Workforce management startup Laudio landed a $13M Series B round to tackle labor productivity and burnout, two challenges proven large enough to attract funding in any environment.
Unlike staffing solutions aimed at adding more people, Laudio helps retain the talent healthcare organizations have already invested in by automating repetitive work and nudging managers toward next best actions.
- Laudio’s AI-driven software automates tasks such as employee rounding, new hire check-ins, quality audits, and overtime assessments. It also helps with reminders for events like employee birthdays and work anniversaries.
- Example: If a nurse has worked several consecutive shifts with new employees, Laudio will alert the manager to reach out and thank them, deliver scheduling recommendations, and suggest follow-ups.
Laudio plans on using the funding to build out its AI capabilities and recommendation engine, while adding more partnerships with health systems throughout the country.
- Over 20 health systems already use Laudio, and it attributes its early success to its focus on becoming an all-in-one platform for frontline managers, who frequently turn to a variety of point solutions for quality audits and employee engagement.
- Laudio counts major systems like Novant and UNC Health among its early adopters, and reports that the platform has reduced RN turnover by 26% by driving a single meaningful interaction every month between frontline managers and nursing team members.
Health systems have been stuck in a vicious cycle of high turnover leading to burned out workers leading to even more turnover. If Laudio can use its Series B funds to prove it can break that chain, it’ll have no shortage of hospitals lined up to streamline the workflows of their frontline managers.
The pent-up-demand narrative is back on the menu. Speaking at Goldman Sachs’ Global Healthcare Conference, the CEO of UnitedHealthcare’s Medicare business Tim Noel said that costs are on the rise due to elevated demand for outpatient procedures.
- “We’re seeing that more seniors are just more comfortable accessing services for things that they might have pushed off a bit like knees and hips.”
That quip sent shares of UnitedHealth Group sliding over 6%, wiping out roughly $29B from the healthcare giant’s market capitalization in one of its largest single-day drops in years.
- United now expects its Q2 medical loss ratio (percentage of spend on claims versus premiums collected) to be moderately above its full year forecast (82.1% to 83.1%).
- The stocks of other major Medicare players took a pretty significant sympathy dive, with CVS (-7%) and Humana (-11%) getting the worst of it.
Why is this important? Payors have been enjoying a lull in surgery expenses due to hospital-wary patients postponing care during the pandemic, but that trend might be reversing.
- Although several surveys have suggested that some of these skipped appointments are lost for good, United’s comments show that Medicare patients are getting back on track.
That’s good news for hospital operators and medical device companies, whose revenue is closely tied to surgery frequency.
- Shares of hospital operators Tenet Healthcare and HCA Healthcare each jumped on the news, while joint replacement and implant manufacturers like Stryker and Zimmer Biomet climbed around 4%.
Investors are listening closely for any signs of increased payor costs as patients start catching up on postponed care, and United’s role as the bellwether for the group means that even off-the-cuff comments at conferences are heard loud and clear. While the extent of the pent-up-demand remains to be seen, United seems to think the pressure could start shifting from hospitals to payors in the second half of the year.
The youth mental health crisis is past the tipping point. The number of mental health hospitalizations among children and young adults doubled between 2016 and 2022, with inpatient stays for anxiety-related issues and eating disorders tripling over the same period.
That’s according to an analysis of claims data for over 24M Americans under the age of 21 in the new The Kids Are Not Alright report from Clarify Health Institute, whose high quality research is matched only by its stellar report titles.
To frame up just how dire the youth mental health crisis has gotten (2016-2022):
- Clarify found a 124% overall increase in mental health inpatient (IP) hospital admissions
- A 250% increase in IP admissions for anxiety and fear-related disorders
- A 221% increase in IP admissions for feeding and eating disorders
- A 96% increase in IP admissions for depressive disorders
- A 45% increase in mental health ED visits, including a 74% increase for suicidal ideation, attempts, and other self-harm
Looking at the annual incidence rates between conditions (vs. the utilization stats above), Clarify found a steep climb in new diagnoses for 8 of the 9 leading disorders:
- Feeding and eating disorders had the highest rate of growth (44%), followed by anxiety and fear disorders (40%), and obsessive-compulsive disorders (38%).
- Only diagnoses for disruptive and conduct disorders decreased (16%) between 2016-2022, although some volatility in diagnosing was seen at the start of the pandemic (Ex. anxiety conditions saw a 14% decrease in 2020, followed by a 36% YoY increase).
Another interesting slice of the data highlighted the differences in mental health IP utilization by age and sex, showing a particularly tough increase for girls between the ages of 12 and 18.
- IP admissions for adolescent girls were twice as high as boys in the same age group across the entire time period (27 vs 11 per 1k), with Clarify pointing to ubiquitous social media as a primary contributor.
If the goal of Clarify’s report was to provide a clearer picture of youth mental health care utilization, it succeeded by highlighting just how bleak the current landscape looks. It’s well known that the pandemic didn’t do younger generations’ mental health any favors, but these statistics are a stark reminder that there’s an urgent need to heed the calls-to-action from groups like these pediatric mental health societies and the Surgeon General.
The digital health sector has gotten a bit of an ego check since the white hot market at the start of the pandemic. Rising interest rates and a minor banking crisis continue to put a damper on startups’ ability to raise capital, but a mid-year prediction roundup from some of healthcare’s top dealmakers gives a good preview of what might come next as the market cools.
Dudley Baker, Canaccord Genuity. Notable moves: Privia Health IPO, Doximity IPO
- Since 2020, many startups have sprung up to provide specialized behavioral health and chronic condition management benefits to employers, but the surge in valuations made many of them too expensive to acquire. These companies could have a hard time raising more capital on their own, so Baker expects them to seek out mergers of equals instead.
Claire Pearson, Barclays. Notable moves: Cricket’s merger with InterWell and Fresenius
- Pearson sees four areas ripe for M&A centered around new tech capabilities and scale: women’s health, orthopedics, cardiology, and kidney care. Pearson pointed to Cricket’s merger with InterWell and Fresenius as an example of what works in each of these sectors – it combined contracting, providers, and technology under one roof.
Fletcher Gregory, General Atlantic. Notable investments: Included Health, Vida Health
- Employers weary from working with too many vendors have begun narrowing their focus to companies that can deliver outcomes and lower costs. To make the cut, Gregory predicts that digital health startups working on a single problem are going to have to improve their clinical models in ways that they likely can’t do without combining.
Seth Kneller, TripleTree. Notable moves: KKR’s acquisition of Therapy Brands.
- Kneller favors companies that are addressing the labor crisis by helping hospitals and health systems become more efficient. Companies using AI to take over tasks like clinical documentation and administrative work look especially attractive to acquirers, but only if they can prove cost reductions for hospitals.
Karl Palasz, William Blair. Notable moves: Fortive’s acquisition of Provation
- Companies that employ behavioral health providers to deliver virtual care have struggled to live up to expectations due to a lack of differentiation and the clinician shortage. Palasz has his eye on companies that provide software to niche behavioral health practices, such as substance-use recovery or autism.
Pending any major economic catastrophe, it seems like the general consensus is that the tide could start turning for digital health M&A within the next few months. Although the IPO market will probably stay limited, the partnerships that are forming now are setting the stage for more M&A in the back half of the year as companies look to combine so they can better weather the tough funding environment.
Health benefits navigation platform Amino Health just gave our lackluster Q2 funding totals a nice eight-figure lift after landing $80M in an even mix of equity and debt financing.
Amino got its start as a direct-to-consumer healthcare guidance product before recently evolving into an enterprise subscription model serving health plan members, third-party administrators, and benefits administrators.
- Amino’s platform offers customizable tools to guide its users toward efficient care, using over 200 clinical quality measures to assess the quality and necessity of various treatments for everything from migraines to surgery.
- The company says its D2C roots “battle tested” the platform’s user experience, and it now supports over 1.6M members with 97% customer retention – usage that’s generated 26 billion claims to date.
Within the last quarter, Amino added over 500k providers by including groups like nurse practitioners and physician assistants, and the new funding will accelerate further marketing and product development efforts.
- As the benefits market expands and grapples with new regulatory requirements and an explosion of data – particularly from the federal Transparency in Coverage Rule – startups providing navigation tools have had some positive tailwinds.
- The funding environment for these companies has held up better than the broader sector, with recent rounds including HealthJoy’s $60M Series D and Transcarent’s $200M Series C.
Amino’s transition away from D2C gives the company a more capital-efficient model that allows its product to get sponsored by either the employers that are purchasing the benefits directly or the partners who are helping people find them. The large funding round gives Amino credit for the pivot, as well as $80M to help it execute on the new strategy.
Bessemer Venture Partners recently put out a top-tier blog post outlining how to scale a health tech business to $100M in annual recurring revenue (ARR) and the benchmarks to look out for along the way.
We won’t dive into the full finance lesson, but here’s an overview of the key benchmarks Bessemer gave to help understand how top performers compare to similar companies.
Every company is different, but Bessemer segments health tech businesses into two main buckets.
- Healthcare SaaS – Cloud-based software alongside data and analytics with highly recurring revenue. Examples include Doximity, Mindbody, and Veeva.
- Tech-Enabled Services – Care or navigation support to patients via either B2B2C or direct-to-consumer models. Revenue is mostly recurring from either an enterprise or consumer via subscriptions. Examples include Hims & Hers, Livongo, and Accolade.
It takes roughly a decade to reach $100M in ARR across most health tech businesses. However, tech-enabled services businesses scale to their first $10M ARR in an average of three years, whereas healthcare SaaS businesses take an average of six years due to longer sales and implementation cycles.
Growth slows as companies scale their ARR. Bessemer found that both business categories see revenue growth of over 200% until $10M ARR, and each grow half as fast by the time they reach $25M ARR. Tech-enabled services grow faster than SaaS at every step.
Improving margins unlocks scalability. Tech-enabled services businesses steadily improve gross margins as they scale due to several factors (pricing power follows proven outcomes, tech improvements improve care quality, provider panels get more efficient). Healthcare SaaS businesses see more stable 65-70% gross margins across all stages.
Bessemer’s full analysis breaks down pretty much every metric a health tech startup could ask for to inform their scaling decisions, but the three charts above give a quick snapshot of top performers. For a full benchmark overview by company size, make sure to bookmark these cheat sheets for Healthcare SaaS and Tech-Enabled Services.
The most talked about research of the week was easily the JAMA Internal Medicine study that found that licensed medical professionals prefer ChatGPT’s responses to patient questions better than doctors’ responses 79% of the time – in part because ChatGPT is more empathetic.
What wasn’t discussed as much was the fact that the doctors’ responses were sourced from questions on Reddit – AKA from doctors with the time and empathy to share their thoughts in the first place – so it’s possible that ChatGPT’s lead is even wider than it’s getting credit for.
Here’s how it worked. Researchers randomly pulled 195 exchanges from the r/AskDocs subreddit where a verified physician responded to a patient question.
- ChatGPT responses were then generated by entering the original question into a fresh session (without prior questions to work with). The anonymized responses were then evaluated by five licensed medical professionals.
- Evaluators chose “which response was better,” then judged “the quality of information provided” (very poor, poor, acceptable, good, or very good) and “the empathy or bedside manner provided” (not empathetic, slightly empathetic, moderately empathetic, empathetic, and very empathetic). Outcomes were transferred to a 5 point scale.
The results were a blowout. The proportion of responses rated as “good” or “very good” quality was 3.6x higher for ChatGPT, with 78.5% of ChatGPT responses scoring ≥4 points versus… 22.1% for physicians.
- The proportion of responses rated as “empathetic” or “very empathetic” was a whopping 9.8x higher for ChatGPT, with 45.1% of ChatGPT responses scoring ≥4 points versus just 4.6% for physicians.
- Disclaimer: It probably wasn’t too hard for the judges to discern between ChatGPT’s well-punctuated prose (not to mention its 211 word average response length) and the off-the-cuff Reddit comments of the physicians (52 word average).
When it comes to answering the health questions of random Reddit users, tireless AI robots appear to be far better than physicians donating their time. That said, overflowing EHR inboxes remain a leading contributor to physician burnout, and the authors summed it up perfectly with: “Despite the limitations of this study and the frequent overhyping of new technologies, studying the addition of AI assistants to patient messaging workflows holds promise with the potential to improve both clinician and patient outcomes.”
We’re dedicating today’s top story to the people and publications that we rely on to find the most interesting digital health stories from across the web. Assuming that you already subscribe to Digital Health Wire, these are the 45 other newsletters, websites, and podcasts to follow if you want to keep up with the latest and greatest in healthcare.
Although we stay on top of all the mainstream outlets and digital health journals, some of the best content is usually found just off the beaten path. We’re a newsletter, we love newsletters, so we’re kicking things off with our favorite healthcare newsletters.
When we’re done rounding up the headlines from the major news sites and back out of our morning newsletter rabbit hole, we can count on finding more fresh perspectives from these specialty publications and blogs.
These days most of our favorite content isn’t published, it’s tweeted. These all-stars are the ones doing the tweeting. (With sample tweets for your viewing pleasure.)
And finally, the podcasts that let our ears take over when our eyes are tired from all the blogs and tweets. We have a soft spot for founder interviews, B2B trends, and long form conversations.
It’s a lot to keep up with, but if you want the best digital health news out there, these sources will do more than get you started. You can also subscribe to Digital Health Wire and we’ll do the heavy lifting for you:)
PS – This list could easily have been a top 100, so if there’s a publication or news source that we’re crazy for not including, hit reply and let us know!
It’s Thursday morning on the final day of HIMSS23, and although most exhibitors are still diligently manning their booths in the Windy City, the announcement fireworks have already gone off and it’s time to round up some of the biggest stories from the trade show.
The exhibit hall chatter had a familiar ring to it, touching on the same themes of healthcare consumerization and workforce burnout that were favorites at ViVE, but with a good amount of HIMSS’ signature interoperability seasoning sprinkled on top.
The list of generative AI launches somehow managed to be longer than the line at a McCormick Place Starbucks, but it seemed like most of the ~35,000 attendees were balancing the initial shock and awe with a realistic understanding of the tech’s current limitations in healthcare.
HIMSS23 major announcements, launches, and partnerships:
- Amazon rolled out several Alexa Smart Properties features designed to improve the patient and staff user experience at hospitals. The updates look like they make the lives of IT teams easier as they set up and maintain Alexa devices like the newly available Echo Show 15.
- Caregility announced a new portfolio of hybrid care solutions built on Caregility Cloud that’s designed to reduce tech investment risks for health systems by offering the flexibility to choose apps that are a good fit for their environment without creating more IT silos.
- eClinicalWorks introduced ChatGPT to its EHR and practice management solutions with the goal of making clinical workflows more efficient as it deepens its collaboration with Microsoft. Azure OpenAI Service will also be enhancing Scribe, eClinicalWorks’ AI dictation service.
- Epic and Microsoft are bringing generative AI powered by Azure OpenAI Service to the Epic EHR, which might take the cake as the biggest announcement of the show. The partnership delivers a “comprehensive array” of solutions, including SlicerDicer self-service reporting.
- Health Gorilla took the lid off its HG Accelerator Program that gives startups access to its solutions, portfolio of healthcare data APIs, and interop mentorship. The inaugural class already includes Oatmeal Health (AI cancer screening) and Long Health (patient onboarding).
- Innovaccer unveiled six new solutions that together look like the beginning of a new chapter in the company’s growth story. The Sara conversational AI leads the lineup that also includes Health Equity, Readmission Predict, Risk AI, Network Optimizer, and Health 1:1.
- Memora landed $30M to scale its SMS-based care communication platform that automates clinical responses to frequently asked questions, nudges patients with care prompts, and sends reminders via text, escalating only the most urgent concerns to care teams.
- Philips released its Future Health Index 2023 global report, which found that healthcare leaders are investing heavily in AI for both critical decision support and operational efficiency, and that these execs are leaning into outside partnerships to help provide the best possible care.
- RevSpring launched Engage IQ to coordinate patient interactions from pre-service to post-service to payment. The platform handles intake, clinical reminders, and billing to improve clinical and financial outcomes while solidifying patient loyalty.
- Rimidi’s clinical management platform is now integrated with MEDITECH, allowing clinicians to see remote patient-generated data and PROMs within disease-specific views in the patient chart alongside CDS support to drive next best steps.
- Salesforce customers can now use Einstein GPT to generate info using natural language prompts directly within their Salesforce CRM, with a new Slack integration also allowing care teams to summarize chat information and complete CRM tasks.
- symplr debuted four product suites as part of its Connected Enterprise initiative to help health systems address burnout and cost pressures. The new portfolio includes a Workforce Suite, Supply Chain Suite, Quality Suite, and Credentialing Suite.
- Withings completed its new range of smart scales with the introduction of the Body Smart scale that brings body comp, heart rate, visceral fat, metabolic age, and basal metabolic rate analysis to the entry-level tier of the lineup.
It’s now been three years since the pandemic stopped HIMSS20 in its tracks, but healthcare’s biggest IT conference is very much alive and well with an in-person energy that’s straight out of 2019. We hope that everyone had an awesome time if you made it to Chicago, and welcome all of our new readers that we met at the show. Stay tuned for a deeper dive into some of these announcements next week.
The news cycle took a bit of a breather ahead of the upcoming wave of HIMSS announcements, giving us a chance to highlight an excellent thinkpiece from the healthtech team at a16z.
After charting up a beautiful comparison of publicly traded healthcare companies versus other growth companies, a16z found that the healthcare outperformers leverage the same three types of “business model magic” as the world’s largest tech companies:
- Increasing customer lifetime value (LTV Magic)
- Expanding operating leverage (Operating Leverage Magic)
- Declining customer acquisition costs (CAC Magic)
LTV Magic can be boiled down to creating “sticky” products with high retention. Healthtech companies that embed their platform into their customers’ core workflows can then build pricing power and widening revenue streams.
- Outperformers can add new components to their platforms that increase LTV without a proportionate increase in costs. Ex. Flatiron Health’s provider network enabled it to efficiently build a pharma-facing, real-world evidence generation business on top.
Operating Leverage Magic revolves around reducing the marginal costs to serve customers as the business expands – mainly by leveraging software’s near-zero marginal cost dynamics.
- Outperformers in a16z’s analysis also maintain modest operating expenditure growth at the central business level as they scale. Ex. Agilon and Oak Street command a valuation premium for impacting the cost of care without having to hire many central clinical staff.
CAC Magic involves finding ways to have declining marginal costs of customer acquisition. One of the most efficient ways to acquire new customers is by accessing groups of patients through partnerships with entities that already maintain those relationships, like MA plans.
- Outperformers also have network effects that make their service more valuable as more people use it. Ex. Doximity gave more value to its 10,000th user than its 1,000th user, making it easier to acquire new users over time.
a16z makes one thing very clear with its analysis: investors are ultimately underwriting a business’s ability to generate a lot of revenue over the long term. Every healthcare startup has to find its own way to reach that goal, but the three types of magic highlighted by a16z give a good sense of the ways that current outperformers are earning their premium valuations.