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Digital musculoskeletal care is booming. Where does the market go from here?

Musculoskeletal care is a big problem for the U.S. healthcare system, digital health companies say. Disorders are common and expensive to treat, but care that could cut down those high costs is inaccessible to many who need it.

That message is resonating with investors. Over the past year, they’ve poured hundreds of millions of dollars into the digital MSK space. Unicorns Hinge Health and SWORD Health both closed multiple rounds of funding in 2021, some worth nine figures

But they weren’t the only companies competing for venture dollars: Kaia Health, RecoveryOne and SpineZone also raked in millions of dollars in deals last year. Meanwhile, DarioHealth, which also offers tools for managing chronic conditions like hypertension and diabetes, bought its way into the space by acquiring Upright Technologies. It announced the launch of its MSK platform, called Dario Move, in October. 

“It is part of the macro boom that we see within digital health,” Boris Kheyn-Kheyfets, senior manager at Deloitte Consulting, told MobiHealthNews. However, he added that “musculoskeletal, in particular, deserves special mention within that, because musculoskeletal is an extremely large total addressable market. And the reality is that you can save quite a bit to employers and plans around surgery avoidance.”

Musculoskeletal disorders are pricey to treat in the U.S. According to a study published in JAMA analyzing the nation’s healthcare spending, low back and neck pain led 154 conditions in healthcare spending in 2016, costing an estimated $134.5 billion. And the number two spot? Other musculoskeletal disorders, coming in at $129.8 billion.

The analysis noted that just over 57% of the low back and neck pain spending came from private insurers and was associated with working-age adults. Meanwhile, spending for that condition increased nearly 7% between 1996 and 2016, though the number of prevalent cases only increased by just more than 1% annually.

Mark Luck Olson, CEO of RecoveryOne, argues surgeries are too common in the U.S. and that intervening early with physical therapy would save money. But the goal for digital musculoskeletal care should be more than just moving a physical therapy appointment to a virtual environment.

“That end-to-end journey is what we’re trying to innovate. We are not trying to digitize the visit. Sure, visits can be part of many episodes, but that’s not the point,” he said. “The point is to improve the cost and quality of that journey from ouch to all better, not digitizing the visit.”

The COVID-19 factor

The COVID-19 pandemic changed remote care and telehealth in general, pushing more providers and patients to accept care delivered virtually. The Department of Health and Human Services reported a 63-fold increase in telehealth utilization during the pandemic, with 840,000 Medicare visits conducted via telehealth in 2019 to 52.7 million in 2020. 

Rachel Anderson, principal, portfolio partnerships at Cigna Ventures, an investor in RecoveryOne, said the pandemic showed the industry that patients want care that’s easily accessible and convenient.

“People are not only comfortable accessing care from home, but they also have an increased expectation to be able to do so. Through virtual MSK care, we not only reduce the burden on providers but create more access points to care,” she wrote in an email.

Todd Norwood, a physical therapist and director of clinical services at Omada Health, which recently announced its musculoskeletal care program, saw a 250% increase in year-over-year member enrollment. Omada also offers digital tools for diabetes, hypertension and behavioral health, and stepped into the MSK space with its acquisition of Physera in 2020

Norwood said it can be a radical change for PTs to take such a hands-on job into a digital setting. But when COVID-19 hit, suddenly no one could get in-person physical therapy, and they were out of other choices.

“For whatever reason, in the U.S. as a profession, we haven’t been welcoming telehealth with open arms,” Norwood said. “And then I can tell you, even in 2017-2018, going to conferences was like, ‘What’s that? It’s not really PT, it’s got to be hands on. That doesn’t count.’ So, I really think COVID and the pandemic changed things a lot, changed patient perceptions, but also changed provider perceptions.”

Digital MSK companies argue there were barriers to physical therapy access even before the pandemic. Hinge Health President Jim Pursley notes it can be hard for patients to get to an in-person appointment, particularly if they live in a rural area. Plus, cost can be prohibitive, especially for hourly workers who may need to take time off for physical therapy.

“COVID didn’t cause people to be frustrated with the status quo, suffering from chronic pain, unable to get help, driving huge costs. And so, I think these changes were coming. I think the pandemic just accelerated them,” he said. “I mean, if you can’t go in and see an in-person PT because the whole world is locked down, then digital becomes not just a better option. It might be your only option.”

The future of remote MSK

Digital companies don’t see in-person care going away – particularly for higher-need patients – but technology and artificial intelligence could complement a physical therapist’s work. 

Rick Anderson, president and general manager, North America at DarioHealth, thinks AI models could handle lower-acuity problems on their own eventually, but a physical therapist’s oversight is necessary at this time. Last month, Dario entered into an agreement to acquire Physimax, which offers AI-enabled movement assessment and injury prevention.

“From a clinical effectiveness perspective, input and oversight, at least right now, is important,” Anderson said. “In the future, I think that AI-based models and computer vision are getting better and better, … but what that really allows is the ability for PTs to really focus on the more challenging cases.”

Meanwhile, tele-rehabilitation is growing on physical therapists. Though the American Physical Therapy Association doesn’t take a stance on digital MSK companies, as the platforms are evolving and vary, the organization is supportive of telehealth and legislation that would expand access.  

A recent study published in JMIR found practitioners in the U.K. generally viewed tele-rehabilitation positively, noting benefits like reduced travel time, getting to see patients in their home environment and allowing senior staff to support lower-level workers. 

But there were downsides, like concerns about conducting effective physical assessments and safety if a patient were alone and unsteady on their feet. Technology could also be an issue, as internet connections weren’t always stable and some patients struggled to use the platforms. 

Study authors Sarah Buckingham, research fellow, and Jenny Freeman, professor of physiotherapy and rehabilitation, both from the school of health professions at the University of Plymouth, said advanced technology could help with some of these problems, but they have to be vetted thoroughly.

“Technology moves quickly, and there are a number of possible software programs and tools that could potentially be of great benefit for remote physical assessments. New technologies should be rigorously tested (including an evaluation of their cost and acceptability to the end user) before they are adopted by health services, and it should be stressed that technology cannot replace a clinician’s expertise,” they wrote in an email to MobiHealthNews.

So, what’s next for these companies after this year of rapid growth? As companies mature, some  will likely go public, and the market could see more mergers and acquisitions, including from aggregators that will try to bundle a variety of digital health solutions to sell to employers.

Those who take the public route will have access to capital, but they’ll be under increased scrutiny to show return on investment, said Peter Micca, audit and assurance partner, and national health tech leader at Deloitte & Touche LLP.

“The two wildcards in any kind of expansion are the consumer, the patient, and how quickly they adopt tools. … The second is the regulatory environment,” he said. “To a large degree, this industry is not regulated. Their customers are, but the industry isn’t regulated. The FDA did come out recently and proposed a certain set of regulations around health technology and clinical trials. And so do we see CMS, HHS and all the alphabets think about wanting to regulate this in some way? I think all the capital that the sector has received in the last year is starting to get a lot of attention.”

Deloitte’s Kheyn-Kheyfets said some companies will move to using more advanced technologies like AI, hiring fewer physical therapists and improving their margins. But that could come down to another big factor in healthcare: what gets paid for.

“At the end of the day, it’s going to come down to reimbursement, like whatever new line incentives, whatever gets reimbursed, is what gets done,” Micca said. “So I think therein lies the influence of employers and health plans to kind of steer these capabilities to emerging technologies through a financial nudge.”

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