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Sword Health, the Hinge Health S1, and me

By MATTHEW HOLT

The big news in the comeback of digital health is that Hinge Health filed its S1 and is looking to go public soon. I suspect that they’d have preferred to get the IPO done late last year when the AI bubble was expanding rather than deflating, but timing the market is tough! Nonetheless Hinge is almost profitable and at over $350m in revenue at a growth clip of some 75% last year, in terms of a show pony to trot out, it’s about as good as the digital health field has got. The problem is that the last round in 2021 was at a $6bn+ ZIRP-era valuation with Tiger & Coatue paying the idiot price because Teladoc was trading at $15bn market cap then (albeit down from $30bn a year before that!). That is, err, no longer the case. There’s a bunch of weirdness in the IPO structure to pay those guys back, but the main point is that the likely valuation will be in the $1.5-2.5bn range. 

But there’s another problem. And it’s one I have some personal experience with. I must stress that my experience is not with Hinge.

As it happens I did a video interview at Hinge’s booth at HLTH in 2022 when my back collapsed, and I got to try out their Enso device (it helped a bit but not much after the first few minutes using it). I discussed the process with PT Lori Walter and got a quick interview with President Jim Pursely (an old Livongo hand BTW). 

But this past summer I used the services of their main competitor, Sword Health. As far as I can tell the two companies are very similar in their process and services, both with self-service exercises delivered via the smartphone and both moving from remote care from therapists to AI therapists. But I could be wrong. So for this article I am extrapolating from one company to the other to look at the field of MSK digital services overall.

In total, I thought the Sword experience was good as a standalone program. But the problem was that it was standalone.

My problem was with my left knee. I had a lot of knee surgery in 2002-4 as the result of snowboarding into a tree (Hint. If you snowboard, try to make sure you and the board go the same side of the tree). More than 20 years later in 2024 I managed somehow to induce terrible pain in the knee running for a ferry in January, a train in May and an airport shuttle in June. (It seems that travel and my knee disagree). This didn’t stop me strapping up, taking drugs and snowboarding in the 2024 winter season but it certainly slowed me down a whole lot. Around this time there were many reports of people much younger than me getting their knees replaced.

So I thought I should do something about it. My Blue Shield of California plan offers Solera which is an agglomeration marketplace of digital health apps and services. Sword Health is their PT app, so I selected it, enrolled and off I went.

Note that there was zero integration with my PCP, any orthopedic surgeon, any clinical person at the health plan or basically anyone. This was purely patient-driven and managed.

With Sword I had a 15 min intro call on June 6 – then was sent a box containing a generic tablet and six sensors which fit into straps that you attach to your lower and upper legs and arms.

There was a conversation in the app with a PT and then it spat out a selection of exercises for me. The example below is my second exercise session. If you want to check out more, I have put more of the exercise and the chat with the PT here.

Sword suggested, instead of regular 45-60 minute physical PT sessions, that I did four 15 minutes sessions a week. Essentially one every other day.

The end result was that I did eight sessions between June 12 & June 30.

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Unlocking the power of sensor data in type 2 diabetes care

By GABRIELLE GOLDBLATT

Highly relevant, high-resolution data streams are essential to high-stakes decision making across industries. You wouldn’t expect an investment banker making deals without full market visibility or a grocery store to stock shelves without data on what’s selling and what’s not—so why are we not leaning more into data-driven approaches in healthcare? 

Sensor-based measures, data collected from wearables and smart technologies, often continuously and outside the clinic, can drive more precise and cost-effective treatment strategies. Yet, in many cases, they’re not used to the fullest potential – either because they’re not covered by insurance or they’re treated as an add-on rather than an integral input to disease management. As a result, we lack sufficient clarity of the true value of treatments, making it difficult to discern which are high quality and which drive up the already sky-high cost of healthcare in the U.S.

Take type 2 diabetes (T2D), for example, which impacts upwards of 36 million Americans. Many people with diabetes also face comorbidities like cardiovascular disease, obesity, and kidney complications, which increase treatment complexity and costs. The range of treatments available to manage and treat T2D has grown significantly in recent years, from established therapies like metformin and insulin to newer options like virtual care programs and GLP-1 receptor agonists, which offer benefits that may extend to comorbidities. 

This expanded treatment landscape promises to improve the standard of care, but it also makes it difficult for treatment options to stand out in an increasingly crowded market. This leads to treatment gaps, worsening comorbidities, and an annual burden of over $400 billion on the healthcare system.

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Mental Health’s Unfinished Digital Revolution

By TREVOR VAN MIERLO

In 2021, digital mental health and substance use startups attracted a record-breaking $5.1 billion in funding. Despite the surge, the promise of scalable, transformative digital health platforms remains unfulfilled.

Following the surge, investment plummeted. Unlike other industries that have been revolutionized by digital-first solutions, digital health struggles with models that fail to address cost, complexity, and access.

What we’re left with entering into 2025 are a smorgasbord of solutions clamoring to attach themselves to traditional enterprise incumbents (Health Insurance Providers, Electronic Health Records, Hospital Systems). These incumbents have achieved scale – but not the type of scale that digital health needs to flourish.

Investment in Digital Mental Health (2010-2023)
Digital Mental Health Investment (2010-2023)

Incumbents Build Deep, Startups Go Wide

Incumbent scale is infrastructure-heavy, slow, and linear, and focuses on deep integration within their established markets.

In contrast, startups aim for technology-driven, exponential, and global scale, leveraging digital platforms to serve millions of users quickly. While startups have the speed advantage, achieving scale similar to incumbents requires win-win partnerships and fundamental shifts away from established business models.

Incubent Scale vs. Startup Scale
Incumbent Scale vs. Startup Scale

The investment market does see the tremendous opportunity: a massive, growing global customer-base proactively demanding help as social stigma decreases. And as time passes, this customer-base grows exponentially with technology pervasiveness.

What investors see is unmet demand for mental health and substance use treatment, and a historic opportunity for digital health to step up and deliver solutions that are scalable, accessible, and affordable.

However, the delivery mechanism to these populations, though digital, is obfuscated through the blurred lens of incumbent purchasing power. We can’t get past incumbents’ size, their reach, and their connection to patients. In this common view, incumbents are the customer. This view is promoted by both industry and academia.

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Moving the bar(rier) forward: the benefits of de-risking cytokine release syndrome

By SAMANTHA McCLENAHAN

Every breakthrough in cancer treatment brings hope, but it also comes with a staggering price, raising a critical question: how do we balance groundbreaking advances with the financial reality that could limit access for many patients? 

Developing new cancer medications involves extensive research, clinical trials, and regulatory approvals; a lengthy process that requires substantial financial investment. Within clinical trials, this includes maintaining stringent safety protocols and managing a variety of adverse events, from mild reactions requiring little to no care to extremely severe events with hefty hospital stays and life-saving medical intervention. Take Cytokine Release Syndrome (CRS), for example. CRS is a common adverse event associated with chimeric antigen receptor (CAR) T cell therapy and other immunotherapies that presents across this spectrum with flu-like symptoms in mild cases of CRS to organ damage, and even death, in severe cases. The median cost of treating CRS following cancer-target immunotherapy is over half a million dollars in the United States. Tackling that large price tag – in addition to another $500,000 for CAR-T cell therapies – and reducing associated risks are necessary to break down barriers to care for many patients – especially those who are uninsured or with limited resources hindering the ability to travel, miss work, or secure a caregiver.

Unlocking Cost Efficiency in Clinical Trials with Digital Health Technologies

Integration of digital health technologies (DHTs) including telehealth, wearables such as smart watches, remote patient monitoring, and mobile applications in oncology care and clinical trials has shown immense value in improving patient outcomes, despite the slow uptake within the field. General benefits during clinical trials are captured through: 

  1. Reducing clinical visits and shortening trial length – Remote patient monitoring and virtual consultations minimize the need for physical visits, accelerating trial timelines. 
  2. Enhancing recruitment, diversity, and participant completion – Targeted outreach supported by big data analytics and machine learning algorithms helps to effectively identify and engage with eligible candidates, leading to faster recruitment and lower dropout rates. Digital technologies also overcome traditional barriers to participation, such as location, transportation, language barriers, and information access.  for a broader representation of patient demographics and more generalized findings and improved healthcare equity. 
  3. Increasing availability of evidentiary and safety requirements – Continuous data collection and monitoring in the setting most comfortable to patients – extending beyond clinical walls. This provides a pool of data to support clinical endpoints and enhances patient safety by enabling early detection of adverse events. 

While the exact cost of these digital interventions varies by study, there is significant evidence that cost-saving measures are emerging.

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Digital Health: There is No Exit

By MATTHEW HOLT

All of a sudden we are back in 2021.

You digital health fans remember that halcyon time. In 2019 a few digital health companies went public, and then somehow got conflated in the pandemic meme stock boom, with the harbinger event being the August 2020 sale of Livongo to Teladoc that valued it at $19bn and early in 2021 rather more, as Teladoc itself got to a market cap of $44bn in February 2021

Venture money poured into digital health as a fin de siecle for the ZIRP, that had been going for a decade, combined with the idea that Covid meant we would never leave our houses. The vaccine that became generally available at the start of the Biden Administration in 2021 put paid to the idea that telehealth was the majority of the future of care delivery.

Nonetheless between mid 2021 and early 2022 Jess DaMassa and I were reporting on VC funding in a show called Health in 2 Point 00 (later Health Tech Deals) and every week there were several deals for $100m and up going into new health tech companies.

Things don’t look so pretty now. Even while venture money was flooding into digital health, those public companies, as exemplified by Teladoc, started to see their stock price fall. While it was actually a good year for the stock market overall, in 2021 the digital health sector fell by around 60%. It kept going down. 2022 was worse and although one or two individual companies have recovered (Hi Oscar!), nearly two years later the market cap of the entire sector remains in the toilet.

Of the list that I’ve been following for years there’s only 11 broadly defined digital health companies with a market cap of more than $1 billion–that is only 11 public unicorns

What’s worse is that only one company on that list is decently profitable, and that’s Doximity. It made over $170m profit on revenue of less than $500m last year and trades at 10 x revenue. But Doximity always was profitable, going way back to 2014 (long before its IPO), and although it’s doing cool stuff with AI and telehealth, it’s basically an advertising platform for pharma.

There is no such thing as a profitable public digital health company in the mainstream of care delivery or even insurance–unless of course you count Optum. Which means there’s almost certainly no profitable VC-backed private company either.

Which leads me to this month. You remember those huge rounds that Jess & I used to report on and make fun of? They’re back.

I get it. The stock market is hot and all those pension funds are trying to put their winnings from Nvidia somewhere. VC looks a reasonable bet and there have been a few tech IPOs. If you squint really hard, as STAT’s Mario Aguilar did, you can pretend that Waystar & Tempus are health tech IPOs, although a payments/RCM company and a diagnostics company which are both losing a ton of money wouldn’t give me confidence as an investor.

But the amounts being thrown around must give anyone pause. Let’s take a few examples from the last month. Now these aren’t a knock on these companies, which I’m sure are doing great work, but let’s look at the math.

Digital front door chatbot K-Health raised at a $900m valuation. This round was a $50m top-up but it has raised nearly $400m. It says it’ll be profitable in 2025, and has Elevance as its biggest client. Harmonycares is a housecall medical group, presumably pursuing the strategy that Signify and others followed. It raised $200m, so presumably has a $500m+ valuation–Centene bought an earlier version of the company for $200m a decade ago and sold it to some investors two years back. Headway is a mental health provider network that uses tools to get providers on their system and markets them to insurers. It raised $200m at a reported $2.3bn valuation.

You can look at that list of public companies, including ones taken private like Sharecare, and see that there are lots of telehealth chatbots, medical groups and mental health companies on the list. Any of which probably have similar technology buried inside them. I’m sure if you shook Sharecare hard enough all those technologies would fall out given the number of companies it acquired over its decade plus of expansion.

But let’s take mental health.

Amwell acquired a mental health company called Silvercloud, and a chatbot called Conversa. Its market cap is bouncing around between $250m & $350m and it has more than that in cash–which means the company itself is worth nothing! The VCs who put money into K-Health and Headway could literally could have bought Amwell for about what they invested for a fraction of those companies. Is Headway doing more than the $250m a year in revenue Amwell is putting up? Headway’s value is nearly 6 x the value of Talkspace which is bringing in about $150m a year in revenue. And if you consider BetterHelp to be 50% of Teladoc — which it roughly is — Headway is 3 x the value of BetterHelp which is doing $1bn a year in revenue. Is there any chance that Headway is doing close to those numbers? Maybe somone who saw the latest pitch deck can let me know, but I highly doubt it.

Now of course these new investments could be creating new technology or new business models which the previous generation of digital health companies couldn’t figure out. They might also have figured out how to grow profitably–although as far as I know Doximity stands alone as a profitable company that took VC funding it never needed and never used.

But isn’t it more likely that they are in the market competing with the public companies and those private companies that got funding in 2020-22, have similar pitches, similar tech and are similarly losing money?

I am a long time proponent of digital health and really hope that technology can change the sclerotic health care sector. I want all these companies to do well and change the world. Maybe those VCs investing in those mega rounds are more sensible than they were in 2022. But given the state of the digital health sector on the current stock market–which is otherwise at all time highs–I just don’t know what the exit can be, and it pains me to say it.

What’s behind all these assessments of digital health?

By MATTHEW HOLT

A decent amount of time in recent weeks has been spent hashing out the conflict over data. Who can access it? Who can use it for what? What do the new AI tools and analytics capabilities allow us to do? Of course the idea is that this is all about using data to improve patient care. Anyone who is anybody, from John Halamka at the Mayo Clinic down to the two guys with a dog in a garage building clinical workflows on ChatGPT, thinks they can improve the patient experience and improve outcomes at lower cost using AI.

But if we look at the recent changes to patient care, especially those brought on by digital health companies founded over the past decade and a half, the answer isn’t so clear. Several of those companies, whether they are trying to reinvent primary care (Oak, Iora, One Medical) or change the nature of diabetes care (Livongo, Vida, Virta et al) have now had decent numbers of users, and their impact is starting to be assessed. 

There’s becoming a cottage industry of organizations looking at these interventions. Of course the companies concerned have their own studies, In some cases, several years worth. Their  logic always goes something like “XY% of patients used our solution, most of them like it, and after they use it hospital admissions and ER visits go down, and clinical metrics get better”. But organizations like the Validation Institute, ICER, RAND and more recently the Peterson Health Technology Institute, have declared themselves neutral arbiters, and started conducting studies or meta-analyses of their own. (FD: I was for a brief period on the advisory board of the Validation Institute). In general the answers are that digital health solutions ain’t all they’re cracked up to be.

There is of course a longer history here. Since the 1970s policy wonks have been trying to figure out if new technologies in health care were cost effective. The discipline is called health technology assessment and even has its own journal and society, at a meeting of which in 1996 I gave a keynote about the impact of the internet on health care. I finished my talk by telling them that the internet would have little impact on health care and was mostly used for downloading clips of color videos and that I was going to show them one. I think the audience was relieved when I pulled up a video of Alan Shearer scoring for England against the Netherlands in Euro 96 rather than certain other videos the Internet was used for then (and now)!

But the point is that, particularly in the US, assessment of the cost effectiveness of new tech in health care has been a sideline. So much so that when the Congressional Office of Technology Assessment was closed by Gingrich’s Republicans in 1995, barely anyone noticed. In general, we’ve done clinical trials that were supposed to show if drugs worked, but we have never really  bothered figuring out if they worked any better than drugs we already had, or if they were worth the vast increase in costs that tended to come with them. That doesn’t seem to be stopping Ozempic making Denmark rich.

Likewise, new surgical procedures get introduced and trialed long before anyone figures out if systematically we should be doing them or not. My favorite tale here is of general surgeon Eddie Jo Riddick who discovered some French surgeons doing laparoscopic gallbladder removal in the 1980s, and imported it to the US. He traveled around the country charging a pretty penny to  teach other surgeons how to do it (and how to bill more for it than the standard open surgery technique). It’s not like there was some big NIH funded study behind this. Instead an entrepreneurial surgeon changed an entire very common procedure in under five years. The end of the story was that Riddick made so much money teaching surgeons how to do the “lap chole” that he retired and became a country & western singer.

Similarly in his very entertaining video, Eric Bricker points out that we do more than double the amount of imaging than is common in European countries. Back in 2008 Shannon Brownlee spent a good bit of her great book Overtreated explaining how the rate of imaging skyrocketed while there was no improvement in our diagnosis or outcomes rates. Shannon by the way declared defeat and also got out of health care, although she’s a potter not a country singer.

You can look at virtually any aspect of health care and find ineffective uses of technology that don’t appear to be cost effective, and yet they are widespread and paid for.

So why are the knives out for digital health specifically?

And they are out. ICER helped kill the digital therapeutics movement by declaring several solutions for opiod use disorder ineffective, and letting several health plans use that as an excuse to not pay for them. Now Peterson, which is using a framework from ICER, has basically said the same thing about diabetes solutions and is moving on to MSK, with presumably more categories to be debunked on deck.

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TOMORROW: ZS Impact Webinar on Digital Health

Join ZS’s Ahmed Albaiti with me, Matthew Holt, author and founder of The Health Care Blog, as we discuss the considerations and approaches that policy experts, regulators, clinical leaders and the venture capitalist community can take to affect a future for connected health technologies.

Date: Wednesday, November 22, 2023

Time: 12:00 PM Eastern Standard Time

Duration: 30 minutes

Register here

The Future of Digital Health: How UX Design is Shaping the Industry

By PARV SONDHI

As the digital health world continues to expand, more and more people are turning to apps to manage everything from diabetes and obesity to depression and anxiety. People rely on these apps for their physical and mental health, so it’s crucial that product developers ensure a safe, effective, and engaging experience for them. Healthcare experts agree.

A team of researchers and health system leaders recently introduced a new framework called “Evidence DEFINED” for evaluating digital health products. This framework offers hospitals, payers, and trade organizations a precise set of guidelines to assess the validity and safety of a digital health product. It also gives digital health companies good benchmarks to work from.

As digital health companies create new products in the space, they should keep specific points in mind — from user experience design to considerations for data privacy. While clinical outcomes will always reign supreme, the framework suggests that patient experience, provider experience, product design, and cost effectiveness can’t be discounted.

Here are a few critical considerations that product delivery teams should plan for when creating digital health apps.

Clear navigation

First things first: a user won’t use an app that’s hard to navigate. To help people stick to their health goals, developers need to create apps that are intuitive and easy-to-use. When a user logs onto an app, they want to find the content they need immediately and be guided through the experience step by step.

A lot of different people use health apps, and not all of them are tech-savvy. Health apps need to be accessible to all demographics, including people of various ages who speak different languages. It’s also important to remember that digital health apps can be used across multiple platforms, so the navigation should remain clear when switching between devices.

While navigation might seem like a no-brainer, it’s often overlooked when designing for digital health.

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Interview with Oxeon CEO, Sonia Millsom

Sonia Millsom is the relatively new CEO at Oxeon, which became the dominant executive search (headhunter) firm in digital health over the past decade or so. The company was built by Trevor Price and team. Sonia discussed the transition to her leadership, the other things Oxeon does (venture studio, relationship to TownHall Ventures), and the state of the employment market in digital health. TL:DR on that, it’s slowed but they are doing a lot of work and still growing.–Matthew Holt