By Jason Robart
The opportunity and absolute necessity for private investment to fuel innovation in the U.S. healthcare system — innovation that drives greater access, lower costs and better outcomes — has never been greater. But the question is: Does venture capital have the stomach for it during these uncertain regulatory and political times? Let’s hope so.
The U.S. healthcare system is one of the largest and most complex in the world. It accounts for more than $4.5 trillion in annual spending, or over 18% of GDP. The infrastructure is vast, with about 6,000 hospitals, 900,000 licensed beds, 900,000 physicians and more than 4.7 million registered nurses.
Funding comes from a mix of public and private payers, and despite the shift toward value-based care, more than 20% of reimbursements still follow the fee-for-service, or FFS, model — a structure that incentivizes volume over value.
Yet for all its scale and spending, the U.S. underperforms. Compared to other developed nations, it has the highest healthcare expenditure per capita but continues to deliver sub-par outcomes, including lower life expectancy and higher rates of chronic disease. The mismatch between cost and care has long been clear, and it is only growing more urgent.
The underperformance of the U.S. healthcare system has made it ripe for disruption — and with the opportunity for disruption comes the opportunity for significant financial reward. Digital health investment surged by tens of billions of dollars from 2010 to 2021, before tapering off in recent years.
The case for VC interest
But now, with the rise of artificial intelligence and advanced analytics, we’re seeing a new wave of innovation — one that could redefine access, affordability and efficiency if supported appropriately.
Not everyone, however, is entirely on board with the role of private investment in healthcare, and their skepticism is understandable. Critics argue that venture capital is inherently short-term in orientation, with high tolerance for failure and limited patience for systemic change.
Others warn that the focus on ROI can deprioritize marginalized communities, leading to inequitable access and ethical gray zones, especially in areas like predictive analytics or patient data monetization.
In many respects, guilty as charged. Traditionally, the acceptable time horizon for healthcare investors to see strong financial returns (five to seven years) has been inconsistent with the time required for true healthcare transformation to take hold.
Some may argue that the rapid growth of telehealth during and post-COVID prove the contrary, but it is important to remember that this growth came on the heels of many years of incremental growth and was buoyed by a global crisis.
But there are several examples of where traditionally public-interest sectors have benefited tremendously from private capital and innovation, including transportation, clean energy and internet access.
Closer to home, privately financed companies such as Cityblock Health, Oak Street Health, Carbon Health and Zipline have made considerable progress in expanding access to care and improving health outcomes for underserved and vulnerable communities.
Additionally, AI is showing real promise in diagnostics, workflow optimization and clinical decision support. Here, public-private partnerships are essential — combining the innovation muscle of startups with the oversight and scale of government infrastructure.
The call for ethical capital
Just as important is the role of the investor. This moment calls for “ethical capital” — investment that prizes sustainable, equitable impact as a driver not a detractor of financial return. The continued expansion and new generation of shared-savings and value-based contracts finally make this a real possibility.
But if private investors pull back the consequences will be profound. Without private investment, digital and AI-driven tools will remain siloed or underdeveloped, underserved and vulnerable populations will fall further behind, and ultimately the status quo — high costs, poor coordination and preventable outcomes — will persist.
In short, disengagement is not a neutral act. It is a choice to accept a system that costs too much and delivers too little. The stakes are too high for private capital to sit on the sidelines.
The U.S. healthcare system stands at a crossroads. The opportunity to invest in innovation that meaningfully improves care — while generating attractive long-term financial returns — has never been greater. But it will require investors, entrepreneurs and policymakers to reframe the narrative around healthcare investment: from one of incompatibility and risk to one of shared purpose and transformative potential.
The alignment of opportunity and necessity is clear, but do we collectively have the courage to act?
Jason Robart is the co-founder and managing partner of Seae Ventures. He works with companies looking to leverage the intersection of strategy, innovation and venture to further their competitive position and bring fundamental change to the healthcare system. Prior to Seae, he served as the chief strategy officer of Blue Cross Blue Shield of Massachusetts, as well as the president and CEO of Zaffre Investments, a wholly owned subsidiary of Blue Cross Blue Shield of Massachusetts.
Illustration: Li-Anne Dias
Stay up to date with recent funding rounds, acquisitions, and more with the
Crunchbase Daily.
