| | DECEMBER 20208UTLOOKHealthcare Tech IN MY OPINIONBy Tom Miller, Founder and Managing Partner and Maren Taylor, Intern at GreyBirdInvesting in Precision DiagnosticsWhen GreyBird Ventures was established only five years ago, we wanted to exclusively invest in medical diagnostics. Specifically, we intended to invest in precision diagnostics in which the sensitivity and specificity of our portfolio technologies would be high enough that treatment uncertainty would be minimized. At the time of our founding, investing in diagnostics of any kind (in-vitro, in-vivo, imaging, IT, etc.) was at a nadir as we quickly learned from the 238 fundraising rejections that we received. It seemed to us that almost all investment funds were exclusively chasing new pharmaceuticals and therapeutic medical devices. While laboratory diagnostics influence 85% of healthcare decisions, they only account for 3% of healthcare spending and this was fully reflected in the investing environment. This was until COVID-19 abruptly shifted public attention and, concurrently, the focus of medical investing. Recently, diagnostic testing has dominated the front page of every newspaper. New testing technologies and the performance of diagnostic tests that may allow us to safely reopen our societies have become the topic of dinner conversations, political discourse, and of course, investment opportunities. We wish that it did not take a global catastrophe to underscore our original thesis, that cost-effective medicine requires innovation in diagnostics. However, now that we appear to have brilliantly forecasted our present, we must articulate why we decided to invest entirely in precision diagnostics five years ago, as the fundamentals have not changed. The cost of healthcare continues to rise in the United States even though statistically our national health outcomes are worse than the vast majority of industrialized nations. The US healthcare system has proven extremely difficult to fix, with policies and practices largely driven by the conflicting incentives of patients, payors, regulators, providers, publicly funded researchers, and privately funded industries. These problems have been written about extensively. What has, however, received little attention are the dramatic improvements in outcomes coupled with reduced costs offered by just getting a highly specific diagnosis correct in the first place. There is nothing more wasteful to both health and money, than treating someone for a disease they don't have, or with a treatment that will not work for their biology, or to detect an illness well after the point when the cost to treat, and the likelihood of cure, is well past. Various trends in scientific progress have led to the dramatic increase in the amount of care provided to patients. While this has improved outcomes for many patients with previously fatal illnesses, it has simultaneously driven up the cost of care. One root cause may be found by simply tracking the growing list of diseases. As our understanding of the biology of disease improves, what was once a single disease (e.g.
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