Flare Capital is thrilled to lead the $25 million Series B funding into Eden Health based in New York. We wanted to share our perspective on why we invested in the company and this necessarily requires an examination of the world of employer health and the rise of virtual primary care amidst the dynamic backdrop of Covid-19.
U.S. Employer Healthcare
The U.S. employer healthcare market is immense and undergoing dramatic change. There are 78 million employees covered by employer-sponsored health plans, accounting for roughly $32 billion of total healthcare costs. Healthcare insurance is one of a handful of attractive employer-sponsored benefits offered to employees, designed to increase employee satisfaction and retention. Unlike other standard employer-offered benefits, the cost of health insurance is highly variable and tied to employee health conditions and related healthcare utilization. Employers desire to keep healthcare costs low but have historically taken a back seat to insurance carriers and third-party administrators (TPAs) to hold responsibility for ensuring value in employer-sponsored healthcare care coverage.
As healthcare costs continue to rise at a rate higher than inflation, employers are taking matters into their own hands. Several surveys have found a majority of larger employers procuring pivotal interventions to impact cost trends. Employers are engaging in novel contracting arrangements, partnering with new provider entities to deliver comprehensive primary care directly to their populations and sourcing solutions to better manage chronic medical diseases.
Workplace Clinics, Telehealth 1.0, and Navigation
In recent years, the main driver of healthcare cost has been price, and not the utilization of healthcare services. For this reason, employers are actively nudging their populations to lower sites of care. Solutions such as workplace clinics, telehealth, and navigation allow for employers to provide much-needed healthcare to their populations at an affordable cost.
Prior to the Covid-19 epidemic, a growing number of employers were adopting both workplace clinics and telehealth. PWC notes in 2019, 38% of large employers offered onsite/near-site health clinics, up from 27% in 2014. In addition, 86% of employers covered traditional telehealth services through benefit packages that incentivized employees to utilize telehealth over more costly in-person doctor visits. As employers purchase an array of a la carte healthcare services, navigation assistance becomes a must-have. Over 80% of employees surveyed by PWC requested a guide to help choose between in-person and virtual offerings.
Telehealth 1.0 usually referred to as “direct to consumer telehealth,” has been largely used for episodic transactions; predominantly urgent or after-hours care. Dominant early movers in this market space were Teladoc, Doctor on Demand, and American Well. Engagement would occur sparsely and infrequently without a clear longitudinal clinical relationship. Each telehealth “visit” would likely be with a different clinician, with no prior relationship to the patient. These characteristics led to baseline low utilization rates; Mercer found that in 2019 on average only 9% of eligible employees would use their telehealth benefit.
Rise of Covid-19 and Virtual Primary Care
Amidst the Covid-19 pandemic, employers have clamored to ensure the health and safety of their employees. Given the need for social distancing and concern for the disease’s transmission in healthcare facilities, traditional brick and mortar primary clinics have become prohibitive sites to receive care. In exchange, employers have seen historic rises in previously low telehealth utilization rates. Mckinsey estimates telehealth utilization rates have jumped 4.5x to a 46% utilization rate from pre-Covid levels.
With uncertainty about the near-term return of traditional primary care, we have seen an acceleration in the interest and potential adoption of “virtual primary care.” Virtual primary care (VPC) departs from its telehealth 1.0 progenitors by providing a holistic, longitudinal, and comprehensive care model for its patient population. VPC has the potential to serve as the “health home” for the patient, making referrals to specialists or a full complement of diagnostic testing. True VPC deploys care teams that develop long term relationships with patients, such that the patient will receive care from the same care team over time.
The power of VPC is through the tech-forward characteristics as asynchronous chat, with potential seamless escalation to synchronous telehealth, and digital connectivity with the rest of the healthcare system. Early entrants such as 98.6 and K Health have led the pack with AI powered, chat-based functionality. These tech-forward companies look to conveniently resolve most healthcare transactions without actually speaking to a clinician in real-time by using automated symptom checkers. By harnessing the power of AI and reducing the need of actual synchronous clinicians, these companies can offer compelling direct to consumer offerings in the $10-20/month price range.
As the excitement continues to heat up, a number of retail clinics have added digital offerings to speak to this need. The largest is One Medical, which, fresh off a successful IPO, has attempted to augment digital offerings to service their populations. As the progenitors of “virtual care,” many direct to consumer telehealth companies have modified and rebranded their historic telehealth 1.0 services as “virtual primary care.” In addition, popular online pharmacies known for prescribing treatments for hair loss and erectile dysfunction such as Ro and HIMS, have added “virtual primary care” services to their existing menu.
Enter Eden Health
Founded in 2016, Eden Health delivers a full stack virtual-first primary care platform that emphasizes omnichannel access to manage employer populations in all 50 states. Eden, an NCQA accredited Patient-Centered Medical Home, provides comprehensive primary care services virtually through their mobile native platform as well as through physical on-site /near-site clinics. The Eden care model combines 24/7 access to asynchronous chat with synchronous telehealth delivered by a dedicated, multi-disciplinary care team that can manage the most common healthcare conditions. Eden integrates behavioral health therapy and provides concierge navigation services to help employees streamline the administrative complexity of their healthcare journey.
The Eden Health team is co-founded by CEO Matt McCambridge and CPO Scott Sansovich, who prior to founding Eden worked as investors and technologists. Jack Stoddard, who has held former executive roles at Accolade, Haven, and Optum, serves as executive chair. The team is rounded out with leading healthcare technologists and Harvard-trained clinicians who manage clinical operations.
Aside from Flare, the team has won the support of previous investors Greycroft, PJC, Acrew capital, Max Ventures and attracted new one too — principals at Stone Point Capital — in the Series B round. This brings the company’s total capital raised to $39 million. Eden plans to continue to scale nationally with both virtual and in-person offerings delivered in all 50 states. In the next phase of the company, Eden plans to partner with insurance carriers, benefits consultants, and brokers to better serve employer populations.
Picture: Feodora Chiosea, Getty Images
