Dive Brief:
- Anthem, digital health startup K Health and Blackstone Growth are launching a joint venture focused on leveraging technology to better triage patient care and lower healthcare costs.
- The venture, which has nine figures in funding and is called Hydrogen Health, has been in development for years, the companies said in a Wednesday release. Hydrogen will use K Health’s artificial intelligence tools to bring digital health products to the employer and consumer markets.
- Financial terms of the deal were not disclosed, but the company will launch with a put and call agreement between Anthem and Blackstone. A spokesperson for the deal declined to share details on which parties held the put/call options.
Dive Insight:
Anthem first tapped K Health for its AI technology in 2019, investing tens of millions of dollars in the platform in a bid to better triage care for its more than 40 million members.
K Health’s app allows consumers to screen medical needs past an AI trained to ask questions about history, age and gender to address the health concern. The algorithm, which was built by doctors, was trained on millions of medical records to give more accurate results, and — after a short conversation — tells patients how doctors diagnose and treat people with similar conditions and backgrounds.
The symptom checker is free, but a one-time virtual visit with a doctor costs $19, and a membership with unlimited telehealth visits is $9 per month.
K Health has grown steadily since its founding in 2016, raising $271 million in funding to date and growing to a base of 4 million users. Like other digital health startups, K Health saw its growth accelerate during the coronavirus pandemic, with CEO Allon Bloch saying in November the company grew 1,000% over the past year alone.
The five-year-old company focuses on primary care, along with mental health conditions like anxiety and depression, and launched K for Parents, a virtual pediatrics service, in February. It has also been rounding out its partnerships in the space, announcing a collaboration with academic medical giant Mayo Clinic through the Mayo Clinic Platform, the hospital’s digital health and artificial intelligence project, in November.
Along with Anthem, K Health also partners with Maccabi Healthcare Services, Israel’s second-largest HMO with 2.4 million members.
The new venture from New York-based K Health, backed by an Anthem investment and funds managed by investment firm Blackstone, is aiming to tackle perhaps the most fundamental problem in American healthcare: skyrocketing expenditures.
The venture will develop new technologies targeting the direct-to-consumer, direct-to-employer and direct-to-insurer markets, with solutions designed to be integrated in different health plans, the companies said.
Hydrogen will triage care at a “dramatically lower cost than other options on the market,” hopefully lowering medical costs, the release said.
Though it enjoys backers with deep pockets and long histories in healthcare, Hydrogen is not the first player with high hopes of cutting health costs using tech. A high-profile joint venture from Amazon, Berkshire Hathaway and J.P. Morgan, shuttered in February after three years of trying to lower prices with little to show for the effort, hinting at the difficulty of reforming the complex insurance system.
Unlike Haven however, which focused on disrupting the insurance sector, K Health is attempting to improve access to primary care, which advocates say is key to curbing overall costs and bettering quality of care in the U.S. Despite the ongoing push to prioritize preventative medicine in the U.S., primary care accounts for a fraction of overall expenditures, and numerous doctor’s offices have been forced to close or consolidate, a situation that’s been worsened during COVID-19.
Bloch, who previously ran online publishing site Wix and helped found online car retailer Vroom, will also serve as CEO of Hydrogen.
