Venture capital giant Andreessen Horowitz (a16z) got right to the point in a recent blog post that made a huge splash across health tech social media: “We think the biggest company in the world will be a consumer health tech company.”
a16z lays out two paths that could let a healthcare company leapfrog over massive consumer icons like Google, Apple, Facebook, and Amazon to become the world’s most valuable company (Fun fact: the $4T US healthcare market is 5x the size of the global advertising industry).
Path 1 involves creating a vertically integrated “payvidor” that grows to own most care. Picture a company that looks something like if “UnitedHealth Group and Apple had a baby,” with the business model of UHG but the sleek consumer experience of Apple.
- a16z believes that these companies will need to become big enough to cover most specialties, and also own a health plan that encourages patients to stay within the same care ecosystem (similar to Apple’s tech lineup).
- Combining both components is essential so that the reimbursement arm can serve as a distribution channel for the care delivery services.
Path 2 centers around building a horizontal marketplace similar to Amazon where healthcare services are aggregated alongside trusted reviews and comparison data.
- According to a16z, the key to success for healthcare marketplaces is to serve as an acquisition channel for established players, in addition to being their own acquisition channel.
- These companies will need to crack the code on how to direct patients to relevant services, while also leveraging the traditional healthcare system for both provider listings and patients.
The Takeaway
Some of the biggest companies in the world are consumer companies that were built in relatively small industries, and the US healthcare market is so big that it can support plenty of success stories with both vertical and horizontal models. That said, packaging something as complicated as healthcare into a consumer experience as simple as Amazon isn’t exactly an easy task, which is why a16z believes that the biggest company in the world will be the one that pulls it off.
