Severe mental health disorders are complicated problems to solve, and the legacy documentation systems used by most psychiatrists don’t do much to help the rate of progress. Electronic health record startup Osmind raised $40M in Series B funding to equip psychiatrists with tools to better manage complex patients, while also starting to fill the data gap in research for breakthrough therapies.
On the surface, Osmind offers an EHR tailored to clinicians serving patients with treatment-resistant mental health conditions like severe depression and PTSD.
- The Osmind EHR supports clinical and administrative functions with features that streamline charting workflows, automate outcome tracking, and drive engagement.
- An integrated mobile app enables patients to record their thoughts and feelings in between visits, giving providers a clearer view of their patients’ overall well-being.
The back end of Osmind’s platform is equally as important as the EHR. A real-world evidence engine takes the granular data from the EHR and makes it available to researchers studying breakthrough mental health treatments such as ketamine and psychedelics.
- While other companies like Flatiron Health and Verily also leverage anonymized patient data to influence therapy design, Osmind has quickly compiled a leading dataset to help translate this strategy to the mental health arena.
- Earlier this year, Osmind partnered with Stanford University School of Medicine to publish the largest-ever real-world data study on ketamine infusion therapy as a treatment for depression.
The fresh funding will be used to expand Osmind’s team as well as the types of data its software can capture to advance a wider range of clinical trials and therapies.
Mental health startups have proliferated over the past few years, but few have focused on breakthrough treatments for the millions of patients who have tried and failed multiple other options. Osmind’s new funding will allow it to better help these patients, not with direct clinical care, but by supporting the providers and researchers already serving them.
In recent years, digital health has been a hot-bed of innovation as companies tackle healthcare inefficiencies with new technology, but the rapidly climbing valuations are causing many to wonder: how much higher can they go?
Healthcare AI raises $8.5b in 2021.
According to a report from CBInsights, private healthcare AI companies have raised $8.5b through the first three quarters of the year, surpassing 2020’s full-year total of $6.6b.
- Q3 2021 was healthcare AI’s strongest quarter ever ($3.2b raised across 149 rounds)
- Top areas of focus include remote patient monitoring, decentralized clinical trials, and home diagnostics.
- AI startups account for approximately 40% of year-to-date digital health funding
Unicorns are no longer endangered.
The term “unicorn” used to indicate that a young company was a successful outlier with a $1b+ valuation, but has recently been diluted as more startups earn the designation.
- CBInsights now counts the total number of “unicorns” at 925 globally, including 13 healthcare AI companies that received the title just last quarter.
- When the term unicorn was coined in 2013, there were fewer unicorns than there are “decacorns” with a $10b+ valuation today (45).
- Devoted Health currently has the highest healthcare company valuation ($12.6b).
How much higher can valuations go?
Digital health companies scaled quickly during the pandemic by taking on outside investment to keep up with the surge in demand, which sent private valuations soaring. Many of these valuations were based on the size of the total addressable market, driven more by potential than current revenue. If these companies fail to capture share, or if health-tech adoption declines as the pandemic wanes, then these expectations might be hard to meet and we could start to see some moderation.
Digital health venture fund and advisory team Rock Health recently published an excellent blog post outlining what they call healthcare’s “middle children,” defined as large-but-not-huge companies that should be eyeing expansion into healthcare.
The authors argue that these middle children have distinct competitive advantages over the cohort of technology giants that have recently been pursuing the healthcare space, which include the likes of Amazon, Alphabet, and Apple.
- Middle children with market capitalizations between $10b and $350b are large enough to make an impact in healthcare, but small enough to avoid the scrutiny of massive players. They are often consumer-facing, with business lines that could pivot towards a healthcare use case (picture Lululemon’s acquisition of Mirror).
- Larger middle children have deep pockets and talents pools (Salesforce, Nike), with the capabilities to pursue large healthcare goals.
- Smaller middle children have more specialized capabilities (Garmin, Airbnb), that could help with solving more focused problems.
Middle Children Advantages
- Smaller healthcare goals are big enough for middle children to pursue for growth, whereas much larger companies need loftier projects to warrant market expansion.
- Loyal customer bases can be activated by middle children to establish initial users while avoiding the regulatory attention quickly drawn by larger competitors.
- Specialized assets from middle children, such as logistics expertise or data analytics, can provide a competitive edge in healthcare.
Potential Middle Children Plays
- Blizzard could passively monitor behavioral health conditions for children playing its games
- Paypal could integrate Health Savings Accounts to help users manage healthcare spending
- Hello Fresh could offer health insights and recommend food products for delivery
Gaining share within the $3.5t US healthcare market is a powerful motivator for any company looking to pursue a strategy shift, but even consumer-favorite brands will need humility to navigate the complex and quickly evolving environment.
Although middle children don’t specialize in the sector, Rock Health makes a solid case that they might be some of the best-positioned companies for healthcare disruption, and I wouldn’t be surprised if we’re reading about some of the plays listed in this blog post in next year’s business news.