By Melissa Kandinata

At 53 Stations, we invest in early-stage companies tackling the most persistent friction points in U.S. healthcare. This post outlines the areas where we believe the system is breaking down and the kinds of platforms we’re actively looking to support: those who are building the infrastructure that will help healthcare work better for patients, clinicians, health systems, payers, pharma, and organizations alike.

We all know the U.S. healthcare system is under pressure. But it’s not just about more people needing care and fewer people available to provide it. It’s a system under compounding strain, driven by shifting demographics, workforce shortages, and outdated infrastructure—all at a time when real progress is possible with better technology and smarter workflows. We believe this pressure point is also a turning point.

The Problem: A System Jammed by Demand, Supply, and Policy

Healthcare now accounts for nearly 20% of U.S. GDP yet remains one of the least digitized major industries. That disconnect between how critical the sector is and how inefficiently it runs adds strain across every part of the system. Four structural challenges are compounding:

1. Capacity Gaps are Widening

Healthcare demand is rising faster than the system’s ability to deliver care. An aging population is accelerating demand without a matching increase in caregiving capacity.

• A shortage of over 100,000 healthcare workers is expected by the end of the decade.
• By 2030, 1 in 5 Americans will be over 65. Nearly 70% of them will need some kind of long-term care for chronic conditions.
• The U.S. will add more people over 65 than ever before, driving care needs that are outpacing the growth of the clinical workforce.

2. Administrative Burden is Slowing the System

Operational inefficiencies and pricing pressure are squeezing every part of the system. Across the board, stakeholders are expected to deliver more with less under tighter budgets, shifting policies, and growing regulatory and geopolitical uncertainty.

• Documentation burdens are a major contributor to burnout. More than 45% of healthcare workers say they feel burned out often or very often. Nurses spend a third of their shift documenting. Doctors spend half their day on EHRs and desk work.
• $812 billion a year is how much we spend on admin overhead. It’s more than 30% of total healthcare spending.
• Over half of U.S. hospitals ended 2022 with negative operating margins.
• Payers are under similar cost pressure, and life sciences companies face increased scrutiny around drug pricing and limited growth in NIH funding.
• Clinical trials are costly and slow. Pharma needs ways to streamline R&D and de-risk trials. With long timelines and resource constraints, there’s real urgency to find smarter infrastructure.

3. Data is Abundant but Hard to Use

The system produces massive volumes of data, but little of it translates into usable insight.

• Healthcare generates ~30% data globally, but over 90% is unstructured or inaccessible. Much of it remains locked in PDFs, faxes, or free text.
• Nearly 70% of clinicians say they’re already overloaded with patient data and expect digital tools to make things harder, not easier.

4. Infrastructure Vulnerabilities Persist

Critical operations remain exposed to disruption.

• Supply chain vulnerabilities were exposed during COVID, from basic PPE to key medical products. Many of those issues remain unresolved.
• Cybersecurity threats are increasing – hospitals and health systems are among the most targeted sectors, with rising costs and risk to patient care.

Each of these pressures feeds into the next. It’s not one problem. It’s a system of frictions.

The Solution: Invest in Companies that Reduce Friction

We’re backing tools and platforms that make healthcare work better by making better use of data, streamlining workflows, and expanding clinician capacity to reduce system drag in operations. Ultimately, these improvements benefit the broader system and lead to better experiences and outcomes for patients. We’ve already made investments behind this conviction, including in Function Health, Ketryx, and Labviva.

Admin: Cutting the Noise

• Platforms that remove duplicative documentation and simplify revenue cycle management
• Seamless integrations that don’t require retraining
• Systems that reduce the effort it takes to coordinate care

Ketryx is a great example of this kind of work. It supports regulated teams by streamlining documentation and quality workflows, reducing administrative burden while improving speed and audit readiness. We’re actively looking for more companies building deep levels of operational depth and integration-first thinking.

Data: Increasing Access and Making it Actionable

• Platforms that normalize messy data (including PDFs, faxes, free text) and reduce noise
• Platforms that unlock and unify access to critical datasets (including EHRs, claims, and other unstructured sources) so they can be used effectively at the point of care
• Tools that surface the right info, at the right moment, in the right workflow
• Longitudinal views that help clinicians and patients see the full picture

Function Health makes personalized, whole-body biomarker data actionable, enabling patients and clinicians to move from reactive to proactive care. It’s the kind of data-driven personalization we believe will define the next era of patient engagement. At the same time, we see a broader opportunity for B2B platforms to power this kind of personalization at scale serving provider, payer, and pharma settings where integration into existing workflows is critical.

Interoperability: Connecting What’s Already There

• Infrastructure that translates unstructured data into usable insights
• Platforms that connect with legacy systems without adding new friction
• Real-time data stitching that enables better care coordination

Labviva helps pharma R&D teams cut through fragmented procurement workflows by consolidating supplier data and creating a transparent, integrated purchasing experience. It’s a strong example of how smart infrastructure can make legacy systems more navigable.

Clinical: Stretching Capacity

• Hybrid models and smart task-shifting
• Solutions built for high-touch settings like long-term care and home health
• Tools that help staff do more without burning out
• Clinical decision support platforms that help clinicians triage high-priority cases, accelerate time to diagnosis, and reduce cognitive load in complex environments

The Kicker: Great Products Need to Land and Stick

Solving friction is only half the battle. The other half is distribution and adoption.

To succeed in today’s environment, companies must:

• Understand how to sell into complex healthcare systems, both in terms of regulatory hurdles and GTM execution
• Treat implementation as part of the product
• Prove value fast and keep delivering it over time, ideally with an unfair go-to-market advantage that helps them break through long sales cycles
• Deliver measurable cost savings or operational ROI early in the engagement, helping stakeholders justify adoption in increasingly constrained environments

For providers, that might mean increased throughput, reduced readmissions, or improved documentation. For payers, it’s earlier visibility into high-cost risks and better member outcomes. For pharma, it’s faster trial ops and more efficient development.

The strongest companies win trust by showing up in the workflows that matter and by continuing to solve problems that don’t go away.

How We Partner

We back companies building the infrastructure that eases the load: foundational tools focused on data, workflow, and workforce leverage.

We aim to be thoughtful, hands-on partners, especially as teams navigate the complex go-to-market motions required in healthcare. That includes helping refine positioning, messaging, and commercialization strategies, and working closely with founders to professionalize key functions as well as navigating capital strategy and M&A.

We know getting in the door is hard, and staying in the room is even harder. Our goal is to help companies do both and to build momentum that lasts. If you’re building something in this space, or thinking about it, we’d love to hear from you!