Health tech industry observers: DTC is no longer DOA
Direct-to-consumer health care has retaken its seat at the table, industry observers told Axios at HLTH.
Why it matters: The shift in tune comes as rising health care costs see patients, particularly women, become more active health care purchasers.
Driving the news: The rise in recent years of high-deductible health plans means patients bear more of the risk for their care than payers. The average deductible for an employer-sponsored plan in 2023 was $2,004 for an individual and $3,868 for a family.
- Telehealth-friendly regulations have been extended, including a last-minute reversal by the Drug Enforcement Administration (DEA) that extends a waiver to let providers prescribe controlled substances without in-person visits.
- Women, including women of color, are increasingly turning to virtual care tools, including telehealth.
Of note: Women are also the most active users of health care services generally, particularly when it comes to preventive care.
Flashback: Many experts dismissed the approach several years ago, citing challenges including high customer acquisition costs and dependence upon developing name recognition and maintaining customer loyalty.
What they're saying now: "I used to say DTC was DOA," Bessemer partner Steve Kraus told Axios during a meeting at HLTH. "I don't say that anymore," he added, citing the success of companies such as One Medical.
- "We are all about consumer-directed health care. You need to be able to deliver care in a cost-effective, accessible way," said 7wire Ventures partner Alyssa Jaffee told Axios during a meeting at HLTH.
- Jaffee added one exception to that rule: startups that don't accept insurance. "Cash pay I will never support — it contributes to health inequity."
Be smart: Peer-reviewed research and reports find women's medical concerns are dismissed by providers at far higher rates than those of men — and that, too, is likely underwriting increased demand for DTC approaches.
- "Particularly for women of color, trust is central in re-orienting care relationships that have historically been rooted in violence, dismissal or other forms of discrimination," Rock Health analysts wrote in a 2022 report.
Meanwhile, the historic reversal of Roe v. Wade in 2022 has also turned investors toward women-focused startups.
What's happening: "One of the underlying mechanisms within women's health care today is that there's such a lack of trust in the system, because there's such a lack of trust from the system," Hey Jane CEO Kiki Freedman said during a panel at HLTH.
- "Women are so underserved ... they are often the ones seeking out better options," Evvy interim CEO Priyanka Jain said on the panel with Freedman.
- "People never believe me when I tell them our customer acquisition costs. People never believe me when I tell them our organic revenue. But here's the thing: That's where women are going when they're experiencing these symptoms," she said.
- "I know there's a lot of DTC unfriendliness in the market right now, but I will say we just raised our Series A, so it's definitely possible," Jain added.
State of play: Many direct-to-consumer startups have attracted market attention in recent years, with several focused on women.
- Amazon bought primary care network operator One Medical for a cool $4 billion.
- Caraway, a startup offering youth-focused virtual mental, reproductive, and physical care, this June raised a $16.75 million Series A.
- Abortion care provider Hey Jane last fall collected $6 million in Series A capital.
- Virtual-first care provider Thirty Madison in June acquired assets from birth control startup The Pill Club for $32.3 million.