In spite of the tremendous attention being paid this summer to health care reform, it is critical that investments in medical technology startups not go into a “holding pattern,” but continue unabated. So says ONSET Ventures partner Rob Kuhling.
There is a danger that investors will take a “wait and see” attitude, Kuhling believes, as the health-care ecosystem works through what could be far-reaching legislative and policy changes in coverage, funding, reimbursements, and even clinical standards and procedures. And there are several key reasons why he thinks that waiting is a mistake.
First, he says, is that the underlying fundamentals of medical technology investments will not change – regardless of what happens with reform. “Today’s health care imperatives are very simple,” says Kuhling: “provide the highest quality health care to as many people as you can at the lowest attainable cost.” To reach this goal, Kuhling says, there are tremendous opportunities for advanced technologies to simplify treatment and thus lower both near-term and long-term costs of care.
Second, he believes that it is always a poor strategy to build business plans around the expectation of government subsidy or regulatory relief. Simply put, he says, “If a company’s business plan can’t stand on its own merits without government support, it is most likely not a good investment.”
In particular, Kuhling believes that startups should be careful about focusing on healthcare IT. “There is a lot of discussion today about electronic health records for all,” says Kuhling. “While this very important evolution clearly must happen, we think that the problem is simply far too big – and expensive – for traditional venture-capital-funded startups to tackle.” Instead, the very large IT companies that have already been focused on this area and the very large customers within it are most appropriate to deal with the profound security, privacy, real-time data management, and integration with complex systems issues involved, Kuhling maintains.