Category: Digital Health

CB Insights unveiled its annual Digital Health 50 rankings of the most promising private digital health startups, and this year’s list certainly included many of the industry’s brightest stars.

Here’s the methodology / our disclaimer: The final cut was selected from a pool of 10k+ applicants based on “proprietary metrics” – Commercial Maturity and Mosaic Scores – along with data on partnerships, growth stats, and market adoption. (CB Insights is of course happy to share this data with its customers, but promises that being one of them doesn’t land you a spot on the list.)

With that out of the way, here’s a look at the Digital Health 50 (high-res version):

It’s tough to compare this list to last year’s given the ever-evolving categories and methodology, but CB Insights called out four key themes for the latest cohort:

• AI is becoming foundational infrastructure: 36 of the 50 companies are building AI products, ranging from operational automation high-flyers like Laguna to specialized healthcare LLMs like Hippocratic AI. No surprises here.

• Workflow efficiency is a key priority: 19 of the companies are streamlining administrative or clinical tasks, spanning document processing startups (Tennr) to ambient AI heavyweights (Abridge). These players seem like an obvious inclusion, but the same could be said last year when ambient AI was nowhere to be found.

• Diagnostic innovations dominate: 11 companies comprised this year’s largest category, developing next-gen diagnostics across imaging (Airs Medical), pathology (Proscia), and non-invasive diagnostics (Alimetry). Diagnostics was in a three-way tie with Clinical Intelligence and Virtual Care, although the categories have some hazy boundaries. 

• More specialized platforms: Virtual and hybrid care representation doubled in this year’s cohort, reflecting the shift from general telemedicine toward condition-specific virtual models in areas like mental health (Talkiatry) and cancer care (Resilience).

The Takeaway

Lists like these never fail to get pushback because of the methodology or glaring exclusions, but this year’s cohort feels pretty well aligned with the high momentum names that keep popping up in our own coverage. Major congrats to the companies that were included.

The “move fast and break things” motto might work wonders with consumer products, but a new editorial in npj Digital Medicine makes a compelling case that healthcare needs to flip that paradigm on its head and co-create with clinicians to “sync fast and solve things.”

The editorial argues that healthcare practitioners (HCPs) should play an active role in driving digital health innovation, as opposed to being passively “consulted” so that developers can tout the fact that their product is backed by clinicians.

• The breakneck pace of digital innovation in the wake of the pandemic has outpaced the inclusion of HCPs in the co-creation of new solutions, leading to a fight-or-flight response where clinicians are reluctant to adopt said solutions to defend their traditional responsibilities. Separate research seems to back that up.

• If new tools lack product insight and buy-in from HCPs, they’re significantly more likely to be doomed to clinical irrelevance, as showcased by a recent analysis that found 44% of digital health companies have a clinical robustness score of 0 out of 10.

Although it isn’t an earth-shattering revelation that HCPs have a solid grasp on the exact workflows needed to inform clinically relevant solutions, the authors offer three considerations for shifting from “passive” to “active” co-creation.

• First, financial incentives alone aren’t enough to ensure busy clinicians can engage in meaningful co-creation. The most important incentive that companies can offer clinicians is time, particularly by delivering a product that can optimize workflow efficiency or help deliver quicker treatments.

• Second, the article stresses a need to embed digital health technologies in clinical curricula so that HCPs can learn about not just using these new tools, but also translating their experience into better-informed products.

• Lastly, the authors lay out why there’s a role for regulators to mandate that HCPs participate in digital health innovation, and suggest that payors and legislators consider augmenting their approval processes by requiring HCPs be involved in the development of new solutions to serve as a proxy for their clinical safety and efficacy.

The Takeaway

Healthcare clearly isn’t the best sandbox to “move fast and break things,” but this article is an important reminder that “sync fast and solve things” shouldn’t mean trading clinician input for speed. While passive co-creation might help with the marketing materials, giving clinicians an active role in product development is the only way to ensure their experience is reflected in digital innovation.

It’s rare that a mid-year trend roundup qualifies as the biggest story of the week, but it’s also rare that they’re as stellar as the one that former HHS policy leader Paul Mango just released.

Mr. Mango served juicy takes on three of the biggest trends shaking up the industry:

Trend #1) Payor transformation has been full-speed-ahead as payors seek success in managing beneficiaries with chronic conditions by developing their own disease management platforms (not to mention new arcs of growth help justify their climbing P/E ratios).

• Evernorth is now 80% of Cigna’s total revenue and a whopping 68% of its profit – mostly as the result of its Express Scripts acquisition in 2018. In the first half of the year, Evernorth grew 29% while Cigna as a whole grew 4%.

• United was obviously an early mover into non-health plan assets, but Optum is now the key growth driver for the entire enterprise. United Healthcare remains Optum’s largest client (accounting for two-thirds of its revenue), but Optum now represents 25% of UNH’s total revenue and 49% of its profit (thanks in large part to OptumRx).

Trend #2) Provider tailwinds are adding up as several key performance measures improve simultaneously, including higher volume, increased acuity for inpatients, and lower labor costs. 

• HCA just posted same store revenue up 10% due to a combination of the aforementioned tailwinds. ACA exchange volume was up 46% (total commercial volume rose 12.5%), and contract labor costs were down 25%.

• Even Community Health Systems, whose performance has lagged other national hospital chain operators, saw a 3.2% increase in admissions and a 4.7% bump to same store revenue. CHS axed contract labor costs by 39% year over year.

Trend #3) Medicare Part D upheaval has been emanating from the Inflation Reduction Act, which will take full effect on the 1st of next year.

• Mango boils down the IRA’s impact on Part D as such: it shifted the economic burden from beneficiaries who are heavy consumers of prescription drugs to the payors issuing the plans. 

• Medicare Part D has been around for twenty years and during that time the combination of the beneficiary’s premium and government’s subsidy only rose to $64.28. “The impact of the IRA in one year’s time will cause that to rise to $179.45.

The Takeaway

Where is all this payor transformation heading, especially as providers increasingly view them as competitors? Will health systems sustain their momentum, or is recent performance a reflection of pent-up pandemic demand? All eyes will be on next quarter’s numbers to find out, and you’ll be the first to know when we see them.