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.

Digital Health Trends to Watch in 2023

Happy holidays, and welcome to the last Digital Health Wire of 2022! For our final issue of the year, we’re polishing off our crystal ball (crowdsourcing predictions from digital health leaders) to bring you some of the top trends likely to make a big impact in 2023.

Without further ado…

  • Show, Don’t TellDiMe CEO Jennifer Goldsack – Digital health innovators with practical solutions for real problems have enormous potential to thrive in the coming year, but only if they have clinical evidence to demonstrate their value. Even better, full-stack digital solution providers will identify pathways to reimbursement that don’t involve throwing themselves at the feet of healthcare systems and carving away at their margins.
  • Deeper Patient SegmentationSCAN Health Plan CEO Sachin Jain – The idea that all patients should receive the same clinical model is being fundamentally questioned, and more companies will look at further segmenting their offerings to differentially serve diverse populations. See: Clever Care (MA startup with Asian-focused benefit offerings), Included Health (Affirm product focused on LGBTQ+ population), and Zocalo Health (clinical care “by Latinos for Latinos”).
  • More ConsolidationCentura Health CEO Peter Banko – Traditional health care competition will intensify as consolidation continues and new entrants bring disruptive value propositions. Private equity firms’ $700B+ in dry powder is set to surge even higher in 2022, and national health plans are deploying their pandemic-driven financial gains to fuel consolidation and diversification.
  • Quality Funding Rounds7wireVentures Partner Alyssa Jaffee – With fewer IPOs for exits, many high quality startups will return to the private markets for another funding round. Fewer investors are running around with loose capital, making it likely that investment decision cycles will take longer but have more discipline. For context, there were 23 public digital health market exits in 2021, vs. 7 in 2022.
  • D2C Pivot to B2BAlyssa Jaffee again since her Twitter thread was best-in-class – As inflation continues pressuring the global economy, half of consumers can’t cover a $1K medical expense within 30 days. As consumer purse strings tighten, we could see an increasing number of D2C companies pivot to B2B models to survive.
  • AI-Driven EngagementMD Anderson Cancer Center CIO Rebecca Kaul – AI will start to enable omni-modal communications that are personalized, predictive, and empathetic to the patient. Communications platforms will need to be able to seamlessly connect patients to integrated end-to-end solutions, and more sentiment analysis is needed to build emotional intelligence into digital tools.
  • Mission Critical TechOMERS Ventures Principal Christina Farr – Hospitals are bleeding revenue, so 2023 will be about “must have” vs.“nice to have.” What’ll do well is anything mission critical (addressing labor shortages, burnout, revenue cycle). Companies that can be wiped out by Epic’s next feature update will be in a tough spot.

The Takeaway

It’s tough to predict which of these trends will become the top story of 2023, but it’s pretty safe to say that we’re in for another action-packed year for digital health. While the record shattering funding days of 2021 are behind us, we still have overworked providers, rising healthcare costs, and patients in need of innovative solutions. Cheers to making those solutions a reality in the new year.

Sonde Raises $19M for Voice-Based Screening

Sonde Health puts a few unique spins on the hard problem of early disease detection, but its core tech is built around doing one thing extremely well: flagging patients at risk for health conditions using short voice clips.

Now, after landing a string of new partnerships and $19.25M in Series B funding, Sonde is turning its sights to global expansion.

Sonde’s AI-enabled platform analyzes vocal biomarkers like smoothness, pitch, and clarity to gain insight into a patient’s mental state. It also measures breath cadence and vocal capacity to gauge their respiratory health.

  • This data isn’t positioned as a standalone solution for diagnosing medical conditions, but as a way to improve the clinical workflows of physicians / therapists, the patient stratification of RPM programs, and the value of call center audio.
  • Sonde’s platform can be embedded directly onto device chipsets for passive health monitoring, a feature that’s already being explored within Qualcomm’s smartphone chips and GN Group’s hearing products.
  • This technology also produces a treasure trove of every healthcare startup’s favorite asset – data. Sonde claims to have the largest and most diverse health-labeled voice dataset, with over 1.2M voice clips from 85k users across four continents.

The latest funding will help Sonde expand into Asia, where it’s reportedly seen high demand for its existing solutions, and support the addition of more health conditions to its platform.

  • A validation study of Sonde’s mental health tools is underway at McMaster University, and research on new focus areas is in development at Cambridge University (cystic fibrosis) and the Albert Einstein College of Medicine (dementia).
  • A partnership with Korean telecom giant KT corporation should also streamline the international expansion by bringing Sonde into its call centers and telehealth solutions.

The Takeaway

Although voice-tech is a relatively new healthcare arena, the prospect of passively diagnosing conditions has attracted plenty of competition from startups like Kintsugi ($20M Series A in March) and Eleos ($20M Series A in April), and it’s definitely on the radar of larger players like Microsoft (Nuance) and Amazon (Alexa).

As these companies begin to refine the AI models supporting voice diagnosis, access to proprietary data sets for training the algorithms will become increasingly important for gaining an edge, and Sonde’s funding announcement makes it clear that it plans on turning its dataset into its biggest competitive advantage as quickly as possible.

CB Insights Digital Health 150 Report 2022

CB Insights released its annual Digital Health 150 rankings of the most promising private digital health startups, and it was interesting to see how dramatically the landscape evolved over the past year.

Methodology (maybe more of a Disclaimer): The startups that made the final cut were selected from a pool of 13k applicants based on “proprietary Mosaic scores,” company business models, funding, investor profiles, competitive positioning, tech novelty, and plenty of other metrics. Getting your company to purchase CB Insights’ data products wasn’t listed as one of them, although it probably wouldn’t hurt your chances.

With that out of the way, let’s dive into some of the biggest trends that emerged in the Digital Health 150 pictured above (here’s a high-res version).

  • Early-stage innovation: This year’s Digital Health 150 included a huge share of high flying up-and-comers, with nearly half of the list at Series A or earlier in their growth. These players included Equum Medical (acute care telehealth), Vori Health (hybrid MSK treatment), Playback Health (mixed media patient-provider communications), and Homeward (rural healthcare provider).
  • Diagnostics focus: The screening, monitoring, & diagnostics category led with 29 startups (25%), including Babyscripts (virtual maternity care), Ixlayer (precision health testing), and Enlitic (medical imaging AI). That category was followed by interoperability & data (12%), virtual care (11%), and patient engagement (11%). These categories clearly have a ton of momentum, but growing success leads to growing saturation.
  • Mental health momentum: Although the treatment indications took some time to sort out manually, we counted 24 startups building mental health solutions, a big step up from the 10 that were included last year. It would have been more surprising if it were any other area.
  • Few repeat showings: Around 90% of this year’s cohort wasn’t on last year’s list, which was apparently due to record M&A activity and public exits in 2021. Repeat showings included names that are tough to argue with like Xealth, Redox, and Maven Clinic.
  • Top investors: General Catalyst was the most active investor in this year’s cohort, backing 13 of the companies since 2017 (Ex. Equip, Casana, SWORD Health). Insight Partners was a close second (10), followed by 7wire (6), and Plug and Play (6).

The Takeaway

Lists like these usually get some pushback because of the methodology or glaring company exclusions, but this year’s Digital Health 150 cohort feels pretty well aligned with the high momentum names that keep popping up in our own coverage. For what it’s worth, here were some of social media’s most commonly mentioned exclusions: Ada Health, Awell, Cityblock, Innovaccer, Memora, Ribbon, Turquoise, TytoCare, and Zus.

care.ai Raises $27M for Ambient Monitoring

“Non-clinical workflow” companies continue to lead the pack in terms of digital health funding, and ambient monitoring startup care.ai just added $27M to the segment’s Q4 total following its latest raise.

care.ai’s Smart Care Facility Platform uses ambient sensors spread within care facilities to monitor patients and their caregivers, informing real-time clinical and operational insights.

  • The platform records data such as patient bed exits and falls, while also reducing manual tracking in EHRs by enabling contactless check-ins and screenings.
  • The ambient nature of the solution means that patients aren’t required to wear any RPM device for it to be effective, removing a big source of friction for many virtual nursing or virtual sitting programs.

The fresh funding will help care.ai expand to more hospitals, skilled nursing facilities, and assisted living facilities, building on the 1,500 locations already using its technology.

  • care.ai points to the continued prevalence of staff shortages and burnout as key demand drivers for its solutions, which aims to improve the lives of overworked staff by automating away manual workflows.
  • Other products from GE, ADT Health, or even Amazon’s Alexa fall detection feature compete at least somewhat within the same arena, but care.ai is focused on creating the first truly care site-agnostic solution to the problem of ambient patient monitoring.

The Takeaway
care.ai is setting out to automate away the manual processes causing higher burnout and operational costs for the organizations attempting to deliver optimal care. It’s a tough promise to live up to, but the company’s leadership has done it before. care.ai founder and CEO Chakri Toleti sold his previous patient engagement startup HealthGrid to Allscripts for $60M, and prior to that was putting his motion sensor expertise to work while filming what look to be some pretty epic Bollywood action movies.

The Biggest Company in the World

Venture capital giant Andreessen Horowitz (a16z) got right to the point in a recent blog post that made a huge splash across health tech social media: “We think the biggest company in the world will be a consumer health tech company.”

a16z lays out two paths that could let a healthcare company leapfrog over massive consumer icons like Google, Apple, Facebook, and Amazon to become the world’s most valuable company (Fun fact: the $4T US healthcare market is 5x the size of the global advertising industry).

Path 1 involves creating a vertically integrated “payvidor” that grows to own most care. Picture a company that looks something like if “UnitedHealth Group and Apple had a baby,” with the business model of UHG but the sleek consumer experience of Apple.

  • a16z believes that these companies will need to become big enough to cover most specialties, and also own a health plan that encourages patients to stay within the same care ecosystem (similar to Apple’s tech lineup).
  • Combining both components is essential so that the reimbursement arm can serve as a distribution channel for the care delivery services.

Path 2 centers around building a horizontal marketplace similar to Amazon where healthcare services are aggregated alongside trusted reviews and comparison data. 

  • According to a16z, the key to success for healthcare marketplaces is to serve as an acquisition channel for established players, in addition to being their own acquisition channel.
  • These companies will need to crack the code on how to direct patients to relevant services, while also leveraging the traditional healthcare system for both provider listings and patients.

The Takeaway

Some of the biggest companies in the world are consumer companies that were built in relatively small industries, and the US healthcare market is so big that it can support plenty of success stories with both vertical and horizontal models. That said, packaging something as complicated as healthcare into a consumer experience as simple as Amazon isn’t exactly an easy task, which is why a16z believes that the biggest company in the world will be the one that pulls it off.

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