Eric Kirsch

I’m worried about the state of venture capital and direct-to-consumer (DTC) healthcare startups. Hims & Hers is the poster child for DTC healthcare at $1.2B proj 2024 revenue and a $3.6B valuation. By most accounts, they have been an outlier success for DTC since bottoming out in May 2022. So why is this bad news for DTC healthcare? Because the market leader (Hims) trades at a 3x forward revenue multiple. And the category leader typically gets a higher valuation multiple than smaller startups. We see this phenomenon in private equity. They “roll up” smaller companies within the same category at a lower multiples just to create one larger platform that trades at higher multiples. Now back to DTC healthcare startups. If Hims commands a 3x revenue multiple, it’s not unrealistic that smaller, unprofitable startups may be valued 1-2x revenue at exit. At 2x revenue, a startup must generate $500M to produce a $1B exit in today’s market (depending on growth and profitability). Series A/B venture capitalists must see a pathway to $1B outcomes. And if the growth-stage investors with billions under management are less interested in DTC healthcare, the future funding rounds necessary for fueling growth are not guaranteed. Juxtapose this against 2017-2022 where DTC could raise Series B-E funding. Let’s take a DTC startup doing $25M after 3-4 years of operations and has already raised a Series A. By most accounts, it would be a phenomenal accomplishment. But today, investors will question the chances of that same company scaling from $25M to $500M revenue in the next 3-4 years with unknown future funding sources from Series B and beyond. You're stuck in VC-funding purgatory. Some of these companies will shut down. Some may sell for 1-3x revenue. And some may try to transition to profitable, cash-flowing businesses. All of which are certainly not the venture-backed goal the founders, investors, and employees often had in mind when first taking capital. I say this all with friends working at or starting DTC healthcare companies, I feel bad for them. I also feel bad for the patients who enjoy those products or services. To caveat (b/c I know people will object), there will be other DTC brands that exit for $1B+ (i.e., Ro). However, they were forged and scaled during a different time period where seemingly endless venture capital was available for DTC healthcare. Now we're in a different time with no end in sight. Thoughts?

149

36 Comments

95% of the time, I speak to health systems who need to "fix transportation," and, yet, they have 0 idea how many rides their system is booking. 😅😅😅 I can't blame them - most of these workflows are phone-based and there isn't a single source of truth to pull data from. #patientflow is suffering and #healthequity initiatives are stalled. They know it's a problem they want to tackle, but haven't been able to forecast the impact fixing #NEMT will have, let alone be able to make a business case to justify investment in a solution. If you know these 5 data points about your health system, you can predict the volume of rides that your social work, case management, and other front-line folks are booking. 1. Number of Monthly Inpatient/ED discharges 2. Number of monthly appointments 3. % of Medicare Patients 4. % of Medicaid Patients 5. % of Commercial Patients Layer in assumptions about the % of discharges that require transportation, % of appointments that require transportation to and from, and mobility levels and voilà! #RideEconomics

10

1 Comment

Today’s healthcare policymakers are focused on their favorite boogeymen: physician compensation, biopharma, and new medical technologies. The real villains are ‘benefit managers’ and administrators’ who lurk in the shadows extracting 25 cents of every healthcare dollar. The reality is, in fact, in plain view if you look: administrators have grown 3200% while physicians have grown 200% over the last two decades; physician compensation is down, net of inflation. Admin comp is up, way up. PBM (pharmacy ‘benefit’ ‘management’) revenue has outstripped Pharma revenue growth in the last 20 years. Pharma extends life and improves quality of life, and extends working lives of taxpayers. PBMs - who knows… People grasp onto things they understand like doctors and drug companies. ‘Administrators’, ACOs, VBC, VBC, PBMs, spread pricing are more challenging to grasp and are allowed to obsfucate people about what they do from the shadows. America’s healthcare landscape is burdened by ‘administrators’ and ‘managers’ who extract rents from an otherwise highly innovative system. https://lnkd.in/gK3mCme4 https://lnkd.in/gPC9vKB9 DocVader puts it aptly: ‘thoughts and prayers’ https://lnkd.in/gUfnSXGV Technology is one answer. Physician and nurse leaders are another. If your company is about literally decimating administrative costs in the back office or front office of healthcare, I applaud you. As Americans we need this. Return care to the people and shrink administration and management bloat across the system. Medicare deserves this and so do the commercially ‘insured’.

158

18 Comments

Prior auth is about to change dramatically, and adapting will cost health insurers $16.2B. Yesterday, we explored the history of prior auth and how we ended up with the frustrating system we have today. Now, let's look at the imminent regulatory changes. Here's what you need to know and how you can brace for impact: → There’s broad bi-partisan support for radically restricting insurers’ ability to conduct prior auths 1. The House of Representatives has passed bipartisan legislation demanding sweeping prior authorization reform. [1] 2. Texas, Michigan, and Louisiana have already enacted similar laws. 3. 30 more states are in the process of drafting their own legislation. → The financial impact The Congressional Budget Office estimates that complying with these new laws will cost insurers $16.2 billion. Insurers will be required to: 1. Universally adopt electronic prior authorization (ePA) 2. Maintain 24-hour response times 3. Publicly release data on all prior authorization metrics 4. Implement gold carding programs for certain providers 5. And a slew of other restrictions The industry response? Major insurers like UnitedHealthcare, Aetna, and Cigna are already preparing. They're proactively slashing their prior authorization requirements and racing to implement universal electronic prior authorization. 𝗧𝗵𝗲 $𝟭𝟲𝗕 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻: 𝗛𝗼𝘄 𝗰𝗮𝗻 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗽𝗿𝗲𝗽𝗮𝗿𝗲? It’s going to cost a lot. There’s no getting around it. But by centralizing your prior authorization data, you can avoid the worst of it. Here's why: - Public data releases require a centralized repository of all your prior auth metrics. - Universal ePA adoption needs a centralized system to manage incoming requests. - Gold card programs require centralized tracking of provider performance. - Ensuring 24-hour response times necessitates centralized monitoring. Once you centralize your data, you unlock a world of possibilities. The big one? Automation. McKinsey estimates that with today's technology, 75% of prior auth can be automated. [2] Here’s what this will unlock for insurers facing these new laws: → Responses in minutes, not days → Public data releases with a click of a button → Gold Card programs that run themselves → Vast majority of auth requests handled without human intervention The pendulum is swinging back towards providers, but payers can adapt and thrive with the right approach. By centralizing data and embracing automation, you can slash costs, ensure compliance, and emerge stronger.

15

6 Comments

I've seen companies buy a "turnkey" RPM solution only to realize it can't sync data with their EHR system or runs on outdated tech the engineers hate. Then you're stuck doing expensive overhauls or ripping and replacing. But even there, I avoided turnkey offerings. Why? Because they're often bloated with features my team didn't need, and custom workflows were difficult to build. Instead, I chose to build our RPM devices and billing software from the ground up. It took way more time and money upfront, but it let us mold the tech to our audience’s exact clinical and operational needs with zero shoehorning. Was it a harder road? Yes. But now I'm not stuck paying heavy fees to customize a turnkey system. That's my philosophy - unless it's a dead simple commodity, forget turnkey. In healthcare, the upfront savings are rarely worth the debt. Build it custom or be prepared for a gut rehab down the line. As a founder, what’s your take on the turnkey model? ♻️Repost to gather more insights. #founder #turnkeymodel #tips #healthcare

13

12 Comments

💥 New Episode: Second Opinion with Caroline Pearson, Executive Director of Peterson Health Technology Institute (PHTI)! Remember that bombshell PHTI report showing many digital diabetes companies aren't producing meaningful improvements in patient outcomes—and are even driving up healthcare costs?? We had a candid chat with Caroline about how the industry can do better. Some takeaways: 📊 Prove Your Worth: "Digital" isn't a value proposition—it's table stakes. Whether you're driving clinical outcomes or providing patient support, back your claims with evidence and be crystal clear about what you're actually delivering. 🏥 Healthcare is Unaffordable: Caroline talks about the tough trade-offs we make every day due to finite resources. If we’re going to spend healthcare dollars, let’s make sure it’s on something that delivers real value. 🤝 Collaboration is Key: Caroline emphasizes the need for companies to work together—don’t compete when it comes to building evidence. Let’s all push towards better solutions for patients! Check out the full episode here and let us know what you think: ᯤ https://lnkd.in/gUmfWSPq  https://lnkd.in/g7FdqZhs ⏵ https://lnkd.in/gnGH7dpt Turpentine Christina Farr Luba Greenwood, J.D.

53

2 Comments

One key reason why healthcare technologies like AI, telemedicine, and software haven't structurally lowered costs or broadened access for the entire system after decades of experimentation (excluding pure financial engineering of payer contracts) is the limited reimagining of care delivery itself, with asynchronous telemedicine as a notable exception. In the same way that digitizing physical paper failed to exploit the capabilities of a new computing medium for word processing, hosting physician-patient conversations over video does not transform the actual delivery of care. In telemedicine, many of the inputs (e.g., clinician time) and therefore cost structures of in-person care persist, which is why we often see fee-for-service telemedicine companies struggle to achieve economies of scale (i.e., growing revenues non-linearly while growing costs linearly). Until we deconstruct the components of a medical appointment – from intake and triage, to chart review, history gathering, physical examination, diagnosis, treatment, and follow-up – we will continue to be underwhelmed by the disconnect between the transformative potential of these technologies and real-world patient/system impact. I’m optimistic that the emergence of reliable and performant medical AI agents will urge us to perform this deconstruction and redesign the fundamental building blocks of a “medical appointment.”

215

38 Comments

There is a misconception emerging that AI agents will lead to immediate reductions in healthcare labor costs. While AI agents can automate end-to-end workflows such as booking appointments, answering basic patient questions, and performing form completion for prior authorizations, automating a single task is not equivalent to automating an entire job. Nurses are a prime example. Certain nursing tasks, such as care coordination and patient documentation, are highly automatable by AI agents; however, there is a tremendous amount of work nurses perform on the ground that cannot be fully automated with current technologies such as direct patient care, physical examinations, medication administration, wound care, patient support, and clinical assessments. These nuances make full role elimination less likely with current technologies. When articulating the ROI of an AI agent, we need to be both precise and accurate. Automating a task is more often not automating an entire profession. For roles that encompass many functions, such as nursing, AI agents can be invaluable tools for unburdening staff, increasing efficiency, and boosting throughput—benefits that are particularly valuable given current healthcare staffing and resource shortages. The most promising job candidates for full role elimination through AI remain positions with monolithic task structures, of which there are relatively few in healthcare today—scribes, medical coders, and data entry specialists for example. It is therefore unsurprising then that the most progress has been made in these categories.

123

18 Comments

Health caregivers suffer a "death by thousand logins and passwords".... A login/ app for EHR A login/ app for Payroll A login/ app for Benefits A login for Scheduling .... The list goes on. By the time is comes for a healthcare services operator to integrate "the next best thing for X", they're faced with adding yet another login/ app to their caregivers' experience. That's why, from Day 0, the Arya team has been focused on integrating into caregivers' existing tech ecosystem and workflow, in stead of adding to it. Arya now supports SAML 1.0, SAML 2.0 and OTP-based authentication, all powering lightweight and "login-less" (but secure) web and mobile experiences for caregivers. Another step towards our vision of powering a "simple, single pane of glass" for the caregiver. Come join us. #digitalhealth #homecare #homecareagencies #homehealth #PostAcuteCare #healthcareworkers #skillednursing #personalcare

19

We're underestimating how physicians will build and access software in the future and we're 100% underestimating how this will impact independent practice. By now I'm sure you've seen the Claude 3.5 Sonnet demos and all of the use cases or application non technical folks are building with 1-3 line prompts. Even Jensen Huang, CEO of Nvidia made a controversial comment on the future of coding, “It is our job to create computing technology such that nobody has to program. And that the programming language is human, everybody in the world is now a programmer. This is the miracle of artificial intelligence,” This is absolutely true, and if there's one area where this will have the biggest impact on society, it will be healthcare. The reason for that is that physicians and clinicians have NOT been included in the design of healthcare technology over the last 20ish years, leaving them to practice in systems designed by non-clinical people. Claude 3.5 offers a glimpse into the future of independent practice. Physicians will be able to design, build, and launch AI applications as needed without requiring developer support. In the future, I envision independent practices hiring their own AI Agent developers who can not only build these applications, but also integrate them into their practice operations infrastructure to create the ultimate practice management system. What application would you build if this were possible today? ----- Hi, I'm Dr. Mario Amaro, Founder and CEO Ease, and I talk about all things starting, running, and growing a private practice with AI. Follow me, if you are planning to start one or are currently figuring out creative ways to grow one. #PrivatePractice #SelfEmployment #HealthcareOnLinkedin #HeyEase #IndependentTogether #Fintech #Infrastructure #AIinHealthcare #CareDelivery

21

14 Comments

“I wish AI could document for me” Well it can. If you’re a healthcare leader or aspiring executive consider reaching out to schedule a demo. Connect here —> [email protected] Why is this type of technology even important? Clinicians want to treat patients not tap mindlessly on their EHRs. Clinical leaders want accurate documentation not documentation lacking skill provided or misinformation. Executives want retention and vibrant company culture not burned out ready to leave employees. Patients want better outcomes and true face to face time with their providers. In the home or elsewhere. Looking to talk more about AI and clinical workflows but not ready yet for a demo? My DMs are always open! #healthtech #healthcaredemo #healthcareinnovation #AIinhealthcare #aidocumentation #NLP #clinicaldocumentation #qualityreview #cliniciantransition #nonclinicalroles #homehealth #healthcareleadership #nursing #physicaltherapist #occupationaltherapist #slp

16

Should you sell your practice to a VC-Backed MSO Startup? tldr: - new VC-backed startups are forming MSOs to roll up independent practices - The pitch is physicians receive early liquidity from the roll up and are granted ESOP shares that can be used for retirement - Problem is the use of ESOPs with independent practices is not a new concept and has been used with large group practices since the 70's - ESOPs do not grant full ownership and in order for the shares to be valuable for retirement, the practice needs to run the same if not better post roll up - With VC-backed startups being primarily operated by non-physicians with zero clinical or medical practice experience, the likelihood of this happening is extremely low making the entire concept high risk However, there is a viable path for continued ownership + liquidity for independent practices. Check out the article to learn more. ⤵ https://lnkd.in/gmGvTYwP

7

3 Comments

Here’s your recap of last week’s health IT news 🗞️ 👇 🤖 AI Products • Emergency Services, Inc. + Augmedix Go ED: The emergency medicine group adopted the new ED-specific AI ambient scribe solution.    • Color + OpenAI: The cancer care tech company partnered with the GenAI giant to build a AI clinical decision support copilot.    • AKASA Medical Coding: The AI RCM vendor known for its AI prior auth tool AKASA Authorization Advisor released a new GenAI medical coding solution.    • Humata Health: The AI prior auth for providers vendor closed a $25M funding round led by healthcare org-backed funds The Blue Venture Fund and LRVHealth.    • Wellsheet + Concord Hospital Health System: The AI-enabled Smart EHR UI solution announced a client-reported 16.3% reduction in length of stay and 40% decrease in time spent in the EHR via its partnership with Concord Health, as well as the release of its new LLM-generated handoff summary feature. 🍎 VBC • BSIM Healthcare Services + Innovaccer: The healthcare provider—embarking on its first VBC contract—adopted the pop health data platform for analytics. 🩼 Durable Medical Equipment • Parachute Health: The DME e-prescribing and ordering solution released an update that integrates prior authorization. ⚕️Clinical Staffing • Matchwell + Indiana Hospital Association: The clinical staffing service partnered with the hospital member org to create the first state-wide resource pool for temp staffing. 🧑‍💻 Virtual and At-Home Care • Deaconess Health System + KeyCare: The Indiana-based health system adopted the Epic-based virtual care provider for around-the-clock virtual urgent care.    • UC Davis Health + Current Health: The health system launched a new RPM program for high blood pressure in partnership with Best Buy Health’s care-at-home platform. 🧠 Food for Thought: We came across a couple of good resources this past week on the current state of healthcare data information exchange: • This article in Health Affairs from Deven McGraw and Tina Grande provides a comprehensive overview of some of the patient health data abuses we've seen come to light in recent months, as well as a number of policy recommendations to improve the health information exchange landscape for all participants. https://lnkd.in/e_GEQ-JJ  (h/t Alya Sulaiman)    • This episode of Health Gorilla's InteropTalk gives a helpful update on the current state of affairs, with a particular focus on the state of trust across the health data exchange community and how the definition of "Treatment" may evolve. https://lnkd.in/e96AJG-5 (h/t Brendan Keeler) --- Reminder: you can sign up for the Elion Briefing to get the latest healthcare tech news delivered to your inbox each week 📬 👉 https://lnkd.in/e2UJ3ckP

36

2 Comments

Cracking the Code: Overcoming Venture Capital Challenges in Healthcare Substack:https://lnkd.in/eeE83ry3 Youtube: https://lnkd.in/e6pKBXZF In this video, we discuss the complex challenges healthcare startups face when dealing with venture capital. From conflicting expectations to ever-changing investment criteria, we dive into the issues entrepreneurs encounter and offer insights for success. #HealthcareStartups #VentureCapitalChallenges #StartupInvestment #Entrepreneurship #HealthcareInnovation #BusinessGrowth #InvestmentCriteria #EntrepreneurAdvice #HealthcareIndustry #StartupSuccess

4

Cracking the Code: Overcoming Venture Capital Challenges in Healthcare In this video, we discuss the complex challenges healthcare startups face when dealing with venture capital. Substack:https://lnkd.in/eeE83ry3 Youtube: https://lnkd.in/e6pKBXZF From conflicting expectations to ever-changing investment criteria, we dive into the issues entrepreneurs encounter and offer insights for success. #HealthcareStartups #VentureCapitalChallenges #StartupInvestment #Entrepreneurship #HealthcareInnovation #BusinessGrowth #InvestmentCriteria #EntrepreneurAdvice #HealthcareIndustry #StartupSuccess

1

Perhaps surprisingly, success in healthcare innovation takes more than a great idea – it takes strategic execution.   I have seen firsthand that founders who carefully align their teams and refine and sharpen their strategies are the ones who have the best chance of breaking through.   We are excited to help companies navigate this complex but rewarding journey.

10

2 Comments

Celebrating success with Augusta Health! Augusta Health, Virginia's leading community health system, is reshaping patient care with AI and automation. Their mission? To provide top-tier care while empowering patients and reducing staff workload. The Challenge: Traditionally, pre-registration was tedious and error-prone. Augusta Health aimed for a seamless, inclusive process for all patients. The Solution: Teaming up with Notable, Augusta Health crafted a user-friendly digital pre-registration experience. Patients can complete forms, submit insurance info, and get instructions via email or text. All info syncs directly with their MEDITECH Client/Server EHR seamlessly. Metrics that matter: Digital Registration & Intake Efficiency: Augusta Health has seen a 3.3x increase in efficiency through our digital solutions. Patient Satisfaction: A remarkable 91.2% average patient satisfaction rate, underscoring the user-friendly nature of our web-based workflows  2,000+ hours saved in manual labor. 👏 Direct Patient Feedback: - “I was able to get it completed at my leisure!” (65 - 74 yo patient) - “Instructions are easy to follow! Very efficient and uncomplicated compared to other registrations I have done at other locations!” (75 to 84 yo patient) - “I'm not completely confident using electronics, but this was easy for me to do.” (75 to 84 yo patient) - “Everything worked and made it very easy to complete on my phone. Nice application!!” (65 to 74 yo patient) - “Have done this several times and saves time on day of appointment/procedure.” (75 to 84 yo patient)  🙌🏻 Empowering Seniors: Senior patients love the simplicity, with 65-74-year-olds leading in digital intake completion rates at 63.5%! This is just the beginning of a profound improvement in healthcare productivity through AI and Automation. Thank you Katie A. for your leadership through this transformation.

61

MedView Patient Education Reports 62% Surge in Instruction Delivery in First Half of 2024 Company Prepares to Introduce AI Capabilities in Second Half of the Year Atlanta, Ga, 7/15/2024 – MedView Patient Education proudly announces a remarkable 62% increase in the number of new instructions delivered (69,745 to 113,039) during the first half of 2024, showcasing the company’s commitment to improving patient education and support. The growth spans across various instruction categories: - Home Medical Equipment: 61% increase - Disease Management: 7% increase - Medication Management: 42% increase - Home Respiratory Devices: 36% increase - Telehealth Instruction: 130% increase "This significant growth underscores our dedication to enhancing patient care through comprehensive education and support," said HD Hunsberger, Founder at MedView Patient Education. "Our team’s efforts are making a tangible difference in the lives of homebound patients, and we are excited to continue this momentum." Looking ahead, MedView is preparing to introduce advanced AI capabilities in the second half of 2024. These innovative tools are expected to further enhance the efficiency and effectiveness of patient education, providing more personalized and adaptive support. "We are on the cusp of a new era in patient education," added Hunsberger. "The integration of AI will empower us to offer even more precise and customized instruction, ultimately improving patient outcomes."

4

1 Comment

An overlooked benefit of AI scribes: standardizing and enriching clinical documentation for research purposes. Today, patient stories are filtered heavily through the lens of the physician and are further warped by billing codes. Depending on the medical specialty, pertinent positive or negative findings may not be documented, especially if they are insignificant for billing purposes. Omitting this information has tremendous downstream implications for research on disease phenotyping, progression, and treatment, as well as clinical trial recruiting. If architected thoughtfully, AI scribes can preserve the integrity of the patient journey, producing standardized and consistent documentation to support breakthrough research across disease classification, diagnostics, natural history, and therapeutic development.

123

12 Comments