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Hi Hospitalogists,
Welcome to Thursday's edition! I had the pleasure of attending the Nashville Healthcare Sessions last week and figured it'd make sense to share my thoughts and observations with all of you here to pick apart and dissect. Let's dive in. |
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My Recap of the Nashville Healthcare Sessions |
While AI was the main focal point (which makes sense, given Oracle's large presence at the event), I picked up a ton of great nuggets of information at Nashville Healthcare Sessions, which is in its 3rd year. I'm sad to have missed the first 2 years - this conference was one of the best I've attended from both a content and networking perspective. The Nashville healthcare scene is unmatched in prowess and while sometimes you're wondering if you're outside of the Nashville Healthcare Inner Circle (everyone seems to know everyone here!) everyone is friendly, collaborative, and open to great conversation (and food!). While I lost my notebook with the first half of the event's notes in it (who takes a notebook and doesn't at least hand it in to the staff?? RIP) The access to great healthcare leaders is insane too. Here I am chatting with two folks about whether ACA subsidies get extended and the supplemental payments stuff going on, and what Ardent is going to do about that, when I turn around and see Marty Bonick, Ardent's CEO, walking right up! to chat with us! Psychic stuff, I tell you. Thanks so much to the Nashville Healthcare Council for inviting me out. I had a blast and hope to make it every year. I want to give a special shout out to the HTD Health x Bradley happy hour. I show up to the upper deck of the restaurant and what do I see, front and center? A handle of Blanton's!! The bartender wouldn't let me have the horse and jockey stopper. Maybe next time. Pleasantries aside, here were some fun nuggets of information I picked up on throughout - both during panels but also conversations over the course of the event. Forgive me for not citing every single person who quoted these snippets: - The private equity-backed IPO will return. Companies like Medline, and then PPMs, and finally other assets (RCM, analytics) will likely go public over the coming 12-24 months pending market conditions. A big reason why this trend is resurfacing is…there's nobody left to sell to. So naturally retail investors will be the suckers here. Strategics like large payors either aren't interested given valuation or FTC / anticompetitive concerns. Probably the best panel of the day was a private equity investor and venture capital guy talking about market conditions. Both agreed that late 2025 has been the toughest operating environment and worst transaction market they've ever seen in the history of their careers. One remarked that a colleague of his mentioned in a recent conversation, "It's like 2001 all over again." Other tidbits from that fascinating conversation:
- The regulatory environment will hamper liquidity and the ability to sell businesses in all segments of healthcare
- On that note, the two mentioned a need for another fundraising cycle as the lack of strategic buyers and exit opportunities is creating a structural fork in the road - elongation of illiquid portfolios (longer involuntary hold periods), incestuous transactions (PE selling to other PE)
- Seed-Series A startups still hold reasonable valuations while later stage health tech valuations are more likely to be bonkers
- There's a clear private equity paradigm shift to execution and operational excellence, which will likely emphasize the participation and governance of these assets by those subject matter experts closest to the company (physicians, etc.) And while AI holds significant promise in generating additional margin, underwriters are finding the story hard to believe, meaning that they don't believe the models that are baking in margin appreciation. Like we've already mentioned…it's the toughest operating environment in like 30 years!
- On the venture side, this particular investor was focused on capital light technology. Headwinds today dictate that labor will HAVE to be replaced by tech over time and we'll HAVE to see automation by default, otherwise system collapse. This investor made the distinction that technology investments were attractive while tech-enabled services were struggling, and that this trend is a divergence. I found this point particularly interesting given AI is really the first meaningful technology to move the needle from a margin perspective with tech-enabled services as we've seen with the likes of Hinge. Maybe a slightly contrarian perspective but you guys let me know what you think on this distinction.
- The biggest signal as to whether or not an organization can adopt AI effectively is whether the culture of people who are working there is set up to do so. For instance, you can't use AI effectively while you think it'll eventually replace your role at the organization.
- Lower middle market opportunities will 'always be there.'
- Who has the better bots? Appeals are inundating the managed care industry. They're drowning in paperwork. Created by AI.
- Capital Rx - er, sorry, Judi Health - is crushing it.
- I enjoyed a panel on the first day with Julie Yoo and friends and she recapped those thoughts here. Great stuff, including a chart noting that at least 5 AI-enabled companies founded in 2020 and beyond have hit $100M+ in ARR.
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- One investor noted they expect payvidors - vertical consolidators - to divest assets over the coming years.
- Oura (the smart ring maker) continues to make a significant push into traditional healthcare as they continue to tout their partnership with Essence. The company is growing like crazy and raising something like $875M at a $11B valuation. There is a ton of promise here as perhaps the first consumer wearable to bridge the gap and integrate into traditional healthcare workflows. A lot of the talking points I had with Jason Oberfest and Saria Saccocio back at ViVE were still true today, and more - seniors engage a TON with Oura rings and there are indicated uses for a number of conditions including sleep apnea and more. Whether we see more materialize here or if it's marketing fluff will be contingent upon continued provider engagement with actionable wearables data.
- Zipline, the drone delivery company, caught a couple of strays with me during the event. During one panel a CEO mentioned offhand a failed pilot with Zipline given the cost of delivering via drone and the fact they were piloting the drones in a…no-fly zone. Meanwhile I heard from another individual that Novant Health said "not yet" to drone delivery for similar reasons. Maybe drone delivery will work in other markets in healthcare, but at least not these two, or not quite yet.
- During the Global Health Innovator's Summit following Sessions, several investors mentioned the following areas as attractive sectors for investment: Proactive health (longevity, wearables), senior care, and behavioral health. One investor during this event remarked that he expects to see AI valuations come back down to earth late next year as the likes of OpenAI will require another funding round. Somewhat contrarian as I think the hype cycle still has runway.
- The final point I noted during my time was that the idea of 'going direct' in healthcare continues to pick up steam, leading to more consumer-forward elements coming to light over time
- There was also an idea floated by an investor that I've thought of myself…and that's the notion of giving people ownership of their own healthcare data and allowing them to license that data to trusted healthcare organizations, train on algorithms, etc and benefit some way in return. Not sure what that looks like in practice but it's an interesting idea nonetheless.
All in all, despite many noting some doom and gloom, I thought the overall vibe was one of optimism and continued progress in the right direction. When you see a bunch of hospital and health system folks talk about AI, that seems to be a paradigm shift in a good direction. My next - and thankfully, last - stop this year is HLTH where I'll try to delineate between agentic bullshit and actual builders! |
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Alright fam, in my opinion the Red River Rivalry is the breaking point of the 'Horns season. While Mateer isn't expected to play (though he is questionable), it's going to be an uphill battle with our dismal O-line play against OU's pressure-happy defense. The only thing I'll say is that crazy things happen in the Cotton Bowl and it doesn't matter a lick how good either team is - anyone can win. With how young Texas is, can we overcome that composure hurdle and early season disaster, or will we get it together and let this be a turning point for the rest of the year? My hopes are high, but my expectations are low. Everything rests on the offensive line play. |
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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