New kidney care companies intend to make money by keeping patients out of the dialysis chair

San Francisco-based Cricket Health only has about a dozen employees. 

But the tech-enabled kidney care provider has some big ambitions in the next year or so when it comes to disrupting the world of kidney care. Namely, they intend to show that their proprietary data analytics can identify high-risk patients to allow early intervention, improve outcomes and lower the costs of the care that chronic kidney disease often requires. 

In a world of perverse payment incentives, that is far easier said than done, Arvind Rajan, Cricket's CEO, told FierceHealthcare in an interview.

"It’s a completely broken system from end to end and that’s really what we set out to tackle," Rajan said. "We provide care where the primary focus is slowing the progression of kidney failure."

Arvind Rajan (Cricket Health)

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The company recently raised a $24 million series A funding round from a who's who of investors including Cigna Corp., as well LinkedIn CEO Jeff Weiner, Joe Montana's Liquid 2 Ventures and Rock Health co-founder Halle Tecco. They are not yet profitable, said Rajan, but they expect to become so in the next few years by saving payers money through better managing patients, keeping them out of the hospital and out of dialysis centers as long as possible. 

Over the next 24 months, the company will begin ramping up its activities, scaling its workforce to about 100 people and deploying its first commercial programs for both payers and health systems around the country, he said.

If successful, they'll be in good company. Earlier this year, CVS Health—which is still working to close a deal to acquire insurance giant Aetna—announced its plan to enter the chronic kidney care market. Its plan is to focus on patient education and early detection of kidney disease while working on developing and deploying a home-based hemodialysis device.

They're also part of a wave of startups gaining investor attention for their focus on disrupting the massive kidney care market in light of shifts to value-based payments across healthcare. Among these companies are groups started by former executives of Denver-based kidney care giant DaVita.

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Town Hall Ventures, the venture firm co-founded by a group of health industry veterans including former CMS Acting Director Andy Slavitt, just announced it invested in kidney care startup Strive Health. The company, which is led by former DaVita executives Bob Badal and Chris Riopelle and has gained investments from New Enterprise Associates, boasts that its kidney care service line, powered by specialized analytics, can cut inpatient utilization by 50% and triple rates of home dialysis adoption.

In April, Town Hall Ventures also announced it invested in Somatus, a Vienna, Virginia-based kidney care company led by another DaVita alum: CEO Ikenna Okezie. That company also specializes in offering value-based kidney care management services to health systems and payers.

"There is a big entrenched system, particularly among the two dominant players like DaVita where they have brick-and-mortar centers, they have dialysis chairs they need to fill and they've spent a lot of money on that infrastructure and system," Trevor Price, general partner at Town Hall, told FierceHealthcare.

But that no longer makes sense, Price said.

"In today's world, you can treat patients with chronic kidney disease in different settings that are frankly much better for them and lower cost for the system," Price said. "You can provide forms of dialysis in the home. You don't need brick-and-mortar settings and you don't need to have all the big real estate infrastructure costs these companies have built up trying to dominate and control this massive industry. There is the opportunity to disrupt the system. And it benefits everyone."

Rajan estimates Cricket Health is chasing a market worth well over $100 billion. An estimate published earlier this year by KBV Research projects that the global dialysis market is growing at an annual rate of 5.3% and will reach $124 billion by 2023. "Our main theses as a company is the way to truly change the cost curve of kidney disease is fundamentally be intervening earlier with kidney disease patients because you can keep patients from dialysis longer," he said.

Of course, DaVita officials have said it has also evolved to address the changing healthcare landscape. 

Kent Thiry, DaVita's chairman and chief executive officer, told Bloomberg earlier this week that his company is “unusually suited to drive” change in the industry. The company is selling its primary health business while investing in new businesses. "Every patient is different," Thiry said. "What we're proud of is we give each patient very customized attention in the midst of a very disciplined process. We are the clinical leader in America both in terms of execution and in innovation."

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Rajan said the legislation reflects the frustration of payers over the cost of in-center dialysis care, which can reach well north of $100,000 a year and is not the best treatment option for most patients.

"I think this reflects the tipping point of that frustration which has driven the legislation around the country," he said. "What we're excited about is it's the first step in payers reassessing the fundamental understanding of how to approach kidney care. Even the conversations we've had with payers in the last six months compared to when we started three years ago is fundamentally different."