| Margins are under scrutiny
Many of the more "buzzy" AI startups are still getting a pass on their margins, but in general, investors are increasingly focused on margin durability, according to Vig Chandramouli, partner at Oak HC/FT. "We're certainly scrutinizing it a bit more to understand what's driving that margin deterioration — and it's actually not really compute cost, like you would think," he declared. He said the biggest cost issues instead often turn out to be related to customer success, onboarding labor or forward-deployed engineers. To him, the key question is whether those costs are temporary or structural. Underpricing and poor contract structure can pose real scaling risks.
Some startups are moving from SaaS-based pricing to transaction- and success-based pricing — which can backfire if these companies don't design their contracts carefully, Chandramouli pointed out. "If they price, for example, on a success basis, and they're doing 10 actions and one of them is successful, that's where you get screwed in the unit economics. On the per successful action basis, you make money, but when you're doing 10 of them, your margins are a lot worse, right? There's things like that where you just have to be really careful on how it's being contracted," he explained. The need for better labor management tech
Labor management for nurses and allied health professionals is a major underinvested opportunity. For the most part, startups selling clinical AI solutions have focused heavily on physicians — but 70% of the healthcare system's labor comes from nurses and allied health professionals, Chandramouli pointed out. Burnout, staffing flow, scheduling and unit coverage remain poorly addressed in this population, largely because these employees aren't direct revenue generators — unlike physicians, who are reimbursed for the care they provide, he explained. He said this area is a ripe one for innovation — and hopefully more startups will build tech addressing this issue. Epic looms large, and it's limiting long-term commitments.
Epic puts market pressure on "pretty much any product" in the healthcare tech space, Chandramouli noted. "The first question is, is Epic releasing something in 12 months? And if it's not, then the customer is willing to try, but customers are not willing to sign long-term deals with anybody. They know the market's evolving quickly, so you're probably going to get a one to two year deal," he stated.
— By Katie Adams | 
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