Last year, a startup pitched me a device designed to improve endoscopic procedures in gastroenterology. Slick deck. Strong team. Blue-chip venture capital (VC) backing. One problem: The device added three extra steps to a workflow that gastroenterologists have spent decades optimizing for speed. Any gastrointestinal (GI) physician would have flagged this in the first five minutes. But the investors who wrote the check? None of them had ever held a scope.
This is not an unusual story. It is the default in health care venture capital. The vast majority of capital flowing into health care startups is allocated by people who have never treated a patient, never navigated a prior authorization, never explained to a nurse why a new piece of technology is worth changing a workflow that already works. They rely on market reports and consultant opinions to evaluate whether a clinical problem is real. Physicians know whether a clinical problem is real because they live inside it every day.
I spent the first chapter of my career as a physician-scientist. Over 100 peer-reviewed publications. Years of clinical practice in internal medicine and gastroenterology research. I saw firsthand how the problems I encountered at the bedside were the same problems that startups were trying to solve, often poorly, often with solutions designed by people who understood the technology but not the medicine.
Seven years ago, I started investing in health care startups. Not as a side hobby. As a full-time venture capital investor. I wanted to test a simple hypothesis, that a physician who understands the clinical problem, the regulatory pathway, and the reimbursement landscape would make better health care investment decisions than a generalist financier learning those things secondhand.
The results have been instructive. Across 22 investments, the returns have been strong. But the more important finding has nothing to do with financial performance. It is this: The advantage physicians bring to health care investing is not marginal. It is structural.
The clinical diligence gap in venture capital
Most health care startups do not fail because the technology does not work. They fail because nobody with real clinical expertise pressure-tested three gates before the check was written.
Gate one is clinical necessity. Is the problem painful enough that physicians will change their workflows and patients will demand the solution? Not “is there a market,” but will a cardiologist actually use this remote monitoring device at scale, or will it sit in a drawer? Will patients pay for it, push their insurers to cover it, or ask their doctors about it by name? A generalist investor reads a total addressable market (TAM) slide. A physician knows whether the pain point is real because they see it every day.
Gate two is regulatory feasibility. For drugs and devices, there is a Food and Drug Administration (FDA) pathway that can take years and cost millions, and the specific pathway (510(k), De Novo, Premarket Approval (PMA), Investigational New Drug (IND) to New Drug Application (NDA)) dramatically changes the timeline, cost, and probability of success. For health tech and digital health products, the regulatory landscape is different but no less complex: hospital system compliance requirements, information technology (IT) security reviews, and clinical validation standards. A physician who has navigated these systems from the clinical side understands which pathways are realistic and which are wishful thinking on a slide deck.
Gate three is reimbursement viability. Even if the product works and clears regulatory hurdles, someone has to pay for it. Is there an existing Current Procedural Terminology (CPT) code, or does the company need to pursue a new one? Will insurers cover it? Will hospitals absorb it into their budgets? Will patients pay out of pocket? These questions determine whether a company has a business or just a technology, and they require the kind of health care system fluency that comes from years of practice, not months of market research.
These three gates, clinical necessity, regulatory feasibility, and reimbursement viability, represent the minimum diligence standard for any health care investment. Yet in traditional venture capital, they are almost entirely absent. The result is predictable: billions of dollars invested in health care solutions that are technically functional but commercially stranded.
Why artificial intelligence cannot close the gap
There is enormous excitement right now about artificial intelligence (AI) powered tools that can accelerate deal sourcing and generate investment memos in minutes. I use these tools myself. They are genuinely powerful for compressing the information-gathering phase of investment analysis.
But AI cannot sit across from a founder and know, from clinical experience, that the regulatory pathway they are proposing will take three years longer than their model assumes. It cannot tell you that a reimbursement code they are counting on is under Centers for Medicare and Medicaid Services (CMS) review. It cannot walk into a hospital and feel whether a product will be adopted or ignored.
The technology layer is getting better. The clinical judgment layer is as scarce as it has ever been.
The power of physicians in health care investing
I am not suggesting that every physician should leave clinical practice to become a venture capitalist. What I am suggesting is that physicians have an enormously underutilized role in shaping where health care capital goes.
You do not have to write checks to have impact. You can serve as clinical advisors to venture funds, providing the diligence expertise that most investors lack. You can participate in clinical review panels that evaluate startups before investment decisions are made. You can invest as limited partners in health care funds, aligning your capital with your clinical knowledge. You can mentor physician-founders navigating the transition from research to company-building.
Every time a physician engages with the investment ecosystem, the quality of capital allocation in health care improves. Because a physician’s judgment about what works at the bedside is the single most valuable input in health care investing, and it is the one input that is most consistently missing.
We spend our careers solving clinical problems. We should also have a hand in deciding which solutions get funded.
Harsha Moole is an internal medicine-trained physician-scientist with more than 100 peer-reviewed publications, including work featured in the New England Journal of Medicine. After years of clinical practice and gastroenterology outcomes research, he made an unconventional transition from the bedside to the boardroom by founding PhysicianEstate, a health care-focused venture capital firm.
Over the past seven years, Dr. Moole has made 22 early-stage health care investments across digital health, medical devices, biotech, and therapeutics. He has also built a network of more than 200 physicians from institutions such as Johns Hopkins and Stanford who help source opportunities and provide clinical diligence before capital is deployed. His core thesis is that physician-scientists with firsthand clinical experience are uniquely positioned to identify health care investments that generalist investors often miss.
His research background is reflected in his publication record on Google Scholar, and he shares professional updates on LinkedIn.
