Quantcast
Channel: UnitedHealth

THE DIGITAL HEALTH ECOSYSTEM: The most important players, tech, and trends propelling the digital transformation of the $3.7 trillion healthcare industry (AAPL, IBM, ANTM, GOOGL, MSFT, AMZN, PFE, GE, MCK, TMUS, WMT, WBA, MRK, CVS)

0
0

bii digital health ecosystem graphic 2019 altThis is a preview of a research report from Business Insider Intelligence,  Business Insider's premium research service. Current subscribers can read the report here.

Until now, healthcare was the only remaining industry that had yet to feel the rapid impact of digitization endured by retail, banking, and media. But consumer adoption of digital tech, regulatory overhauls, and a shifting reimbursement model are forcing healthcare players' hands. US Employers Average Annual Premium Contributions Are Rising

Summary List Placement

Digital health innovation offers market incumbents new opportunities to combat constricting margins, labor shortages, and rising costs.

But it also poses a threat to slow movers, as new entrants lean on their digital prowess and lack of legacy infrastructure to cut costs and remain nimble. As such, incumbents are turning to acquisitions, partnerships, and new investments to strengthen their digital health services.

The first Digital Health Ecosystem Report from Business Insider Intelligence explores the current healthcare ecosystem, industry trends that are driving digital transformation, and where the industry is headed. FORECAST: Penetration of Electronic Health Record Systems in the US

We outline the role of each of the industry's major players — including payers, providers, and manufacturers — and how they're affected by healthcare's digital disruption. 

 

Here are some of the key takeaways from the report:

  • Digital health is at the forefront of transformation in the healthcare industry — both as a driver of and an answer to the challenges industry players are grappling with.
  • All of the industry's major players — including payers, providers, and manufacturers — are affected by healthcare's digital disruption.
  • A confluence of forces induced healthcare's embrace of digital health, including changing consumer expectations, a new and disruptive reimbursement model, and rising healthcare costs
  • Tech-focused entrants are also breaking into healthcare, acting as catalysts for change and threatening legacy players' bottom lines.
  • Key digital health solutions like EHRs, digital therapeutics, telehealth, AI, wearables, and blockchain are the foundation of the industry's digital awakening.
  • Early evidence that digital health can address many of the industry's myriad challenges has fueled a vibrant US digital health funding market in 2018, with overall funding hitting $6.8 billion at the end of Q3. 

 In full, the report:

  • Details the US healthcare landscape by the role that payers, providers, manufacturers, and distributors play in the healthcare ecosystem.
  • Gives an overview of how digital health is enabling incumbents to overcome industry challenges.
  • Outlines how tech-focused healthcare entrants are pressuring incumbents and accelerating healthcare's digital transformation
  • Identifies promising digital health funding areas to illustrate what the future of digital health will look like.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >>Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >>Learn More Now

The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of the fast-moving world of the Digital Health.

The companies mentioned in this report are: Aetna, Alphabet, Amazon, American Well, AmerisourceBergen, Anthem, Apple, Arizona Care Network, Arterys, Babylon Health, Beth Israel Deaconess Medical Center, Bay Labs, Blue Cross and Blue Shield Association, Blue Mesa Health, Bright Health, Cardinal Health, Cedars-Sinai, Cleveland Clinic, Clover Health, CVS, DePuy Synthes, Devoted Health, Dexcom, Doctor on Demand, Express Scripts, Fitbit, Fresenius Medical Care, GE Healthcare, Geisinger, Glooko, GSK, healthfinch, IBM, IDx, Johnson & Johnson, Mass General, McKesson, Medtronic, Merck & Co., Merck KGaA, Microsoft, NewYork-Presbyterian, Northwell Health, Novartis, Olive, Omada Health, Optum Rx, Oscar Health, Pear Therapeutics, Pfizer, Philips, PillPack, ResMed, Rite Aid, Roche, Samsung, Sanofi, Senseonics, Suki, Tallahassee Memorial Hospital, T-Mobile, UnitedHealth Group, Verily, Viant, Walgreens, Walmart, Wellpepper, Zocdoc

 

 

SEE ALSO: Patients are transforming from passive recipients of healthcare services to active participants in their own health

Join the conversation about this story »


The biggest US health insurer has a $600 million VC arm that places bets on the future of healthcare. Here are Optum Ventures' 18 biggest investments, including startups reinventing home care and pharmacies.

0
0

Truepill cofounders Umar Afridi and Sid Viswanathan

Summary List Placement

Like other industry giants, UnitedHealth Group wants to back startups that hope to turn the healthcare industry on its head. 

To get in early, UnitedHealth created Optum Ventures, a corporate venture fund that operates as a separate entity from the biggest health insurer in the US. The $600 million fund was created in 2017 just as digital health startups were becoming hot investments across Silicon Valley's traditional venture-capital ecosystem. 

In the first half of 2021 alone, Optum Ventures was the single most active corporate investor, according to a July CB Insights report. According to Pitchbook data, the fund regularly participates in multiple funding rounds for its portfolio companies, upping its stake with each successive round. 

To date, Optum Ventures has participated in blockbuster funding rounds for at-home testing startup LetsGetChecked and at-home urgent care startup DispatchHealth, both of which have raised over $200 million according to Pitchbook data. An Optum spokesman in August 2020 declined to specify how much Optum Ventures contributed to each funding round but confirmed the firm's participation in the deals.

Several investors have told Insider that it's not a surprise to see so many incumbents battling it out for deals given the current environment: many insurers or hospital systems need to add tools such as telehealth or new ways to manage chronic diseases as the coronavirus-induced lockdowns continue to drag on. The easiest way to accomplish that goal, investors said, was to partner with a startup already specializing in those areas instead of attempting to create those services in-house. 

UnitedHealth is a $390 billion healthcare company that operates a health insurer and a pharmacy-benefits manager, runs urgent-care clinics and surgery centers, and provides technology and consulting services to hospitals and other healthcare firms. Optum Ventures is overseen by Larry Renfro, who is also vice chairman of UnitedHealth.

Here are the top 18 deals Optum Ventures, UnitedHealthcare's $600 million venture fund, has participated in since it was created. The startups are listed by the size of the deals that Optum Ventures participated in, from smallest to largest.

This article was initially published in August 2020 and has been updated to include Optum Ventures' more recent investment activity in the first half of 2021.

SEE ALSO: 10 healthcare startups that could be M&A targets after Teladoc's record-breaking $18.5 billion deal for Livongo

Lumeon - $29.49 million

What it does: Boston and UK-based Lumeon is a digital health startup that tracks patient care through its software. The startup's tools can help different doctors coordinate treatment across different areas, such as primary care and urgent care offices.

Funding summary: Optum Ventures co-led Lumeon's most recent funding round, a $29.49 million Series D, together with Endeavour Vision on August 11. It had not previously invested in the company, according to Pitchbook data.



RubiconMD - $31.8 million

What it does: RubiconMD is a startup that allows physicians to virtually consult specialists through its software. According to the company, this helps lower the cost of care while improving access to specialists in high-need areas.

Funding summary: Optum Ventures co-led RubiconMD's $13.8 million Series B funding round with HLM Venture Partners in April 2018. It reinvested in the startup's $18 million Series C funding round in March 2020, according to Pitchbook data.



Digital Diagnostics - $33 million

What it does: Digital Diagnostics, formerly known as IDx, makes software to better identify and treat specific conditions using artificial intelligence. It started by focusing on diagnosing diabetes by scanning patients' retinas but recently entered the dermatology space by acquiring 3Derm Systems on August 21, 2020.

Funding summary: Optum Ventures invested in the Iowa-based startup in its first institutional funding round in September 2018. The startup raised $33 million in the Series A after relying on angel funding for several years, according to Pitchbook data. It is unclear if Optum Ventures also participated in its $12.5 million Series B on June 8.



Apervita - $39.06 million

What it does: Chicago-based Apervita makes software that allows insurers and doctors to quickly share information for reimbursements and clinical data. The health IT startup merged with Boston-based Qcentive, another health IT startup, in August 2019.

Funding summary: Apervita was another early investment for Optum Ventures. It participated in its September 2017 $16.5 million Series A with Graphene Ventures, Illinois Ventures, and Bootstrap Venture Partners. And Optum Ventures also participated in the following round, a $22.56 million deal, in October 2019, according to Pitchbook data.



AKASA - $60 million

What it does: Bay Area-based AKASA makes payments software for healthcare companies. The software uses predictive technology that analyzes historical payments data and uses that to reduce manual input data from hospital administrative staff. 

Funding summary: Optum Ventures participated in AKASA's $60 million Series B round on March 23. Bond Capital led the round, which valued the company at $250 million, with participation from Andreessen Horowitz, Costanoa Ventures, and Refactor Capital, according to Pitchbook data.



Groups Recover Together - $60.2 million

What it does: Groups Recover Together treats patients experiencing opioid use disorder with a combination of medication and group therapy with the goal of creating a supportive community that also keeps patients accountable in recovery. It operates clinics in 12 states with the goal of expanding to 17 by the end of 2021.

Funding summary: Optum Ventures participated in the company's $60.2 million Series C round on May 21. Oak HC/FT led the round, which also included Kaiser Permanente Ventures, Transformation Capital Partners, RRE Ventures, and Bessemer Venture Partners, according to Pitchbook data.



Buoy Health - $64.2 million

What it does: Buoy Health created a virtual assistant that uses artificial intelligence to help doctors better triage patients quickly. People can use the software to diagnose themselves before heading to a doctor's office or urgent care clinic, which helps cut the cost of care by saving doctors time.

Funding summary: Optum Ventures first invested in Buoy Health in August 2017 through its $6.7 million Series A funding round, according to Pitchbook data. It also participated in the following round, a $20 million Series B, in October 2019, and again in its November Series C that clocked in at $37.5 million. Pitchbook estimates that Buoy Health is now valued at $191.5 million.



Vesta Healthcare - $65 million

What it does: Vesta Healthcare is a senior care company that builds software for clinicians and other care providers. The software enables care coordination among different groups of providers and shares information with insurance plans to help track costs.

Funding summary: Vesta Healthcare raised $65 million in funding on April 6 in a deal led by Deerfield Management. Optum Ventures participated in the round, which also included Kaiser Permanente Ventures, CareCentrix, Nationwide Ventures, Epstein partners, K2 HealthVentures, Generator Ventures, Lux Capital Management, and Oak HC/FT, according to Pitchbook data.



Brightline - $72 million

What it does: Palo Alto-based Brightline is a pediatrics behavioral health startup. Its app and website offer resources and education for behavioral health conditions for children, their parents, and other care providers or educators using telehealth. It also offers speech therapy for children.

Funding summary: Brightline raised $72 million in Series B venture funding and debt financing announced in June. GV, formerly known as Google Ventures, led the round that valued Brightline at $220 million, according to Pitchbook data. Optum Ventures participated in the round along with 7wire Ventures and Gaingels. 



Truepill - $75 million

What it does: Truepill got its start as a digital pharmacy startup that delivers prescription medication directly to patients' homes. It partners with healthcare organizations directly, marking the biggest difference between the startup and Amazon-owned PillPack. It has since expanded into at-home testing and virtual care. 

Funding summary: Optum Ventures participated in Truepill's Series B on December 17, 2019. According to Pitchbook data, the $25 million round did not include a lead investor but included Trusted Insight and Initialized Capital Management as additional participants.

In September, Truepill said it had raised an additional $75 million in a round led by Oak HC/FT, a round in which Optum participated. In total, Truepill has raised $114 million. 



Somatus - $75 million

What it does: Somatus focuses on diagnosing and treating kidney disease. It works closely with doctors and insurers to catch chronic kidney disease early, which it says helps cut treatment and hospitalization costs in the long term.

Funding summary: Optum Ventures first participated in the startup's $11 million Series B in April 2018, putting the company's pre-money valuation at $50 million. The fund later co-led a $64 million Series C with Longitude Capital and Deerfield Management in June 2020 that boosted the startup's pre-money valuation to $180 million, according to Pitchbook.



Vim - $95.06 million

What it does: Vim is a San Francisco and Tel Aviv-based digital health startup whose software helps match doctors and other care providers with patients using algorithmic models.

Funding summary: Vim was one of Optum Ventures' first investments when the fund participated in its Series B in November 2016. In addition to that $11 million deal, Optum Ventures has also co-led a $24 million round with Premera Blue Cross in September 2019, according to Pitchbook data, and again in its most recent $60 million round in April.



Caresyntax - $100 million

What it does: Caresyntax develops algorithms and software applications for robotic-assisted surgeries. It uses techniques such as artificial intelligence and analytics to help automate decisions for the surgical team, which in turn helps the teams' management of risk-bearing contracts.

Funding summary: Optum Ventures participated in Caresyntax's $100 million Series C on April 28. PFM Health Sciences led the round, which also included Intel Capital, Lauxera Capital Partners, IPF Partners, Rezayat Investments, Surgical Intelligence, Vesalius Biocapital Partners, Harmonix Fund, Societe Financiere de l'Arno, and Relyens, according to Pitchbook data.



Kaia Health - $109.16 million

What it does: Kaia Health is a digital chronic-care-management startup that specializes in physical therapy for back pain and COPD. Its technology uses computer vision to automatically prompt adjustments for patients dialed in virtually.

Funding summary: According to Pitchbook data, Optum Ventures led an early-stage venture funding round in June 2019 for $8.16 million. It co-led the larger Series B roughly a year later with Idinvest Partners and Capital 300 for $26 million. On April 21, it invested yet again in Kaia's $75 million Series C round.



Unite Us - $150 million

What it does: Unite Us makes software that connects healthcare providers with social services. The software allows both groups to simultaneously track patients' health and monitor other changes to external conditions, like changing homes, that could impact their overall health.

Funding summary: Optum Ventures participated in Unite Us' $150 million Series C round on March 16. ICONIQ Capital led the round, which valued Unite Us above $1.6 billion,the company said.



Mindstrong Health - $159.35 million

What it does: Mindstrong is a mental health startup that provides on-demand care for patients experiencing severe mental illness. At the end of 2019, it hired several executives from top-tier tech companies to expand its product offerings, according to a TechCrunch report.

Funding summary: Back in February 2017, Optum Ventures joined the first round of outside financing for Mindstrong, a $14.35 million Series A. The fund again invested in its $45 million Series B in 2018, and in its May 2020 Series C for $100 million, according to Pitchbook data.



DispatchHealth - $168.8 million

What it does: DispatchHealth is an on-demand urgent care startup that sends certified care providers to patients' homes. The house-call model has benefited significantly from the coronavirus pandemic that has turned cautious Americans away from potentially dangerous waiting rooms, and the startup raised its most recent round after seeing increased growth.

Funding summary: Optum Ventures participated in the startup's $33 million Series B funding round in June 2019, and later co-led its Series C that closed in June 2020 for $135.8 million, according to Pitchbook data. In March, Dispatch raised $200 million in a round Optum Ventures didn't take part in. That round valued Dispatch at $1.7 billion



LetsGetChecked - $269 million

What it does: LetsGetChecked is an at-home self-testing startup that lets its customers test for a range of conditions using a proprietary sample kit. The startup's founder, Peter Foley, started the company after developing testicular cancer when he was 16, which went undiagnosed for months.

Funding summary: Optum Ventures co-led LetsGetChecked's Series A in 2018 with Qiming Venture Partners. After participating in that $12 million round, Optum Ventures participated in the next three deals: a $30 million Series B in May 2019, $71 million Series C in May 2020, and its most recent $150 million Series D on May 28, according to Pitchbook data.



$380 billion juggernaut UnitedHealth is getting into one of the hottest parts of healthcare, and that should be a warning for upstarts like Hims and Ro

0
0

Andrew Witty

Summary List Placement

UnitedHealth Group is coming for Ro and Hims.

The $383 billion parent company of the country's largest health insurer has taken a page from the playbook of venture-backed direct-to-consumer startups and has started selling prescription drugs online to people paying with cash.

UnitedHealth is the largest US healthcare company by profit. Its net income totaled $15.8 billion in 2020. Johnson & Johnson, the second largest healthcare company, reported 2020 profit of $14.7 billion.

Optum, UnitedHealth's fastest growing business, quietly revamped its online pharmacy, called the Optum Store, to sell more than 800 generic drugs at discounted prices to people who forgo using their insurance.

Optum is also offering cash-only telehealth services so people can get prescriptions for birth control or medication to treat anxiety, depression, erectile dysfunction, and other common illnesses. Soon it will offer treatment for hair loss, its website said.

Optum is veering into the territory of digital-health startups such as Ro and Hims, which offer telehealth and prescription drugs online for some of the same ailments Optum is tackling. Ro also has a mail-order pharmacy that delivers more than 1,000 generic drugs to people's homes.

UnitedHealth said the Optum Store is a way to increase access to affordable healthcare.

"Optum Store is one example of our commitment to offer consumers meaningful choices and encourage engagement throughout their health and care journey," a UnitedHealth spokesperson said.

But it's clear to industry observers that Optum's push into the direct-to-consumer world is a bid to own another piece of the healthcare system and keep its customers' healthcare dollars in-house, rather than losing them to VC-backed startups or Amazon, which launched its online pharmacy in November. As more Americans pay directly for their healthcare, UnitedHealth is now catering to people who use insurance and those who can't afford to use it.

A.J. Loiacono, the CEO of the pharmacy benefit manager Capital Rx, said traditional healthcare companies are playing defense as new players enter the market providing access to cheaper prices.

"Some of these new partnerships or offerings are a direct result of new entrants into the market, such as Amazon and Walmart, enhancing their presence in healthcare," he said.

Optum is selling generic drugs and virtual care for cash

The Optum Store launched in November 2020, and in late June it added pharmacy and healthcare services, including mental health and virtual care, to the mix. Its website now looks a lot like Ro's, Hims', and that of a bunch of other consumer health brands.

Screenshot of the Optum Store website showing various services

Andrew Witty, UnitedHealth's CEO, said during an earnings call in July that the online pharmacy had "just been rolled out" under Optum's pharmacy benefit manager, OptumRx, and would drive "a ton of access for consumers."

UnitedHealth has long been expanding into every corner of the healthcare industry. No longer just a health insurer, it has amassed a fleet of medical groups and surgery centers. It employs or contracts with more than 50,000 doctors.

Through the Optum Store, it can tap into that smaller but still lucrative market for customers paying cash for prescription drugs. Americans spent $359 billion on medicine in 2020, and patients paying without insurance spent $14 billion, IQVIA found.

Truepill, the same company handling drug fulfillment for direct-to-consumer brands such as Hims, Nurx, and Simple Health, is providing the pharmacy services for the Optum Store. Optum and Truepill already had a relationship. Optum Ventures, the company's investment arm, participated in Truepill's Series B and C funding rounds in 2020.

A screenshot of the website for the startup Hims

In an interview in August, Sid Viswanathan, Truepill's cofounder and president, told Insider that while Truepill spent its early years working with direct-to-consumer brands, it has started working with large payers such as UnitedHealth, drug manufacturers, and health systems.

"What we realized about two years ago in our company was the infrastructure that we're building in pharmacy, telehealth, and diagnostics — it's not just for digital healthcare. It applies to all of healthcare and all the incumbents," he said.

Optum brings new competition to the direct-to-consumer market

Amazon Pharmacy

Optum's entrance into the direct-to-consumer market brings new competition to online pharmacies and telehealth providers selling their services directly to patients.

VC-backed digital pharmacies have been snatching big funding rounds and attracting new customers as more people look for convenient ways to get healthcare from home. As copayments and insurance deductibles rise, these startups are also attracting customers who have realized that they can save money on drugs and visits to the doctor by paying without insurance.

CB Insights found that funding for telepharmacy companies totaled $1.2 billion in the first half of 2021, compared with $299 million in the first half of 2020.

Ro, a $5 billion startup, raised $500 million in a Series D round in March. It's raised $876 million to date. Hims, which raised more than $300 million in funding before going public in January, reported on Wednesday that it grew revenue 70% to $60.9 million in the second quarter over the same quarter last year.

Beyond the startups, Amazon Pharmacy is selling prescription-drug discounts to cash-paying Prime customers, while Walmart has built clinics to offer primary care for low prices. It's now gearing up to provide telehealth across the country

When an analyst asked about competition from Optum during Hims' earnings call on Wednesday, CEO Andrew Dudum said a number of players are starting to move toward a direct-to-consumer model. 

"I'm excited that there are investment dollars moving into the space, because frankly a lot of people need help in this country," Dudum said. "But I think the reality is, you've got a $4 trillion market, of which I think about 80% of healthcare delivery is going to be moving toward essentially a delivery service that looks like Hims & Hers in the next 5 or 10 years. So this market is massive."

Ro declined to comment on the record.

Jade Khatib contributed reporting.

Join the conversation about this story »

NOW WATCH: Why we knock on wood and the origins of other common superstitions





Latest Images