Zeal Capital Partners’ Emily Zhen: Opportunities for AgeTech Innovation

ABSTRACT

KEY POINTS FROM EMILY ZHEN'S POV:

What makes AgeTech such an important category going forward? 

• Innovative solutions for the needs of older adults are becoming increasingly critical, as the U.S. population is older today than it has ever been. Addressing these needs effectively will not only support these individuals but also alleviate the mounting pressures on healthcare systems and caregivers. Moreover, workplaces must recognize the diverse life stages and health challenges faced by different age demographics and the role that employers must play in providing education and other support to the 65+ population, as this demographic accounts for an ever-larger portion of the workforce. 
• There are significant opportunities for AgeTech innovation that span from healthcare to fintech. Advancements in AI and machine learning, as well as personalized care models, are driving new approaches to enhance the independence, safety, and overall well-being of aging adults. “These opportunities include innovative retirement savings plans and options for financing long-term care, caregiving solutions, chronic disease management through improved primary and specialty care, services for mental health and loneliness, Medicare innovation, improved services for dual-eligibles (Medicare and Medicaid patients), and women’s health solutions,” says Zhen. 
• Following the demonstrated success of value-based care models in primary care, the service model is being increasingly adopted within specialty care. In contrast to the traditional fee-for-service model in healthcare, value-based care aligns the incentives of providers, doctors, medical teams, and care teams to improve patient outcomes. “The initial wave of implementation was seen in primary care with companies like Oak Street Health and ChenMed serving Medicare Advantage. Now we are seeing the wave of adoption shift towards specialist areas,” says Zhen. “This is an exciting trend that will be critical for truly improving patient outcomes. Specialists play a vital role in treating chronic conditions that affect many adults—diabetes, heart disease, kidney disease, or many others—and are huge contributors to their overall health. The Center for Medicare and Medicaid Innovation continues to provide tailwinds for this initiative by introducing the Guide Models for Dementia Care, the Kidney Care Choices program and the Oncology Care Model.” 

What kinds of business models or use cases might be attached to the category?

• AI-driven platforms that facilitate and streamline benefits care navigation. An example is Auxa Health, a Zeal Capital Partners portfolio company that leverages AI and natural language processing to support seamless benefit navigation of prescription drug, health plan, state, and federal benefits. By combining extensive healthcare information, Auxa serves as a one-stop-shop for healthcare organizations to understand patient coverage information, surface eligibility and prior authorization requirements, and efficiently enroll patients into high-value public benefits in real time. The result is significantly reduced admin burden, improved health outcomes, and increased patient and team member satisfaction.
• Solutions targeting dual-eligible populations—those who qualify for both Medicaid and Medicare—will play an essential role in reducing systemic healthcare costs. Dual-eligible individuals often have a higher prevalence of chronic conditions, requiring integrated care solutions that can manage multiple health issues simultaneously. By improving care delivery and outcomes for dual-eligible populations, AgeTech solutions can help reduce overall healthcare costs. Effective management of chronic conditions and better care coordination can lead to fewer hospitalizations and emergency room visits, translating into significant cost savings for the healthcare system.
• Future of Work solutions that foster continuous learning and skills development. From skills development to health and wellness programs, these categories serve as essential tools for fostering a supportive and productive work environment for individuals of all ages. “Individuals aged 50 and above play a significant role in the labor force, contributing invaluable skills and experience. They also make up an increasing share of the workforce. It's critical that workplaces are aware of the different life stages and the unique health challenges that every segment encounters.”
• Fintech solutions such as portable retirement benefits make it easier for people to save and invest in their future. Nearly half of all working Americans lack access to a retirement plan at work. Fintech solutions are emerging that make saving for retirement easier. Icon Savings, a Zeal Capital Partners portfolio company, has fundamentally changed the game of retirement savings by building a portable retirement plan (PRP). A PRP offers the familiar benefits of a 401(k) through pre-tax contributions but goes further. It eliminates the usual hassles for employers like high costs, complex administration, and regulatory hurdles. And for employees, PRPs remove the need for the dreaded rollover, thereby allowing the freedom to seamlessly move retirement savings from job to job. 

• A new generation of companies is emerging to support the implementation of value-based primary care and specialty care models. Examples of value-based care models serving older adults that Zhen invested in her previous role at NEA include Strive Health, Curana Health, and Spiras Health:

  1. Strive Health works with health systems, physician groups, and payers to care for patients with Chronic Kidney Disease (CKD) and End-Stage Renal Disease (ESRD) in a value-based setting. Strive has helped its partners achieve meaningful clinical results and savings, including 49% reduction in hospitalizations and 36% reduction in 30-day hospital readmissions. “This wave of adoption by primary care providers and specialists presents a significant economic opportunity for the companies that facilitate adoption. By reducing historically high healthcare spending, these companies can positively benefit patients while capturing savings and continuing to grow,” says Zhen.
  2. Curana Health partners with more than 1,400 senior living communities across the country to provide in-room rounding, on-site clinics, and health plans designed for older adults. Curana is an example of the powerful intersection between healthcare and senior housing: partnerships between senior housing operators and healthcare providers can benefit older adults while reducing the total cost of care as they address clinical care and activities of daily living together. Curana’s partnership with senior housing operators has resulted in tangible clinical outcome improvements and savings. Curana has helped reduce hospital admissions by 39% with a 95% member satisfaction. Its Medicare Shared Savings Program (MSSP) Accountable Care Organization (ACO) performed in the top 1% of ACOs in its first year of operation, achieving a per beneficiary per year (PBPY) savings amount of $2,235 - the highest PBPY for any first-year MSSP ACO since 2012.
  3. Spiras Health offers a home-based and virtual care solution for older adults with complex chronic conditions like congestive heart failure, hypertension, diabetes, and chronic obstructive pulmonary disorder, in partnership with health plans. According to studies, Medicare beneficiaries with one to four chronic conditions have the highest risk for emergency department visits and admissions. Spiras’ care model, which addresses both clinical and social needs, has helped reduce hospitalizations by 40% and reduce ED visits by 20%.

• Payment models in value-based care can vary, ranging from shared savings arrangements to models where providers assume full responsibility for both generated savings or losses:

  • Per-Member-Per-Month Fee: Providers are compensated for each individual covered, at a certain fee per month.
  • Shared Savings: Providers have the opportunity to assume increasing levels of risk. This includes both upside savings potential and downside risk if performance is poor.
  • Global Capitation: Providers receive the full premium dollar for managing a patient. They retain 100% of the savings if costs are reduced but also bear 100% of the losses if expenses exceed revenue.

What are some of the potential roadblocks?

• Personalized healthcare solutions that leverage AI must achieve a delicate balance in order to augment—but not replace—the inherently human elements of healthcare. Ensuring that technology complements rather than replaces human care is vital in creating personalized healthcare solutions that improve patient outcomes. “While advancements in AI offer tremendous potential for enhancing healthcare, it is equally important to acknowledge that many aspects of healthcare cannot be replaced with technology. The concept of 'nudge and touch' encapsulates this balance: technology can provide reminders and personalized recommendations, but it cannot replace the human element between patients and their doctors,” says Zhen.
• The unpredictability of government regulation can present challenges for emerging companies when navigating the complex healthcare landscape. This is especially relevant for startups operating in the Medicaid, Medicare, and dual-eligible space, as they must navigate regulatory requirements while developing and implementing digital tools to support older adults.

IN THE INVESTOR’S OWN WORDS

The number of Americans ages 65 and older is projected to increase from 58 million in 2022 to 82 million by 2050 (a 47% increase), and the 65-and-older age group's share of the total population is projected to rise from 17% to 23%, according to the U.S. Census Bureau. The number of people retiring every day is over 11,200 per day, according to Fortune, and more than 4.1M Americans are expected to turn 65 in 2024.

The U.S. population is older today than it has ever been, and people are living longer due to medical advancements. However, living longer does not necessarily mean living better. This also impacts the working generation of caregivers taking care of their aging parents. The need - and the underlying costs - of this implication is huge. 

Across the many facets of the AgeTech category, there are opportunities to leverage technology—including AI, machine learning, medical devices, and remote patient monitoring—to better understand the needs of older adults on a longitudinal basis. Value-based healthcare can improve how the 65+ population is served. Moreover, the digital infrastructure that companies invested heavily in during the pandemic can be scaled to imp older adults.

MORE Q&A

Q: What do other market participants or observers misunderstand about this category?

A: One common misunderstanding is that older adults do not engage with technology. This is not true—they engage differently and cannot be considered as a monolith. 

It's important to understand that every generation will have its own preferences and tendencies in how they interact with technology. A comprehensive understanding of older adults' needs and preferences when engaging with technology is essential for the successful adoption and utilization of digital tools that are tailored to this demographic.

WHAT ELSE TO WATCH IN THIS CATEGORY 

Innovation and investment in women’s health are accelerating, yet there are still many opportunities to address unmet needs through education, research, and greater funding for startups. Improved dissemination of accurate and evidence-based education will be critical to ensuring that consumers are aware of treatment options and that providers are equipped with the latest research and innovation. Zeal Capital Partners portfolio company Seven Starling, Rosy Wellness, Midi Health, Origin Therapy and Mae are among the startups promoting women’s health literacy and education. Additionally, further research on numerous diseases that disproportionately or uniquely impact women will inform improved treatments and diagnostics. An example is autoimmune disease. Nearly 80% of those with an autoimmune condition are women. Zeal Capital Partners portfolio company ViuHealth is tackling autoimmune care management and accelerating life sciences research in the space.   

Read more from Emily Zhen in Inflection Point:Accelerating Women’s Health Innovation, and in Health Equity Trends to Watch in 2024.

STARTUPS MENTIONED IN THIS BRIEF

Auxa Health*, ChenMed, Curana Health, Icon Savings*, Mae, Midi Health, Oak Street Health, Origin Therapy, Rosy Wellness, Seven Starling*, Spiras Health, Strive Health, ViuHealth*  

Editor’s Note: Zeal Capital Partners' portfolio companies denoted by (*).

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