The pandemic has pushed U.S. healthcare into a tech revolution

When Eren Bali founded Carbon Health in 2015, he had a vision of a health care company that put technology front and center. 

With his San Francisco-based urgent care centers, Bali hoped to bring a Silicon Valley sensibility to an industry that, while known for major breakthroughs like robotic surgery and implantable cardiac devices, struggled to offer digital conveniences like online scheduling and bill pay.

The COVID-19 pandemic could upend that distinction. The ability to see patients in their homes, to use technology to address staffing shortages, to connect people to rapid testing sites and address mental health needs — these are no longer nice-to-haves; they are public health imperatives.

The coronavirus crisis has forced America's health care industry to enter the digital age, at breakneck speed. And it has created new benchmarks that are likely to set the standard for care for years to come. 

For a new generation of health startups — including Carbon Health, one of seven of such firms on this year’s LinkedIn Top Startups list — the pandemic marks an incredible opportunity to meet the urgent and expanded need for health care services. Legacy health care providers, in turn, are using a combination of strategies including building the technology themselves, working with startups as clients or investing in them through their venture capital arms.

“Health care’s new front doors are digital,” said Dr. Steven Lester, who serves as associate medical director in the department of business development at the Mayo Clinic. “It has flooded the marketplace with nimble, innovative, disruptive companies.”

Even as the pandemic roiled the capital markets, venture funding for digital health reached a new high in the first half of 2020, as companies raked in a record $5.4 billion, according to Rock Health, a digital health venture fund. The average deal size also spiked to a record $25.1 million.

LinkedIn’s 2020 Top Startups U.S. list includes a critical mass of health care players not seen in previous years. These companies are rapidly expanding their employee headcount, attracting attention from non-employees and hiring talent away from LinkedIn’s coveted Top Companies. (Read more about the 2020 Top Startups list and our methodology here.) 

Some of these young companies are tackling pandemic-specific problems. Curative Health, for instance, no. 17 on the Top Startups list, is developing a diagnostic test that people can self-administer using a mouth swab.

But these firms are also responding to a number of broader, long-lasting industry shifts, as identified by Rock Health and other industry watchers. They include: 

• Prioritizing behavioral health on par with other medical conditions;
• More consumer-friendly care options, including telemedicine;
• A greater acknowledgement of the social factors that influence health outcomes; and
• More investment in data solutions, both to allow data sharing across a health care network as well as to build algorithms that can help with treatment and diagnostic decisions.

The health care firms on this year’s Top Startups list reflect all of these trends. Capsule (no. 15) and Alto Pharmacy (no. 49) are online prescription delivery services. Modern Health (no. 16) addresses employee burnout through remote and in-person services, while Mindstrong (no. 34) connects people with virtual therapy appointments. Trella Health (no. 37) analyzes Medicare data for post-acute care providers (like home health, hospices and skilled nursing facilities). And Carbon Health (no. 40) provides what it describes as “tech-enabled” care for people with urgent medical needs. 

Mental health gains fresh urgency

Alyson Friedensohn wasn’t thinking about a global pandemic when she and her co-founder started Modern Health in 2017. She just needed a therapist. She had moved to San Francisco with dreams of starting a business. But within her first two weeks in the city, she lost her job, her boyfriend broke up with her and her apartment flooded. It took 40 phone calls to find a therapist who would see her at a reasonable price.

These days, the company’s offerings include counseling services for frontline workers and group therapy sessions for people who are socially isolated. It has also set up what it calls Healing Circles for members of the Black community, as well as allies, who want to work through issues related to racial justice. 

The need for mental health services, already hard to find, has only become even more urgent this year. As the pandemic continues to cause major disruptions to our lives and livelihoods, more people are struggling with anxiety, depression and stress, surveys have found.

That’s why health care providers, including established players, are making behavioral health core to their services.

“For some people, behavioral health is the new primary care,” said Rich Roth, chief strategic innovation officer at CommonSpirit Health, a Chicago-based network of hospitals and outpatient services in 21 states. CommonSpirit is using a combination of human and digital methods to provide personalized care. Its program for pregnant women, for example, has meant fewer babies born preterm and shorter stays in the neonatal intensive care unit.

The doctor will see you now … in your living room

Carbon Health, for its part, tripled its headcount in the first half of 2020 and plans to add an additional 900 employees in the coming months. The company shifted its business to expand its telemedicine services, employ app-based screening tools and establish onsite testing for the coronavirus. It also recently launched a new service that will allow workplaces to test employees for the coronavirus in their offices.

Startups may be charting this digital path, but many legacy health care providers are moving in lockstep.

Providence, the largest health care provider in Washington state, an early epicenter of the U.S. coronavirus outbreak, acted quickly to prevent the spread of COVID-19 and scale its response. It set up 13,000 doctors and nurses on telemedicine — a massive increase from just a few hundred prior to the pandemic. And it increased its efforts to monitor COVID-19 patients in their homes, using a secure text messaging system and a six-question screening tool. Instead of assigning one nurse to monitor 20-25 people, it built an algorithm that would ultimately allow a nursing team to track 9,000 patients over five months.

“Covid is ... putting a lot of strain on hospitals,” said Dr. Todd Czartoski, Providence’s chief medical technology officer. “My hope is that, coming out of this, we will have changed the mindset of a lot of our providers. This crisis accelerated the transition faster than we could ever expect.”

St. Louis-based Ascension, the country’s second-largest hospital operator with 150 hospitals, also has digitized as much as possible for patients. To create social distance, for instance, it’s eliminated waiting rooms, instead using a digital waitlist to fast-track people right into an exam room.

Telemedicine visits also increased from just 10 per day to 17,000 per day, according to Eduardo Conrado, Ascension’s chief strategy and innovation officer. And the group expects that number to remain high for years to come. “Going forward, we forecast that 10% to 20% of interactions with our physicians will be virtual,” he said. 

Crisis forces regulators’ hands

Consumer demand and public health needs aren’t the only factors driving health care’s digital shift. The real kickstart came from Medicare, which made two key changes: It decided to reimburse telehealth visits on par with in-person appointments, and it waived restrictions that prevented physicians from treating patients outside the state where they are licensed. That latter change, for instance, allowed Providence’s ICU doctors to help treat patients in New York, when that state was overwhelmed by COVID-19 cases in the spring.

Telemedicine appointments also had been doubling at Providence each year since 2014. Last year, it reached 70,000 patient visits. 

This year? It’s already completed 1 million. 

“We’re betting on this — this is our future,” Czartoski said. “The only thing Covid did is accelerate it. If it hadn’t hit, getting telemedicine set up for 13,000 providers would have taken years.”

There’s plenty of excitement around how to serve people in their homes — not only for telehealth, but also with laboratory and pharmacy services. One-third of respondents to a LinkedIn poll said virtual visits are their preferred way of receiving medical care (another 42% are using telemedicine as a way to decrease the risk of contracting COVID-19.) That demand is a gamechanger.

“The market is stronger than the regulators,” Mayo Clinic’s Lester said.