Mark Bakken is CEO of Nordic Consulting and an investor in several healthcare IT startups.
How’s Nordic’s business these days?
Our business is booming, like everybody else in healthcare IT right now. We’re doing a lot with optimization, helping a lot of Epic customers as they figure out how to leverage their investment in Epic and the EMR to not only improve care, but reduce costs at the same time.
It’s been pretty fun to be able to send in experts to quickly do an assessment and say, hey, if you enabled all these features and other things, you could most likely make your co-workers very, very happy by saving them some time, and at the same time, get better results or hone in on a cure a little faster, leverage the technology you have while at the same time get more done with less. It’s like the equivalent of robots for manufacturing. It’s fun to do these.
These organizations are so large. Nobody likes to eliminate positions or let people go if they don’t have to. But since most of them are so big, they can reduce the number of staff they need relative to them growing. If they do acquisitions and mergers, they don’t need to hire as many. The net effect is their efficiency gets better from a cost perspective, or they could do it through attrition if they say we no longer have to do registration, for example. Customers and patients are doing it automatically, so we need a lot of people. That person can then take a new career opportunity within a healthcare organization.
It’s fun to be on the forefront, to see organizations starting to leverage their initial investment into that second wave.
The company just moved to a new headquarters location. Epic is known for some interesting and fun buildings. What’s yours like?
[Laughs] It’s nowhere near as Disney or Google-like as Epic’s, but it’s nice and open and airy. We pride ourselves on transparency. We made it nice and professional looking, but within reason, I would say.
What’s the overall state of healthcare IT innovation and the business climate in Wisconsin?
Obviously with Epic in Madison — and I’m in Madison — there’s a lot going on here. There’s a lot of really sharp people that either come to the University, work at Epic, and then they have some ideas. Epic’s road map isn’t going to get around to building those into their core products for a few years, so they say, hey, maybe I can do it, grab some friends, and give it a shot at the new American dream — starting your own company and making it big some day. There’s a lot of that going on.
There’s a lot of support around that from the investment community here. Madison, Wisconsin was one of the leaders in the whole biotechnology wave that started taking off with stem cell research and everything else. Not to mention all the providers in Wisconsin were some of the early adopters, especially with Epic in our back yard, where they tried some things and are benefitting from some of those early advances with healthcare IT. We’ve got a lot of the good raw ingredients here.
Neither you nor Judy Faulkner would have fit my mental model of what education a founder would have since you both have degrees in computer science. Is there something different about being educated at University of Wisconsin or does Epic just create things that are like Epic?
It is interesting because usually that isn’t the background. We’ve taken different paths. Judy has been at it obviously for a long time. Trying to figure out the right mix and perseverance is a big piece of it and you do find that in computer science people that gravitate towards that. There’s always a problem you’re trying to figure out and there’s many different ways to go about it.
Maybe there’s something to that. Who knows? It might just be coincidence or maybe it is one of those things, as computers and technology are becoming much more relevant in a services-based economy, where you can use computers to automate things. That’s a good question.
What are you doing with your investing and what kinds of things you look for in companies?
What I look for, like most people, is a great management team, leadership, and passion. People that can inspire people, whether it’s people that follow them or just believe in their vision and their dream, whether it’s customers, or potentially investors. Then other employees that have the same desire or vision to do that.
With healthcare and IT and everything going on right now, all the pressure and all the change and everything else, there’s lots of ways you can use technology to not only get the patient more engaged and more accountable and figure out how to do that from the Fitbits, smart scales, to the whole continuum of care that say, it’s all about responsibility. It’s not just the physician, it’s not just the healthcare organization. Let’s all try to leverage technology to be healthier and live longer and find things sooner so we can find a cure.
Learn from each other. I heard a stat that says something like an average 40 percent of physicians’ initial diagnoses are incorrect. If that’s true, we can definitely do better than that by leveraging data. If we can leverage technology, leverage data to find things, to hone in on things sooner before they’re uncurable or unfixable, that ends up being a good thing. That’s basically what you look for.
Epic, Cerner, athena, Meditech, McKesson, AllScripts — the list goes on and on. They’ve got a really good platform and a good foundation, but healthcare and driving down costs and improving care is much more than just the clinical data. You got to take everything into account and there’s lots of different ways to do that. There’s a lot of bolt-ons.
I saw a ton of this with the whole Microsoft wave and revolution in 1990s and early 2000s where Microsoft has a platform, and then there’s lots of other companies out there like, hey, we can build on it and we can make something better for what you specifically need. The thing is, the bigger the companies get, they can’t come out with that specific module or niche. It might take them three to five years, and by the time they come out with it, the market may have moved on. They might have a different need or something else came up.
Young, small startups that are agile and can get things done quickly … it’s fun to be part of that.
What are some companies you’re investing in?
I would probably start with Catalyze.io. They’re creating repeatable platforms for healthcare IT. It’s HIPAA compliant. Instead of reinventing the wheel, there’s a lot of things that we could learn from each other. We can share that framework to do quick custom development stuff.
Forward Health is a great analytics company, population health, medical intelligence organization. Great way to slice and dice information easily. Not just clinical data, but when you look at RX data, claims data, consumer data, or anything else that you need in order to make better decisions faster for actuaries and statisticians as well as physicians.
Wellbe.me is another organization. Patient engagement before they come in for a surgery or when they leave, making sure they do all the things ahead of time and they fill out all the forms and all the checklists. They do it in a very easy way that’s a nice wraparound any of the EMR programs out there. Very affordable, works very, very well. Lots of interest from everybody to say, hey, when you come in, if you do all these things ahead of time, the odds of you not having to be readmitted greatly increase. Then afterwards, make sure you do all the follow-ups. It makes it easier for a healthcare organization to manage tons of people before they come in and after they come in and leverage their social network to do so.
Moxe Health, which is the connection and interfaces. Just think of all the different things you have to connect out there. Instead of paying someone to customize all those at the end of the day, maybe there’s 50 different systems that someone has to connect to, why do you have to custom build all those things over and over and over again? They’re making reusable app store type connectors out there.
Healthfinch is another one that makes a great way to save physician time. That’s their whole goal in life is to reduce the number of clicks. Right now there’s a lot of frustration on the physician side saying, hey, I just want to do what I do. Trying to find the best use of their time, finding that right mix without making them all hire scribes to follow them around. There’s some clever things they’ve done with prescription refills, which is interesting. On average, physicians spend seven percent of their time doing that. They have a way they can get it down to one percent. For every 100 physicians, if you can free up six physicians’ time doing things that could be automated, that’s a good thing for everybody.
What’s your vehicle for investing? Do you just make a personal investment or do you have a fund of some sort?
It’s all new territory for everybody. It’s either go to friends or family, which is tough because you don’t want to mix friends and family. It’s to try to do a round, or do a convertible note is what they would call it, where you can do a loan and then down the road, if they raise money, once they have more customers and more success than the valuation.
The trick is, you want to make sure the people actually doing the work have some substantial stake in the outcome and some motivation to make sure they can create something that’s creating value out there. If they do, they benefit and that would be good for me, too.
I just am a huge, huge fan of entrepreneurs. I know how tough it is to get going. You need the right mix of everything. You need the stars to all align and a little bit of guidance from “don’t do this” or “how do you do that?” Everywhere from how do you work with large organizations, how do you contract with them, how do you get insurance, how much insurance, to payroll, to taxes, to a lot of little things that everybody needed despite what they’re doing. If I can help point them in a direction that will save them a bunch of time so they can focus on what they really are good at, then I think that’s a good thing.
Is there a way the average person can invest now that some of the rules have loosed up, such as for crowd funding, for instance?
Not as easily as you would hope yet. You read all about the crowd funding. Some of the laws in Wisconsin, thankfully, have changed. You can actually get them some equity instead of some kind of token gift or something. It’s going to be easier without having to be accredited and all this other stuff and all these hoops.
There’s some other things I’m looking at personally trying to do. Change the business lending laws to be more in line with America’s economy, which is more of a services-based economy. The business lending laws that were set up 70 years ago were based on America being a manufacturing-based economy. You need inventory, you need all these other things, assets, you need buildings that a bank could repossess in order to get a line of credit or a loan. If we can make that easier for people so they don’t have to spend a bunch of time trying to get people to invest in their idea and everything else, I think that would be a good thing. It would be good for them, good for America.
What do the companies you’re investing in need most, other than money?
They need a mixture of things. You’ve got to have a customer that is willing to work with you, to at least do the pilot, to work out the kinks, to figure out how to price it, how to package it, how to deliver it. That’s one.
They need mentors from every angle, from lawyers, from LLCs or S corp to C corp to some other structure, and then all the other mentor types around like that. In Madison, we have something called 100health, which is geared towards helping people figure out where they can go for different resources and packages to get their idea off the ground in the most efficient manner.
I do have to say, there is a lot of other interest in investment in healthcare IT right now from the venture capital community, even down to the tens or hundreds of thousands of dollars, whether they’re from Chicago or all over the country. I just was in an advisory board meeting where they said that VC funding has more than doubled in the last four years in healthcare IT space. The rest of the world’s starting to take notice, to say, hey, I think there’s something to this whole EMR and healthcare IT technology wave that will be good for everybody.
Money comes at a price and companies give away their equity too early or get taken in a direction that seems to be the quickest path to profitability and not really what their vision was. Do you see that as a challenge?
Yes, absolutely. There are strings attached. Part of it is finding the right way to do that. Typically in Wisconsin and other states around the country, there’s a lot of older money. They don’t quite understand this new world economy; the Silicon Valleys and WhatsApp be worth $18 billion, not to say healthcare IT is going to go that kind of crazy.
It is basically trying to find that right balance. That’s why I think I can, because I know the healthcare IT space. Me personally making some kind of investment of faith at some kind of valuation to at least set the bar that is fair. Then other people can piggyback on that and do things at the same ratio with the entrepreneurs and the people doing all the work feel like, OK, that’s fair, I don’t feel like I’m getting held over a barrel.
What are the start-ups most naive about?
Most of them really, really get excited about their idea and their program or whatever they’re going to do without 100 percent going to the market and knowing are people willing to pay for this, and if so, how much, and is it enough where they can actually make a good living by providing that value to a customer. People can think great thoughts, but if the market isn’t ready, if there isn’t a budget, if it really doesn’t make sense, if it’s a nice to have instead of a need to have, then it’s one of those lessons learned type things.
How do you think healthcare IT will look different than it does today in five years?
It will be hugely different in a very, very good way. There was another study that came out like one in eight hospitals had an EMR back in 2009, five years ago. Five years from now, I think almost everybody will. With that, hopefully we’ll be able to analyze that data to be able to find other Patients Like Me type thing, where physicians, nurses, everybody in the healthcare world can use that data to hone in on a cure faster or to diagnose something before it’s unsolvable. I think we really, really, really will be using data a lot more so to make care better so people can live longer, healthier, happier lives.
Do you have any final thoughts?
It’s pretty fun to be part of it right now, the whole healthcare IT revolution that’s going on. The one thing I look at is saying roughly 18 percent of our economy is spent on healthcare and it’s basically flying blind. We’re using data for everything else, so it would be nice to actually use this data to make care safer and better. It’s fun to be part of it.