A Guide to Health Startups
The healthcare startup world saw $4.5 billion in venture funding in 2015, up from $4.3B in 2014. These startups all purport to “fix” healthcare. But what does that exactly mean? What do these startups actually do? There’s no simple answer. With the myriad of problems that exist in healthcare, startups have carved out increasingly smaller and more specialized niches. I’d like to use this post to break down the different types of healthcare innovations. To start, here is an illustration that reflects how I think about today’s health startups. All views are my own.
A Guide to Reading the Map
The majority of health innovation can generally be understood via 4 linked buckets:
1) Patient Empowerment, 2) Healthcare Coordination, 3) Payment Reform, and 4) Personalized Medicine. A startup may not fit neatly into any one bucket, but most likely falls somewhere among the other subcategories.
First things first, what do these 4 buckets mean?
What is it?: These are startups that are strongly consumer or patient-oriented, which “empower” the patient to take an active role in their own health. Most well-known startups likely fall in this space given their consumer-friendly marketing and appeal.
What problems do they address?: Patients have largely been missing from the healthcare dialogue. When patients fail to feel involved in the dialogue, so does their willingness to engage in positive health practices. For example, patient adherence to medication may drop if the patient feels uninspired and uninformed about the drug, thus negatively impacting their overall health. A patient seeking a physician about a condition, without an easy-to-use online search portal, may never initiate that conversation if they don’t know where to search. The problem boils down to consumer transparency in healthcare, an industry that’s traditionally opaque from end to end.
What is it?: These are startups that bridge connections between different healthcare stakeholders. Any startup that works towards this bridge (e.g. between a nurse to a doctor, a doctor to a hospital, or a hospital to a payer, etc.) falls under this category.
What problems do they address?: Healthcare is very disjointed. Not only are patients generally not a part of the dialogue, but care is often siloed by setting. It’s both an infrastructure and cultural problem. It’s infrastructure in that different units of the same hospital system may maintain different types of databases for patient records. Medical records may not be passed on efficiently from doctor to doctor. Payers also own a different, unlinked set of claims data that can reveal huge insights into patient health. It’s cultural in that once a patient is discharged or leaves a hospital, there is often no continuum of care that ensures the patient continues to be adherent to medication or is following proper treatment protocols. Once a patient leaves a setting of care for an acute treatment, there may be low obligation to maintain care. This leads us to payment reform.
What is it?: Such startups maintain that healthcare is disjointed and costly because of misaligned financial incentives. At the moment, there’s low drive to unify care because those that may reap the cost savings of improved outcomes may not be the ones investing in the change. While patient care is always the goal, the financial lens through which payers, doctors, or health systems see through could vary. These startups focus on re-aligning financial incentives across healthcare stakeholders.
What problems do they address?: Healthcare costs are skyrocketing and treatments are becoming more expensive. While stronger health coordination can alleviate costs, it may not be sustainable without fundamentally changing how healthcare is paid for. Can we financially incentivize health
stakeholders to encourage better continuum of care? Can we demonstrate that cost-savings are possible if treatments are conducted a certain way? While government-sponsored solutions are emerging, startups are pushing ahead with platforms that help align financial incentives to benefit healthcare stakeholders, and most importantly, the patient.
What is it?: Personalized medicine (aka: ‘precision medicine’) refers to the concept that as we collect more patient data (see ‘Patient Empowerment’), we can design better treatments custom-tailored to a specific patient. The majority of startups here focus on personal diagnostics and genomic-based treatments. I consider these to be the more medically-oriented counterparts to startups in “Patient Empowerment.”
What problems do they address?: Treatments today are designed at a population-level. Clinical studies for drugs are conducted over hundreds or even thousands of participants. Treatment guidelines are often created via population-level inferences on what seems to work for different diseases. The availability of new patient data and emerging ease of genomics testing has enabled a new world of research into personalized medicine, whereby treatments target a patient’s medical background, treatment history, or genetic makeup. However, personalized treatments may be costly to an unprecedented level, so startups under “Payment Reform” are also seeking to address this emerging issue.
Diving into the Niches
With these 4 buckets in mind, let’s dive right into what all these subcategories mean. I’ll do my best to highlight example startups* in each specific subcategory.
*Note: This is not a comprehensive nor competitive assessment of startups. Startups in the same category don’t necessary compete, but for the sake of simplification, play in a similar area. These subcategories are also not mutually exclusive for a startup; startups often offer services that play across multiple buckets. Please use this guide more so as an indication of what types of startups to explore for those interested in learning more.
Consumer Diagnostics: These are startups that take traditionally old methods of diagnostics and make them more accessible to the public. So rather than go to a lab for testing, perhaps a consumer can buy a finger-prick device that plugs into a phone to measure glucose levels. The belief is that by making tests more convenient and accessible, patient engagement in their own health will be higher, and thus more real-time and accurate.
Example startups: Verily, Theranos (currently troubled by investigations), Cue, Proteus Digital Health, Glooko, Sway Medical, 23andMe, Ybrain, Voluntis
Wearables: Wearables are consumer-friendly devices that you “wear” to track data and metrics about your own health. It’s similar to “Consumer Diagnostics”, except for the key difference that these devices do not “diagnose” anything (and thus do not go through a robust FDA-approval process). Rather, data is collected
on diet, exercise, or lifestyle indicators as opposed to cholesterol or glucose levels. Example startups: Fitbit, Jawbone, GOQii, Basis Activity Tracker, Lumo, Sensoria
Wellness and Lifestyle: In a step beyond wearables, these startups focus on entire platforms to support a consumer’s healthy lifestyle decisions. Startups are often weight-loss, diet, or exercise-oriented and provide souped-up, fun, “gamified” platforms to encourage a consumer’s commitment to be healthy.
Example startups: Welltok, LifeSum, Glow, Rally Health
Health Convenience: Such startups look to add transparency to the decades-old, antiquated user interface and opaqueness of healthcare. Health is so complex that patients fail to engage in their own health out of sheer inconvenience. To make healthcare more consumer-friendly, startups are creating new portals to find doctors, buy insurance, pay bills, and much more all in the name of enhancing consumer accessibility.
Example startups: ZocDoc, Oscar Insurance, Amino, Pager, Stride Health, Opternative, CoPatient
Telehealth: In addition to health convenience, there are also some real infrastructure issues that prevent physicians from communicating with their patients effectively, especially after they are discharged or leave their setting-of-care. Telehealth startups focus on bridging this gap by providing consumer and physician-friendly tools that enhance communication (e.g. instant chat, live video, etc.) These startups don’t just help you find a healthcare professional, but look to move the entire doctor-patient relationship to the digital space.
Example startups: American Well, Teladoc, Doctor on Demand,
HealthTap Care Management: Such startups take a bigger picture approach to care and directly guide patients across the complex healthcare system: between different doctors, different hospital systems, or other settings-of-care. These may involve elements of “telehealth” and “health convenience,” but the overarching goal is to provide a friendly coach to keep patients engaged in the healthcare system by providing supportive services. Some are disease-focused. Some are more payer-driven. It’s a big category which can be further subdivided.
Example startups: Grand Rounds, One Medical Group, Hometeam, Wellframe, Reflexion
Health, Sherpaa Health IT and EMR: Such solutions are typically less patient-centric, but enterprise-focused for health systems or payers. These startups may target data technology issues, new EMR (electronic medical record) systems, or even new modes of enterprise communication (e.g. doctor-to-doctor). These platforms seek to unify health through updating and improving on today’s health tech infrastructure beyond patient engagement. This is another big subcategory that can be further subdivided.
Example startups: AthenaHealth, Health Catalyst, Practice Fusion, TigerText, Voalte, Flatiron Health, Syapse, PatientSafe, PokitDok, CareCloud, Pieces Technology, Medivo, Validic, QuantiaMD, CipherHealth, Kit Check, Epion Health, ManaHealth, Jiff, AiCure, Cureatr, Vivify Health
Case Management: Case management looks to oversee care for specific acute or chronic conditions, rather than the more generalized “care management” approach. The primary aim is to reduce costs. Cases are usually disease-specific with startups taking the initiative to manage the cases health systems or payers have had difficulty managing. As a result, startups may carve out (a term used to describe when another group takes financial ownership of a medical situation that would traditionally fall to a payer) challenging conditions like “mental health” for care coordination and share cost savings accrued back to the system. As such, these startups often contain elements of “care management” or “health IT” solutions. Approaches also include defining better treatment guidelines, pathways, or protocols.
Example startups: MD Revolution, Omada Health, Ginger.io, AbilTo, Keas
Quality Metrics Reporting: Quality metrics have grown in increasing influence as a means to understand how effectively or efficiently various providers or health systems are operating. Overtime, payers and government pilots have tested the idea of benchmarking payment to these metrics. Unfortunately for many physicians or health systems, finding the data for these metrics can be time-consuming and difficult. Startups have emerged that partner with providers to simplify this.
Example startups: Aledade, QPID Health Health
Exchange/Marketplace: Many startups have taken a cue from the government-sponsored health exchanges from Obamacare and taken a privatized approach. These startups often curate their own private marketplaces for individuals or employers, such that they can more effectively choose health plans that match their personal or employee group’s profile.
Example startups: Maxwell Health, Truveris, Gravie, HealthSherpa
Alternative Financing/Value-Based Care: Government and startups have been exploring new payment models to replace the de facto fee-for-service (FFS) model. Whereas payers pay for each service under FFS, new payment models are being tested that pay for value of service provided. Sometimes this means paying providers a lump sum (or bundle) for an “episode-of-care” and leaving it up to the providers to dictate how they want to allocate that spend on treatments for a patient. Many variations of these
payment models exist. To that end, startups have begun to help address the more difficult questions: how do you measure value? how much should the bundle be?
Example startups: Remedy Partners, Evolent Health, HealthLoop, Aver Informatics
Companion Diagnostics: Companion diagnostics are slowly changing the way treatment decisions are made or drugs are prescribed. Such devices help doctors make drug treatment decisions. Perhaps a certain gene in your body reveals you should not receive Drug X. The resulting benefit is that expensive drugs are only being used on patients where they have the highest chance of success.
Example startups: Enlitics, Tute Genomics, NantHealth (also in Health IT/case mgmt), assortment biotechs and pharma companies particularly in oncology (search for ‘targeted therapies’ like TKIs or ‘immunotherapies’ like PD-1s if you’re interested)
Genetics-Based Therapy: Genetic-based therapies are taking an even further leap when it comes to advancing human health. There are many ways to segment genetic-based therapies: genomic editing, stem-cell gene therapy, genetic-based age research, etc. As more data comes from genetic-based “consumer diagnostics,” the more that can be done in uncovering how genetic differences impact our healthcare decisions.
Example startups: Human Longevity, Editas Medicine, Bina Technologies, Bluebird Bio
“Big Data” will be Key
If there’s one core aspect of my map I haven’t quite addressed, it’s the concept of “big data.” While it may be a worn-out, overused buzzword, it’s still something that many, if not all, of the startups above touch on.