The Next Era of Digital Health | Lee Shapiro

The US spends nearly 20% of GDP on healthcare and gets outcomes that trail most other industrialized nations by a wide margin. That gap is not an indictment of the system's effort. It is an argument for a fundamentally different kind of technology investment, one built around what Lee Shapiro, co-founder and managing partner at 7wire Ventures, calls the informed, connected health consumer.

The healthcare system was designed for acute illness, not chronic condition management or prevention. Most digital health innovation to date has been substitutive rather than transformative, replacing paper with electrons without changing how decisions get made or how people engage with their own care. The companies 7wire backs are trying to change that by building tools people actually want to use, producing measurable outcome improvements, and delivering a return on investment of at least two to three times to whoever is bearing the cost of care.

CFOs are now sitting alongside benefits leaders in purchasing decisions, a shift that reflects how close healthcare spend is getting to the threshold that pushed General Motors toward bankruptcy in 2008. Per-member-per-month pricing models reward free riders. Outcomes-based or shared-savings contracts are the more honest structure because they align everyone's incentives in the same direction.

At the seed and Series A stage, what makes a digital health company worth backing has less to do with the financial model than with the founding team's lived experience and judgment. The example 7wire returns to is NOCD, a severe mental illness platform whose founder built the company after his own OCD went undiagnosed for years. That kind of personal stake produces a different kind of product, and a different kind of staying power.

Tune in for Lee Shapiro's three-part formula for backing a digital health winner, what employers should look for when evaluating digital health vendors, and why the next wave of innovation may look very different from the last.