Venture

U.S. Telehealth Startups Offer Cures To Healthcare Challenges

Sick of that drive to the doctor’s office and the anxiety that comes from waiting in their office as you grumble at the amount of time and cash it took for you to even get there in the first place?

Yeah, you aren’t the only one. Not only have startups emerged to bring healthcare to a digitized level, but investors are seizing on the opportunity.

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With our ability to connect through message, voice, and video at an all-time high, daily activities–from exercise to work–have become more convenient. And healthcare, with its multiplicity of difficulties is no exception.

Telemedicine companies ranging in category from urgent care to fertility to cannabis have landed significant capital over the past few years.

Take a look at some notable companies that have raised since the beginning of 2017:

Why these companies are attracting so much interest is no mystery. Most of us have experienced the pain points that riddle our healthcare system. Doctor shortages, healthcare costs, administrative burdens and lack of appointment availability are just a few of the consistent complaints from both patients and physicians in the U.S.

Telemedicine seems like a logical solution to at least some of those problems. On a basic level, a video visit with a physician for urgent needs that can be treated without in-person diagnostic tests means patients can take care of their basic health needs from their office or home.

The Landscape

The telemedicine space is an industry in which startups have led disruptive changes in regulations, according to Shubhra Jain, a former physician who now leads healthcare investments at San Francisco-based Cota Capital.

American Well, one of the first companies in the space, went state-by-state to gain traction and lobby for regulatory changes to expand access to telemedicine, Jain said.

Founded in 2006, American Well provides health systems, employers, payers, clinics, and other groups with enterprise-level telemedicine software and hardware products. The company is backed by more than $500 million in venture capital. Teledoc, another early player (now public), which offers both B2B and 24-hour consumer services, also has a history of lobbying for telehealth-friendly regulations at the state and federal level.

With incumbents having paved the way, startups now have more market access than ever and more powerful tools to bring convenient healthcare to patients. Companies like Lemonaid Health and Doctor On Demand, have led the wave of newer telehealth startups focusing even more on consumer access, providing insured and uninsured patients with medical care.

Launching as a virtual urgent care clinic five years ago, Doctor On Demand built a platform that provides patients with a way to access 24/7 on-demand care. Physicians, which are employed by the company, meet with their patients via video to discuss health, diagnose urgent issues, and prescribe medication. The company has banked more than $160 million since its founding in 2012.

Doctor On Demand CEO Hill Ferguson told Crunchbase News that according to its internal study, the company’s overall rate of prescribing medications matched in-person care. Further, the rate of antibiotic prescriptions were 2 percent lower. Doctor On Demand was 4.5 to 5 times less expensive than its in-person alternative and readmission rates were on par with brick and mortar providers, according to the study’s results.

Provided by Doctor On Demand

“We’re able to diagnose and treat patients with the same level of quality, in fact, more quality, because they’re not waiting 18 days to see a doctor. They’re waiting five minutes,” Ferguson said.

Lemonaid Health, which started by offering birth control, also offers care for urgent needs like UTIs and sinus infections. Founded in 2013, the company is backed by more than $20 million in venture capital.

Both Ferguson and Lemonaid Health CEO Paul Johnson told Crunchbase News they believe acute care is just the first frontier for televisits and telemedicine. Both companies have made strides in expanding their offerings into more preventative and primary care needs. Lemonaid Health doctors, for example, order lab tests for cholesterol and blood sugar.

Doctor On Demand expanded relatively early into mental health care in 2014, offering individuals video-based psychology and psychiatry visits. The company recently launched a platform offering for payers and employers which integrates with existing healthcare offerings. The platform makes it easier for Doctor On Demand’s doctors to maintain patient medical records while smart referrals allow them to quickly refer patients to in-network specialists.

“When you look at the data…about 30 percent of adults don’t have a primary care physician. 50 percent of millennials don’t and that trend is growing,” Ferguson said, adding that telemedicine can help fill the gap.

The irony of the video-based telemedicine approach lies in the fact that it uses technology to take the patient-doctor relationship back to its home-visit roots, contends Katalyst Ventures Founder and General Partner Susan Choe. The potential for that video-visit culture to grow is particularly interesting as the tech-enabled baby boomer population gets older, she added.

Not Just Video

Telemedicine startups haven’t stopped at video calls. Like other industries, mobile use, artificial intelligence, and direct-to-consumer business models are playing a more influential role in the way that telemedicine companies interact with their customers. Further, not every company is sold on the idea that patients want and need the video-visit for proper healthcare.

Companies like Ro, The Pill Club, and Hims have attracted a collective $349 million in venture funding for their subscription services which allow individuals to message doctors about care regarding birth control, hair loss, nicotine addiction, and even erectile dysfunction. Doctor On Demand and Lemonaid Health have incorporated messaging into their platforms. 98point6, a telehealth platform which incorporates artificial intelligence into its messaging systems has raised more than $80 million for its own efforts.

One startup, Nurx (pronounced “nurex”), which launched its service in 2015, has raised more than $41 million from investors that include Y Combinator, Union Square Ventures, and most recently Kleiner Perkins. Nurx began as an on-demand birth control delivery company where patients could sign up through the app, message a Nurx clinician, and receive their birth control in the mail.

Nurx CEO Hans Gangeskar

The company, which owns its own pharmacy, has since expanded its offering, allowing patients to request emergency contraception, HIV tests and PrEP (the daily medication that prevents HIV contraction), and at-home HPV tests through its platform.

CEO Hans Gangeskar told Crunchbase News that Nurx does not require initial consultations to take place through video or phone call, or so-called “synchronous” visits for patients to get the care they need. The anonymity that messaging services available to Nurx patients makes them more likely to be transparent with their care providers without fear of judgement and more likely to seek care in the first place. Furthermore, structured data collected from patients during the questionnaire and requesting process can better inform healthcare decisions, he said.

Nurx has noticed that it has higher penetration rates in states with less public health infrastructure. Interestingly, Nurx’s market share for birth control is highest in Indiana, and its market share in Texas is roughly twice the size of its share in California when comparing local populations and percentages. Most of the company’s users fall between the ages of 25 and 35 years old.

Gangeskar said the company is not launching in states like Maryland that require initial visits to be synchronous, in-person video or phone consultations until the states change those regulations.

“There are 3 million unintended pregnancies every year and over 50,000 HIV infections in the U.S. and it’s on the rise,” Gangeskar said. “The brick and mortar model has failed to meet the patients where they need… and telemedicine is the first chance that we have to address the systemic failures of the health care system and get population-level changes in healthcare.”

Regulation, The Digitized Self, And The Future Of Telemedicine

All telemedicine companies must comply with state-by-state regulations, including those which require companies to match patients with doctors licensed locally. Ferguson of Doctor On Demand said that makes supply and demand of doctors a top concern for telemedicine companies offering immediate appointments. Complying with regulations regarding pharmacy licensing and lab partnerships is also a requirement, according to Gangeskar.

But state regulations are changing relatively quickly, particularly as companies continue to lobby for change like Teladoc did in Texas last year. That opens up the doors for startups like Nurx to increase their prescience.

Further, it foreshadows a potentially more open regulatory atmosphere which execs say could enable patients with particular symptoms to seek specialist care through telemedicine without the need of a primary care referral. A future where cross-border telemedicine allows patients to seamlessly access the best providers, regardless of geographical location is also on the horizon.

But the more immediate, tangible future for expansion in telehealth is intimately linked with advances in both wearable technology and medicine. The more people can accurately gather their own data with personalized medical devices and tests, like at-home fertility tests, EKG-enabled watches, blood tests, and more, the less the patient-doctor relationship is limited to the doctor’s office and the more equipped doctors will be to treat those patients.

According to sector participants, the possibilities are endless. And industry watchers agree that healthcare is ripe for innovation. Just how and when the end-user navigates these new paradigms will determine which course telemedicine will take.

Illustration Credit: Li-Anne Dias

CEO Hans Gangeskar – Photo provided by Nurx

Editorial Note: A previous version of this article mistakenly stated that Lemonaid Health offered “at home” cholesterol tests. It has since been updated.

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