This is a consequence of Startup Year One, a special series of interviews with founders about the most important lessons that they learned immediately after their company's first year of operation.
Starting a startup during a pandemic sounds unfortunate. Starting a healthcare startup during a pandemic may sound inscrutable – but the founders of medical device seller Tomorrow Health suggest that this was the best possible strategy.
The company was co-founded by Vijay Kedar (a veteran of Oscar Health) and Gabriel Flateman (a co-founder and former chief technology officer at Casper) and is supported by $ 60 billion and today from Andreessen Horowitz, a Silicon Valley venture capital powerhouse the second fastest growing area of healthcare spending by facilitating the purchase of home health care products such as orthopedics and respiratory devices.
Although the company was founded in 2019, the official launch was slated for later in 2020. However, the co-founders postponed the launch date to mid-May to meet a need that is deeply personal but affects millions of people across the country. Kedar says he saw firsthand cracks in the U.S. healthcare system when his family needed reliable home care after the months of his mother's months spent on a stage 4 ventilator in cancer intensive care.
Total domestic health expenditure in the U.S. rose to $ 108 billion in 2018. And now the COVID-19 pandemic has left many patients with no choice but to stay at home, even when dealing with ongoing, non-COVID-related health needs. This current public health crisis has focused on home health care and highlighted gaps in the ability of national infrastructure to provide comprehensive support to patients where they live.
Fortune recently spoke to Kedar and Flateman to learn more about the startup's first fiscal year, lessons learned, hurdles overcome, and plans for next year.
For reasons of clarity, the following interview was compressed and edited slightly.
The co-founders of Tomorrow Health, Vijay Kedar (left) and Gabriel Flateman. Courtesy of Tomorrow Health
Fortune: Can you tell me something about your background? How did you connect?
Kedar: When I grew up in a family of doctors, I often say that I assumed I came from the womb. I have spent hundreds of hours volunteering in middle school hospitals and writing medical research in high school. When I was young, I knew what impact health problems could have on the lives of patients and their families.
After investing in health and technology companies for a few years, I joined Oscar Health as a former employee and was wearing a range of hats as we grew from a few dozen to over 1,200 employees and sales of $ 1 billion. As General Manager, I founded the company's Texas division, built a business that covered over 50,000 Texans for health insurance, and drove efforts to manage care at a national level. As Senior Director of Care Innovation, I worked with my colleagues to give patients the ability to manage home healthcare and better coordinate care for our sickest members. At Oscar, I learned what it takes to drive real change in the healthcare ecosystem by combining a detailed understanding of the realities and complexity of U.S. healthcare with technology, data, and design to deliver better outcomes for patients .
Flateman: I am a repeat founder and self-taught engineer who focuses on using technology to drive consumer change in areas where it is most needed. At Tomorrow Health I manage engineering, product, design and analytics across the company. Prior to that, I worked for over five years as a co-founder and chief technology officer at Casper, where I built and scaled the business to generate over $ 1 billion in combined sales. I led a team of over 100 people in the areas of technology, digital products and customer experience and developed the technology to operate Casper's extensive logistics infrastructure across multiple channels, regions and product lines. I also focused on building and expanding Casper's award-winning customer experience on our website and in retail stores. I am a lifelong musician and have a degree in music from Brown University.
Kedar: Gabe and I have been friends for years. When I started developing the Tomorrow Health business model, I first asked him for advice. We spent hours developing the technical architecture and mapping the components of the business. It wasn't long before it became clear that his experience in designing technology-based processes and creating a seamless customer experience in an industry where it was painfully lacking was critical. By combining our experience, we have built a team that similarly reflects the connection of in-depth health services and operations with some of the best minds in technology, logistics and member experience.
Healthcare is a Byzantine industry by nature, but especially in the United States. What inspired the start of Tomorrow Health? In your opinion, what gaps can your company close and what can it fix in a system that many critics say is broken – which is only made more apparent by the current public health crisis?
Kedar: During my time at Oscar, my mother was diagnosed with stage 3 rectal cancer. After a few months in the hospital, she needed a year of intensive home care. Coordinating their home care opened my eyes to the major challenges that so many patients and families face when they transition to home health care. From working with almost a dozen different providers to faxing documents for hours to use their insurance benefits (up to experiencing) the ubiquitous lack of patient education or guidance, I knew there had to be a better solution. We developed Tomorrow Health as this solution to help millions of patients manage their healthcare where they want to be: at home.
Major health problems in the US include misaligned incentives between key stakeholders, enormous fragmentation of care (with care providers performing very isolated roles) and a lack of commitment to patient experience. With this in mind, we offer our patients a seamless and connected care experience by coordinating with their doctors to identify the products and services that best suit their needs. Navigation in their insurance benefits; Providing the home care resources they need; and guide them through every step of the journey. We combine a full-stack healthcare provider with a technical logistics platform to offer patients, their service providers and insurers a promise of cost and quality value and to link it with a personalized service. The result is a healthcare experience that feels much more like what we would all expect for our loved ones in a time of need.
Starting a new healthcare company in the middle of a pandemic is daunting, to say the least. And you've moved your start timeline up. What prompted you to take this action and how did it turn out?
Kedar: As the COVID-19 pandemic spread, we saw its impact on the patients we looked after. Hundreds of millions of Americans were suddenly connected to their homes, including seniors and people at risk. As the need for home care increased dramatically, we heard from many patients who faced access issues as many local retailers closed their doors or were unable to care for patients at home. We knew we could help. We had a nationwide distribution network, the ability to provide virtual supplies, and a team that quickly adapted to the reality of remote work. And that's how we acted.
Since our introduction, we have served both COVID-infected and COVID-affected people. We have provided critical breathing equipment and support to elderly patients who manage step-down care with a COVID-19 ventilator after weeks. Some of the millions of Americans who are currently dealing with chronic illnesses without traditional access to their health care receive medical care and guidance providers. We work with over 100 regional and national health plans and have launched a special program with the New York Department of Health and Human Services to provide the city's seniors with medical equipment, supplies and support. We were thankful that we were able to help those in need in these difficult times, and I was always amazed at the way our team responded to the call.
Looking back, what were some of the biggest hurdles you faced in the past year before you started? What surprised you the most?
Kedar: As mentioned earlier, healthcare innovation requires understanding and recognizing the complexity of the industry. You can't just build better technology on a broken health infrastructure and expect much better results. You have to rebuild the infrastructure, and that takes time. For us, this meant building a full-stack home care provider that spanned dozens of regulatory applications, determining where to build and where to partner, and continually learning how to best serve our patients and partners .
We were grateful that we closely linked investors from Andreessen Horowitz, BoxGroup and Rainfall Ventures as well as consultants who supported our journey in every phase. Our advisors, Trent Haywood, former chief medical officer at the Blue Cross Blue Shield Association, and Beth Bierbower, former segment president at Humana, helped inform our insurance partners and find out how we can bring the maximum benefit to our partners. Trevor Fetter, former CEO of Tenet Healthcare, gave valuable advice on how to lead in a time of great uncertainty at the start of the COVID-19 pandemic.
How will the pandemic and the downturn affect your company's future, from product development to capital raising, given the current economic climate?
Kedar: The transition from home care was inevitable well before the pandemic. 90% of the elderly opted for age and the systematic switch to value-based care. However, there is no doubt that this trend has been significantly accelerated by COVID-19. We have noticed that our customer base – patients, insurers and providers – has increased the demand and need for resources that enable home care. We worked closely with insurers and integrated healthcare systems to retrofit their home networks and received inquiries from dozens of potential distributors.
As we expand our team, we have seen great interest from candidates from different backgrounds who are interested in solving problems that affect the health and well-being of many people in this crisis. In addition, we have received important information from investors interested in more comprehensive topics related to home and virtual care.
If you look beyond the post-pandemic, which can range from one year to a few years, how do you plan to expand Tomorrow Health and what should the business look like in five years?
Kedar: Our vision for Tomorrow Health is to be America's trusted platform for delivering and coordinating healthcare at home. In the coming years, we will expand nationally, build new partnerships with industry stakeholders, and expand our capabilities to serve a broader base of patient needs. We will expand our team in the areas of technology, operations, business development and advocacy for care.
Ultimately, we want to be a partner and advocate for millions of patients and families who manage chronic illnesses or the recovery from surgery from the comfort of their own home. As our footprint, team and skills grow, we want to maintain the same ethos and values that guide us today and strive to improve the health experience that we believe patients deserve, always on mission Report and treat each patient as we would our own family members.
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