NEA Blog

Managing personal health through social, mobile technologies: it’s not an app, it’s an ecosystem.

Today Welltok®, developers of the CaféWell® social health management platform that enables consumers to optimize their health in partnership with plans and providers, announced a Series B round of funding to accelerate product development and increase focus on strategic partnerships. NEA believes that Welltok is uniquely positioned to deliver a vital service to consumers and we are thrilled to be a new investor in an already strong syndicate—particularly with the concurrent news that executive chairman Jeff Margolis will now serve as the company’s CEO. For me, it’s a long-sought opportunity in a highly attractive, though highly challenging, market segment.

Since the late 1970s, NEA has invested in healthcare technology innovation as part of our Healthcare Services practice, with applications ranging from patient records to medication distribution to benefits administration. Yet almost without exception, all have focused on providing software or systems solutions within the healthcare ecosystem. Even WebMD was originally created for healthcare providers. In recent years we have invested in a number of services companies focused on direct-to-consumer, like Elements Behavioral Health, but have largely avoided the recent swell of “there’s an app for that” companies targeting individuals.

Mobile, social, gaming, Software-as-a-Service and other technology trends, coupled with an increasingly empowered user population eager to adopt those new technologies, have spurred a massive wave of healthcare tools and applications aimed directly at consumers. From getting the best prices for medication to counting every step and calorie, many of these tools have the right idea—there’s no doubt that population health management through consumer engagement is an attractive potential market opportunity. But for several reasons, we have kept an eye on the tide without plunging into the ocean.

For starters, we have always been intensely focused on healthcare products and services that accomplish, at a minimum, these three objectives:  improve access, increase quality and reduce cost. These themes are consistent throughout our portfolio, and it makes for a high hurdle when considering consumer-facing technologies. For NEA to invest in a social platform or mobile application, it must not only engage consumers but also garner the support of the medical ecosystem—both are crucial for driving the kind of meaningful, sustained impact on patient behavior and/or quality of care that guides our investment thesis across the healthcare landscape.

With respect to the latter part of that equation, Welltok clearly gets it. Until now, no one has figured out how to satisfy the diverse needs of constituents (i.e., save the payors money, increase positive outcomes for the providers and improve quality care for the consumers). By combining the best in purpose-driven social, community, personalization and gaming technologies and by aligning incentives in a way that directly motivates positive behavioral and lifestyle changes, Welltok’s social health management strategy truly has the potential to translate into better quality of life for consumers while reducing overall healthcare expenditures.

Just as importantly, now is the right time. The healthcare system is increasingly open to exploring innovative consumer facing models to manage rising costs while consumers are looking for a solution that helps them better navigate their own health management.  Since its commercial launch in late 2011, WellTok’s CaféWell social health network has become the leading platform for health plans and other population managers, with two of the nation’s five largest health plan organizations among its customers. The company is currently contracted to serve nearly 10 million consumers on its flagship CaféWell platform and is looking to sign its tenth customer in the coming months.

I have personally known Jeff Margolis since he was the keynote speaker at the NEA Healthcare Services CEO Conference in 2009, and when it comes to consumer engagement, there is no one better equipped to navigate the complex system of payors, providers and consumers. (After all, he literally wrote the book—The Healthcare Cure: How Sharing Information Can Make the System Work Better). Across the rapidly growing landscape of consumer-focused healthcare technology companies, only a handful have the potential to effect the kind of change that will truly transform our healthcare system. We believe that Welltok represents the right approach at the right time with the right team.

Mohamad Makhzoumi is a Partner at NEA.