Healing America’s broken healthcare industry has been at the top of the priority list for almost every politician, entrepreneur and inventor for at least the past 40 years.
Costs continue to climb (roughly 5 percent this year) and spending is already 20 percent of the nation’s GDP. For the trillions of dollars Americans spend on healthcare, they’re getting declining services, more frequent ailments and a steadily diverging standard of care for the rich and the poor in the country.
Something needs to be done — and venture capitalists and some of the biggest names in finance led by Goldman Sachs are investing $74 million in a technology startup they see as a potential solution.
The company is Doctor On Demand, and its solution is video-based telemedicine.
The new funding, led by Goldman Sachs and Princeville Global (with participation from existing investors, including Venrock, Shasta Ventures and Tenaya Capital), will be used to continue the company’s rapid expansion in the U.S. and abroad — and brings the company’s total financing to $160 million.
“This trend of consumerization, which we’re leading, is really going to result in much greater patient-driven healthcare experiences, which will save the patient a lot of money,” says company chief executive Hill Ferguson .
Ferguson knows that the arc of internet services bends toward on demand and he says that healthcare should be no different. “Most people have no idea they can see a board-certified physician on their phone from their bed while they’re sick at two in the morning with a five-minute wait time,” he says.
That’s essentially the service that Doctor On Demand provides.
While the company’s consultations aren’t a panacea for everything that ails the healthcare industry, Ferguson claims his company’s board-certified staff can handle 90 percent of the consultations that happen every day in urgent-care facilities and for $300 less than insurers currently pay out.
While the service started out as something that consumers had to pay out of pocket, it has now transitioned to a more seamless (and cheaper) option for customers — it’s covered by most major insurance carriers.
“We’ve shifted from being a cash pay virtual practice to more of an enterprise player. We’re driving most of our volume through health insurance plans and employers,” Ferguson says.
The company employs its own doctors and staffs its video consultation service 24 hours a day, seven days a week, Ferguson says. Despite the workload — which sees the company’s virtual doctors consult with four patients each hour on average — the company’s 14-day readmission rate (a standard measure of effective diagnoses) is on par with brick and mortar services, Ferguson says.
Roughly 5 percent of the consultations involve patients who need to be referred to specialists, according to Ferguson.
The service also can refer patients to diagnostics and testing facilities to get blood work and other tests that can supplement an initial diagnosis.
Through its agreements with insurers, Doctor On Demand stipulates what kinds of conditions its video consultations can cover, and which ailments and maladies require immediate medical attention. Increasingly, customers are taking advantage of the company’s mental health services — an area that’s grown 240 percent since it was introduced, according to Ferguson.
Mental health is one growth area for the company, and its testing services provide another. In all, Ferguson thinks there’s a $50 billion addressable market in the U.S. alone. A figure, he says, that more than justifies the company’s $160 million (and counting) in funding.
Doctor On Demand isn’t profitable yet, and the new financing still sees the company valued under $1 billion, but Ferguson is confident about the future. “I gotta wear shades,” the chief executive said.