By CLAUDE.AI trying to write like me MATTHEW HOLT<\/p>\n
I finally did what I have been wanting to do for a while and had an AI ingest everything I\u2019ve written on The Health Care Blog. Given there\u2019s 20 years of my posts intermingled in hundreds of guest posts, it wasn\u2019t as easy as I\u2019d hoped. But over three days I finally got to about 500 or so articles I\u2019ve written and asked Claude to ingest my style. I then gave it three decent sized prompts which I\u2019d previously used on linkedin or in a Slack message and it spat out this<\/em>\u2014Everything below is AI with no edit and no re-prompting. And it is about 60% of my tone and maybe 75% of my opinion<\/em>. Pretty amazing\u2013Matthew Holt<\/strong><\/em><\/p>\n The Private AI Bubble Meets the Public Digital Health Reality Check<\/strong><\/p>\n So Garner Health just raised $118 million at a $1.35 billion valuation<\/a>, and Talkiatry pulled in $210 million<\/a>. Meanwhile, you could buy both Talkspace (market cap ~$640 million)<\/a> and BetterHelp\u2014Teladoc\u2019s entire mental health division<\/a> that once did over a billion in revenue\u2014for under a billion dollars combined given Teladoc\u2019s current market cap of $953 million<\/a>.<\/p>\n Something doesn\u2019t add up here, and it\u2019s not the math.<\/p>\n We\u2019re watching a fascinating divergence between what private market investors think digital health companies are worth and what public market investors are actually willing to pay for them. And stuck in the middle is the latest gold rush: AI-powered revenue cycle management.<\/p>\n Let\u2019s start with Garner. I like what they\u2019re trying to do\u2014using massive claims datasets to steer people to higher-quality doctors with financial incentives. It\u2019s clever. But 12% in cost savings in the first year<\/a>? The Health Rosetta crowd claims they can get their members far better results. The direct primary care groups working with employers are reporting bigger numbers without needing a $1.35 billion valuation to do it. And they don\u2019t have a medical group like Included Health backing them up.<\/p>\n So why the massive valuation? Because \u201cAI-powered\u201d and \u201cbig data\u201d and \u201c320 million patient records\u201d sound really good in a pitch deck. Never mind that the actual demonstrated savings are less impressive than what consultants have been delivering for a decade.<\/p>\n Then there\u2019s Talkiatry, which just raised $210 million<\/a>\u2014on top of their previous $130 million Series C<\/a>. Good for them, they\u2019ve built something real: 800+ employed psychiatrists delivering actual care with decent outcomes data. But here\u2019s what I can\u2019t figure out: why is every mainstream mental health company still raising hundreds of millions in private markets when literally nobody has gotten out?<\/p>\n Talkspace trades at a $640 million market cap<\/a>. Teladoc owns BetterHelp<\/a>, which peaked at over $1 billion in revenue<\/a> and is now in the dumpster, dragging down Teladoc\u2019s market cap to under $1 billion total<\/a>. Where\u2019s the Lyra IPO? The Brightline exit? The Spring Health or Headspace liquidity event? They don\u2019t exist.<\/p>\n The public markets are basically screaming: \u201cWe don\u2019t believe digital health companies are worth what VCs think they\u2019re worth.\u201d And yet the private money keeps flowing.<\/p>\n Now let\u2019s talk about where the really stupid money is going: RCM AI. We\u2019ve got Anterior raising $64 million total<\/a> to help payers process prior authorizations faster, and an entire ecosystem of companies raising massive rounds to help providers fight those denials. As I\u2019ve written elsewhere, we\u2019ve gone from the smartest people in the world getting consumers to click on ads to half of them trying to squeeze 5% more revenue out of payers for providers, while the other half are building AI to help payers stop them.<\/p>\n This is the dumbest arms race in healthcare technology. We\u2019re automating the negotiation over the crumbs instead of fixing the system that creates the waste in the first place. But VCs love it because there\u2019s a clear value proposition: \u201cWe\u2019ll get you an extra $X million in reimbursements\u201d or \u201cWe\u2019ll save you $Y million in denied claims.\u201d Never mind that we\u2019re spending billions to build technology that makes a fundamentally broken payment system slightly more efficient at being broken.<\/p>\n Meanwhile, back in the public markets, actual digital health companies with actual revenue and actual customers are trading at valuations that suggest investors think they\u2019re going to zero. Teladoc\u2019s market cap is $953 million<\/a>. They did $2.53 billion in revenue last year<\/a>. That\u2019s a 0.37x price-to-sales ratio. BetterHelp alone was doing over a billion before the bottom fell out.<\/p>\n The divergence is getting absurd. Private companies with unproven business models and uncertain paths to profitability are raising at sky-high valuations. Public companies with real revenue, real customers, and real operations are trading like they\u2019re distressed assets.<\/p>\n So what\u2019s happening here? A few things:<\/p>\n First, private market investors are betting on potential while public market investors are pricing in reality. Potential sounds better in a conference room than on an earnings call.<\/p>\n Second, we\u2019re in an AI bubble. Slap \u201cAI-powered\u201d on anything healthcare-related and suddenly you can raise at multiples that make no sense. Doesn\u2019t matter if the AI is actually doing something useful or just glorified automation of existing processes.<\/p>\n Third, the exit window for digital health has been effectively closed for years. The SPAC boom and bust taught us that taking half-baked digital health companies public ends badly. So private companies keep raising private money because that\u2019s the only money available, creating a massive valuation disconnect.<\/p>\n Fourth, and this is the one nobody wants to talk about: a lot of these companies might not be worth what VCs are paying for them. The mental health companies keep raising because they can, not because they\u2019ve proven a path to sustainable profitability. The RCM companies are raising on the promise of extracting value from a broken system rather than fixing it.<\/p>\n Here\u2019s my prediction: We\u2019re going to see a reckoning. Either these private valuations are going to come down to meet public market reality, or we\u2019re going to see a wave of down rounds and shutdowns. The public markets aren\u2019t wrong about digital health\u2014they\u2019re appropriately skeptical of companies that haven\u2019t proven they can make money at scale.<\/p>\n And the AI RCM gold rush? That\u2019s going to end when someone realizes we\u2019re spending billions to automate arguing over money instead of spending billions to reduce the total cost of care. Because at the end of the day, every dollar these companies \u201csave\u201d or \u201crecover\u201d is a dollar that shouldn\u2019t have been in dispute in the first place.<\/p>\n The smartest investors should be looking at the public market valuations and asking: if actual digital health companies with real revenue can\u2019t get respect from public investors, why are we valuing private companies like they\u2019re going to be worth 10x more when they finally try to exit?<\/p>\n Unless, of course, nobody\u2019s planning on exits anymore. In which case, we\u2019re not building companies\u2014we\u2019re building very expensive science projects funded by LPs who apparently have infinite patience and capital to burn.<\/p>\n I\u2019ve been covering this industry long enough to know how this movie ends. And spoiler alert: it\u2019s not with a bunch of unicorn IPOs.<\/p>\n Claude is a clever chatbot made by Anthropic. Matthew Holt hopes it replaces him soon<\/em><\/p>","protected":false},"excerpt":{"rendered":" By CLAUDE.AI trying to write like me MATTHEW HOLT I finally did what I have been wanting to do for a while and had an AI ingest everything I\u2019ve written on The Health Care Blog. Given there\u2019s 20 years of my posts intermingled in hundreds of guest posts, it wasn\u2019t as easy as I\u2019d hoped….<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-11440","post","type-post","status-publish","format-standard","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/11440"}],"collection":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11440"}],"version-history":[{"count":0,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/11440\/revisions"}],"wp:attachment":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11440"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11440"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11440"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}