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How Livongo Just Opened the Floodgate to a Digital Healthcare Wave

healthcare
August 12, 2019 By Pete Wilkins

In the future, when we analyze moments in time when true innovation transformed an industry, we’ll remember an event that happened just a couple of weeks ago: Livongo’sIPO. By the end of its trading debut — which left the company valued at $3.4 billion — Livongo proved two things: that it’s possible to empower people to live healthier by focusing on their whole being and that combining technology-driven solutions with a human touch is a successful business model in healthcare.

Using technology to help people effectively manage chronic health conditions like diabetes, Livongo demonstrated that their business model is effective for improving consumer health, is less costly for the payer, and thus is attractive for investors — especially because the model can expand into tangential markets and scale across the world. Unlike many traditional healthcare companies, Livongo helps people use less-intrusive technology and an easily accessible professional support network to change and maintain behavior that leads to healthier lives.

While this hasn’t been the business model of the past, it seems to be where healthcare is headed. Livongo is not the only company with a model like this. Another well-known startup that boasts a similar model is Noom — and more are entering the market. This is what is key. Livongo’s IPO is not merely an exciting success story; it is a catalyst for the forthcoming digital healthcare wave, a proof point that will leave consumers, healthcare professionals, insurance executives, CEOs, and investors confident that there are more innovative ways to address healthcare industry transformation.

And that industry transformation has guided a shift in how investors think about healthcare startups. Based on its market performance, investors valued Livongo more as a technology company than a healthcare company, the latter of which typically trades at lower multiples of revenue. Livongo fits into a broad digital-health sector that includes telemedicine, DNA testing, and consumer-wellness apps. And although Livongo is officially based in Mountain View, the company’s roots go back to Chicago, which is its second headquarters and home to Livongo’s founder and executive chairman, Glen Tullman.

This isn’t Tullman’s first healthcare company with a Chicago presence; he previously founded Allscripts here, which went public in 1999, and co-founded 7wire Ventures, a healthcare venture firm based in Chicago. Tullman has worked continuously to transform healthcare to a consumer-oriented business that provides people with the information, support, and control to own their health care. (You can read more about his insights on the topic in his book On Our Terms: Empowering the New Health Consumer.)

Tullman, Allscripts, and Livongo aren’t the only ones working to transform the healthcare industry here in the Midwest. Home to some of the best hospitals in the country, the Midwest is a prime location for continued healthcare innovation. With such a strong healthcare talent pool, we see a number of startups that are working to inspire greater wellness here and gaining strong traction.

Precision Medicine

In March of this year, Chicago-based precision medicine startup Tempus raised a $200 million Series F round to further its ability to help doctors prescribe patient- and disease-specific treatment. Now valued over $3 billion, the company started by sequencing cancer data and is expanding to other diseases as well.

Another precision medicine startup in the Midwest is Ann Arbor’s Strata Oncology, which raised a $26 million Series B funding round last year led by Pfizer and Merck. Strata empowers the creation, sharing, and use of clinical data across healthcare systems, thereby fueling further advancement in precision oncology treatment.

Convenient Access to Care

One of the major areas where we see a great deal of innovation is in moving the access point to healthcare closer to the patient. An early-stage startup that empowers patients to have more control over their healthcare is Detroit-based Alerje. Alerje helps patients with severe food allergies not only make healthier, data-driven choices about what they can eat, but the app allows them to easily seek healthcare fully inform providers of their medical conditions when they have an incident.

Regroup*, which is headquartered in Chicago, is democratizing access to mental healthcare through its telehealth platform that allows psychiatrists to provide patient care in rural areas where mental health resources are few.

While Regroup is focused on psychiatric care, Minneapolis-based Nice Healthcare’s platform is focused on general healthcare. Nice allows doctors to see patients online. When an in-person visit is necessary, Nice’s clinicians go to patients’ homes.

Similar to Nice, Chicago’s Kaizen Health* is working with healthcare providers to ensure that patients have the follow-up care they need for positive health outcomes. Kaizen partners with transportation services to ensure that everyone, regardless of access to transportation, is able to attend their healthcare appointments.

Mental Health

Another area where we see a notable increase in healthcare innovation is in how startups are seeking to provide better mental healthcare and disrupt addictive and compulsive behaviors.

Chicago-based Blueprint Health* — which helps clinicians conduct online mental health assessments between in-person visits and allows clinicians to deliver measurement-based care — raised $1.3 million earlier this year.

Ann Arbor-based Workit Health raised a Series A round earlier this year to expand its ability to provide expert addiction care online through a combination of doctors, therapists, and coaches.

Meanwhile, Chicago’s Triggr Health is also tackling addiction by using mobile phones to understand the habits of those in recovery and then intervening when the platform predicts relapse.

Chicago-based NOCD is doing similar work in to help those suffering from obsessive compulsive disorder (OCD). Its platform helps sufferers develop individualized plans, practice exercises to disruptive compulsive behaviors, and connect with therapists as well.

Similar to NOCD, Minneapolis-based HabitAware is working to empower people to disrupt compulsive behavior. Their hardware bracelet helps sufferers become more mindful of habits like nail biting, skin picking, and hair pulling — and then break those habits.

Healthcare Benefits

Disrupting a long-held healthcare industry are startups working to improve healthcare benefits. Minneapolis-based Bright Health is working to revolutionize the U.S. healthcare system by partnering with healthcare providers to improve the healthcare experience for patients and make it more affordable. The company plans to be in 12 states by next year.

Also in Minneapolis and looking to disrupt health insurance is Bind, which is focused on making insurance — and care — more transparent and accessible. The company’s goal is to empower people to make better choices about their care, through cost reduction and more informed healthcare decision-making.

Similar to Bind, Chicago-based benefits platform Health Joy’s cohesive platform provides benefits guidance to help employees make better decisions about their healthcare. The company raised a $12.5 million Series B round earlier this year.

Healthcare Operations

Finally, another area where we see healthcare innovation is in data-driven decision making. In April, Chicago-based ExplORer Surgical secured an addition $5 million in financing. The SaaS company helps hospitals monitor and understand what happens in the operating room.

Similarly, Chicago’s SwipeSense is being used to understand behavior in hospitals as it relates to patient care. The company’s hardware detects and tracks whether and when care providers wash their hands. This allows hospitals to increase their hygiene compliance requirements and reduce the spread of infection.

While some of these startups are farther along in their growth than others, all of them have no doubt been buoyed by Livongo’s IPO and the signal it sends to healthcare corporations, innovators, and investors everywhere. We are proud to have this expertise and vision here in the Midwest, and we look forward to seeing more Livongo-like exits in our future.

* My firm, HPA, invested in this company.

Originally featured in Forbes.