Venture Capital for Medicine Moves from Robots to Realism

In medicine, a culture shift may be underway in venture capital, which subsidizes the cutting-edge technology that keeps a culture moving forward.

As reported by Kaiser Health News (KHN) in conjunction with NPR and KQED, for venture capitalists, the bloom is fading from expensive medical gee-whizzery. These days, such deep-pocketed supporters are more in favor of improving medical efficiency than in staking a claim to such glitzy endeavors as robotic surgery, whose questionable benefits we recently covered.

Hospitals love boasting about their amazing new machines and surgeons love using them. Insurance companies don’t love paying for them, so their enormous costs are passed along to employers and patients.

As the recession took hold, however, and the Affordable Care Act (ACA) was passed, the financial engine behind high-tech R&D began to reassess where to put its fuel. As one Silicon Valley venture capitalist told KHN, “If you come in with [a device] that’s 10 percent better and twice as expensive, it’s hard to get anyone to care.”

Venture capitalists look for opportunity wherever it occurs, and these days it’s in areas such as helping hospitals figure out how to reduce readmissions. It’s expensive when a recently released hospital patient must be readmitted because of complications, and under the ACA, readmissions carry financial penalties.

Because the ACA will increase the number of people who are covered by high-deductible insurance plans, venture capital is funding a technology company that helps them choose the least expensive care. Another less-than-glamorous funding recipient, but one with an enormous impact, addresses the often torturous process of health-care billing.

“There’s a half a person per hospital bed on average that sits in the hospital doing coding and collections and trying to get paid,” according to one venture capitalist. His solution is to replace the labor-intensive manual coding with software that can understand repetitive charges and devise efficiencies that minimize repetitious functions.

That doesn’t mean new medical developments are all about process instead of product, but the products are simpler. Infections, notoriously borne by the widespread use of catheters, are being controlled better through the venture-capital development of a plastic device that kills microbes. The DualCap catheter costs less than a dollar.

Sometimes, the most thoughtful investment isn’t about the sexiest new surgical tool that helps 10 rich people find a place in medical history; it’s about helping millions of average patients gain access to competent, affordable care for the long run.

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