In the high-stakes world of healthcare SaaS, where the performance of digital platforms can determine patient safety, care quality, and operational efficiency, investors are at a disadvantage when assessing the foundations of a SaaS investment opportunity.

While balance sheets, ARR growth and churn rates dominate due diligence, the underlying vitality of a company’s codebase—its Intellectual-Property (IP) ownership, code risk, and software engineer performance—is too often left unexplored. Alone, each of these metrics can tell a compelling story. But when pulled together, they offer an indispensable window into a company’s long-term viability and resilience.

Code Health Pillars

Intellectual-Property ownership is not a legal footnote—it’s a core asset. A company that unknowingly builds its platform on open-source or third-party licensed components without proper permissions isn’t just risking a compliance audit—it’s potentially headed toward litigation, forced code rewrites or even platform shutdowns. Investors who fail to validate the code ownership of a SaaS product are flying blind into risk-laden territory.

Code risk, the second pillar, includes vulnerabilities embedded deep within the code’s architecture—unpatched libraries, legacy systems or hastily written custom code that lacks documentation or test coverage. A platform with high code risk might function well today but is essentially a ticking time bomb. Healthcare investors, in particular, must appreciate the implications here: poor “code hygiene” can lead to downtime, cybersecurity breaches, and / or performance degradation that damages provider trust.

Software engineer performance, though a more nuanced metric, speaks to the heart of a company’s ability to evolve. Metrics such as commit frequency, bug resolution speed and code review quality don’t just measure productivity—they reflect the development culture and organizational maturity. High-performing teams release faster, fix quicker and are more agile in meeting market demands and regulatory changes.

Why Code Health Matters

Viewed individually, these three metrics offer tactical insights. But combined, they provide a strategic X-ray into the product’s code vitality—the software equivalent of a stress test for banks. This integrated “code health” measure reflects how secure, sustainable and scalable the platform truly is beneath its glossy user interface and sales deck.

Imagine evaluating a healthcare SaaS company that has:

• Full IP ownership over a modular, well-documented codebase
• Minimal code risk due to automated vulnerability scanning and active code refactoring
• A high-performing engineering team that consistently pushes clean, test-covered commits

Now contrast that with a company whose valuation depends on a brittle platform filled with third-party dependencies, an overwhelmed engineering team and a patchwork of legacy modules. The former is future-proof. The latter is a liability disguised as growth.

Yet, the capital markets rarely discriminate.

The Investor Blind Spot

Why do investors so often ignore “code health” when making eight-figure bets on healthcare SaaS ventures?

The answer is simple: it’s technical, opaque, and foreign to the typical investor's toolkit. Due diligence processes are well-tuned to evaluate financials, customer contracts, and management teams—but they are woefully inadequate when it comes to assessing software quality beneath the surface.

Many investors admit to feeling out of their depth when trying to interpret development workflows, code analysis tools, or software architectural documentation. As a result, they either avoid the subject altogether or rely on the CTO’s word, which introduces the risk of bias or oversight.

In healthcare, this oversight is even more dangerous. A bug that causes a minor glitch in e-commerce could translate into a life-threatening error in a clinical workflow. Yet investors continue to make decisions as if code is a black box they can’t and shouldn’t open.

The Market’s Willful Neglect

There is also a structural problem: the market doesn’t reward code health—at least not visibly. Growth and customer acquisition are still king. SaaS companies that take the time to invest in clean, scalable, and secure codebases often do so at the expense of short-term speed. Their slower go-to-market strategy can be penalized by impatient investors looking for hockey-stick like trajectories rather than robust infrastructure.

Ironically, many of the most high-profile SaaS collapses and breaches in recent years can be traced back to code health issues: hidden vulnerabilities, mismanaged IP, and engineering burnout from unsustainable coding practices.

A Non-Technical Code Health Metric

Investors in healthcare SaaS can no longer afford to ignore the code that powers the platforms they bet on. Intellectual-property ownership, code risk and software engineer performance are not abstract technical concerns—they are the DNA of the digital products investors hope to monetize or scale. And if they can’t speak the language of code, they must demand a translation—a non-technical, standardized “code health score” that distills these three pillars into a single, digestible metric. Just as ESG metrics allow investors to gauge sustainability performance without becoming climate scientists, code health metrics should empower investors to evaluate software resilience without becoming engineers.

Such transparency could change how investors allocate capital. SaaS companies would be incentivized to build responsibly from day one. And the entire ecosystem—especially in healthcare, where lives are at stake—would become safer, more stable, and more trustworthy.

Code health isn’t a luxury—it’s a necessity. Start asking for it.