GE Ventures and StartUp Health, a global health innovation company, are expanding their partnership to focus on a class of healthcare startups developing virtual health and next generation payment solutions.
Over the next year, StartUp Health and GE (GE) will select at least 10 qualified companies in the payment or virtual health business. Chosen companies will then enter into the intensive three-year StartUp Health Academy and receive an initial $50,000 investment. The idea is to mentor startups working in a field that has a “tremendous amount of opportunity for everyone,” according to Ruchita Sinha, director of healthcare for GE Ventures.
“There’s a huge transition to value-based care,” said Sinha. “It’s coming fast and furious, and we want to be right in the center of it. Our focus for these startups are defined by this transition.”
To put it in perspective, about 20% of all Medicare payments used a value-based model in 2014. By 2018, the department of Health and Human Services aims to tie 50% of traditional, or fee-for-service, Medicare payments to a value-based model. That represents a huge opportunity for companies that can help hospitals, doctors and post-acute care providers make that transition, especially by leveraging new, effective business models.
Sinha pointed to Omada Health as an example of a startup that’s developed a unique payment model for its virtual diabetes prevention program. Omada Health amassed huge amounts of clinical data showing that the program helps patients lose weight and prevent diabetes onset. It has allowed them to leverage companies’ medical budgets to buy their services rather than the usually cash-strapped wellness budgets, which, in turn, led them to big players like Cigna (CI) who started offering their platform to other self-insured employers.
“One of the really exciting things happening in healthcare innovation is not only the technology, but the business models that we’re seeing evolve,” said Unity Stoakes, co-founder and president of StartUp Health. “We’re always looking for companies that are doing disruptive things, looking at innovation differently.”
Nurturing these startups is also a big opportunity for investors like GE Ventures and StartUp Health, which both hope to recreate the success of their initial class of startups. Their partnership started almost three years ago with an initial crop of 16 digital healthcare-focused startups. The portfolio value of those companies has increased three- to four-fold since GE’s initial investment, including one company that was acquired and two companies that GE invested in with follow-on funding.
The program will accept applications through Nov. 2nd, looking for startups and early-stage growth companies focused on payment solutions and virtual health platforms.
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