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BFD Expert Voices - Health Tech Deals

BFD Expert Voices

VCs love paperwork. Investment in AI-powered EHR documentation is on fire this year, with more than $300 million deployed in Q1 alone, per a new SVB report.

Why it matters: Those bets face a reckoning, with Epic recently releasing an open-source tool to help health systems monitor the performance of EHR-integrated AI models, Axios' Claire Rychlewski writes.

What they're saying: "The word is out for this need for efficiency as investment in EHR documentation companies leveraging AI is on pace in 2024 to blow every other year out of the water," the authors write.

The big picture: AI-powered health care was one of last quarter's best-funded digital health categories, per a recent Rock Health report.

"Administrative and clinical use cases are seeing 60% of the total AI investment in health care," writes SVB VP Raysa Bousleiman.

Ambient clinical documentation tools have become the latest hot ticket, with several AI-powered scribes on the market and companies drawing big checks and conference crowds.

Follow the money: Since 2021, venture capital has invested $6.6 billion in administrative-focused cases like revenue cycle management, note-taking and EHR documentation, per the SVB report.

In the same period, VC has deployed $12.5 billion into more clinical-facing AI solutions (patient triaging tools, data-informed diagnostics like Tempus, imaging tools and remote monitoring).

VC has invested $12.9 billion in AI therapeutics and research companies since 2021.

Between the lines: AI use cases for diagnostics and drug research generally require much larger checks and involve a higher level of risk, with uncertainty around regulatory approval and insurance reimbursement.

State of play: Payers' AI buy-in could facilitate adoption across health care, but insurers have kept a tight lid on the specifics of their respective AI strategies.

"UnitedHealthcare, Cigna, and Elevance Health are increasingly using AI for labor-intensive tasks like processing claims and approvals," the report's authors write.

Both UnitedHealthcare and Cigna have made AI-focused acquisitions (Change, MDLive, BrightMD), while Elevance has primarily partnered with or invested in AI solutions.

1 big thing: VC AI paperwork bets face real world

two medical record clipboards surrounded by circles and cutouts of money 

Caregiver support startup Grayce collected a $10.4 million Series A led by Maveron, CEO Julia Cohen Sebastien tells Erin exclusively.

Why it matters: An aging America is in the grips of a caregiver crisis, with burdens on unpaid custodians — particularly women and the "sandwich generation" — compromising peoples' health and ability to work.

Zoom in: BBG Ventures, Correlation Ventures, GingerBread Capital, Alumni Ventures, Visible Ventures, Gaingels and What If Ventures participated in the round.

Funds will be used to help Grayce expand to work with payers in addition to employers whom they currently serve.

Cohen Sebastien foresees Grayce raising a Series B in 2025.

How it works: The San Francisco company connects people to social workers employed by Grayce who help manage tasks such as planning, prioritizing and coordinating care, identifying resources and advocating for services.

Grayce also offers educational content and connection to a peer community.

For example, someone might ask a Grayce social worker about what to do for an aging family member who'd recently fallen. The social worker could talk them through budgeting, search possible sites of care and at what level of acuity, assist in identifying safe agencies or facilities that meet their criteria, and then help arrange that care.

The big picture: This is the seventh deal in the caregiver support space in the past year, with companies including Helpful, Family First, Nili, and Tuesday Health all raising early-stage rounds since summer 2023.

Three of those deals were announced last July alone.

What they're saying: "We believe the next wave of benefits will come in caregiving," says Maveron partner Jason Stoffer.

"There is not a single need, like childcare or fertility, but rather a range of needs that can debilitate employees, causing them to either work less or take leave and leave work altogether," he adds.

Flashback: Cohen Sebastien, a former SVP at Aetna, and Kassidee Kipp met through a mentoring program while caring for loved ones and founded Grayce in 2019.

A side effect of caregiving, per Cohen Sebastien: being treated as a bystander by providers and administrators. "I wanted to be a part of changing that. I think every family deserves that," she says.

By the numbers: Nearly a quarter of U.S. workers are estimated to perform caregiving duties for a family member, and the task is thought to cost U.S. families an estimated $522 billion in lost annual income.

One fun thing: The name Grayce is an homage to several concepts in the aging and caregiving realms, including the name of someone you might trust to care for your loved one, the idea of aging gracefully and the notion of providing care with grace.

"That's what outside help should enable you to better do," says Cohen Sebastien, "to care with grace."

State of play: Alongside Family First, Helpful and Nili, other recent relevant deals across the caregiving and end-of-life care support sectors include:

End-of-life care support company Tuesday Health this May raised $60 million.

Cariloop, a caregiving support tool for employers, this April collected a $20 million Series C.

Betterleave, a startup that partners with organizations to improve end-of-life care, last fall input $2.4 million.

The BFD: Grayce collects $10M for caregiver support

Illustration of a pillow with a health plus on a rocking chair.

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

• Omniscient, an Australian MRI company, raised a $60m Series C. axios.link/3Xg8eIJ

• Avava, a Waltham, Mass., medical aesthetics company, raised a $35m Series C including $25m from backers including strategic partner Jeisys Medical, and $10m from Catalio Capital. avavaskin.com

• Arya, a SF sexual wellness content startup, raised a $7.5m seed led by Patron and Play Ventures. axios.link/3xpXBs2

• Rivia, a Swiss clinical trial infrastructure startup, raised a €3m seed led by Speedinvest. rivia.ch

• QHP Capital sold Pro-ficiency, a Raleigh tech-enabled training and compliance for clinical trials to Simulations Plus (Nasdaq: SLP). https://axios.link/4aY8xes

• Healwell, a Canadian data science company focused on preventive care, agreed to acquire VeroSource, a Canadian provider of digital front door technology services to provincial health care systems, for ~$24.5m. healwell.ai

• Brightside Health, an SF telemental health provider, acquired Lionrock Recovery, a Northern California provider of virtual substance use treatment. axios.link/3xfFtRK

• Foresite Capital, a Silicon Valley multi-stage life sciences investment firm, closed its sixth fund with $900m. foresitecapital.com

• Steward Health Care, the Dallas-based hospital operator previously owned by Cerberus, secured $225m from a group of Steward's secured FILO lenders, and will seek court approval in the U.S. Bankruptcy Court for the Southern District of Texas. axios.link/3VBhOV8

3. Deals o' the day

• Tamara Bickston, former associate director of care systems at Novartis, joined HealthBridge as VP of operations. axios.link/4bVdC8r

• Jaime Vinck, former CEO of CPF Recovery Ways, joined Meadows Behavioral Healthcare as president. axios.link/3RqSa38

• Michael Seggev, former SVP of commercial at Juli, joined MindMed as VP of global marketing. mindmed.co

• Amy Kennedy, co-founder of The Kennedy Forum, joined Little Otter as an adviser. axios.link/4cgMHUe

4. It's Personnel

💰 Hospitals are refusing to do surgeries unless you pay in full first — WSJ

💔 How "carewashing" alienates employees — HBR

🏥 Cigna CFO: "We don't need" M&A — Becker's

💸 Biden admin moves to keep medical debt off credit reports — Axios

5. Your daily dose

an illustration of an eye chart spelling out "daily dose" wth the axios logo as the largest letter

🏀 Aaron hopes the Celtics can go up 3-0 in the NBA finals. 

🏆 Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Jay Bennett. Please ask your colleagues, friends and family to sign up.

June 12, 2024

1 big thing: VC AI paperwork bets face real world