Issue 0003
Welcome to Issue 0003 of the new every-other-Wednesday newsletter focused on the rise of in-network virtual clinics. (This will alternate with the existing E&O Wednesdays, so back with a new employer’s digital health benefits stack teardown next week.) This every-other-Wednesday issue digs into digital health companies that operate virtual-first medical practices with go-to-markets that include DTC as well as an in-network provider with insurance companies.

 E&O Wednesdays: Virtual Clinics

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Virtual Clinic Case Study: NOCD

NOCD is a virtual clinic for people with obsessive-compulsive disorder (OCD). The company’s core offering is a type of cognitive behavioral therapy (CBT) called exposure and response prevention (ERP). Here’s how the International OCD Foundation explains ERP:

More on the specifics of NOCD’s treatment model below, but it is worth pointing out that ERP requires a therapist’s guidance in the beginning. NOCD has also built its business by training mental health workers in ERP therapy and increasing access to it via its nationwide virtual care network. At least so far, NOCD has not primarily focused on pharmaceutical treatments. Here are more details on the clinic’s treatment model:

Nine NOCD medical groups = nationwide care network?

NOCD has set up affiliated medical groups in eight states around the US: Illinois, Connecticut, Kentucky, Maryland, New Hampshire, New Jersey, North Carolina, and Washington state. I may be missing some, but it seems like with this group of P.C.s the company is able to offer virtual care to patients in all 50 states. NOCD also offers insurance coverage in all 50 states from big name insurers like Cigna, United/Optum, Humana, and many regional Blues.

Pricing and revenue estimates

In order to put together some estimates around the company’s annual revenue, I had to piece together a few other numbers first.

• Number of video sessions per patient: As NOCD’s treatment model above makes clear, the typical program participant will have 12 video sessions with virtual care providers (2x/week for three weeks followed by 1x/week for six weeks).
• Number of video sessions per year: One of the few growth metrics that NOCD had publicly shared is the number of telehealth sessions it had completed on a monthly and annual basis. Toward the end of 2021 the company said it was doing about 12,000 a month or 140,000 video sessions a year.
• Price per video session: NOCD often mentions the average price for traditional ERP sessions with in-person providers — $350 apiece. It also often describes its own pricepoint as less than half the cost of the average in-person ERP session. That gets us close but message boards and NOCD reviews indicate the company’s out-of-pocket price per video session is about $170. (That squares with the other hints above.) Assuming health insurance companies also pay NOCD for about the same amount as their cash pay patients, we can put together a back-of-the-envelope 2021 revenue guess.

Number of video sessions in 2021 x Price per video session = Estimated 2021 revenue. 140,000 x $170 = $23.8 million in estimated 2021 virtual care revenue for NOCD.

That’s not the company’s only revenue stream, however. I think it’s a fair assumption that NOCD also brings in revenue from its partnership with Biohaven Pharmaceuticals (more on that below). Since we also know that the NOCD program is designed to include about 12 video sessions per patient, we can also estimate the number of patients that NOCD served in 2021:

Number of video sessions in 2021 / Number of sessions per patient = Number of patients served in 2021. 140,000 / 12 = 11,666 patients treated by NOCD in 2021.

100,000? One headscratcher here is that in some of its advertising, NOCD seems to indicate that the total number of patients it has treated is more than 100,000. Here’s how one ad puts it: “Join 100,000+ peers and get access to a personal therapist specialized in treating OCD.” If that figure was referring to the number of people who have downloaded one of NOCD’s apps, I’d buy it. I don’t see how the other numbers listed above point to more than 100,000 patients treated via the video therapy sessions though, right?

About those apps: NOCD’s iOS and Android apps offer a number of free resources to anyone who downloads them. (More on this in the marketing section below.) NOCD can point to much larger numbers of people with NOCD that it has helped via its apps and website, but I think the 11,666 estimated patients number is close to the number they treated as a virtual care provider last year.

Big lift: Educating payors about OCD

Apparently, like many others, I did not understand what obsessive-compulsive disorder (OCD) was before researching NOCD for this issue. One of the virtual clinic’s ongoing challenges has been educating the general public, which includes undiagnosed OCD patients and payors, as to what is and isn’t OCD. Part of the case that NOCD makes to insurance companies is that OCD is often misdiagnosed and, therefore, mistreated by many providers. And since payors aren’t seeing a significant number of billing claims for OCD, they are less likely to devote enough resources to it. One of NOCD’s three big goals for 2022 is increasing awareness about OCD in a campaign it has branded #KnowOCD.

Marketing — apps, ads, partnerships, influencers

NOCD has worked with comedian Maria Bamford to create awareness campaigns about OCD. It has also forged strong ties to OCD-focused or related non-profits and advocacy groups. As part of its intake form just prior to a patient’s first screening call with a member of the NOCD intake team, the company asks: “How did you first hear about NOCD?” The potential answers line up with the marketing channels that NOCD uses currently:

• Friend or Family
• Another medical provider
• Facebook/Instagram
• Google Search
• Podcast
• YouTube
• TikTok
• Psychology Today
• Other

NOCD’s free iOS and Android apps are an important part of its marketing efforts. A study published in 2021 noted that 25,369 people used NOCD’s iOS app between March 2018 and mid-2020 to track their symptoms. That study also showed those users were from 108 different countries. As I wrote above, I imagine NOCD is up over 100,000 app users now, which squares with some of its advertising claims. That has to be a steady funnel for new video therapy patients too.

Pharma partner: Biohaven Pharmaceuticals

Like Cerebral, NOCD is also helping a pharmaceutical company recruit participants in a clinical trial. NOCD has worked with pharmaceutical company Biohaven since 2018 on a series of clinical trials (here is the latest) focused on a new pharmaceutical treatment for people with OCD who have not seen enough benefit from SSRI drugs. The studies are testing “troriluzole as adjunctive therapy in subjects with OCD who have had an inadequate response to SSRI, clomipramine, venlafaxine or desvenfaxine treatment.” NOCD is currently running social media ads to recruit participants for this trial.

NOCD’s tech stack and other partners

I wasn’t able to uncover NOCD’s full tech stack. (NOCD’s founder and CEO Stephen Smith is currently out on paternity leave, so I wasn’t able to get all of my questions answered in time for this issue.) A few I did find: NOCD uses AdvancedMD for its EHR. It also works with AWS and Aptible for cloud services and hosting. I also believe it works with SteadyMD to build out its clinical network, but NOCD trains these providers in ERP themselves. NOCD works with Triduum to help other providers identify OCD in their patient population and drive referrals to NOCD. Finally, NOCD also tapped Violet to help it “upskill [its] clinical team’s ability to deliver culturally-aware care.”

Future opportunities: Other conditions, other countries

NOCD’s most obvious expansion opportunities might be to help treat people with other behavioral health issues that benefit from ERP therapy. Those conditions include PTSD, anxiety, depression, and phobias. PTSD is one that NOCD’s founder has mentioned in at least one past interview. NOCD has already expanded beyond the US. In 2021 it launched its virtual care services in the UK, six provinces in Canada, and Australia. Other English-speaking country rollouts seem likely.

At the end of 2021, NOCD announced a few of its plans for the year ahead. Two launches it previewed in the year-end post were NOCD Telepsychiatry and NOCD Intensive Therapy. It also framed those as two new services as for its “current community”. That phrase really makes me think they will add virtual care for new conditions this year.

Four upcoming virtual clinic launches from venture studio Redesign Health

Redesign Health is a New York City-based venture studio that has spun out a number of digital health startups in recent years. Among them are virtual clinics like weight loss or metabolic health-focused Calibrate and cancer-focused Jasper Health. Redesign is quietly building dozens of other digital health companies and while they sort of do that in stealth — Redesign uses the word “stealth” a lot — there are also tons of clues floating around the internet as to what those companies will be.

This week I rounded up some details on a few virtual clinics that Redesign is currently incubating along with a few other digital health companies they have in the hopper.

(Apparently, the first company Redesign tried to incubate was a sperm bank that was going to be named Freezeport.)

All of the companies mentioned below are still in “stealth” mode. No launch announcements yet. So, I wouldn’t be surprised if the company names change for some of these. Here’s how they are branded and positioned today based on government filings and job posts:

• Motto: Virtual clinic for inflammatory conditions starting with Rheumatoid Arthritis. “Healthcare services for treating patients with chronic inflammatory conditions using evidence-based interventions, patient symptom tracking, personalized lifestyle modifications, and care coordination from an in-house clinical team… “A new rheumatology patient care model… build and scale our clinical organization. …world-class patient experience and an improvement in clinical outcomes for patients with Rheumatoid Arthritis.”
• Quartz: A virtual care clinic for pre- and post- surgery. “We are launching a stealth venture that is a virtual-first perioperative clinic for patients. We are viewing surgery as a catalyst for change and believe that by building out an evidence-based virtual care clinic that combines predictive analytics with multimodal therapy, we can identify risk factors and create custom care plans for patients to optimize surgical outcomes.”
• Aurelia Health: Virtual care add-on for OB/GYNs that extends their practice into chronic conditions, behavioral health, and coaching. “Aurelia Health is a tech-enabled, virtual care partner that empowers OB/GYNs to improve patient outcomes by extending their latitude of care. Aurelia’s collaborative care platform augments existing OB/GYN capabilities with support from a virtual network of general and behavioral health providers, so they can provide comprehensive, evidence-based care pathways tailored to each patient’s unique needs beyond reproductive & sexual health into behavioral health, chronic disease management, and cohort-based coaching.”
• Fort: Virtual clinic offering mental health care to children and adolescents. “Our stealth child and adolescent mental health company is on a mission to broaden access to quality, affordable, and evidence-based mental health services for children aged 4 to 19 and their families. Today, 50% of children in the US with a mental health issue do not receive care, and 60% of US counties do not have even a single practicing psychiatrist. This is a massive area of need, impacting 17M children in the United States with a market size greater than $50B. The company’s vision is to create an integrated set of support resources to understand, assess, diagnose and treat mental health challenges through digital tools and access to virtual clinicians. The company is partnered with the industry-leading child psychotherapy non-profit institution in the US, who will help to build its clinical protocols, train its providers, and create proprietary content.”

Those were the virtual clinics in stealth at Redesign. Here are a few more digital health startups the incubator is currently cooking up. These are also all still in “stealth” mode:

• Hopewell: This one might include a virtual care component, but I couldn’t tell exactly. “Digital-first kidney care and transplant solutions through education, donor outreach, community support, and care coordination.”
• Rhythm Cardiology: This one is not a care provider exactly but it might end up bundling individual cardiology practices into a national network. So, in effect, it might end up creating a virtual network. “We are launching a stealth venture in the tech-enabled physician services space that partners with independent cardiology groups to build the cardiology practice of the future on a national scale… Rhythm Cardiology partners with independent cardiologists, enabling them to drive better patient outcomes and economic results. Through proprietary technology and centralized support, Rhythm enables Cardiologists to spend less time on administrative tasks and more time with patients. Finally, Rhythm’s partnership structure allows independent Cardiologists to remain independent, while benefiting from the growth of a national platform.”
• Peppermint: This one is more of a consumer health play, but it touches on the creator economy too along with the growing senior market. “Redesign Health is launching a social activity and learning venture designed to help retirees and those entering retirement script the next chapter of their lives. At Redesign Health, we look at health in a broadly defined way. Relationships and a sense of purpose lead to good health. It is hard for those entering retirement years to navigate the transition and many people feel that they lose relationships and are not clear on the identity and next chapter of their lives… The technology and media platforms that dominate their lives today are yet to offer a one-stop-shop for enthusiasts and creators looking for meaningful connections and growth. This stealth venture aspires to fill the void by shaping a community that will help this cohort explore, engage and realize aspirations. The stealth venture’s vision is to create an all-encompassing platform that enables creators and enthusiasts to engage purposefully, foster learning and meaningful connections, and achieve life goals. Part of the mission of this stealth venture is to facilitate better health with community, cognitive and physical engagement through a social activity and learning platform…”
• Tempopay: OK, this is the fintech meets healthcare startup Redesign is working on. It’s a bit out of my wheelhouse but the short description is: “Healthcare services, namely, employer-sponsored cards for financing healthcare.” The longer version: “Redesign Health is launching a new venture, StealthCo, in the fintech/healthcare payments space that will make high-quality healthcare more affordable and accessible. StealthCo is reimagining how consumers find and pay for healthcare services by delivering a seamless, simple, and consumer-first payment approach.”

That’s all I could find on Redesign Health’s stealth portfolio for now.

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