Babylon Health in the UK increases membership in the US by 220%
UK’s leading digital healthcare company, Babylon Health, recently announced its second quarter (Q2) 2022 results, highlighting significant growth in the US despite losing $157 million in the period. .
Founded in 2013, the first London-based digital health company made its foray into the United States via a $4.2 billion merger last year, buying California-based firm First Choice Medical Group to push its expansion across the country.
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Babylon has since expanded into new states, pinning its hopes on a series of partnerships and acquisitions to help cement its place as one of the leading telehealth providers in the United States.
In Q2 2022, the UK-based company recorded a 220% year-on-year (YoY) increase in US value-based care (VBC) members, reaching a total of about 269,000 as of June 30.
“Second quarter revenue growing 4.6x to $265.4 million…to up to 7x increase in high-risk member sign-up speed, and avoidance of 31 % of ERs in our longest running VBC contract, to a 7.5% improvement in medical margins within three quarters, nearly all of our key metrics are performing well,” said Ali Parsa, CEO and Founder of Babylon, in a press release.
Read more: UK’s Babylon Health sees ‘huge demand’ in US for unique, digital-first solution
Competitive UK landscape
Babylon’s heavy focus on the US market raises the question of why a UK-based healthcare company seems so determined to establish itself as a top player in the US healthcare space.
Although Babylon is not the first UK tech company to see the US market as the ultimate prize, the nature of UK healthcare services has made international expansion particularly attractive for the company.
Read more: To win big, European companies must first win the US, says Hoxton Ventures Partner
Read also: VCs say European companies can still win big without expanding into the US
When Babylon first launched in 2014, its primary business model was a private subscription service where users paid a fixed monthly fee to be able to book remote consultations with Babylon’s in-house physicians. The company’s first major partnership was with the UK’s largest private health insurance provider, Bupa, which since 2015 has made Babylon available to all policyholders.
But while the Bupa link was a key step in Babylon’s growth, ultimately private health insurers were eclipsed by the UK’s largest healthcare provider, the National Health Service (NHS). funded by the state.
In 2014, company founder Parsa said Wired UK in 2014 that there was no reason why the platform could not be used by the NHS, indicating an interest in a partnership agreement with the national health system: “Our price includes the price of doctors. If it became a platform for the NHS, it would be pennies per view,” Parsa said at the time.
Yet, for some reason, Babylon will have to wait until 2017 before a deal is signed to supply its “GP [General Practitioner] at your fingertips” to NHS patients. The initiative has since been relatively successful, but it’s not the only telehealth technology in the NHS arsenal, and Babylon has to compete with increasingly popular provider Livi, a subsidiary of pan-European telehealth company Kry based in Stockholm.
Watch Kry COO’s interview: Is digital healthcare advancing faster than European lawmakers can adapt and regulate
Navigating Public Vs. Private Health Systems
One of the most widely voiced complaints about Babylon’s NHS initiative is that it forces patients to unsubscribe from their existing GP, a factor which has led some NHS staff to publicly protest in front of a Babylon Health clinic in 2018. Livi, on the other hand, does not require patients to sign up for its services.
More on this: Swedish telehealth company Kry raises $160 million
And unlike Babylon’s first digital doctor’s practice, Livi functions more as an ancillary service to support existing practices, without patients needing to switch registered GPs.
As PYMNTS reported, much of Kry’s success has come from building partnerships with national and regional healthcare providers, a tactic that has allowed it to expand its footprint from Sweden to the UK. , Germany, France and Norway.
Read more: European health technology companies are using partnerships and a hybrid approach to complement the existing delivery model
The Swedish company is focused on training doctors to perform remote consultations and then signing service contracts with public health facilities, which then offer their patients remote options through Kry’s platform.
In 2020 the company introduced a SaaS product in the UK, partnering with the NHS to provide telehealth services to patients, and to date has helped over 6 million NHS patients access appointments you remotely.
Kry’s success in signing these agreements with European public health care providers stands in direct opposition to Babylon, which seems to be moving more and more towards privately funded health systems, such as the one that the found in the United States.
Like the Health Service Journal reportedParsa reported earlier in May that the company was “very cautious” about any further growth in its UK GP services, as it is currently losing money on every patient it signs.
Kry, on the other hand, has shown no indication of its intention to diversify into privately funded healthcare markets. And its current business model has proven strong enough that investors aren’t holding back.
The company’s Series D funding round in 2021 valued the company at more than $2 billion, and last month it announced it had secured an additional $160 million to expand operations in the region.
Further reading: Digital health startups are making major strides in the UK, Europe and Africa
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