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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

In today's doctor's office, generative AI is already more prevalent than the stethoscope, said attendees at the Health Tech Expert Voices lunch at BFD San Francisco on Tuesday.

Why it matters: As AI's role in health care becomes clearer, dealmakers see potential for a stratified model, not unlike CVS' MinuteClinic, Axios' Claire Rychlewski writes.

The big picture: "There's some subset of work that is being done right now that requires absolutely no judgment," says SCAN Group CEO Sachin Jain.

Generative AI will "supplement the labor arbitrage taking place" as it turns "doctors into super-doctors," he says.

Yes, but: Lack of interoperability presents issues, especially with clinical documentation, says Montage Ventures vice president Nia Patel.

"We've been speaking to a lot of founders in the space and one thing we hear is until there's a change in infrastructure — who's using Epic, who's using Cerner — it's really hard to implement the level of accuracy needed to have an impactful inflection point," she adds.

Between the lines: Investors and entrepreneurs must clearly understand the difference between use cases, particularly when selling to strategics, says Define Ventures partner Lynne Chou O'Keefe.

Friction point: Health systems and payers are looking for comprehensive, end-to-end generative AI solutions — a big ask for nascent startups.

"When have you seen an early-stage startup actually support a massive transformation of a scaled company? I can't think of one," Jain says.

"I do think that strategics believe that the companies on the application layer should be doing all of that quality control for bias and toxicity on their own," Chou O'Keefe says.

State of play: Most startups rely on models created by players like OpenAI, which are constantly being updated.

"One thing we've started to ask ourselves internally when we're looking at investments is ... 'Does the company we're looking at stand to gain a lot by a stepwise improvement in the foundation model?'" says Susa Ventures partner (and former MD) Derick En'Wezoh.

"If the answer is no, that's a pretty damning sign," En'Wezoh says. "Dozens of companies are being put out of business with each one of these dev days."

"It's not just what you're releasing this particular year, but how far in the stack do the application layers have to go," says Chou O'Keefe.

The bottom line: "The stethoscope is only one tool and most physicians I know don't carry one," En'Wezoh says.

1 big thing: Generative AI claims space in the doctor's bag

Sachin Jain of SCAN Group speaks to Lynn Chou O'Keefe of Define Ventures at the EV lunch.  Photo: Chris Constantine

SCAN Group's Sachin Jain and Define Ventures' Lynne Chou O'Keefe at the Axios BFD expert voices lunch. Photo: Chris Constantine

Google may have dissolved its formal health division years ago but the company remains active in the sector, per chief health officer Karen DeSalvo.

Why it's the BFD: Google Health was formally dismantled in 2021, with its units scattered throughout the search giant, raising questions about the company's strategy, Erin writes.

Zoom in: DeSalvo described a gamut of health initiatives spanning search, cloud, diagnostic models and consumer wellness on stage at the Axios BFD event in San Francisco with tech reporter Ina Fried.

What she's saying: "We've woven [our health efforts] into all of our product areas, as opposed to trying to put it in one space," said DeSalvo.

During the pandemic, Google realized it needed to focus on the quality of the health information its search engine surfaced, she said, which was part of the rationale to dismantle the formal health division.

"What we learned ... in the pandemic ... is that every day, half a billion people are knocking on our front door, which is search, asking us a health question," DeSalvo said. "We have a really important consumer-facing front door and needed to strengthen our health information quality."

Inside the room: Google's more recent health care efforts include a project with HCA, the nation's largest health system, using generative AI to help address nurse burnout during shift changes.

"Could we help improve the efficiency [of] that shift change — a summarization of what happened in those hours of that shift — handing that off to the next nurse?" said DeSalvo.

Other recent AI projects include using LLMs to help contextualize data from wearable devices (recall that Google in 2021 closed its $2.1 billion acquisition of Fitbit).

"Not just how many steps I took, but what else was going on in my life that day when I took fewer steps ... what were the patterns that the personal LLM is going to be able to see to help me," said DeSalvo.

Another major focus area of Google's AI work is medical imaging. The company recently fine-tuned the models that power its Med Gemini 3D tool, for example, which reads three-dimensional scans like CTs and answers questions about those images.

In a recent, non-peer-reviewed paper published in arXiv, the model became the first LLM capable of generating reports for 3D CT scans.

Reality check: Still, only 53% of the reports were clinically acceptable, per the study. Google acknowledged additional studies were necessary to get the tech to the level of expert radiologist reporting — a subject DeSalvo addressed.

"I think eventually we're going to get to a place where quality and safety start to meet a bar where we feel like it can be more real-time, but right now most of the experiences are that it still needs a lot of human oversight," she said.

What's next: "One of the exciting opportunities I think that we have right now in understanding the usefulness of these models is ... how are we going to develop them and assess quality and safety, almost in the way that we do for physicians," DeSalvo added.

2. The BFD: Google's Karen DeSalvo lays out health strategy

Karen DeSalvo speaks onstage with Ina Fried. Photo: Chris Constantine.

Google's Karen DeSalvo speaks onstage with Axios' Ina Fried. Photo: Chris Constantine

Want more health tech deals? Check out the Axios Pro Deals Tracker.

• Sona, a British workforce management platform for front-line employees, raised a $27.5m Series A led by Felicis and joined by Antler, SpeedInvest, Northzone and Bag Ventures. axios.link/3UCwqSF

• Acclinate, a Birmingham, Ala.-based company focused on improving clinical trial diversity, raised a $7m Series A led by Cencora Ventures with participation from Labcorp and Latimer Ventures. axios.link/4bE0VhZ

• OptMyCare, a Dallas provider of tools for health care risk management, raised a $3m Series A led by LiveOak Ventures. axios.link/3WGcb9c

• DoorSpace, a Houston health care employee management software provider, raised a $2m seed. axios.link/4bfEM9T

• Versant Diagnostics, a Texas independent physician services company, acquired Associate Pathologists of Joliet, an Illinois multi-specialty pathology practice. versantdx.com

• Cardio Partners, an Ohio medical equipment manufacturing company and division of Sarnova, acquired One Beat Medical & Training, a Florida medical training and equipment company. cardiopartners.com

3. Deals o' the day

• Mona Siddiqui, former SVP at Humana, joined Highmark Health as home and community services lead. axios.link/4byvA03

• Daryl Todd, former assistant general counsel at J&J, joined Kalderos as chief strategy officer. axios.link/3yk8yeW

• Justin Larkin, former health investor at Andreessen Horowitz, joined Sprinter Health as VP of product. axios.link/4a8P3U1

• Frank Fischer, former CEO of NeuroPace, joined CoMind as chair of the board of directors. axios.link/4b1CIlH

• Harry Palmin, former Acer Therapeutics CFO, joined Anumana as CFO. axios.link/4dGpKLS

5. It's Personnel

💰 Situational awareness: EQT-backed health payments company Waystar wants to raise as much as $1 billion in an IPO that could happen in June, per Bloomberg, citing sources familiar.

🌁 Erin enjoyed climbing the hills of SF and is looking forward to reuniting with family in Tahoe.

📝 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Egan Millard. Please ask your colleagues, friends and family to sign up.

May 15, 2024

1 big thing: Generative AI claims space in the doctor's bag