While venture capitalists are reportedly investing less in early-stage biotechnology and medical devices, some of their dollars are apparently finding their way to companies that offer ways to reduce health care costs, such as those in the information technology sector. According to a recent Washington Post article, investors provided biotech projects with $3.6 billion spread across 332 deals in 2007, but have put only $1.1 billion into 89 deals as of October 2011. Some contend that this is the result of a realization that part of the escalating costs of health care in the United States can be attributed to “the bells and whistles of [medical] technology.” Thus, “the smart money is recognizing that’s not the winning formula for the future.” A California-based venture capitalist reportedly said, “If you come in with [a device] that’s 10 percent better and twice as expensive, it’s hard to get anyone to care.
Journalist Christopher Weaver reports that the 2010 health care overhaul bill “has accelerated demand for companies that use data to make health care more efficient, provide online services to help consumers shop for care, and help the insurance industry adjust to new regulations.” A former health policy adviser to the Obama administration claimed, “The changes in the health system are rocket fuel for entrepreneurs.” Now a venture capitalist, Bob Kocher is apparently looking for investments in companies that help hospitals keep patients from returning soon after treatment and companies that help patients choose the least expensive care. Whether the law survives challenges currently pending before the U.S. Supreme Court, investors are preparing for a future with the law intact, repealed or invalidated. In any event, costs must be controlled. See The Washington Post, November 5, 2011.