A Healthcare VC’s Take on the Ruling (David Jones, Jr.)

By Joanna Glasner, PEHub.com            6/28/12
http://www.pehub.com/157522/a-healthcare-vcs-take-ruling/

Overall, David Jones, a healthcare VC and self-described “recovering lawyer” is pleased with today’s Supreme Court ruling on of the healthcare reform bill.

It’s not the just the contents of the decision, which will let stand the controversial individual coverage mandate. It’s also the fact that the case is closed.

“The biggest value is not that they’re right, but that they’re final. Now we know what the law is and we can get on with our business,” says the Chrysalis Ventures managing director. Jones adds that he had expected the court would  uphold the individual mandate, but was somewhat surprised at the legal reasoning justices employed in the majority ruling.

Jones says the ruling, though generally a positive outcome for healthcare services and IT startups, probably “is not a huge big deal” for the firm’s portfolio companies. That’s because insurance companies and healthcare providers, mandate or not, face pressure to cut costs and improve productivity and care quality. Thus the areas in which Chrysalis and competing VCs tend to invest – in healthcare IT and analytics, new care delivery models and consumer health education and preventative services – were already growth areas. Moreover, more than half of the mandates in the healthcare bill have already come in force, he says.

That said, there will be a psychological impact from the Supreme Court ruling, as health insurers and large care providers may have put off some new initiatives and investments as they awaited a decision. That means that now, “for the big customers to whom our little portfolios sell to, the decision will probably shorten decision cycles in purchasing.” Jones says.

Jones says one portfolio company – Connecture, a provider of web-based sales and service automation tools for health insurers – will probably see the biggest boost from the court’s ruling, as the healthcare law involves setting up state-regulated healthcare exchanges, which would be a new customer base.