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January 09, 2023 09:00 AM

Omada Health announces partnership with Intermountain Health

Gabriel Perna
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    Omada Health

    Omada Health, a chronic care management digital health company, has begun selling to health systems, starting with a partnership with Intermountain Health, the organizations said Monday. 

    Omada will work with Castell, Salt Lake City-based Intermountain’s value-based cared subsidiary, to identify patients for the digital health company’s virtual diabetes prevention program. Patients who receive primary care within Intermountain’s medical group will be contacted by Castell care coordinators if they’re eligible for the program.

    Patients enrolled in the program receive preconnected cellular scales, continuous glucose monitors and blood glucose meters that allow primary care physicians to track patient data in real-time. Omada will track clinical metrics, such as the reduction of A1C levels, as part of the program.   

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    Financial terms of the arrangement were not disclosed.

    Since its founding in 2011, Omada Health grown by selling its diabetes care management programs to employers and health plans. CEO Sean Duffy said three trends prompted the company to begin selling to health systems. Health systems are more open to virtual care due to the COVID-19 pandemic. They’re also taking on more risk-based contracting arrangements and dealing with a labor shortage among clinicians, Duffy said. 

    “The labor shortage is causing these health systems to find an alternative to support their primary care infrastructure and put more tools in their tool kit,” Duffy said. “We’re in a world where one out of five primary care docs are leaving the profession in the next few years and there’s not enough practitioners to accommodate for that.”

    The company closed a $192 million Series E financing round in February and planned to go public later in the year before the financial markets soured. While not commenting specifically on Omada’s plans, Duffy said the company is financially well capitalized and he doesn’t expect many digital health initial public offerings to take place this year.

    Duffy said selling to health systems doesn’t mean Omada will stop marketing its products to employers, but he noted employers are starting to tire of having too many digital health solutions.

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    “We recognized three or four years back that at some point heads of benefits would start to say, ‘I’m deploying Omada for pre-diabetes, Livongo for diabetes, Hinge Health for musculoskeletal, Hello Heart for hypertension. I’m managing five different vendor contracts and five different implementations,’” Duffy said. “We’re seeing more requests for proposals where employers are like, ‘I just need to consolidate my point solutions.”

    Leaders at other digital health companies have raised similar concerns.  Don Trigg, CEO of Apree Health, a digital health company that also sells to employers, said in an interview that there was a blizzard of point solutions introduced over the last few years thanks to venture and private equity funding. 

    “The consensus with purchasers in this space is that we are going to see a real shakeout, relative to a lot of the point solutions that were introduced before and during COVID,” Trigg said. “That expense line review and supplier review process already started to play out in 2022.”

    Health systems have their own challenges, which include longer sales cycles, inflationary pressures and billions of dollars in losses. More healthcare organizations are at risk of credit downgrades and defaults, according to a recent analysis from Moody’s Investors Service. Duffy said he understands health systems will be hesitant to invest in new solutions amid the financial challenges. 

    “You won’t find a health system in today’s environment that isn’t under extraordinary cost pressures,” Duffy said. “You have to be very crisp in partnership with them to make sure that the economic model between your organizations works for you and works for them.” 

    This story first appeared in Digital Health Business & Technology.

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