Anthem has partnered with a major private equity group to scale an AI-powered app that helps consumers check symptoms and provides virtual care.
The Indianapolis, Ind.-based insurer announced on Wednesday it worked with Blackstone Growth to create a new joint venture aimed at scaling K Health, which has backing from Kaiser Permanente, Comcast Ventures, Anthem and more.
The joint venture, named Hydrogen Health, seeks to grow K Health across Anthem and other insurers' employer and individual customers, according to K Health CEO Allon Bloch, who will also serve as the head of Hydrogen Health. Financial terms of the deal were not disclosed but Bloch said Hydrogen Health recieved $100 million from Blackstone and Anthem.
"This is a really exciting time in healthcare," Bloch said. "Look at the whole wearable movement- people are interested to take control and I think a lot of it is just enabling people to take control. Because otherwise it's insurance and your medical network, and it's expensive and scary."
Bloch credited the pandemic for accelerating consumer interest in K Health—in November 2020, he said the business had grown 1,000% year-over-year.
The New York-based startup has now grown to more than 4 million users and raised $271.3 million in venture funding. Bloch said he believes algorithms are less biased than humans when it comes to making decisions about patient care—as an example, he said doctors are less likely to diagnose a "30-year-old, 6'4'', very strong man complaining about chest pain" with a heart attack than someone who appears less healthy.
"A machine is going to be much more focused on the facts and not look at the people's color of skin or any external attribute that the doctors are facing," Bloch said. "Fundamentally, a doctor's a human."
A subscription to K Health costs $9 per month, with a single primary care visit priced at $19. The co-pay associated with a trip to a traditional primary care provider generally costs between $15 to $25, according to some estimates. However, patients have expressed preference over the convenience of virtual care.
Anthem, which operates Blue Cross and Blue Shield plans in 14 states, started working with K Health in 2019 and integrated its algorithm into its Sydney app. The new venture follows a line of recent investments by the insurer.
Last month, the payer made its entrance into the provider business with its acquisition of myNEXUS home health benefits manager for its 2.3 million Medicare members. In February, Anthem invested in Sharecare, saying the company would help build out its digital engagement and personalization strategy through more robust AI capabilities. Both businesses fall into the company's non-insurance diversified business group, which it has said it aims to grow from managing 7% of its medical spend to overseeing 25% of its medical costs by 2025.
"[Healthcare] is just not good enough," Bloch said. "Why not make it 24/7? Why not make it fantastic and delightful? Why not make the system come to you, as opposed to you needing to go and stand in line and book appointments? Why not be in front of a doctor in five minutes, as opposed to five days?"