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A handful of companies are powering the next wave of the digital health revolution. Here's why investors are betting millions on healthcare's 'plumbers.'

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  • Companies like Wheel provide technology for other digital-health companies as a service.
  • Investor interest in these companies could mean the digital-health ecosystem is maturing.
  • Similar to technology, though, only a few infrastructure companies will remain dominant over time.

A new generation of technology startups wants to upend how healthcare is delivered after the coronavirus pandemic upended the industry's status quo.

As the pandemic dragged on, most hospitals and doctors' offices started thinking about how to best serve patients virtually longer-term. A group of startups has stepped in to help bigger healthcare companies fill the technology gaps. 

These startups have a simple proposition common among tech companies. They make software that facilitates videoconferencing, productivity, patient tracking, and scheduling for healthcare companies. And much like their tech-industry counterparts, these companies start by selling to other healthcare startups before landing lucrative contracts with bigger hospitals. 

These companies sell themselves as one-stop shops. The startups handle the technical sides of things, train physicians on how to use the software, and are around for troubleshooting. All the business they're selling to has to do is create an account and sign the contract.

As more parts of healthcare add virtual services in any capacity, these companies could become an entrenched part of the system and worth billions of dollars.

For now, the field is relatively open, with private investors pouring roughly $231 million into a handful of potential winners in what amounts to healthcare tech's latest gold rush.

"The core tech operating system of healthcare just does not work on a go-forward basis," the Andreessen Horowitz general partner Julie Yoo told Insider in July. "The notion that we are seeing the building of a new healthcare system outside the traditional healthcare system — you would get laughed out of the room 10 years ago because it just was not a viable strategy. It didn't exist back then."

Investors have pegged a handful of early standouts, including Wheel, Truepill, SteadyMD, and Particle Health, a group that Insider has dubbed the "plumbers." Much like plumbers, these companies are building the pipes through which healthcare information, data, and patient services will travel. And like plumbing, these companies' software remains invisible to patients unless something goes wrong.

"As we continue to plumb the industry, we find, oh, there's a really big problem that impacts the clinician or impacts the ability for people to innovate in a new way. So we solve that problem and continue to add on," the Wheel cofounder and CEO Michelle Davey told Insider in August.

Companies like Wheel sell easy-to-use software for clinics that want to add telemedicine capabilities

A headshot of Michelle Davey, Wheel CEO and cofounder
Michelle Davey, Wheel CEO and cofounder. Wheel

Wheel is almost like a version of the e-commerce giant Shopify in healthcare.

It sells its software for running virtual visits to clinics, which they can then customize to suit their needs, even adding logos or other branding changes for when patients and doctors log on. To date, it has raised more than $66 million in funding, according to PitchBook data.

Wheel today works with clinics, labs, tech companies, and pharmacies to get telemedicine services up and running. For instance, Wheel is powering the virtual visits through the delivery startup Gopuff's website as the $15 billion company expands into dispensing and delivering prescriptions. A representative for Wheel told Insider that it doesn't confirm or comment on its list of clients.

"Pre-Wheel, everybody was building this stack themselves," Davey said of the healthcare industry's technological fragmentation. "So we said, well, what if we built the horizontal layer, if we build that plumbing and infrastructure, everybody can just plug in on top and scale their services."

According to Davey, Wheel lets healthcare companies set up a telemedicine service essentially overnight, a process that she estimated used to take upward of 15 weeks and $15 million.

During the pandemic, Wheel helped clinics see patients virtually as many doctors scrambled to provide care during lockdowns. At the time, it had just 15 employees. Now it has over 100 and is helping more companies navigate a hybrid system in which doctors see patients virtually and in person.

"Most people talk about the patient, but what I think is most interesting is how much adoption came from the clinical side," Davey said of telehealth use during the pandemic. "I think that the preconceived notion that doctors and clinicians don't like telehealth is actually going to fall by the wayside."

Other startups like Truepill help online startups deliver  medications

Side-by-side headshots of Truepill cofounders Umar Afridi and Sid Viswanathan
The Truepill cofounders Umar Afridi, left, and Sid Viswanathan. Truepill

Truepill, another startup, offers a similar solution for companies looking to deliver medicines. It handles the messy logistics of shipping medications, working with telehealth startups that send patients Viagra and birth control.

At first, Truepill worked with online startups like Nurx, Hims, and Lemonaid. It fulfilled members' prescriptions and delivered them around the US as part of its "pharmacy API and fulfillment service," Insider previously reported. Now Truepill is starting to work with health systems, drug manufacturers, and health insurers. For instance, it's providing pharmacy services for UnitedHealth Group's consumer online pharmacy Optum Store. 

Similar to Wheel, Truepill customers connect their website or app directly to Truepill on the software's back end, meaning a customer wouldn't know their prescription is coming from Truepill. If a Nurx customer were prescribed birth control, for example, that prescription is sent to Truepill, which fulfills the order and sends it directly to the customer's door.

To date, the company has raised $114 million from investors such as Optum Ventures, Oak HC/FT, and Social Capital, among others.

Other companies like Particle Health are breaking down barriers between provider data

A group of Particle Health workers wearing masks stands outside beneath a structure with stone columns
The Particle Health team. Particle Health

Another set of infrastructure companies breaking into healthcare is focused on allowing doctors' offices, clinics, and hospitals to communicate easily in the name of continuous care.

New York-based Particle Health is one such company that has developed software to confirm patients' identities across different healthcare systems and has standardized templates for forms to make transitions between systems smoother. If a patient sees a neurologist, for example, the records from that visit can carry over to their primary-care physician by confirming that it is the same patient.

Greg Yap, a Particle Health investor at Menlo Ventures, likened the startup to Plaid, a fintech company that similarly confirms peoples' identities for banking and other financial services. To date, Particle Health has raised $14.3 million, according to the company.

A big part of the challenge, he said, was accurately distinguishing among patients with the same name and converting records that have been stored in different formats. To power that part of healthcare IT's infrastructure is bigger than just copy and pasting information across documents, he said.

"It's a complicated tech challenge," Yap told Insider in December.

The company doesn't store any of the data it makes available, which allows it to make efficient changes more often and sell to different groups that have vastly different security needs. 

"The data holders keep their information, and data seekers can access it through the pipes. It's only ever the data that the patient wants them to see," Yap said.

Startups like SteadyMD want to power telehealth services that are just as cohesive as in-person care

SteadyMD handles both the technical aspects of telehealth as well as the human aspect by hiring its own network of physicians, clinicians, and nurse practitioners who can see patients virtually. From there, it pairs members with the same doctor each time they use the service to create a similar experience to in-person visits.

Its software allows smaller companies and clinics to conduct virtual urgent-care visits or at-home testing, according to the company's website. It also facilitates online prescription delivery if a patient opts in to its preventive-care program.

SteadyMD works with direct-to-consumer startups, behavioral-health companies, and some health plans. 

The St. Louis-based company has raised $36.5 million to date, according to PitchBook data, from investors such as Lux Capital, 23andMe CEO Anne Wojcicki, and Ashton Kutcher, among others.

Digital Health Startups Venture Capital

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