The Clinical Innovation Mindset Stack by Paulius Mui, MD and Ben Dolson

Digital Health

How Health-Tech Founders Can Survive a Brutal 2024

Journalist-turned-VC extraordinaire Christina Farr put out a feast of insights just in time for Thanksgiving, with the latest issue of Second Opinion sharing “How Health-Tech Founders Can Survive a Brutal 2024” instead of a rosy predictions post.

Why might things get worse in 2024? In part because most companies raise funding every 18 to 24 months, and those that raised at the top of the market but had a healthy enough burn rate to sit out 2023 will have to come back to the table. Some startups won’t like what they hear when the music stops.

1. Don’t forget that there’s no shame in letting go… Farr opens her survival guide with some heartfelt advice and a light at the end of the tunnel for the startups that don’t make it. If you end up starting over with a clean slate, you’ll have: 1) a faster path to funding because you’ll know more investors; 2) a better sense of the right hires for the early team; 3) more experience finding the right customers.

2. Don’t be afraid of a rollup. For companies that are “features” as opposed to platforms, firms are actively looking to invest in roll-ups that keep talented teams intact as they merge with other companies to build comprehensive solutions.

3. Practice ruthless prioritization to get to break-even. Farr recommends that founders start operating as if they won’t raise another dime. The hard decisions, like cutting a growth initiative that might not pan out, are ultimately what will get expenditures equal to income.

4. Think through what a liquidity event looks like for your business. Not all companies will see a $1 billion exit. Now’s the time to be realistic about your company’s potential and make smart decisions around that. “If you don’t expect in your heart of hearts that your company can IPO, don’t waste cycles trying to raise a big round at a big valuation.”

5. Get into short-term survival mode. Farr is in the camp that now probably isn’t the time to step on the gas. Rather than being forced to shut down because of lack of capital, play it tight and maintain optionality. “Sometimes, particularly in healthcare when things tend to be slower, that’s all you need.”

6. Think carefully about a down round versus structure. When debating whether it’s better to take the hit on valuation or take a term sheet that preserves valuation but includes “structure” provisions that are less favorable, Farr’s team at OMERS Ventures mostly agreed that a down round is preferential. That said, “in 2024, take whatever you can to stay alive!”

The Takeaway

The takeaway here is simple: the frontrunner for this year’s best prediction post is a survival guide, and you should probably be tuning in to Second Opinion.

Bridge Remote Care Gaps With RPM + PERS

Head over to our Q&A with Clear Arch Health CEO Robert Flippo to see how combining remote patient monitoring and PERS into a turnkey solution that’s easy to implement for both patients and providers can help more people remain independent as they age in place.

Wrangling the Right Amount of Data

Optimizing treatment decisions starts with wrangling the right amount of data. Join Synapse Medicine and Health Gorilla on December 4th at 1pm ET for an expert discussion on the tech and challenges making the biggest impact on clinical decision making, including the latest AI / data policy advances, the information gaps in EHRs, and the risks of data overwhelm.

Four Ways to Connect Fragmented Provider Data

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The Wire

• Aya Acquires Winnow AI: Digital staffing platform Aya Healthcare acquired Winnow AI to bolster its physician recruitment capabilities with AI-driven matches for open roles and predictive modeling of which physicians are likely to change jobs and be willing to relocate. Aya provides a long list of labor services ranging from travel nursing to permanent placements, and Winnow AI marks its third acquisition in recent months after picking up Flexwise Health (forecasts gaps in patient demand / staffing levels) and Polaris AI (predicts staffing needs / helps plan alternative schedules).

• Medicare ACO Mental Health Struggles: Health Affairs published an analysis on three years of data from the 2016-2019 Medicare Current Beneficiary Survey suggesting that Medicare ACOs are falling short with mental healthcare. Among FFS Medicare patients not enrolled in ACOs at baseline, those who newly enrolled in ACOs were 24% less likely to have their depression or anxiety treated during the following year, and they saw no relative symptom improvements at twelve months. The authors conclude that better-designed incentives are needed for Medicare ACOs to start moving the needle on depression and anxiety.

• AstraZeneca Dives Into Digital: AstraZeneca is the latest pharma giant to dive into the digital health deep end by spinning up a dedicated business unit – called Evinova – focused on building new tech for patients and clinical trial optimization. Similar to Bayer’s Precision Health unit, Evinova will launch a portfolio of remote patient monitoring and digital therapeutic solutions that will double as a way to expedite new drug development. It also has some big-name partners already signed on, including a pair of CRO early adopters in Parexel and Fortrea.

• The Clinical Innovation Mindset Stack: XPC reminded everyone why it’s one of the best places to find original thought leadership with its latest article on the frameworks that clinical organizations can use to drive innovation from within their org. The “Clinical Innovation Mindset Stack” not only covers the core organizational beliefs that serve as nourishing soil for clinical improvement, but also the step-by-step methodologies that you can use to get started. Highly worth the ten minute read.

• Long Covid = More COVID: People with long COVID are more likely to be reinfected, according to a Lancet Respiratory Medicine study of 1,359 people who were among the first recorded cases of the virus. Three-quarters of those with long COVID were reinfected after two years, versus two-thirds of those who made a full initial recovery. Although organ function recovered over time in both groups, long COVID patients were also more likely to develop pneumonia and other new symptoms.

• Q3 Health System Lightning Round: Mayo Clinic posted $4.5B in revenue at a 7% operating margin in Q3, marking its third consecutive quarter in the black as outpatient visits and surgical cases surge. Kaiser Permanente also netted $239M last quarter (quite the rebound from the $1.5B loss this time last year), and all eyes are on the next system it decides to add to Risant. HCA’s report wasn’t so rosy, as its otherwise strong performance was weighed down by its physician staffing joint venture that’s expected to bleed over $10M/quarter for the foreseeable future.

• Humana’s State of VBC: Humana put out its annual VBC report, which highlighted how 70% of its members now participate in some form of risk-based contracts (up a pinch from 68% last year). Self-described “healthcare curmudgeon” Matthew Holt pointed out that Humana barely touches on any cost data, which naturally used to be a core component of the reports. “In 4 years they’ve gone from 64% to 70% of their Medicare Advantage population in ‘Value based care’ and it apparently makes no difference in costs.”

• Postnatal BP Self-Monitoring: A study that made waves at AHA 2023 shows that following pregnancies with hypertension complications, patients could benefit from self-monitoring their blood pressure and automatically transmitting the data to physicians. In a single-center randomized study with 220 participants, those who self-monitored and had physicians adjust their meds as needed had a 6.5-mm Hg lower diastolic BP and 6.5-mm Hg lower systolic BP than the control group nine months postpartum.

• Lightbeam eCQM Launch: Lightbeam Health Solutions expanded its population health solution suite with a new eCQM (electronic clinical quality measure) capability geared toward helping MSSP ACOs remain compliant with CMS Quality Reporting initiatives and manage eCQMs more efficiently. The launch arrives as CMS is pushing to move to completely digital quality measurement by 2025, a tall order for ACOs that often work with a wide variety of EHRs across different providers and care sites.

• Medicare Reimbursement Fact Sheet: CMS said it handed out $16.6B in overpayments to Medicare Advantage organizations in 2023, although it stressed that most of that was due to administrative errors, rather than fraud. The estimated error rate in MA was 6.01% for the year, a step lower than the 7.38% seen in FFS Medicare ($31.2B total). Those figures “were not statistically different from 2022,” and the agency gave itself a pat on the back for hitting a seventh straight year of keeping FFS Medicare reimbursement errors below the 10% threshold required by law.

• More Screening Saves More Lives: A modeling study in JAMA Network Open found that boosting compliance rates by 10 points for four major screening exams would save thousands of lives annually. For CT lung screening, each 10-percentage-point increase would save 1k lives out of the 987k people eligible for screening under 2021 USPSTF criteria. For breast screening, 1.8k lives would be saved out of 2.2M eligible women. The study serves as a response to skeptics who questioned screening’s value earlier this year.

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Glooko Outcomes Using Real-World Data

Modern diabetes management requires personalized, always-on, and connected care. Explore Glooko’s latest clinical studies to see how remote patient monitoring is making real-word improvements across multiple glycemic outcomes.

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