May 23, 2025 • 19 mins
Health Affairs' Jeff Byers welcomes Christina Farr, advisor, investor, editor-in-chief of Second Opinion Media, to the pod to discuss recent moves by Omada Health and Hinge Health to take the companies public, how the IPOs could impact the digital health market, and what gains her attention when companies make their investment pitches.
Health Affairs released their first trend report, which is exclusive for Health Affairs Insiders. The first report focuses on AI in health care and you can get full access to this report by becoming an Insider. Insiders also will receive access to our June 17 event on risk adjustment trends.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jeff Byers (00:08):
Hello, and welcome to Health Affairs This Week. I'm
your host, Jeff Byers. We'rerecording on 05/22/2025. This
week, we released our firsttrend report to insiders. It's
on the use of AI in health care,and we've been told it's, quote,
a really helpful resource assomeone who works in the AI
regulatory space, unquote.
(00:29):
Join insider for a hundred and$80 a year, and you can get that
trend report as well asexclusive access to our May 29
event on the changes at the FDA,and our June 17 event where Jay
Michael McWilliams will explainrisk adjustment trends. Today on
the pod, we have Christina Farr,managing director at Manat,
founder and GP at Scrub, andeditor in chief at Second
(00:52):
Opinion Media to talk about thestate of the digital health
industry and more. When the newsdropped that Hinge Health was
going to IPO, Christina was thefirst person I thought of to
have on this pod to discuss, andthen we were blessed with the
news that Omada Health droppedits s one filing to make this an
even more timely conversation.And on top of that, we're
(01:15):
recording on the day when Hingeis expected to open on the New
York Stock Exchange at $32 ashare upon open. Christine and I
have known each other for alittle bit in the digital space,
but this is our first timespeaking face to face virtually,
much like our conversation withBob Herman, which you can check
out in the archives.
I'm looking forward to this.Christina, welcome to the
(01:35):
program.
Christina Farr (01:35):
Oh my gosh. Thanks for having me on, and so
much to talk about.
Jeff Byers (01:39):
Yeah. Yeah. I you know, as I mentioned, you were
the first person I thought of.You do such a great job of
explaining your insights in yoursecond opinion newsletter, and
it kinda seems like digitalhealth is kinda having a moment
again. So taking the Omada andthe Hinge Health developments,
you know, what's a narrative youcan give our listeners for
(02:00):
digital health industry at thistime?
Christina Farr (02:01):
Yeah. So this was, really important news for
the industry because we had justnot had a lot of exit activity
for quite a while. Was very, Icalled it kind of like the IPO
winter for digital health. Andit went on for several years.
And so what does that mean?
Well, for
Jeff Byers (02:19):
the
Christina Farr (02:19):
venture market, for venture all the way through
to you know, growth equity andbeyond, is all the funding that
happens before a company goespublic. A lot of that a lot of
that gets impacted becauseinvestors need to know in the
private markets how to valuethese businesses based on how
the public markets will react tothem. And there was just so
(02:40):
little data out there, and so noone really knew. And I think
that uncertainty has createdsome problems with getting
companies in this in this spacefunded. And now I think we've
got these two upcoming IPOs thatwill really test investors in
the public market's interest inthis category.
How much do they understand thiscategory? It's still very
(03:04):
emergent and very nascent. Andno one, I mean, think the other
challenge is, are these techcompanies or are they healthcare
companies? And because they sitright in the middle, it's really
questionable. And you have to gointo the fundamentals of each
business to determine where itsits.
And that has an impact which wecould talk about on revenue
(03:24):
multiples, which you're startingto see now with both Hinge and
Omada. So I've been trackingboth of these really closely for
that reason. And it's also whyyou see all these hilarious
jokes from industry operatorsand digital health CEOs on
social media saying, like,everybody, we all need to, like,
rally and buy shares in Hingeand Armada because how these
(03:47):
companies perform will dictatehow everybody else will be able
to raise capital in the nextcouple of years.
Jeff Byers (03:55):
Yeah. Hold the line. Right?
Christina Farr (03:56):
Exactly. Exactly. So important.
Jeff Byers (03:59):
You noted Omada in your newsletter was very much
part of the second wave ofdigital health companies. And
you kinda already mentioned thisin what you're talking about.
Like, just for listeners thatmay not be aware of the digital
health space, so we mostly focusto a health policy realm, What
can you tell us about what thatsecond wave is? So you talked
(04:19):
about the is it a tech company?Is it a health care company?
What are the main features ofthe second wave?
Christina Farr (04:24):
Yeah. So I would think of the first wave as as
like your sort of one point otelehealth company. You know,
the innovation there was let'stake a typical kind of visit
that happens between a doctorand a patient and put it online.
And I would argue that, youknow, these businesses
ultimately struggled becauseit's just there's no
defensibility, there's no moat.So anyone could come along, you
(04:47):
know, in theory and start atelehealth business.
And then that creates a lot ofpricing pressure over time,
which is really what happened tomany of the companies in sort of
this gen one space. And thenthis, I would say the next
generation is really the trueblue digital health companies
that tend to take theinterventions and try to provide
(05:10):
them as conveniently as possiblewith the focus on really a new
buyer, which has historicallybeen more health plans and even
systems. And is now for thisgeneration increasingly the
employer was the purchaser,which you saw both with Hinge
and Omada, and it's really wherethey got their start. And
they're not just telehealthbusinesses. They use a variety
(05:34):
of different interventions.
It could be a wearable device,it could be a physical therapy
session augmented with AI, whichis what Hinge offers. And then
they try to provide theseinterventions in a cost
effective way and ensure thatthey actually do work. And now
there are questions around thattoo, which we can get into. But
(05:56):
they are more sophisticatedofferings. And I would say both
Hedge and Armada, you know, Iwould refer to as classic
digital health companies reallyfrom the start.
Jeff Byers (06:09):
Yeah. Let's dive into that. Both companies take
this approach of, like, tryingto get patients or individuals
to do something. Right? Tryingto change their behavior.
Christina Farr (06:18):
Yes. Yes. Exactly.
Jeff Byers (06:20):
And I don't know about you, but I know it's
really hard to can change mybehavior as well. So, like,
getting a large group of peopleto change their behaviors,
especially under the notion of,like, this is gonna be healthier
for you, I think is a is a nobletask. So, like, how have they
been performing?
Christina Farr (06:38):
So I think your question is a is a really good
one, and it's also complicatedbecause behavior change is is
very hard. And, you know, we allknow that from those of of your
listeners in the policy worldcertainly do know that. But then
there are conditions where it's,you know, not as challenging as
others. I would say for Omada,which is really in this sort of
(06:58):
area of chronic disease, youknow, diabetes, prediabetes, I
would say that is a much hardertask because you're dealing with
something that is chronic. Andthat individual may have had
that condition because ofcertain lifestyle choices.
And those lifestyle choices can,there's so many social factors.
(07:19):
And other factors outside ofeven healthcare that contribute
to that. And so being able toreach these people effectively
with tech is just tough. Andmeanwhile, something like a
hinge, is in thismusculoskeletal area, people who
have suddenly got very severe,like a good friend of mine just
recently had back surgery, andit was absolutely crippling what
(07:41):
he went through, the level ofpain. So it's very acute when it
happens.
And if you're indicated forsurgery, in the cases where you
are indicated, you can havefairly quick relief. If there is
a path with physical therapy,which there often is, then can
also over time get that relief.And you go from something that
(08:01):
feels very acute and veryepisodic to feeling like you can
be productive again and get backto your life. And so I think
Hinge chose a category where thebehavior change aspect was, I
wouldn't say easier, but whereit's just much more clear how to
be able to reach the theindividual in that moment and
then, you know, make sure thatthey're on a path that that can
(08:23):
get them quick results.
Jeff Byers (08:25):
So you say get productive and get back to your
life. I I love that phrasebecause it makes me think these
companies are selling toemployers. Right? So if you can
get productive and get back onwith your life, that's a lot of
a lot of that has work for a lotof people than be productive for
for companies. So pretty bigcase point for selling to the
employer market.
(08:46):
Is this what the digital landhealth landscape is currently
of, like, trying to find theemployer point solutions to sell
into? Or, like, given these twocompanies, what does that say
about the digital health market?
Christina Farr (08:59):
Yeah. So so taking a step back, I would say
most of these companies didstart with the employer. And the
reason for that was like fifteenyears ago, you know, employers
started to be more willing toaccept some of these point
solutions for their members.They were starting to, so many
of them were self insured. Sobecause they were taking on the
(09:21):
financial risk, they were ableto be more flexible with the
benefits they offered.
And the digital health companiescame along and said, you know,
here are some of your biggestareas of spend. You know, we
have offerings in these exactareas and we can really move the
needle. And in some cases theyhave and in others they haven't.
And I think we're still learningkind of what the best practices
are here and employers havemoved from kind of styles of
(09:44):
contracting that were much morekind of sweeping to contracting
based on who's actually usingthe product and if the product
is even working as described.So, you know, things have
changed over the last kind often to fifteen years.
But for both companies andreally the landscape overall,
the employer is where theystarted. In theory, you know,
(10:04):
cycles were a little bit quickerand easier than selling into
health plans. And these were bigcontracts in the case of the
jumbo employers. You could seethat you can get to hundreds of
millions in revenue with justkind of a relatively small
number of very large contracts.The challenge is there's only so
many of these big employers togo around.
And when we continue to investin these businesses and create
(10:28):
categories with, you know, sayfour, five, six companies in
each category, what happensnext? Pricing pressure. And
that, of course, affects thefinancial trajectory of these
businesses. So where do they gonext? And I think that's the big
question as this next generationis hitting the public markets.
Can they crack Medicaid? Canthey crack Medicare? How about
(10:49):
health plans? What aboutconsumers? What are the other
pathways open to them to makemoney outside of the employer?
And it's incumbent on all thesebusinesses to prove they can do
it, I believe, to have realsustainability.
Jeff Byers (11:04):
So we touched on the where they could go next. I did
wanna ask you, you're thefounder and GP at Scrub. When
you look or take pitches, whatdoes it take for companies to
stand out from a digital healthperspective when you're in that
room?
Christina Farr (11:20):
Yeah. It's a great question. I actually just
wrote a book about storytelling,and that the book's coming out
in the fall. We can we can talkmore about it closer to the
time. But I I'm actually reallyinterested in in backing good
storytellers.
I think if you can tell a goodstory to an investor, you're
more likely to be able to tell agood story to all the other
(11:43):
stakeholders that you need on onyour side to be effective,
whether that's, you know,customers, whether it's
potential hires, whether it'sthe media. So if I find myself
riveted by a presentation, thento me that's a good sign for the
business overall. So so I amlooking for that. And then I'm
(12:04):
looking for, you know, thingsthat are new and different that
I haven't seen a million timesbefore. I'm looking for
companies that are not just kindof greasing the wheels and, you
know, making the existingexisting system even worse than
it is.
I'm interested in companies thatare trying to change health care
and make it better. And then,you know, beyond that, it's like
(12:25):
all the obvious stuff. Like, youwant decent metrics and growth
and, you know, all the thingsthat financial investors look
for. So if I can find that thattrifecta of good story, big
impact, and solid businessfundamentals, then I'm in.
Jeff Byers (12:41):
That's great to hear about the storytelling. Yeah. I
think storytelling is such afantastic part, in a company's
life cycle because if you insome ways, you know, reality is
perception. So if you can tell astory that changes the
perception of your company andsell that idea to Wall Street,
I'm sure it makes a handy ahandier investment down the
line.
Christina Farr (13:00):
Yes. I agree with that. And I think
sometimes, which is why I wrotethe book, people say, Oh, you're
a good storyteller, so thereforeyou're not a good operator. And
I just think that's a falsedichotomy. I've met plenty of
good operators who are also goodstorytellers.
And guess what? It's like havinga superpower. You just you stand
(13:21):
out in the category. And, youknow, for me, like, if I can
find somebody who's got bothskill sets, then I just I
ultimately just see a winner.
Jeff Byers (13:31):
And what's the book called?
Christina Farr (13:32):
The Storyteller's Advantage.
Jeff Byers (13:34):
Is that out for preorder yet?
Christina Farr (13:35):
It is out for preorder as of literally this
week. So, yeah, I haven'thaven't announced it yet, but
it's it's out for preorder. Foryeah. As you all know, for for
authors, pre preorders are areeverything. So if anybody's
interested in the book, thenthen let me know.
Jeff Byers (13:51):
Well, fantastic. We'll put the link in the show
notes, and hopefully we can haveyou back on to talk about that
when it's released later thisfall. You know, one question two
questions before we go. One, onHinge and Omada, is there
anything that we didn't touch onabout how this relates to the
state of digital healthindustry? I know we had a wide
range in conversation there.
Christina Farr (14:11):
Yeah. I think it's interesting to sort of
compare the two businesses.Know, they're wildly different.
They're in different categories.But I had an interesting
afternoon just kind of lookingat both S1s and thinking about
the differences between the two,because it's inevitable that
they they will be comparedagainst each other, both being
kind of from the same categoryand in digital health and and
(14:35):
whatnot.
I do think it's reallyinteresting that that Omada is
an an older company, started in2011 while Hinge was right
around 2014. So it got methinking a lot about this kind
of fallacy of the first moveradvantage in digital health. And
I actually I actually thinkthere's value in the second or
even third or fourth moversadvantage. And that's that's in
(14:56):
you know, because this space isso new, like, Omada had to write
so many of the playbooks. Like,they had to figure out they just
spent a lot of money and timefiguring out how to make that
business work.
And I think ultimately, theythey made some huge
realizations, like, you have tobe a virtual clinic. You gotta
be a provider. You can't just bea vendor. And that was something
they had to learn in the courseof building this business
(15:17):
because it was such a new area.And so anyone who came along
later like Hinge would have beenable to look at Omada and
basically spend years lessmaking the same mistakes and
just piggyback off of a lot ofthat learning and growth that
Omada had to do.
I can think of many otherexamples in different
(15:40):
categories, but I think it'slike in this space, it's
actually very helpful to not befirst. And I think that'll be
continued to be true for a whileuntil we we reach some kind of
maturity.
Jeff Byers (15:50):
Yeah. I'm so glad you touched on that because I
was wondering if you so it's2025. People can do the math.
It's like fourteen years forOmada, thirteen, you know, the
other number, for Hinge Health.When you're with clients and
advising, them or in the roomwith founders, you know, do you
give them a sense that this is along game or is there a push to
(16:13):
like get to 10 x as quickly aspossible or like for digital
health specifically?
Christina Farr (16:17):
Yeah. I mean, I I tell them it's a long game. If
you if you wanna make moneyquickly, then I can think of
quite a lot of other ways to dothat. That is not starting a
venture backed digital healthbusiness. I also spend a lot of
time with founders, whether theybe clients or any just people I
know, thinking through kind ofhow do you want to build this
(16:38):
business?
And I think a lot of people,because of the low interest rate
era, sort of jump immediately tothis idea of venture capital as
the B end all. And they believethat you need this kind of money
in order to build a business inhealth care. But a lot of
companies don't and shouldn't.You know, if you wanna build
something that has hockey stickstyle kind of revenue growth,
(17:00):
and scale it as quickly aspossible, and you don't mind
that, like, you have to continueto fundraise every eighteen
months to two years for the,like, foreseeable future, then
sure, you should raise VC money.And by the way, you're also
gonna get diluted.
You know, you're not gonna ownas much of the business by the
end of it. You might own verylittle of Mean meanwhile, like,
lot of people actually don'twanna do that. They'd rather
(17:21):
just, like, maybe raise a couplemillion from friends and family
and then run a business that,like, maybe just, like, makes
good money. And they own most ofit. And that's fine too.
And I I don't think we talkenough about just different ways
of running businesses in thisspace because I see so much
stuff take venture money and getventure funded where in my mind,
(17:43):
like, it didn't really didn'tneed to be that way.
Jeff Byers (17:45):
I don't know if we have the time to touch on it,
but there can be a hive mindmentality of, like, if you're
hearing what other people aredoing and they're like, well,
that's what I'm supposed to bedoing as well.
Christina Farr (17:54):
Exactly. And nobody really shares the lows.
They only share the highs. Weget such a skewed view of, you
know, what's going on in themarket. And that's that's
basically the thesis behindsecond opinion that, like, I'm
I'm not interested in just, youknow, providing a catalog of
company wins.
I'm interested in, like, whatdoes it really take to make a
(18:14):
business successful in thisspace?
Jeff Byers (18:16):
Yeah. Well, that's a perfect segue as we wrap up. Let
the listeners know what do youwhat do you have going on these
days.
Christina Farr (18:22):
Yeah. I mean, subscribe to
secondopinion.media. You'll getmy newsletter. I I promise I
won't spam you. It's a couple oftimes a week, and I do kind of
deep analysis on the industry.
I ask hard questions. Justbefore I spoke with with you, I
was just writing one on how, youknow, the question of how how
much time to spend with VCsbefore a capital raise. So I
(18:45):
like kind of asking these sortsof operational questions and
then kind of diving into thetactics and not just kind of the
high level view, you know, downto the level of, well, what
percentage of time and how andwhy and when and all of these
questions. So I'm trying to makeit a little bit easier to build
a digital health business bykind of exposing lessons from
(19:05):
others in the industry who'vehad to learn it the hard way. So
that's second opinion dot media.
And then if you need, you know,my help on the consulting side,
reach out to me. I I do a bit ofwork with companies as well. And
and then I also invest throughthrough Scrub Capital. So if
you're raising a a pre seed or aseed, reach out to me as well.
Jeff Byers (19:25):
Well, fantastic. Christina Farr, thanks for
joining us today on Health Fairsthis week. And to you, the
listener, if you enjoyed thisepisode, send it to the friend.
Send it to a friend, and we'lljust leave it at that today.
Well, thanks, and see you nextweek.
Hello, and welcome to Health Affairs This Week. I'm
your host, Jeff Byers. We'rerecording on 05/22/2025. This
week, we released our firsttrend report to insiders. It's
on the use of AI in health care,and we've been told it's, quote,
a really helpful resource assomeone who works in the AI
regulatory space, unquote.
(00:29):
Join insider for a hundred and$80 a year, and you can get that
trend report as well asexclusive access to our May 29
event on the changes at the FDA,and our June 17 event where Jay
Michael McWilliams will explainrisk adjustment trends. Today on
the pod, we have Christina Farr,managing director at Manat,
founder and GP at Scrub, andeditor in chief at Second
(00:52):
Opinion Media to talk about thestate of the digital health
industry and more. When the newsdropped that Hinge Health was
going to IPO, Christina was thefirst person I thought of to
have on this pod to discuss, andthen we were blessed with the
news that Omada Health droppedits s one filing to make this an
even more timely conversation.And on top of that, we're
(01:15):
recording on the day when Hingeis expected to open on the New
York Stock Exchange at $32 ashare upon open. Christine and I
have known each other for alittle bit in the digital space,
but this is our first timespeaking face to face virtually,
much like our conversation withBob Herman, which you can check
out in the archives.
I'm looking forward to this.Christina, welcome to the
(01:35):
program.
Christina Farr (01:35):
Oh my gosh. Thanks for having me on, and so
much to talk about.
Jeff Byers (01:39):
Yeah. Yeah. I you know, as I mentioned, you were
the first person I thought of.You do such a great job of
explaining your insights in yoursecond opinion newsletter, and
it kinda seems like digitalhealth is kinda having a moment
again. So taking the Omada andthe Hinge Health developments,
you know, what's a narrative youcan give our listeners for
(02:00):
digital health industry at thistime?
Christina Farr (02:01):
Yeah. So this was, really important news for
the industry because we had justnot had a lot of exit activity
for quite a while. Was very, Icalled it kind of like the IPO
winter for digital health. Andit went on for several years.
And so what does that mean?
Well, for
Jeff Byers (02:19):
the
Christina Farr (02:19):
venture market, for venture all the way through
to you know, growth equity andbeyond, is all the funding that
happens before a company goespublic. A lot of that a lot of
that gets impacted becauseinvestors need to know in the
private markets how to valuethese businesses based on how
the public markets will react tothem. And there was just so
(02:40):
little data out there, and so noone really knew. And I think
that uncertainty has createdsome problems with getting
companies in this in this spacefunded. And now I think we've
got these two upcoming IPOs thatwill really test investors in
the public market's interest inthis category.
How much do they understand thiscategory? It's still very
(03:04):
emergent and very nascent. Andno one, I mean, think the other
challenge is, are these techcompanies or are they healthcare
companies? And because they sitright in the middle, it's really
questionable. And you have to gointo the fundamentals of each
business to determine where itsits.
And that has an impact which wecould talk about on revenue
(03:24):
multiples, which you're startingto see now with both Hinge and
Omada. So I've been trackingboth of these really closely for
that reason. And it's also whyyou see all these hilarious
jokes from industry operatorsand digital health CEOs on
social media saying, like,everybody, we all need to, like,
rally and buy shares in Hingeand Armada because how these
(03:47):
companies perform will dictatehow everybody else will be able
to raise capital in the nextcouple of years.
Jeff Byers (03:55):
Yeah. Hold the line. Right?
Christina Farr (03:56):
Exactly. Exactly. So important.
Jeff Byers (03:59):
You noted Omada in your newsletter was very much
part of the second wave ofdigital health companies. And
you kinda already mentioned thisin what you're talking about.
Like, just for listeners thatmay not be aware of the digital
health space, so we mostly focusto a health policy realm, What
can you tell us about what thatsecond wave is? So you talked
(04:19):
about the is it a tech company?Is it a health care company?
What are the main features ofthe second wave?
Christina Farr (04:24):
Yeah. So I would think of the first wave as as
like your sort of one point otelehealth company. You know,
the innovation there was let'stake a typical kind of visit
that happens between a doctorand a patient and put it online.
And I would argue that, youknow, these businesses
ultimately struggled becauseit's just there's no
defensibility, there's no moat.So anyone could come along, you
(04:47):
know, in theory and start atelehealth business.
And then that creates a lot ofpricing pressure over time,
which is really what happened tomany of the companies in sort of
this gen one space. And thenthis, I would say the next
generation is really the trueblue digital health companies
that tend to take theinterventions and try to provide
(05:10):
them as conveniently as possiblewith the focus on really a new
buyer, which has historicallybeen more health plans and even
systems. And is now for thisgeneration increasingly the
employer was the purchaser,which you saw both with Hinge
and Omada, and it's really wherethey got their start. And
they're not just telehealthbusinesses. They use a variety
(05:34):
of different interventions.
It could be a wearable device,it could be a physical therapy
session augmented with AI, whichis what Hinge offers. And then
they try to provide theseinterventions in a cost
effective way and ensure thatthey actually do work. And now
there are questions around thattoo, which we can get into. But
(05:56):
they are more sophisticatedofferings. And I would say both
Hedge and Armada, you know, Iwould refer to as classic
digital health companies reallyfrom the start.
Jeff Byers (06:09):
Yeah. Let's dive into that. Both companies take
this approach of, like, tryingto get patients or individuals
to do something. Right? Tryingto change their behavior.
Christina Farr (06:18):
Yes. Yes. Exactly.
Jeff Byers (06:20):
And I don't know about you, but I know it's
really hard to can change mybehavior as well. So, like,
getting a large group of peopleto change their behaviors,
especially under the notion of,like, this is gonna be healthier
for you, I think is a is a nobletask. So, like, how have they
been performing?
Christina Farr (06:38):
So I think your question is a is a really good
one, and it's also complicatedbecause behavior change is is
very hard. And, you know, we allknow that from those of of your
listeners in the policy worldcertainly do know that. But then
there are conditions where it's,you know, not as challenging as
others. I would say for Omada,which is really in this sort of
(06:58):
area of chronic disease, youknow, diabetes, prediabetes, I
would say that is a much hardertask because you're dealing with
something that is chronic. Andthat individual may have had
that condition because ofcertain lifestyle choices.
And those lifestyle choices can,there's so many social factors.
(07:19):
And other factors outside ofeven healthcare that contribute
to that. And so being able toreach these people effectively
with tech is just tough. Andmeanwhile, something like a
hinge, is in thismusculoskeletal area, people who
have suddenly got very severe,like a good friend of mine just
recently had back surgery, andit was absolutely crippling what
(07:41):
he went through, the level ofpain. So it's very acute when it
happens.
And if you're indicated forsurgery, in the cases where you
are indicated, you can havefairly quick relief. If there is
a path with physical therapy,which there often is, then can
also over time get that relief.And you go from something that
(08:01):
feels very acute and veryepisodic to feeling like you can
be productive again and get backto your life. And so I think
Hinge chose a category where thebehavior change aspect was, I
wouldn't say easier, but whereit's just much more clear how to
be able to reach the theindividual in that moment and
then, you know, make sure thatthey're on a path that that can
(08:23):
get them quick results.
Jeff Byers (08:25):
So you say get productive and get back to your
life. I I love that phrasebecause it makes me think these
companies are selling toemployers. Right? So if you can
get productive and get back onwith your life, that's a lot of
a lot of that has work for a lotof people than be productive for
for companies. So pretty bigcase point for selling to the
employer market.
(08:46):
Is this what the digital landhealth landscape is currently
of, like, trying to find theemployer point solutions to sell
into? Or, like, given these twocompanies, what does that say
about the digital health market?
Christina Farr (08:59):
Yeah. So so taking a step back, I would say
most of these companies didstart with the employer. And the
reason for that was like fifteenyears ago, you know, employers
started to be more willing toaccept some of these point
solutions for their members.They were starting to, so many
of them were self insured. Sobecause they were taking on the
(09:21):
financial risk, they were ableto be more flexible with the
benefits they offered.
And the digital health companiescame along and said, you know,
here are some of your biggestareas of spend. You know, we
have offerings in these exactareas and we can really move the
needle. And in some cases theyhave and in others they haven't.
And I think we're still learningkind of what the best practices
are here and employers havemoved from kind of styles of
(09:44):
contracting that were much morekind of sweeping to contracting
based on who's actually usingthe product and if the product
is even working as described.So, you know, things have
changed over the last kind often to fifteen years.
But for both companies andreally the landscape overall,
the employer is where theystarted. In theory, you know,
(10:04):
cycles were a little bit quickerand easier than selling into
health plans. And these were bigcontracts in the case of the
jumbo employers. You could seethat you can get to hundreds of
millions in revenue with justkind of a relatively small
number of very large contracts.The challenge is there's only so
many of these big employers togo around.
And when we continue to investin these businesses and create
(10:28):
categories with, you know, sayfour, five, six companies in
each category, what happensnext? Pricing pressure. And
that, of course, affects thefinancial trajectory of these
businesses. So where do they gonext? And I think that's the big
question as this next generationis hitting the public markets.
Can they crack Medicaid? Canthey crack Medicare? How about
(10:49):
health plans? What aboutconsumers? What are the other
pathways open to them to makemoney outside of the employer?
And it's incumbent on all thesebusinesses to prove they can do
it, I believe, to have realsustainability.
Jeff Byers (11:04):
So we touched on the where they could go next. I did
wanna ask you, you're thefounder and GP at Scrub. When
you look or take pitches, whatdoes it take for companies to
stand out from a digital healthperspective when you're in that
room?
Christina Farr (11:20):
Yeah. It's a great question. I actually just
wrote a book about storytelling,and that the book's coming out
in the fall. We can we can talkmore about it closer to the
time. But I I'm actually reallyinterested in in backing good
storytellers.
I think if you can tell a goodstory to an investor, you're
more likely to be able to tell agood story to all the other
(11:43):
stakeholders that you need on onyour side to be effective,
whether that's, you know,customers, whether it's
potential hires, whether it'sthe media. So if I find myself
riveted by a presentation, thento me that's a good sign for the
business overall. So so I amlooking for that. And then I'm
(12:04):
looking for, you know, thingsthat are new and different that
I haven't seen a million timesbefore. I'm looking for
companies that are not just kindof greasing the wheels and, you
know, making the existingexisting system even worse than
it is.
I'm interested in companies thatare trying to change health care
and make it better. And then,you know, beyond that, it's like
(12:25):
all the obvious stuff. Like, youwant decent metrics and growth
and, you know, all the thingsthat financial investors look
for. So if I can find that thattrifecta of good story, big
impact, and solid businessfundamentals, then I'm in.
Jeff Byers (12:41):
That's great to hear about the storytelling. Yeah. I
think storytelling is such afantastic part, in a company's
life cycle because if you insome ways, you know, reality is
perception. So if you can tell astory that changes the
perception of your company andsell that idea to Wall Street,
I'm sure it makes a handy ahandier investment down the
line.
Christina Farr (13:00):
Yes. I agree with that. And I think
sometimes, which is why I wrotethe book, people say, Oh, you're
a good storyteller, so thereforeyou're not a good operator. And
I just think that's a falsedichotomy. I've met plenty of
good operators who are also goodstorytellers.
And guess what? It's like havinga superpower. You just you stand
(13:21):
out in the category. And, youknow, for me, like, if I can
find somebody who's got bothskill sets, then I just I
ultimately just see a winner.
Jeff Byers (13:31):
And what's the book called?
Christina Farr (13:32):
The Storyteller's Advantage.
Jeff Byers (13:34):
Is that out for preorder yet?
Christina Farr (13:35):
It is out for preorder as of literally this
week. So, yeah, I haven'thaven't announced it yet, but
it's it's out for preorder. Foryeah. As you all know, for for
authors, pre preorders are areeverything. So if anybody's
interested in the book, thenthen let me know.
Jeff Byers (13:51):
Well, fantastic. We'll put the link in the show
notes, and hopefully we can haveyou back on to talk about that
when it's released later thisfall. You know, one question two
questions before we go. One, onHinge and Omada, is there
anything that we didn't touch onabout how this relates to the
state of digital healthindustry? I know we had a wide
range in conversation there.
Christina Farr (14:11):
Yeah. I think it's interesting to sort of
compare the two businesses.Know, they're wildly different.
They're in different categories.But I had an interesting
afternoon just kind of lookingat both S1s and thinking about
the differences between the two,because it's inevitable that
they they will be comparedagainst each other, both being
kind of from the same categoryand in digital health and and
(14:35):
whatnot.
I do think it's reallyinteresting that that Omada is
an an older company, started in2011 while Hinge was right
around 2014. So it got methinking a lot about this kind
of fallacy of the first moveradvantage in digital health. And
I actually I actually thinkthere's value in the second or
even third or fourth moversadvantage. And that's that's in
(14:56):
you know, because this space isso new, like, Omada had to write
so many of the playbooks. Like,they had to figure out they just
spent a lot of money and timefiguring out how to make that
business work.
And I think ultimately, theythey made some huge
realizations, like, you have tobe a virtual clinic. You gotta
be a provider. You can't just bea vendor. And that was something
they had to learn in the courseof building this business
(15:17):
because it was such a new area.And so anyone who came along
later like Hinge would have beenable to look at Omada and
basically spend years lessmaking the same mistakes and
just piggyback off of a lot ofthat learning and growth that
Omada had to do.
I can think of many otherexamples in different
(15:40):
categories, but I think it'slike in this space, it's
actually very helpful to not befirst. And I think that'll be
continued to be true for a whileuntil we we reach some kind of
maturity.
Jeff Byers (15:50):
Yeah. I'm so glad you touched on that because I
was wondering if you so it's2025. People can do the math.
It's like fourteen years forOmada, thirteen, you know, the
other number, for Hinge Health.When you're with clients and
advising, them or in the roomwith founders, you know, do you
give them a sense that this is along game or is there a push to
(16:13):
like get to 10 x as quickly aspossible or like for digital
health specifically?
Christina Farr (16:17):
Yeah. I mean, I I tell them it's a long game. If
you if you wanna make moneyquickly, then I can think of
quite a lot of other ways to dothat. That is not starting a
venture backed digital healthbusiness. I also spend a lot of
time with founders, whether theybe clients or any just people I
know, thinking through kind ofhow do you want to build this
(16:38):
business?
And I think a lot of people,because of the low interest rate
era, sort of jump immediately tothis idea of venture capital as
the B end all. And they believethat you need this kind of money
in order to build a business inhealth care. But a lot of
companies don't and shouldn't.You know, if you wanna build
something that has hockey stickstyle kind of revenue growth,
(17:00):
and scale it as quickly aspossible, and you don't mind
that, like, you have to continueto fundraise every eighteen
months to two years for the,like, foreseeable future, then
sure, you should raise VC money.And by the way, you're also
gonna get diluted.
You know, you're not gonna ownas much of the business by the
end of it. You might own verylittle of Mean meanwhile, like,
lot of people actually don'twanna do that. They'd rather
(17:21):
just, like, maybe raise a couplemillion from friends and family
and then run a business that,like, maybe just, like, makes
good money. And they own most ofit. And that's fine too.
And I I don't think we talkenough about just different ways
of running businesses in thisspace because I see so much
stuff take venture money and getventure funded where in my mind,
(17:43):
like, it didn't really didn'tneed to be that way.
Jeff Byers (17:45):
I don't know if we have the time to touch on it,
but there can be a hive mindmentality of, like, if you're
hearing what other people aredoing and they're like, well,
that's what I'm supposed to bedoing as well.
Christina Farr (17:54):
Exactly. And nobody really shares the lows.
They only share the highs. Weget such a skewed view of, you
know, what's going on in themarket. And that's that's
basically the thesis behindsecond opinion that, like, I'm
I'm not interested in just, youknow, providing a catalog of
company wins.
I'm interested in, like, whatdoes it really take to make a
(18:14):
business successful in thisspace?
Jeff Byers (18:16):
Yeah. Well, that's a perfect segue as we wrap up. Let
the listeners know what do youwhat do you have going on these
days.
Christina Farr (18:22):
Yeah. I mean, subscribe to
secondopinion.media. You'll getmy newsletter. I I promise I
won't spam you. It's a couple oftimes a week, and I do kind of
deep analysis on the industry.
I ask hard questions. Justbefore I spoke with with you, I
was just writing one on how, youknow, the question of how how
much time to spend with VCsbefore a capital raise. So I
(18:45):
like kind of asking these sortsof operational questions and
then kind of diving into thetactics and not just kind of the
high level view, you know, downto the level of, well, what
percentage of time and how andwhy and when and all of these
questions. So I'm trying to makeit a little bit easier to build
a digital health business bykind of exposing lessons from
(19:05):
others in the industry who'vehad to learn it the hard way. So
that's second opinion dot media.
And then if you need, you know,my help on the consulting side,
reach out to me. I I do a bit ofwork with companies as well. And
and then I also invest throughthrough Scrub Capital. So if
you're raising a a pre seed or aseed, reach out to me as well.
Jeff Byers (19:25):
Well, fantastic. Christina Farr, thanks for
joining us today on Health Fairsthis week. And to you, the
listener, if you enjoyed thisepisode, send it to the friend.
Send it to a friend, and we'lljust leave it at that today.
Well, thanks, and see you nextweek.
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