The document discusses the growing importance and opportunities in healthcare information technology (HIT). It notes that HIT is hot right now due to factors like the Affordable Care Act and HITECH Act driving technology adoption, ubiquitous computing putting tools in providers' and patients' hands, and investors recognizing HIT's potential for cost savings. The document outlines opportunities in areas like outpatient providers, payers, inpatient providers, and consumers. It also warns of challenges like long sales cycles and the need to clearly explain economic value.

1. March 9, 2012

2. Healthcare IT in Perspective
2
Banking Industry
Once Upon Not That Today
a Time Long Ago
SXSW Conference: Lisa Suennen 3-9-12

3. Healthcare IT in Perspective
3
Manufacturing Industry
Once Upon Not That Today
a Time Long Ago
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4. Healthcare IT in Perspective
4
Healthcare Industry
Once Upon Not That Today
a Time Long Ago
SXSW Conference: Lisa Suennen 3-9-12

5. Why HIT is HOT Right Now
5
 Without change, costs will grow from $2.7 trillion now to
$4.5 trillion in 2019
 Healthcare inflation is a crushing weight on the economy
 Healthcare adds $1500 to cost of every GM car
 Starbucks spends more on healthcare than on coffee
 Companies with the highest healthcare costs grow the slowest*
 Every 10% increase in “excess” healthcare costs the economy
120,000+ jobs and $28B of lost revenues*
 The cost shift from employers to individuals has begun
 Almost 10,000 people per day are aging into Medicare
 2/3 of Americans over 65 have 2+ chronic illness
 Chronic illness accounts for 75% of all healthcare costs *Rand Corporation
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6. Consumers Are Feeling The Pinch
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7. Is This Just 1990s Deja Vu?
Haven’t I Seen This Bubble Before?
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 It was all about the new kid on the block: the
Internet
 Products focused on disintermediation, not
cost/quality:
 Content portals, such as WebMD, DrKoop.com
 Ecommerce portals: PlanetRx, Drugstore.com
 Group purchasing websites, such as Medibuy
 E-prescribing—the only thing that was more
physician workflow oriented;
Epocrates, PocketScript, Allscript
SXSW Conference: Lisa Suennen 3-9-12

8. Why It’s Different This Time
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 PPACA and HITECH Act are driving technology throughout a
previously low tech system
• Near-universal access to Internet, broadband and wireless
technologies at every significant U.S. clinical organization;
• Ubiquity of smart phones & iPads put cheap computing power in
the hands of physicians and consumers
• Cheap and widely available software enables mass customization
at affordable cost with real ROI
• Recognition that the healthcare system can no longer avoid the
information age if we are serious about cost-containment
• Investors turning to HIT as biotech/medtech has become a
money-losing proposition
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9. And Furthermore,
The Times, They are a’Changing
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 Providers facing new risk management and cost-cutting realities
 Complex new delivery system models emerging (ACOs)
 Employers desperately trying to exit the healthcare business
 Advent of HIX changing payer industry dynamics and consumer
branding requirements
 Payers diversifying their businesses
through healthcare IT acquisition
 If consumers are going to pay
they need:
 Information transparency to make
 Financial tracking systems
 Anytime/anywhere access
 Personalization
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10. Where Are the Big Opportunities?
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Outpatient
Providers
Payers
Inpatient
Providers
Consumer
Others
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11. HIT is HOT: Venture Investments Up, Up, Up
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2010-2011 Healthcare IT Deal Growth
(# Deals)
30%
26%
% Growth in Investment Activity
25%
20%
15%
10%
5%
-6% -3%
0%
-5%
-10% Biopharmaceuticals Medical Devices Health IT
2010-2011 Growth (# Deals)
2011 Biopharma Med Devices Health IT
Investment ($ billion) $3.9 $3.3 $0.6
2010-2011 $Growth (%) - 27% 22%
SXSW Conference: Lisa Suennen Source: Dow Jones VentureSource 3-9-12

12. HIT is HOT: The Proof is in the Payments
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 There is ton of HIT development money out there from
non-traditional sources:
 CMS
 ONC and a myriad of Other Challenges, Grants and Incentives
 Return of the Accelerators/Incubators
 Robust exit environment for HIT companies
 100 acquisitions 2010-2011 compared to 76 in 2009-2010
 Acquisition checks getting larger
 Suddenly everyone’s a healthcare company
 38 of the 2011 Fortune 50 are in the healthcare business compared to
5 of the 2001 Fortune 50
 Even Merck and Pfizer now have HIT-focused funds
SXSW Conference: Lisa Suennen 3-9-12

13. What to Watch Out For
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 Doctors and consumers don’t like to pay for things
 Lives are short and sales cycles are long, especially in the
payer and hospital worlds
 If you can’t explain your economic value, you will lose
 Nothing ever happens in the timeframe you think it’s
going to happen
“We always overestimate the change
that will occur in the next two years
and underestimate the change that
will occur in the next ten.”
-Bill Gates
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14. What to Watch Out For:
The Curse of the Underpants Gnomes
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15. But If You Have a Good Thing, Money Abounds
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Incubators/ Angel Venture Corporate
Accelerators Investors Capitalists Investors
Rock Health Hopefully Psilos Group United Healthcare
Blueprint Not Chrysalis, Venrock Humana
HealthBox Your Cardinal, HLM Wellpoint
StartUp Health Parents Physic, Kleiner Aetna
More to come Aberdare, Lemhi Siemens
Camden, Excel Merck, Pfizer
Mohr Davidow Best Buy
Morgenthaler Walgreens
and many more
SXSW Conference: Lisa Suennen 3-9-12

16. Thanks and Have a Great Meeting
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Lisa Suennen
Managing Member
Psilos Group
lisasuennen@psilos.com
Read my blog at
http://venturevalkyrie.com
SXSW Conference: Lisa Suennen 3-9-12