The Opportunity is Now for Technology-Enabled Care Models to Transform Healthcare Delivery

Companies like DispatchHealth, a provider of at-home high acuity care, are leading the field with scalable, technology-enabled, patient centric solutions   

By Austin Sherwindt, Managing Director of K2 HealthVentures 

Prior to 2020, a level of re-imagining and healthcare service model innovation existed, yet the majority of technology-enabled healthcare service approaches struggled to break through to scale their innovations and provide real impact to patients. As we have all seen, change in healthcare is hard and the pace is slow. Innovators face uphill battles to fulfill their disruptive potential, particularly given the embedded nature of centralized delivery systems, misalignment with stakeholder interests, technological limitations, and lack of payment models that step outside the confines of traditional fee-for-service structures. However, the COVID-19 pandemic is catalyzing real change — forcing healthcare systems and stakeholders to rethink centralized delivery and evaluate new care models fueled by technology-based solutions.

At K2HV, we believe this radically altered backdrop will enable major shifts in the way services are delivered across the U.S. over the coming decade, representing a significant long-term value creation opportunity for innovators to drive true transformation. Scaling care models that align interests across multiple stakeholders — and seeing the success of this approach tethered to measurable impact on patients’ lives — will achieve the promise of better delivery of healthcare and outcomes for patients.  

Take an area like high acuity care, which we view as a compelling target for change. The traditional point-of-service model (often an emergency department setting) has a high overall relative and absolute cost burden. It is a setting of care that too many patients have come to rely on, leading to an inefficient mismatch in resources and a suboptimal care experience for the patient. One emerging model is to divert the ED visit altogether by sending a team of clinicians to the patient’s home where they can resolve the vast majority of non-life threatening illnesses in a more comfortable and convenient (and cost effective) setting. This care model is enabled by recent technological advances and supported by an exceedingly compelling value proposition across all stakeholders including patients, hospital systems, at-risk provider groups, and payers. A key success factor for this kind of alternate care model is scale.

K2HV has recently made our first investment in this area as part of a $400 million equity-debt combination capital raise for DispatchHealth, who we view as the category leader in delivering decentralized high acuity care. DispatchHealth is building a true ecosystem that facilitates not only ED diversion for complex patients, but is going further to enable longer-duration episodes to be managed in the comfort of patients’ homes as an alternative to brick-and-mortar facilities like hospitals and skilled nursing facilities. They have generated compelling evidence as to the power of this model to reduce costs, improve outcomes, and deliver a better experience for patients. We are excited to support their mission and it has been our privilege to engage with DispatchHealth’s experienced and visionary management team, led by co-founders Mark Prather and Kevin Riddleberger, who are committed to delivering a truly transformative home-based care model.

K2HV is committed to offering flexible, long-term capital to companies that, like DispatchHealth, are forging substantial innovations in healthcare. Our deep understanding of the healthcare services space and of DispatchHealth’s differentiated approach and business model, coupled with our confidence in their leadership team and ability to execute on an ambitious growth strategy, uniquely positioned us to be a meaningful capital solutions partner for the company in ways that traditional debt providers without this specialized domain focus cannot.

We are excited by the value creation opportunity ahead in the healthcare services space and are actively looking to partner with innovators to provide the growth capital that will be required to realize the transformational potential. Learn more about K2HV’s investment approach by visiting us at k2healthventures.com.

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