Foodsmart Loads Its Plate With $200M

The headliner of this week’s funding-heavy news lineup was Foodsmart, which loaded its plate with over $200 million to expand the reach of its virtual nutrition services.

Foodsmart supports patients facing chronic disease and food insecurity by partnering with health plans and providers to improve access to personalized healthy eating options.

  • The FoodSMART telenutrition platform delivers virtual nutrition counseling from the largest standalone network of Registered Dietitians in the US, with integrated benefits management to help with things like applying for SNAP/EBT benefits.
  • The FoodsMART marketplace then bridges the gap between the visit and the table, allowing patients to order quality food and have it delivered to their doorstep.

The combination of Foodsmart’s dietitian network and food marketplace sets it apart from most of its competitors, which either focus on supporting specific conditions or avoid tackling the logistics of grocery delivery.

  • That versatility has led to Foodsmart serving over 2.2M members, as well as numerous peer-reviewed studies highlighting the cost reductions and health improvements resulting from the approach.

The food-as-medicine movement has provided fertile ground for startups since the pandemic, with shifting consumer behaviors and regulatory changes planting the seeds for growth.

  • Investors are taking notice, and Foodsmart’s mega-round follows close behind other raises from Season Health ($7M), Fay ($25M), and Nourish ($35M).

The Takeaway

At a time when weight management medications are getting all the attention, Foodsmart is paving its own non-pharmacological path to preventing diet-related issues. If an ounce of prevention is worth a pound of cure, then $200M should be heavy enough to help Foodsmart improve the lives of plenty of patients.

Spotlight on Prior Authorization, Humata Health

Digital health’s flavor of the week was prior authorization, which has clearly been leaving a bad taste in people’s mouths.

Humata Health took center stage by adding $25M in unlabeled funding to advance its AI prior auth automation suite for payors and providers. 

  • CEO Dr. Jeremy Friese was president of Olive’s payor business before forming Humata to acquire the PA assets after the company was forced to wind-down, and dealt with the headaches of prior auth first-hand during his time practicing at Mayo Clinic.
  • The round was led by Blue Venture Fund (representing the majority of BCBS plans) and LRVHealth (investing on behalf of nearly 30 health systems), which sends a strong signal about Humata’s ability to support both sides of the prior auth equation.

MedPAC’s annual report to Congress did a great job highlighting the prior auth inefficiencies that Humata set out to solve:

  • 95% of PA determinations by Medicare Advantage plans in 2021 were “fully favorable.” In other words, the plans approved nearly all treatments deemed necessary by providers at full coverage.
  • Further, after providers appealed an initial PA denial, MA plans reversed their decision and fully approved the PA request in 80% of cases. That means all of the manual labor and staff hours results in the same outcome 99% of the time.

Right on cue, the AMA put out its own physician survey on the topic, finding that the average physician fields 43 PA requests per week that require 12 hours of staff time to resolve.

  • Two-thirds didn’t believe that PA decision criteria are evidence-based, and nearly all reported that PA increases burnout. 
  • Most physicians also agreed that PA increases overall utilization as patients are forced to pursue less effective treatments or schedule additional appointments after PA delays.

The Takeaway

You’d be hard pressed to find a single payor or provider that thinks prior authorizations are perfect in their current state, and regulators are starting to take notice. Bipartisan leaders recently reintroduced legislation to mandate electronic processes for streamlining PA, following a final rule from CMS in January with the same goal.

Talkiatry Hauls in $130M Series C

Times are tough, which means business is booming for virtual behavioral health providers like Talkiatry – a telepsychiatry startup that just hauled in $130M in Series C funding.

Since launching in 2020, Talkiatry has built a network of over 320 psychiatrists, who serve patients with conditions ranging from anxiety and depression to OCD and PTSD.

  • Talkiatry operates in 43 states, and is in-network with more than 60 payors, reportedly covering 70% of commercial lives in the US.
  • It’s also begun leaning in on partnerships with health systems, and recently scored a major contract with HCA Healthcare.

Unlike most behavioral telehealth companies that got their start at the onset of the pandemic, Talkiatry’s physicians are W-2 employees, rather than contractors.

  • This allows Talkiatry to standardize the quality of physician care and influence patient outcomes over time, crucial ingredients to any recipe for value-based care success.
  • That model also makes Talkiatry one of the few companies that can demonstrate superior outcomes to major payors. A recent cohort study showed that Talkiatry led to a 68% reduction in hospitalizations, 32% fewer ED visits, and $700 lower monthly care costs.

The benefits of Talkiatry’s model compound with scale: as its full-time psychiatrists continue demonstrating superior outcomes, it can sign more partnerships with payors and reach more patients. That puts it in a solid position to take on additional risk.

  • Talkiatry earmarked the fresh funds to scale up its VBC offerings and begin taking on more downside risk, a move that few behavioral health companies have been willing to make given the difficulty of proving performance. “There’s no blood test for depression.”

The Takeaway

Demand for behavioral health resources only continues to climb, yet there are still significant barriers to delivering the care that’s being called for – particularly a shortage of providers and a lack of technology to help fill the gap. Talkiatry overcomes both of these hurdles by offering virtual treatment from in-house psychiatrists, and it now has $130M to continue scaling its model for patients in need.

Are Preventable Hospitalizations A Flawed Measure?

Preventable hospitalizations are one of healthcare’s most widely adopted quality measures, which is exactly why they ended up in the crosshairs of a new opinion piece in Health Affairs.

Rates of preventable hospital admissions were first developed as an indicator of access to timely ambulatory care over 30 years ago, yet they’re now used to judge the performance of hospitals, health plans, and even individual providers (MSSP is an easy example).

  • These measures are typically based on inpatient admissions or ED visits for conditions like hypertension or asthma, where hospitalizations can potentially be avoided if patients have access to effective ambulatory care.

The authors argue that the metamorphosis of preventable hospitalizations from an access measure to a quality indicator was a serious misstep, and incorporate nearly a dozen studies to help make their case.

  • One of the most rigorous studies was from the Agency for Healthcare Research and Quality, which found that differences in socioeconomic status explain “a substantial part – perhaps most” of the variation in preventable admissions for many conditions, and recommended against using the metric as a standalone way to assess provider quality.

Those findings prompted the director of the AHRQ to publish an editorial outlining the “persistent challenge of avoidable hospitalizations,” which referenced a VA trial suggesting that high-quality ambulatory care might result in more, not fewer, admissions.

  • The VA analyzed 1,400 veterans hospitalized with potentially avoidable admissions for congestive heart failure, diabetes, and COPD. Veterans that received intensive primary care were hospitalized more frequently than those in the usual care group, but were also more satisfied with their care despite the additional hospitalizations.

Other evidence suggests that using preventable hospitalizations as a measure of provider quality can actually decrease care quality by discouraging necessary admissions.

  • This study linked reduced readmissions to increased mortality for heart failure patients, unexpected results that might be explained by the fact that “incentives to avoid readmissions may lead to potentially inappropriate management of higher-risk patients… in the outpatient rather than inpatient setting.”

The Takeaway

Whether or not preventable hospitalizations are a flawed quality measure, this article is a solid reminder that “strong beliefs should be loosely held,” and that widely adopted views are often the most important ones to stress-test.

Telehealth Struggles to Live Up to Expectations

Telehealth demand hasn’t exactly lived up to expectations, but that might have more to do with manic forecasting than real-world performance when a 6,000x utilization increase isn’t enough to satisfy the naysayers.

There’s nothing like forced adoption to kickstart a market, and the combination of in-person office closures and pandemic-era legal flexibilities caused telehealth utilization to vault from less than a million visits in Q4 2019 to over 60 million visits by Q2 2020.

(Overly) enthusiastic forecasts quickly followed the early data, but Trilliant Health’s latest telehealth tracker shows that demand has only headed downhill since the initial spike. 

  • As of Q3 2023, sustained declines have left telehealth volumes 54.7% below their peak, and the trendline doesn’t appear to have found a bottom.

Recent high-profile retreats from players Optum and Walmart have sparked solid viewpoints from pessimists and optimists alike, although the general consensus is that patients don’t view telehealth as a substitute for in-person care for most conditions.

  • Since 2019, behavioral health has represented a consistently increasing share of overall telehealth utilization, and accounted for a substantial majority (67%) of all virtual visits in Q3 2023.

E-prescribing increases closely mirrored the telehealth growth, and now represent a significant share of prescriptions for many drug classes:

  • 30.3% of antidepressants, 38.9% of stimulants, and 5.4% of opioids. It’ll be interesting to see the GLP-1 data when it catches up.

The Takeaway

Event-driven demand shocks don’t last forever, and the telehealth slowdown showed that reality is usually more nuanced than an overnight paradigm shift. New modalities don’t magically create better businesses, but they can be the tools that founders use to build them.

Sword Health Lands $130M, Unveils Phoenix AI

Sword Health is officially on a hot streak, and it’s only going to keep turning up the heat with $130 million in fresh funding and a new AI care specialist named Phoenix.

At a time when many startups are taking down rounds – at lower valuations – to secure more capital, Sword just did a mic drop round. It’s valuation spiked 50% to a cool $3 billion.

  • Sword expects to be profitable before the end of the year, and said it didn’t need any financial help to get there.
  • Besides the valuation refresh, Sword also wanted to give its employees some long-awaited liquidity. That’s why $100 million of the funding was secondary (shares from employees) and the other $30 million is reportedly locked away “generating nice interest.”

Founded in 2014, Sword pairs motion tracking technology with in-house clinicians to deliver virtual physical therapy programs for muscle and joint issues. 

  • Employers and health plans have flocked to digital musculoskeletal solutions to help members manage pain from home while avoiding opioids and costly surgeries, attracting competition from both well-funded giants (Hinge, Omada) and agile startups (Kaia, Vori).

Sword’s next chapter will focus on finishing the pre-IPO puzzle, and it just locked in one of the most important pieces: Phoenix, an AI care specialist that chats with patients during sessions to assess how they’re feeling and provide real-time feedback.

  • As patients move through the exercises, Phoenix factors in medical history and verbal feedback to deliver optimal sessions within the human clinician’s pre-set parameters.
  • It then summarizes the performance data to identify trends and surface actionable insights, making it easier for clinicians to optimize patient progress.

The icing on the cake? The Peterson Health Technology Institute highlighted Sword in an impeccably timed report on the clinical advantages of virtual MSK solutions as an effective alternative to in-person care – a glowing review compared to their harsh critique of digital diabetes programs.

The Takeaway

It sends a clear signal when a company raises nine figures just to flaunt its valuation and show its employees some love. Sword is in peak form as it gears up for an initial public offering, and it sounds like we could see a move as early as 2025 if the IPO market continues to rise from the ashes.

Physician Compensation Rebounds

The numbers are in. Doximity’s always-anticipated Physician Compensation Report showed that overall compensation grew 5.9% last year – a welcome rebound after the 2.4% dip in 2022. 

Survey responses from 33k doctors brought more good news than that, with medicine’s gender wage gap narrowing to 23%, down from 26% in 2022.

  • Decent improvement, but women physicians are still taking home an average of $102k less than men after controlling for specialty, location, and experience.

Neurosurgeons continued to top the charts at $764k, nearly 4X the annual compensation of their pediatric endocrinologist peers at the bottom of the totem pole ($217k).

Other interesting highlights from the report included the fact that 81% of physicians reported feeling overworked, causing many to consider an employment change (59%) or early retirement (30%).

  • 88% of physicians also said that their practice has been impacted by the physician shortage, three-quarters of which described the impact as “moderate” or “severe.”
  • Funnily enough, the physician shortage wasn’t even the leading contributor to burnout, which 70% of respondents pinned squarely on administrative burden.

Despite recording a slight increase, total physician compensation has dropped 26% since 2001 when accounting for inflation. As it currently stands, only 40% of physicians are happy with their compensation, and more of these disgruntled doctors are unfortunately eyeing the exit.

The Takeaway

Physicians are still overworked and the wage gap is barely moving in the right direction, but at least they can rest easy knowing inflation is barely eating into their total compensation…

The Hidden Cost of Mental Health Inequities

Mental health inequities across the US are racking up an annual tab of over $477 billion, and a new report from Deloitte and the Meharry School of Global Health didn’t offer a particularly rosy forecast given our current trajectory.

If left unchecked, the authors expect the annual burden to reach $1.3 trillion by 2040, a brutal total considering the “avoidable and unnecessary expenses” behind it.

Drawing on data from government agencies and Komodo Health, the researchers identified four primary cost drivers stemming directly from mental health inequities.

  • Avoidable ED utilization resulting from untreated or undertreated mental health conditions. 2024 Expenditures: $5.3B
  • Chronic physical conditions linked to mental health’s role as “the invisible counterpart to physical health.” 2024 Expenditures: $23.9B
  • Productivity loss due to mental health-related unemployment and missed work days. 2024 Expenditures: $116B
  • Premature deaths from suicide, substance use disorders, and mental illness associated with comorbid conditions. 2024 Expenditures: $332.2B

Disadvantaged populations are disproportionately impacted across all four categories due to a “legacy of policies” creating structural inequality, and the report lays out several solutions taking different routes to the same destination: equal access for those who need it most.

  • One way to get there is to address the provider shortage by integrating behavioral care with primary care. Not only do PCPs already manage areas like depression, but they’re also experts in the chronic conditions more prevalent among mental health patients. 
  • From a regulatory standpoint, Congress should look at reimbursement policies that “create unintended barriers to treatment.” A prime example is Medicaid being “woefully underfunded” to ensure access to care for the 40% of nonelderly beneficiaries with a mental health or substance use disorder.

The Takeaway

If the moral argument for addressing mental health inequities wasn’t enough to inspire action, this business argument should be just as compelling to payors and employers. Although the answers to the problem are obviously easier said than done, the report succeeded in framing up the massive cost of not solving it at all.

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