Second Layer Spotlight, Edition #3: HealthTech
The U.S. spends over $5.5 trillion on healthcare every year, with a staggering 20% of those costs going to overhead, operations, and administration. Here are a few companies helping change that.
I am especially excited to share these healthcare-aligned companies because I believe affordable healthcare is arguably the biggest challenge facing America today. Healthcare in the United States, put bluntly, is broken.
The United States spends $14,885 per capita on health, more than double the average for OECD (Organization for Economic Cooperation and Development) countries of $5,967 per capita (according to the OECD Health at a Glance Report). That’s $5.5 trillion a year on healthcare alone.
Logic would suggest the U.S. would be the healthiest country - this assumption, however, is far from the truth. The Commonwealth Fund did a report on 10 of the wealthiest nations, ranking healthcare effectiveness across 5 different key metrics: access to care, care process, administrative efficiency, equity, and health outcomes. The U.S. scored last on 3 out of 5 of these metrics (including health outcomes), earning the lowest spot in the aggregate rankings.
The issue is clearly not a funding problem - it’s an operational problem. And it needs to change.
We all know someone (or many) who currently or previously needed significant healthcare treatment - when it comes to friends and family, you do the very best you can to give them the best possible care. But whether it’s prolonged time-to-treatment, insurance billing complications, or outrageous medical bills, millions struggle to get the care they deserve.
Powered by AI, many startups are trying to change the narrative. America has the best schools and best hospitals in the world, and our healthcare system should reflect this. America doesn’t need more doctors: it needs better systems around those doctors, helping them operate as they were intended to. This is the Second-Layer focus.
Here are three Second-Layer aligned companies seeking to change the status quo and make healthcare more efficient for millions of Americans across the country.
1. HEARTio
$5.28M, Seed Stage. Pittsburgh, PA. Investors include Shepherd Ventures, Intelligence Ventures, Audacious Capital, VU Venture Partners, LifeX, and Bessel.
Coronary artery disease (CAD) is the leading cause of death in the US, killing an estimated 375,000 Americans every single year. Diagnosing the disease remains a critical issue: coronary CT angiography and catheterization labs are expensive and geographically concentrated in certain urban areas.
Additionally, when primary care physicians highlight heart conditions, it’s difficult to distinguish between milder heart issues and more critical ones (like CAD). This leads to misdiagnoses, where patients with active disease aren’t treated fast enough, and patients without disease are unnecessarily over-referred for costly medical treatments.
HEARTio provides AI-powered software layered on top of existing ECG infrastructure, which more accurately detects coronary artery disease on a per-vessel basis. This enables more accurate disease detection (clinical accuracy over 90%), pinpointing which specific coronary arteries are blocked (in just 30 seconds) and helping distinguish between CAD and other milder issues.
With FDA Breakthrough Device Designation, two peer-reviewed publications in the Canadian Journal of Cardiology, and JACC Advances with 16,000+ patients, HEARTio is a cost-effective, proven solution to one of America’s biggest problems.
HEARTio stands out across the following areas:
Technical Execution: FDA Breakthrough Device Designation in 2020, 16,000+ patient cross-validation, and a 510(k) premarket study in the works show that they are on their way to commercialization. 3 issued patents as defensibility.
Founder-Market Fit: 3 University of Pittsburgh PhDs (led by Utkars Jain, CEO) who built the technology during their doctoral research, with an experienced advisory board to support go-to-market.
Market Size: there are 14 million ECGs in the U.S. alone - this software can be layered onto these existing ECGs, demonstrating simple integration.
2. Kinstead Health
Pre-seed stage (funding undisclosed). New York, NY. Backed by Wisdom Ventures, Headstream Innovation, and angel investors.
There has been a consolidation of our healthcare system: the share of physicians in independent practices fell from 60% in 2012 to under 25% today. Nurse practitioners are the fastest-growing clinical workforce in the country; however, as founder Taylor Rose realized while working at the Children’s Hospital of Philadelphia, burnout in major health systems is very common, often due to a misalignment between preferred and mandatory working hours.
Kinstead Health is an AI-native platform that helps nurse practitioners (NPs) launch and grow independent practices. They handle setup, scheduling, documentation, billing, credentialing, compliance, and growth all under a single umbrella. With Kinstead, NPs go from idea to practice in 90 days or less.
NPs who want to go independent face an array of challenges that Kinstead supports them with, inspiring the quickly growing number of NPs to take the leap and start their own independent practice.
Here are a few areas where Kinstead excels:
1A Founder-Market Fit: Taylor Rose (McKinsey, CHOP, Roivant Social Ventures, McKinsey/WEF women’s health report) and Parth Chodavadia, MD (ex-PathAI Digital Diagnostics); the team has lived the problem from hospital administration, consulting, and clinical practice angles simultaneously
3B Timing & Competition: With NPs growing so quickly, the need for an AI-native platform is immense, especially as burnout rates of NPs in large systems remain sky high. Other teams lack the direct operational and commercial experience of Kinstead.
3A Market Size: Scope-of-practice expansion in 27+ states; every independent NP practice in the U.S. is an addressable customer, and the trend is accelerating (NPs are the fastest growing health practitioner occupation).
3. Understood Care
$8.4M, Seed Stage. New York, NY. Investors include Y Combinator, 1984 Ventures, Rethink Education, and Zeal.
Medicare Advantage covers over 50% of all Medicare beneficiaries, which equates to over 31 million Americans. While these plans were designed to handle care more efficiently than traditional Medicare, there have been a multitude of issues associated with them: an explosion of authorization requests, claim denials, and administrative friction.
The largest payers (UnitedHealthcare, Humana, Aetna) deny roughly one in five prior authorization requests, and most beneficiaries simply give up rather than appeal their cases. This means many Americans don’t receive the care their plans should theoretically cover.
Understood Care provides AI-native Medicare patient advocacy, helping Medicare beneficiaries navigate Medicare Advantage plans, file appeals, manage authorizations, and coordinate care across multiple providers.
2024 Centers for Medicare & Medicaid Services (CMS) Codes are brand new, allowing patient advocacy to be billed directly to Medicare for the first time. Understood Care was built specifically around these codes, where CMS pays for the service directly. By becoming the first venture-backed entrant to structure their revenue in this way, they are establishing a strong, defensible moat that must be emphasized.
Here’s what specifically stands out in my assessment of Understood Care:
2B Revenue Signals: CMS-funded revenue from day one via 2024 advocacy billing codes; Medicare itself pays for the service, eliminating customer acquisition burn typical of healthcare startups
1A Founder-Market Fit: Sam Wu, former senior operator at Cedar (healthcare billing) and co-founder of Finni Health (YC W23, pediatric autism care); repeat founder with directly applicable domain experience is an unusually strong signal at the Seed Stage.
3B Timing & Competition: Medicare Advantage now covers 50%+ of all Medicare beneficiaries with prior authorization and denial rates at all-time highs; 2024 CMS advocacy codes are new, and Understood Care is the first major venture-backed company built around them.
Closing Thoughts
U.S. healthcare is a problem, but I believe companies like the ones highlighted above are truly making a difference. AI gets a lot of hate (and sometimes for the right reasons). However, seeing the impact AI has had as a transformative tool, empowering the above founders to bring truly great products to healthcare, gets me genuinely excited. I can’t wait to see the impact these founders have on the world.
Relevant Links
Email: bryanhanleyvc@gmail.com
LinkedIn: https://www.linkedin.com/in/bryan-stanley-hanley/
Lovable Website: https://bryan-hanley.lovable.app/