PitchBook News - Enabling the future of healthcare

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The Research Pitch

March 16, 2024

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Enablement companies are key to the future of value-based care

The $4.5 trillion US healthcare market is on an unsustainable path, with spending fast outpacing improvement in outcomes.

As a result, the healthcare industry is undergoing a sea change known as value-based care, which focuses on improving holistic patient outcomes while controlling costs.

More precisely, it involves alternative reimbursement models that reward healthcare providers for keeping patients healthy through holistic and preventative care—in contrast to traditional, fee-for-service reimbursement, which rewards providers simply for providing a higher volume of care.

VBC is transformative—and transformative isn't easy. Pursuing this model requires healthcare providers to fundamentally change the way they operate.

For most physicians, this means practicing medicine the way they have wanted to all along, prioritizing outcomes and centering the labyrinthine healthcare delivery system around the patient rather than the other way around.

But it also means rewriting the playbook on financial incentives, collaboration structures, care pathways, and how technology is used. That is extraordinarily difficult for most healthcare providers to pull off in an environment where many are burned out and struggling for financial sustainability.

There are many ways for investors to align themselves with solutions to this fundamental problem. When we began researching value-based care years ago, we asked the question: What is the model that will allow the value-based care transformation to take successfully and rapidly take root throughout the US healthcare system?

We believe that model is VBC enablement. Companies that are "VBC enablers" help healthcare provider organizations transition from fee-for-service into value-based payment models by providing wraparound technological, administrative, and clinical resources.

It's a capital-light model that comes in many flavors but fundamentally bridges the gap between where healthcare is today and where it's headed—and does so rapidly, at scale.

In a new note, we unpack why we believe enablement is the most important mechanism by which the VBC transition will play out in the US over the next five to 10 years.

Download the free research here: The Value-Based Care Enabler Landscape

In the past, we've also written about the broader opportunity set for VBC investment, what a successful VBC transition looks like within a nonprofit health system, and how PE is navigating the changing VBC market.

If you're interested in discussing PE and VC investment in value-based care, please feel free to reach out.

Best,

Rebecca Springer, Ph.D.
Lead Analyst, Healthcare
Email | LinkedIn

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Market Updates

US PE middle-market deal volume rebounded in Q4, which brought some optimism about an overall PE acceleration.

The seemingly solid turnaround may be misleading, however, as too many deals involved rescue capital or reflected distressed valuations.

Exits also bounced back amid a flurry of continuation fund transactions in the space. Our new US PE Middle Market Report explains why that trend is likely to continue:

read the free report

Between 2015 and 2021, the cumulative deal count for PE and VC in Southeast Asia more than tripled, and deal value hit a high-water mark of $34.1 billion in 2022.

Last year, though, activity in the region slowed significantly.

Our debut Southeast Asia Private Capital Breakdown finds that considerable opportunities remain among the region's fast-growing and diverse economies:

read the free report

The Middle East and North Africa saw a boost in both PE deal value and count last year. Exit value and volume were also on the up and up.

Fundraising was a low point, falling significantly from 2022's record highs, according to our inaugural MENA Private Capital Breakdown.

From a VC perspective, 2023 was the second-highest year for deal value as the market continues to mature:

read the free report

Thematic Research

Surfing Turbulent Cash Flow Waves

Tracking the ebb and flow of fund cash flows is pivotal for determining the outlook of a portfolio's liquidity.

For LPs, capital call activity and net cash flows of funds are just as important to allocation planning and portfolio maintenance as the well-documented distribution dearth.

With data from thousands of funds, our note analyzes distributions relative to net asset values and capital calls compared to uncalled commitments across asset classes:

read the free research

Q4 Public BDC Venture Lender Earnings

Public business-development companies that specialize in venture debt delivered robust performance in Q4 2023 due to higher base rates and their ability to use financing mechanisms to keep funding costs low.

Our quarterly analysis tracks the performance of five public BDC venture lenders and explains why they have benefited from strong deal pipelines:

read the free research

Industry & Tech Research

Could top VCs be warming up to crypto—again?

Our Emerging Tech Indicator shares quarterly insights on investment activity from a subset of the world's most successful VC firms.

The data shows that while AI and biotech stayed the most popular verticals, crypto has recorded steady gains:

get the free report

Led by the CRM segment, enterprise SaaS startups raised $14 billion across 597 deals in Q4, a 12% increase in value but a 9% decrease in deal count on a quarterly basis.

Our new Enterprise SaaS Report dives into the data and also looks at companies leveraging conversational AI:

read a free preview

Emerging Space Brief: Geothermal Energy

With novel applications in agriculture and industry, geothermal energy has become an exciting space as it's isolated from external conditions and, unlike wind and solar, offers consistent base-load energy.

Investors are tapping into the market as tech advances in the binary cycle and dry rock fracturing drive innovation:

read the free research

Webinars & Events

Be sure to add these events to your calendar:

March 18-20: Join us at ALTSLA in Los Angeles, where our lead quantitative and funds analyst Zane Carmean will participate in a panel discussion on investing in emerging managers in the new era of specialized alternatives. Register here.

March 20-27: We're hosting a pair of webinars to discuss the findings from our new All In reports, as women in VC have made progress but continue to face many challenges. On March 20, we'll focus on the US ecosystem. On March 27, we'll turn our attention to Europe.

April 29-May 1: Come visit us at DealMAX in Las Vegas, where our lead PE analyst Tim Clarke will lead a session discussing where and when private equity firms will find exit opportunities going forward. Register here.

In the News

Kyle Stanford weighs in on Reddit's unique IPO plans.

Our insights and data featured in the press:

Discussing Reddit's IPO and the buzz surrounding involvement from users. [Yahoo Finance]

On competition among female founders, verticals of opportunity, and other conversations around women in VC. [CNBC]

Enterprise SaaS investment makes a comeback—but not where you'd expect. [TechCrunch]

Private equity, venture capital fundraising drop at different rates. [P&I]

Where cybersecurity multiples eclipsed software overall in Q4. [Fortune]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

More of our recent research (* - report preview):

Market updates

Global Private Market Fundraising Report
Nordic Private Capital Breakdown
Germany Market Snapshot
VC Emerging Opportunities

Thematic research

Industry & tech research

Credit research

Coming next week (subject to change)

Global Private Debt Report
Global Real Estate Report
US PE Lending League Tables
Mobility Tech Report*
The State of Private Market ESG and Impact Investing in 2024

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PitchBook News - Enabling the future of healthcare

Older messages

Venture debt market thaws—for some

Prestigious VCs aren't a venture debt guarantee

Sizing up Southeast Asia's markets

Going with the cash flow

Zoom in on Mideast, North Africa markets

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