AI is changing healthcare operations and where investment is going
AI has become the focus of investing for Santé, a healthtech and medtech venture capital firm that manages over $800 million of capital for healthcare and technology startups.
Santé works with companies that sell AI directly to hospitals and also directly with healthcare systems as investor partners.
“Ten years out, AI is used across all decision-making,” said Dennis McWilliams, a partner at Santé. “We spend a lot of time thinking about how AI can change operations.”
The takeaway is AI can improve clinical outcomes, lead to increased efficiency and new revenue streams, but first viable business models need to be developed. This starts with realizing there are two segmented approaches to healthcare AI. One is supporting vertical platforms for specific areas of care and the second is in resolving widespread pain points.
Eric Epstein, a principal for Santé, leads the company’s health tech business.
“Where Santé is seeing the most innovation from an investment perspective,” Epstein said, “is in making business models viable.”
His first recommendation is to identify the low hanging fruit for technology innovation, such as in medical coding, documentation and the call center. Next is to see which use cases have the most impact and create better outcomes for patients.
He also recommends hiring an AI expert.
Santé has been investing in AI since the company was founded in 2006. Its capital is managed in two separate strategies: privately held companies, with a particular focus in biotech, medtech, and healthtech; and in publicly traded securities.
Now on its fourth fund, Santé makes investments in the $5 to $10 million range.
These include five different investments in IBM Watson, most recently in the surgical space; in BeekeeperAI, which created a speeded-up data escrow system; and in Clarity, in conjunction with a large hospital system to develop an algorithm for a 5-year risk factor for breast cancer.
Santé, with US Venture Partners, recently led a $15 million Series A funding round in Surgical Safety Technologies, a medtech startup that engineered an Operating Room BlackBox to provide real-time data on patient safety and identify when something goes wrong, saving money and lives. It is currently being used by 24 large academic healthcare centers across North America and Europe, according to Santé.
AI is taking off in healthcare, but remains far behind other industries, according to Epstein. This is because the data has been siloed.
With greater interoperability, AI will get better as more data becomes available for algorithms. This will create base level data and enable hospitals to get to scale.
Generative AI is still nascent, McWilliams and Epstein said, because there remains high risk of getting it wrong.
“We continue to believe there’s a huge technological breakthrough with generative AI,” Epstein said. “We’re at peak hype level with generative AI. We believe this is going to be a transformation tech over the coming months and years.”
Email the writer: SMorse@himss.org