Healthcare: New Models of Care
Updated: May 22
The past 12 months have by no means been ordinary for the healthcare innovation ecosystem. Whether it is the jaw-dropping $6.7B that went into startups in Q1 2021, the 8 IPOs of digital health companies in 2020, or the 11 SPAC mergers completed or announced in Q1 2021, it has been a time of many firsts. Care delivery models have consistently been the largest category of venture dollars over the past few years, as described by Deloitte in this report.
One of the main reasons for the large amount of venture funding focused on supporting innovation in care delivery models is that the majority of healthcare remains episodic and is delivered in a high cost, acute care setting within the four walls of a hospital, whereas in reality most of it should be preventative, personalized, and delivered in a place and manner that meets the consumer where they are. All while lowering costs and improving outcomes.
The past decade has seen significant innovation in new primary and urgent care models with a wave of tech-enabled startups that have focused on delivering a superior patient experience while improving cost and outcomes. Companies like One Medical, Carbon Health, and Forward are primarily focused on consumers and self-insured employers, while others like Oak Street Health, Iora Health, and ChenMed have focused on delivering value-based care for Medicare and commercial health plans. In addition, while telemedicine companies like Teladoc, MDLive, and Doctor on Demand have pioneered a virtual-first approach to care, others like Livongo, Omada Health, and Hinge Health have demonstrated the value of prevention and disease management focused models.
At AV8 Ventures, we believe that this disruption is only the tip of the iceberg and this initial wave of innovative companies will help open the doors for new models to emerge. Our research with senior leaders at health systems, plans, and employers tells us that their appetite for more personalized, evidence-based care models that improve patient experience while reducing costs and improving outcomes will only grow in the near future. Over the past few years, as we thought about these verticalized approaches to care delivery, there were 3 areas that stood out for us – pediatric care, women’s health, and home health. Below we summarize our thesis in these areas and highlight some AV8 portfolio companies.
According to the US Census 2010, the number of children under 18 years in the US were 74M. According to the American Medical Association, there were 91,915 pediatricians in the US in 2011. The ratio of 805 children to a pediatrician points towards a significant access problem for pediatric care in the US. It is estimated that more than 50% of pediatric ER visits are for non urgent care that can be delivered in lower acuity setting not only at a 10X lower cost but also, in a shorter time (15 min wait in urgent care vs. 1-1.5 hour wait in ER). In addition, there are 21m single parents who struggle with taking time off work during the day to take their children to well visits, vaccinations, and other pediatric appointments, which are only available 9am-4pm.
Brave Care is a tech-enabled, hybrid care solution that addresses these unmet needs in pediatric care. Brave Care combines pediatric urgent and primary care with remote and tele-health solutions to provide patients the most affordable, accessible, and tech-forward access to high quality care centered around children. Their solution reduces the need to take time off work and school, reduces hospitalizations and leverages data to constantly increase the quality and efficiency of care for all children.
Women’s Preventative Care
For many conditions in the US, less than 10% of patients are ultimately seen by a physician. This is due to many factors – but access, inconvenience, and cost are key causes for this under-consumption. Specifically, many women do not access preventive and primary care because of the following key pain points:
Wait times to see specialists (often > 29 days avg. in the US) and referral requirements for non-PPO (Preferred provider org) patients
High copay costs, increasing with prevalence of high deductible health plans
Price opacity and variation in prescription drug costs
Inconvenient, confusing shopping experience for OTC (Over the counter) products
Shame/embarrassment of discussing sensitive topics in person
Difficult post-treatment follow-up, support, and treatment modification
In addition, 65M Americans live in a “primary care desert”, where the total number of PCPs meet only 50% or less of the community healthcare needs. Inadequate access to preventive and primary care leads to higher downstream medical costs and poorer outcomes.
Alpha Medical solves this problem for women by enabling seamless diagnosis, prescription treatment and management for some of the most common indications for women. The company has built a web application that provides both quick access to a physician’s diagnosis and delivery of their prescription medications in a single, unified experience. By providing high quality, convenient care at affordable prices, Alpha empowers women to take care of their personal health.
The Covid-19 pandemic has been a much needed tailwind for the transition of care out of the hospital and into the home. According to the Business Insider US Healthcare Report, US home healthcare market is projected to grow about 7% annually from $103 billion in 2018 to $173 billion by 2026. Increasing pediatric healthcare needs and a growing geriatric population worldwide are the key drivers of this increasing demand. According to the AARP (America Association of Retired Persons), 9 out of 10 seniors want to stay in their homes as long as they can.
The home healthcare industry has been reducing costs for years. In 2008 alone, hospital costs were reduced by up to $25 billion thanks to the shift from long-term hospital stays to home health care. According to a study by a Columbia University Professor of Business, between 1998 and 2008, the percentage of patients discharged from a hospital to home health care rose from 6.4% to 9.9%.
The growing demand for home healthcare is creating a significant mismatch between patient demand and the supply of at-home health providers. Nurses make up the largest section of the healthcare workforce and are facing severe shortages due to a lack of potential educators, high turnover, and inequitable workforce distribution. The US Bureau of Labor Statistics projects that 11 million additional nurses are needed to avoid a further shortage. Moreover, with an aging population, personal care aides will be the most in-demand job in the US over the next years (Source: US Bureau of Labor Statistics). Recruiting new, qualified nurses is essential, but also expensive, costing up to $3,000 per each successful recruit. Current data shows that out of 100 nurses that apply for employment at a home health agency, only 2 or 3 will complete the entire onboarding process to complete even one visit.
SwiftShift is a comprehensive workforce management platform for home healthcare providers that helps close this gap and add 2-3 times capacity to the system, to meet the tremendous demand out there for at-home care. For the caregivers, it provides a location-based mobile app that allows the best nurses and caregivers to find available shifts from leading home healthcare providers that suit their preferences. Their technology allows nurses to work more hours, have higher, more predictable income, and select cases that match their professional interests. This autonomy in making staffing and work decisions helps prevent nurse burnout and improve retention.
The 3 segments highlighted above are by no means meant to exhaustive of how we think about the evolution in care delivery models. As we continue to think about this space and look for new emerging trends, we welcome your thoughts and perspective on the space. If you are an entrepreneur who is equally passionate about changing the future of healthcare delivery, please reach out.