health system perspective, electronic records have enabled providers to be able to understand patients, to identify and stratify risks, identify gaps in care, and try to be more predictive as opposed to reactive in care.

At the same time, health care, which for perhaps millennia has been patrician-based, with doctor knowing best, has been democratized and consumerized. Now patients have access to information and forums and community and research they can generate themselves, along with higher expectations around turnaround times and access. When you continue down to the provider, all hospital systems are losing money serving Medicaid and Medicare patient populations. The commercial customer — someone who works for a company and has access to an insurance plan provided by their employer — is the only profitable segment for a hospital system.

And all of these patients are digital. All of those people want the convenience of scheduling online. They want to communicate with their doctors via email and SMS and phone. They want information stored and retrieved and presented digitally.

In other words, health care is finally digitally enabled, with the base and platform to be able to offer that tech saavy to their customers.

Clinicians need to capitalize on the positive data that they have there, and enable them to be able to engage with consumers and meet the expectations for health care that they have in other industries. They’re becoming more tech-adept.

EHRs are traditionally an on-prem, code-based hosted ERP solution. But now, API access offers more interaction up into the cloud, enabling a lot more fluidity of data exchange in and out. On the SDK level, hospital systems are implementing their own apps and own their brand experience, and then working backward to leveraging a best-of-breed portal experience through the EHR data. There’s a proliferation of cloud connectivity based on some of the clinical EHR data. AI and machine learning are making analytics more useful and effective. And it’s all opening up a world of new opportunities for entrepreneurs.

But all these companies flooding into the market with new ideas and new pitches too often neglect the most essential part of their attempt at disrupting the health care industry: marrying up against the priorities of the provider systems.

“It’s really about enhancing patient care and the whole clinical delivery process,” Galles says.

For population health purposes, that means helping leverage the data that health care systems are sitting on with respect to electronic medical records, claims, pharmacy, and being able to stratify patients and be predictive with respect to concerns that patients might have before they get to them, not just being reactive to claims data.

On the administrative side, it’s helping doctors do their jobs more easily by streamlining charting and coding processes. As health care systems take on more risk in terms of payments, they’re going to need to engage with patients on a more longitudinal basis, treating patients like customers who want to be wooed, and won, and kept through easy access to telemedicine, health information, cost transparency, navigating through their health care journeys.

The opportunities are huge, but there are similarly huge, key challenges for digital health startups.

“Providence is only investing in about one of every 100 deals that come cycling through and presented to it,” Galles says. “That’s not unheard-of in the world of VC investing in health care.”

In health care, the political, governmental risk factors play an outsized role versus some other technology opportunities. The sales cycle is monumentally slow when you’re trying to convince a system stuck inside bureaucratic decision-making cycles. The sales process, the deployment, the scaling from pilot to system-wide, takes longer than you would typically see in enterprise, or certainly in a consumer-oriented context. There’s a marketing challenge — how are you going to distribute this program, app, service? The reimbursement — who’s paying for it — is absolutely crucial toward scaling a digital health solution, penetration, usage, and value creation for that entity. And then there’s intense market fragmentation, across 3,400 different hospital operations in the United States, and fierce competition from other health care companies.

“I see a lot of entrepreneurs coming in and thinking they’ll change the world, because things are so screwed up, and it’s so obvious that things need to be fixed, but there are hurdles there,” Galles says. “It doesn’t mean you can’t overcome them, but if you don’t understand and appreciate them, you run into a lot of challenges there, banging your head against the wall.”

To learn how to jump those hurdles and get your health care tech company funded, don’t miss this VB Live event.

Don’t miss out!

Access on demand for free right here.

By attending this webinar, you’ll:

  • Learn what it takes for a startup to be successful in the highly complex and regulated healthcare industry
  • Gain perspective from established health tech CEOs
  • Understand the importance of having a strategic VC in an industry like healthcare
  • See what VCs are looking for in the healthcare and health tech categories


  • Mike McSherry, CEO of Xealth
  • Daniel Galles, Partner, Providence Ventures
  • Stewart Rogers, Analyst-at-Large, VentureBeat
  • Rachael Brownell, Moderator, VentureBeat

Sponsored by Providence Ventures