Health IT Startup Fiesta: Introducing the 2012 DC to VC Finalists

By Missy Krasner

Today we announced the 13 startup finalists for the 2012 DC to VC contest.  DC to VC is a nation-wide contest to find the most promising health IT startups looking for Seed and Series A ($2-5M+) funding. An annual event started by Morgenthaler Ventures over a 3 years ago to help close the gap between what was going on in Washington D.C. (at ONC, CMS and the White House) and aligned interests in the Silicon Valley on health IT investing, the event has now grown into a large health IT startup competition. Moregenthaler Ventures got interested in this space when they invested in Practice Fusion over 3 years ago (they just invested in Doximity – see funding announcement).  I joined as an Executive in Residence (EIR) in January after leaving Google Health and asked Matthew at Health 2.0 to combine forces with us to make the event even bigger–given he was our featured MC last  year and will be again this.

This year the application pool was overwhelming; we received over 140 applications to compete in the contest. Our pre-selection judges worked with us to narrow down the applications to the 13 finalists below who will present to a packed room of venture capitalists, angel investors, government officials and entrepreneurs on the last day of the annual Health 2.0 conference on October 10, 2012 in San Francisco, CA.  Registration is open to all, so grab your seat fast as the room is getting packed!

Here is a summary of each company and why our judges liked them. Series A candidates needed to have a product or prototype in the market, show some proof that pilot customers or clients were using it, and were seeking approximately $2M to $5M+ in venture capital. Seed stage candidates had to be submitted through accelerator partners and be actively looking for a Seed round of funding.  The full judging criteria can be found here.

Series A Finalists

GSI Health delivers workflow, care coordination apps and health information exchange (HIE) solutions for hospitals that manage patients across the care continuum and outside the enterprise. They are located in Philadelphia, PA and they were founded in 2003. The founders are Leroy Jones and Lori Evans-Bernstein who were both among the very first inaugural team at the ONC at HHS when David Brailer was the first National Coordinator under President George W. Bush. They coined the term Health Information Exchange (HIE) and Regional Health Information Organization (RHIO).  Now, their company is bringing that vision to fruition in the private sector. Their flagship clients are Maimonides Medical Center , a large hospital in the Bronx/New York and the Arizona Health-e Connection (AzHeC).

CarePlanners is a platform that enables a nationwide network of careplanners to help patients and caregivers better navigate their individual and ongoing experiences with the healthcare system using a combination of personal services and online tools. They were founded in May of 2011 but launched to the public in June of 2012. They are located in New York, NY and Alan Blaustein and Dr. Nancy Snyderman, Surgeon and Chief Medical Editor for NBC News are Co-Founders. Careplanners was born after Alan was diagnosed with thymic cancer in 2005 and became frustrated with the limited resources available to effectively navigate the system. After his recovery, Alan and longtime friend Dr. Nancy Snyderman founded CarePlanners to provide the type of service and resources Nancy gave to Alan during his illness. They have a number of employer pilots underway and are working with 2 significant not-for-profit organizations and are in the final stages of a pilot design with a substantial home healthcare organization in the greater New York area.

Starling Health offers an intuitive, touchscreen bedside communication system for hospitals to improve patient interaction at the point of care and help streamline the nurse triage and communication process. If you have ever been on a Virgin Airlines flight and pushed the stewardess button, then this is what they are doing for hospital beds and patients.  They are located in New York, NY and were founded in 2011. Brian Yarnell is the Acting CEO. Their flagship clients include NYU Medical Center and War Memorial Hospital in Sault St. Marie, Michigan.

HeathLoop offers an automated patient follow-up solution that tracks patient recovery and improves outcomes by engaging patients with their doctor between visits. They are located in San Francisco, CA and were founded in October of 2009.  Jordan Shlain, M.D. is a Co-Founder and Mike Kaplan and Ted Meisel are Angel Investors. Jordan is an actively practicing internist who believes in value-based, personalized medicine. He has founded numerous medical and technology companies with the common thread of bringing doctors and patients closer together. When he is not caring for patients, he is always fine tuning his patient centric practice at CurrentHealth . Their flagship clients include an international device manufacturer, one large national health plan, and many leading surgical physician practices.

AgeTak unleashes big data in healthcare from dispersed data silos in real-time based on consent from the true owner of the data. The company was founded by a father and son team in 2004 and is headquartered in Hopkins, MN with offices in Menlo Park, CA and India.  Pratik Verma is the Co-Founder and COO but AgeTak was started in the basement of a town home in MN by a family of recent immigrants to the U.S. with their own personal savings. For outside seed funding, Pratik went to Stanford University to get a Ph.D. and took out graduate student loan to help pay for the start up. Last year, the company grew to a 16-person team and they generated $3.7M in revenues from customers that include Fortune 50 healthcare organizations. They serve financial services and healthcare clients that have data in multiple silos.

Beyond Lucid Technologies offers a pre-hospital records or type of electronic health record (EHR) solution for ambulance drivers, medics and first responders. They are located in Walnut Creek, CA and were founded in May 1, 2009. Jonathan Feit is the Co-Founder and CEO and Christian Witt is Co-Founder, President and CTO. An interesting story for how Beyond got started was when Jonathon joined the U.S. Army Reserve on September 11, 2011.  He was slated to become a Combat Medic (91W), but was unable to complete training because of his Tourette’s Syndrome. After feedback from the Department of Defense’s U.S. Army Research Institute of Environmental Medicine, Jonathan went into the emergency response industry. Beyond has a pilot underway in New York City and has 5 deployments in various stages of negotiation around Northern California. Beyond also recently received a Letter of Support from the country’s largest EMS provider. In total, their current pipeline covers over 620 ambulances, with an additional 4000 if they succeed in forming a partnership with the aforementioned industry leader.

Comprisma is a special candidate in that they are still very early, but  we really liked them for their unique solution given current the healthcare reform environment. They make health insurances markets healthier by providing risk markets for health insurers to share risk with one another, reducing the uncertainty and volatility in aggregate policy experience.  Comprisma was founded shortly after the passage of the Affordable Care Act in March 2010 and was the company was incorporated in January of 2011.  Chris Dugan and Adam Pelavin are the Founding Principals of Comprisma and have been childhood friends since elementary school. They are also self-proclaimed policy wonks. Comprisma serves national and regional health insurance plans and provider networks that share financial risk for their patients.

NudgeRX is a Series A "Honorable Mention" and considered a finalist but will not officially compete in the contest. They reduce unplanned hospital admissions by providing daily, web-based recovery monitoring and guidance for patients and caregivers. They were founded in 2010 and are located in Seattle, WA. A brother team, David Schuster is the Co-Founder and CEO and John Schuster is the Co- Founder and COO. They currently serve 3 large hospitals in Southern California.

Seed Stage Finalists

This year, the contest held open applications for Series A venture back-able health IT companies but the  Seed stage candidates were submitted by accelerator partners: Rock Health, Blue Print Health, Healthbox and Startup Health.  Check out our 6 Seed stage finalists below.

Aidin is the finalist representing Blue Print Health. They provide a hospital discharge solution for social workers and case managers to refer patients to post-acute care providers or to receive care in the home. They were founded in 2011 and are located in Nashville, TN. Russ Graney is the CEO and Mike Galbo is the COO. The company was born when Mike's family was shocked that it took 17 phone calls, 5 faxes, and 3 extra days in the hospital to find post-acute care for his uncle. Their initial pilot sites include regional medical centers in New Yok, Pennsylvania and California.  Video link is here www.myaidin.com/demo.

United Preference is the finalist from Healthbox. They offer flexible payment architectures on an easy-to-administer card platform for the delivery of employee and health plan incentives that help drive healthy behavior. They are located in Chicago, IL and were founded 2011. Mark Hall, CEO and Pamela Hall, COO are the co-founders and are a husband and wife team. The company formally launched at the end of April 2012 and it already supports over 200K lives within its programs, and has a Fortune 500 company client and an East Coast Blue Cross Blue Shield health plan.  When United Preference applied to DC to VC, they were more of a Seed stage company, but with their recent client activity they are now seeking Series A funding.

Force Therapeutics is the finalist from Startup Health.  They are a physical therapy platform for both consumers and physical therapists that leverage telehealth to help deliver mobile care in real time. FORCE Therapeutics was founded in 2010 and they are located in New York, NY. Bronwyn Spira is the CEO and Co-Founder and Mark Lieberman is Co-Founder and President. Bronwyn has been Director of Physical Therapy of major clinics and has been a practicing physical therapist for 20 years. She started FORCE Therapeutics in order to solve major inefficiencies in the delivery of injury rehab and prevention. Currently, Force has 6 physical therapy practices and 1 orthopedic surgery practice using FORCE’s web and mobile platform within the New York tri-state area.

Nephosity is the finalist from Rock Heath. They offer an iPad viewer app and cloud server that enables collaborative access to medical images, anywhere, anytime.  They were founded in 2010 and are located in San Francisco, CA. Michael Pan is a Co-Founder and CEO and Zaich Chang is Co-Founder and UI Architect. Interestingly, both co-founders hail from non-healthcare backgrounds. In fact, Michael comes from DreamWorks Animation and was nominated for an academy award and worked on such films as Shrek the Third, Fu Panda, How to Train Your Dragon, Shrek Forever After and MegaMind. They are piloting with doctors at Brigham and Women’s Hospital , a teaching affiliate of Harvard Medical School and Dana Farber Cancer Institute in Boston to improve the usability of the product.

Capture Proof is a special candidate in that it was not submitted by any accelerators but is the judges' choice for most promising new seed stage company.  It captures, shares and compares patient images for easy analysis by doctors who want to monitor their patient's health and physical healing over time. It was incorporated in 2012 and is located in Los Angeles, CA. Meghan Conroy is the CEO and Founder and has a background in pharmaceutical sales and photography. She got the idea for CaptureProof when she was managing photos for clinical trials across Europe for post lumpectomy breast reconstruction patients. Capture Proof is launching beta sites with doctors in San Francisco and Boston and is in conversations with 2 well known consumer branded weight loss companies.

Cara Health is an "Honorable Mention" in the Seed Stage round and is considered a finalist but will not officially compete. They are an alum from the first class at Healthbox and originally from Ireland. They use language analytics and machine learning algorithms to calculate risk of unplanned adverse events based on live conversations with patients who are reporting their health status with care managers at call centers. Enda Madden is the Co-Founder along with Professor Carl Vogel, Director of the Centre for Computing and Language studies at Trinity College Dublin. They are piloting with 2 hospitals in the Midwest and East Coast.

Genomera is the second "Honorable Mention" in the Seed Stage round and is considered a finalist but will not officially compete. They are an alum from Rock Health's first class.  They offer a crowdsourcing health discovery service that helps any consumer create group health studies or clinical trials using social networking. They were founded in 2010 and are located in San Francisco, CA. Greg Biggers is Chief Instigator and CEO. The company began by helping consumers who feel unserved by the medical research establishment. Today, while continuing those participant-driven studies, Genomera also powers academic-driven studies and commercial studies. Significant customers include: Activist consumers, University of Geneva, Switzerland, Stanford University, Riken Genesis, DIY Genomics Second Genome, and multiple disease advocacy foundations.

Missy Krasner is an executive in residence (EIR) at Morgenthaler Ventures.

Missy Krasner and Matthew Holt 19 Sep, 2012

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Source: http://thehealthcareblog.com/blog/2012/09/18/health-it-startup-fiesta-introducing-the-2012-dc-to-vc-finalists/
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How ObamaCare Could Cause Nonprofit Hospitals To Lose Tax-Exempt Status

By David Whelan

Affordable Care Act (ObamaCare) has been knocked for its alleged unintended consequences. The bill's attracted speculation that workers will lose their health plans, college grads will stop looking for jobs, and even that fewer people will get married.

Those are just the effects related to insurance regulations. Less attention has been given to how hospitals and health systems might change  after ObamaCare.

The most common theory is that reform causes consolidation. But what if the effect on hospitals is even more radical? What if the legislation changes the largely nonprofit nature of the industry?

Right now approximately 60% of the 6,000 or so hospitals in the U.S. are nonprofit, while 25% are government-owned. The rest–fewer than 1,000–are for-profit. There's a reason the pie cuts this way.

Religious groups, especially Catholic orders, opened many of these facilities as charitable institutions. (Ever driven by a hospital with Mercy in its name?)

Then during the post-war infrastructure boom the federal government offered subsidies to cities that wanted hospitals. Getting the money required nonprofit tax status and a promise to provide "community benefit."

The IRS originally defined community benefit to mean spending 3% of operating revenue to take care of patients who couldn't pay. Over time, being tax-exempt became a good deal. If you count all the sales, property, and income taxes that nonprofit hospitals avoid paying it would total $20 billion.

The new health reform legislation could shake the foundations of this cozy set-up. Why?

Many hospitals already do not take care of enough uninsured patients. The GAO found that in California in 2005–which exemplified national trends–nonprofit hospitals only spent 3.5% of their expenses on average on uncompensated care for the uninsured. That means many were below the line. Ironically, for-profit hospitals spent 3.2%.

When 30 million more people get insurance from ObamaCare, those numbers will fall. And tax-exempt status could be threatened.

State laws already provide some guidance. In Texas a hospital must spend 4% of its revenue on charity care to stay nonprofit. In Pennsylvania it is 3%. In Illinois the attorney general, Lisa Madigan, is calling for an 8% threshold to stay nonprofit. Imagine how few will meet that cutoff when, at least in theory, everyone has insurance.

Illinois, with its $8 billion budget deficit, has been the most aggressive state to challenge nonprofit hospitals. The state has been suing one hospital for ten years. Its opponent, Provena Covenant, is a Catholic hospital in Urbana that was known for using bill collectors to go after uninsured patients. The year before the legal battle began Provena spent only 0.7 % of its revenue on charity care.

Last year Madigan began the process of voiding the tax-exempt status of other hospitals in Illinois, including Northwestern's new women's hospital.

For now these hospitals can argue, in the legislature and in court, about how much charity they truly provide. Many facilities take a bath on Medicaid patients. But they can not count that as charity care under most current rules. There's also a legitimate question about what constitutes charity care and what constitutes bad debt or an unpaid bill.

Those will soon be dated arguments.

Assuming that the supply of uninsured patients dries up after 2014 when ObamaCare goes into effect hospitals will have two options.

One will be to convert themselves into for-profit enterprises. This is already happening in places like Detroit, Boston, Scranton, and Miami–where for-profit chains are gobbling up old Catholic and nonprofit systems.

The other option would be for hospitals and governments to agree on a community benefit standard that unlike the old one does not depend on taking care of uninsured patients for free. Many people who work at nonprofit systems do so because they like the mission of caring for their community. So this would be a better option.

Redefining that mission might mean taking money that was going to go to build a new patient tower and instead providing free preventive health services, funding biomedical research, or pursuing some other charitable endeavor.

Will nonprofit hospitals be able to adapt before they get swallowed up? It will all become clear fairly soon.

David Whelan is a contributing editor at Forbes, where he was a staff writer for 8 years covering health care payers, providers and policy. He's currently studying and working in hospital administration. Follow him on Twitter @WhelanHealth. This post first appeared on Forbes.

David Whelan 19 Sep, 2012

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Source: http://thehealthcareblog.com/blog/2012/09/18/how-obamacare-could-cause-nonprofit-hospitals-to-lose-tax-exempt-status/
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