VC powerhouse Andreessen Horowitz (a16z) is quickly building out its library of health tech thought leadership, and its latest opus focused on the areas of consumer health where it sees the most opportunity.
Here’s a high-level summary for the three major categories, but the full report has plenty of insights to go around if you want to take a deeper look at any of the topics.
Area 1: Improving Access to Care
- Marketplaces: To say that a16z is bullish on marketplaces would be a huge understatement. One of the biggest challenges for marketplaces is that consumer usage must be frequent and durable enough to justify the customer acquisition cost (one reason why apps that focus on infrequent forms of care struggle), but a16z believes we’ll start to see these metrics improve by letting users compare drugs, health plans, and non-traditional services (wellness, family, caregiving) within a single platform.
Area 2: Changing How Consumers Receive Care
- Payor Focus Categories: a16z goes with a safe pick for its first subcategory: the specialties that payors spend the most on. These include cardiometabolic/diabetes (Omada, Marley Medical), MSK (Sword, Vori), and oncology (Thyme, Jasper) – all areas where payors need better care at a lower cost. While this market is relatively mature, a16z predicts that there’s more success to come for startups who can leverage their ability to engage consumers, manage medications, and inspire behavior change into broad consumer engagement platforms across multiple patient journeys.
- Consumer Focus Categories: Several VC success stories come from spaces where people don’t expect payor coverage, and therefore handle the costs themselves (Hims, Ro). a16z is forecasting a lot of upside for services that have had slower adoption in traditional healthcare, but are quickly gaining traction in DTC, such as medication-assisted weight loss, psychedelics, and biohacking/longevity.
- Gaming: a16z is also excited about the intersection of healthcare and gaming, but it’s still wondering whether the successes in this category will “gamify healthcare or healthify games.” In other words, will they look more like Epic Systems (EHR) or Epic Games (Fortnite)? Gamified health is more likely to be designed for efficacy and health outcomes, but healthified games are more likely to have better retention (which is one of healthcare’s biggest challenges).
Area 3: Helping Consumers Afford Care
- The last section was such a minefield of spam words that any summary side-stepping all of them wouldn’t do it much justice. That said, “less crappy” health plans, patient-friendly BNPL, and new card products all made an appearance. With total American healthcare debt already sitting at over $1 trillion, it’s a big enough problem that a16z sees enough space for several massive companies to emerge while solving it.