Unhinged: The Virtual MSK Reckoning (and What Comes Next)

Presented by Commons Clinic

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Hinge Health, a virtual MSK company and one of health tech’s most well-known unicorns (over $1 billion raised, $6 billion valuation), has filed an S-1 with plans to go public. With a stubbornly frozen IPO market, sagging digital health stocks, and exit-hungry investors—the entire ecosystem is watching. Much is riding on Hinge’s performance.

One of healthcare innovation’s paradoxes is that great clinical models don’t always equate to great business models—and vice versa. While the venture capital community is more intently focused on how Hinge Health performs financially, questions surrounding Hinge’s clinical relevance remain. The company’s S-1 filing provides clues to both.

This week’s edition of The Surgeon’s Record, presented by Commons Clinic, breaks down Hinge Health’s S-1 and what it means for the future of innovative MSK care—virtual or otherwise.

The main goal here is to view Hinge Health through a clinical lens in terms of impact and systemic disruption. Will the company and its service revolutionize MSK treatment and tame the beast that is musculoskeletal care? Or is virtual PT a niche solution destined to address only a slice of the much larger MSK Total Addressable Market (TAM)?

Does digital therapy replace or complement traditional MSK care? Will employers and payers continue to support virtual MSK if ROI remains uncertain? Is Hinge Health building “a new health system that transforms outcomes, experience and costs,” or is it another example of VC-backed startups misunderstanding healthcare?

If Hinge Health and its virtual care counterparts aren’t the future of specialty care, then what other model will deliver sustainable, high-value transformation?

(I recently updated the original article I wrote on this topic 3.5 years ago. IMO, it still holds up).

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The Case for Digital MSK — Hinge Health’s Achievements

Blake Madden did an excellent job breaking down Hinge’s IPO from a business perspective, but it still merits brief discussion. First, full credit to the Hinge Health team for building a viable company and reaching an IPO. Irrespective of anything else, simply getting to this point is no small feat. The service is undoubtedly helping people and improving access to care.

Digital health is transitioning from an era of misguided, ZIRP-fueled hype to an era of misguided, AI-fueled hype. (Interestingly, we’re now seeing those eras collide. Hinge highlights its increasing use of AI in the S-1, and its competitors are betting big on AI, too). The prior era spawned several heavily funded, highly valued companies whose exit path is unclear. The success of Hinge’s IPO may well determine the fate of other ZIRP-era startups and shape the future of digital health as an investable area of innovation.

Hinge Health has unquestionably achieved some impressive milestones:

• First-mover advantage: Hinge is one of the original digital health unicorns—its brand has been synonymous with virtual MSK care for years.

• $1B+ venture capital raised at a peak $6 billion valuation: In an increasingly red ocean, the company has maintained investor interest and confidence.

• 20M covered lives & 2,250 employer contracts: A proven ability to sell to self-insured employers and payors—often a struggle for digital health companies. (Hinge counts 49% of Fortune 100 companies as customers).

• Reducing MSK-related costs by $2,387 per member, per year: Proving sustainable ROI is a key component of long-term success for any health tech platform. If validated, this is a compelling argument for continued adoption of Hinge’s platform. (If validated).

• High customer satisfaction (NPS of 87, 98% client retention): Demonstrating consistent patient engagement is critical for virtual care. With employer point solution fatigue setting in, all eyes will be on retention rates of digital health tools.

• Successful integration of technology into a scalable virtual platform: Tech-driven engagement improves access and program adherence while potentially reducing costs and achieving equivalent outcomes to in-person care.

• Published over 19 peer-reviewed papers: Clinical validation is often hard to find in the digital health ecosystem—something that remains a major issue. According to a 2022 Rock Health study, 44% of digital health companies had a clinical robustness score of 0.

A recent Peterson Health Technology Institute (PHTI) assessment offered a positive assessment of virtual MSK solutions. (A similar evaluation of digital diabetes management platforms was less favorable). Taken together, these achievements make a compelling case for Hinge Health’s offering and digital MSK in general.

But do these achievements withstand closer scrutiny?

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Clinical Rigor — Does Hinge Health Deliver?

Hinge Health claims to have published over 19 studies—a significant feat considering almost half of digital health companies haven’t produced any. However, quantity ≠ quality and peer-review ≠ scientific rigor. Despite this cadre of publications, the Hinge S-1 leans heavily on two studies: a 2020 longitudinal cohort study and a 2-year medical claims study. (Both papers were sponsored by Hinge).

The S-1 highlights impressive findings from both studies:

• 68% average improvement in VAS pain scores

• 58% decrease in depression and anxiety scores

• 73% program completion rate

• $2,387 reduction in per member, per year spending

• 2.4x return on investment

On the surface, these findings add weight to Hinge’s ROI claims. But a closer look reveals some cracks—both studies falter under scrutiny.

The 2020 longitudinal study lacks a control group, without which it’s impossible to conclude if Hinge Health is superior to standard PT, self-directed treatment, or no intervention at all. Selection bias may skew results towards patients motivated and willing to complete a tech-enabled program.

The reported 73% completion rate is impressive for a digital health platform. However, completion was defined as “at least one exercise session or reading one educational paper in weeks 9-12”—a very liberal definition that tells us little about overall engagement. It’s possible participants stopped engaging well before week 12 but still counted as "completers" simply by completing a single action in the final weeks. Was a digital platform necessary for either of these tasks?

We simply don’t have a great sense of Hinge Health’s true patient engagement, completion, and retention rates. Twenty million covered lives is an impressive number but not an especially helpful metric when evaluating the adoption of digital health tools. The S-1 states that only 3.4% of the company’s member base engaged with the service last year—a concerning number for a well-funded, mature digital health company. (Some have questioned if Hinge’s growth is inorganically reliant on outsized sales and marketing spend).

It’s also worth noting that, while pain and mental health scores improved for Hinge users, there’s no objective evidence that function improved (e.g., HOOS, KOOS, WOMAC, ODI scores, etc.) The study period only lasted 3 months, even though many MSK conditions are chronic and result in waxing and waning symptoms. The lack of longitudinal outcomes is a major limitation, and any claims of reducing surgical rates must be taken with a grain of salt.

Proving ROI remains the biggest determinant of digital health’s future. Do these tools deliver enough financial and clinical value for employers, payers, patients, and providers to justify the investment? Hinge’s medical claims study answers this question in the affirmative with an almost $2,400 reduction in PMPY spend and a 2.4x ROI. Are the numbers valid and reproducible?

First, the medical claims study uses propensity score matching to construct a control group. This reduces but doesn’t eliminate, baseline differences between the groups and fails to account for unmeasured confounding variables. Are Hinge users otherwise representative of the general claims data population? Was disease severity similar between the two groups?

Correlation ≠ causation.

Were reduced costs due to the use of Hinge Health services or some other unidentified factor? Outliers were excluded (total MSK costs > $300,000 and total medical spend > $1 million), but these are generous, arbitrary cutoffs. Were there equal numbers of high-cost patients in each group? Even a small difference could have significantly altered results. (Winsorization might have been a better approach here.)

The medical claims study also lacks longitudinal outcomes data. Was surgery avoided or simply delayed (perhaps unnecessarily in some cases)? Was functional improvement superior in the Hinge group compared to the control group? Analyzing a single year’s worth of claims data doesn’t account for long-term trends or outlier years. Given that the study period occurred during the pandemic, what was the effect of COVID-19 on utilization? Were these true cost savings or simply evidence that using a digital health platform shifts the cost timeline? These are important considerations, as cost savings primarily came from surgical avoidance over the one-year study period.

Both studies suggest interesting trends. But do they prove that Hinge Health is a driver of reduced costs and improved outcomes? Based on study limitations, we simply don’t know. The study findings need to be reproduced and further validated, preferably in longer-term studies that aren’t sponsored by the company. Hinge deserves credit for doing something many of its digital health peers haven’t — publish data. However, these studies are a good first step, not definitive evidence of clinical impact or financial sustainability.

It’s reasonable to expect a mature, well-funded startup to produce higher-caliber follow-up studies. Without them, it’s impossible to determine if Hinge Health truly bends the MSK cost/outcomes curve—and justifies its $6 billion valuation.

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Hinge Health’s True TAM

Musculoskeletal conditions have garnered significant interest from VC-backed startups, employers, and CMS/CMMI for one simple reason: they’re pervasive and expensive.

Hinge’s S-1 nicely outlines the scope of the problem:

• MSK conditions impact ~1.7 billion people worldwide

• ~40% of the US adult population suffered from an MSK disorder in 2021

• The US spends $661 billion/yr treating MSK conditions

• In 2017, elective Orthopedic and MSK surgery cost the US $205 billion

• In 2022, 62% of spending on MSK conditions was attributable to surgical intervention and related costs

Add in indirect costs such as disability and missed time from work, and the estimated total MSK cost burden is nearly $1.3 trillion per year.

That’s a substantial TAM. Put another way, reaching a $6 billion valuation would require capturing only 0.5% of the total MSK cost burden. Just how much of this TAM can Hinge Health reasonably address?

Reading the S-1, it’s clear that tech-enabled virtual PT is Hinge Health’s core competency.

“[W]e’re now using thoughtfully designed software, AI and connected hardware to deliver care across nearly every major joint area and muscle group, while automating ~95% of human clinician hours associated with traditional physical therapy.” (Emphasis mine).

It’s worth mentioning that the favorable PHTI report largely evaluates digital MSK solutions as replacements for in-person PT rather than assessing their full potential to reimagine the entire MSK care continuum. In other words, digital MSK solutions are more “PT substitute” than “comprehensive MSK care model.”

The PHTI analysis highlights low engagement rates, lack of long-term surgical avoidance data, and challenges in proving ROI to payers. In its current state, I’d argue that Hinge Health should be viewed through the same lens.

Physical therapy is an important and often underutilized intervention in the treatment of MSK conditions. But the TAM for PT is estimated to be $50-70 billion, a fraction (~5%) of the $1.3 trillion MSK cost burden. Hinge’s customers include self-insured employers and payors willing to pay for a virtual PT solution—and their employees/members willing to use it. By their own numbers, this is only 3.4% of the company’s member base.

To justify a $6 billion valuation at a reasonable 3-6x multiple, Hinge would have to reach ~$1.2-2B in yearly revenue. According to the S-1, the company fell far short of this in 2024—with a still impressive $400 million. Actual numbers are difficult to pin down, but digital PT is realistically around a $10-15 billion market. Based on these numbers, the company would have to capture 12-17% of the total digital PT market to justify its most recent valuation.

Put another way, Hinge would have to increase its yearly revenue 3-5x or double its market capture to reach a $6B valuation. Put even more succinctly, 99% of the $1.3T total MSK cost burden is outside Hinge’s core offering.

Hinge might dispute this characterization, arguing it’s far more than a virtual PT company. However, according to its own research, the company’s ROI largely comes from reduced surgical costs. The principle levers it can realistically pull here are surgical avoidance and (maybe) better patient optimization and avoidance of postoperative complications/readmissions.

This is mainly accomplished through digital PT and interactions with health coaches. (Presumably, AI will play a role, too, in the near future). There’s only one mention of “complications” in the S-1 and zero mentions of “readmissions” or “optimization.” The company’s medical claims study showed almost no reduction in ER utilization compared to the control group.

Surgical avoidance is a core value proposition of almost all digital MSK platforms. But, their ability to help patients appropriately avoid surgery remains unproven. Hinge Connect—the company’s care integration offering—leverages EMR data to enable real-time interventions. The software allows Hinge to identify patients early in the MSK care process. Depending on your point of view, this is either a powerful tool to drive high-yield care or an unwelcome intrusion insidiously interposing Hinge between patients and specialists.

Hinge’s vision—“to build a new health system that transforms outcomes, experience and costs by using technology to scale and automate the delivery of care”—is bold. It’s also necessary to justify the company’s valuation and position as a true specialty care disruptor. Hinge may eventually get there by adding more customers or expanding its offerings. But, as it stands, the company has a long way to go, and its true TAM is a mere sliver of the larger opportunity.

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The Real Future of MSK

Hinge Health’s S-1 forces us to face an uncomfortable reality—it’s difficult to address healthcare’s true TAM with virtual care alone. At some point, patients need (and want) in-person care, imaging, injections, interventions, and (yes) surgery. As attractive as it may be, attempting to “SaaS” healthcare significantly limits your actual addressable market.

In truth, capturing the entire $1.3T MSK TAM requires a comprehensive solution that incorporates several features:

• Holistic care, prevention, and health optimization

• Tightly integrated primary and specialty care (the hub and spoke model)

• Evidence-based clinical pathways and the right combination of surgical and non-surgical treatment

• Hybrid care and thoughtful implementation of technology

• Sustainable advanced payment models such as condition-specific bundles and global sub-capitation

• Shifting sites of service to cost-effective outpatient centers and ASCs

• Aggregating proven networks of high-quality MSK care supported by transparent outcomes and costs

• Robust patient engagement and education tools

Virtual PT unquestionably has a role to play in this new model of specialty care. However, by itself, it’s more complimentary than revolutionary. “The right care-to the right patient-at the right time” (RC/RP/RT) became an overused buzzphrase in ZIRP-era health tech. Regardless of its trope status, RC/RP/RT remains the core tenant of high-quality, cost-effective healthcare (VBC, if you will).

Who’s best positioned to deliver it — a virtual PT company or someone else?

The real future of MSK care isn’t about digital engagement, surgical avoidance, or cool technology—it’s about creating a scalable, high-value model that integrates prevention, intervention, and surgical care into a single, outcomes-driven approach. Virtual PT alone won’t solve the MSK cost crisis—but a hybrid, data-driven, value-based approach will.

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Final Thoughts

Hinge Health’s IPO is an important milestone, but it also highlights the broader questions facing next-generation specialty care. Virtual MSK platforms like Hinge have the opportunity to evolve into more comprehensive solutions—but only if they integrate hybrid care, long-term outcomes tracking, and value-based incentives.

Their success depends on engagement, payer alignment, and proof of long-term savings. Can startups expand beyond virtual management of early-stage MSK patients and integrate more fully into an innovative, holistic approach? Or will their impact remain limited to a niche segment of the MSK market?

The Hinge Health IPO is another step along the pathway to better MSK care. The companies that will define the future won’t just offer virtual tools—they’ll integrate them into a scalable, value-driven, outcomes-based MSK ecosystem that truly reduces costs and improves patient outcomes. That’s the real revolution waiting to happen.

Ben Schwartz, MD, MBA

Editor-in-Chief, The Surgeon’s Record

Commons Clinic Senior Clinical Fellow