Can India’s First Healthtech Unicorn Innovaccer Expand Its Data-Driven Solutions Beyond The US Shores?

The US has a notoriously complicated healthcare system, often plagued with high cost, poor quality of care and a lack of competitive environment that does not make healthcare cheaper for consumers. But think of a different use case where data-driven risk score analyses and predictions can help with targeted treatment and thus bring down overall healthcare costs. 

These are precisely the solutions that have helped six-year-old healthcare startup Innovaccer enter the unicorn club in February this year. Set up in 2014 by IIT-Kharagpur graduates Abhinav Shashank and Kanav Hasija and IIM- Ahmedabad alumnus Sandeep Gupta, Innovaccer uses a broad collection of raw patient data to predict an individual’s risk score (say, chances of readmission from the same medical condition and the future cost of care). Simply put, post a hospital visit, Innovaccer’s repository collects the raw data distributed across the patient’s healthcare touchpoints, integrates it and processes it via its analytics platform. The information derived from these data analyses are then provided to hospitals and healthcare providers to make decisions based on easy-to-understand documentation.

That is not all. The company has also built innovative telehealth facilities and SaaS-based B2B data exchange platforms for seamless access to patient data across the healthcare ecosystem. Globally, and in the US, such patient data comes from cloud-based storage of electronic health records (EHR) or electronic medical records (EMR). But more on that later after we take you through the unicorn’s journey.

Innovaccer is not the only company operating in the space encompassing healthcare data analysis and prediction. Its key competitors include EMR software vendors like eClinicalWorks (headquartered in Westborough, Massachusetts), Allscripts Care Director (Chicago) and Ohio-based MicroMD PM. However, the enterprise healthcare software startup entered the coveted unicorn club a couple of months ago after an undisclosed Series D investment took its valuation to $1.3 Bn. This is a $950 Mn or 171% leap from the $350 Mn valuation the company had during its Series C funding in February 2020.

The current round, pegged to be around $105 Mn, was led by Tiger Global Management. Existing investors Steadview Capital, Dragoneer, B Capital Group, Mubadala Capital, M12 and a new investor, OMERS Growth Equity, also participated. Although the onslaught of the Covid-19 pandemic had a considerable role in its rapid valuation spike, even before 2020, Innovaccer was serving Epic and Cerner, the biggest EHR vendors globally. The question is: What has taken this company to the top of the healthcare SaaS chain even though it originally provided a different kind of data services?

Innovaccer’s Unicorn Journey 

Innovaccer initially worked on all big data analytics projects and had not opted for a niche market. The company started by offering data analytics to business schools and a few corporate clients such as The Walt Disney Company and Harley Davidson. In early 2015, it undertook a project to identify analytics use cases for healthcare organisations and was able to close a deal with Mercy Accountable Care, Iowa.

“After that, we left 70% of our revenue (coming from non-healthcare verticals) on the table to realign our focus towards healthcare. It took us three-four months, but we finally decided to focus on a single industry,” says Sachin Saxena, senior director of marketing at Innovaccer.

All stakeholders, right from hospitals to insurers, need data for informed decision-making, which leads to service efficiency and cost savings. But most of these companies do not have access to simple information exchange formats. On the other hand, Innovaccer relies on 200+ APIs to process and deploy data to 37,000 healthcare providers, including primary medical care specialities, hospitals, labs, pharmacies, health planners and more. In fact, Innovaccer Health Cloud, one of its core offerings, provides a managed infrastructure and developer-ready platform with plug-and-play integrations and reusable analytical, clinical and business workflows compliant with popular healthcare compliance standards. It helps healthcare providers create channels to interface with each other for a holistic view of patients’ requirements.

This platform is further combined with the company’s flagship SaaS product called the Healthcare Data Activation Platform, used by several governments and private institutions to maintain medical records of more than 3.8 Mn patients and generates savings of $400 Mn for healthcare providers. The data activation platform can integrate data from over 60 types of sources (EHR/EMR formats), receive and deliver data in 150+ formats and is compliant with quality checks across 62 coding standards for documentation. It also provides APIs (connectors) to more than 200 health IT vendors. Besides, Innovaccer has pre-built, format-agnostic connectors to ensure seamless syncing with new data protocols like the Fast Healthcare Interoperability Resource (FHIR).

The startup aims to take its current number of patient records to 100 Mn+ and reach out to 500,000 caregivers over the next five years. Since Innovaccer has focussed on healthcare-only solutions, nearly 100% of its business comes from its healthcare partnerships in the US. Due to its wide reach across the ecosystem, the company can also provide patients with quick and easy access to an affordable nutrition and care environment.

The growth challenge remains, nevertheless. “We are pretty much focussed on the US right now. But if we get relevant opportunities, we are open to establishing our presence in other geographies. We are already in discussions in the UAE, Europe and India. But for our solutions to be implemented, the market must have a large and digitised healthcare data set to work with,” says Saxena.

Offering similar solutions in new geographies will also depend on Innovaccer’s access to integrated healthcare datasets required for its data-driven offerings. In the US market, the company offers a slew of solutions ranging from documentation and telehealth services to patient risk scoring and clinical research analytics.

But here lies the catch. Innovaccer often compares itself with the likes of enterprise software major Atlassian and cloud-based data warehousing and analytics giant Snowflake instead of its healthcare peers. It speaks volumes about the crucial role of its data platforms and undermines the importance of its sectoral play. “It is not about our solutions but the platform that we are building. Any healthcare company can build new solutions on top of this,” says Saxena. 

Where Is The Market Outside The US?

Despite its hard-core technology focus, Innovaccer’s top clients include major healthcare providers in the US, including MercyOne PHSO, Banner Health, Dignity Health, Sanitas, Elevate Health, Emtiro Health and Children’s Mercy (Kansas City), to name a few. This underlines why the company’s analytics solutions are crucial for its business and its requirement for massive healthcare datasets that can be (legally) accessed in a market like the US.  

Two critical questions arise here. With 100% of its clients concentrated in this geography and its solutions essentially tailored for American healthcare providers, how flexible and confident is Innovaccer about entering other countries? More importantly, will its target countries provide similar access to raw but digitised patient data to third-party solution providers? 

At $4,092 per capita non-government healthcare spending, the U.S. expenditure is more than five times higher than Canada, the second-highest healthcare spender globally. But this does not mean the quality of care in the country is exceptional. In reality, health insurers have realised the need to collaborate with care providers to use analytics and reduce the massive cost. This is a key incentive to invest in healthcare data digitisation, which is not the case in other developed markets with lower healthcare costs and better government support.

According to a report titled Global Healthcare Cloud Computing Market 2020-2024 by research firm Technavio, the healthcare cloud computing market is estimated to reach $25.54 Bn, at a CAGR of nearly 23% during the forecast period. North America was the largest healthcare cloud computing market in 2019 and almost 40% of the market’s growth is expected to originate there until 2024 compared to other regions like South America or West Asia. 

The U.S. healthcare market is populated with healthcare data vendors like Epic and Cerner, which have 90% of their business in the US. Outside the country, the EHR market is limited to geographies like the UK, parts of Europe, West Asia and Australia for specific use cases. The US has a data privacy and consent mechanism in place called the Health Insurance Portability and Accountability Act (HIPAA) that regulates healthcare data and its handling by businesses working in that space. This allows healthcare data to be treated separately from other forms of personal data compliance. On the other hand, the General Data Protection Regulation (GDPR) covers all types of personal data across the European Union (EU). Simply put, HIPAA’s goal is to protect organisational data within the US, while the GDPR is more stringent as it focusses on users’ rights over their data, including “sensitive personal data” like race and ethnicity. Then there are some nations like India which are yet to digitise their healthcare data or formalise compliance norms for the same. Given these operational and regulatory hurdles, will Innovaccer want to expand its reach outside the US in the near future?

“All of Innovaccer’s solutions do not require access to healthcare data upfront. Beyond analytics, we have solutions that help document and consolidate patient care data. These do not need a deep dive into patient data,” says Kanav Hasija, cofounder and chief customer officer at Innovaccer. 

Individual hospital chains and medical research institutes usually need such documentation solutions as these enable them to standardise and structure institutional datasets without getting into the complications of data-sharing laws across businesses, which may be governed by different data privacy policies.

Hasija, however, says that the company is currently focussing on a bigger U.S. footprint (up to 40% market share in the next five years). Even then, Innovaccer is in talks with implementation partners, developers and system integrators like Accenture and Tech Mahindra to figure out compliance and use cases for different geographies. 

Will There Be An India Opportunity?

According to data released by the Organisation for Economic Co-operation and Development (OECD) in November 2020, India’s total healthcare spending (out-of-pocket and public) at 3.6% of the GDP was much lower than the 8.8% average of OECD countries. 

India is also lagging behind in data digitisation. In 2018, the government think tank, NITI Aayog, introduced the National Health Stack (NHS) to set up an electronic national health registry that would function as a single foundation of health data and help build a robust ecosystem covering healthcare and health insurance. It would also engage with market players (NGOs, researchers, watchdog organisations and more) to innovate and develop relevant services to identify and fill the gaps in healthcare policies. A year later, the government also came up with a National Digital Health Blueprint (NDHB) to transition into integrated digital services. These would include Unique Health Identification (UHID) number for patient record digitisation, privacy and consent management, national portability of records, EHR, health analytics and multiple access channels via call centres, the Digital Health India portal and MyHealth app to track patient care. 

Interestingly, Innovaccer is currently in talks with stakeholders across the National Health Stack. “We have been observing the Indian market for the past 18 months. The country has skipped older healthcare data exchange formats like Health Level 7 (HL7) and is already working on the FHIR protocol, according to the NDHB. So, we are talking to a few stakeholders, and the moment we have a service and a developer ecosystem ready for India, we will be able to participate,” says Hasija.

Indian startups like HealthPlix, NeoDocs and Doxper are building solutions for healthcare documentation in the country. But it remains a largely untapped market for lack of institutional backing, which the NHS is expected to gain. 

According to Manoj Vallikkat, research manager, healthcare insights, at the IDC Asia/Pacific, EMR/EHR is the most-talked-about subject among the CIOs of healthcare providers, given the current pandemic-hit scenario.

In its recent estimates, the IDC has stated that by 2023, 65% of patients will have accessed care through a digital front door as healthcare providers look for ways to improve access, engagements and experiences across services. Vendors can act as a catalyst in EMR adoption by offering a user-friendly platform for physicians and all other healthcare professionals engaged in the process.

Moreover, several governments from various countries are driving EMR adoption through time-bound plans, which will be more effective. “For example, in the Asia-Pacific region, Singapore, South Korea, Taiwan, Malaysia, Australia and India have a strategic approach to EMR adoption. In India, EMR adoption is currently in a nascent stage. But the National Digital Health Mission (NDHM), announced by the Indian government, will give the initiative an adequate boost,” says Vallikkat.

According to an Inc42 Plus report titled India’s Healthtech Landscape In A Post-Covid-19 World, the country’s healthtech market is projected to reach $21.3 Bn by 2025, from $5.2 Bn in 2019. The market is expected to grow at a CAGR of 27% during 2020-25 and will account for 3.2% of the global healthtech market pie by the end of the period. 

Hasija adds that Innovaccer has worked from the ground up in the US. But in new geographies, it must have an ecosystem first because healthcare has many local considerations. “We will not enter new geographies unless we are confident about successfully implementing some use cases. At our current pace of innovation, we are 12-18 months away from that kind of expansion,” he concludes.