WellTok gets another $22M;
IBM Watson finds a new app
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IBM Watson meets CaféWell Concierge
Welltok CEO Jeff Margolis and IBM executives describe how the new CaféWell Concierge product will utilize IBM's Watson 'intelligent' computer technology to uncover insights from Big Data.

y 2021, total health care spending in the United States is expected to reach $4.8 trillion, accounting for almost one-fifth of the entire nation’s economy. To put that in perspective, that’s a staggering 64 times more than the $75 billion spent in 1970.

Businesses providing health care benefits to employees, along with their insurers, believe one way to keep costs down is to foster a healthier population. And Welltok Inc., an emerging Colorado technology company, thinks it has a surefire way to do just that.

Some tech industry heavyweights — including IBM and Qualcomm — agree. This week, a group of investors put up an additional $22.1 million for the firm to continue development of its “health optimization” products, particularly its CaféWell Concierge application.

Welltok, based in Denver, was founded in 2009 and has attracted steady investment ever since: Series A funding of $4.98 million in 2011, a venture round of $2.15 million in 2012, and a Series B investment of $18.7 million last April. The additional funding this week brings the company’s total investment to nearly $48 million, making it one of the past year's best capitalized digital health companies.

welltok-graphicThe latest Series C funding was led by New Enterprise Associates, with participation from IBM and Qualcomm Ventures, along with existing investors Emergence Capital Partners, InterWest Partners, Miramar Venture Partners and Okapi Venture Capital.

For IBM, the investment is as much strategic as it is monetary.

The contribution marks the first direct investment from the company’s newly formed Watson Group, a business unit created to capitalize on Big Blue’s recently developed artificial intelligence computer. Called Watson (after IBM founder Thomas J. Watson), the machine is capable of answering questions posed in natural language. It was originally created to answer questions on the quiz show Jeopardy! As it turned out, the machine was pretty good at it. In 2011, Watson actually competed on the show against human contestants and won the first place prize of $1 million.

Welltok is now building a new application — CaféWell Concierge — infused with Watson's cognitive computing capabilities. According to the firm, the app will utilize Watson's unique ability to uncover insights from Big Data “by understanding the complexities of human language, reading millions of pages of data within seconds and improving its own performance by learning.” According to Welltok, Watson will learn which itineraries or rewards are most successful in helping consumers reach health goals and refine recommendations accordingly.

IBM is betting big on Watson. The Watson Group is set to invest $1 billion to introduce “a new class of cognitive computing services, software and apps,” and plans to invest $100 million to spur development of Watson-powered solutions.

Welltok’s current signature product, CaféWell, is what the company calls a “Health Optimization Platform.” Described as “an ecosystem of resources and programs,” it uses games, incentives and social networks to motivate people to live healthier. It is a bit like Pavlov’s conditioned reflex for a healthy lifestyle — reinforcing healthy behaviors with “the right incentives and rewards.”

Businesses, insurance companies and other health care population managers use CaféWell as a PaaS (platform as a service) to offer participants advice and incentives to lead healthier lives. It provides apps, condition management programs, tracking devices, content and other elements to create personalized “Social Health Itineraries,” based on an individual's health status, available benefits, behavioral characteristics, interests and other factors. It also offers incentives, such as premium reductions for taking actions that lower Body Mass Index (BMI).

The platform, the company says, can enhance revenue growth, increase administrative efficiencies and deliver health care value.

"We must transform beyond the current 'sickcare' system built for patients, to one that optimizes each consumer's health status,” says Welltok chairman and CEO Jeff Margolis. “To do so, the industry needs a practical, but radically different approach to engage the 85 percent of the nation's population who are making daily choices that impact their health."

The latest funding will be used to develop the new CaféWell Concierge product line, expand CaféWell's market-specific solutions and enhance the CaféWell Connect program to include new partners that are creating communities, innovative condition management and wellness programs, tracking devices and applications.

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