The US healthcare data aggregation market is becoming more congested by the day as specialist vendors rush in, the big health networks and payers on their radar. It is an intense, battleground where differentiation is so vital, and yet so elusive.
One US vendor aiming to step out from the crowd is 1upHealth, which earlier this month announced it had secured $40M Series C funding. In a sector with many different forces at play, the market will be watching closely how the firm spends its cash.
The Signify View
Connected data, or the relative lack of it, is one of the main challenges of the moment for many providers and payers. Despite some progress, most healthcare information is still siloed in multiple IT systems and organisations, with data locked deep in the patient record, hard to access, extract and normalise. Data aggregation tools that offer a longitudinal view of the patient journey, leveraging claims data, data from different EHRs (both inpatient and outpatient) as well as blending social determinants of health into a single data warehouse are valuable to healthcare providers, especially when value-based care (VBC) and the holistic management of patients is factored in.
Regulation is also driving demand among US providers and payers, who by law must now give patients the ability to securely access, use and share their electronic health information. CMS regulation also requires that health plans participating in federal exchanges share claims data with patients electronically.
Compared to many specialist VBC vendors flooding into the space, 1upHealth has quite the track record: six years in business, healthy growth in the last couple of years, 75 organisations (including national and regional health plans), the highest performing CMS ACOs, international clinical research organisations and more than 20 state Medicaid agencies on its client base; and a solid (FHIR platform-based) product. These are solid foundations on which to plot its next steps and a $40M war chest to spend.
Accelerating the Data Cloud
1upHealth says the funding will be deployed in three main ways as it steps up the creation of its data cloud. The first will be to develop its product in advance of the CMS regulations we refer to earlier. The second, enhancing the firm’s data cloud infrastructure for serverless scalability and open access. And, third, growing its customer services teams to support expansion.
While this strategy will enable 1upHealth to scale and sharpen its edge in a very competitive ecosystem in the medium-term, the longer-term outlook is a lot more uncertain as the dominant EHR vendors (like Epic and Oracle Health that already offer data aggregation tools), payer-provider-owned vendors like Optum and big tech generalists like Amazon (with its HealthLake solution) provide increasingly robust competition. Data aggregation/VBC specialists, such as 1UpHealth, Innovaccer and Health Catalyst, currently retain the upper hand in this environment with their better data aggregation and workflow solutions, but health networks do have a choice beyond specialist solutions, and product sophistication from the competition is increasing.
In the medium- to longer-term, all signs point to big EHR vendors winning out here as the IDNs and ACOs consolidate their health IT procurement. It would be logical, from both an integration and cost perspective, for an IDN using different instances of the Epic EHR across different care settings in its network to extend it to data aggregation, rather than buying data aggregation functionality from a specialist vendor. Many providers openly say that they ultimately want to align around Epic, and are simply waiting for Epic’s data aggregation and general VBC workflow products to get up to speed to take that next step. As that happens, more and more specialists will be replaced in IDNs and ACOs.
Confirming this shift, there are examples of IDNs using Innovaccer population health management products who are also engaging with Epic on how to evolve their solution based on the IDNs’ experience with Innovaccer.
With all this in mind, where do specialist vendors go from here? How do they adapt and respond?
A Case of 1up-manship?
Specialist vendors will take some comfort from the fact that their products are ideally suited to serving the US population health management/integrated care/VBC ecosystem, a key driver of US digital health markets. Vendors like Health Catalyst and Innovaccer and (to a much smaller extent) 1upHealth still compete well here, but questions remain as to whether they can keep their competitive advantage over EHR vendors over the medium-term.
In its case, 1upHealth will need much more in its locker than having an easily implemented integrated platform for IDNs, ACOs and payers in one patient record to differentiate and compete going forward. Put like that, $40M doesn’t sound like the sort of figure that will be a game changer, but it will definitely add to the firm’s integrations, enabling the building of more AI algorithms into the platform to improve workflows, and helping it scale commercially.
Another area where 1UpHealth can make headway is by serving up aggregated data as a basis for providers to build their own insight, care management and patient activation tools (which 1UpHealth already offers, but in a limited way). Providers like having a data platform that gives them the flexibility to build their own tools and this is a possible area for 1upHealth to develop. For many IDNs, Health Catalyst and Innovaccer tick more boxes in this respect, but 1UpHealth could deploy some of the $40M towards bolstering its care management tools portfolio.
One competitor that does this is Redox Healthcare, which has 4,500 health plan, provider and digital health company customers on its books. It announced in February it would be simplifying the exchange of healthcare data from legacy systems into Google Cloud products like Healthcare Data Engine and Healthcare API, effectively replicating its platform on Google Cloud for Google Cloud’s customers.
Another avenue for 1upHealth is the payer market which, compared to the provider market, has upside potential. Many new entrants to the data interoperability market, like Salesforce, are less focused on the provider/IDN/ACO market because of what they assume will be the domination by EHR vendors (and possibly big tech) in that space over the coming years.
But insurers also see huge value in using VBC management IT to help them manage customers’ health in the most efficient way. 1upHealth’s products are aligned well to payer needs, meaning this could well become a significant revenue stream in the medium-term, and again further developing its analytics and patient management tools to serve this market would be another wise allocation of some of the Series C funding.
Creative To Differentiate
Its Series C investors clearly see a bright future for 1upHealth. The firm is well run, has been on a steady growth trajectory and has a coherent strategic roadmap. However, this market sector is awash with start ups that have struggled to scale, and so it will need to be creative to differentiate, not deviate from its customers’ main pain points, and respond to the very real threat posed to it (and myriad other) vendors from the big EHR vendors.
In such an environment, there is no guarantee of success, but 1upHealth at least has a fighting chance.