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The Next Wave of Transformative Digital Health
By Raj Ganguly, Eduardo Saverin as written on techcrunch.com
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Digital healthcare investing has gone through several waves: 2013 was the year of consumer wearables, 2014 of healthcare big data, 2015 of virtual care delivery and 2016, so far, has been about payer disruption. 2017 will be a return to the core practice of medicine: technology that enables providers and biopharma to extend their reach and take greater risk for outcomes.
In 2016, the VC market has rewarded digital health startups that are disrupting traditional carriers. In the last 12 months, we’ve seen startups, like Bright Health (new carrier, $80 million raise in April), Clover Health (new Medicare Advantage plan, $165 million raise in May), Collective Health (TPA/ASO replacement, $80 million raise in late 2015), Hixme (migrating covered lives from large group to the individual market) and Oscar (new carrier, $400 million raise in February) raise tens to hundreds of millions of dollars in venture financing at substantial Series B and C valuations.
Why? Because payers have been an easy target.
Carriers were born in an era where fee-for-service reimbursement rewarded coverage, so they built large networks of contracted providers, leveraged economies of scale in volume and rented access to these networks to self-insured employers. That compact is fraying.
Providers are taking risk and competing upstream (with the help of companies like Evolent Health), employers are building their own narrow networks to steer volume to high-quality/low-cost centers of excellence (with the help of companies like Imagine Health) and medical loss ratios (which dictate the percentage of carrier premium revenues that need to be spent on clinical services) are squeezing carrier margins.
Large carriers have responded by consolidating, seeking even more scale. However, survival through size has its limits. The DOJ has drawn the line at Anthem’s $54 million bid for Cigna and Aetna’s $37 billion bid for Humana on antitrust grounds.
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The payer disruption story has played out
Our view is the business of insuring lives at scale is labor and capital-intensive. There is substantial operational complexity required to contract with 5,600 hospitals and 800,000 physicians in the U.S., issue membership cards, verify eligibility, process claims and engage consumers when they call. It’s hard to achieve venture level returns at Series B and C valuations approaching $1 billion.
Healthcare innovation is the solution to rising costs and limited access.
We’ve seen this story before: Investors putting tens of millions to work into Fitbit and Jawbone in 2013, chasing the consumer wearables story. Similarly, 2014 was the year of using healthcare big data in vertical applications like price transparency, which resulted in Castlight’s controversial IPO. 2015 was all about telehealth — Doctor on Demand raising $63 million, MDLive raising $50 million and Teladoc raising $157 million in their IPO, all announced during an eight-week window last summer. Later-stage investors in many of those instances have not been able to generate returns at exit.
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So what’s next? The funding market is returning to enabling the core practice of medicine
Our view is that in 2017, the market will reward innovative startups that are in the business of enabling providers and pharma companies to personalize care and participate in greater outcomes-based economics.
Several tailwinds are contributing to this. In the provider world, regulation with esoteric names like “Meaningful Use 1 and Meaningful Use 2” are largely behind us and providers will have more bandwidth to move on from EMR integration (plumbing) to the use of technology for expanding care (tools). Concurrently, advances in the fields of genomics and compound specialty pharmacy are enabling new ways for biopharma companies to personalize therapeutic delivery down to an individual patient, which is a building block for outcomes-based drug reimbursement.
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Prediction
VC investment into digital health will flow to startups in the business of provider and pharma enablement. It will start to happen in the back half of 2016.
Silicon Valley Bank predicts that $9-$9.5 billion will be invested in healthcare in 2016. MobiHealthNews recently reported that digital health companies raised $150 million in July 2016 alone. In the last month, Azalea Health raised a $10.5 million Series B to sell revenue cycle management software and mobile tools to providers. Akili Interactive raised a $11.9 million Series B to develop clinically validated video games for cognitive interventions. Caremerge, which markets a care coordination platform for assisted living facilities, raised a $14 million Series C. Docent Health raised a $17 million Series A to build patient engagement software for health systems.
Healthcare innovation is the solution to rising costs and limited access. We think of healthcare as a global economy, not just an industry — it is a $3 trillion market approaching 20 percent of GDP in the U.S. alone. Access to affordable, effective care is a universal challenge felt in both developed and developing markets. To the entrepreneurs out there — we look forward to funding the next wave of transformative digital health companies that enable greater access to quality, outcomes-based care.
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Mary Johnson joins Managed Solution as the Director of Cloud Marketplace. Born and raised in New York, Mary attended Fordham University and graduated with a BA in English Literature. After working in the marketing field, Mary attended Portland State University and graduated with an MBA. She enjoyed a successful career with Arthur Andersen Business Consulting for seven years, selling and delivering professional services and helping business leaders optimize their companies through people, process and technology engagements.
Prior to joining the Managed Solution team, Mary worked for Microsoft for 13 years in varying roles. For the last 8 years, Mary was the Partner Sales Executive for the commercial accounts segment in San Diego, Hawaii, and South Orange County. She was responsible for recruiting Microsoft partners and supporting them to sell and deliver Microsoft technologies.
Mary lives in Carlsbad, CA with her husband Randy and twin four year olds, Aaron and Jordan. In her spare time she enjoys spending time with extended family and friends, attending concerts at the park, visiting all the local breweries and wine shops that North County has to offer, and traveling.
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Yammer adds mobile application management capabilities through Intune
People are increasingly using apps for work on their personal mobile devices. This is especially true of “deskless” workers—employees who spend most of their work day away from a desk—in industries like retail, manufacturing, healthcare, airlines and consulting. In the case of Yammer’s customers, an employee might use the Yammer mobile app to help customers in-store or share customer feedback with colleagues. In other scenarios, employees might access Yammer when they are in transit or working remotely.
This trend of using personal mobile devices for work presents a challenge for IT departments that want to ensure the security of company data, especially those concerned about unintentional data leaks.
Today, we’re excited to announce an update to the Yammer apps for iOS and Android that allows IT administrators to protect their corporate data using mobile application management (MAM) controls in Microsoft Intune. Using Intune, organizations can provide their employees with access to corporate apps, data and resources on their personal mobile devices while protecting their corporate data with a rich set of mobile device management, mobile application management and PC management capabilities delivered from the cloud. Read the Intune blog post for more details.
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(Left) Message on the iOS app informs users that their IT department has enabled MAM. (Right) Prompt on the Android app asks users to set a PIN to access the app in future.
Administrators can now apply different policies for the Yammer apps. These policies include requiring a PIN or corporate credentials to access the apps, limiting data sharing between apps and remotely wiping out data on the apps. For a complete list of supported policies, please review the Manage Yammer with Microsoft Intune support article.
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IT departments can use the Intune admin console to set policies for iOS and Android apps.
All of these policies are available for use on both mobile device management (MDM) enrolled devices and on unmanaged devices through Intune’s MAM without enrollment capabilities. MAM without enrollment is a great option for BYOD (Bring Your Own Device) scenarios, where you want to keep corporate data safe without managing a user’s device. To enforce MAM policies, users should be authenticated to Yammer by Azure Active Directory (Azure AD) accounts through Office 365 sign-in.
The updated app will be available in the Google Play and iOS App stores today.
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