Return to site The quality engine behind telemedicine

Iaso allows telemedicine to scale. 

As telemedicine explodes, Iaso is using computer vision to give feedback to medical professionals as they communicate on video. Iaso allows providers to continue their existing telemedicine practice (whether Zoom, MS Teams, or a traditional telemedicine video client), and provides them with the quality control and complaince functionality that is essential in this regulated industry. 

Iaso is the quality stack behind telemedicine visits. It addresses: 

1. User-experience: was the clinician on-time, clearly visible, easy to understand? 

2. Auditing: did the visit occur, for the requisite amount of time? 

3. Quality: did the clinician do a good job?

Iaso is the next-gen infrastructure powering visits. 

2020 saw 100 million telemedicine visits in the US, a 10x increase from 2019. This resulted in over $20B in direct reimbursement for telemedicine visits. Even assuming COVID effectively goes away by mid-2021, we still expect 80 million telemedicine visits in the US this year. 

Telemedicine is here to stay. Yet we don’t believe investing in direct telemedicine companies themselves is the right bet because most visit growth in telemedicine is from providers servicing their existing patients, not from new telemedicine companies. For example, 95% of the growth in telemedicine in 2020 was incumbent providers servicing existing patients. As a result, we believe it’s best to invest in companies that enable telemedicine to be delivered, adopted, and paid.

As telemedicine overtakes in-person visits for routine appointments, there is a major need for compliance and quality infrastructure. For example, last Sept, the Dept of Justice announced a major “take down” of telemedicine fraud. We expect telemedicine providers will be held to the same standard of quality and auditing as are in-person clinicians. Iaso is the first off-the-shelf software that can do this for any clinician. 

The emerging quality/compliance needs in telemedicine are reminiscent of the early needs of e-commerce companies in the late 1990s/early 2000s. Specifically, as early e-commerce and fintech companies like eBay and PayPal scaled, they discovered an enormous financial fraud problem on their platforms. Unable to find off-the-shelf solutions, they had to spend significant sums (and large percentages of their total revenue) building their own home-grown solution. Iaso precludes the need for telemedicine companies to do the same, by providing an off-the-shelf solution that integrates with every telemedicine client. 

The growth of video telemedicine has also highlighted the inconsistency of video experience, much like we all experienced while working from home over the past year. As companies and provider organizations (e.g., hospital systems) contemplate their telemedicine offerings, standardizing this experience should be a priority and Iaso is a core tool to do this.

Iaso has already secured several pilot sites and initial customers in which to test the product, which will fully launch later this year. Like other infrastructure companies, Iaso has a tiered SaaS revenue model.

Iaso has diverse customers in large and fast-growing markets.

Iaso has two distinct customer bases:

1.  Direct-to-consumer (DTC) pharmaceutical telehealth – like Hims, Roman and Heal– all are interested in Iaso to better control their own user-experience. These are transactional, cash-pay telemedicine companies that patients use in order procure specific medication or consultations easily. With these companies, the patient has no durable relationship with the individual clinician. As their visit volumes explode, they’ve had problems maintaining a high standard of quality across patient visits. This variability is a top risk to their brand and future growth. While they’re a small segment of the telemedicine market today, they’re growing fast and are excited about Iaso’s ability to measure and evaluate the features necessary to ensure consistent experience.

We estimate that cash-pay DTC telemedicine providers will do approximately 5 million video visits in 2021, resulting in $200 million revenue from the consultation itself + $1 billion from resulting prescriptions. We believe the market for compliance/user-experience products, like Iaso’s, is over $100 million today and growing rapidly. We expect this customer group to be relatively quick adopters of Iaso technology because they are looking for this functionality in the market today.

2. Traditionally reimbursed healthcare providers who are performing traditional consultations over video. This customer base accounted for the vast majority of video visits in 2020. Since these providers are reimbursed by the government or commercial insurance, their interest in Iaso tends towards compliance and quality. 

Between telemedicine fraud and patient lawsuits, traditional healthcare providers are scrambling to implement compliance procedures for their telemedicine visits. Historically, this has entailed manual double-entry record keeping: a provider does the telemedicine visit on one platform and then manually logs all of the logistics details into a separate auditing system. 

Beyond compliance, providers that accept reimbursement are required to manually audit 5-10% of all visits. For in-person visits, a supervisor or other clinician accompanies the treating physician. Iaso’s cloud-based machine vision product is the only solution available for telemedicine visits. 

We estimate the current market for compliance and quality to be about $12/visit or $1.1 billion today. We expect this group of customers to be slower adopters of Iaso technology, simply because sales cycles associated with traditional providers tend to be longer.

Compliance and quality are just a start, the expansion possibilities are enormous. 

In owning the quality and compliance layers of the stack, Iaso is making itself very sticky. Since healthcare is such a litigious and compliance driven industry with long tails of liability (typically 7+ yrs), it is very difficult to churn off of established products and procedures.

Once Iaso establishes itself across the industry with its first offerings, it will move down the “administrative stack” of telemedicine, selling more functionality to existing customers. Future product offerings could include: identity verification/fraud protection, provider credential verification, patient compliance, as well as growing fin-tech opportunities in payment reconciliation or provider payment disbursement.

Proactively sourced, double-digit ownership, a board seat: a Healthy Ventures deal. 

Iaso perfectly follows the Healthy Ventures strategy of editorially identifying interesting market segments and then proactively finding the bestcompanies, leading the investment round and getting >10% ownership at Seed. In our search for companies that will power the new telemedicine stack, we proactively sourced Iaso. Discussions with both traditional and new DTC telemedicine providers underscored the needs for Iaso’s product – immediately and especially as telemedicine grows.

The co-founder/CEO of Iaso, Dr. Ty Vychon, lived this problem first-hand when he was Dept Head for Medicine for the Navy in Okinawa Japan. As an established expert in medical applications of artificial intelligence (AI) prior to the Navy, Dr. Vychon recognized the power of machine-vision in solving many of the administrative problems specific to telemedicine. His network as a physician leader has also helped secure several initial pilots. 

Knowing that he had to find a technical co-founder who could build a robust, scalable, and extensible product, Dr. Vychon recruited Artur Ergashev. Artur is a full-stack engineer specializing in cloud software architecture. Artur has architected, built, and optimized the software platform for several companies. He brings to Iaso best practices honed across many different industries. 

 We led this deal, investing $800k as part of a $1.55 million round, owning 15% of the company and having a seat on the board of directors. Investing with us in this round are Refactor Capital, Tau Ventures, and Esther Dyson.

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