Vijay Kedar, Tomorrow Health, on restoring healthcare in the home
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In this episode, I sat down with Vijay Kedar, CEO and Co-Founder, of Tomorrow Health. Founded in 2017, Tomorrow Health builds technology to improve the way home-based care is ordered, delivered, and paid for. In August 2022, Tomorrow Health raised a $60M Series B round led by Bond. The company partners with over 100 health plans across the country, experienced a 317% increase in ARR year over year between 2021 and 2022, and has grown to 100+ employees.
Vijay and I discuss:
- His early career as an investor, why he transitioned to an operator role at Oscar Health, and what he took away from each of these experiences
- How a personal experience with home healthcare inspired him to start a company in the space
- How Tomorrow Health is shifting incentives for key players in home health including patients, providers, and payors
- Where Vijay sees Tomorrow Health going as well as the digital health industry more generally
Beginning — 10:33: Vijay’s early experiences in healthcare
- Path to healthcare: Vijay’s path to a career in healthcare started at a young age (despite his early aspirations to be an F16 pilot thanks to Top Gun). He grew up in a household of physicians, volunteered at a hospital in middle school, and wrote medicine-related papers in high school. The direct impact that physicians could have on individuals inspired Vijay, but he started questioning if being a clinician was the best way for him to create change at scale. After college, he landed in Goldman Sachs’ private equity arm, focusing on healthcare, tech, and services companies.
- Passage of the ACA: Vijay found himself at Goldman Sachs around the time of the Affordable Care Act’s (ACA) passage. As a result, he spent a substantial amount of time digging into the law and understanding its impact on each sub-sector of healthcare. He took advantage of this opportunity to connect with stakeholders across the healthcare system — banking and equity researchers, policy folks, and more. From his research and conversations, It became clear to him just how much the ACA would transform healthcare and create a host of exciting opportunities for innovation and investment.
- Career pivot: Although Vijay loved the vantage point of an investor, he shared that he also found that he most enjoyed working closely with management teams and thinking about the challenges they faced. Rather than just evaluating growth projections for a company, he wanted to dig into the strategies, business development initiatives, and product development that influenced those projections. To explore this further, he connected with some of the most exciting healthcare companies at that time including Omada Health and Flatiron Health.
- Joining Oscar Health: Oscar Health, and specifically its Co-Founders Mario Schlosser and Jared Kushner, was one of the companies with which Vijay connected. The significant role of payors in transforming the healthcare ecosystem energized him, especially in light of the consumer-driven marketplaces established through the ACA. He saw the exchanges as a way for patients to “vote with their feet,” or select plans that best matched their unique needs and preferences. Vijay wanted to be part of this new wave of innovation and get experience in everything from designing networks to constructing plan benefits.
- Fast-growth environment: Vijay was one of the first few dozen folks to join Oscar, and he and I discussed his incredible three-year journey at the company. He helped grow the organization to 2,000 team members and more than $1B in premium revenue. He took on numerous responsibilities including finance, strategy, plan design, pricing, and general management. Later in his time at the company, he relocated to Dallas where he launched the company’s Texas division as General Manager and then later returned to New York to lead its national clinical strategy. In this last role, Vijay dug into how to best approach and manage complex case management and transition more care into the home, experiences that would be important to his future as an entrepreneur.
- Lessons from days at Oscar: One of Vijay’s key takeaways from his time at Oscar, that he’s now seen again and again, is that the way we pay for care influences how it’s delivered. As a result, the structure of incentives within payment reforms drives the degrees of clinical and patient experience changes we have (and haven’t) observed. Vijay agreed with my sentiment that understanding the payor mindset is essential to understanding healthcare more generally. At Oscar, he found the breadth of what payors need to cover and think about both impressive and informative. For example, in building out the Texas market, he had to think about how to develop care delivery networks across the entire spectrum of care — acute hospitals, pharmacy, ancillary and post-acute care, home health, DME networks, and more.
Health care is delivered in line with the way that it’s paid for…I have always believed that that is really where major innovation has to start. It’s really understanding the incentives and the motivations [for how] payment policies are driving downstream care delivery.
10:33–19:31: Investor & Operator to Founder
- Starting Tomorrow Health: When I asked Vijay if he had planned to be an entrepreneur or founder long before he started Tomorrow Health, he said that he’d experienced two major learnings that prepared him to take on the responsibilities of starting something new:
- Driving real change in healthcare is different from how it looks at 10,000 feet
- He loved the building process
At the same time, an element of being in the right place at the right time also played a role in leading him to start a company. Vijay explained that he wanted to work on solving a problem he deeply cared about since he knew the exact way of solving that problem would change as the company’s business plan and operational model evolved.
- Vijay’s personal experience with home health: Vijay’s experience managing his mother’s home-based care led him to care a lot about how home health is delivered in the US. A number of years ago, Vijay’s mother was diagnosed with stage three colorectal cancer, and she required dozens of chemotherapy and radiation cycles. During this time, she also contracted lung disease, spent four months in the ICU and three months on a ventilator, and then needed a year of intensive home-based care. Her home care necessitated 14 liters of oxygen, wound care supplies, mobility and respiratory equipment, and physical and respiratory therapy. She had nearly a dozen different home care providers, but she and her family felt like they received very little guidance on how to navigate the system as a patient or caregiver. Vijay and his family, who were all deeply entrenched in the healthcare ecosystem, still struggled to get the support they needed. Just getting all the equipment and supplies to start home care took about six weeks. Vijay saw similar challenges around this time at Oscar. In Texas alone, the company needed to contract with hundreds to thousands of home-based care providers and coordinate discharges from acute care settings. It became clear to Vijay that while patients wanted to receive care in the home, the setup and delivery of home care was a pain point for patients, providers, payors, and medical supplies companies.
It just became clear the infrastructure required…to enable home-based care reliably and at scale was simply lacking. And that is really what inspired our vision at Tomorrow Health — to restore the home as a patient’s primary place of care and to provide the technology and the operations infrastructure needed to support and enable effective home-based care at scale.
- Enter Tomorrow Health: These personal and professional experiences inspired Vijay’s vision for Tomorrow Health: to restore the home as a patient’s primary place of care and to provide the technology and infrastructure needed to support and enable effective home-based care at scale. The company builds technology that is purpose-built for each stakeholder in the healthcare ecosystem — health plans, physicians, hospitals, home-based care suppliers, and patients — in order to deliver home-based care in a more coordinated and affordable way. In describing the homecare industry, Vijay broke it down into a number of areas including:
- Products that patients need to heal at home
- Clinical services delivered in the home
- Remote and virtual care
To date, Tomorrow Health has mainly focused on the equipment, supplies and products piece of the puzzle. For example, they’ve simplified the historically disjointed equipment ordering process that used to require multiple faxes between many parties. They’ve gotten it down to a digitized transaction that takes 10 minutes to complete and matches orders with the highest quality and value supply providers.
19:31–32:49: Tomorrow Health’s approach to transforming home care
- Why products and supplies first: I asked Vijay why he decided to tackle simplifying the product and supply ordering, delivery, and payment process first, and he shared two reasons for this decision: 1) his personal experiences have illuminated just how broken and fragmented this part of the system is. To illustrate this, supplier groups have extremely low NPS scores and 72% of patients report significant difficulty in getting the products they need to receive care at home. 2) medical equipment and supplies impact a broad patient population. One in four aging seniors and one in six Americans more broadly needs some form of medical equipment or supplies. Beyond a high volume of patients requiring some form of supplies, there’s major diversity in this population. It includes new mothers in need of breast pumps, young people with ACL tears, CPAP machines for people with sleep apnea, and walkers or wheelchairs for older adults or people with disabilities. In other words, it’s a category that touches a really wide cross section of patients and clinical conditions. Therefore, getting into this part of home health first created an opportunity to solve an entire ecosystem issue and build a foundation that could support a wider breadth of home care needs.
- Realigning incentives: Vijay noted that altering incentives is one of the biggest opportunities in driving transformative impact for patient care at home, so shifting to value will be critical. He shared that Tomorrow Health hosted a conference a couple of weeks ago that brought together key executives and thought leaders:
- Sachin Jain, CEO of SCAN Health Plan
- Sandhya Rao, CMO of Blue Cross Blue Shield of Massachusetts
- Eric Hargan, Former Deputy Secretary of Health and Human Services
- George Barrett, Former Chairman & CEO of Cardinal Health
The group’s discussion revolved around how to enable value-based structures in home based care, and Vijay had two main takeaways:
- make the desired outcomes crystal clear
- achieving outcomes should be rewarded
Vijay shared that he’s seen real interest from health plans in value-based models and technologies that enable value-driven home-based care. The technology infrastructure has been lacking, so the company has invested in advanced and comprehensive outcomes measurement on behalf of providers. Collecting relevant data and analyzing it, looking at factors that influence operational reliability since they directly impact key total cost of care outcomes for patients — whether it’s prescription to package delivery timelines or it’s certain therapies that ultimately keep patients healthy, at home, and out of the hospital — is critical. Vijay also noted that it’s not only about measurement, but also building a mechanism where success and improvement can be rewarded and the accountability measures can be administered and enforced.
- Scope of home care: Vijay emphasized that while a lot of care can be shifted to the home setting, this site of care has its imitations for what it can do. The home is thought of as a single site of care, but in reality its tens of millions of settings across the country. After all, some homes are better set up than others for home care, making some patients and families more likely and willing to drive adoption. Also, some types of care are better suited for the home than others. While Vijay and his team believe that a wide breadth of care can be successfully provided at home, there will always be a need for acute care facilities, surgical units, and other types of more intensive care healthcare settings.
- Stakeholder perspectives on home care: When I asked Vijay about which stakeholders — payors, providers, patients, and caregivers — have been most willing to adopt home care or even drive its adoption, he described how the desire to shift more care into the home has been almost universal. However, stakeholders’ reasons for their support differ.
- Patient vantage point: We’ve known for a long time that patients prefer to get care in the home. Until the 1940s, the vast majority of care was delivered at home. The advent of expensive capital equipment and our modern insurance ecosystem drove many of the best doctors into integrated hospital systems and delivery networks and therefore patients into care settings outside the home. But in the last decade or so, we’ve seen the unbundling of care in some ways. Patients’ desire for in-home care has only become clearer since the pandemic, and we’re really just starting to see what’s possible with virtual and home care delivery.
- Payer vantage point: Payers, who for obvious reasons care a lot about the cost of care, like the home since its costs are about one-tenth of a hospital’s. From a value-based perspective though, Vijay described how we need to get comfortable seeing utilization for certain forms of care increase. For example, we want more virtual care, home-based care, and medical supplies since they’re driving more care to the highest value settings. Payors understand this, so they are encouraging more care in the home where feasible and appropriate.
- Provider vantage point: Vijay commented that out of all stakeholders, providers are probably the most interesting group since they are where some of the biggest opportunities and challenges lie. On one hand, you’d perhaps expect that hospital systems would be more resistant to home-based care since they’ve traditionally been incentivized to have more heads in beds. But provider organizations are having a lot of trouble managing capacity. As a result, Tomorrow Health has found that large integrated hospital systems are really interested in technology that can not only streamline home care delivery, but also give them greater visibility into the care that is being delivered in the home. That could be through improved clinical data streams, remote patient monitoring, and more. Providers are becoming quite forward thinking about this, and Tomorrow Health seeks to support provider organizations in reaching these objectives.
We are starting to see providers be quite forward thinking around this, and ultimately [Tomorrow Health is] providing them solutions that can enable efficient transitions of care and visibility into home-based care, which will be the unlock to driving their support and adoption over time.
32:49 — End: Tomorrow Health’s Future
- Series B Capital: Vijay described how Tomorrow Health’s successful Series B funding round in a tough funding environment stemmed from the company’s:
- tremendous interest from health plan and provider partners
- strong patient and partner outcomes
- ability to scale its model across the country.
As a result, Tomorrow Health plans to use this new capital to unlock new partnerships, enable deeper penetration in existing markets, enter new markets, double down on its core technology, and invest in its team.
Navigating a massive sea change: We wrapped up our conversation discussing the banner couple of years it’s been for healthcare innovation and investment, but how we’ve seen a pull back this year. Vijay doesn’t think this is a bad thing. Instead, he expects this change will force greater discipline around investment and drive more focus. Rather than companies trying to do 10 things at once and not doing them all well, companies should focus on the one or two things that will really move the needle for their customers and partners. It’s a challenging time, but the best companies will come out of it with more discipline and rigor that will ultimately improve the scalability of their models in years to come.
We are so appreciative to Vijay for joining us on this episode of The Pulse Podcast! Subscribe to our new releases on Twitter, Spotify or Apple podcasts.