Digital health care company Omada Health has just raised $73 million at a valuation of about $600 million. The company is playing into the rapid growth of digital health; according to research and investment firm Rock Health, digital health startups raised $8.1 billion last year, up from $956 million in 2011.
Omada started almost 10 years ago as a diabetes prevention company. Unlike traditional health care providers, the company only gets paid when its tools are effective, such as when patients lose weight or show improvement in their blood sugar levels. After it became successful in diabetes prevention, the company moved into mental health and other chronic conditions where coaching and monitoring can lead to behavioral change and better health.
Early in its life, Omada focused on research and published 11 clinical studies, transforming into a full medical provider rather than just a tech company. Now, Omada’s focus is to build a “21st century provider,” said CEO Sean Duffy, so patients can rely on digital services for more everyday health needs rather than going to the doctor’s office or the hospital.
Omada now has 550 companies paying for its services, including Cigna, Lowe’s, Costco, and more than 35 health plans.
“Omada seemed to do it right from the start,” said Chris Hogg, chief commercial officer of digital therapeutics company Propeller Health. “They focused on a specific and important user problem and brought both great design and also evidence generation.”
Although the Centers for Medicare and Medicaid Services recently said they wouldn’t pay for digitally administered diabetes prevention programs like Omada’s for Medicare patients, Duffy said he hopes regulators will change their minds in the future. Right now, however, the company is working with some private Medicare plans and has some contracts with state Medicaid plans as well.
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