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The arms and legs of digital doctors
How white-label infrastructure solutions are expanding digital health use cases
The promise of digital health is threefold: better outcomes through preventative and holistic care, reduced costs through more efficient care delivery, and better patient experience. A great example is the annual wellness exam. Going to the doctor at least once a year can capture chronic conditions early or even before acute symptoms emerge. But getting people to show up to their annual checkup is easier said than done. The idea is that virtual appointments can improve patient access and experience and thus is an essential instrument for better and cheaper care. Doctors can already do many parts of the annual exam virtually: screening for depression, checking for alcohol or substance abuse, or asking for physical activity levels. However, critical components still need to be done in-person: taking a blood sample or measuring blood pressure, height, and weight. To fulfill the promise of better outcomes, lower costs, and better patient experience, digital health startups need to find a way to break the virtual wall and reach into the real world.
Luckily, many exciting solutions are emerging to marry the physical world with the virtual world. Today, I want to look at the different infrastructure providers enabling digital health companies to go “in person”.
Bringing care to the home
When people think of home health, they often have senior care in mind. However, home health is increasingly a convenient option for everyone, especially in pandemic times. A whole range of services are now available at home, and more and more companies are white-labeling their services for digital health providers so more care can happen on your couch.
Do-it-yourself doctor exams: At-home test kits
With the recent Omicron surge, by now, everyone should be familiar with at-home COVID tests. Not only COVID, but a whole range of tests exist now that can be self-administered at home and sent back to a lab for analysis. EverlyWell, the market leader, focuses on consumer-facing at-home test kits for various conditions. Kit.com is a white-labeled solution that allows virtual health companies to send at-home tests to their patients. Kit offers a blood drawing kit, where the patient can prick their finger and send a few drops of their blood back to Kit's lab for further analysis. In addition, they also send medical equipment (a scale, a blood pressure monitor, etc.), so the doctor can get all the data they need for the annual exam. The results are then made available to the provider via an API integration - This service allows patients to complete the full yearly wellness exam from their home.
A key factor of success for these self-service tests and devices will be their usability. I would love to see a study of how many false negatives for at-home COVID tests are due to mistakes when administering the tests. In addition to making mistakes, good usability is also a key for adoption. An exciting insight was how different demographics react to self-administered tests. Check out this (obviously not significant) Twitter poll:
People seem to underestimate older people, but in fact, younger people often struggle more with at-home test kits than seniors. One potential explanation is the short attention span that generation smartphone and social media have and that they are unwilling to read through a 12 step manual. In addition to ease of use, patients need to become more comfortable with specific types of tests. For example, a blood draw from a finger prick is sufficient for the annual wellness exam, but not everyone is comfortable pricking their finger. Some people are just afraid of needles. I assume that test kit design will be a key differentiating factor for these companies.
Showing a clear ROI is critical for digital health providers to get reimbursed by insurances or employers. At home, tests can be a potential path to delivering better outcomes. For example, if a virtual health provider can show that getting a quarterly blood draw via an at-home test kit can prevent or early detect certain conditions, there will be more and more interest in at-home test kits. Another example of a positive ROI would be higher completion rates for the annual wellness visit. This is a standard metric for many value-based care contracts, and lowering the bar/ making the wellness visit more accessible can help providers achieve this goal.
HVaaS - Home visits as a service
As cool as self-administered tests are, they also have certain limitations. I've already talked about usability challenges and the unwillingness of certain people to prick their fingers. In addition, self-administered tests can have a longer lead time, as shipping can take time from the lab to the patient and back to the lab. Also, other tests require professional tests, like a blood draw from the vein or an ultrasound. Several startups have responded to this and are now offering home visits as a service. The idea is that nurses and nurse practitioners would perform the same services at the patient's home instead of asking the patient to come into the doctor's office.
It's probably worth looking at the economics of these models:
Unit Costs: First of all, it's worth noting that unit costs are higher for an at-home nurse visit than for a visit to a doctor's office. A nurse in a doctor's office can see more patients per hour if they don't have to spend time traveling between patients.
Return on investment: While unit costs might be higher, home nurses have a potentially high return on investment. For example, if at-home care increases the accessibility of preventative care, identifies at-risk patients before they develop an acute episode, or reduces the length of stay in a hospital or a skilled-nursing facility (SNF), the benefits can justify the higher unit costs.
(Local) network effects: At-home nursing providers have economies of scale, as more patients will allow for better route planning and more time that nurses will spend on the patient vs. traveling around. However, these network effects are only local - similar to ride-sharing. There is a reason that different ride-sharing services exist in other countries. It remains to be seen if at-home nursing providers will remain a local business or create a national brand.
Different approaches have emerged to enter the market for on-demand home care services:
Labs & IV: Other providers have specialized in just a specific type of service such as specimen collection or IV. These specialized solutions are useful if providers only need a particular service. Examples here include Sprinter Health & GetLabs for lab draws and Ivee for IV therapy.
Nursing services: Then more generalist companies provide a range of services, including labs, examinations, setup of medical devices, and even ultrasound exams. Leading players are Axle Health and Workpath. They both offer API integrations for scheduling and visit results and nurses will adopt the brand for different digital providers, when making the visit.
This categorization, however, is somewhat artificial, as I would predict these providers will eventually offer all the same services. It is super
It will be interesting to see how the business model of the on-demand home-service companies will evolve. Many of these are cash pay and are not working with insurance. The bars for home care under Medicare are still relatively high (annual wellness exams at home are currently not covered), but we might see some changes here. However, if home care providers can show better outcomes & costs, they might compel risk-bearing entities such as Medicare Advantage Organizations (MAO) or Accountable Care Organizations (ACO) to pay for their services more broadly.
Remote patient monitoring - data from devices
Another way for digital health companies to break the virtual barrier is by collecting patient data from smart clinical devices. This is a very hot topic right now, and growth in this area has been rampant. It's a recurring topic in health care: reimbursements drive innovation. Since CMS added several billing codes that let providers bill for remote patient monitoring, utilization of these services (and startup valuations) has gone up quite a lot.
Several companies are supporting the setup of a remote patient monitoring programs. It's possible to segment the RPM providers by their service level.
Device & data infrastructure: these companies deal with the logistics of procuring the device, shipping it to the patient, getting the device connected to the internet (via Bluetooth, wifi, or cellular data), and collecting the data in a consumable format. A great example here is Impilo, which primarily focuses on medical devices' procurement and data connectivity.
Clinical frontend solution: Once the device is sent to the patient and sends data, the physician will need to review the data set up alerts and make clinical decisions on that data. Several vendors offer these capabilities here for digital health companies and physicians alike. Their products include a patient interface, a clinician interface, and the ability to conduct clinical workflows related to the sensor data.
Full-service solutions with nurse support: For remote patient monitoring to make sense, someone needs to act on the data, i.e., call the patient and remind them to take their pills if the pill dispenser indicates a medication lapse or adjust blood pressure medications if the values are too high. Similar to how Wheel is providing digital health technology as well as providers who can take the calls, Athelas and Cadence also employ a white-labelled nursing workforce that will follow up with patients using their service. They provide the device, technology & frontend, as well as the human capital.
There is much more to be said about remote patient monitoring, but I will leave it here, and I might come back to it in another post.
Bridges to brick and mortar providers
It is exciting how much care can already be delivered at home and there are probably more and more use cases for at-home care. Outset is developing a dialysis machine that should make dialysis at home more patient-friendly. However, certain services will remain at facilities as specific equipment is needed, i.e., surgeries, colonoscopies, or most medical images.
For this, digital health companies will need to partner with "brick-and-mortar" providers to conduct these services. Integrations need to be built for an efficient handoff, a seamless user experience, and a reliable closing of the referral loop. A few companies are venturing into this space.
Quest and Labcorp have about 55% market share in the diagnostic testing market. They also offer APIs for providers to connect with their lab services. A digital health provider can use their API to schedule an appointment for their patient. The patient will then go to one of their testing centers. Afterward, the provider will receive the test results via API. Grassroots Labs offers a very similar service.
Some direct-to-consumer companies offer easy access to medical images, such as Green Imaging or Sesame. Imaging Panda at first also adopted a direct-to-consumer strategy but later realized that selling medical images to consumers is not an easy task. For most people, medical images are not a regular purchase, and in general, people follow the advice of their doctor rather than price shop. Their expansion strategy is to connect digital health providers with imaging providers and provide a seamless experience for ordering, scheduling, and analyzing a medical image.
This is an area where I could not find much. But I believe that in the next few months, we will see a few companies popping up that help digital health providers, especially primary care providers, connect their patients to cost-effective specialty care providers. Ribbon Health allows digital providers to select appropriate providers (like are they in-network? what is the expected co-pay? Are they suitable to treat a specific diagnosis?); however, they only cover the decision part of the referral process. I think there is a need to seamlessly connect brick and mortar facilities (like a colonoscopy center) with virtual care. This integration should include:
easy scheduling for the patient
data sharing between the virtual care provider and the specialty facility
informing the digital provider about the outcome of the visit
Pharmacy - Mail-order Pharmacies
The last category of on-demand services is mail-order pharmacies. They have already existed for quite a while. Still, they are getting increasingly used by digital health startups because they provide a convenient and uncomplicated way for patients to get their prescriptions filled. Pillpack (now part of Amazon) and Capsule have been around for quite a while. An exciting company is B2B startup Truepill, enabling DTC startups to fulfill their prescriptions. I don't want to dive deeper here, as this will probably be a topic for a future post.
My take on this
As always, here are some of my thoughts on these on-demand services:
What is infrastructure, and what is the competitive edge?: With more and more white label solutions out there, it is worth looking at the potential market dynamics. In one future, the "arms and legs" of digital care will be commonly available and expected by patients (like telehealth capabilities are now). These white label solutions will make it easier and easier to spin up a digital health practice, and there will be many providers targeting specific geographic, demographic, or clinical populations. Digital providers will become more similar to biotech companies: each will try out a particular treatment approach hoping to deliver better costs and/or outcomes. Some will make it past the "trial" stage and deliver their promises; many will not. In a different future, digital health companies will vertically integrate with infrastructure companies (note: Ro has already aquired Workpath and Kit.com), and these services will become a key feature to differentiate their care offering.
What's the use case?: Digital health is still in its infancy. Many companies are still trying to figure out the proper use case for many of these services and combine them to a patient experience that can deliver good outcomes and cost efficiencies. The success of many of these infrastructure providers will depend a lot on the success of their digital health customers. If digital health companies don't prove their positive ROI, infrastructure providers will need to find use cases with the existing providers (who have a much better ability to pay).
Scaling business models is challenging: It will be crucial for the infrastructure providers to find a scalable (!) way to get reimbursed beyond cash pay. One way is through fee-for-service reimbursements, but this comes with its own challenges. Right now, the main alternative to cash payment is to make bespoke agreements with payers and value-based care providers, but this often requires a lot of dedicated resources to close these deals. There is a need for more standardized value-based care contracts, that include standartized metrics and requirements. This would make it much easier for providers to join these payment models.
Anti-kickback laws make platform businesses difficult: Building speciality bridges are classic platform businesses - connecting many digital health providers to many brick-and-mortar specialty providers. However, anti-kickback laws limit how referrals can be reimbursed. Essentially they don’t allow a per-lead payments and to provide financial incentives for doctors to recommend certain providers. A connector business in this area will need to figure out a sensible business model does not conflict with these laws.
More bridges are needed - especially for specialties: US health care is discovering the value of primary care (again) - a lot of value-based care models and digital health companies focus on this right now. However, specialty care won't go away. For primary care providers to fulfill their cost efficiency promises, they will need to work well with cost-efficient specialty care providers that happen in person. I believe there is a lot of potential for better integrations between virtual and in-person care.