After the 2008 financial crisis, a new slate of regulations aimed at protecting consumers and businesses opened the floodgates for a surge of fintech companies to develop into household names over the last decade. Now, it might be healthcare’s turn.
Part of the Dodd-Frank Wall Street Consumer Reform and Protection Act, passed in 2010, stated that financial institutions were required to give consumers access to their financial data electronically either for personal or third-party use. This regulation is why we can link our bank accounts to Venmo or Zelle to send money to our friends or why Stripe and Plaid have been able to revolutionize payment infrastructure for so many businesses.
Now, healthcare is seeing a regulatory catalyst of its own. The 21st Century Cures Act, which passed in 2016 and will begin to be enforced this year, outlines information sharing guidelines, API standardization and national infrastructure for sharing this type of information. An increase in healthcare innovation is listed as one of the act’s goals.
The question is, will healthcare startups tap into these regulatory guidelines with the same fervor that fintech founders have over the last decade?
Investors like Jordan Nof, a co-founder and managing partner at Tusk Venture Partners, hope so. Tusk has long been bullish on digital health but has started developing a thesis in this area lately because it sits in the firm’s sweet spot — heavily regulated industries.
“This could be a catalyst to drive meaningful change in the way that impacts a lot of the plumbing, so to speak, in healthcare,” Nof told TechCrunch. “It’s an area we’ve been thinking a lot about and trying to figure out what the most compelling use cases are.”
While Tusk is still looking for its first investment in the space — Nof said it has a robust list of companies it’s currently tracking — founders have already started moving.
Yesterday, I published a story about Canvas Medical. The EMR startup launched a year before the 21st Century Cures Act was passed but is now in a position to be a frontrunner in the space, especially with its API capabilities and recent certification by the Office of the National Coordinator for Health Information Technology, which allows it to work with government programs like Medicare.
“It’s great — we want the competition,” Canvas Medical founder and CEO Andrew Hines said. “They just have a lot more to learn about how the markets work and the regulatory environment, which is no small aspect of creating value.”
Some of this potential transformation is what got Latif Peracha, a partner at M13, excited about Canvas, prompting him to lead the company’s Series B round and join its board.
“Digital health is a really big thesis [for M13]; we believe digital healthcare is still in the early innings,” Peracha said. “What we saw in fintech, we see something similar happening in healthcare.”
Nof added that while people have been working to bring medical records online for the last decade, he’s eager to see where entrepreneurs will take it from here. Will this data sharing extend to consumers? Do consumers even want this information? Will this regulation improve payment processes? While still very early, this could drastically change the digital healthcare space over the next decade.
“It will be interesting to see what the pace of entrepreneurs is to come after solving problems like this — it isn’t a new problem,” Nof said. “The opportunity set is still there, but here is a new catalyst and we are in a different era right now than when people were trying to perviously solve this problem — the tailwinds weren’t there.”
They are now.