The Series B round led by Spark Capital values 5-year old Abridge, which is used by 5,000 doctors, at $200 million. But it’s up against Nuance, which Microsoft bought for $18.8 billion and is used by half a million doctors.
Shiv Rao, cofounder and CEO, Abridge.
Since he was a pediatrician-in-training, Alistair Erskine has dreaded the process of writing down all the tiny details of every patient visit needed to meet various medical record, legal and billing requirements. “Documentation has been the bane of our existence since I went to medical school,” said Erskine, who is now chief information and digital officer at Emory Healthcare.
There have been some advancements throughout his career, like dictation software where he could speak his notes into a microphone and get a typed transcription. But he also had to remember to dictate punctuation like “comma, period, next line” to ensure accuracy.
But now, he’s using an app from the AI-powered medical scribe startup Abridge that takes everything he says as he’s talking to his patients and edits it down into a readable note — saving him time and headaches. “Not only does it capture what I want to say, it also captures the stuff that I don’t either have time to write in the note or that I forgot,” he told Forbes. He signed a deal with Abridge in July to bring the software to the thousands of doctors who work at Emory.
With Abridge’s app, there are no humans – only machines – involved in the processing of these doctor-patient conversations. The key is large-language models that utilize “transformers” – the T in the viral ChatGPT. Right now, doctors pull up the Abridge app on their phone and record the patient’s conversation. After the patient visit, a note is generated within seconds to minutes and doctors then see an option to “send” the note to the patient’s electronic health record.
The Pittsburgh-based company got its start with a free app that has been used by 500,000 patients since 2019 to record their doctor’s visit and generate a transcript with basic explanations of key terms. The goal, but much more complicated technical feat, was to build out the version to help doctors speed up onerous medical record entry, Abridge cofounder and CEO Shiv Rao told Forbes.
Now, Abridge has announced a $30 million Series B led by Spark Capital, which has backed other big generative AI companies, such as Anthropic’s $450 million Series C and Adept’s $350 million Series B. The funding is part of a flurry of investor and customer interest across healthcare in using machines to ease the administrative burden on doctors. “It doesn’t feel like tailwinds,” Rao said. “It feels like a tornado right now.”
The round, which closed in May but was announced Thursday, values Abridge at $200 million. The company has raised $62.5 million since its founding in 2018. Other investors in the round include Bessemer Venture Partners, CVS Health Ventures, Kaiser Permanente Ventures, Mayo Clinic and UC (University of California) Investments.
Compared to the mega-rounds that more generally focused generative AI startups have raised, Abridge’s funding and valuation are relatively small. But it does put Abridge at a similar valuation with one of its publicly-traded peers. Augmedix, which also sells AI note-taking software to hospitals, went public in 2021 and had a market cap around $190 million as of Wednesday’s close.
All of the smaller companies building in the space have one common foe: Nuance Communications, which Microsoft bought for $18.8 billion in 2022 and whose more rudimentary dictation software half a million doctors already use. But while its prevalence in dictation software has given Nuance a head start on its competitors, it only recently announced fully automated medical note-taking technology that doesn’t require a human in the loop to check for accuracy. In other words, the race to dominate the market for AI medical scribes is still anyone’s to win.
And with around a million doctors in the U.S., it’s a big market. In the hospital of the future, having a robot medical scribe listening to patient exams will be a basic, expected function, said Sharon Hakkennes, a healthcare analyst at Gartner. “What I see happening amongst these vendors is the ambient scribe becomes kind of the foundational capability,” she said. The winners, Hakkennes said, will be the companies that build more functions to make doctor’s lives easier, from auto-populating the right billing codes to teeing up imaging orders and prescriptions.
Rao said around 5,000 doctors are currently using Abridge, including those at University of Pittsburgh Medical Center and University of Kansas. Nuance vice president Kenn Harper, said “thousands of clinicians” are using the company’s fully automated scribe called DAX Copilot, including University of Michigan Health West and North Carolina-based Atrium Health.
Key to Abridge’s gambit against Nuance is Epic, one of the biggest electronic health records companies in the country that around 2,700 U.S. hospitals use — and the companies are about to go head-to-head. In August, Epic announced a new program it’s calling “partners and pals,” which gives companies a chance to have a higher level of integration with Epic’s software – and a competitive leg up against the rest of the field. For generative AI, Epic selected Nuance as its first “partner” and Abridge as its first “pal” (the difference in moniker being that Nuance is a large company and Abridge a small startup), though Epic says more companies could be added in the future. Epic declined to comment on the financial terms of the partnerships.
Thanks to the Epic partnership, Abridge will soon be directly available within Epic’s app, so doctors will no longer have to pull up the Abridge app at all. For doctors working long hours and seeing dozens of patients, just having one less app to open can help ease their workload. Harper said Nuance already has several customers using DAX Copilot within Epic’s app.
The Epic relationship will be an important factor as Abridge looks to compete not just with Nuance but also with other startups, said Will Reed, a general partner at Spark Capital. But there are a couple of other things that set Abridge apart, he said. One is a core function of the tech stack meant to mitigate “hallucinations,” where large language models insert things that sound real but are actually made up. Abridge has an important “auditability” function, he said, that lets you “track things in the note back to where they occurred naturally in conversation.” For example, you can click on a word like “diabetes” and Abridge will show the transcript and offer a playback of the recording wherever the word was mentioned. Nuance provides the transcript but not a recording playback, according to Harper.
This transparency feature is going to be key to Abridge earning doctors’ trust that its models aren’t just making things up. That will be increasingly important in a future world where Abridge’s transcript serves as the basis for all the subsequent decisions a doctor makes, said Reed. “We have a theory that the medical note sits upstream of so much that happens within healthcare,” he said. “On top of coding and billing and much better clinical decisions.”
Alistair Erskine, chief information and digital officer, Emory Healthcare.
Emory Healthcare
Abridge’s most rapid uptake so far has been at Georgia-based Emory Healthcare, a $5 billion hospital system (2022 revenues). After Emory Healthcare signed a deal in July, nearly 500 of its doctors are already using Abridge, which has helped them cut the average amount of time they spend on patient notes (about five hours) in half.
Erskine said Emory doctors have been “banging on my door” to be next in line. Despite the demand, Erskine said the hospital is deliberately rolling out the tech slowly enough so that he can collect detailed survey data that he hopes to eventually publish. Erskine expects to be at 1,000 users by December and 2,000 to 3,000 by next July.
“I thought of Abridge as the Goldilocks company,” said Erskine. He didn’t want to work with too big of an AI company that wouldn’t tailor its products to his system’s needs, or too small of a company that wouldn’t be able to build out new products. He said Abridge’s product was priced much cheaper than the $10 million-plus price tag to use Nuance for Emory’s 3,450 doctors, but declined to provide specifics.
Plus, Erskine was able to get a license for everyone in the health system – not just on a per person basis, as he said Nuance proposed. Erskine says the highest usage so far has been among primary care, urology, orthopedics and, to his surprise, palliative care, the doctors who take care of people at the end of their lives. One doctor in that specialty told him the reason she likes Abridge is because “she doesn’t have to relive the sad story that she’s experiencing for hours with a dying [patient and their] family.” when later documenting the visit.
“It’s great for doctors, but it’s going to be even better for nurses and social workers and people who never get this kind of technology,” said Erskine. Rao confirmed Abridge plans to build out tools for employees beyond physicians in the future, which Nuance is working on, too.
Moving forward, Erskine is interested to see how Abridge’s tech will play out in the emergency room – a loud environment where doctors are often moving from room-to-room. Rao says Abridge has a new function that allows users to “pause” conversations and return to them, which might be of help for ERs.
The company has also been working on different languages. Currently there is general availability for Spanish, meaning a doctor or patient can speak in Spanish during the exam and it will generate a note in English. Rao says Abridge is working on around 50 languages and certain early adopters, like Emory, are testing them out.
With automated note-taking eventually being something that doctors take for granted, one longer-term question for companies like Abridge is whether electronic health record companies like Epic will continue to want to partner or whether they will build their own systems in-house. Hakkennes of Gartner points to Oracle Health (formerly Cerner), which is integrating generative AI into a digital assistant that could potentially compete with third-party developers like Abridge and Nuance.
But for now at least, it appears Epic is taking the partnership route. “Our current strategy is not to develop native ambient capabilities in Epic,” said Epic vice president Alan Hutchison. In the meantime, Rao told Forbes that Abridge is currently looking for office space in Madison, Wisconsin, in order to give his team a chance to work more closely with the medical records giant.
Now that its doctor-focused technology is scaling up, Abridge wants to bring its more sophisticated tech to patients, too. The company is testing a function that takes the doctor’s note and makes a patient version at a fifth-grade reading level. This will be more detailed than the simple explainers patients get in the current app, and it will also be translatable into different languages. The hope is that eventually customers like Emory will be able to “demonstrate that this improves health literacy,” Rao said.
“And ultimately, the long game,” he said, “is that it actually improves outcomes.”
This article was first published on forbes.com and all figures are in USD.
