There are a lot of predictions that artificial intelligence doctors are coming soon. A look at the investment market confirms the industry is buzzing around AI healthcare startups.
But AI chatbots can only get patients so far. At some point, most medical treatment, especially specialty care, requires a face-to-face encounter with a physician.
Hybrid care companies that combine in-person medical services and virtual care services are poised for strong growth, many industry executives say, buoyed by economic and workforce trends, federal policy changes and the rising demand for care. As healthcare costs continue to rise, providers and payers are looking for innovative solutions and alternative models that provide high-quality care to patients and address high-cost medical issues such as obesity and maternal health.
Knownwell, which launched in 2023 as a weight-inclusive primary care and metabolic health company, offers in-person care at its nine clinics and provides virtual care across all 50 states.
"The reason that we designed it as 'click and mortar' is the idea behind knownwell is that patients with obesity don't just need an app or a specialty group, they need a healthcare home, and we felt like the ability to do full primary care, including for some patients, full and in-person physicals, would help establish ourselves in the healthcare home," Brooke Boyarsky Pratt, co-founder and CEO of knownwell, told Fierce Healthcare. "We do other things that the clinics enable us to do, for example, clinical trials. You can't do that if you don't have physical clinics, but we really felt like it would help us deliver a fuller suite of services to some patients."
Knownwell offers broader services beyond just weight management or GLP-1 prescriptions to include nutrition counseling and behavioral health services both online and in person.
Boyarsky Pratt acknowledges that "click and mortar," or what's sometimes referred to as "click and brick," may not be a provocative sell to investors as compared to AI solutions. But hybrid care that includes a traditional in-person component is the best approach to provide longitudinal and comprehensive care to patients, she asserts.
"Our average patient is 49, our average patient has two comorbidities, plus our average patient is 50% more likely to have class II or class III obesity. We have patients who still want and need to have someone who's getting their medical records. We have a nurse line and our doctors are on call. If you call us at 2 a.m. in the morning, you can get a doctor. That's not as sexy of a sell as knownwell.ai, but it's what our patients need," Boyarsky Pratt said.
Hybrid care is not new, and many companies have tried to scale businesses that combine physical clinics and telehealth. Just a few years ago, retailers made a big play for hybrid primary care.
Walmart launched health clinics in 2019, then built out a network of 51 primary care locations in five states. Five years later, in April 2024, the retail giant shuttered Walmart Health along with its virtual care services.
Amazon bought One Medical in 2022 for $3.9 billion while CVS Health acquired Oak Street Health in 2023 for $10.6 billion, but CVS is losing money on the primary care chain for seniors and plans to close 16 underperforming locations. Another pharmacy retailer, Walgreens, is looking to sell VillageMD after investing billions in the primary care provider.
This new generation of hybrid care companies is taking a different approach by focusing on narrower patient populations and tailoring clinical programs around specific conditions or medical episodes that tend to be costly for employers, providers and health plans, noted Tyler Giesting, director of healthcare M&A at West Monroe Partners.
"Narrowing your model to those specific disease types or cohorts allows them to get really targeted with how they manage those populations through the hybrid model, which could be some mix of a clinic brick and mortar footprint, it may also mean home-based, but it also certainly is wrapped in digital health and engagement technologies that are designed to deliver next best action, education and gathering data that allows them to continue to refine and tailor the care plan and approach, ultimately focused on improving outcomes and lowering costs," Giesting said.
"Some prior approaches were a little bit broader, or we're just less tied to the pain points and the cost drivers of a payer," he added.
These hybrid care players are demonstrating results on measures that matter such as cost, quality and outcomes. "They can start to engage in discussions with payers that they're working with to really do new and innovative things in terms of compensation and reimbursement for their specific model," he said. "They're able to demonstrate the ROI in a way that I think just hasn't been done on the same type of scale previously."
At the same time, there are macro trends that are creating momentum behind hybrid care. Sweeping Medicaid cuts, as a result of the One Big Beautiful Bill Act (OBBBA), will put pressure on providers to use virtual care to fill gaps in medical services while the $50 billion Rural Health Transformation Program will push the adoption of digital health technologies, Giesting said. Rising healthcare costs and headwinds in the Medicare Advantage (MA) market will force health plans to explore new models that are cost-effective and improve outcomes, he noted. And, advances with artificial intelligence and data exchange also bolster hybrid care models, Giesting added.
Building a patient-centered experience
Anu Sharma did not set out to build a clinic when she founded Millie, a California-based women's health startup. Sharma's vision was to reimagine maternal health and address significant gaps in medical services—cracks in the system that she saw firsthand when she experienced her own "near-miss" following the birth of her daughter. Barely 36 hours after being discharged home, Sharma walked back into the ER on the verge of a stroke after having self-diagnosed postpartum preeclampsia.
"What I wish I had was something that was really my companion that would help anchor me during the journey and provide more information around the things I needed to be watching out for. How do I tell the difference between the normal symptoms of pregnancy versus something that has a clinical significance?" Sharma told Fierce Healthcare. "It all felt like a very disjointed set of information. You've got apps, you've got books, you've got various forums and you also have friends and family, and then you've got your clinical care, and that's happening somewhere else," she continued. "What I'd hoped to initially build was a care platform which was put more into the hands of patients that could anchor them in that journey and not do the clinical care, but be threaded into it."
She continued, "What we realized was that the health systems were not going to build this; it's just not what they do. If you build a platform or an app, it's not going to integrate with clinical care and you weren't actually going to solve the problem. If we were looking to ultimately move the needle on a patient-centered experience where we were providing excellent clinical care and closing some of the gaps that are left behind through poor intervention management and postpartum care, we had no choice but to build it."
The company, which launched in 2022, shifted to a model that offers patients both in-patient and virtual care services with a midwife-led model. The company's two brick-and-mortar clinics are in Berkeley, California, and San Francisco's South Bay. The company plans to open between two and four new clinics next year with new health system partners, Sharma told Fierce Healthcare, and the company will expand beyond California. Millie has served 2,500 patients since its launch in 2022. It accepts all major insurance plans, both commercial and Medicaid.
In the past three years, the company has expanded to offer preconception counseling and gynecology services along with perimenopause and menopause care.
Other hybrid care companies include women's health practices Oula, Tia and Diana Health as well as functional health company Parsley Health.
These hybrid care companies don't just run clinics that are prettier than a typical doctor's office—they are providing a better standard of care and keep patients healthier, the companies assert.
Millie says its midwife-led care model has shown better health outcomes with 30% better caesarean section rates among low-risk, first-time mothers and 67% better preterm birth rates.
Knownwell asserts it has delivered strong outcomes as it has grown, including a 90-plus net promoter score, 91% one-year patient retention and 93% one-year sustained weight loss.
Other hybrid care providers take a different approach and bring medical care directly to patients. Homeward Health aims to fill gaps in rural healthcare to help patients get care in their homes and with local providers. The company employs a multidisciplinary care team, available both virtually and on the ground via community-based mobile care units, with in-home remote monitoring that keeps patients connected to their care team.
Founded in 2022, Homeward inks value-based care contracts with payers and currently manages the health of 100,000 rural Michigan patients enrolled in MA plans.
Homeward intentionally designed a longitudinal care program that includes both in-person and virtual care explicitly for people living in rural markets, Jennifer Schneider, M.D., Homeward co-founder and chief executive, said.
The company serves as a clinical extension of local provider care teams to support things like post-discharge care management, in-home safety checks and managing chronic conditions. And Homeward also built out tech-enabled services to help modernize the infrastructure for rural providers, such as tackling key functions in the revenue cycle, executives said.
"We have learned from our years in rural markets that a lot of the technology assets we were bringing were valuable both to providers and payers, above and beyond us caring for the population," Schneider said. "We've been pursuing the unbundling, if you will, of our technology platform to enable the entire rural ecosystem to accelerate. We were not only managing Medicare Advantage members under risk-based contracts, but we were unbundling parts of that technology that was forwarding our ability to manage the risk contracts to help further the ecosystem."
There are a number of companies focused on a combination of virtual care and mobile health services including DocGo, DispatchHealth—which merged with Medically Home this year—MedArrive and Imagine Pediatrics, a hybrid care company for children with special health needs.
OnMed, a company that developed an innovative way to provide medical checkups almost anywhere, also combines in-person care with virtual consultations. The company developed CareStations, 8-foot-by-10-foot facilities, that are equipped with advanced diagnostics, real-time scans and vital sign monitoring along with a telehealth visit.
The concept of a "clinic-in-a-box" has been attempted before. A company called Higi developed health stations, and high-profile startup Forward Health raised more than $600 million in venture capital funding, rolled out CarePods in 2023 and then abruptly shuttered in 2024.
Karthik Ganesh, CEO of OnMed, asserts the company is taking a very different approach with a tech-enabled hybrid care model that combines the comfort of in-person care with the scalability of telemedicine.
"Technology, for technology's sake, has not worked. I don't remember the last time I went to a bank. I do all of my financial transactions on my phone. But, I don't have a single healthcare app, and I would think of myself as a fairly sophisticated healthcare user who's been in the industry for 25 years. You need your solutions to be tech-enabled, yet human-delivered. That is where the comfort comes in. That's where the psychological confidence comes in. That 'human wrapper' is what allows us to deploy CareStations in underserved communities and have a 37% to 38% return rate to the CareStation," Ganesh told Fierce Healthcare.
"We have humanized the tech. In a world where we are obsessive and obsessed with bots and avatars, everything has a place, but you've got to figure out how those can be enablers versus the destination," he said.
Roadblocks to scaling hybrid care
Companies trying to scale a business that combines virtual and in-person care need to understand the value proposition of their model and the economics of that model as well as how those two tie together, Giesting said.
"These are extremely difficult companies to build," Sharma noted. "You're building a clinical model. You're building all of the care operations, the technology enablement, and then you have to go figure out how to solve the insurance conundrum. We actually also have to learn how to integrate with health systems and operate in their environment and deliver our patients there with all the clinical backup that is needed."
Hybrid care companies also have to develop a trusted brand and acquire patients by educating them about how the care model and services offer a better experience and deliver superior outcomes compared to more traditional medical practices and incumbent health systems.
"You're building something novel, and you're trying to tell patients, 'Hey, why don't you come deliver with a startup that you've never heard about?'" Sharma noted.
Developing partnerships with health systems and payers often is a key part of the business strategy for hybrid care companies.
Millie partners with hospitals, where its providers support labor and deliver babies. The company operates its clinic in Berkeley through a partnership with Alta Bates Summit Medical Center, a Sutter Health-owned hospital, and its San Francisco's South Bay location in collaboration with Good Samaritan Hospital, part of HCA Healthcare.
"We built the model and then said we're going to prove demand, we're going to prove outcomes, we're going to prove experience and then we're going to go knock on the doors of some of the largest health systems and demonstrate to them the ROI of why a strategic partnerships makes sense," Sharma said, noting that partnerships with health systems can help offset the challenging economics of running maternal health clinics.
As health systems and hospitals face increasingly tight margins, these organizations are looking for new ways to contract with health plans, West Monroe's Giesting said. "These tech-forward, tech-enabled, cohort-focused companies are much better at operating that type of a business and providing that type of care than a health system is equipped to do. It's just a completely different type of model, different infrastructure, technology, operational challenges and considerations that they're just not in the position to set up themselves in a way that would be scalable."
Hospitals benefit from these partnerships as maternal care startups can help bridge gaps in care, improve outcomes and offer holistic support. These startups offer remote monitoring and integrated digital platforms that extend support from the hospital into the home and provide a tech-forward experience that patients now expect.
Hospitals also have high operating costs for labor and delivery and are seeing lower delivery volumes. Partnerships with these startups helps maintain a steady volume of patients for labor and delivery.
"There is a real need, and there is a synergistic partnership opportunity," Sharma said. "We are structuring deals with some of the largest health systems. I think maybe we've just met a market moment where they have a need that has reached the point of being quite untenable, and it's created a tipping point in the space."
Brooklyn-based Oula, a startup that provides maternal health services through a technology-enabled and hybrid care approach, also partners with hospitals including Mount Sinai West in New York City and Stamford Health in Connecticut. Oula combines obstetrics with midwifery and currently operates three maternity clinics in Brooklyn and Manhattan and one in Norwalk, Connecticut, with a second location planned for 2026. The company also offers comprehensive virtual care services.
“We know a majority of women are interested in care that integrates midwifery and OB-GYN. This new practice draws on Stamford’s long-standing excellence in maternity care, coupled with our proven approach that drives best-in-class patient outcomes, experience, and equity," said Adrianne Nickerson, Oula co-founder and CEO, when the Connecticut clinic opened in September.
Boyarsky Pratt said health systems show a growing interest in partnering with knownwell to address the increasing demand for obesity care. "Not only do they struggle with primary care access, they very much struggle with weight management and obesity access," she said.
She added, "The head of primary care at one health system told me, 'I believe we are failing our patients with obesity every day here, and it keeps me up at night.' Clinicians want to get patients better care and they say, 'We are not going to be able to invest resources to create a specialized experience for our patients with obesity, so we should partner with someone who will.'"
Many hybrid care companies face roadblocks in raising capital as investors often are looking for startups that are capital-efficient and can quickly gain traction in the market.
"Investors don't know what to do with you—you're not purely a four wall, you're not purely virtual," Boyarsky Pratt said. "We're a complicated story—80% of our visits are virtual and nearly half of our patients have never been in a clinic and aren't in the same state as a clinic. Yet the clinics play this special role in our care model and in our ability to do clinical trials and partner with health systems."
Sharma echoed that perspective: "Traditional venture capital is not built for companies like this. When you get to series A and beyond, you have to think about your capital structure, and it's not straightforward. I think one reason why companies don't succeed is they don't think hard enough about the unit economics early on."
But a growing number of investors see big opportunities in hybrid care and are placing their bets on this sector. In October, knownwell picked up $25 million in fresh funding, led by CVS Health Ventures and backed by MassMutual Catalyst Fund and Intermountain Ventures.
“The ability to deliver comprehensive and longitudinal care at scale is exactly what payers and health systems need to address one of the most pressing drivers of high costs and poor outcomes in healthcare today,” said Alyssa Reisner, partner and executive director at CVS Health Ventures, in a statement. “We see this as more than an investment. This is an approach that can transform how obesity is treated across the country."
Geoff Price, co-founder of Oak Street Health, also invested in knownwell. “Obesity care is the next frontier of value-based care, and knownwell is building the care model that can work for patients, providers, and payers alike," Price said.
The company has raised a total of $50 million to date, with a $20 million round in late 2023.
Millie raised $12 million in series A funding in February, backed by TMV, Foreground Capital, Pivotal Ventures and the March of Dimes Innovation Fund.
"Millie’s inclusive approach, focus on overlooked markets, broad-based health system partnership strategy, and in-network care is purpose-built to address critical access gaps in maternity care,” said Erin Harkless Moore, managing director of investments at Pivotal Ventures. “Its experienced team and capital efficient model offer significant potential for change at scale.”
Company founders need to think about unit economics early in building the company, Sharma noted. "You don't build product and then find distribution. You have to think about distribution and then build a product that can actually survive and then be very vigilant with your unit economics," she said.
Maternal care providers receive low reimbursement rates, Sharma asserted, which is why partnerships are often critical to scale the business.
Tailwinds going into 2026
The Rural Health Transformation Program (RHTP), authorized this summer under the OBBBA, will dole out $10 billion per year to all 50 states over the next five years to support health initiatives in rural communities. The awards for 2026 were announced right at the end of the year, and it's anticipated that the funds will boost health tech and digital health.
Homeward Health executives contend that the goals of the RHTP—strengthening rural health prevention, standing up sustainable access, developing a rural workforce and introducing innovative care delivery and technology—tie in well with the company's ongoing work.
“Those technologies hit across all the themes that Homeward has been involved with, everything from technology to support the administrative components of what providers are doing, think revenue cycle management as a good example where automation and generative AI can play a really significant role, all the way to the delivery of care itself,” Homeward co-founder and president Amar Kendale said.
Rural health providers often face challenges adopting new technology and innovative care models. Homeward can act as an advisor to help health systems identify technology solutions and even deploy the tech, he said.
“As we head into the RHTP deployment phase, which begins in January, we're looking at ways to directly support care delivery in these virtual models,” he said.
Kendale also asserts that mobile clinics will play a key role in rural health innovation. Homeward also has experience deploying mobile clinics—vans equipped with exam rooms and labs—to serve rural patients. In early 2025, the company was selected by the Advanced Research Projects Agency for Health as part of the PARADIGM program to design and test a mobile, procedure-driven care model, backed by up to $12 million in research funding.
“From all of that work we've been doing for the past 18 months, we've emerged with some very strong opportunities that are specifically focused on rural communities in areas like maternity, in areas like wound care, which are really high volume, high need areas where you do need a physical component to the care to bridge this gap to the skilled personnel,” he said. “That's where virtual comes in. On a mobile platform, imagine a world where you have the equipment—think ultrasound, or you have the sterile environment for doing wound care work, you have a community paramedic or a community health worker on board the clinic, and you're using virtual technology to bring in the provider from wherever they might be. This is an example of how we can really start to create leverage, where providers can be remote, but the hands and the eyes can be on board a mobile clinic to deliver the kind of care that's necessary for these communities.”
He added, “That’s all coming together in the context of the Rural Health Transformation Program. Mobile clinics are one of the very consistent themes we've seen across every state that we work with. We work very closely with about 15 of the 50 states on their applications and their proposals. We’re seeing a lot of demand for those kinds of solutions in ways that don't just involve buying the capital equipment, but really involve this new model of care that takes the local staff, upskills them, and then combines them with remote staff that's delivering the higher skill components of the work.”
Schneider, Homeward's CEO, added, "Every company in the ecosystem has a rural offering because there's a bunch of funding coming into rural healthcare. The real difference is understanding the population that you're trying to service, rather than fit a widget into something else. These innovations have to be delivered without friction. They have to be delivered by understanding not just the patient need, but the provider needs, and how the training to use and leverage those new tools will be felt and received so that they can be effective in nature."
"We have the advantage of having actually done a bunch of stuff that didn't work. We failed a bunch," she said. "We have a good 'lessons learned' set of tattoos or scars on our back that give us confidence in what we're pursuing and why we're pursuing and why it will work."