Homeward launched five months ago and the rural healthcare startup is moving full-speed ahead to notch major partnerships and secure a fresh bundle of cash.
The company secured $50 million in series B funding to rapidly expand into new states and markets, focusing on value-based contracts with health plans.
Health tech veteran and former Livongo executive Jennifer Schneider, M.D., reunited with other Livongo alums to tackle rural healthcare. Homeward launched at the ViVE 2022 digital health conference in March with an initial $20 million investment from General Catalyst.
The startup was able to secure a hefty $50 million round despite investor uncertainty amid the current economic downturn.
"We weren’t looking for funding and I think that speaks to traction in the market and the massive opportunity," Schneider said in an interview.
Homeward plans to invest in scaling its on-the-ground and virtual multidisciplinary care teams, including specialty care, as it expands into additional states in the coming months.
Homeward also inked its first value-based care partnership with Priority Health to provide medical care to Medicare Advantage members in rural Michigan. Priority Health Medicare members in 14 Michigan counties will have the opportunity to receive care from Homeward beginning this fall. The two organizations plan to expand this offering across the state.
Through the partnership, Homeward care teams will provide medical services to Priority Health's MA members through at-home visits and via community-based mobile clinics.
"The next stage of this company is all about execution. We'll be looking to execute and deliver on the Priority Health contract and we'll look to expand that gives us the ability to go faster and deliver the care model into more markets," Schneider said.
In June, Homeward landed a big partnership with retail pharmacy Rite Aid to provide primary care services on-site at up to 700 Rite Aid pharmacy locations in rural communities. Homeward plans to start providing in-network clinical services, including primary care and specialty care—beginning with cardiology—using its mobile vans parked in Rite Aid parking lots at stores in Michigan in the third quarter of this year.
Americans living in rural communities are experiencing increasing health disparities due to accelerated rural hospital closures and physician shortages. In fact, Americans living in rural communities experience a 40% higher preventable hospitalization rate and suffer a mortality rate 23% higher than those in urban communities due to the lack of access to quality care.
"The ecosystem in rural healthcare is not just kind of broken, it's massively broken," Schneider, the CEO of Homeward, told Fierce Healthcare back in March.
She noted that rural areas also contend with poor infrastructure and the lack of access to broadband internet.
The startup aims to "re-architect" rural healthcare, Schneider said.
Homeward delivers a hybrid model of technology and services that will immediately increase access to primary care and specialty services, beginning with cardiology. Homeward employs a multidisciplinary care team, available both virtually and on the ground via mobile care units, with in-home remote monitoring that keeps patients connected to their care team. These teams conduct physical exams, perform diagnostic tests and integrate with regional health systems, local physicians and specialists to provide care coordination, referring members to local in-person services as needed, Homeward executives said.
We asked ourselves a question, 'Could we actually deliver a service that was easier for people to access?' And the answer is yes. So that starts with a home visit or a visit in our mobile clinic, through one of our partners such as Rite Aid, and then we use the technology enablement, such as remote patient monitoring. So we don't have to see the patient every month. We can actually track and follow vitals to see how they're doing and then give recommendations," she said.
There are many healthcare disparities facing rural communities and it's a sizable problem. About 60 million people, or one in five Americans, live in rural America.
"People will say, 'Oh rural markets, that's a really interesting kind of niche play.' It's 60 million Americans. Livongo was focused on the 30 million Americans living with diabetes and everyone seemed to think that was a massive market," Schneider said. "Interestingly, it's independent of economic wealth. Just like where you live from a geographic standpoint, your outcomes in healthcare are different because of access to healthcare. We can change it; it doesn't have to be that way by leveraging technology and the ability to bring great high-quality care to people."
The company's partnership with Priority Health and its 30,000 MA members represents a significant step in the company's strategy to expand its care model to Medicare beneficiaries in rural areas, starting with Michigan.
By comparison, it took Oak Street Health six years to enroll 30,000 value-based patients, according to its S-1 filing with the U.S. Securities and Exchange Commission when it filed for its IPO in 2020.
Iora Health had 38,000 patients when they were acquired by One Medical last year for $2.1 billion.
About half of all counties in Michigan are rural, she noted. Homeward takes accountability for outcomes and cost of care, which allows the company to deploy services and technology in ways that wouldn’t be possible in a traditional fee-for-service model, according to Schneider.
"Priority Health has the insurance arm and they also are partnered with the largest employer, the largest health system in the state of Michigan, which is Spectrum Health and Beaumont Health (BHSH System). What that allows us to do in our partnership is that we will have 30,000 Medicare Advantage lives within the next three years and we can also work back into the health system," she said. "While we reach out to people and provide a lot of that technology enablement, we can then also partner and refer back when people need higher-level specialty care."
Our target market is tightly distributed among a small handful of health plans. In fact, approximately 90 percent of Medicare-eligible beneficiaries who live in rural markets are covered by seven payers. This funding enables us to reach rural populations even faster in partnership with health plans and local physicians.”
The series B round was led by ARCH Venture Partners and Human Capital and includes participation from General Catalyst, which led Homeward’s series A funding. Heavyweights in the health tech investment world also are backing the company—Lee Shapiro and Glen Tullman, co-founders of 7wireVentures, a well-known early-stage healthcare venture fund.
As the market tightens, the frantic pace of health tech funding witnessed in the past two years has slowed down.
From his perspective as an investor, Shapiro said the current market still opens up opportunities for startups that focus on tackling hard problems with innovative business models and strong leadership teams.
7wireVentures focuses on investing in early and growth-stage companies in health tech and digital health. "We haven’t got caught up in the hype around valuations that existed in 2020 and 2021," Shapiro said in an interview.
"Part of our thesis of what we’ve done for some time is helping to address the challenge that we all face as consumers of healthcare. Rural communities are suffering from lack of access, affordability and in many cases, the services we take for granted in urban areas are unavailable in rural areas," Shapiro said. "We truly believe in the mission of what [Homeward] is doing and we have a ton of confidence in the team."