Healthcare Reform Phase II ... A Healthcare Investment Revolution? ... the Psilos Annual Outlook 2010

Colleagues,

... One of my favorite venture capital firms, the Psilos Group, has just published their “Annual Outlook” ... Psilos specializes in new models of healthcare delivery that reduce cost, improve quality and align incentives across payers, providers and patients...

... The Psilos Annual Outlook provides investors, analysts, businesses and policy-makers with a good guide to the trends shaping healthcare growth investing...

Key Points:

* Healthcare reform has emerged as a $1 trillion plan extending health insurance to 32 million more Americans over the next few years.

* This will have a dramatic impact on healthcare technology investing

* Companies that prosper, will foster a new healthcare economy focusing on delivery of true value for every dollar spent.

* Expect the following "Driving Forces" to have a big impact in the next 1 to 3 years:

   • Creation of new payment and delivery systems
   • Development of new models of insurance
   • Dramatic improvements and reduction in administrative costs
   • Elimination of costly errors and ineffective treatment modalities
   • Reduction of unnecessary hospitalization through intelligent use of technology
   • Deployment of diagnostic and treatment tools that enable better outcomes at lower cost

... Psilos argues that investing in incremental changes that have failed repeatedly will be futile, such as classic disease management, standard insurance models, and traditional fee-for-service medicine.

... Disruptive models of healthcare services and medical technologies will be the foundation for new businesses based on 21st century technology.

...The report identifies 6 areas for high return on investment innovations:

Establishing an efficient system to prevent and manage chronic illness;
Creating applications to reduce errors in inpatient, ambulatory and post-acute care;
Developing new technologies and management plans to address the diabetes epidemic;
Identifying new technologies to facilitate more timely and accurate diagnoses;
Creating medical devices to facilitate less invasive and more effective surgical interventions; and
Expanding the adoption and investment activity in health IT that incentivizes the commitments and efforts of entrepreneurs