Kidney care startup Monogram Health plans to raise “several hundred million” in funding as early as December, according to CEO and co-founder Michael Uchrin.
Monogram Health previously raised $172 million through 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 will not act as key investors, Uchrin said.
“Investors are attracting and looking for high-quality companies and so we are excited about this momentum,” said Uchrin.
Monogram Health’s funding round will represent one of the largest funding rounds ever this year, according to data compiled by Digital Health Business & Technology.
Global venture capital funding into digital health companies fell 40% to $13.8 billion in the first nine months of 2022, compared with $23 billion in the period a year ago. The drop follows the collapse of large rounds of venture capital funding because of high inflation and rising interest rates. Rounds larger than $100 million in the first nine months of 2022 are down more than 50%. There are 30 sponsorship deals of $100 million or more, compared to 69 in the first nine months of 2021
Kidney care has become a common target for digital health disruption. Rival kidney care startup Strive Health plans to raise more capital next year, said CEO Chris Riopelle.
“We spend about $400 billion in our country on kidney care, and with many of those patients, there is a huge opportunity to get people into treatment earlier,” says Riopelle. “Sixty percent of patients on dialysis have an accident, which is a common term for a series of acute hospitalizations on those fateful days when your kidneys stop working.”
He declined to disclose how much the company has sought to raise capital. Existing investors New business associations and CapitalG will likely participate in the round but there will likely be a new lead investor, Riopelle said. According to Crunchbase, Strive Health has raised a total of $220 million in funding.
Both startups recorded their growth in the bear market due to some recent policy changes.
People diagnosed with end-stage kidney disease, including those under the age of 65, have long been eligible to enroll in traditional Medicare, which includes 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 can only be included in Medicare Advantage plans. These plans can be an attractive option for patients because they provide out-of-pocket costs and additional benefits that can address the social determinants of health that these patients may have. must face to face.
In 2016, then-President Barack Obama signed into law the 21st Century Act, allowing patients with chronic kidney disease to enroll in a Medicare Advantage plan for the first time last year.
About 150,000 of the 809,000 patients with end-stage kidney disease were enrolled in a Medicare Advantage plan at the end of 2019, according to the most recent data available from the American Kidney Data System, a monitoring initiative. federal. CMS said it expects to eventually have 83,000 patients enrolled in Medicare Advantage plans.
This large number of patients can cause financial difficulties for insurance companies. Medicare Advantage plans pay 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 typically pays providers the same fee as fee-for-service Medicare. Researchers note higher amounts are paid for outpatient dialysis for industry consolidation: DaVita Kidney Care and Fresenius Medical Care North America control more than 75% of the industry, the report said. The report said 42% of their Medicare patients were enrolled in private Medicare Advantage plans by the end of 2021.
Health plans are strikingly partnering with at-risk startups to ease some of the costs associated with patient care.
Monogram Health has signed more than 18 partnerships with health plans, including Humana, Cigna and Devoted Health, Uchrin said. Strive Health has partnerships with Humana, Blue Cross Blue Shield North Carolina, Independence Blue Cross, and others. Interwell Health — a 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.
Uchrin said the high cost of care for these patients has attracted the attention of reinsurers. Monogram Health has partnered with several reinsurers, he said, while refusing to identify the companies. Reinsurance companies contract with health insurers to accept the risk for some of their patients, for a fee.
Service providers are also interested in reducing the risks of some of these patients.
Former President Donald Trump’s 2018 executive order directing the Centers 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 about 250 providers through CMMI’s Chronic Kidney Care Choice Model, launching this year, Riopelle said. The company plans to double the number of nephrologists it works with through the program by 2023.
Gabriel Perna contributed to this report.
