Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HIMSS 2023
  • Opinion
    • Breaking Bias
    • Commentaries
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - AI and Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
November 16, 2022 04:04 PM

5 takeaways from HLTH: Economic troubles loom large

Gabriel Perna
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    hlth photo.jpg
    HLTH

    Investors, bankers, founders and tech enthusiasts descended upon the Venetian Expo Center in Las Vegas this week for the annual HLTH conference. The glitzy conference attracted nearly 10,000 attendees, according to the organizers. 

    Here were five takeaways from the event. 
     

    1. Economic troubles loom large in digital health

    Multiple sessions and conversations touched upon the challenging economic realities facing digital health companies. With interest rates sky high, the “free money” era of digital health investment is over.

     In one panel, “Doom or Boom? Digital Health’s Financial Future,” experts harped on uncertainty in private and public markets. Cheri Mowrey, head of U.S. investment banking at Morgan Stanley, said she expects the companies to resume going public in 2024. “If they attempt to go public in 2023, they will have to be profitable, lower-growth companies that have stability in their business models from management responding to economics,” she said.

    Michael Yang, managing partner at OMERS Ventures, a venture capital firm in Palo Alto, California, said the market will get worse before it gets better. He said founders should do whatever it takes to get to the other side of this economic downturn.

    “That could mean losing coworkers or taking financing you never would want to, but you have to swallow your pride,” Yang said. “It’s ‘Survivor’ at this point. There were a lot of great businesses that were in the middle of being birthed, created and scaled, and now you have to recalibrate.”

    Some of the companies that exhibited at HLTH have laid off employees in the past few months, including Calm, Noom and TruePill.

    Jonathan Bush, CEO of digital health company Zus Health, said that 2021 was the “land of milk and honey.” Zus closed a Series A funding round in July 2021 for $34 million. “Now I’m relieved to be getting 20% down from that round,” he said.

    Scott Barclay, managing director of venture capital firm Insight Partners, said that while a lot of excitement marked the atmosphere at HLTH, the economic realities were hard to avoid.

    “It feels like people are showing up to the party when the [Federal Reserve] has already removed the punchbowl,” Barclay said. “The production quality of this conference is great. Next year it will be great too, but there may be fewer people here.”

    Download Modern Healthcare’s app to stay informed when industry news breaks.

    2. Profitability is the new king

    In the economic climate, investors are generally interested in a path to profitability and reasonable growth. High growth targets from the last few years are out the window.

    “20% growth is fine right now, especially if you are profitable,” Yang said.

    Missy Krasner, venture chair at startup creator Redesign Health, said her firm is telling portfolio companies to conserve cash and focus on unit economics.

    On the public markets side, Mowrey said that investors will do better due diligence around future IPO waves in digital health. Two out of 20 digital health companies since 2020 that went public have lost significant market share, according to Digital Health Business & Technology’s database.

    “Profitability is definitely king here,” Mowrey said.

    Not everyone is on board with profitability, though. Glen Tullman, CEO of the digital health company Transcarent, said on another panel that many companies in Series A, B and C to focus on profitability. “We wouldn’t have the Amazon we have today if they focused on profitability and they had just stopped at books,” he said.

    3. Some optimism shines through

    Despite the harsh economic realities ahead, plenty of optimism was expressed by investors and founders at HLTH. While 2020 and 2021 might have been peak hype around digital health, the next few years have the potential to create some good companies. 

    “We’re writing fewer checks but we’re as excited as we’ve ever been,” Barclay said. “The checks we write in the next three years will power an entire next generation of outcomes, meaning clinical outcomes, human health impact and a return for our investors.”

    Dr. Justin Norden, partner at venture capital firm GSR Ventures, said that there is a sentiment of optimism in the investment world. His colleague at GSR, Dr. Sunny Kumar said that the market will weed out the companies that were dependent on hype without the substance. 

    “Companies that are creating real value and have a high return on investment are going to fuel this entire segment,” Kumar said.

    Download Modern Healthcare’s app to stay informed when industry news breaks.

    4. D2C brings hype and retreat

    While numerous digital health companies publicized new products and services in Las Vegas, it was Amazon’s announcement from Seattle that overshadowed them all. On Tuesday, the company announced it was rolling out a virtual health marketplace that would feature third-party direct-to-consumer telehealth providers to potential customers.

    Many experts at HLTH said it was a logical and smart play from Amazon. Kumar said that while many direct-to-consumer companies have faced challenges in customer acquisition, Amazon won’t have the same problems.

    “Amazon has a brand that everyone knows,” Kumar said. “We’ll see exactly how they implement it and how they direct patients to this service, but because they have this huge base of users, they can get around this perennial issue of finding patients.”

    As Amazon leans into the direct-to-consumer space, others are headed in the opposite direction because of economic headwinds. Headspace Health CEO Russell Glass said he hopes the company’s enterprise service becomes its largest driver of revenue. Headspace’s revenue is split evenly between direct-to-consumer and enterprise customers.

    “Consumers are struggling. They’re facing inflation, economic headwinds and they have increasing mental health needs,” Glass said. “We’re looking for different ways to reach them that reduce their out-of-pocket costs, which is why our health plan deals are so important.”

    5. Don’t forget about burnout

    A lack of representation from the provider side at HLTH didn’t go unnoticed by some attendees. While disruption in healthcare and advancements in digital health are exciting, clinicians still can often feel burned out, said Paul Markovich, CEO of Blue Shield of California.

    “If you’re not ultimately improving the lives of the physicians that you’re hoping to influence, they’re eventually going to walk with their feet, whether it’s retire or do something else,” Markovich said. “Changing healthcare ultimately comes down to changing human behavior.”

    Dr. Vindell Washington, chief clinical officer at the life sciences research company Verily, said physicians need to be proactive in creating a better environment for themselves amid increasing disruption from outside forces. He said he’s mentored other physicians who want to stop practicing medicine to take on a different role.

    “It’s valuable to have physicians in a position of decision-making,” said Washington, who headed the Office of National Coordinator for Health IT during the Obama administration.

    This story first appeared in Digital Health Business & Technology.

    Related Article
    Amazon launches new virtual health service
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Copy of states hospital costs_WEB_i.jpg
    Mark Cuban-backed study finds price discrepancies in hospital services
    transparency rx
    PBMs form Transparency-Rx to push for drug pricing reform
    Most Popular
    1
    CMS tries luring providers to revamped Medicare ACOs
    2
    Oregon joins other states in setting ratios for nurse staffing
    3
    Blue Shield CA taps Amazon, Mark Cuban, CVS for new PBM model
    4
    A health innovation hub grows in Lake Nona Medical City
    5
    Hospital-at-home providers push for Medicaid coverage
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HIMSS 2023
    • Opinion
      • Breaking Bias
      • Commentaries
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing