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Yahoo Finance Plus The pandemic 'pushed digital health forward like 15 years in three weeks,' health tech CEO
Technology in health care has skyrocketed as a result of the pandemic, though shaking out which platforms and strategies have the most staying power is still a work in progress.
Within the past two years, there has been both a spike and decline in digital health funding. Deals in the recent past have focused on telehealth, remote monitoring or administrative platforms to make health care management more efficient — though few have focused on therapy. The use of apps as a way to treat mental health or manage chronic illnesses is a fledgling segment of the sector but competition is heating up.
"I think what we're seeing is a recognition that ... there is the potential to generate billions of dollars worth of revenue by transitioning where we're going with care. Digital health solutions really have an opportunity," Rick Anderson, president and general manager 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 helpful to industry, even as insurers aren't yet sold on the idea, he said.
"All of this stuff will play out over a period of time, and we're moving more and more into a traditionally reimbursed approach for digital health. I don't think it'll all end up being prescription ... driven, but I do think that we're going to see different levels of reimbursement," Anderson said.
The five-year, $30 million deal with Sanofi adds to what has been a profitable past 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 earnings for 2021.
Moving outside the health facility
What Dario and Sanofi are doing adds a new layer to accelerate care for patients at home. That segment, especially in the older population, has been steadily growing. Companies like Vytalize Health, Current Health, and Tomorrow Health are all focused on the at-home space.
Whether it's as simple as monitoring vitals on a regular basis or helping find the right medical devices and coverage from health plans, the broad spectrum is ripe for a competitive market.
The novelty of using digital solutions to care for patients when they're outside a health care facility is a natural progression in the industry's goal to reduce inpatient stays while also maintaining patients' health.
The goal stems from one key buzzword in the industry — value-based care — the idea that you are paid to keep your patient healthy by avoiding costly urgent treatments and hospital stays.
The idea, which has its share of critics, is that better management of spend can bring down the cost overall.
Tomorrow Health's CEO Vijay Kedar told Yahoo Finance that prior to the pandemic, 90% of senior citizens wanted to age in place (at home), making the home the highest value site of care.
"It was, I would say, a top-five priority for health plans thinking about how to enable more effective care at home," Kedar said.
Since inception, his company has grown to partner with major health providers like Geisinger Health and 125 health plans at the regional and national levels.
Kedar said he found a sweet spot with medical devices, a complex area, and whether or not something is cheaper with or without health insurance.
Device suppliers "are burdened by the real operation 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 requiring holding localized inventory.
It creates a system where the only way these businesses can run is by marking up those costs," Kedar said. That's just one example where technology is helping serve patients at home.
With the medicine industry moving into specialty drugs and therapeutics, there is also room to find novel ways to treat someone without a physical intervention.
That has been the crux of mental health and wellness apps employers have deployed in recent years.
Anderson said the future still awaits the results of recent innovations.
"I don't think we really know yet how it's all going to sort out," he said. "I think one of silver linings, I'll call it, of the pandemic was it pushed digital health forward like 15 years in three weeks," Anderson said.
Where regulators had once been concerned about fraud and implementation, the pandemic forced its hands and provided proof of concept instantly.
"I really hope we don't go backwards on some of this stuff," Anderson said.
Follow Anjalee on Twitter @AnjKhem
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