Anne Viola-Krase, a Virta Health patient
Anne Viola-Krause has been taking medication for her diabetes for more than a decade. In 2016, her doctor recommended that she up her dose, but Viola-Krause felt reluctant because of the side effects.
Viola-Krause is one of more than 30 million Americans with type 2 diabetes, which affects the way the body processes blood sugar, putting her at an increased risk of many health conditions including strokes. People who get diagnosed are typically advised to exercise regularly and lose weight, but are often prescribed a battery of medications by their doctors to keep their blood sugar under control.
Because of the scale of the problem — and the costs associated with avoidable complications — an array of venture-backed companies like Livongo, Alphabet-backed Onduo, and Omada Health have popped up to help people with diabetes manage the disease. But one of those companies in the group, Virta Health, is taking a more daring approach, which it hopes will ultimately eliminate the type 2 diabetes altogether.
Virta offers people with the disease access to its virtual coaches, who aim to safely get them off medications by dramatically changing their lifestyle. Their specific focus is on nutrition, and its goal is to drastically reduce its patients’ carbohydrate intake to just a small portion per day.
Viola-Krause is one of Virta’s earliest users. She’s been using the service since 2016 and recently got a tattoo on her forearm with the company’s logo as a reminder to stick with it.
A Virta patient got a tattoo to remind her to stick with it.
She’s lost some weight on the Virta program, but more importantly to her, her Hemoglobin A1c levels have come down. Technically speaking, she still is in the range for diabetes, but she’s scaled back her meds.
After signing up, Virta matched Viola-Krause with a health coach who helped her change her diet and sent a list of foods she should eat, or look to avoid. She stuck with the guidelines, and within a few weeks, her body transitioned into a state of ketosis, burning stored fats instead of recently eaten carbs.
Virta also sent her a strips and a lancet as well as a glucometer to track her blood sugar levels through the process.
Overall, she describes it as an “empowering experience,” and said the hardest part has been to wean herself off some of her favorite foods, like burritos and pasta. But she often turns to her virtual coach for help with that, who she still talks to regularly.
A new $93 million funding round
Virta was founded in 2014 by Sami Inkinen, a former executive from real-estate listings service Trulia who once told CNBC he had no intention of getting into health care. But that all changed after some routine health tests revealed that was at high risk for type 2 diabetes, despite being a super athlete. Inkinen did some of his own research to understand if his lifestyle was responsible, and through that he learned about a growing body of scientific research into carb restriction and the impact on metabolic health.
He went on to start Virta, and raise more than $80 million in funding from investors, including Venrock and Obvious Ventures.
Now, the company said it has landed an additional $93 million from many of its existing investors, and it brought on some key advisors that include executives from health plans, large employers and academic medical centers.
Viola-Krause, the Virta user,, first heard about the service through one of her former doctors. She initially thought it sounded “too good to be true,” but Virta was offering an introductory price of $500 for the first year, so she decided to give it a try. Her employer — a mortgage lending company — did not have a deal with Virta to cover the cost of the service, but she was willing to pay out-of-pocket.
Virta does have such arrangements with some large employers like US Foods, as well as a smattering of health plans. It claims to save these large companies more than $9,000 per patient in the first 24 months by helping them avoid paying for expensive diabetes medications.
With the new financing, Inkinen is hoping to scale the business to many more patients and his company is working on convincing employers to pay for the service if — and only if — they can produce results that improve patient outcomes and reduce their overall health spend.
The incentive game
Not everyone can stick with it. One of the biggest criticisms of Virta’s program is that it’s not sustainable to keep people on a low-carb diet in the long-run, given how challenging it can be to keep carbs to a minimum. Moreover, Virta hasn’t produced clinical studies for longer than two years, so it’s hard to say whether most people stick with it for longer than that.
Virta’s Inkinen acknowledges the issue, but says the company can typically get about a quarter or more of the workers with diabetes involved in a program in the long-term, if their employer is subsidizing it. That’s higher than the typical utilization for health-tech programs, which often hover around 3% to 5% utilization.
He believes Virta’s big challenge comes from the current U.S. prescription payments system, which isn’t set up to reward companies that reverse or cure disease.
Inkinen notes that in many cases, employers are offering high-deductible plans that force employees to shoulder more of the cost burden for drugs, meaning that employers don’t feel the true cost of the medications. On top of that, the companies that negotiate drug prices on behalf of employers and health plans, known as pharmacy benefits managers, often pass back an additional sum, known as a “rebate” from the pharmaceutical manufacturer to the insurer or employer. That provides a powerful financial incentive to keep patients taking medications.
“We’ve got a health system where we as a company can get a patient off meds and save lives and money, but we still hear that it’s not enough,” said Inkinen. “That’s how the system is wired today. Reversing disease might hurt someone’s business.”
But for Viola-Krause, it’s worth it to pay for Virta’s program on her own because she’s committed to keeping healthy for her own and her family’s sake. And her tattoo is a daily reminder of that.