🏥 Omada Health and the Dropout Comeback

The fundamental-focused business model, post-ZIRP moat-building, and the dangers of Artificial Intimacy in healthcare

PARTNERED WITH Happy Tuesday, Hospitalogists!   Last week, I got to sit down for a fireside chat with Omada Health's CEO and co-founder, Sean Duffy, alongside the Hospitalogy community. Fun fact: Sean was a MD/MBA student at Harvard before dropping out to build a digital health company that now serves hundreds of thousands, specifically around diabetes management, hypertension, MSK, behavioral health, and more.    We got into it, from pricing models, GLPs, leveraging tech, the future of chronic care, leadership lessons, how to defend a business in digital health in 2025, and more. Pretty timely considering the (potential) Hinge Health IPO (the subject of a prior newsletter; see my analysis here) and the ongoing GLP weight / nutrition management frenzy. If I do say so myself.   Read on for a few key takeaways from our conversation. Hospitalogy members can find the full recording here.   If you found my breakdown of Hinge's S-1 useful, Omada is worth watching as a parallel case study for where digital health is headed…and definitely a name you should know. Also, Sean Duffy is the man.    Let's dive in. Was this email forwarded to you? Subscribe Here SPONSORED BY COMMURE What if, beyond automation, AI could actually think, act, and anticipate, reshaping workflows in real time? Spoiler: not a hypothetical. For the uninitiated, Agentic AI is already here. Healthcare leaders, IT pros, physicians: this one's for you. Join Commure and AWS for an exclusive webinar with live demos, expert insights, and a look at Commure Agents in action—answering calls, scheduling, handling pre-clinical check-ins, slashing inefficiencies, and cutting costs. Plus, a live Q&A with industry experts. 📅 April 16, 2025 | 10:30-11:30 AM PST 🎟 Spots are limited—secure yours before an anticipating AI does. Register now. BIG HEALTHCARE STORIES The most important news from the week The Omada Health Breakdown with Sean Duffy Hinge Health tackled the "pain" problem (literally). It built an AI-enabled virtual PT model that slashes costs, increases access, and claims better outcomes. Employers and payors buy in because it keeps employees healthier and out of high-cost downstream care.   Omada's playbook? If you squint, there's a lot in common…just swap MSK with diabetes, hypertension, and obesity. Virtual-first care, AI-powered insights, and remote monitoring aim to prevent high-cost interventions like hospitalizations or complications.   Both companies are selling into the same customer base (self-insured employers, payors) with a model that lowers costs and improves engagement. They also both make money only when members actually use the program; a de-risked approach employers love. Omada, Then and Now: Building a Moat and Staying Focused When you talk to Sean Duffy, you get the sense he's been playing the long game. Omada launched in 2011 and has weathered more than one hype cycle in digital health. But unlike some of the flashier DH darlings of the pandemic era, Sean never chased the sugar high.   Instead of the ZIRP/COVID-era temptation to run after the shiny things, Duffy outlines how Omada built a blended approach of technology with dedicated human care teams. This combo has created a complex, hard-to-replicate service, alongside a multi-product platform strategy.   But the real difference in my eyes? A relentless focus on the fundamentals and what was in front of them…aka, the customer.     "Our thesis at Omada is that, in time, the member convenience and the customer convenience really can matter there. You need to do the job…of really supporting the actual person in care in order to get better outcomes and better value."    Omada's bet: digital care works best when it's grounded in clinical rigor, delivered at scale, and built with real-world complexity in mind. That mindset seems to have paid off: they're now one of the most scaled chronic care platforms in the country, with Fortune 500 employers like Costco, and contracts with major PBMs. State of the Union of Digital Health, from Peak Pandemic to 2025 Boom times mean innovation, and more shots on goal. So what does a post-ZIRP world look like for digital health? How does Duffy look at all the new players?    "What I love about this 2.0 era is many of them are delivering real, differentiated, evidence-based clinical services. [...] Some of the downtimes have created even more favorable environments for the next generation of companies, because of the constraints…[it] has focused on the companies that I think are delivering real value."   I tend to agree: The boom times spurred innovation and gave everyone a lot of shots on goal, but the downturn has refined the market, favoring companies with strong fundamentals, evidence-based services, and real value delivery. Let's Talk Business Model (Yes, They Bill Through Claims) Omada is not your average chronic disease management platform. They contract as a covered entity. And as such, they bill through medical claims. Yep, the real ones, through carriers, via an AMA CAT III code that Omada themselves got the AMA to issue and which many of their competitors now use.  Most of their revenue flows that way (I asked).   They also lean heavily on an engagement-based pricing model: Omada only gets paid when members are enrolled and engaged.   "As small as it sounds, it's really big to have a pricing model that's aligned with the success of the member…in yesterday's world, you tended to see a lot of broad-based PEPM, PMPM, you charge a dollar for every single person regardless of who utilizes, etc. By having our pricing structure targeted to only the people that enroll, and [who] stay engaged and are successful—that incentive alignment [...] impacts an organization. Over many, many years it creates a lot of benefit. And frankly, that's more in line with building lasting, defined enterprises."   Obviously, this means solving—and maintaining—engagement is mission-critical for Omada. They've gone deep into not just customer success-style account managers, but also deep market research and marketing campaigns to reach the right people. Bringing Nuance and Thoughtfulness to the GLP-1 Gold Rush. Duffy isn't blind to the unprecedented explosion of GLPs, but he flags that Omada is concerned with supporting members in the way they need, individually.    They call it the "GLP-1 Care Track." Think of it as a personalized, longitudinal weight management programs alongside the drugs, not pushing meds (Note: they don't prescribe the GLPs—the focus is strictly on coordinating whole health care).    This approach has led to their recent partnerships with Express Scripts and CVS Caremark, and strengthened relationships with PBMs.   "Clearly these meds are amazing innovations. The issue is, nothing's a silver bullet, and our job, we believe in our contribution is to maximize the pros of these medicines and minimize some of the risks."   As a sidecar to GLPs, I've tried to ensure [Omada] recognizes that you can't simplify some things in healthcare. You have to lean into the detail, be very thoughtful about it, and view them as constraints. [...] It's kind of the opposite of the like. 'Move fast and break things' mantra in Silicon Valley. You have to be very, very reasoned and measured to deliver the results that you want for your clients and members."   So yes, GLPs are hot. (This just in: sky is blue.) But Omada's betting that investing in behavior change, a respect for complexity, individualization, and wraparound care still matters, and that nuance is a big differentiator.  Tech, Trust, and the Dangers of Artificial Empathy Part of Omada's moat is also their unique approach to leveraging tech. Specifically, blending technology with a people-centered approach. And Duffy is both optimistic and careful about rushing into the latest hype cycle. For him, it's about finding efficiencies so the care teams can do more of what they do best: focusing on the customer.   "We're obviously so excited about the world of AI. But human accountability really matters [...] The balance we want to always strike is combining the tech and the people side. I think there's a reason that 'artificial intelligence' is a buzzword, but 'artificial empathy' is not. [...] There's nothing more important than the currency of trust."   As Duffy points out: how you use AI is more important than whether you're using it at all.    Based on Omada's history of leveraging machine learning to differentiate the care experience, I'll be very curious to see what they have in store for the rest of 2025. For now, it seems like they're quietly scaling a model that acknowledges both the limitations and the promise of tech-enabled care. Leadership, the Long Game, and Poetic Recruiting Duffy was 27 when he founded Omada in 2011, so I had to ask him if he had any leadership lessons for growth-focused entrepreneurs looking to play the long game.    His 4 answers:  "Recognize what you can learn from your team. Often CEOs & founders are like, well, who's my external mentor? If you hire the right people, you actually get the most mentorship internally, such that you know you're humble and recognize you're bringing folks into the organization who have skills you don't."  "Always ensure you're looking backwards and feeling a little bit embarrassed about your last year's view…" "...but also try to cast out and abstract yourself from the role. "What does the business need out of the CEO for the next year? What are the skill sets? How can you best serve the company in the next chapter? "Go to the end of the earth to hire amazing talent.  Lean into values. "Especially in healthcare, values are important. We don't tolerate bad behavior at Omada. It's a super values-driven organization. I'm so convinced that [when you achieve values alignment], your customers can feel it." The man really cares about talent. Like, research-what-excellence-looks-like in-each-role, fly-cross-country-for-a-one-hour-meeting, write-a-poem-for-a-candidate, find-their-favorite-sports-team-jersey levels of commitment. Respect. (And it seems to be working out for them.) What's Next for Omada? What does 2025 and beyond look like for Omada?   It's the platform era, y'all. Multi-condition platform expansion, deeper tech/software integration (stay tuned—I will be), more wraparound care in areas like GLP-1 support, and pushing innovation.    Sean's focused on building the go-to platform for chronic care, and taking advantage of the scale they've achieved while also staying "super hungry, super paranoid, and always feel like we're at the starting line." (New motto?)   "Omada's mission here is to bend the curve of chronic disease, and the disease areas we're in. You can't yet find an epidemiologist who can say, Omada made a difference. So we gotta keep the ambitions high enough to ensure that someday, that's the case."   In an increasingly crowded digital health space, Omada's not chasing buzzwords. They're focused on what works: claims-based billing, proven outcomes, and a clinical model that actually holds up in the real world. SPONSORED BY SMARTERDX Clinical AI is transforming the way hospitals operate, and SmarterDx is at the forefront. Founded by physician-data scientists, their proprietary algorithms optimize the revenue cycle while understanding clinical reasoning. This means improved revenue, higher quality scores, and more accurate data, which optimizes the overall healthcare system. Take heart failure vs. pulmonary edema - SmarterDx's AI catches those clinical differences to capture the correct diagnosis. In a landscape where everyone suddenly "has AI," their team is the real deal: a who's who of healthcare and tech experts from Google, Harvard, Epic, Apple, and more, who are shaping the future of clinical AI. Discover what sets SmarterDx apart from the rest. Learn more. HEALTHCARE HAPPENINGS If you're a Hospitalogy Plus or Pro member, join us on Friday, April 18th at 1pm ET for a roundtable chat on the latest trends in healthcare. If you aren't a member, apply to join here before RSVP-ing for this event. MISCELLANEOUS MADDENINGS Random personal anecdotes and musings from me Guess what, Hospitalogists? I'm chilling in Cabo right now. I'll float you guys a top shelf margarita from all the tequila I'll have acquired as soon as I get back. Until then, have a great week. That's it for this week. Thanks for the read, and huge thanks to Sean Duffy for taking the time to share his insights! Let me know what you thought by replying back to this email.   — Blake   Share Hospitalogy, Earn Rewards Have friends who'd love Hospitalogy too? Click the link below to share Hospitalogy with your friends and earn awesome rewards! PS: You have referred 0 people so far Share Hospitalogy! Get your brand in front of 42,800 executives and healthcare decision-makers. Let's Partner The Board Room  I'm building an exclusive community for top healthcare executives. Join the Movement Here. Workweek Media Inc.  1023 Springdale Road, STE 9E Austin, TX 78721   Want to ruin my day? Unsubscribe.