The health tech diligence questions your team doesn't know to ask.

Healthcare is roughly a fifth of the economy, obviously broken, and obviously expensive, so it reads as the perfect target for a technology fix. Fertility and infertility benefits, women's health and menopause, mental and behavioral health, physical therapy and musculoskeletal, telehealth and virtual primary care, diabetes and cardiometabolic, GLP-1 and weight management, oncology support, cost-containment and MRI imaging plays, reference-based pricing, cash-pay vendors and healthcare marketplaces, medical bill and EOB analyzer tools, tech-enabled payers, and claims adjudication platforms are all drawing capital right now. Each is a real problem with real spend behind it, and a sharp product can look like it prints money. That's the draw, and it's not wrong.

The trap is that the size of the problem tells you nothing about whether a company can get paid to solve it. Healthcare is the rare market where the person receiving the service, the person delivering it, and the person paying for it are three different parties, and the one who pays is the one nobody in the pitch understands. That's the gap I work in.

Rarely the technology. The product is usually sharp and the topic is hot, whether it's a fertility benefit, a mental health platform, a physical therapy or MSK solution, a telehealth service, or a cost-containment play. What breaks them is the payer. They don't understand how to plug into a health plan, they can't produce the reporting a plan needs to see, and their cost-saving story doesn't line up, philosophically or technically, with the heartbeat of the industry, which is the payer and the TPA that administers the plan.

The deeper failure is underwriting. The benefit a point solution offers is often one that underwriting doesn't cover in the first place. So even when the solution is genuinely good, it never plugs into how the plan is funded, and a solution the plan won't fund is a solution with no path to scale. I can tell you in one read whether a company understands that or is about to learn it with your money.

The general venture question, and the one you should ask first: is anyone else already doing this, and is the window closing? In healthcare there's a sharper way to answer it. New benefits almost always get adopted by self-funded employer plans first and move into fully insured coverage years later, so where a solution sits on that curve tells you whether it's early with runway ahead of it or late to a market that's already consolidating.

Saturation in healthcare also hides. A category can look wide open because no incumbent has a consumer brand, while a handful of players quietly own every payer relationship that matters. I tell you which kind of empty you're looking at.

Whether the product is a cheaper MRI through a cost-containment vendor, an infertility benefit, a mental health platform, a musculoskeletal or physical therapy solution, or a diabetes program, the question is the same: will anyone actually pay for it, and which payer is that? Founders answer with a hand-wave, "payers will cover it." Which payer? A self-funded employer, a fully insured carrier, the member out of pocket, a provider group? Each one buys differently, on a different cycle, for different reasons, and a company built for the wrong payer runs out of money before its first real contract.

I trace the actual dollar: who writes the check, what has to be true for them to write it, and how long that takes. If the honest answer is that nobody in the payment chain has a reason to pay, that's the finding, and it's better to have it before the wire than after.

A generalist looks at an infertility solution, a cash-pay MRI product, or a direct-to-consumer telehealth play, sees that people already pay out of pocket for it, and concludes the company can skip insurance entirely. That's the question that separates a nice business from a category-defining one, and it's easy to get wrong. The cash market looks like proof of demand, and you can build a real company selling to consumers directly. But that ceiling is low: you're limited to the people who can find you and afford to pay cash on top of the premiums they already carry, and adding another out-of-pocket healthcare cost is exactly where consumers freeze.

The reason to go through the insurance and payer channel is reach. About 310 million Americans, roughly 92 percent, have health coverage, and employer plans alone cover around 154 million people, most of them in self-funded plans. If a solution plugs into the plan, the plan pays for it and the member gets it as a benefit, so the individual isn't reaching into their own pocket at all. That removes the single biggest block to adoption and puts the product in front of an entire covered population at once instead of one cash-pay customer at a time. That's how a point solution becomes a household name instead of a boutique.

So the real diligence question isn't whether a company can sell to consumers. It's whether it has a credible path into the payer channel, because that path is the difference between a niche and the whole market. I tell you whether that path is real or wishful.

Cash-pay vendors, tech-enabled payers, and insurance-disruptor marketplaces are among the hottest categories in health tech right now, and they fall into two kinds. One is a consumer marketplace where an individual, often underinsured or uninsured because they don't want to carry large premiums, shops for care at a cash-pay rate outside their plan. The other is a cash-pay vendor that partners with an employer-sponsored health plan to pay claims in cash, up front, negotiated directly with the provider instead of running through the network. Both are genuinely interesting, and both are full of pitfalls the founders usually haven't hit yet.

On the consumer marketplace side, a cash rate looks great until something goes wrong. What happens with balance billing? What happens in a catastrophic case, a car accident, a long hospital stay, when the cash-pay logic falls apart and there's no plan behind the member? Those are the scenarios that scare a consumer off, and a solution that hasn't answered them isn't ready for the market it's pitching.

On the cash-pay-through-the-plan side, I've implemented, integrated with, and vetted multiple of these platforms, and I know exactly where they fail and where the fraud gets in. Founders describe a clean idea and miss the levers: how the stop-loss carrier treats it, access to funds to pay up front, and hospitals that submit one claim to the network and another on the cash-pay side so the plan pays twice. They also misread the providers. They pitch same-day payment as the hook, but speed of pay isn't the lever they think it is. Providers want clean, correct, reliable payment more than they want it fast. I know which questions surface those failure points, because I've lived through them.

A product can be excellent and still die in the sales cycle. Selling to health plans and large employers can take a year or more per deal, runs through brokers and benefits consultants the founder may not even know exist, and lands on a January renewal calendar that waits for no one. A startup that models SaaS-speed adoption against a market that moves once a year has a burn problem it hasn't priced.

I pressure-test the go-to-market against how the buying actually happens, including the gatekeepers in the middle, so you know whether the growth curve in the deck is possible or fiction.

Healthcare scares generalist investors because the rules are dense, so regulatory risk gets either ignored or wildly overestimated. Both are expensive. A company can be sitting on a compliance cost it hasn't budgeted for, or it can be building elaborately toward a requirement a regulation doesn't actually impose.

I've contributed to federal rulemaking on the No Surprises Act and the CARES Act, so I can tell you the difference between what a regulation requires and what the market assumes it requires, which is often the difference between a real cost and an imagined one.

Cost containment and alternative reimbursement, reference-based pricing, narrow and wrap networks, direct contracting, are one of the hottest and most misunderstood corners of this market, and one I've lived from every side. I built and ran alternative reimbursement programs at a TPA, implemented reference-based pricing as the HR leader inside an employer, worked at an organization whose entire market play was cost containment and alternative reimbursement, and built a company around it. I've also been the member on the receiving end of one of these programs, so I know exactly what it feels like when it works and when it doesn't.

That's the failure point most of these companies share. The product is genuinely good at bringing down the employer's cost of care, and it's built and sold entirely around that number. What it stops looking at is the member. A strategy that saves the plan money but exposes the employee to a balance bill, or to the stress of a fight with a provider, isn't the win it looks like on the sales sheet, and it shows up later as disruption, complaints, and lost accounts.

The other blind spot is the provider side. A reimbursement model only works if hospitals and providers will actually accept it, and many of these companies haven't stress-tested their model against a real provider landscape, or they have and the pain isn't worth the savings. If you're investing, you need to know that some of the capital is going to have to fund that stress-testing, or the work to mitigate it, and I tell you which.

Then there's the question the economic model never captures: what actually makes one of these products sticky. The savings win the deal. The headache is what loses the account. You can have extraordinary savings on a reference-based pricing program, a narrow network, international pharmacy sourcing for specialty medications, or an alternative reimbursement play for infusion services, and still lose the plan, because managing those services is where it falls apart. On a two-thousand-life plan, it doesn't take a revolt. Three members who can't get their medication on time, or who land a balance bill and complain to HR all year, can end it. HR gets tired of being blown up, decides it isn't worth it, and moves back to a standard program. Those failure points are subjective and human, they never show up in the model, and you only see them coming if you've lived inside these programs. I have, from every seat, including as the member holding the bill.