Every call with an industry friend these days, whether it’s a startup founder, operator, provider or anyone else, seems to begin with the statement “everything is wild right now!”
It truly is.
From a macro perspective, we are living through an unprecedented time in healthcare. Millions of people face the prospect of losing their healthcare coverage, and providers are bracing for the fallout from that. There’s inflation, tariffs, rising prices for specialty drugs, and myriad other factors that are driving up costs. Employers are facing a double digit percentage increase in medical costs, related to factors like rising rates of cancer, complex surgeries, GLP-1s, cell and gene therapies, and more. Affordable Care Act health insurance premiums are expected to shoot up next year.
Bottom line: Life feels like it’s increasingly expensive, and Americans are paying more for healthcare than ever.
The only silver lining is that this picture could accelerate progress towards meaningful solutions that have made little to no progress in the past few decades. There’s not much enthusiasm around value-based care these days, especially as many payers are cutting teams that manage these contracts. But there do still seem to be tailwinds around ICHRA, telehealth, AI and direct primary care. I’m planning to write more about this ICHRA given the ongoing questions around ACA subsidies because I think there is a lot more to be said.
More of my time these days is spent on understanding the policy landscape. But most of the money I’m seeing get invested into healthcare is about driving us towards a future where care is heavily augmented by AI. We have gone absolutely gaga as a venture ecosystem for AI, with recent reports from Rock Health and Pitchbook indicating that two-thirds of all dollars (or more) are going into the tech. If AI isn’t a slam dunk, I’ll be very worried about the current vintage of firms. I’m convinced there will be some winners, but I do still have questions about valuations because I’m seeing them be very high even for pre-revenue, seed stage companies. These companies will all need to be valued in the billions, and historically there aren’t many in the healthcare sector that have reached that size and sustained it as a publicly-traded company. Are you all bullish we can get there because of AI? Love to hear your collective takes.
An invitation to my paid subscribers
On September 8 at 1 et, I’ll be teaming up with the brilliant Blake Madden from Hospitalogy, author of one of my favorite healthcare newsletters. We’re hosting a private Zoom “ask me anything” (AMA) on the topic of the future of media, how to pitch independent media, and what newsletters specifically are looking to report on - and why. This should be beneficial to our subscribers in communications, as well as any founders who’d like to attend.
Blake Madden of Hospitalogy
The news worth reading this week
Tenet overperforms but investors have questions
What’s been reported: Tenet Healthcare signals a confident 2025 outlook after reportedly outperforming in Q2. The health care operator increased its 2025 projections by $400 million, according to Fierce Healthcare.