Breaking the habit: Omada CEO uses integrated approach to improve customer care

Sean Duffy, CEO and cofounder of Omada Health, is striving to be the 'operational innovator' of healthcare.

Sean Duffy, cofounder and CEO of Omada Health, isn’t really a disruptor.

Omada offers online courses that help prevent and manage type 2 diabetes and hypertension. If the stakes seem small, then it’s by design.

"You have to approach healthcare with some level of humility," Duffy says. "Or you get burned."

He wants to fix healthcare, but doesn’t want to take a blowtorch to the industry.

Duffy’s brand of innovation has a softer touch, focusing on fixing the backend of healthcare, IT, billing processes, and helping the patients themselves.

But this is not to discredit Omada’s ambition: Reforming a bureaucratic, intransigent industry is no less difficult than inspiring millions of people to quit their bad habits to change human behavior.

Offered as an in-network benefit through employer health plans, Omada leverages data, behavioral science, and design to get participants to sign on, stay on, and lose weight.

If Omada can reduce chronic disease rates, a key driver of health costs, it can lower medical costs and relieve some of the pressure on the insurance system.

"We have to start with what’s happening clinically," Duffy notes. "For the first time in history, preventable chronic diseases have killed more people than infectious disease. If you look at the top 10 most expensive diseases, four are related to the rise in obesity."

This is how it works: Once a doctor signs up a customer for Omada, they receive a scale and a welcome kit in the mail, which allows the company to monitor their weight fluctuations throughout the 16-week program.

From there, the customer is matched with a group based on demographics, location, health goals, and other information. Then it pairs the customer with a health professional who serves as their personal coach.

"In early digital health, the world fell victim to this fallacy you can just mail them a scale and give them a chart, or a heart tracker and a coach," Duffy explains. "Those things don’t cut it. What you need to do is create the right timelines, goal architecture, social pressures, curricular content, and use the data you obtain through the internet of things to make all of that ecosystem relevant."

Unlike other entrepreneurs who can carry themselves with so much bravado, Duffy doesn’t believe in moving fast and breaking things. He embraces corporate partners.

In September, health insurer Cigna announced it’s expanding its partnership with Omada. Effective January 2019, Omada’s diabetes prevention program will be available to all Cigna national and regional employer clients, embedding Omada into Cigna’s go-to-market strategy, Duffy says.

"The world of digital health is getting more comfortable with the reality you have to work with the existing ecosystem in a deeper way," he adds.

This decision to integrate Omada into Cigna’s services was based on the success of the results of its pilot work the year prior, Duffy says. Also, it exposes Omada to middle market accounts, which as a 300-person company, it didn’t have the bandwidth to reach.

Participants in a pilot program for some of Cigna’s clients reported on average losing 4% to 5% of their body weight in 16 weeks, according to a spokesperson. The majority have maintained their weight loss two years after starting the program.

Duffy declined to disclose financial information. He says Omada has experienced year-over-year revenue growth, expecting this year to be its biggest yet.

In total, Omada has raised $126.5 million. Its most recent funding round was led by Cigna and closed in June 2017, netting $50 million. Other participants included customers such as Kaiser Permanente, Providence Health & Services, and Humana, as well as Andreessen Horowitz and GE Ventures.

Operational innovation

Despite understanding the potential of wearable technology and internet of things to collect data, Omada also knows insights alone aren’t enough to sustain the business.

So it specializes in what Duffy calls "operational innovation," integrating the new and old, whether that be in terms of IT or regulatory frameworks.

It also means shifting the healthcare industry toward a patient-centric mindset. To that effect, Omada moved away from a fee-for-service billing model to a pay-for-performance model in 2014, charging based on how much weight customers lose. While the company does not disclose revenue figures, for Duffy, it was an obvious, overdue decision.

"What’s funny about healthcare is when people talk about it entering this ‘patient-centered world,’ every other industry is already thinking that way," he says.

When Duffy launched Omada with Adrian James, cofounder and president, their company used a diabetes prevention program from the Centers for Disease Control and Prevention as its blueprint. Today, Omada has 175,000 participants, Duffy says.

But to scale the initiative, he knew Omada would need more than just a backbone of medical expertise. It would also have to compete with the tech giants of the world for the same pool of talent: designers, developers, and technologists who can create a great customer experience.

Telling that innovation story is a key part of Omada’s PR strategy, notes Adam Brickman, senior director of strategic comms and public policy, adding the company does its marketing and PR in-house. "Omada emphasizes the comprehensive nature of its digital health program while telling the stories of its customers, participants, and employees with expertise in consumer-grade design, medical affairs, and data science," Brickman explains via email.

He adds Duffy has been featured at the World Economic Forum in Davos, Switzerland, the JP Morgan Healthcare Conference, and other high-profile events.

Marketing at Omada eschews stuffy technicalities, Duffy says. For a company that signs six-figure contracts without any guarantee of revenue, it has to infuse its marketing with some creativity.

"The trap in healthcare that people fall into is not really thinking about consumer marketing fundamentals," he explains. "You have to pull people in to try something because it seems unique, and show value at the consumer level."

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