Health Tech, Startups

Pandemic proves the mother of health innovation as startups raise $9B in NYC

Funding for 2021 was up 150% from the previous record of $3.6 billion raised in 2020, according to the 2022 New York Healthcare Innovation Report. Digital health startups in areas including virtual care, patient engagement and mental health captured 87% of funds.

Health investing in New York City hit a historic high in 2021 as 182 health and life sciences startups raised a total of $9 billion, according to the 2022 New York Healthcare Innovation Report released Tuesday by the New York City Health Business Leaders. Investment skyrocketed “due in part to the pandemic and the implicit healthcare challenges it exposed,” the organization noted in a news release announcing the latest annual report.

Funding for health and life sciences companies in New York was up 150% from the previous record of $3.6 billion in 2020. A five-year snapshot included in that report outlined consistent, significant year-over-year growth, with last year’s investment total nearly 13 times the $700 million raised in 2017.

For 2021, 87% of funds raised went to digital health startups. And much of that investment went to companies focused on virtual care, patient engagement and mental health.

Brooklyn-based Cityblock led the group with $592 million raised in multiple rounds of funding in 2021. The company provides in-home, community-based and virtual care to Medicaid and lower-income Medicare beneficiaries. Weight-loss app Noom raised $540 million and direct-to-consumer health startup Ro hauled in $500 million to expand into at-home diagnostics and care.

The CEO of the group that published the report believes the record year for investment in digital health startups adds up to a major endorsement of the city as a healthcare innovation hub.

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A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

“2021 is the year that New York cemented its position as the digital health capital,” said Bunny Ellerin, co-founder and CEO of NYCHBL, in a statement. “The city’s diversity, access to capital and deep talent pool have founders and funders flocking to New York to launch or relocate their digital health startups.” 

The annual report draws on insights from New York-based entrepreneurs, investors, clinicians, patients and thought leaders and showcases 100 leading innovators in the region, including startups focused on women’s health, and details the evolution of urgent care.

In addition to the three top fundraisers, the report’s “Digital Health 100” featured many other startups. Twentyeight Health, a women’s health platform that’s focused on increasing access to reproductive and sexual healthcare in underserved communities, was among those spotlighted.

“Having immigrated from Taiwan to Canada when I was seven years old, I experienced firsthand the impact of universal healthcare for underserved communities,” said Amy Fan, co-founder, president and chief product officer at Twentyeight Health, who was quoted in the report. “This inspired me to pursue a career in advancing health equity in the U.S. for communities that face the largest barriers to access.” Among other services, the company provides home delivery of birth control.

Virtual care, at-home services and deliveries, and convenient access to Covid-19 testing and vaccination have all driven innovation in digital healthcare in New York as in many other areas during the pandemic. And the virus is a major driver for the evolution in urgent care as well, according to leaders in that space interviewed for the report.

“Being on the frontlines, we were in a position to provide access to testing and vaccinations for the communities we serve, which was quite fulfilling,” noted Vivek Taparia, NY Market president for GoHealth Urgent Care, in the report.

But he added that there have also been challenges related to managing surges, supply chain issues and staffing; and that’s required urgent care organizations to adapt on the fly to meet changing demand.

“Industry-wide urgent care volumes have grown dramatically: Pre-Covid, only 5% of facilities saw over 60 patients a day, today that number is closer to 50%,” Taparia said.

Like hospitals, urgent care centers have been frequently overwhelmed by demand during the pandemic. Besides the bottlenecks patients have faced at urgent centers, the increased demand has caused administrative backlogs, missed revenue and denied claims. That’s according to Julien Dubuis, senior vice president and head of commercial for Nym, which was also featured among the 100 leading innovators in the report. The artificial intelligence-enabled company translates clinical language into medical billing codes to help clear those backlogs, Dubuis said.

Such investment, like patient volumes, continues to surge as Covid-19 strains so many aspects of healthcare and life. And that’s allowing many more digital health companies to gain a foothold and expand.

“As we look ahead to 2022, we will continue to see significant traction in areas like specialty virtual care, mental health and data infrastructure,” Ellerin said in a statement. “One thing is certain – digital health in New York will continue to evolve, adapt and innovate.”

Photo: Kena Betancur/Getty Images