Monogram Health, Strive Health to raise big funds as kidney care grows

[ad_1]

Kidney care startup Monogram Health plans to raise “a couple hundred million” in capital by early December, according to CEO and co-founder Michael Uchrin. 

Monogram Health previously raised $172 million over two funding rounds led by TPG, Frist Cressey Ventures and Norwest Venture Partners, according to Crunchbase. The three will likely participate in the next round, but not serve as the lead investors, Uchrin said. 

“Investors are gravitating and seeking out high-quality companies and so we’re excited about the momentum,” Uchrin said. 

Monogram Health’s funding round will represent one of the largest so far this year, according to data compiled by Digital Health Business & Technology. 

Global venture capital funding into digital health companies declined 40% to $13.8 billion in the first nine months of 2022, compared with $23 billion in the year-ago period. The decrease follows the collapse of large venture capital funding rounds because of high inflation and rising interest rates. Large, $100 million-plus mega-rounds in the first nine months of 2022 fell by more than 50%. There were 30 funding deals of $100 million or more, compared with 69 in 2021’s first nine months

Kidney care has become a popular target for digital health disruption. Rival kidney care startup Strive Health plans to raise additional funding next year, said CEO Chris Riopelle. 

“We spend about $400 billion in our country on kidney care, and with that many patients there’s a huge opportunity to engage people earlier in process,” Riopelle said. “Sixty percent of patients on dialysis arrive through a crash, which is a common term for a series of acute admissions on the fateful days that your kidneys don’t work anymore.”  

He declined to disclose how much the company sought to raise. Current investors New Enterprise Associates and CapitalG will likely participate in the round but there will probably be a new lead investor, Riopelle said. Strive Health has raised $220 million in total funding, according to Crunchbase.  

Both startups credit their growth in the bear market to a number of recent policy changes. 

Individuals diagnosed with end stage renal disease, including those under age 65, have long been eligible to enroll in the traditional Medicare program, which covers dialysis treatments, kidney transplants and other services. Dialysis removes waste and fluid from the blood when the kidneys are no longer working.

But before 2021, patients could only be grandfathered into Medicare Advantage plans. These plans can be an attractive option for patients because they offer out-of-pocket caps on spending and supplemental benefits that can address the social determinants of health faced by these patients.

In 2016, then-President Barack Obama passed the 21st Century Cares Act in 2016, which allowed patients with chronic kidney disease to enroll in Medicare Advantage plans for the first time last year.

Approximately 150,000 of the 809,000 total end stage renal disease patients were enrolled in Medicare Advantage plans at the end of 2019, according to the most recent data available from the U.S. Renal Data System, a federal tracking initiative. CMS said it expected 83,000 patients to eventually enroll in Medicare Advantage plans. 

An influx of these patients could present financial difficulties for insurers. Medicare Advantage plans pay an average of 27% more for dialysis services than traditional Medicare plans, according to an August study conducted by researchers at the University of Southern California.

That represents an anomaly for the private Medicare program, which generally pays providers the same rate for services as fee-for-service Medicare. Researchers credited the higher amount paid for outpatient dialysis to consolidation in the industry: DaVita Kidney Care and Fresenius Medical Care North America control more than 75% of the industry, the report said. Dialysis giant DaVita Kidney Care said 42% of its Medicare patients were enrolled in private Medicare Advantage plans by the end of 2021, according to the report. 

Health plans are striking partnerships with risk-bearing startups to offload some of the costs related to caring for patients. 

Monogram Health has inked more than 18 partnerships with health plans, including Humana, Cigna and Devoted Health, Uchrin said. Strive Health holds partnerships with Humana, Blue Cross Blue Shield North Carolina, Independence Blue Cross and others. Interwell Health–the joint venture between kidney care providers Fresenius Health Partners, InterWell Health and Cricket Health–announced a value-based partnership with UPMC Health Plan on Wednesday.  

The high costs of caring for these patients have captured the attention of reinsurers, Uchrin said. Monogram Health has inked partnerships with a few reinsurers, he said, while declining to identify the companies. Reinsurance companies contract with health insurance carriers to accept the risk of some of their patients, for a fee.

Providers are also interested in offloading the risk of some of these patients. 

Former President Donald Trump’s 2018 executive order directing the Center for Medicare & Medicaid Innovation to create value-based programs addressing kidney care has also helped grow these startups. Many of CMMI’s payment models have focused on incentivizing providers to accept the risk of kidney patients. Strive Health is working with approximately 250 providers through CMMI’s Chronic Kidney Care Choices Model, which launched this year, Riopelle said. The company plans to double the number of nephrologists it works with through the program in 2023. 

Gabriel Perna contributed to this report.

[ad_2]

Source link