Rethink / Digital Health / At the Tipping Point of Digital Transformation: Why Team8 is Building and Investing in Digital Health
Digital Health

At the Tipping Point of Digital Transformation: Why Team8 is Building and Investing in Digital Health

Varda Shalev March 6, 2024

I am thrilled to officially announce the launch of Team8 Health! 

In its 10 years of existence, Team8 has explored, created, and invested in groundbreaking territories such as cybersecurity, data infrastructure, AI, fintech, and, most recently, digital health. While the expansion into the digital health domain may seem odd to some – for us, it’s an organic progression fueled by our pursuit of innovation in industries on the tipping point of digital transformation. 

Today, with the launch of Team8 Health, we announce our first digital health company venture-creation fund of $70M. These companies will provide innovative solutions to major problems at the intersection of cyber, AI, fintech, and healthcare – all areas of Team8’s expertise.

We understand that true success isn’t just about technology – it’s about people. As part of our process, we partner with serial entrepreneurs looking to make an impact on the world and create category-leading companies in digital health. These entrepreneurs, paired with extraordinary founding teams and a dedicated Village of healthcare executives, receive deep access to the market that streamlines their go-to-market and product market fit efforts.

So… Why Enter the Digital Health Market?

The US healthcare market currently suffers from fragmentation, silos, and a lack of alignment among stakeholders, leading to widespread dissatisfaction. This status quo is simply unsustainable.  

However, we view these challenges as opportunities. 

Firstly, the magnitude of spending in the US healthcare sector is staggering

  • Healthcare is the US’s largest industry – one-fifth of the American economy.
  • Healthcare expenditures soared to a remarkable $4.7 trillion in 2023, constituting roughly 18% of the US GDP, which is only predicted to increase.
  • This sector is poised for substantial growth, with projections indicating an annual growth rate ranging from 7.5% to 12.7% between 2023 and 2030.

The US also severely lags behind other developed nations in health outcomes, costs, and patient satisfaction. 

  • The US has the highest healthcare costs per capita across the OECD countries, with disproportionate spending compared to other countries.
  • The US spends over $900 per person on administrative costs, four times more than the average of other wealthy countries and about the same as the spend on preventive or long-term healthcare.
  • Despite high spending, the US lags in key health metrics such as life expectancy, infant mortality, and diabetes management.
  • Dissatisfaction with the healthcare system is evident, with a recent Time Magazine survey revealing that 70% of Americans feel let down by it.

Physicians and professional caregivers are increasingly overwhelmed by burnout, a consequence of persistent legacy issues within the healthcare system. 

  • Physicians spend less than one-third of their time directly engaging with patients, as administrative tasks like managing Electronic Health Records (EHR) consume much of their workload. This detracts from their ability to excel in their profession, as they desire to focus on patient care rather than administrative duties.
  • This and the excessive overload, has led to a significant increase in burnout, reaching 63% by the end of 2021, up from 38% the previous year. Burnout is associated with higher rates of medical errors, lower patient satisfaction, and increased absenteeism. 
  • In the InCrown 2022 Burnout Report, 55% of doctors knew of a colleague leaving clinical care, up from 41% in 2021. Nearly 30% considered leaving their profession in the past six months.
  • Moreover, the aging population in the US is driving up demand for professional caregivers, exacerbating severe shortages and understaffing across departments.

Still, the pace of innovation hasn’t caught up. 

  • Before 2010, EHRs were uncommon in the US, but the HITECH Act spurred adoption by setting standards and providing funding.
  • By 2021, 88% of US office-based physicians were using EHRs. 
  • Recent federal regulations, like those under the 21st Century Cures Act in 2022, empower patients to control their health data, akin to banking.

This shift marks the beginning of a patient-mediated data economy, where consumers can – theoretically – easily access and share their health information, opening the door to new services and applications. However, significant business hurdles remain, which can be addressed through smart utilization of data, AI tools, and the establishment of innovative processes. Despite challenges such as administrative overhead, interoperability, and data management, the market is ripe for solutions.

It is said that you have to be ambitious and relentless to try to fix the United States’ healthcare system… Indeed, it’s possible that some of the answers to these major issues lie in other geographies where we’ve seen this play out before. 

A 75 Year-Old Country in the Middle East…How Israelis Play Above Their Weight in Digital Health

Israel has been a few steps ahead of the curve when it comes to healthcare and digital health innovation. 

Since its inception, Israel has built a robust and efficient healthcare system. At its core is the State Health Insurance Law of 1994, which establishes the obligation of health insurance for the residents of Israel and the basket of medical services provided through Health Maintenance Organizations (HMOs). Israel’s healthcare ecosystem is spearheaded by its 4 HMOs, renowned for delivering exceptional patient outcomes, supported by comprehensive digital databases that span over two and a half decades. 

This, coupled with the nation’s personal identification number allowed for streamlined interoperability through the patient journey. Operating under a Value-Based Capitation model, Israel’s healthcare system leverages its rich history of digital health data to refine patient care and outcomes.

Ranked among the world’s healthiest nations with the 10th highest life expectancy, Israel achieves this while maintaining low healthcare costs through lifestyle choices and innovative digital health solutions.

As a small country, Israel was compelled to become an innovation hub of early adapters. This proactive approach was particularly evident during the COVID-19 pandemic. Israel swiftly responded to the COVID-19 pandemic, implementing social distancing measures in March 2020 and launching a successful vaccination campaign starting in December 2020.

Israel’s healthcare system also shares a dynamic partnership with the US, collaborating on research, technology transfers, and clinical trials. Pioneering electronic health records over 25 years ago, Israel sets a benchmark for digital healthcare and value-based care, providing valuable lessons for the US as it navigates similar technological challenges. Israel’s experience positions it as a crucial case study in the US’s journey toward digital health transformation.

Building Digital Health Companies Within Team8’s Methodology

We firmly believe that healthcare is the next frontier for successful and impactful companies. 

The US healthcare sector has taken initial steps toward significant digital transformation with new business models and payment methods. This has led to an explosion in data, with approximately 30% of the world’s data volume being generated by the US healthcare industry today. Projections indicate that by 2025, the compound annual growth rate of data for healthcare will soar to 36%. 

And it’s precisely at this nexus of data, cybersecurity, and fintech – where Team8 excels. By harnessing our expertise in these interconnected fields, coupled with our robust, data-driven, repeatable methodology for problem identification, conceptualization, and validation, Team8 can navigate and capitalize on the emerging landscape and shape the future of healthcare. 

At Team8 Health, we were fortunate to embark on our journey in the digital health fund and company-building process during a pivotal moment marked by unprecedented advancements in LLMs and generative AI. While many companies faced setbacks due to the rapid pace of these technological developments, we were able to harness these tools to build innovative digital health products using AI. Leveraging the abundance of available data, we strategically built our companies with these capabilities from their inception. 

Team8 Health: Driven by a Team of Operator, Investors, Serial Entrepreneurs and Industry Insiders

At the heart of Team8 Health’s expertise and approach is our leadership team’s collective multidisciplinary expertise. 

As an active family physician, medical informatics expert, researcher and founder of Maccabi’s Health Research and Innovation Centre, I have been fortunate to combine my medical expertise with a three-decade passion for entrepreneurship and company-building enabled me to deeply explore integrated health systems and the ever-evolving world of health-tech innovation. 

Joining me is Assaf Mischari, Managing Partner. With 25 years of cybersecurity and technological leadership experience, Assaf has achieved remarkable milestones, including serving as the Chief Technological Officer of Unit 8200, Israel’s elite military intelligence unit. During his ten-year journey with Team8, Assaf has successfully established and scaled 12 companies by leveraging the rigorous Team8 company-building and scaling process. His extensive cybersecurity and data perspective, coupled with access to top-tier talent, are critical for the success of our founding teams.

Demetrios L. Kouzoukas, our Partner, brings an extensive understanding of the US healthcare system and policy, cultivated over 22 years in various leadership positions. Recently, he served as the Chief Executive of the Medicare program at the Centers for Medicare & Medicaid Services. With deep experience across all sectors of the US healthcare industry, including business, law, government, healthcare providers, medical technology, pharmaceutical innovators, and payers, Demetrios enhances our collective ability to innovate effectively by navigating regulatory landscapes and understanding healthcare system intricacies.

Last but not least, our Partner, Dror Grof, is a serial entrepreneur. With over 20 years of experience, he established several software and B2C companies in the fields of data science, cybersecurity, and digital health. Prior to Team8, Dror was part of the founding team and VP of research at Noogata (a Team8 portfolio company). Previously, he co-founded and led Mining Science, a data-science think tank. Dror also co-founded Gonutss, a B2C digital health tool that helped millions adopt new metabolic movements.

On a personal note, working alongside individuals who have collectively built over 20 successful companies using the Team8 repeatable process provides me with a unique opportunity to learn from their wealth of experience, offering invaluable insights and guidance. Together, with a dedicated team of Business Development, Operations, Strategy, Research, and Administration professionals, we form a unique team, each bringing our unique perspectives and expertise to the forefront to revolutionize the digital health landscape. .

The US healthcare market is ripe for disruption. There are many challenges just waiting to be solved – and the potential for tech innovation is boundless. 

Team8 Health’s expertise uniquely positions us to capitalize on the opportunity and build successful digital health companies. With a proven track record in pioneering technology products at the forefront of digital revolutions, we leverage our proficiency in cyber, data, AI, and fintech to navigate healthcare complexities and enact impactful change.

Already Rethinking the Healthcare System? Join us!

If you’re ready to be part of shaping the future of digital health, we want to hear from you. Get in touch.

 

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