Provided by Tendo
Located in Brooklyn, New York, Tend offers dental patients a curated experience in a minimalist environment (Credit: Courtesy of Tend)
Several companies are entering the US market looking to disrupt the traditional and rigid healthcare system, seeing huge opportunities to make a difference — and make a profit.
At CityBlock Health’s permanent locations across the Mid-Atlantic and Midwestern US, sleek waiting rooms are adorned with the brand’s royal blue logo. In some cities, the company also deploys mobile units: giant converted motor caravans painted the same color. Providing medical, mental health, and social care, CityBlock Health began as part of Google’s urban innovation group, Sidewalk Labs, to make healthcare more accessible. Its aesthetic is not too different from the glitzy vibe of its Silicon Valley origins: it feels like a hip urban coffee shop.
The company is one of a growing number of startups, both physical and digital, making serious inroads in the US healthcare industry. These companies aim to change the face of healthcare delivery by replacing traditional systems that are stiff, impersonal and often clunky with ones that are more attractive, efficient and, in some cases, spa-like. Similar companies are popping up all over the world, but the US, where private insurance is notoriously complex and opaque, has a unique opportunity.
To succeed, these companies are looking to address some of the biggest pain points in healthcare in this country, such as cost and accessibility — by streamlining appointments, shortening doctor visit times, and even opening up previously restricted access to medical technology equipment. Many of these companies work directly with private and government insurers and have made simplifying the patient experience a core part of their business strategy.
This approach seeks not only to break down barriers, but also to reach a new, younger consumer base in a familiar, frictionless way. Will it work?
Market opening
Many of these new healthcare companies have physical locations with the same curated, minimalist feel and approach across a range of medical disciplines. Dental franchise Tend has dozens of stores in the US, all designed with warm wood and cool green tiles. They use an app for bookings and tout transparent pricing. Patients can watch TV with noise-cancelling headphones while they receive treatment. Afterwards, they can rinse their mouths in “The Brushery”, which Tend says is designed for “selfie moments”. Membership-based urgent care centre chain One Medical prioritises same-day appointments and has an on-site lab. In February 2023, Amazon acquired the chain in an all-cash deal for $3.9bn (£3.07bn) and introduced membership in November at a discounted price of $99 (£78) a year for Prime members.
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Amazon acquired medical clinic chain One Medical for $3.9bn (£3.07bn) in February 2023 (Photo credit: Getty Images)
Virtual startups with the same ethos are also major players. Their digital aesthetic mimics the minimalism of brick-and-mortar clinics, and they offer their services on modern, ultra-functional web platforms. Maven Clinic, a virtual women’s health care platform, was named one of Time magazine’s 100 most influential companies of 2023. BetterHelp, which connects patients directly with mental health specialists online, topped $1bn (£790m) in profits in 2022.
Other companies are aiming to deliver healthcare equipment to consumers’ homes: TytoCare’s thermometer, otoscope and stethoscope devices are branded “Smart Clinic” and sold by national retailer Best Buy, while Mosie Baby offers a $129 (£102) at-home artificial insemination kit that was recently approved by the US Food and Drug Administration (FDA).
Dan D’Orazio, CEO of health care research and consulting firm Sage Growth Partners, says the reason there are so many privately funded new entrants in the field is because of the sheer size of health care costs. “If U.S. health care was a standalone country, it would have a GDP of $4.3 trillion, the fourth-largest in the world,” he says. “The amount of money spent on health care in the U.S. is truly enormous.”
America’s health care problems offer a clear path to innovation and, hopefully, profit.
“It’s no secret that people avoid the dentist,” says Helen Chan, Tendo’s director of public relations. Not only do they rate their dentist experiences low on the Net Promoter Score, a measure of customer satisfaction, but they’re “known for unexpected bills, long wait times, critical attitudes from doctors, and unfriendly environments,” she adds. Tendo’s goal is not only to eliminate reasons for people to avoid the dentist, but to provide a visit that’s comfortable and welcoming enough that patients find it an “enjoyable experience,” encouraging them to “stop skipping visits and make oral health a priority again,” Chan says.
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One of the strategies of many healthcare startups is to create a seamless online experience that moves away from outdated medical portals (Credit: Alamy)
Perfect timing
For virtual-health startups in particular, much of the surge is down to timing: Many of these companies have been around since the 2010s or even earlier, but the explosion in popularity of telemedicine during the pandemic has accelerated consumer comfort and desire for digital services.
“Telehealth has been around for 20 years, but it probably had a 2% to 3% adoption rate pre-COVID,” D’Orazio said. “We’re not used to receiving that kind of care, and it’s hard to break patterns, so it would never have happened without COVID. What we were able to do in six weeks with COVID would have taken six years with telehealth otherwise.”
D’Orazio adds that the lack of barriers to virtual care has made it easier for medtech startups to grow, including physical franchises that offer specialized services in aesthetically pleasing spaces. They also cater to patient demographics of all ages, but younger generations have embraced them more easily, he says.
These disruptors surely shouldn’t be so naive as to think that getting into healthcare will be as easy as a walk in the park – Dan D’Orazio
“A lot of younger people don’t have a primary care doctor, and for them, that’s not a big deal,” he says. Telehealth platforms and brick-and-mortar franchises are appealing because of the choice, ease and flexibility they offer. And their approach is as agile as their audience. Let’s say a patient moves across the country. They can see the same virtual provider regardless of location, or go to the same clinic franchise in New York that they did in Los Angeles.
The path to success?
The upside to the rise in startups, D’Orazio said, is that primary and specialty care has indeed become more accessible, as hoped. For example, with walk-in appointments and quick scheduling, many companies have been able to reduce the long wait times (sometimes months) that patients have to wait for appointments. Direct coordination with insurance companies has also eased the burden on many patients who would normally have to submit reimbursement paperwork through a maze of portals.
But D’Orazio cautions that these wins don’t necessarily indicate overall success and viability: Many health tech startups, especially those backed by private investment, have failed.
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Smile Direct Club is expected to file for Chapter 11 bankruptcy protection in September 2023, leaving some customers in financial difficulty. (Photo: Getty Images)
“I think a lot of these companies are struggling because they’re technology companies, not health care companies,” D’Orazio said. “Also, I don’t think these disruptive innovators are naive enough to think they can just go into health care and win big. There are still regulations, payment challenges, and a shortage of medical workers. Just because they’re flashy doesn’t mean they’re immune to these problems.”
He sees a path to increased feasibility through a kind of middle ground: collaboration between traditional clinics and health systems and the world of medical startups. “Integration is really important, and we’re starting to see that in some of these partnerships.”
While many experts agree that American health care is facing a period of disruption, the arrival of these startups doesn’t mean the end of traditional medicine as Americans know it, but they could help nudge the system toward transformation.
David Dranove, a professor of health care management at Northwestern University’s Kellogg School of Management, said there is a lot of room for improvement in health care, and if even a few startups can succeed and help solve the problems, that’s a good thing.
“Not every new idea will be good for consumers, but the status quo is unacceptable. The more we encourage experimentation and new ideas, the more we will learn,” he said.
