Healthcare technology has skyrocketed in the wake of the pandemic, although figuring out which platforms and strategies are the most resilient is still a work in progress.
In the last two years, there has been both a rise and a fall in digital health financing. Deals in the recent past have focused on telemedicine, remote monitoring, or management platforms to make health management more efficient — though few have focused on therapies. The use of apps to treat mental health or treat chronic diseases is a young segment of the sector, but competition is intensifying.
“I think what we’re seeing is the realization that … there’s the potential to generate billions of dollars’ worth of revenue by carefully sourcing where we’re going.” There really is an opportunity in digital health solutions,” Rick Anderson, president and chief executive officer of digital therapeutics company Dario Health, told Yahoo Finance.
Dario (DRIO) recently announced a partnership with Sanofi (SNY) to expand digital care. Dario’s platform helps patients manage diabetes, hypertension, weight management, musculoskeletal and behavioral health.
The government’s shift in creating billable codes for digital health is also helping the industry, although insurers aren’t yet convinced of the idea, he said.
“All of these things will play out over a period of time and we are moving more and more towards a traditionally reimbursed approach to digital health. I don’t think everything will end up being prescription…driven, but I think we’ll see different levels of reimbursement,” Anderson said.
Five-year, $30 million deal with Sanofi adds to profitable last two years.
Total revenue increased 171% from $7.6 million in 2020 to $20.5 million in 2021 and has a book of business worth $35 million in total contract value, the company said in its full-year results for 2021.
Moving outside of the health facility
What Dario and Sanofi are doing adds a new layer to expedite care for patients at home. This segment, especially in the older population, has been growing steadily. Companies like Vytalize Health, Current Health, and Tomorrow Health are all focused on the home space.
Whether it’s regular vital sign monitoring or helping find the right medical equipment and health insurance coverage, the broad spectrum is ripe for a competitive market.
The novelty of using digital solutions to care for patients outside of a healthcare facility is a natural evolution of the industry’s goal of reducing inpatient stays while preserving patient health.
The goal stems from a key industry concept – value-based care – the idea that you get paid to keep your patient healthy by avoiding costly urgent treatments and hospitalizations.
The idea, which has its fair share of criticism, is that better expense management can reduce overall costs.
Vijay Kedar, CEO of Tomorrow Health, told Yahoo Finance that before the pandemic, 90% of seniors wanted to age in place (at home), making the home the place of highest value care.
“I would say it was one of the top five priorities for health plans thinking about how to enable more effective care at home,” Kedar said.
Since its inception, his company has grown into partnerships with major healthcare providers such as Geisinger Health and 125 Health Plans at the regional and national levels.
Kedar said he’s found a sweet spot with medical equipment, a complex area and whether or not something is cheaper with or without health insurance.
Equipment suppliers “are burdened by the real-world operational challenges and complexity of operating in this space. It’s everything from the billing complexity of 3,500 Medicare billing codes to supply chain logistics for many of these providers who need to maintain localized inventory.
It creates a system where these companies can operate just by adding to that cost,” Kedar said. This is just one example where technology is helping to care for patients at home.
As the medical industry focuses on specialty drugs and therapeutics, there is also room for new ways to treat someone without physical intervention.
That’s been the whole point of the mental health and wellness apps employers have been using for the last few years.
Anderson said the future is still waiting for the results of recent innovations.
“I don’t think we really know how this is all going to work out now,” he said. “I think one of the silver linings, I call it that, of the pandemic was that it pushed digital health up 15 years in three weeks,” Anderson said.
Where regulators were once concerned about fraud and implementation, the pandemic forced their hands and provided an instant proof of concept.
“I really hope we don’t go backwards on some of these things,” Anderson said.
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