Matthew Holt
The big news about the digital health comeback is that Hinge Health proposed S1 and hopes to be made public as soon as possible. I suspect they would rather complete the IPO at the end of last year when the AI bubble expanded rather than deflation, but the market time is tough! Still, Hinge is almost profitable, with a growth clip of about 75% last year, and it earned over $350 million in terms of the shows it ran out, which is as good as the digital health sector. The problem is that the last round of 2021 is $6 billion + valuation of the ZIRP era, and the tiger and coat are idiot prices, as Teladoc trades at $15 billion in market cap (although it has dropped $30 billion in the year before that!). That is to say, errors are no longer the case. There are a lot of weird money on the IPO structure that can pay back these guys, but the point is that the possible valuation will be in the range of $150-25 million.
But there is another problem. This is my personal experience. I have to emphasize that my experience is no with hinges.
It happened that when my back collapsed, I had a video interview at Hinge's Booth in HLTH in 2022 and then tried their ENSO device (it helped with this after the first few minutes of use, but it helped with it). I discussed the process with PT Lori Walter and had a quick interview with President Jim Pursely, an old Livongo Hand BTW.
But last summer, I used the services of their main competitor, Sword Health. As far as I know, the processes and services of both companies are very similar, both through self-service exercises provided by smartphones and from remote care to AI therapists. But I might be wrong. So, in this article, I will infer from one company to another to study the overall field of MSK digital services.
Overall, I think the sword experience is an independent plan. But the problem is that it is independent.
My problem is my left knee. I had a lot of knee surgery in 2002-4 years, which is due to the result of skiing into the tree (tip. If you are skiing, make sure you do it with the board on the same side of the tree). More than 20 years later in 2024, I managed to induce knee pain from ferries in January, trains in May and airport shuttles in June. (It seems that the trip and my knees don't agree). This hasn't stopped me from being tied up, taking drugs and snowboards in the 2024 season, but it will certainly slow me down. Around this time, there were a lot of reports that people younger than me had replaced their knees.
So I think I should do something about it. My California program Blue Shield offers Solera, a gathering market for digital health applications and services. Sword Health is their PT app, so I chose it, signed up and left.
Please note that there is no zero integration in my PCP, any orthopedic surgeon, any clinical staff in the health plan or basically anyone’s clinical staff. This is purely patient-driven and managed.
With Sword, I made a 15-minute intro call on June 6 – and then sent a box containing a universal tablet and six sensors that fit your belt to connect to the lower leg and leg.
There is a conversation with PT in the app and it spits out some exercises for me. The following example is my second exercise. If you want to see more information, I will practice more and chat with PT.
Sword recommends that I do 15-minute classes four times a week instead of the regular 45-60-minute body PT course. Essentially every other day.
The end result was that I had eight meetings between June 12 and June 30.
Then I lost my motivation and took a 10-day vacation, but then came back to it, with nine meetings between July 10 and July 29 (three more than 3 per week). In most cases, the system works well. For some reason, the deal with Blue Shield was sending sensors as well as dedicated tablet devices, rather than having me use my phone for video-based tracking, which is now standard on Sword, Hinge and its competitors. Sometimes the sensors will have problems with the device and I shorten a session or two because the data I send back is wrong. But overall, the technology works well and I suspect video-based surveillance is even better.
I've had some discussions with my (non-AI) therapist all the time – there were two on my first vacation. It was very limited, but the therapist asked me some questions, I was able to send some knee photos to determine where the pain was, she made some adjustments to my request and reported the exercise at the pain level. Apparently, there is no physical manipulation (I used to have a big PT), nor is there an electrical stimulus. Some hinges that may be related to their ENSO devices are doing.
Then, when I was on vacation in Europe, I stopped the program – I spent too much time walking around museums and big cities. After all, after walking, I felt much better. When I came back I had a vague intention to start PT again, but I never did. My therapist sent me a message in the app trying to get me to start over, but I've never heard of Sword since then. They didn't even ask for my equipment.
So what is the result? I have 17 meetings in 7 weeks.
Clinically speaking, my range of exercise has increased, my ability to exercise has improved a little, and in the last class, I performed 20 minutes of practice. As I mentioned, after quite a lot of knee surgery, I did a lot of PT. My conclusion is that 1) this gives me a program that sticks to a little more or less for a while, which is good, 2) it tracks the scope of movement and improvement. In other words, practicing on YouTube is a level above me.
But after I came back from vacation, I stood out. Then my knees slowly deteriorated. This didn't stop me from returning to the skis. It works, but it hurts.
In the fall, I met my friendly UCSF knee surgeon at a party. He played with my knees and said, come and see me and then replaced it. Meanwhile, Lindsey Vonn, the greatest downhill skier of all time, made her surgery change her knee (partially) replaced by implants and returned to the World Cup track at the age of 40.
Of course, I'm not Lindsey Vonn, and the Scripture story of Eric Topol's knee replacement, which is extremely wrong and ruins his life. I know what knee surgery (and recovery) is like. So, I'm still not sure what to do.
So what did all this cost?
Solera (I think this requires a cut and pass the percentage onto the sword) CA's billing blue shield. Once the day before I first introduced the phone, the setup cost was $497. Then there are 3 subsequent bills, 6/16 $300, 7/11 $310, 7/13 $300. There are no patients of any type.
Blue Shield No Discount – obviously pre-verified rates. I'm trying to figure out what the trigger for the bill is. It seems the first $497 is the bill I registered for while the next specific number of meetings.
But the total bill is $1,407. For this sword, there are introductory calls, many messages with my PT (but these messages took 30-45 minutes in total, less if pre-written or AI delivered answers) and 17 actual sessions.
$82 per session (assuming the cost of the equipment is built-in inside a regular PT clinic). My rough greeting is that the cash price for regular face-to-face PT meetings is between $75 and $125. So my self-service meetings don't seem to be much cheaper than I go to a specific PT provider. Remember, these courses range from 12-20 minutes and I have 2-4 per week. Typically, even postoperative PT courses last for an hour (one PT for 2-3 patients per person) and are phased out relatively quickly – you may be 2-3 weeks a week for 4 weeks, then 1 week, then two months. Meanwhile, perform a 15-minute “therapeutic exercise” (CPT code 97110) Medicare pays $28.82!
To me, this means that the Blue Shield takes about the time it takes just like my short-distance classes in human physiotherapy. (I probably won't go!).
What I don't know is what would happen if I kept moving forward after I came back from the holidays. Is Solera & Sword able to keep billing Blue Shield? Or the upper limit for each patient. Unless either party is ready to indicate what their contract says, it is impossible to tell.
Another issue I care about
I don't like something and see it as a sword, hinge and the rest of it, is the integration zero with the rest of me. My PCP has no idea I'm doing this. I don't have a current orthopedic surgeon (except my UCSF party friends). The sword didn't try to connect me with anyone other than PT, except that I gave up on me quickly after I gave up on it.
They may have reported it back to the Blue Shield as a victory. As a patient, I underwent the treatment process, which was apparently improved, and no surgical request was made for the next 6-9 months. But they don't know if I'm seriously considering the surgery or if my progress continues.
Will I change my knees? My UCSF friend said, finish and go back to your favorite activity. I'm kind of like this, but it's painful. But I talked to a European orthopedic doctor who said that if the patient can’t sleep overnight, we have signs that if the pain is too high, the knee replaces the knee. I go to sleep!
IPO and the next step
What does this mean for hinge IPO? Assuming their deals with plans and employers are similar to those with Sword, I see two big challenges.
The first is integration with the rest of the health system. You might think that services like hinges or swords work well in some kind of integrated medical group, which has some kind of payments and is able to phase out expensive human PTs with cheap virtual PTs and see expensive surgeries as a result. Currently, at least in 1 of my, there is no way to tell the patient what is happening next to the virtual PT program afterwards. Did I have surgery? Have I met a surgeon? what happened? No one knows. Presumably, if I were the final payer, I at least ended up wondering.
The second is the price. Again, this is 1 of n, but in my opinion, in two months of virtual PT, $1,400 is a lot. Assuming the price of the hinge and sword is roughly price-competitive, how long will it take to knock it down at a much lower cost – especially if you can replace a virtual therapist with AI. We have seen other areas of AI have also seen lower costs, especially in environmental engagement. It's hard for me to imagine that hinges and swords can maintain this price level. If they can't, imagine Wall Street might get frivolous.
Matthew Holt is a publisher of THCB and his knees are still hurting!
