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Andreessen Horowitz: Consumer HealthTech will create 'biggest company in the world'



Just over 6 months ago, Andreessen Horowitz (a16z) made the bold claim that a consumer health tech company will become the biggest company in the world. They believe that the healthcare industry is ripe for disruption by technology, and that a company that can successfully do this will have a huge addressable market.


a16z identifies two main opportunities for consumer health tech companies to become the biggest company in the world:

  • Vertically integrated payvidor: This would be a company that provides all aspects of healthcare, from insurance to doctor's visits to prescription drugs. This would allow the company to control the entire patient journey and provide a seamless experience.

  • Horizontal marketplace or infrastructure layer: This would be a company that provides a platform for other healthcare companies to connect with each other and with patients. This could include things like online appointment booking, medical records management, or drug pricing comparison.

a16z believes that the future's biggest consumer health tech company will be a company that is both consumer-obsessed and healthcare-native. This means that the company will have a deep understanding of the healthcare industry and the needs of patients, but will also be able to use technology to deliver a better experience.


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Let's dive deeper into exactly what a Vertically integrated payvidor and Horizontal marketplace or infrastructure layer are:


Vertically Integrated Payvidor


A vertically integrated payvidor is a company that owns and controls all aspects of the healthcare delivery process, from insurance to doctor's visits to prescription drugs. This allows the company to have a complete view of the patient's healthcare journey and to coordinate care more effectively.


Some of the benefits of vertical integration in healthcare include:

  • Improved coordination of care: When a single company owns all aspects of the healthcare delivery process, it can more easily coordinate care between different providers. This can lead to better patient outcomes and lower costs.

  • Increased bargaining power: A vertically integrated payvidor has more bargaining power with healthcare providers, which can lead to lower prices for patients.

  • More data: A vertically integrated payvidor has access to more data about patients, their health, and their preferences. This data can be used to improve care delivery and develop new treatments.

However, there are also some potential drawbacks to vertical integration in healthcare, including:

  • Reduced competition: When a single company owns a large share of the healthcare market, it can reduce competition and lead to higher prices for patients.

  • Less innovation: A vertically integrated payvidor may be less likely to innovate, as it may not have the same incentive to do so as a smaller, more nimble company.

  • Increased risk: A vertically integrated payvidor has more risk exposure, as it is responsible for all aspects of the healthcare delivery process. This could lead to financial losses if there are any problems.

Overall, vertical integration in healthcare can be a good thing, but it is important to weigh the potential benefits and drawbacks before making a decision about whether or not to pursue it.


The term "payvidor" is a portmanteau of "payer" and "provider." It is a relatively new term, and its definition is still evolving. However, it is generally understood to refer to a company that combines the functions of both a payer (such as an insurance company) and a provider (such as a hospital or clinic).


Payvidors are becoming increasingly common in the healthcare industry. They offer a number of potential advantages, such as:

  • Increased efficiency: Payvidors can use their data and insights to coordinate care more effectively and reduce costs.

  • Improved patient outcomes: Payvidors can use their resources to invest in preventive care and other initiatives that improve patient health.

  • Enhanced customer experience: Payvidors can offer patients a more seamless and integrated healthcare experience.

However, payvidors also face some challenges, such as:

  • Regulatory scrutiny: Payvidors are subject to a variety of regulations, which can make it difficult to operate.

  • Potential conflicts of interest: Payvidors may have a conflict of interest between their roles as payers and providers.

  • Public distrust: Payvidors may face public distrust, as some people believe that they are more interested in profits than in patient care.

Overall, payvidors have the potential to improve the healthcare system. However, they also face some challenges that need to be addressed.



Horizontal Marketplace


A horizontal marketplace in healthcare is a platform that connects different healthcare providers and organisations with each other and with patients. This can include things like online appointment booking, medical records management, or drug pricing comparison.


Horizontal marketplaces can offer a number of benefits to both healthcare providers and patients, including:

  • Increased efficiency: Horizontal marketplaces can help to streamline the healthcare process by making it easier for patients to find and book appointments, as well as for providers to manage their schedules and communicate with patients.

  • Improved patient care: Horizontal marketplaces can help to improve patient care by providing patients with access to a wider range of healthcare providers and services. They can also help to improve coordination of care by making it easier for providers to share information with each other.

  • Reduced costs: Horizontal marketplaces can help to reduce costs for both patients and providers by providing patients with access to competitive pricing for healthcare services. They can also help to reduce administrative costs for providers by streamlining the billing process.

Some examples of horizontal marketplaces in healthcare include:

  • Zocdoc: Zocdoc is an online appointment booking platform that connects patients with doctors and other healthcare providers.

  • GoodRx: GoodRx is a drug pricing comparison website that helps patients find the best prices for prescription drugs.

  • Healthgrades: Healthgrades is a website that provides ratings and reviews of healthcare providers.

Horizontal marketplaces are still a relatively new phenomenon in the healthcare industry. However, they have the potential to revolutionize the way that healthcare is delivered. By connecting different healthcare providers and organizations with each other and with patients, horizontal marketplaces can help to improve efficiency, reduce costs, and improve patient care.



Andreessen Horowitz (a16z) believes that a consumer health tech giant will have the following strengths:

  • Large addressable market: The global healthcare market is worth trillions of dollars, and it is growing rapidly. This provides a huge opportunity for a consumer health tech giant.

  • Technology-driven: The healthcare industry is ripe for disruption by technology. A consumer health tech giant that can successfully use technology to improve the healthcare experience will have a significant advantage over its competitors.

  • Consumer-focused: A consumer health tech giant will need to be focused on the needs of the consumer. This means providing a user-friendly experience, offering personalized services, and making healthcare more affordable.

  • Data-driven: A consumer health tech giant will need to be able to collect and analyze data to improve its products and services. This data can be used to identify trends, predict risks, and personalize treatment plans.

However, a consumer health tech giant will also face some weaknesses, including:

  • Regulation: The healthcare industry is heavily regulated. This can make it difficult for consumer health tech giants to operate and grow.

  • Competition: The healthcare industry is already crowded with established players. A consumer health tech giant will need to find a way to differentiate itself from the competition.

  • Trust: Patients are often hesitant to trust new healthcare providers, especially those that are not regulated by the government. A consumer health tech giant will need to build trust with patients in order to succeed.

Let's dive deeper into the strengths and weaknesses of a consumer health tech giant:


Strengths

  • Access to data: A consumer health tech giant will have access to a vast amount of data about patients, their health, and their preferences. This data can be used to improve products and services, develop new treatments, and identify trends.

  • Innovation: A consumer health tech giant will be able to innovate quickly and easily. This is because they are not bound by the same regulations and bureaucracy as traditional healthcare providers.

  • Scalability: A consumer health tech giant can be scaled up quickly and easily. This is because they are not reliant on physical infrastructure, such as hospitals and clinics.

Weaknesses

  • Lack of experience: A consumer health tech giant may not have the same level of experience as traditional healthcare providers. This could lead to mistakes and errors.

  • Security concerns: A consumer health tech giant will have access to a lot of sensitive patient data. This data could be vulnerable to cyberattacks.

  • Regulation: A consumer health tech giant may face increased regulation as the industry matures. This could make it difficult to operate and grow.

Overall, a consumer health tech giant has the potential to be a very successful company. However, it will need to overcome some challenges in order to achieve its full potential.



Potential timeframes for Andreessen Horowitz's consumer healthtech predictions


The potential timeframes for Andreessen Horowitz's (a16z) healthcare predictions are difficult to say for certain. However, there are a few factors that could influence the timeline.

  • The pace of technological innovation: The healthcare industry is rapidly evolving, and new technologies are emerging all the time. If a16z's predictions are correct, these new technologies could have a significant impact on the healthcare industry. However, it is also possible that these technologies will take longer to develop and implement than a16z predicts.

  • The regulatory environment: The healthcare industry is heavily regulated, and this could slow down the adoption of new technologies. If a16z's predictions are correct, new regulations could be put in place to govern the use of these technologies. However, it is also possible that these regulations will not be adopted as quickly as a16z predicts.

  • The level of public acceptance: The public may not be immediately accepting of new technologies, even if they have the potential to improve healthcare. If a16z's predictions are correct, it may take time for the public to become comfortable with these technologies.

Overall, the potential timeframes for a16z's healthcare predictions are uncertain. However, if the pace of technological innovation is rapid, the regulatory environment is supportive, and the public is accepting, then it is possible that these predictions could come true within the next 10-20 years.


Here are some examples of other healthcare predictions that a16z has made:

  • Virtual care will become more common: a16z predicts that virtual care, such as telehealth, will become more common in the future. This is because virtual care can be more convenient and affordable for patients, and it can also help to improve access to healthcare in rural areas.

  • Personalized medicine will become more widespread: a16z predicts that personalized medicine, which uses genetic information to tailor treatments to individual patients, will become more widespread in the future. This is because personalized medicine has the potential to improve the effectiveness of treatments and reduce side effects.

  • AI will be used to improve healthcare: a16z predicts that AI will be used to improve healthcare in a variety of ways, such as diagnosing diseases, recommending treatments, and managing chronic conditions. AI has the potential to make healthcare more efficient and effective, and it could also help to reduce costs.

These are just a few examples of healthcare predictions that a16z has made. It is still too early to say whether or not these predictions will come true.


However, if the pace of technological innovation is rapid, the regulatory environment is supportive, and the public is accepting, then it is possible that these predictions could come true within the next 10-20 years.


Engage with the HealthTech Community


HealthTech M&A Newsletter from Nelson Advisors - Market Insights & Analysis for Founders & Investors. Subscribe today! https://lnkd.in/e5hTp_xb


HealthTech M&A Advisory by Founders for Founders, Owners & Investors. Buy Side, Sell Side, Growth and Strategy mandates - Email lloyd@nelsonadvisors.co.uk


HealthTech Thought Leadership from Nelson Advisors - Industry Insights & Analysis for Founders, Owners & Investors. Visit https://www.healthcare.digital


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