March 5, 2024
By: Emily Zhen, Principal and Head of Healthcare
We are excited to publicly share the thesis behind our newest investment vertical, health equity, and highlight trends that are currently top-of-mind for us in 2024.
The need for healthcare innovation is clear, particularly with a lens towards health equity. While the pandemic dramatically accelerated healthcare innovation, it also exacerbated and highlighted longstanding inequities and disparities. At Zeal Capital Partners, we see a ripe opportunity to invest in tech-enabled, early-stage businesses delivering or accelerating care to underserved populations. These platforms are simultaneously creating massive social impact by addressing health disparities and increasing the total addressable market. At the same time, advancements in AI and technology are enabling greater access to personalized care. Investing in these companies has the potential to drive meaningful alpha.
Zeal invests in enduring companies that generate outsized economic and impact returns across 3 categories: health equity, financial technology, and the future of work and learning. Our five-pronged, market-backed approach called Inclusive Investing transforms the way we source, invest in, and scale businesses to grant equitable access to capital, resources, and opportunities. Within health equity, we focus on investing in the following subcategories:
- Access & Affordability of Care: Tech-enabled solutions or infrastructure that improve access and affordability of care and medications across all populations (Medicaid, Medicare, commercial and uninsured)
- Women’s Health: Evidence-based, tech-enabled care models that improve women’s health outcomes, ranging from fertility to maternity to menopause and conditions that disproportionately impact women
- Mental Health & Wellness: Innovative tech-enabled solutions that address behavioral and mental health conditions, including wellness solutions that improve quality of life
- Social Determinants of Health: Platforms that address non-medical factors that impact health outcomes, such as food as medicine, medical transportation, housing, and environmental factors
Trends to Watch: In this piece, we outline 4 health equity trends across our subcategories:
1. Access & Affordability of Care: Spotlight on Specialty Care
The U.S. spends an estimated $2 trillion annually on specialty care. Specialty care is a massive component of payer costs, and care delivery infrastructure is extremely fragmented today. Case in point: at least a third of older adults see more than five doctors. When it comes to improving access and affordability of care, addressing specialty chronic conditions is paramount. To do this, we must (i) rethink traditional business and payment models, (ii) integrate primary and specialty care to make the care journey more seamless, and (iii) address “next frontier” specialty care.
Rethinking traditional payment models in specialty care: The Center for Medicare and Medicaid Services (CMS) set a goal to have all Medicare beneficiaries and the vast majority of Medicaid enrollees in a value-based relationship by 2030. The first wave of value-based care models was in primary care (such as the ACO REACH Model and Making Care Primary Model), and the next wave is in specialty care. Given the high spend and unmet need, specialty care is ripe for technological and business model innovation. CMS has realized this too, promoting several innovative payment models in specialty care including the Kidney Care Choices Model, Oncology Care Model and the Cell and Gene Therapy Access Model for Sickle Cell Disease. These payment models aim to encourage a more whole-person, integrated approach to specialty care and promote more equitable access. Accompanying these new CMS models, innovative companies have emerged like Strive Health (kidney care), Thyme Care (oncology) and Marti Health (sickle cell disease).
The below market map from Health Management Associates describes the growing number of specialty-care focused care delivery organizations that are starting to take on risk, whether it be hybrid (primary + specialty) or specialty-care focused. As you can see, there is significant whitespace and spend in the specialty-care focused markets.
Integrating primary and specialty care: Primary care and specialty care today are highly fragmented, resulting in worse outcomes for patients and inefficiencies for both providers and patients. To improve end-to-end outcomes, we must integrate primary and specialty care. We need to reimagine referral management, clinical decision support, and care coordination between providers managing the same patient. There are various approaches to solving this:
One approach is “curbside consults” for clinical decision support. PicassoMD offers a platform for primary care doctors to conduct specialty curbside consults during visits, helping to reduce unnecessary specialty referrals and make appropriate referrals.
The second approach is integrating primary and specialty care providers in a risk-bearing network. Conduce Health is a multi-specialty risk-bearing network that contracts between risk-bearing primary care providers and specialty groups.
The third approach is creating “specialty care” MSOs focused on a given condition, like chronic kidney disease, and contracting with at-risk primary care groups and payers. Strive Health partners with nephrology groups and helps them enter into risk-bearing arrangements with at-risk primary care providers and payers.
Innovating in “next frontier” specialty care: We are excited for further innovation in specialty care in “next frontier” conditions like autoimmune, cardiology (Ventricle Health, Ishi Health, Chamber Cardio), and musculoskeletal care (MSK) (Vori Health).
2. Women’s Health: Empowering OB/GYNs Across Continuum of Women’s Health
Though women drive 80% of healthcare decisions for families, women have long faced challenges in accessing quality healthcare. These challenges include lack of representation in medical research, misdiagnosis, conscious and unconscious bias, and undertreatment, especially among women of color. The health equity challenges in women’s health are dire. The U.S. has the highest maternal mortality and morbidity rate of any other developed country and the number of maternal deaths has actually doubled over the last 20 years. Black mothers died at the highest rate, followed by American Indian and Native Alaskan mothers.
On the bright side, we are starting to see momentum pick up in women’s health innovation and dollars invested, including in focused solutions for women of color. Between 2018 and 2023, women’s health investments rose 314% vs. 15% in all healthcare according to the latest SVB women’s health report. McKinsey considers solving this women’s health gap a $1 trillion opportunity.
What’s clear from our conversations with consumers, providers, and innovators is that OB/GYNs are the lynchpin across the continuum of women’s health. In many cases, OB/GYNs are the go-to resource throughout a woman's life journey, from maternal health to menopause and chronic disease management.
However, there is a severe shortage of OB/GYNs - in fact, half of U.S. counties lack a single OB/GYN. OB/GYNs are overstretched and under-resourced. For this reason, we believe it is crucial to invest in solutions that empower OB/GYNs across women’s health:
Empowering OB/GYNs in Maternal Care: Maternal care is more than just labor and delivery, and OB/GYNs are stretched thin as they try to address all the needs that come up in a women’s reproductive journey. It’s no surprise that women’s health investment has historically centered around reproductive and maternal health. Zeal has been tracking innovations that help to “fill in the gaps” that OB/GYNs may not have the time, training, availability, or geographical reach to address. This includes prenatal and postpartum care (up through 12 months post-pregnancy), high-risk pregnancies, fertility support (e.g. Frame Fertility), targeted care for moms of color, and more. One solution to this is adding OB/GYN extenders like doulas and midwives to complement care alongside OB/GYNs in coordinated care teams. Companies like Mae (doula-led Black maternal care) and Quilted Health (midwife-led care) have shown they can improve maternal health outcomes and reduce complications (co-morbidities and mortalities). The reimbursement environment for doula-led services has also become more favorable. Wraparound models like Mahmee and Cayaba Care offer multidisciplinary tech-enabled care teams to complement existing obstetrician relationships.
Empowering OB/GYNs through Enablement: Given the increasing workload and shortage of OB/GYNs, several companies aim to make the lives of OB/GYNs easier through technology. Through Zeal’s partnership with Barclays to bring institutional capital to Black-led companies at the pre-seed stages, our Barclays Black Formation Investments (BBFI) team recently invested in Aster, an all-in-one women’s health practice management platform. As an early-stage investment firm that invests in companies from pre-seed to Series A, we are proud to support co-founders Fifi Kara, Andrew Tran, and Lailah Kara-Newton, MD:
“We believe the only way to reverse the decades-long downward trajectory of women's health outcomes is to re-design, and rebuild the underlying stack that powers women’s health. At Aster, we are addressing the full cycle of maternal care from conception to delivery to post-partum. Instead of the increasing fragmentation in care delivery, we are improving it at source, where the core elements of care happen. We’re bringing software solutions to a group that has traditionally been underserved and overlooked.”- Fifi Kara, Co-Founder and CEO of Aster
Empowering OBGYNs through Mental Health Screening & Support: It may be surprising to hear that 1 in 10 pregnant mothers experience a mental health condition like depression, yet often, these needs go undiagnosed and untreated. Our portfolio company Seven Starling, Canopie, Mavida Health and FamilyWell are partnering with OB/GYNs to tackle women’s mental health from early screening to triage to treatment. Given that postpartum depression often goes unnoticed, these mental health support platforms are critical. Health equity is a key element to consider here, as availability of care does not equate to access to care. Underserved moms are less likely to be able to utilize services/treatments that exist, and infrastructure must be built to help access these services:
“Especially in maternal mental health, so much has to go right for an underserved mom to get to the point of accessing a service or treatment. Underserved moms are less likely to be screened in the first place for a mental health condition, less likely to have the time to make or attend an appointment, and certainly less likely to have the financial resources to pay out of pocket. Given that underserved moms are more likely to struggle with a mental health condition, the infrastructure around accessing care and services is equally as important as the actual delivery of those services.” - Anne Wanlund, Founder and CEO of Canopie
Empowering OB/GYNs on Menopausal Care: Beyond maternal care, OB/GYNs are the main provider for women in the perimenopause, menopause, and postmenopausal stages. However, fewer than one in five OB/GYN residency programs have education on menopause. This leaves women’s menopause needs and symptoms unaddressed and underdiagnosed. To fill this need, we have seen companies like Midi and Evernow, which offer virtual menopause care and pharmacy resources.
Empowering OB/GYNs in Chronic Condition Management: An area we’d like to see more innovation in is women-specific chronic condition management, such as oncology (breast cancer), cardiovascular, osteoporosis, and autoimmune care. After all, 47% of women’s health is related to conditions that affect women disproportionately. Given this, there is a ripe opportunity to invest in companies that are tackling conditions that are more likely to impact women. For example, Wellen is an exercise platform geared towards women at-risk for osteoporosis.
3. Mental Health & Wellness: Spotlight on Serious Mental Illness & Pediatric Care
Spending and utilization of mental health services increased dramatically since the pandemic. A RAND Corporation claims-based study published in JAMA covering visits for 7 million adults demonstrated a 54% increase in spending from March 2020 - Aug 2022 and 39% increase in utilization in the same time period.
The demand for affordable mental healthcare outpaces the number of psychiatrists, psychologists, and therapists. This supply/demand imbalance and unmet need are particularly acute in serious mental illness (SMI) and pediatric populations:
Increased focus on Serious Mental Illness (SMI) & Higher Acuity: Many solutions address mild-to-moderate anxiety and depression, ranging from employee-focused platforms like Lyra to apps like Calm and Headspace. In our view, the bigger need now lies in higher acuity conditions, where fewer solutions exist. These conditions are highly complex and often cannot be addressed through clinical care alone. To truly address higher acuity mental health conditions, we need to tackle social determinants of health and lived experiences in parallel. Firsthand unlocked the power of shared lived experiences in addressing SMI, especially for the Medicaid population. The Company matches members with peers who have worked through an SMI or substance use disorder themselves, Community Resource Guides to ensure members are connected with housing and food support, and Care Guides to connect members to clinicians for additional support. Similarly, Marigold is an AI-augmented anonymous social network that uses the power of peer support to improve mental health outcomes. Other solutions include OptionsMD (a data-driven telemedicine platform for SMI), Amae (psychiatrist-led integrated clinical and social care for SMI), and Flock Health (which emphasizes early prediction and integrated treatment of mental health crises and SMI).
Increased focus on Pediatric Mental Health: The pandemic also shed light on the great unmet need in pediatric mental health. The initial wave of mental health solutions was primarily adult-focused, while children and adolescents were overlooked. A variety of models tackle this, from Handspring Health to Manatee and Fort Health. These have different go-to-market strategies, including partnerships with payers (Handspring Health), pediatricians (Fort Health) and schools (Daybreak and Maro). Companies like Fort Health are implementing the collaborative care model, which integrates behavioral health care with primary care. Several randomized controlled trials have demonstrated that Collaborative Care increases access to mental health care and is more effective and cost efficient than the current standard of care for treating common mental illnesses. Recognizing the importance of mental health, the CMS announced in January 2024 a new model called Innovation in Behavioral Health (IBH) to advance the integration of behavioral health with physical health. Under IBH, community-based behavioral health practices will form interprofessional care teams consisting of behavioral and physical health providers, as well as community-based supports.
4. Social Determinants of Health (SDoH): Tackling Social Care in Tandem with Clinical Care
Health goes beyond medical care. In fact, medical care is estimated to only impact 10-20% of the modifiable contributors to healthy outcomes in a population. The other 80-90% are accounted for by social determinants of health (SDoH) - health-related behaviors, socioeconomic factors, and environmental factors. Despite the importance of SDoH, they are usually not accounted for or incorporated into clinical care. We believe that SDoH must be addressed in tandem with clinical care through seamless benefits navigation, a community-based approach, and strong clinical integration.
Seamless Benefits Navigation: It’s not just what benefits are provided, it’s about getting members to use them. Resources are difficult to access and tap into, especially for underserved populations. Auxa Health is tackling this issue head-on with their AI-enabled benefits navigation platform that empowers care managers and patients to understand, enroll, and optimize the use of their state, federal, and health plan benefits:
"$100 billion dollars of social care benefits go unused each year, while 70% of Americans report at least one unmet need, such as food insecurity. This glaring disconnect not only perpetuates health inequity, it underscores the fragmented nature of our healthcare system. We do a poor job of arming care teams with the information they need to assess patient needs and respond, in real-time, with solutions. The good news is that we are experiencing a post-Covid sea change where healthcare organizations and policymakers recognize the value of addressing whole person needs and are seeking tools, like Auxa Health, to enable timely intervention." - Monica Chopra, CEO of Auxa Health
Enrolling in state and federal programs like Medicaid and SNAP (Supplemental Nutrition Assistance Program) is highly administratively burdensome. Millions of Americans are left without benefits due to the daunting paperwork. In the wake of Medicaid redetermination restarting, Fortuna Health is making navigating Medicaid faster, simpler, and digital.
Community-Based Approach: We are increasingly seeing nonclinical providers work together with traditional clinical providers to tackle SDoH. For example, Waymark employs a community-health worker led model to provide wraparound care for Medicaid patients in partnership with primary care doctors. In partnership with health plans, Fabric Health meets people in laundromats to enroll and engage them with their health benefits.
Strong Clinical Integration: Non-medical factors like food, housing, and transportation are essential to address, yet they are more powerful when integrated with clinical data and pathways. For example, food can be adapted to an individual’s unique health conditions and lifestyle, and delivered as “food-as-medicine.” Culina Health and NourishedRx are integrating tailored food plans into clinical pathways to improve care outcomes. To close the loop, short-term clinical outcomes and KPIs should be clearly tracked from these SDoH interventions.
Join us in working towards a health equitable world
At Zeal, health equity is more than just a buzzphrase. We believe health equity is imperative to tackle when innovating in any aspect of healthcare and empowering people to live life to the fullest. There is tremendous economic and social opportunity to tackle the most critical unmet demands and underserved markets, and we look forward to the year ahead. If you are a:
- Founder: Building towards a more health-equitable world, we would love to hear about what you are working on.
- Like-Minded Investor: Working towards similar goals, we would love to partner.