Andreessen Horowitz General Partner Julie Yoo is a staunch advocate for companies at the intersection of healthcare and finance. And as a leader of health tech investment at the venture capital investment firm, she’s well-situated to fuel companies looking to ameliorate payment problems in healthcare.

Yoo joined Andreessen Horowitz, otherwise known as a16z, in 2019 after co-founding patient access startup Kyruus — an experience that Yoo says gave her a front seat to the financial challenges faced by both healthcare companies and patients.

Andreessen Horowitz — the biggest venture capital firm by assets under management —  has been an active digital health investor after the pandemic spurred record fundraising in the sector, according to Pitchbook data. The VC recently inked a broad thesis outlining where it sees attractive investment opportunities in the healthcare fintech landscape.

Yoo shared that investment thesis in a wide-ranging interview with Healthcare Dive, touching on her advice for founders going up against entrenched behemoths and why the industry is at a tipping point for fintech adoption.

Editor’s note: This interview has been edited for clarity and brevity.

HEALTHCARE DIVE: Why is fintech in healthcare such an area of interest for you?

JULIE YOO: While at Kyruus, I got fascinated about the financial flow of payments, which drives all the things that work and, more importantly and more frequently, the things that don’t work in our system.

In addition, if you think of insurance as fintech, those are clearly the biggest companies in the space. We’ve done a lot of work to understand and unbundle those business models. What are the components of giants like UnitedHealth Group? How do they tick? Where are opportunities for startups to compete head-to-head to provide a 10 times better experience or 10 times better competency? And where are the white spaces where UnitedHealth doesn’t have a good footprint that startups can go after? We’ve made a number of investments based on that thesis.

What are the biggest opportunities you’ve identified for fintech startups in healthcare?

YOO: The simplest is administrative bloat. The majority of waste in our industry is administrative overhead of unnecessary or redundant tasks that are done through inefficient human labor that can absolutely be automated. We have a number of companies in our portfolio that represent that thesis, of how do you use cutting-edge technologies to do some of the simplest tasks across the revenue cycle.

We have companies doing that on the reimbursed revenue side, like Akasa, and companies doing that on the patient side, like Cedar. I show these products to my colleagues in our consumer and enterprise practices and they’re kind of like, what’s special about that? And I’m like, it’s special in healthcare.

The second bucket is the actual payment model, and how we can create technology solutions that actually contemplate value-based payment models versus fee-for-service. We have a company in our portfolio called Pearl Health that provides software to provider groups to help them bear risk, creating a recurring revenue model that’s far more resilient for these practices. We’re getting a lot of interest from providers who want to stay independent.

How do you advise your startups that are going head-to-head with larger companies to carve out market share?

YOO: A lot of investors are averse to starting with a wedge. Some people look at the segment of the universe that’s attainable to Pearl today and say ‘oh, that’s too small, it’s not worth our while.’

Pearl is going to that underserved long tail of practices that no one else cares about, including other risk-assumption companies like Optum or Agilon or Aledade — because they’re big and have growth targets, there’s just a certain floor of what they can go after. But we believe every niche in healthcare can be $10 billion over time.

We are taking a bet that value-based, risk-bearing primary care is the future and the industry is going to continue to move in that direction. But if it does, then the seemingly small segment that Pearl is able to go after today will be 100 times what it was.


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