Pearl Raises $75M for VBC Enablement

It looks like it’s already shaping up to be a big year for physician enablement companies, with Pearl Health raising $75M in Series B funding to help stake its claim in the independent practice land grab.

The Pearl Platform assists primary care providers participating in Medicare’s ACO REACH model with identifying patients who are driving expenses, then incentivizes them to deliver high-value care.

  • The platform distills data from health plans, hospitals, and pharmacies into turnkey reports that help PCPs prioritize their sickest patients and rein in expenses.
  • It also equips them with admit, discharge, and transfer alerts so they have the information they need to effectively coordinate care following acute events.
  • Pearl’s seen some stellar growth since going live in 2022, growing its platform to over 800 physicians delivering care to upwards of 43k Medicare patients across 29 states.

Unlike many competing platforms, Pearl doesn’t require an EHR integration. After a practice is onboarded, using the Pearl Platform can be as simple as signing on to the website, which more-than-likely played a major role in its rapid adoption.

  • Pearl views its platform agnostic approach as its key differentiator from other VBC enablers like Privia and Agilon that have longer onboarding time due to EHR integration requirements.
  • The fresh funding is earmarked to help Pearl bring more practices onto its platform as quickly as possible, which should help it invite more payors to its model, and in turn allow it to offer more risk-based contracts to its providers.

The Takeaway

The sun is definitely shining on physician enablement platforms, with an aging population and increased utilization acting as powerful tailwinds for companies that can steer providers toward high-value care. That said, there are only so many available physicians and a growing line of startups knocking on their door to help them with the VBC transition, but Pearl’s recent growth seems to suggest that doctors like the sound of its platform agnostic knock.

Amazon Launches RxPass For Generic Drugs

The biggest digital health news of the week was Amazon’s new RxPass offering, which sparked a ton of conversation around the tech-giant’s overall strategy and the direction of retail healthcare.

The RxPass details seem to have already been posted on every news site under the sun, but here they are in case you missed them:

  • Consumers can choose from a list of 53 generic medications for over 80 common conditions such as hypertension, anxiety, or hair loss, then have ALL of them filled for a total of $5/month, including delivery. Here’s the full list.
  • What’s the catch? You need to be a Prime member ($139/year), it’s OOP only (even Medicaid/Medicare coverage is a no-go), and residents of California, Texas, and a handful of other states need not apply… yet.

For patients taking multiple medications, RxPass has the potential to be an absolute game changer. It also seems like a great way to enroll new Prime members that don’t want to watch Jack Ryan or listen to Amazon Music, especially seniors.

  • Only a few other companies have the logistical prowess to put something similar together, such as Walmart’s generic drug service ($4/month PER medication), CVS and Walgreens’ prescription programs, and Mark Cuban Cost Plus Drug Company’s transparency-first approach.
  • What these competitors don’t have is 170M US Prime members and a website that averages two billion monthly visitors. Walmart’s probably the closest, and it last reported having about 12M Walmart+ members.

The Takeaway

Amazon’s RxPass launch is the latest link in a chain of healthcare moves that now looks something like this if you cut out the noise form Alexa / Whole Foods / Halo:

If anything, RxPass reaffirms Amazon’s commitment to compete in the healthcare arena through its core competencies, which isn’t exactly great news for D2C digital health startups or mail-order pill mills. The good news is that if anyone’s going to come out on top of all the competition, it’ll probably be the consumer.

DHW Q&A: Hospital Tech With Steward CEO

With Dr. Ralph de la Torre
Steward Health Care System, Founding Chairman and CEO

In this Digital Health Wire Q&A, we sat down with the founding Chairman and CEO of Steward Health Care System, Dr. Ralph de la Torre, to discuss the challenges facing US health systems and the technologies needed to overcome them. 

Prior to founding Steward, Dr. de la Torre was CEO of Caritas Christi Health Care, as well as the Chief of Cardiac Surgery at Beth Israel Deaconess, where he was widely recognized as one of the top cardiac surgeons in the nation. He’s since guided Steward’s expansion from a six-hospital system to the largest private for-profit hospital operator in the country.

Let’s start with some background on Steward. Can you share a little bit about the overall strategy and your original vision?

The premise of Steward has always been to create a truly integrated system where all of the providers, the hospitals, the care, and the patient are all completely coordinated and unified from a data perspective.

The goal is to understand the patient journey no matter where it takes place – whether at the hospital, the ASC, or the primary care office – and to have anything that comes out of those encounters captured in a central location so that everybody can use it to deliver better care.

Unifying all of that data under one roof is easier said than done. What are some of the technologies that Steward’s been using to make that vision a reality?

One of the biggest has been our enterprise data warehouse, where we collect all of our data in Massachusetts, and can then query a patient across all of their encounters. That’s a tremendous population health tool.

If you think about what payors do, more often than not they use claims data to make predictions and ascertain what needs to be done to keep a patient healthy. Our strategy involves actually using care data, which reveals problems much sooner.

By the time you get a claim, the problem’s already happened. But if you have the right stack of data coming from the providers, you can get out in front of those problems much sooner, and ideally prevent them from happening.

When you’re evaluating new digital health solutions for Steward, what separates the standout solutions from the rest? 

Easy. It’s the return on investment. Whether we’re integrating a new tool or investing in one, we need to know whether it’s a 1-year, 5-year, or 10-year return. The other thing is that it needs to be real. Having a new app that relies heavily on a highly trained workforce almost defeats the purpose of the app itself.

To add to that – one of the biggest problems as hospitals are coming under cost pressure is balancing Best-in-Breed versus Best-in-Suite solutions. Many of us have a suite of applications, whether it’s Epic or MEDITECH or something else, and sometimes these applications provide an element that’s “B” grade.

You might see a new solution outside of your suite with an element that’s an “A”, but is it worth the incremental cost? As cost pressures increase, more and more of these decisions are Best-in-Breed versus Best-in-Suite. If you’re going to go with Best-in-Breed, that automatically raises the threshold of how good the tech has to be.

Are there any areas in healthcare where you think startup founders should dedicate more attention to creating new products and services?

I think as a general rule of thumb in medicine, the United States gets more excited about the latest cutting edge therapy for a small subset of patients than about ordinary care for everyone. US healthcare isn’t lacking in high technology, it’s lacking in the basics. We don’t have basic wellness, we don’t have basic nutrition, we don’t have enough primary care visits.

In America, we don’t really take care of ourselves, but we’re great at keeping ourselves alive once we get sick. I think going back to the basics and building tools that help with basic nutrition, wellness, and population health will have a larger macroeconomic effect than tailoring the latest molecule for a small cohort.

Another area I think people have forgotten a little bit about is the business intelligence tools that make hospitals and physicians more efficient. We’re keeping a close eye on products that can help us improve our efficiency. You have to realize that in the long run, hospitals are cost centers, not revenue centers – so these are the tools that are going to move the needle for value-based systems and providers.

If you could push a magic button to create the perfect business intelligence tool for Steward, what would that look like?

It would be a tool that integrates everything together. It would be able to tell me what each component of care delivery costs in detail, then help proactively guide me to minimize the cost per unit, whether it’s a device or an hour of labor.

As an example, if we have too much staff on a Friday, that’s a huge expense. The tool would need to be able to look at something like OR cases and scheduling, then predict exactly what operating room utilization will be, so that we can move OR cases around to make sure our staff and supplies are there when we need them, and not there when we don’t.

What Steward initiatives are you most excited about right now?

I’m really excited about our Medicare Advantage play, particularly everything we’re doing with CareMax. Steward has an absolutely massive amount of Medicare patients, and we decided that we want to approach them with a complete managed care platform.

We quickly realized that it would take years to build that ourselves, so we went out and looked at the different models that were already out there. We thought that CareMax had the best IT and patient platforms for Medicare Advantage, and so we ended up doing a huge partnership with them.

The way I see it is that Steward has the largest ACO in the nation, and we’re great at managing care behind the scenes. CareMax has what we think is the best Medicare Advantage patient interface, and delivers a great experience at that level. Now we’ve united the two.

I think that the market is underestimating the massive value that uniting these two components really brings, and I think this combination has the potential to be the next big thing in healthcare.

a16z: Consumer Health Forecasts

VC powerhouse Andreessen Horowitz (a16z) is quickly building out its library of health tech thought leadership, and its latest opus focused on the areas of consumer health where it sees the most opportunity.

Here’s a high-level summary for the three major categories, but the full report has plenty of insights to go around if you want to take a deeper look at any of the topics.

Area 1: Improving Access to Care

  • Marketplaces: To say that a16z is bullish on marketplaces would be a huge understatement. One of the biggest challenges for marketplaces is that consumer usage must be frequent and durable enough to justify the customer acquisition cost (one reason why apps that focus on infrequent forms of care struggle), but a16z believes we’ll start to see these metrics improve by letting users compare drugs, health plans, and non-traditional services (wellness, family, caregiving) within a single platform. 

Area 2: Changing How Consumers Receive Care

  • Payor Focus Categories: a16z goes with a safe pick for its first subcategory: the specialties that payors spend the most on. These include cardiometabolic/diabetes (Omada, Marley Medical), MSK (Sword, Vori), and oncology (Thyme, Jasper) – all areas where payors need better care at a lower cost. While this market is relatively mature, a16z predicts that there’s more success to come for startups who can leverage their ability to engage consumers, manage medications, and inspire behavior change into broad consumer engagement platforms across multiple patient journeys.
  • Consumer Focus Categories: Several VC success stories come from spaces where people don’t expect payor coverage, and therefore handle the costs themselves (Hims, Ro). a16z is forecasting a lot of upside for services that have had slower adoption in traditional healthcare, but are quickly gaining traction in DTC, such as medication-assisted weight loss, psychedelics, and biohacking/longevity.
  • Gaming: a16z is also excited about the intersection of healthcare and gaming, but it’s still wondering whether the successes in this category will “gamify healthcare or healthify games.” In other words, will they look more like Epic Systems (EHR) or Epic Games (Fortnite)? Gamified health is more likely to be designed for efficacy and health outcomes, but healthified games are more likely to have better retention (which is one of healthcare’s biggest challenges).

Area 3: Helping Consumers Afford Care

  • The last section was such a minefield of spam words that any summary side-stepping all of them wouldn’t do it much justice. That said, “less crappy” health plans, patient-friendly BNPL, and new card products all made an appearance. With total American healthcare debt already sitting at over $1 trillion, it’s a big enough problem that a16z sees enough space for several massive companies to emerge while solving it.

LeanTaas Acquires Hospital IQ

It didn’t take long for 2023 to mint its first digital health unicorn, and LeanTaas is now a billion dollar company after scooping up workforce management startup Hospital IQ.

The combined entity is now one of the largest providers of hospital efficiency solutions, as health systems scramble for new ways to address both labor shortages and mounting financial pressures.

If you’re unfamiliar with LeanTaas, it provides a cloud-based SaaS platform to optimize capacity for operating rooms, infusion centers, and inpatient beds.

  • While LeanTaas focuses primarily on assets such as equipment and rooms, Hospital IQ is focused on staff optimization and workforce management.
  • By combining these services, LeanTaas is aiming to become the “air traffic control center” for health systems, allowing them to take advantage of predictive AI to improve resource utilization and deliver better care.

The transaction arrives just six months after Bain Capital acquired a majority stake in LeanTaas, which included a “significant” growth investment to accelerate hiring and expand its customer base.

  • LeanTaaS currently serves more than 150 health systems, and it just gained ~40 more from Hospital IQ, bringing its total customer base to over 600 hospitals.
  • The combined company will also benefit from Hospital IQ’s distribution partnerships with various healthcare technology providers, including Oracle Cerner, Siemens Healthineers, and Altera Digital Health (formerly part of Allscripts).

The Takeaway

At a time when everyone is trying to do more with less, LeanTaas’ promise of resource optimization and staffing efficiency has to be one of the easier pitches to try and make to health system execs. Matching supply and demand in an industry where the demand is volatile and the supply is unpredictable is a tough challenge to crack, but bringing staffing and asset optimization solutions under one roof seems like a solid way to go about it.

Rock Health 2022 Full-Year Funding Recap

Every quarter, Rock Health gives us the gift of tallying, analyzing, and adding a bit of spin to the biggest trends in digital health funding – and their 2022 recap might be their best gift yet.

As Rock Health describes it, 2022 was a “downhill ride,” with $15.3B in total US digital health funding signaling the tail end of a three year cycle centered around a pandemic investment frenzy that peaked in 2021 ($29.1B total raise).

That $15.3B figure breaks down to 572 investments at an average of $27M, and we weren’t exactly picking up steam toward the end of the year. (Chart: 10-year trend)

  • Q4’s $2.7B total was less than half of Q4 2021’s $7.4B raise, and it now looks like the market is winding down from its mania to find a more sustainable long term growth rate. (Chart: quarterly totals)
  • Investors’ reluctance to go after late-stage companies and founders’ fears of raising a down round led to only 35 startups raising $100M or more throughout the year. By all means a lot of capital, but well shy of the mega-rounds seen in 2021 (88) and 2020 (43). (Chart: mega-rounds)
  • As investors battled over early-stage prospects, median Series A rounds climbed to an all-time high of $15M in 2022, while check sizes shrunk across all later stages. (Chart: round sizes)
  • Although “on-demand” care companies led the pack with $2.4B in funding (props to DispatchHealth and Homeward), providers’ front-and-center focus on efficiency kept nonclinical workflow startups close behind with $2.2B raised. (Chart: top value props)
  • One of the best charts of the report was tucked away toward the end, highlighting how D2C startups took the biggest hit of any cohort due to rising customer acquisition costs, capital lifelines drying up, and a weakening consumer. (Chart: customer segment focus)

The Takeaway

It’s hard to tell whether we’ve reached the end of this cycle, or if we’re now entering the recession that’ll bring the real pain. Rock Health points to a couple of signals that suggest we might have already seen the worst of it: investors have dry powder stockpiled, and a difficult exit climate could bring late-stage companies back to the fundraising table.

Regardless of when investment starts ramping back up, Rock Health predicts that it’ll be “built up on slow, steady, and maybe even boring strategies.” Sounds like a reasonable prediction, and if 2023 is anywhere near as hectic as many analysts think it will be, “boring” might not be such a bad thing.

Teladoc Launches Integrated Health App

Unified experiences are the name of the game in 2023, and Teladoc just made its first play of the year by revamping its mobile app to cater to the whole-person care needs of its users.

The new app integrates Teladoc’s services for primary care, mental health, and chronic condition management, paving the way for more patients to reap the benefits of personalized navigation to all of their treatments with a single login.

  • The app includes all of Teladoc’s services that can be covered under employers and health plans (DTC solutions like BetterHelp remain separate), enabling users to view services covered by their health plan and review care plans across all their physicians.
  • An engagement component translates real-time data for clinicians and patients into “applied health signals” designed to improve decision making for all parties.
  • Teladoc is aiming to drive better health outcomes (and revenue) by steering patients toward a combination of its services when appropriate, giving the example of better A1C levels and blood pressure control for those enrolled in both its chronic care and mental health programs.

The other major highlight from the press release was that Teladoc’s full suite of services is now available in Spanish on the mobile app and website, welcome news for the 40M Americans that report speaking Spanish at home. 

  • Teladoc is clearly going out of its way to improve the Spanish-speaking member experience beyond the new language option, adding over 100 Spanish-speaking providers and expanding its nutrition plans to include cultural preferences.

The Takeaway

It was almost surprising to find out that Teladoc didn’t already have a unified experience for its various solutions given the clear benefits of bringing them under the same roof, but apparently it wanted to get the care coordination features dialed before the grand debut. The app is now available in select markets, but it’ll be interesting to hear how dialed the final product really is after the nationwide roll out later this year.

Telehealth Rarely Requires In-Person Follow-Ups

Epic Research tied a nice ribbon on the end of 2022 with a study suggesting that telehealth is an efficient use of resources for most specialties, rarely requiring an in-person follow-up within 90 days.

The research appears to indicate that telehealth isn’t usually duplicative of in-person visits, adding weight to the argument that regulators should view it as an alternative, rather than an additional encounter.

After examining over 35M telehealth visits conducted between March 2020 and May 2022, Epic Research found a pretty wide spread between specialties for both the number of telehealth visits and in-person follow-up percentages.

The main finding was that high follow-up rates were present only in specialties that require regular in-person visits for hands-on care, such as obstetrics and surgery. 

  • Mental health and psychiatry had the highest telehealth utilization and some of the lowest need for in-person follow-up. No surprises there.
  • Only 15% of telemental health visits needed an in-person follow-up within the next three months.
  • On the opposite end of the spectrum, obstetrics (92%), fertility (54%), and geriatrics (50%) had the highest need for in-person follow-ups.
  • In specialties that could be consultations (e.g. genetics, nutrition), the researchers stated that telehealth might even replace the need for in-person visits.

The Takeaway

While the numbers certainly look good for telehealth at first glance, the pandemic itself might be doing them a lot of favors.

Many medical offices closed at the beginning of the study period, and most didn’t reopen to in-person appointments for several months. Plenty of patients also remain wary of in-person visits due to the risk of virus exposure. Both factors probably skewed the in-person follow-ups to a lower range.

Those details aside, Epic Research gave a great overview of in-person follow-up needs by specialty, and the more data we can wrap around telehealth’s impact the better.

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