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Startup CEOs and Investors: Bruce Brandes

Why Pokemon Go is More Important to the Future of Healthcare Than Your EMR
By Bruce Brandes (with Charlie Martin)

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Over a year ago, I completed an HIStalk blog series entitled “All I Needed to Know to Disrupt Healthcare, I Learned from Seinfeld.” Now we have a new pop culture phenomenon from which our industry has much to learn.

At a recent conference, keynote speaker and legendary healthcare services entrepreneur Charlie Martin made the following proclamation to a ballroom full of healthcare IT leaders: “Pokemon Go has more to do with the future of healthcare than your EMR.” 

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I’m pleased to collaborate with Charlie through this column to illuminate how a free gaming app will have more of an impact than the billions of dollars spent on an array of electronic medical record systems over the past couple of decades.

Who Cares About Your EMR?

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When you are at home, do you celebrate your plumbing or electricity? Were the type of pipes or wires used in the house a factor in your decision to buy your house? Certainly being able to have light at the flip of a switch and taking a shower are foundational requirements in any home, expected to always work and not be the cause of problems. 

Similarly, the EMR is not a reason a patient selects a hospital or physician. Patients assume and expect you to give them the right drugs, monitor their lab tests, and perform clinical procedures according to best practices. Please keep your Epic go-live parties (and the disproportionate financial investment you’ve made) in perspective. 

Moreover, not only does a patient not care about which EMR you use, here’s another potentially shocking revelation. Apart from delivering a baby, no person ever really wants to be a patient in a hospital. The healthcare system of the future aligns incentives and engages people to be healthy and avoid the hospital if at all possible. 

That is where Pokemon Go becomes more meaningful than your EMR. As our industry clamors to advance initiatives such as population health, consumer engagement, and virtual care to move from a sick-care system to a health-care system, there is much to learn from the example set by Pokemon Go. 

What Pokemon Go Has Done in 30 Days that EMRs Couldn’t Do in 30 Years

  • Attracts 21 million users and 4-5 million new downloads a day.
  • Users spend an average of 45 minutes per day finding Pokemon (and get exercise by walking or running as a byproduct).
  • Seven of 10 users who download the app return the next day.
  • With a free application, Pokemon Go has generated $1.6 million in revenue per day.

Key Takeaways from Pokemon Go for Healthcare

Gamification and augmented reality drive real “meaningful use.” If Pokemon Go can get people moving worldwide in 30 days, just think about how we can extrapolate the platform from here. We are exponentially expanding the number of people who are exercising without realizing they are exercising. How can this concept be applied to drive healthier eating, medication compliance, and preventative screenings?

  • No boundaries. Virtually every individual carries a powerful computer in their pocket in the form of a smartphone. Pokemon Go meets people where they are — in their home or office, on their schedule, and at their convenience.
  • So simple your kid or your grandma can use it. No friction to drive viral use. No cost (freemium model to revenue). Very obvious to understand how to download and use. No implementation or training required. 
  • Free. In order to get rapid adoption, do not create friction by charging users to engage. In addition to Pokemon Go, few people would have ever used applications such as Facebook, LinkedIn, TripAdvisor, Yelp, etc. had there been a cost to participate. That said, these companies have figured out how to subsequently monetize from third parties that derive benefit from the resulting widespread engagement of millions, without infringing on the value and trust experienced by all those free users.

There is a new wave of healthcare innovations which strive to incorporate the principles above into their new solutions. 

Among them, I’m sure you’ve noticed that Apple has set their sights squarely on impacting the healthcare industry. Healthcare has taken note of Silicon Valley’s track record of creating new businesses which have put many entrenched institutions out of business. Apple clearly appreciates the foundational value of the electronic medical record, but sees it as a commoditized base from which real value will be created. Apple CEO Tim Cook recently commented regarding its healthcare aspirations:

We’ve gotten into the health arena. We started looking at wellness. That took us to pulling a string to thinking about research. Pulling that string a little further took us to some patient care stuff. That pulled a string that’s taking us into some other stuff. When you look at most of the solutions — whether it’s devices or things coming up out of big pharma — first and foremost, they are done to get the reimbursement, not thinking about what helps the patient. If you don’t care about reimbursement, which we have the privilege of doing, that may even make the smartphone market look small.

What might he be referencing regarding thinking about what helps the patient?

Lead an active lifestyle. Eat natural, whole foods. Rest. Care for those in your community. These are many of the basic principles on which people have lived since the beginning to time, at least until recently. Proven choices that lead to health, enhanced and exacted by an explosion of promising digital health solutions, are perhaps our path back to the future of healthcare. 

Established healthcare organizations – providers, vendors and supportive third parties alike — need to think differently, collaborate in new ways, and be a meaningful part of embracing and accelerating innovation. Pokemon Go represents a step (or 10,000 steps per day) in the right direction.

Bruce Brandes is founder and CEO of Lucro. Charlie Martin is chairman of Martin Ventures

Startup CEOs and Investors: Marty Felsenthal

The JPMorgan Healthcare Conference and the State of Healthcare Innovation
By Marty Felsenthal

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I had a lot of fun last year at this time writing about the JPMorgan Healthcare Conference. With thanks to Mr. HIStalk, I thought I’d take an opportunity to provide an update on the conference (it’s happening next week in San Francisco) and also on the state of innovation in healthcare services and healthcare software, as the two subjects are very related.  

This will be my 19th consecutive year at the conference, a streak that a handful of the very coolest people might find more impressive than the Golden State Warriors’ winning streak at the beginning of the NBA season. I have been investing in venture-backed healthcare software and services companies for all of those 19 years. I’m recently and temporarily retired, but I’ve been fortunate to have generated strong returns during my career, to have worked with some great entrepreneurs, and to have worked with wonderful partners.  

That said, and as I mentioned last year, until the HITECH and the Affordable Care Acts were passed, I was as relevant as Rand Paul in a Republican debate or a movie theatre showing “Star Wars” I, II, and III. Until 2010, there was certainly innovation in the provision and administration of healthcare, but it was just more limited and — relative to its potential importance to our country — not enough people cared. That all changed with the passage of those two pieces of legislation.  

Once it became obvious that legislative and judicial efforts to change or repeal the Affordable Care Act would not be successful, almost overnight I underwent a combined transformation like Shia LaBeouf (Megan Fox) in “Transformers I,” Anthony Michael Hall (Kelly LeBrock) in “Weird Science,” and Will Ferrell (his first wife Leslie Bibb) in “Talladega Nights.” Life is pretty good these days for people like Steph Curry and me.

With Reform here to stay, the JPMorgan Healthcare conference became the Comic-Con of the healthcare services and software world. The conference this year will be every bit as crowded and frenetic as in recent years past. However, there are, in my opinion, two very big differences from last year.  

When we’re out with friends, my loving wife of 17 years often refers to me as her "old" husband and then goes on to describe what her "new" husband is going to be like. I still haven’t figured out if she intends to leave me, kill me, or just wait for nature to take its course, but she has made it very clear he won’t snore, he won’t nap on weekends, and he’ll be better at taking advice.  

The first big difference at the conference this year is the number of "old" companies that aren’t presenting — or at least won’t be presenting in 2017 if their mergers are completed. During 2015, we have seen a tremendous amount of consolidation activity in healthcare companies attempting to reduce SG&A as a percentage of revenue through the benefits of scale; attempting to gain negotiating leverage with payers or providers (as the case may be) through horizontal consolidation; attempting to gain the benefits of vertical integration by owning more of the value chain; and attempting to diversify away from their core business into areas of the healthcare value chain that potentially have more opportunity and/or may be less regulated.

OmniCare, Rite-Aid, IPC The Hospitalist Company, United Surgical Partners, Vanguard Health, Cigna, Humana, HealthNet, Catamaran, Merge, and Gentiva are just a partial list of public companies that have announced acquisitions this past year and won’t be presenting this year (or next, depending on their merger timing). There are countless other private companies that have been acquired by United, Optum, CVS, Blue consortiums, AmSurg, Emdeon, The Advisory Board, IBM, and others.  

I don’t know this for certain, but as a lifelong fan (for the past 3-4 years) and someone who one day aspires to own 0.0000001 percent of the Warriors, I’d wager my next NBA championship ring that there was more merger activity by dollar volume in healthcare services and healthcare software this year than we’ve ever experienced. This trend will absolutely continue in 2016.

The second big difference at the conference this year is the number of newly public and potentially very disruptive health care software and services companies presenting at the conference this year, all of which speak to the changing healthcare landscape.  

  • Evolent Health (NYSE: EVH) is presenting. The company provides technology and services to help health systems manage full or partial risk, obviously a huge opportunity in the transition to value-based care.
  • Press Ganey (NYSE: PGND) is newly public and deploys its technology and services to help providers measure and manage patient satisfaction, which is increasingly being tied to reimbursement and will only get more and more important as insurance networks get more narrow. 
  • Inovalon (NASDAQ: INOV) is presenting and is a very interesting company that helps health plans and provider organizations collect the necessary data to get paid appropriately, and more importantly, analyze that data to measure quality and identify opportunities to improve quality. 
  • Teladoc (NYSE: TDOC) is also presenting (disclosure:  I’m on the board of Teladoc). Teladoc is deploying its telemedicine platform across many specialties and in the payer and provider communities to address issues related to access, convenience, and cost. 
  • HealthEquity (NASDAQ: HQY) completed their IPO in the second half of 2014, but they also represent another newly public and innovative company helping consumers navigate the transition to high deductible health plans with better tools and engagement. 
  • FitBit (NYSE: FIT) isn’t presenting, but they have participated in healthcare conferences in the recent past and went public last year. I’m always a little torn about whether this is really a healthcare company, but suffice it to say the potential for inexpensive remote monitoring in healthcare using a tool like FitBit is pretty immense. 

These six companies had IPOs in the past 18 months and collectively represent more than $10 billion of market value.

In my 19 years of going to the conference, I’d wager my likely nomination as the next head of HHS that this is the first-year ever that the JPMorgan Healthcare conference had six newly public and truly disruptive healthcare services and healthcare software companies presenting. That’s a very big deal for healthcare — it will lead to more great entrepreneurship and it speaks to the great market needs and opportunity being created by healthcare reform.

This brings me to the current state of innovation in healthcare software and healthcare services, with a little bit of advice for entrepreneurs and larger companies alike trying to capitalize on that innovation.  

I’ve never been more optimistic or excited. Pessimists will point to the unsustainability of the exchanges (unaffordable for most in their current form without subsidies and attracting too few healthy people). They’ll say hospitals can’t manage physicians or assume risk. They’ll say that the sector is over-funded with venture and growth capital, there are too many companies being formed to do exactly the same thing, there are too many inexperienced entrepreneurs, and there are too many inexperienced investors. They’ll also point to the venture markets more broadly and the vulnerability of all the unicorns.

All fair points, but I have unbridled optimism for healthcare right now. I don’t think there has ever – ever — been a better opportunity to create more successful healthcare software and services companies, to make them bigger, and to do it faster (I sound like Oscar Goldman in “The Six Million Dollar Man”). I think the healthcare sector is undergoing the same kind of transformation that the financial services sector started in the 1970s and that continues to this day. The changes at the JPMorgan Healthcare conference I described above are a great reflection of the beginnings of that transformation and opportunity.

Healthcare is the single largest sector of the economy at almost $3 trillion. While there are certain things our healthcare system does extremely well and better than anyone else in the world, there are other aspects that are very broken. It obviously costs too much, we use way too much paper and don’t take advantage of software and automation to the extent other industries do, we still use way too much MUMPS and client-server technology, we don’t routinely use clinicians at the top of their license, our reimbursement system has historically incented volume instead of value, we aren’t as thoughtful about care at the end-of-life care as we should be, care is too fragmented and poorly coordinated, hospital systems don’t treat their best customers like a valuable asset that could walk across the street to a different system, insurers have customers paying them more than $10,000 per year year after year and do nothing to establish a personal relationship…

It’s an obvious list that could go on and on, and therein lies the opportunity. It’s so obvious. As a country with a political and economic system that responds better to change than any other place in the world, entrepreneurs have always risen to the task when markets were broken and/or a catalyst was provided. The Affordable Care Act (for all its imperfections) provided that spark. In my opinion, we’re in the top of the first inning of a game that’s going to last two to three decades. 

My advice to entrepreneurs is simple. Start your company. Try to think of a unique business or clinical problem that isn’t currently being addressed. Surround yourself with experienced people who have built businesses before. Recognize that you have an opportunity cost so establish a set of metric-based milestones that represent the least you’d hope to achieve over the next six, 12, and 18 months. Stick them on your bathroom mirror, stare at them every morning, and hold yourself accountable / be honest with yourself. If you aren’t hitting them, change paths or go do something else.  

Also, pick your financial partners carefully. Money is flowing loosely and freely in this environment. Personally, I think a lot of these capital sources are, in fact, a commodity (and some worse), but there are some truly value-added sources out there and I’d take their money at a discount to work with the right partner.

I’m biased towards experience so that you can diligence what you’re getting from your capital partner. I’d ask for every example they can provide of commercial contracts they introduced to (or helped facilitate for) the companies they invested in. I’d ask the same of every management team member they introduced. I’d make reference calls on them the same way they make reference calls on you and ask to talk not only to CEOs they did well with, but CEOs they fired or CEOs with whom they lost money.

Ask how they think about capital intensity and burn. Personally, I think one of the single most important areas where an investor can add or detract from value is helping to determine whether it’s time to throw fuel on the fire or to continue to let things simmer based on the market size, the competitive environment, the exit environment, and the company’s proven or unproven ability to execute. 

I started my investing career at the tail end of the dot-com bubble in the late 1990s. I was fortunate to have generated returns well above the benchmarks during that environment, too. For the reasons mentioned above, I do think this time is different, but there are some valuable lessons for entrepreneurs.

First, you can raise too much money. If you raise $50 million to execute against an opportunity where your exit is only going to be $75-$100 million, you won’t do too well and your investors won’t be too happy (and ours is a small community, so you want happy investors to back you or speak well of you for whatever you do next).

Second, just because you raised all that money, please don’t feel obligated to spend it. To my point above, I think it’s very important to manage your burn and be extraordinarily disciplined about when you put fuel on the fire.  

Third, every young company hits a bump (or five) in the road. The line to success is never straight. Treat everyone as respectfully and thoughtfully as possible because even though you’ve got everything figured out today, that might change tomorrow and you will still want doors to open freely and eagerly for you.  

Similar to the late 1990s, we’re seeing a tremendous amount of interest from a wide variety of large companies who want to partner with young, innovative companies. This is happening in the broader economy and in healthcare specifically.  

Until recently, I was a managing partner at a wonderful venture firm that included as its limited partners some of the largest for-profit and not-for-profit insurers, health systems, pharmacy chains, and healthcare foundations in the country. We also had the opportunity to interact with drug distributors, diagnostic companies, multi-sector technology firms, PBMs, and others who were equally interested in a window into healthcare innovation. There are some common characteristics of larger organizations that partnered with young and innovative companies the best.

First, they recognize that innovation is only a means to an end. There were too many large companies in the late 1990s (Time Warner AOL being the best example) and too many companies in this cycle pursuing innovation and change just because their competitors did it or just because something seemed cool and hip. The laws of nature still apply and you need a clear business objective, a product that makes sense, and a business model that makes sense.  

When partnering with young companies, don’t worry about over-paying or every little contract detail. You presumably have a strong balance sheet. To a degree, small differences in price or terms at this stage don’t make a difference in the long run.  

What makes a difference is whether you picked the right company. I was fortunate to have led a financing round at Teladoc early on and at the lowest valuation. However, the truth of the matter is that each investor in the subsequent three private rounds have generated outstanding returns to date as well. I led a later and more expensive round at Change Healthcare before Emdeon acquired it. In both cases, it almost didn’t matter what round you participated, just that you partnered with them.  

To that point, when partnering with innovative companies, the most important thing you can do is pick the right partner, and good people obviously make good partners. Avoid entrepreneur hubris when coupled with inexperience. Treat good people well. Give them responsibility. Be flexible and responsive with them. Commit to make the partnership work. Provide transparent and timely feedback on how the partnership is working and ask for the same. If you buy or partner with a company with good people, figure out ways to make sure the good people stay and to make sure they expose the rest of the organization to what they’re working on.  

There are some great examples of large companies that do innovation well. Aetna partnered successfully with lots of our portfolio companies. United / Optum have been wonderful at almost all of the points above.  A number of Blue Cross Blue Shield plans have really stepped up their games in the past decade with direct investments, collaborative investments, and partnerships and acquisitions of technology companies.   Walgreens and CVS have done it well with their retail clinics  UPMC and The Advisory Board have done it with Evolent. Intermountain Healthcare, Geisinger ….it’s a very large and growing list and much larger than just these companies.  

Some of their common themes are that innovation has senior level sponsorship and multiple sponsors. Many of these organizations have a senior-level executive (or someone reporting to a senior-level executive) whose responsibility is to act as facilitator between the executive sponsors of innovation and the folks in the lower parts of the organization who actually get things done. These organizations also make sure to incent their teams — not just on the next big acquisition or meeting projections, but on some of these softer points around innovation. Some of them provide capital for off-cycle and off-budget rapid pilots.  

Much more so than HIMSS, the JPMorgan Healthcare Conference is a microcosm of our healthcare ecosystem because it covers every major and minor sector of the market, not just technology. The name of the game at the conference for the past six years (and in healthcare more broadly) is change, and every student of markets knows that big change always creates big opportunity. Healthcare is the single largest sector of the US economy and it is undergoing an unprecedented amount of change. 

It’s going to be a great year for the entrepreneurs, investors, and large companies that can capitalize on it. Most important, I’m very optimistic that patients are also going to end up better off for all this change — with better and more consistent quality, with lower-cost alternatives, and with a much improved consumer experience.

Marty Felsenthal has been working with and investing in innovative healthcare software and services companies since 1992 and has led financings and/or provided growth capital to companies such as Teladoc (TDOC), Change Healthcare (acquired by Emdeon), Aperio (acquired by Danaher), PayerPath (acquired by Allscripts), Titan Health (acquired by United Surgical Partners), and USRenal Care (acquired by Leonard Green).

Startup CEOs and Investors: Bruce Brandes

All I Needed to Know to Disrupt Healthcare I Learned from “Seinfeld”: Part VII – Showmanship, Double Dipping, and the Timeless Art of Seduction
By Bruce Brandes

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Are there any classes in business school where we are taught to learn to take yes for an answer? Evidently not, because so few do. 

Over the years, we have all been in meetings or presentations that went exceedingly well. In fact, often, the objectives are achieved long before the time allotted for the discussion has expired.  

I was in a meeting just last week when an entrepreneur seeking funding got to a “yes” from our team 45 minutes into an event scheduled for an hour and a half. To his credit, he asked if we had any other questions or topics for discussion. When it was clear we were content, he confirmed next steps, thanked us, and got up to walk out. He exited on a high note for sure! And with my newly-found free half hour, I got inspired and started to write this column.

Not surprisingly, the first thought entering my mind as I sat down at the keyboard was of George Costanza developing a plan to end every conversation on a "high note" and "leave them wanting more."

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George: "I had ’em Jerry. They loved me."

Jerry: "And then?"

George: "I lost ’em. I can usually come up with one good comment during a meeting, but by the end it’s buried under a pile of gaffes and bad puns.”

Jerry: "Showmanship, George. When you hit that high note, say goodnight and walk off."

Unfortunately, in business, showmanship has a different meaning than it does in comedy. Many companies can put on a great show to distract from disappointing or alarming realities. HBOC’s yada yada we discussed earlier comes top of mind.

How would our world, and healthcare specifically, be different if we applied Jerry’s version of showmanship to our healthcare business? Think of your favorite legacy vendor, say one who has built and sold a medical device or an EMR for decades, whose business is clearly waning as they desperately cling to their diminishing ongoing maintenance revenues.  

Imagine the implications of them one day frankly telling the market long before they ever reached that point of decline, “Thank you, everybody. That’s it for me! Goodnight, everyone.”  

In some ways, this does happen, just not as obviously and directly. Is this what Siemens was essentially saying when Cerner bought them last year? Or is that actually what SMS tried to express back in 2001 when they sold the company to Siemens in the first place?  

In the late 1960s, SMS took their first dip into the market by pioneering shared computing for hospitals and helping revolutionize the business of healthcare. Decades later, SMS would try to “double-dip” their way to restored relevance with the  introduction of Soarian. What would the market have missed if SMS had instead taken a page from Jerry’s playbook and stepped off the market stage in 2001 (or earlier)? Would their clients have been better off moving then to another vendor, unencumbered by the pressure to protect legacy maintenance fees, with more clear promise for the future?

You may be thinking that many of these established companies (Philips, IBM, Stryker, etc.) reinvent themselves regularly by acquiring innovative, growing companies with better solutions. Some large companies do indeed make successful integration of acquisitions a core competency.  

However, more often than not, legacy culture extinguishes the spark which made that group they acquired successful in the first place. Established vendors with historical encumbrances find it very difficult to bring innovations to market that may disrupt those legacy revenue streams. So generally they wait until some other entrepreneur with a more agile organization does it for them.

For example, who was better positioned 20 years ago to understand people’s preferences for taking, viewing, and sharing photos than Kodak or Polaroid? Many of you know the story about Kodak inventing the digital camera but shelving it out of fear it would cut into their revenue from selling film. Who would have bet instead on an arrogant, hoodie-wearing, college dropout to put these companies out of their misery?  

When was the last time you shunned Facebook or Instagram in favor of taking your film to the Kodak Photomat so you could share photos like this one?

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Of the companies on the Fortune 500 from 1995, 57 percent are no longer on the list. Eighty-seven percent of the Fortune 500 from 1955 are now completely out of business.    

Which healthcare vendors are poised to become the next Kodak? And might the industry be better served for some of those organizations to accept their inevitable fate, sparing the industry a ride on their death spiral?  

Preferably, the industry would benefit if these legacy EMR and device companies would realize their proper place in the new, boundary-less healthcare ecosystem. Replacing incumbent vendors unnecessarily will only take time and money which healthcare organizations do not have.

To truly add value to the marketplace, legacy vendors must commit to interoperability completely and unreservedly as if their lives depended on it. Historical interoperability initiatives driven by the government or the vendors themselves have left us with little more than brochure-level integration.  

Healthcare executives are now taking control of their own destiny. Through the new Center for Medical Interoperability, the CEOs of the most influential health systems in the country are turning the tables on vendors to open up and play nice with others or seal their fate to follow in Kodak’s footsteps.

I implore those legacy companies who may resist, perhaps greedily trying to hang on, to take metaphorical advice from Timmy, who once rebuked George for trying to double-dip his chip. "From now on, when you take a chip, just take one dip and end it!”

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Personal note: I have often wondered how one day I could apply my endless hours of Seinfeld study to somehow support my career. Having fallen short of my dream job as a sitcom writer, the chance to periodically pen this column has been great fun for me. I sincerely appreciate the kind words and encouragement I have received from old friends and new colleagues through the HIStalk community.

I plan to take my TV friend Jerry’s advice and end this series — hopefully on a high note — with this post, possibly leaving a few of you wishing for more rather than becoming stale and redundant. As a child of the 70s, I vividly recall how the phrase “jumping the shark” was coined. So, good night everybody. That’s it for me!  

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Bruce Brandes is managing director at Martin Ventures, serves on the board of advisors at AirStrip and Valence Health, and is entrepreneur in residence at the University of Florida’s Warrington College of Business.

Startup CEOs and Investors: Brian Weiss

We Need Open Providers (An Alternative View on Open EHR)
By Brian Weiss

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Open EHRs, Soft Drinks, and Leprechauns

Just under a year ago, having surfaced the disturbing and shocking possibility that EHR vendor marketing claims may not all be objectively measured and verified, Mr. H issued a challenge to have someone (other than EHR vendors) define what an “open” EHR really is. That call was answered by two PhDs named Sittig and Wright and a summary of their work was recently published on HIStalk.

You know Mr. H must be pretty excited about something when – despite his admirable track record of correctly calling out flawed survey/study methodologies by others – he set up this week a Yes/No survey with the guidance that if you provide the answer he wants (in support of the self-declared “consensus” about what a great job Sittig and Wright did) you can just vote “yes”, but “if you vote no, it’s only fair that you click the poll’s Comments link to describe what they missed.” Since not everyone is prepared to challenge (in writing) the work of well-credentialed experts, I’m thinking that might introduce a little unintended skew into the survey results.

I think it’s always good for HIStalk when Mr. H is passionate about a subject. However, if we’re going to go after questionable marketing claims, I think it would be great if Mr. H challenged readers to draft measurable standards for claims in other industries as well. For example, what criteria must a cola beverage meet to legitimately claim to be “The Real Thing” or to “Change the Game?”

Does the DoD purchase soft drinks for its personnel? If so, maybe we can get Congress involved here as well. Granted, we probably should stick to the IT realm in general and open IT systems in particular, where the government has demonstrated a strong track record. I’m sure you have also been impressed with the government work being done on Open Personnel Management Systems, which enable a much more efficient global process on security clearances without all that redundant background checking work by multiple countries.

So, no reason to limit ourselves to health IT. I noticed that Sittig and Wright established as a must-have criteria for EHRs that, “An organization can move all its patient records to a new EHR.” Can we do that in other IT areas as well so that purchasers of all IT systems always know they can change their mind at any time? How about with cellular phone plans?

But I digress. Mr. H has earned the right to establish what it is we should be debating and defining, and if he wants us to figure out whether Goofy is or isn’t a dog, what a Leprechaun is, or what an open EHR really is, I’m there.

Send Me the Encyclopedia

I actually don’t have any issues with the specific criteria proposed by Sittig and Wright for defining the mythological creature I’ll call Nessie and they refer to as an open EHR. Even if I did, how can I argue with a summary when I can’t even begin to fathom the precise definition of most of the terms it uses? We can spend years debating what it means for an EHR to provide “role-based access,” “where data are stored and what they mean,” “controlled clinical vocabulary,” “record-locator service functionality,” “existing metadata,” “appropriate support and maintenance,” or “authorized users.” This is how Meaningful Use regulations get to be thousands of pages long.

I’m also not really sure which EHR vendors can actually submit their products for evaluation since the authors of the summary indicated that any vendor that chooses to “maintain a degree of control over access to their software for financial, security, intellectual property, and reliability reasons” can’t be considered “truly open.” And I fear some EHR vendors might fall into that category.

Again, I digress. All in all, I think the Sittig and Wright piece is a pretty good summary of conventional thinking on what constitutes an open EHR.

Welcome to our Dysfunctional Family

My issue is not with the proposed definition of what an open EHR is or isn’t. My issue is that I think we’re focused on the wrong approach to achieving our goals. Like the “National Health Network” or “Beacon HIEs” or “Interoperability Alliances” before it, debating the definition of an open EHR is like looking for a lost wallet where the lighting is best rather than where it might actually be found.

What is it we are looking for? I think Sittig and Wright say it pretty well: “… to address the needs of patients, so they can access their personal health information no matter where they receive their healthcare; clinicians, so they can provide safe and effective healthcare; researchers, so they can advance our understanding of disease and healthcare processes… and software developers, so they can… create new applications to improve the practice of medicine …”

Why is open EHR where the light (of Congress, HIStalk, and so many vendors and providers in the HIT world) is shining, but not where we can find the answer? I think Sittig and Wright started to also say that pretty well: “…in addition to having all EHRs meet these technical requirements, we must also begin addressing the myriad socio-legal barriers (e.g., lack of a unique patient identifier, information blocking, high margin fee-for-service clinical testing) to widespread health information exchange required to transform the modern EHR-enabled healthcare delivery system.”

In my view, “myriad of socio-legal barriers” is a huge understatement. EHR vendor product features (open or otherwise) are a tiny fraction of the issue. And what about all the new forms of healthcare data sources like telehealth, urgent care centers, mail-in clinical or genetic lab tests, personal monitoring devices,  and everything else that isn’t an EHR (open or otherwise)?

Don’t Forget To Update Me on Progress Next Decade

What I think we are capturing in a potential Mr. H-driven consensus on the definition of an open EHR is another meaningless piece of a puzzle that, when complete, will give us a vision of what a theoretical fantasy healthcare world might look like in “one decade from now” (meaning, one decade from whenever you choose to take a look, for eternity).

I have no illusion that the people who are still reading this article are going to be convinced by what I’ve written. And even if all three of them are convinced, I don’t think that will alter the course of the ongoing Congressional hearings, ONC roadmaps, standards body committees, industry consortiums, EHR vendor leader visions, and everything else driving all the never-ending work on “legacy approaches to healthcare data interoperability.”

Plus, other than my youngest son (who is already rapidly changing his mind), does anybody else think that I know more than everyone else? Given the more qualified, more experienced, and smarter people working on this stuff, not only won’t I stop them, I really don’t want to. What if they are right and the emperor is in a stunning getup?

My plea is only this. Let’s also consider an alternative, parallel approach. One from the world I termed (in my not-academic, 20-minute study titled A Tale of Two Healthcare Worlds) “CCHIT” – consumer-centric healthcare IT.

In the few words I (really don’t) have left in this article (even my beloved three readers are now fading fast), I will now publish my definition of open EHR, and more importantly, open provider (note, Mr. H, that unlike Sittig and Wright, I don’t work for a provider, so it’s legit for me to do this one).

You Probably Already Have an Open EHR

If your EHR is MU2-compliant, it’s open enough for me. You just need to validate it is configured (as it should be, and most are) to send MU2-compatible C-CDA documents to any patient-authorized application using Direct Messaging.

Yes, I know CDA is ambiguous and has other issues. As long as the CDAs the EHR sends pass the MU2 certification validator (flawed as it is), that’s good enough.

To meet my self-appointed standards for open EHR, you need to make sure the freely downloadable NATE NBB4C trust-bundle is loaded. That means the EHR can easily and instantly send a patient clinical summary directly to any consumer/personal health product that is part of that NATE NBB4C trust bundle (which they all should be).

Nothing new to buy, no new standards or regulations needed. We’re done. Open EHR is here (and everywhere). Now comes the hard part … 

Open Provider

To save HIStalk PhD readers the work of defining it, let’s jump straight to the certification/testing process for open provider. I now officially declare every patient in America an “Open Provider Authorized Testing Body” (OPATB). Here’s what you do:

  1. Sign up for a free Carebox at https://carebox.it.
  2. Go to the “DIRECT Inbox” feature under “Import” and note your personal Direct Messaging address.
  3. Go to any doctor or hospital that received at least one penny in Meaningful Use money and ask them to send you your clinical summary to that address using their EHR.

OK, you don’t really have to use my product for Steps 1 and 2. There are plenty of other applications that will give you a Direct Messaging address. But since I am making up the rules here, I get to self-promote a little. Plus, mine is free right now and there’s nothing to install, so you can just ignore it after you are done with your role as an OPATB.

Here’s how you score the provider. If in less than five minutes your clinical summary shows up in Carebox, you give them an open provider certificate, a sash they can wear at next year’s HIStalkapalooza, and a big hug from me.

If they ask you to pay anything, make you fill out forms, tell you it’s a “HIPAA issue” for them (it is, but in the sense that HIPAA says they have to do this, not the other way around), send you across town to their “records department,” ask you to provide them a self-addressed stamped envelope and expect some paper records within 30 days, or anything else, you can let Dr. Halamka know that he can stop working so hard to find an “Information Blocker,” at least by my definition.

Which Brings Me Back to Cerner

Mr. H started his initial open EHR challenge last year because he was upset with something that a reader reported was stated on a Cerner conference call about how they were open and others were not. So, Mr. H probably will not be happy to learn that I’m compiling a list of open EHR vendors who support open providers, and guess who is at the top of the list?

Why? Because I got an unsolicited call from two gentlemen at Cerner (I’d be thrilled to name them, but I don’t know if they want me to) who work on Direct Messaging. They wanted to be sure that bi-directional CCD exchange between Cerner and my no-name little startup product actually works. They showed me how easy it was for any PowerChart user — as well as users of many other Cerner apps, which all come pre-enabled to “Send Direct” and pre-configured to support the NBB4C trust bundle noted above – to send any patient’s record right into their Carebox. It worked flawlessly on the first try.

Hopefully other EHR vendors will call soon or someone can tell me who I should call so I can certify them as a great open EHR for open providers to use. Because my taxpayer-funded budget for this program is a bit limited (I’m not even tax-deductible), I’ll settle for self-certification to start. Just send me an e-mail and let me know that you sent a CCD from your EHR to Carebox and it worked. No reason it shouldn’t, if you claim MU2-compatibility. If you have any issues — since I’m told EHR vendors all want to work together to advance healthcare for everyone – I’m sure if you give Cerner a call, they’ll be happy to help you out.

Now all I need to do is convince Neal Patterson of Cerner to get his wife Jeanne to trade in the “bags and bags of records” that he speaks and wrote about her needing to carry around in exchange for a Carebox. Then, in parallel to him figuring out how to get every current or future source of our healthcare data to join CommonWell (good luck!), we can unleash thousands of startups who can help all of us transform US healthcare the CCHIT way.

Are We There Yet?

Freeing up patient data so that patients can authorize the use of that data in any clinical, research, analytics, or application context they want is — in my book — “The Real Thing” and “Changes the Game.” It doesn’t help you quench your thirst (with caffeine, a possible diuretic) or get Type II diabetes, but my CCHIT startup friends and I can try to get ONC or the White House to help us spin up some committees to work on those parts.

I think all of the constituents noted in the earlier quote above from Sittig and Wright will benefit — patients, clinicians, researchers, and software developers. I think we will get “there” a whole lot faster than by following Mr. H’s prescription for “putting the screws” to EHR vendors about what they have to prove to claim they are “open.” Of course, that is going to be lots of fun, too, so we can do that as well.

One Less Study for Mankind

What really compelled me to write this too-long article is that just a few weeks ago, Mr. H. wrote this about patient access to their own healthcare records: “Someone should perform a study to determine the level of demand and the reasons people aren’t requesting their information.”

I started writing a snarky article (do I write any other kind?) suggesting that we go back in time and commission a study in the 1970s about why nobody wants downloadable apps from Apple on their phone (both the rotary and the newer touch-tone kind).

But then along came Sittig and Wright and the associated consensus. It occurred to me that some really smart people might already be hard at work on Mr. H’s newer study request above and I probably missed the boat on my alternative recommendation.

So before it’s too late, I want to suggest that instead of spinning up another study – not to mention all the challenges associated with the time machine and the questionable value of going back to the 1970s, if we did mine – we might all be better served if we just get open providers (who are not information blockers) to free up electronic copies of our own health data that we are all entitled to get under HIPAA Right to Access. To do that, most can use their “already open” (at the “not ideal but good enough for now” MU2-level) EHRs. Then, instead of reading more studies and articles, we can all watch in amazement what happens in months and years from now, not decades.

Brian Weiss is founder of Carebox.

 

Startup CEOs and Investors: Bruce Brandes

All I Needed to Know to Disrupt Healthcare I Learned from “Seinfeld”: Part VI – A Festivus for the Rest of Us 
By Bruce Brandes

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Is necessity still the mother of invention? Edison with the light bulb. Bell with the telephone. Ford with the automobile. Costanza with the Mansiere (or was it Kramer with the Bro)?  

Given the clear market need for all of these innovations, was there ever any question that these entrepreneurs would become wildly successful? Or were men content with candlelight, telegraphs, and horse-drawn carriages, which caused their man-boobs to jiggle as they rode along?

Today, conversely, as suggested by Jared Diamond, invention may be the mother of necessity. Did we know we needed an iPhone until Steve Jobs showed us the compelling device? Unfortunately in healthcare, too often it seems entrepreneurs and investors are introducing products believing they have invented the next iPhone-like phenomenon, to eventually realize that not only does the market not have a need, in many cases does not even have a want.

When looking to invest in an early stage venture which seeks to address a well-understood but yet-unsolved problem, how does an investor know with which one of the multitude of aspiring inventors to bet? 

An important consideration is understanding the motivation and passion of the founder to launch the undertaking in the first place. An example lies in the prolific innovator, Frank Costanza, and the remarkable global embrace of the sensation that is his Festivus, whose origin is summarized in the exchange below.


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FRANK: Many Christmases ago, I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him, I realized there had to be another way!

KRAMER: What happened to the doll?

FRANK: It was destroyed. But out of that, a new holiday was born. "A Festivus for the rest of us!"


In Venture, we often meet bright entrepreneurs seeking funding motivated to build a company that will make them rich and famous. Each time we make this assessment, I am reminded of Philip Rosedale, founder of SecondLife, who once said, “If you have an idea and you know you won’t earn a dime from it but you have to pursue it anyway and solve the issue, then you’re a true entrepreneur.” 

While in hindsight most investors would prefer to have backed Mark Zuckerberg ahead of Philip Rosedale, I suggest that if becoming rich and famous is your primary goal, you are very likely going to fail. Financial rewards may be the result of a more noble primary goal being achieved, but should not be your first focus.  

I believe this is particularly true in healthcare. Two excellent examples (from reality rather than Seinfeld) of promising healthcare technology-enabled solutions that were founded by purpose-driven entrepreneurs and briefly their inspirations.


Wiser Together – Shub Degupta

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In the fall of 2007, my wife and I went through a difficult pregnancy. In particular, the decision about whether to undergo invasive and expensive genetic tests daunted us. There were plenty of sources of information: friends, family, the Internet, helplines, genetic counselors, even academic literature.

In fact, in some ways there was too much information, often out of context. Our friends were helpful, but the information was anecdotal. Health websites had good information, but it was overwhelming, not actionable, and not personalized for our situation. It was nearly impossible to get to a decision that gave us peace of mind.

What we really wanted was the right information for us: What did other couples like us do? What tests did they have? What treatments did they seek? And, always lurking in the background, what was covered in our insurance plan?

We had to make some of the toughest decisions of our lives with insufficient information. Our experience was very stressful—and yet extremely common.

I realized this didn’t have to be the case. With new technology, extensive data, and a thorough understanding of how people make health decisions, WiserTogether was founded in early 2008, a few weeks after our eldest daughter was born. Today, WiserTogether helps millions make health decisions efficiently and intelligently, achieving better outcomes at a lower cost .. and with peace of mind.


Rallyhood – Patti Rogers

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I created Rallyhood after witnessing the power of community and kindness during my long battle with breast cancer. The love and support from family, friends, and neighbors truly changed my life and made a significant impact on my ability to heal. The truth is I could not have done it alone. I needed my doctors and medicine to kill my cancer, but I needed my people to bring me back to life. 

While the people were amazing, my family and I experienced the frustration of trying to organize the support effort with fragmented, difficult-to-use tools. It added unnecessary stress and burden for all of us. After getting well, I was inspired to build a platform for purpose-driven communities that made it easy to rally around a person, event or any common cause. Blending the best of social and and the best of productivity in one place. 

Today, Rallyhood has helped more than 20,000 communities organize emotional, practical, and financial support in one place. By engaging the person’s trusted community, providers can now extend the continuum of care in a more holistic way—improving outcomes, enriching the patient (human) experience, and expanding their brand into the daily mobile lives of the people they serve. Everyone wins.


Ultimately, growing a viable new company and achieving valuable business outcomes takes more than just an inspired founder. There will be conflicts where your team must air grievances if there is any hope for a Festivus miracle. We all know that any success story, over time, will reflect fondly on the feats of strength required to achieve greatness.  

What is the mother of your invention? 

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Bruce Brandes is managing director at Martin Ventures, serves on the board of advisors at AirStrip and Valence Health, and is entrepreneur in residence at the University of Florida’s Warrington College of Business.

Startup CEOs and Investors: Brian Weiss

My HIMSS Was Great — Hope Yours Will Be, Too!
By Brian Weiss

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So Much to Say… So Few Listening

Back in ancient times when not everything had to support this quarter’s numbers or the next funding round, I took a few college courses that were not directly related to my plans to become a software engineer. I don’t remember exactly which Something Interesting And Not Practical Career-Wise 101 course it was in which we pontificated about whether a tree falling in a forest that nobody hears makes a sound.

I wish I remembered the answer, as I think it may have some implications for vendor press releases on the first day of HIMSS. It may also be relevant for writers of HIStalk columns. But I was probably busy optimizing some assembly code interpreter written in Pascal (which engineering readers will recognize as potentially good material for the aforementioned college course).

Seems that almost every day for the past few weeks someone has been serving up another high fastball over my columnist strike zone. CommonWell and Epic trade barbs, MU3 guidelines are published, everything is “on FHIR,” patient-centric data exchange is all the rage, and the US Congress allocates more time to healthcare data interoperability than most hospital system executives. If you’ve followed some of my previous articles on CommonWell, FHIR, and consumer-centric healthcare IT, you can imagine I have a few things to say about some of this stuff.

But I haven’t yet submitted any of these articles in the making. I’m pretty sure I was the most prolific HIStalk column contributor who published nothing in the month of March. Thankfully, no trees have to fall in any forests each time HIStalk news updates land in my Inbox and I feel compelled to open up MS-Word and crank out my passionate thoughts about “whatever,” only to decide somewhere on Page Two that I don’t have anything dramatically new and insightful to add to what I’ve already said.

Besides, who is going to read this stuff I’m drafting with everyone busy preparing for HIMSS?

So instead, I’ll share with you a few of my thoughts about HIMSS itself. Given that I have only attended HIMSS once in the past (in a rather peripheral role) and this is my first HIMSS as a startup CEO, why would you want to read my HIMSS tips, insights, or analysis?

You wouldn’t! That’s why I’ll leave all that to Mr. H and the HIStalk team and all the others who already helped make sure that searching for “HIMSS tips analysis” returns close to half a million hits on Google. That should keep you busy enough on the way to Chicago, even if you are on the shuttle from Uranus and you need to find parking near the convention center.

Here are some of my somewhat contrarian views on HIMSS, though I reserve the right to change my mind about all of them at the end of next week (or whenever I’m certifiably fully awake).

It’s Floor Wax AND Dessert Topping

If you understood this section’s header, then I suppose you also didn’t have enough on your social calendar on Saturday nights in the 70s. If you didn’t understand, try Google (or don’t worry about it). Point is that HIMSS is undoubtedly many different things for different attendees and audiences. While I speak for nobody (perhaps other than myself — we are still debating that internally) I’m hopeful some of this will reflect other startup participants at HIMSS (and perhaps even some more established exhibitors) and thus, in the intended spirit of this column, provide a view into life “on the other side of the aisle” for those of you on the side with the very sore feet.

I have no idea how HIMSS attendees manage to have a productive visit to the massive HIMSS hall. Those of you who actually make it to the peripheral locations (which the HIMSS rules generally assign to new participants); the small, low-budget booths (that rich startups can afford); or the individual pods allocated to partners in various “sponsored pavilions” (where startups are most likely to be) have my sincere admiration. Not enough to get me to put down my cellphone and notice you, but certainly enough to feel a little ashamed when Mr. H takes me to task on that.

I don’t fully get what you think you are going to learn with all this legwork that you can’t more easily pick up with a tablet, a web browser, and your feet up on the couch. I get the part about collecting freebies, but I’m not bringing any, so it’s probably just as well that I’m polishing my BrickBreaker skills (I will trade in my rusting BlackBerry as soon as I get past level three). But, I’m glad you’re there racking up the steps on your fitness bracelet, because without you, there would be no HIMSS.

My HIMSS Was Great!

HIMSS for me was great. Yes, “was” — past tense. Next week might be good as well, I don’t know. But that’s icing (or floor wax) on the cake, from my perspective.

For me right now, HIMSS is first and foremost a “compelling event” that makes many other things happen in the weeks leading up to it. The value of those things is rather independent of — and I expect will prove to be of far greater value than — anything that happens at the event itself.

First and possibly foremost, HIMSS is the excuse vendor companies like mine need to force a refresh of our slide decks, web site, positioning statements, brochures, demo kits, etc. It even forces our R&D departments to do one of the most unnatural acts in software engineering – release a product version.

Next, and particularly important for a small startup like mine, HIMSS creates a compelling event for our work with partners. My company, Carebox, is going to be part of demonstrations in four locations at HIMSS. Yes, I’m dying to tell you where so I can feel like I’ve gotten free marketing benefits in exchange for writing this column when there are a million other things I’m supposed to be doing right now “before HIMSS.” But even if I caveat that with some clever, self-deprecating line like, “Here comes the shameless plug,” I actually would feel shame (and Mr H might edit it out). So, think of it as a scavenger hunt with no prizes. What could be more fun than that?

Now, where was I? Oh, right, looking for the Carebox presence buried in various booths at HIMSS. The point is that even though I don’t really expect any direct benefit from people noticing our presence in all those locations, I’m thrilled about each of them. Because we now have sales demonstrations and scripts, sandbox environments, and more importantly, working product integrations and/or go-to-market plans with all of those rather important partners.

With the exception of our primary host and partner at HIMSS, Box (Booth # 8714 – I couldn’t resist the shameless plug after all — oh, the humiliation), were it not for HIMSS, I believe we would still not even have started practical product and go-to-market work with the others.

The scheduled press releases for next week mentioning my company that Mr. H will ignore — and might have covered and called out this week, or most any other week, and I thus doubt you will even hear falling in the proverbial forest — matter to me as well. They’ll provide important quotes and links for my web site and presentations for months to come. And they create momentum with the partners that published them and within their internal sales organizations.

The obligatory “Will I see you at HIMSS?” e-mails, dinner invitations, etc. have all given me much-needed excuses to reconnect with dropped leads that are generating significant business opportunities as we speak.

There are many more examples, but I think you get the idea, and I’m well into Page Two of this article which is usually when I start boring myself (yes, and you).

While You’re at HIMSS, I’ll Be Very Busy …

I’ve never (yet?) attended the JP Morgan conference and thus enjoyed Michael Barbouche’s writeup a few months ago. My HIMSS schedule is shaping up a bit like what he described – a series of hourly slots in various locations, some at the event itself, others in nearby hotel rooms, some in local restaurants, and one or two in offices around town.

I still have a little time slotted to actually be “in the booth” as opposed to “in the closed holding cell in the middle of the booth constructed so that we can do conference meetings as if we were in the office and just trying to optimize travel logistics, but have to put up with all the noise around us and the other lousy environmental conditions for a meeting.”

But that’s only because I’m not really important (yet?), in which case you would only see me “in the booth” in the context of a journey to get liquids into or out of my body, or as per regulations for “minimum required time in the yard outside of the cell.”

Most of those meetings are definitely important to me and I suppose those constitute “part of HIMSS” and thus invalidate my claim that HIMSS is “past tense” for me, but I think logical consistency was part of that same course I wasn’t paying attention to back in college, so no worries there.

… With You?

If you think you might be a potential customer, partner, investor, or romantic interest (just kidding!) of Carebox, you can still claim my few remaining available minutes next week by reaching out and scheduling any open slots I still have. I’m told that by pre-allocating my time to pre-qualified interactions I can pre-impact the expected value from my HIMSS experience (and perhaps also finally understand why people actually board the plane during pre-boarding).

And then I suppose my HIMSS experience could be completely orthogonal to that of the thousands of people walking around the hall.

Except that won’t actually work for me. I don’t really know the statistical likelihood that a chance encounter in a booth at HIMSS will result in something that changes the trajectory of my company. Maybe that was also covered in one of those college courses I seem to have missed. But apparently the people who did really well in that course don’t buy lottery tickets and don’t start new healthcare IT companies.

So I’ll hopefully be the guy who remembered to turn off his cell phone and otherwise managed to follow a few of the thousands of “10 best tips” for HIMSS and maybe we’ll strike up an interesting conversation. And maybe next year before HIMSS I’ll write a very different (and better) article.

See you next week… if you can find me!

Brian Weiss is founder of Carebox.

Startup CEOs and Investors: Bruce Brandes

All I Needed to Know to Disrupt Healthcare I Learned from “Seinfeld”: Part IV – Are You the Master of Your Domain? 
By Bruce Brandes

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Was it Freud or Costanza who once said, “The ego is not master in its own house”? Ah yes, Sigmund Freud. Costanza said something else about being master of one’s domain. George Costanza also once rebuked George Steinbrenner for destroying the institution of the New York Yankees "all for the glorification of your massive ego”.

For an entrepreneur, ego is both a critical ingredient in the recipe to build success as well as a foundational risk to predestine failure. A keen self-awareness of when to intentionally fortify one’s ego versus the appropriate time to acknowledge the fine line between self-confidence and pride in order to relinquish one’s ego may dictate your fate as an early stage company.  

Today we will discuss the importance of knowing when to have an ego … and its corollary of knowing when to check your ego.

Know When to Have an Ego

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When you first come up with an idea or start a new venture, expect a resounding chorus of naysayers to tell you every reason why your assumptions are flawed, no one will buy from you, someone else has already solved the problem better than you could, etc. In the early days, the entrepreneur must maintain enough self-confidence and commitment to ignore detractors.  

When AirStrip was conceived in 2004, think about what mobility meant. There were no iPhones, no tablets, no texts, no apps, no 4G speed. People carried flip phones, and if they were really progressive, they had a BlackBerry for emails. Remember the Palm Pilot? And yet the AirStrip founders were building a business betting that soon most everyone would be carrying a mobile device in their pocket that could eliminate the traditional geographical boundaries that have restricted healthcare.  

Further, we would have to rely on securing the attention and support from large, closed EMR and medical device companies to collaborate with — what was essentially at the time — two guys in a garage. Not many people inside or outside the industry could embrace their vision at the time. Committed to their mission and confident in their vision and abilities, Cameron Powell and Trey Moore tuned out the noise, relied on sage guidance from trusted advisors, and maintained their focus to deliver.

Two years later, not only had they secured multiple patents and FDA clearances, AirStrip delivered live clients that reported actual clinical and financial outcomes. Their progress attracted attention from a global healthcare technology company which signed a distribution agreement to sell AirStrip’s first product. Like Kramer ignoring Elaine’s negativity regarding his idea for a coffee table book about coffee tables, the AirStrip founders had enough ego to overcome cynics to earn early validation that they were on the right path.  

Further fortifying their boldness, a year later Trey had the vision to go “all in” on switching all development at the time to the newly announced iOS platform. Cameron had the intestinal fortitude to fire his Fortune 100 partner by canceling their distribution contract, believing that we could sell these innovations better ourselves by building our own team. Both of these bold strategies attracted a new round of confused critics.  The following years would prove these decisions to be key factors foundational to AirStrip’s market success.

Believe in what you are doing and let your passion and growth mindset bolster your self-confidence.

Know When to Check Your Ego

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While it is certainly important to have an ego, it is equally as important to know when to check your ego.  

The best entrepreneurs surround themselves with others possessing complementary skills and experiences. Be honest with yourself to know your own shortcomings. Diversify your leadership team to actively invite alternate points of view to support you make the best decisions. Recognize that the skills required to launch a new venture are different than the skills needed to scale a company, which are different from those needed to manage a mature organization.  

At AirStrip, after we secured Series A funding, our new investor wanted to hire a seasoned CEO to take that role from the founders. Cameron loved the company enough to bring in a proven healthcare technology executive to become CEO and catalyze the organization to a new level and scale, with Cameron enthusiastically serving as chief medical officer for the now rapidly growing company.

In contrast, consider the fate of the founder of a fantastic organization of which I was part in the early to mid 1990s. Many industry old-timers may fondly remember Enterprise Systems (or ESi) as a fast-growing, fun-loving pioneer of best-in-class resource management software for materials management and surgical services.  

As the company grew and took on outside investors, the founder and CEO, who passionately built an incredible business (which benefited earlier from his strong will and ego) resisted the changes needed to best position the company for its next chapter of growth. He was unfortunately removed from his own company, which created the opportunity for Glen Tullman, in his first healthcare CEO gig, to lead the organization through a successful IPO and eventual sale to HBOC.

Trusting the right investor is one of the most important decisions an entrepreneur will make to guide a founder’s understanding of his or her best evolving role. The wisdom of our Series A investor at AirStrip was invaluable as the company expanded leadership and attracted subsequent follow-on investment to give our founders confidence their company was in good hands as their roles changed.

After opening this column with words from Freud, consider Jerry’s prescription below to George to improve his life and how it may apply to improving your business.

“You know you really need some help. A regular psychiatrist couldn’t even help you. You need to go to like Vienna or something. You know what I mean? You need to get involved at the university level. Like where Freud studied and have all those people looking at you and checking up on you. That’s the kind of help you need. Not the once a week for eighty bucks. No. You need a team. A team of psychiatrists working round the clock thinking about you, having conferences, observing you, like the way they did with the Elephant Man. That’s what I’m talking about because that’s the only way you’re going to get better.”

Only through an understanding of human behavior by considering the unexamined intersection of Sigmund Freud and Jerry Seinfeld can an entrepreneur know when to be the master of your own house versus when to be the master of your domain. This may determine whether or not you are ultimately “in” or “out.”

Bruce Brandes is managing director at Martin Ventures, serves on the board of advisors at AirStrip and Valence Health, and is entrepreneur in residence at the University of Florida’s Warrington College of Business.

Startup CEOs and Investors: Niko Skievaski

Selling to a Health System Is Like Breaking Your Arm
By Niko Skievaski

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"Selling to a health system is like breaking your arm." I’m speaking with J. Simpson over a Chick-fil-A in the sticky mist of the three-story fountain at MD Anderson in Houston. Many things purchased for UT System’s health campuses come across her desk at the UT System Supply Chain Alliance, MD Anderson Cancer Center included.

"When you break an arm, the cast will be on for six weeks. There are plenty of things you can do to aggravate it and extend the pain, but there’s really nothing you can do to get rid of it faster. Sometimes you never really recover."

She’s referring to the notoriously crippling 12-18 month sales cycles in healthcare enterprise sales. You crack your ulna on the way into the sales meeting. If you’re lucky, you’ll get a purchase order in 12 months. However, most of the time you’ll be looking at up to 18+ months, if you get through at all. The problem is rooted in one thing that startups know very little about: budgets.

The budget for an upcoming fiscal year is approved about a month before that prior year ends. A month before that, department managers submit their budgets up the chain. And another tick before is when they start making "first cuts," where they generate a wish list of expenses for the next year, rank, then start hacking away. This process highlights the opportunity costs. If you want that toy, you’ll have to put down the others.

What this means for us is that if we haven’t already gotten a resilient thumbs up by first cuts, we’re not going to get allocated in that budget cycle. Hence, 12-18 months. Operational budgets are negotiated by employees at every level, and contrary to entrepreneurial optimism, there is no extra play money in the budget. For the most part, we’re talking about businesses that run an extremely tight ship with increasingly small margins. So what can we do?

  1. Ride the cycle. It’s pretty easy to find out the fiscal year of most of these organizations. Check out Guidestar.org. Most hospital systems operate as non-profits, hence the razor-thin budgets. Search for the hospital, click the “financials tab,” and voilà! Fiscal year-end minus three months gives you your target close date. Use this knowledge to allocate your time effectively as you work your pipeline. If you just missed a lead’s cycle, change your flight and drop in on someone else.
  2. Avoid the cycle. I’ve been describing the operational budget process. Things like that sweet software licensing contract you’re selling end up here. The other way they spend money is in the capital budget. These are one-off, large purchases of equipment or buildings (and the things that go inside them). If you can package up your offering as a one-time expense, you might be able to dodge the cycle. Otherwise, if you can get the purchase under $5K, you can bypass budgets all together. Those purchases can typically get swiped, invoice-free, on the department head’s corporate card. However, those cards are a one-shot-deal, so don’t count on using this for recurring revenue.
  3. The pilot close. The idea is to sell a free pilot, contingent on being written into the budget next time. This is a slight variation on the usual pilots we see pitched. Try to time your pilot so that your evaluated in time to get into the upcoming cycle. The most important part here is that your pilot has a definitive close date (the “initial term” in contract lingo), a point when you can ask them to shit or get off the pot. Identify the metrics, date of measure, and what it will cost you to give it away for free for a while. Negotiate this up front with the pilot terms. This smooths the process along and makes it much more likely to be included next go-round.
  4. Stop selling to enterprise health systems. Think of another revenue model that won’t be fraught with such dire peril. For instance, Lily Truong has an amazing gadget that you shove in your ear to (gently) drill out your ear wax. It’s 100 times better than a Q-Tip and less invasive than the normal saline flushes that pediatricians frequently push on terrified toddlers (and I’m not going to mention that weird candle thing). Wouldn’t all the clinics and children’s hospitals want to get their hands on one? Maybe, but Truong’s business will likely fail before she could get through the sale. Rather, she’ll ditch the cycle and bring her gadget into patients hands directly through sales off her site and consumer retailers. It’s a shame that the best tools won’t be used for the job in the doc’s office, but at least you can pick one up at the corner drug store and the innovation wasn’t wasted. Maybe that was an easy example, but I’ve seen people spend months trying to close enterprise deals when there’s a better buyer just around the river bend.

Hopefully some of these strategies will help. I’d like to thank Jess for dropping some knowledge on us youngsters. And to pad her resume, she’s likely one of the only people in any purchasing department who has actually done sales for a startup. It’s a breath of fresh air knowing there’s at least one out there, right?

Niko Skievaski is co-founder of Redox.

Startup CEOs and Investors: Bruce Brandes

All I Needed to Know to Disrupt Healthcare I Learned from “Seinfeld” (and “SNL"): Part III – Serenity Now
By Bruce Brandes

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Competition. A foundational element that drives greater success in a capitalistic society. And yet, examination of the array of perceptions and reactions regarding one’s competitors in business is both fascinating and revealing.

As we get to know an entrepreneur and assess a prospective investment, an important insight is their response to the multidimensional question, “How do you view your competition?” 

How an entrepreneur expresses awareness, insights, differentiation, and honesty in recognition of competition can illuminate market opportunity, commercial viability, and personal credibility. Do you deny, dismiss, disparage, or do you choose to recognize and embrace others in your space? How does that answer vary when discussing competition internally or externally? Does the stress of competition drive your organization to catalyze improvement or to react with paralyzing stress?

What lessons can be learned from the competitive battle between George Costanza and his nemesis, Lloyd Braun? Serenity now.

In our early days at Eclipsys in the late 1990s, the market was peaking with good, old-fashioned street fights to win new business from a hospital. An expansive bevy of vendors were lined up for marathon beauty pageants. Even Miss Rhode Island had a chance to compete. I was oriented with a friendly disdain for Cerner, our chief competitor of the day (hindsight obviously shows who got the last laugh). 

Each vendor’s sales reps were diligently trained to know as much about what the other company could not do as they did about what their own company could do. Accuracy and validity of this information was inherently suspect. Some vendors became adept at lying better than others could tell the truth. I sometimes wonder if this was how the Soviets learned about Americans during the Cold War.

Whether with a prospective customer, recruiting a new hire, or in seeking capital from an investor, there are several potential reactions when questioned about your competition and important implications for you in how your answer may be interpreted.

Reaction 1: Denial 

Apart from the Soup Nazi’s crab bisque, how many products or services today are so uniquely innovative that they are beyond compare? Yet some entrepreneurs communicate they are such game-changers that they face no competition. 

Upon further questioning, they may reluctantly concede that “doing nothing” is a prospect’s only alternative. While potentially valid on rare occasions for true breakthroughs, this is almost always wrong. The arrogance of holding this belief (and the manner in which this position is often communicated) generally discredits the individual and their organization. In most procurement processes in healthcare over the last quarter century, “doing nothing” has won more competitions than anyone.

Reaction 2: Disparagement  

Sometimes more intentional and overt than others, the speculation and innuendo concerning another company often elevates that other vendor’s status as a leader and reflects more poorly on you 100 percent of the time. 

When Seinfeld dentist Tim Whatley announced that he had become Jewish, Jerry disparaged Whatley to a priest claiming that he only converted to Judiasm for the jokes. "This offends you as a Jewish person?” inquired the priest. No,” replied Jerry. “It offends me as a comedian.” Jerry is subsequently outcast, labeled as an “anti-dentite.”

Reaction 3: Logo Bingo

Virtually every pitch deck will have one of two versions of this slide, both of which can be effective but dangerously predictable. 

The first version shows a checkbox-a-palooza with a limited number of vendor logos on one axis and a capabilities list on the other. I have never seen this slide that did not have the presenting company with the most check marks possible, which immediately raises the question what other capabilities are not on the list that should be. The second version depicts four quadrants which universally position the presenting company in the farthest upper-right corner with no competitive logos even close to the neighborhood. 

Reaction 4: Just Dance

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Put your best foot forward and honestly assess if this is the best mutual fit. Be realistic about how you compare with your competition and gracefully admit that you are not always the best choice. The decision may or may not be close, as Chris Farley and Patrick Swayze remind us in this classic skit from Saturday Night Live.

In a free and transparent marketplace, given fair access to decision-makers and equal opportunity to compete, the innovators delivering a superior solution with a compelling value proposition should have better than a puncher’s chance to succeed. Even better than Little Jerry Seinfeld in a cockfight. How you perceive, understand, and communicate your place in a competitive landscape is a critical factor that may dictate your market success. Here’s to hoping you don’t end up living in a van down by the river.

Bruce Brandes is managing director at Martin Ventures, serves on the board of advisors at AirStrip and Valence Health, and is entrepreneur in residence at the University of Florida’s Warrington College of Business.

Startup CEOs and Investors: Michael Burke

Working with Startups: Assessing Viability
By Michael Burke

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In a previous article about accelerators and incubators, I made an argument for why it can be advantageous for purchasers of healthcare IT solutions to strike up vendor relationships with emerging startups. A drawback, however, is that more startups fail than survive.  

In this article, we’ll take a closer look at the prospect of long-term viability for startups. To make it mildly entertaining (and to pay homage to Mr. H’s eclectic musical interests), we’ll compare it to a band trying to make it big in the music business.

What Are The Odds?

The stats related to long-term viability for a startup are not great. The rule of thumb popularized by the National Venture Capital Association is that 25 to 30 percent of venture-backed businesses fail.

However, this stat may be misleading and a little self-serving. Research from Shikhar Ghosh of HBS says that 75 percent of venture-funded enterprises never return cash to their investors, while 30 to 40 percent of them liquidate assets such that investors lose all their money.

The stats for a band trying to make it big are similarly grim. In 2009, only 2.1 percent of the albums released sold more than 5,000 copies. Of the lucky few bands that sold 5,000 or more albums, most didn’t make any money. The reasons most bands don’t make money are oddly similar to the reasons most venture-funded startups fail.  

Winning the Lottery

When a band signs a deal with a major label, they feel like they won the lottery and that their success is guaranteed. They often get a big advance. However, they use a lot of that advance for recording the album and paying professional fees to lawyers and managers.  

When the record is released, they may get lucky and sell a bunch of albums, but there are huge “recoupable” costs for video production, tour support, radio promotion, and other odds and ends. Even after selling a million records, they could still end up owing the label money.

When a startup signs a deal with a venture capital company, they feel like they, too won the lottery and that their success is guaranteed. They get a big cash injection (think “advance”). However, the cash doesn’t go in the shareholders’ pockets — it is used to fund and grow the business (just like a band uses the record company money for recording, promoting, and touring).

If the company gets lucky and folks start buying their product, things are looking good for the founders, right? Maybe. Maybe not.

When the startup signed the deal with the VC, it probably included a number of terms that are immensely preferential to the VC.  The deal probably included terms that allowed the VC to exert considerable influence (if not outright control) over key decisions. The deal probably included  “participating preferred” shares that allow the VC to recoup all their money (sometimes several times their original contribution) before the founders get a dime.  

This means that in order for the founders to earn any money, they have to be able to sell the company for quite a bit more than they may have originally expected just to pay the “recoupable costs” (like in our band example). They are clearly motivated to swing for the fences. Because they gave up control, they can’t choose to focus on organic growth or on operating a great business. Instead, they have to go for the grand slam exit strategy.

For better or worse, raising venture capital moves the goal line for an exit, both in terms of time and value. It changes the responsibilities and objectives of an operator / founder. They must grow bigger and faster, with everything that approach includes. This may require a completely different skill set than the existing team can offer.

If you are a music fan, you may have heard of a number of bands going a different route lately. Instead of working with a major label, they release records on their own or work with a smaller label. They may not gross as much, but they’re far more likely to have a higher net. Possibly more importantly, they get to control their own destiny. Similarly, a startup may choose to bootstrap the endeavor on their own or they might take smaller investments from friends, family, or angel investors. This is the path we’ve taken with Clockwise.MD.

Either path is valid. It really depends on the goals and the circumstances.  

What Really Matters for Customers

Based on what we’ve learned about the risks of working with a startup, what should purchasers of health IT do? That depends.

A health system that has its own early stage fund ostensibly knows the risks and probably doesn’t expect all of its portfolio companies to succeed. Even without a captive fund, most health systems can control the environment to some degree by leveraging their network to boost the success of the startup through referrals. The basic goal should be to avoid the 30 to 40 percent of startups that end up liquidating assets.

If they’re simply trying to solve a problem with technology and are considering a startup’s offering as a possible solution, they can mitigate risk through some simple reflection and investigation:

  • Do they want to influence or control the feature set of the product? If so, they should jump in early. Companies often work hardest to serve their early adopters. Those adopters can have great influence in product development and pricing, which can serve everyone well over the long term.
  • Does the startup have traction? Has it achieved critical mass in the marketplace? Sometimes a startup has a compelling solution but lacks market traction or reference sites to get the customer comfortable with investing time and money. In this case, vendors can enter into a beta agreement to gain the opportunity to prove their value. This can de-risk the relationship.
  • How is the startup funded? What does its financial picture look like? Don’t be afraid to ask. Venture capital support certainly may not hurt a startup’s viability, but it should not be a requirement.
  • Talk with current customers to get an idea of how well the solution works and the level of support and flexibility at the company. For vendors, reference sites are worth their weight in gold.

Working with a startup doesn’t have to be a nail-biting adventure. It largely depends on understanding clearly what you hope to accomplish and doing your due diligence.

I’ll close with a quote from Mark Zuckerberg, founder of Facebook:

"The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks."

Michael Burke is an Atlanta-based healthcare technology entrepreneur. He previously founded Dialog Medical and formed Lightshed Health (which offers Clockwise.MD) in September 2012.

Startup CEOs and Investors: Brian Weiss

Startup CEOs and investors with strong writing and teaching skills are welcome to post their ongoing stories and lessons learned. Contact me if interested.

A Tale of Two Healthcare Worlds
By Brian Weiss

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Many of my peers in the healthcare IT startup world, like me, are developing applications and solutions intended for a new world of consumer-centric healthcare IT, or CCHIT (I just made up that new CCHIT acronym as part of my contribution to world sustainability. Since what was formerly known as CCHIT has ceased operations, the acronym is ready for recycling.)

Have a seat and join me for a tour of CCHIT-land. You must be this tall to ride, keep your arms and legs in the vehicle at all times, and no flash photography, please.

Over on your left as you look out on the horizon, you can see deceptively colorful cloud-like structures. Those are high-deductible health plans and self-insured employers. See the little figures underneath them with the empty wallets that look like they are about to fall over? Those are consumers who are becoming more conscious of the costs of their healthcare.

Whoops! My mistake. Those are the ones on the right. The ones are the left are actually the physician practices dealing with 30 percent collection rates as the consumers on the right ignore their payment notices. You can tell them apart because the physician practices are the ones with the charts behind their backs titled “Same-Day Cash Discount Rates.”

Watch your head under the overpass. Now back over there, thrashing around between the various giant insurance company logos, are employee health plan benefit managers switching plans every year to get a better deal.

More Like Other Industries?

The CCHIT world is one in which high-deductible-plan consumers and self-insured employers increasingly seek to transact healthcare much as they transact travel services, retail purchases, and employee benefit programs.

Allegedly fueling this trend will be the availability of alternative forms of healthcare services – particularly those intended for people who are generally healthy – that were formally the domain of a traditional primary care physicians and hospitals. Telehealth services, pharmacy-based clinics, urgent care centers, home monitoring and testing kits, employer-provided campus clinics, and in-office wellness visits will compete for healthcare services wallet share.

Similar dynamics will occur in the area of high-margin routine testing from imaging centers and labs. The problematic but already well-established trend of stratification of healthcare services — from low-end, Medicare-reimbursed to high-end, spa-style luxury concierge — will continue. New forms of practices will appear, targeting various socioeconomic groups along the lines of the model of the different types of restaurants from “all the grease you can instantly eat for $1.99” to “hundreds of dollars for food you can’t really find hidden within the art-deco presentation.” An ever-increasing percentage of basic healthcare services will be transacted in cash.

Little Susie Has a Sore Throat. Where’s My Smartphone?

Whether it’s Big Joe tracking his type II diabetes or Little Susie’s mom deciding what to do with the sore throat Susie woke up with this morning, the starting point will be a smartphone for search, comparison shopping, advertising, online ordering, in-drive navigation, loyalty points, and all the rest of what makes us decide where to get our morning cup of coffee, which hotel to book in Barcelona, or how to get a ride somewhere.

In this world, notions like “Patient-Centered Medical Home” (in the sense of a doctor getting the new Medicare CCM reimbursements, not the home where the patient actually lives) takes on many flavors and meanings, from specialty patient advocate/consultant concierge services through “do it yourself” (at your real patient-centered home) with a mobile app.

In this CCHIT world, the idea that patient records are stored exclusively in big EHR systems — which have been networked together with patient matching algorithms (or someday, congressionally mandated national identifiers), record locator services, and on-demand copy-paste of entire EHR records from one system to another – seems about as relevant as the old mainframe-based travel agent systems that spit out those triplicate paper tickets with the red ink.

Fact or Fantasy?

If the CCHIT world is coming any time soon, these efforts seem a bit silly:

  • Five-year plans to achieve basic healthcare data interoperability via newly developed standards for provider-to-provider exchange.
  • EHR vendor-driven alliances.
  • Throwing more government money down the drain on more life support for state HIEs that will never be sustainable.
  • Trying to force competing healthcare providers to share their customer data with each other.
  • Waiting for acts of Congress to issue national IDs so we can create some grand interconnected database that everyone can access..

Of course, there’s absolutely no guarantee that world is coming any time soon. Even if it does eventually arrive, it’s not clear how it will coexist with the extensive parts of the healthcare system that will likely continue to operate pretty much as they do today.

What happens with the increasingly large percentage of consumers who are not “generally healthy” that can’t be taken care of properly in the CCHIT model? I’m sure many readers are aware of plenty of other flaws in the CCHIT thinking that we can consume healthcare services like online videos and taxi rides.

There are many complex variables impacting how things will play out. Anyone who wants to predict how things will look in three, five, 10, or 20 years is rather brave. No, they’re not brave if they write an article with their predictions — that’s easy. They are brave when they build companies based on those predictions and visions.

The HIT Startup Dilemma

Which brings me to the point of all this.

The innovative and disruptive healthcare IT startups of tomorrow are forced to do two contradictory things. They have to design solutions for a healthcare world that doesn’t exist (and likely will never exist exactly as they imagine and envision it today) while delivering revenue-generating solutions for the healthcare world that does exist today.

This gets surreal when you watch a startup founder with a CCHIT-intended solution pitching to a room full of big healthcare system execs who want to hear nothing about the CCHIT world. Suddenly the founder’s consumer-centric clinical data integration solution is ideal for provider-to-provider data exchange without patient involvement and consent. The directory service for consumer-centric provider or plan selection is ideal for keeping patients in-network. And on it goes. 

Why? Because that is what generates revenue, pays the bills, and justifies the next round of investment funding. For realizing the very different CCHIT vision.

One of the great things about the startup marketplace is that it drives creativity that never ceases to amaze me. I have seen some really great pitches from colleagues of mine that actually had me believing that you can do both at the same time. I’m still figuring out my “have your cake and I get to eat it too” story.

Though it’s not explicitly spelled out that way, I believe that’s what the venture capitalists I need to woo in the coming months expect me to deliver. They want a disruptive vision that offers the dream of future revenues. Value that will only be awarded to those who dare imagine and create solutions for the new CCHIT world, with a clear ROI-driven revenue model for today’s PPCHIT (provider/payer centric HIT) world (yes, I made that acronym up as well, but I don’t think it was ever used or ever will be again, although I just checked and the domain name is taken).

As noted, the CCHIT and PPCHIT visions are not “either-or” alternatives, so it’s not just a question of transition timing. That’s why despite some of my snarky comments that probably have me on the blacklists of some of the big EHR vendors I need to partner with in the future to be successful (hey, nobody said I was really any good at my startup CEO job), we need the incremental next steps along the current path driven by the experienced industry leaders, the established vendors, the standards organizations, and the government funding programs (I’m trying to correct a little, OK?)

In parallel, we also need to allow for the experimentation and disruption that comes from innovative challengers who think that the healthcare emperor’s clothes – which so distinguish him from all the other industries in the kingdom — are increasingly invisible, to the point where we need to question if they’re real.

It’s a tightrope walking act. I find that I regularly fall off the tightrope on one side or the other. Every day I feel the bruises of those falls. Fortunately, as a small early-stage company, the tightrope I’m on isn’t that high off the ground yet, so I can get still brush off the dust and take another step. Forward, I hope.

Brian Weiss is founder of Carebox.

Startup CEOs and Investors: Bruce Brandes

Startup CEOs and investors with strong writing and teaching skills are welcome to post their ongoing stories and lessons learned. Contact me if interested.

All I Needed to Know to Disrupt Healthcare I Learned from “Seinfeld”: Part II – And YOU Want To Be My Latex Salesman 
By Bruce Brandes

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Upon being granted an interview with IBM while in business school for a chance at my first real job, my initial enthusiasm was slightly curbed by the fact that the position was to become a sales rep. With an undergraduate degree in finance and an MBA, I had imagined a career on Wall Street. 

A sales rep? The vivid composite in my head was of some guy in a shiny suit, with a pinky ring and remarkable hair, trying to sell me something that I really did not need. Just like George Costanza’s dream of pretending to be an architect or a marine biologist before compromising to a desperate hope of an imaginary job as Jerry’s latex salesman, I would have to reconcile the dream with reality.

My IBM sales school training quickly helped reorient my mindset with my new responsibilities as a marketing representative (I was relieved to hear that the dirty word “sales” was not in the official title). One of my first and most enduring lessons came at a meeting of the executive leadership team of a large hospital in New Orleans, my IBM regional executives, and me. As the conversation turned to a mention of a product I had just learned about in training, I enthusiastically interjected with the sales pitch I had recently memorized. The hospital COO interrupted me with the rebuke, “You don’t know what you don’t know. Please be quiet.” Ouch. 

After the meeting, I expected my manager to explain IBM’s termination process. Instead, he suggested if the instinct popped into my head to blurt out a verbal sales catalog, to bite the tip of my tongue behind my lips as a reminder to keep listening and ask another question or two before speaking.

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I soon appreciated that if I first focused on understanding the opportunity or challenge my prospective customer sought to address and then honestly assessed the likelihood that the solutions I represented could help, “selling” did not have to command the same disdain as Newman entering Jerry’s apartment. In fact, it is quite satisfying to help address a customer or market need better than anyone else. That has to be your goal, not earning a commission. A commission check should be the result of your achieving that goal, not the goal itself.

I have also grown to appreciate that “sales” does not have to be a four-letter word. Few businesses can afford to make payroll without having paying customers who are sold on what they do. Each person in the company — from the receptionist to accounts payable to the housekeeping staff — play a role in what ultimately contributes to an organization’s market success. In fact, in some way, everyone is selling something.  Doctors are selling their medical care. The server in a restaurant is selling a dining experience. J. Peterman is selling the urban sombrero.

From a sales perspective, today’s healthcare landscape (as discussed in part 1 of this series) is the opposite of what it was 25, 10 or even five years ago. Historically in the US, our 5,000+ hospitals enjoyed individual freedom in their buying processes. Within each hospital were many managers with decision-making and budget authority for certain products and services. In parallel, independent physicians had broad flexibility in how vendors could earn their influence. 

The role of the sales rep for a vendor was important to lead the navigation of an over-extended procurement processes which included cold calls, demonstrations, requests for information, dinners and dancing, requests for proposal, reference calls, golf, site visits, etc. A handful of dominant vendors led with a sales strategy of FUD –fear, uncertainty, and doubt. No one ever got fired for buying IBM … until they did.

Given rapid consolidation, many hospitals are now are under more centralized control of larger regional and national health systems. Financial challenges have restricted purchasing authority to a limited number of actual decision-makers. A new regulatory environment and group purchasing contracts limit sales reps influence over doctors’ buying decisions. Industry pressures demand that procurement processes and implementations accelerate for solutions with meaningful promise.

At the same time the market has many fewer buyers with greater urgency, there has been an exponential explosion of the number of vendors trying to sell to these poor, overextended, confused people. Most new vendors are hiring the same salespeople who were historically successful (programmed and rewarded) under the old model that is less likely to be effective now. Hiring sales reps without healthcare experience creates a different set of issues. The net of the story is that traditional sales strategies and tactics (and the simple math) of how buyers and sellers engage no longer work for healthcare.  

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Healthcare executives are overwhelmed with a universe of shiny things, trying to differentiate the sales messages from companies that seem as fictitious as Vandelay and Kramerica Industries. We need innovative companies with collaborative sales approaches that are "real and spectacular”, enabling healthcare organizations to address current challenges and seize new opportunities. How many of you Seinfeld fans think you could win that sales “contest?”

Bruce Brandes is managing director at Martin Ventures, serves on the board of advisors at AirStrip and Valence Health, and is entrepreneur in residence at the University of Florida’s Warrington College of Business.

Startup CEOs and Investors: Matthew B. Smith

Where’s the Interest in Healthcare Cybersecurity?
By Matthew B. Smith

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The President’s State of the Union (SOTU) address mentioned cybersecurity concerns and might serve as a rallying cry for greater adoption in the healthcare industry. We certainly must hope the address will spark a more forceful interest in healthcare cybersecurity.

It is curious how the many non-healthcare breaches (principally banks and retailers) that have received national attention and the financial penalties to healthcare providers under HIPAA and HITECH who have suffered lost and breached patient data (though less well-publicized in the national media) have not caused the groundswell of attention to this issue. As patients assume a far greater role and informed involvement in their care, the security of their personal medical information should elevate as a concern.

However, I do expect that the older generation, as characterized by the Baby Boomers, will express a far greater concern about medical data security. The Xers and Millenials don’t seem to hold personal information in the same high regard as the oldsters and may not be as demanding about its importance. Social media seems to have not created a concern about personal information security among them. It would be a great mistake to assume that this is the standard for healthcare cybersecurity. The higher medical users (chronic and elderly) will be the drivers of this requirement as they will be in more consistent contact with the system.

It is curious that medical device, equipment, and instrumentation (DEI) manufacturers have not stepped up in unison to include cybersecurity as a component of their products. I suspect that EHR vendors and providers (especially those with foresight) who see mobile diagnostics and therapeutics as a reimbursable and cost-effective (we hope!) means of care delivery will be the motivators of this adoption. Patients as consumers will also drive this for reasons noted above. What also is desperately needed is national healthcare cybersecurity standards or certifications so that DEI makers will have an easier time incorporating these much-needed technologies to secure medical information, regardless of the source or the recipient of the medical data.

As a frontline participant in the battle for total healthcare data security, we are finding the education of the DEI makers to be the evolutionary equivalent of watching dinosaurs become extinct. The way to true healthcare data security will have to make it easy for DEI makers to adopt independent third-party data security. Too few have shown the foresight to lead in this setting, citing communications with EHRs and other issues as more pressing coupled with them not hearing a demand from their provider clients. Perhaps they are not listening very well.

National technical standards, well documented for other industries, hold the answer for our industry as the approach so the DEI folks can simply pick and choose a qualifying technology that meets the standards. The DEI folks also show a bewilderingly sad understanding of where the Affordable Healthcare Act is taking reimbursement, which we fundamentally believe will do away with the DEI capital budget and replace it with access to these products on a monitored per use/per subscription/per census day or equivalent acquisition payment mechanism with healthcare cybersecurity monitoring embedded in the payment schema.

The precedents for this movement can be seen in the historic reimbursement changes wrought when DRGs were instituted, when cancer centers were developed, and when patient advocacy services arose. All met opposition, but became new ways of conducting business in the industry. Now is the time for the insistence upon healthcare cybersecurity information technology.

Dinosaurs beware!

Matthew B. Smith is president and CEO of
SecLingua of Shelton, CT.

Startup CEOs and Investors: Bruce Brandes

Startup CEOs and investors with strong writing and teaching skills are welcome to post their ongoing stories and lessons learned. Contact me if interested.

All I Needed to Know to Disrupt Healthcare I Learned from “Seinfeld”: Part I – Do The Opposite
By Bruce Brandes

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In my continued efforts to learn from progressive healthcare thought leaders, I recently read Eric Topol’s new book “The Patient Will See You Now.” I was heartened to see Dr. Topol’s opening chapter illustrate his first point with an intellectual / cultural equilibrium I can appreciate … through an amusing story from “Seinfeld” about Elaine’s medical record woes. That anecdote caused me to reflect on how my favorite iconic TV show about nothing is instructive for the entrepreneurs who strive to reinvent our healthcare delivery system.

Cautionary note:  my comments in this series will assume that HIStalk readers have at least a baseline knowledge in all things “Seinfeld.” I apologize in advance to the two or three folks out there who have not seen (or heaven forbid, did not like) “Seinfeld.”

Do The Opposite

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If you are relatively new to healthcare (and missed Vince Ciotti’s insightful HIStalk series on the history of healthcare IT), you may have asked yourself how Epic became so epic. Like George Costanza’s approach in landing a job with the New York Yankees, Epic did the opposite of what every other healthcare information systems vendor did.  

Most enterprise clinical systems originated as either hospital-centered extensions of patient billing systems, intended to capture just enough clinical information to get the bills out the door (SMS and HBOC) or as an expansion of a niche departmental system (Cerner and Meditech). Epic, on the other hand, began as an ambulatory system focused on winning the hearts and minds of the physicians. Those same physicians would later have significant influence over hospital decision-making. 

Rather than deploying armies of salespeople, Epic let their customers sell for them. Rather than making shortsighted decisions to placate quarterly earnings reports, Epic remained privately held. Rather than growing by multiple acquisitions, Epic expanded organically and built their own software on a common database. Epic had successfully broken down the departmental silos of laboratory, radiology, and pharmacy as well as ambulatory and inpatient records so that the health system could be unified on a singular platform.

However, the radical changes underway in our healthcare system now create an interesting parallel from Epic’s history lesson. Hospitals that are lauded for successfully unifying on a single EMR are as limited today in an Accountable Care Organization or Clinically Integrated Network as the historical single hospital was limited by the siloed departmental systems. To achieve population health, information must be openly shared across disparate systems and organizations. The sky-high costs, antiquated technology, and limited interoperability inherent in these legacy healthcare IT investments may prove to be the Waterloo for hospitals struggling for economic viability and competitive relevance in need of flexibility and agility in a value-based care world.

Emerging, disruptive companies should learn from history – and do the opposite. What might “opposite" look like from the traditional vendors with whom healthcare organizations have become accustomed? Some ideas and examples:

  • Free vs. expensive (Zenefits, Practice Fusion)
  • Payments aligned with benefits vs. massive capital outlays with vague ROI promises (Athenahealth)
  • A better experience at a lower cost vs. causing customer dissatisfaction at higher additional costs (Theranos)
  • Simple vs. complex to buy, implement, and use (Apple)
  • Openly shared, interoperable data vs. closed, proprietary systems (anything built in the last few years)
  • Mobile-first (information to you) vs. desktop (you go to the information) (AirStrip, Voalte)
  • Cloud-based SaaS vs. installing and maintaining software (Salesforce)

But beware, big-bang industry disruptors. Over the last several decades, the healthcare IT road (except a certain one-mile stretch of Arthur Burkhardt Expressway) has been littered with major international corporations that saw gold, Jerry, GOLD, in healthcare and failed (American Express, McDonnell Douglas, Alltel, etc.). Healthcare is indeed a “bizarro” industry – almost the opposite of every industry you’ve ever encountered. 

That said, the underlying economic, technical, and clinical restrictions that have historically hindered change are lessening. New mainstream technologies that we all use in our everyday lives are resetting expectations of the tools we use in our healthcare workplace.  

Now is the time for innovative entrepreneurs to consider jumping into the healthcare pool – but make sure your target market’s water isn’t too cold in order to avoid “shrinkage” of your investment.

image

"My life is the complete opposite of what I want it to be. I should’ve done the complete opposite of whatever I’ve done up till now.”

Is this quote from George Costanza or a healthcare system you may know?

Bruce Brandes is managing director at Martin Ventures, serves on the board of advisors at AirStrip and Valence Health, and is entrepreneur in residence at the University of Florida’s Warrington College of Business.

Startup CEOs and Investors: Speculating Scribbler

Finding Those First Few Paying Clients
By Speculating Scribbler

Having been an investor in and advisor to a number of various stage healthcare startups, I have observed a common constraint that applies to nearly every startup before they enjoy early success: finding those first few paying clients. They might have created the best product in the world, a revolutionary way of doing things better or faster, or a way to fill a void that has never been filled. They might have a brilliant team of tomorrow’s Mark Zuckerbergs and Steve Jobs. Without some early clients taking a chance, however, the potential could sadly go untapped.

Startups can have some inherent advantages over the big guys. They are nimble, and if they have the right team, can adapt and adjust their product faster than a large company. They generally have no sacred cow product lines, so the “Innovator’s Dilemma” that can curse large companies that protect cash cow product lines often doesn’t apply to them.

Still, it can take a leap of faith for a hospital, health system, or physician group to engage a startup. Even as an enthusiast of startups, there are some that I would do business with in a heartbeat if I were a hospital, yet others that I would never take a chance on. The old adage that, “You don’t get fired for buying IBM” applies in healthcare, too, even today in the age of the cloud computing and mobile everything.

For those who want to give that smaller, hungry company a chance at earning your business or who need to prove to your bosses or board that you’ve done your diligence before suggesting engaging a startup, here are a few key questions to ask to cover your bases and get comfortable with the startup.

 

What Will This Contract Do To Your Business?

You don’t need to know how profitable they will be or what kind of revenue increase your order would do for them. It is fair, though, to understand what sequence of events scaling up to serve you might trigger. Maybe they will need to change their server structure. Maybe they will need to set up the support department they have never needed before. Perhaps they will need to double their development staff with to-be-determined resources.

Whatever the case, the key is to have the open discussion and get comfortable with their plans. A thoughtful company has thought a lot about how they would scale to accommodate your business. At a minimum, they should have growth plans and timelines that are clear and that you can get comfortable with. The red flag is if they either don’t have a plan or give you the impression they aren’t rigorous enough about the scaling question.

 

Am I A Sustainable Client?

You might be tempted to get an insanely good deal from the startup founder who is hungry for your business. Given the lean nature of most small companies, there should in fact be a very good value proposition for you.

Don’t overdo it, though. The best long-term answer is for you to get a deal you can feel good about and for the startup to have enough revenue flowing in to continue to improve their product and an incentive to spend the time needed to serve you with topnotch attention. Startups often forge new ground in a space that does not yet have tried-and-true pricing mechanisms, but be sure that your business deal gives the company the cash flow it needs to do a great job for you.

 

Are You All Doing This Full Time?

This is one of the questions I ask as an investor and that I would ask it as a potential customer as well. If you are entrusting a startup to fill a key need that you have, you should expect that the people you are talking to are “all in.” It might be a relatively small team, but it is important they are fully committed to their business.

I have observed startups run by people who are moonlighting or trying to get the company going on evenings and weekends. I admire bootstrapping and the founders just might be brilliant and could be the next big thing. If I were a hospital system or physician group, though, I would insist that I only contract with someone who is fully committed to their business. It is a lot easier to walk away from a venture and your contract if you still have a nicely-paid job to go to on Monday morning.

 

How Will Our Organizations Communicate?

Frankly, this kind of expectation-setting question should be done with companies of any size. You probably have experience with big guys who have 40 percent market share dropping the ball on this.

A startup sometimes does not have their customer service or account management infrastructure fully built out, so it is a good question to explore. You just want to be sure you have a clear path for communications to and from the company, whether that be escalating an issue or having regular status updates. A red flag is if the CEO dismissively says “Oh, just call me on my mobile if you need anything.” While it might be flattering to have the founder on your speed dial, it is a sign that they have not thought about how to scale up for multiple customers like you.

 

How Are You Protecting My Data?

I would never suggest that just by virtue of being a startup, a small company is not as good as protecting data. In fact, some of the startup firms I have worked with are doing things with data protection that could set a standard for the rest of the industry. But in the spirit of being able to tell your leadership and board that you responsibly vetted the startup, explore the topic. A well-run startup will welcome the question because it gives them a chance to show that they are a step ahead of their competitors.

 

Conclusion

All of your go-to large vendors were startups one day. I see first hand many startups filling niches that have gone ignored too long. You might find that engaging the right startups could be the start of a great, long-term partnership for your organization. Just ask the right questions first. The mediocre startups will demonstrate that they aren’t ready for your business, but the good ones will show you that they can do things for you that nobody else can.

The author is a healthcare angel investor, board member, and mentor to numerous startups.

Startup CEOs and Investors: Michael Barbouche

Why I’m Happy That I Did Not Go to the JPMorgan Conference (Or, You Can Go Back to College)
By Michael Barbouche

10-9-2013 11-34-07 AM

Now in the sixth year of my entrepreneurial journey with Forward Health Group, one thing is abundantly clear—I don’t watch TV. No, really. I know nothing. “Breaking Bad?” That’s my email inbox. Many things in my world come down to the wire, but not “The Wire” [1]. About the only thing I do try and sneak into the mix is college football. [2] Fall Saturdays are my day. Social media? The only social texting in my life involves my beloved Badgers and occasional jabs at impostors. [3]

Now that the college season has ended, I will miss many things:

  • Tailgating.
  • The University of Wisconsin Marching Band, the best college band, ever, in Intergalactic [4] History.
  • SEC-on-SEC cannibalization.
  • The games that immediately follow Notre Dame’s annual 7-0 start.
  • Dish Network’s kangaroo-imbued commercial (you know, the one with Heath Shuler, the pretty boy from USC, and The Boz!)

I was reminded of Dish’s fluffy kangaroo as I read Marty Felsenthal’s very entertaining (and accurate) post last week. Having attended JPM last year, let me be the first to share the secret with my struggling peers. Yes, you can go back to college! JPM is nothing more than a return to your freshman year—cluelessness, social awkwardness, and the occasional spilled beverage.

Let’s begin.

 

Cluelessness

The first thing you need to know is that the JPMorgan folks must be pretty powerful because even the Google can’t point you to the conference registration page. Try a search right now. Here’s what no one tells you—JPMorgan is like that blowout fraternity party you didn’t attend during your first week on campus. If you don’t have an invite, well, sorry, you’re not going to the actual party.

And, as a matter of record, freshmen just don’t get invited. Those are the Rules. I spent three days hoofing up and down the hills of San Francisco and never once saw your typical conference nametag. No lanyards were spotted. I would ask people, “Hey, where is the conference — you know, the actual JPMorgan event?” None of the folks I met could give me the answer.

Cunningly, JPM is setup just like your college class schedule. But for the first couple of days, you are the only person that doesn’t know how it works. Soon, however, you begin to understand the cryptic system. Meetings are scheduled on the hour, every hour. The meetings really can’t last more than 40 minutes because you need to sprint to your next meeting. Invariably, you are late to every meeting, and as you the entrepreneur stare at the clock, the fear of outright missing the next appointment overcomes your consciousness. Like the phantom fear of missing a final exam, you begin to sweat for no good reason.

 

Social Awkwardness

Imagine a square drawn around Union Square—four blocks by four blocks. Think of this as a human dog park. There are people running all over the place with no particular destination in mind (how else to describe the same people running the opposite direction four minutes later?) [5] The entire reason you are in San Francisco is to engage in brief, repeated sniffing sessions. After your fifth pitch session (of the day), you begin to figure out a few of the signals. [6] By Day Two, you have the routine down:

Savvy Investor (in his 43rd pitch meeting of the week): “What were your revenues last year?”

Struggling Entrepreneur: “We had a pretty good year. We did [$x]! We are really excited about this year—we think we can do [$4x], which is really great.”

Savvy Investor: “That is great. Wow. I must say, however, that our minimum investment for this fund is [$15x]. We have invested in companies as low as [$10x], but that’s atypical.”

[two minutes of awkward stumbling and rambling comments by Struggling Entrepreneur …]

Savvy Investor: “We definitely want to stay in contact with you to monitor your progress. Is it OK if we follow up with you later in the spring to see how you’re doing?”

Struggling Entrepreneur: “Sure. And thanks for the bottle of water.”

 

Occasional Spilled Beverage

On that Tuesday morning of JPM week, you are filled with excitement. The reason you are in San Francisco in the first place is because all of the analysts [7] at VC firms use the exact same Salesforce install with the exact same auto-email template. Beginning in late November, the auto-email template updates to include this sentence:

“Also, wanted to set a time to meet with you at JPM.” [8]

As you scan your full roster for the day, you see that the first discussion lists “2317 HYATT” as the meeting location. You are six blocks away from Union Square and you realize that there is a plurality of hotels named “HYATT” in San Francisco-proper. [9] When you get to the correct Hyatt, your native instinct is to look for the conference rooms. Oddly, when you get off the escalator, the conference rooms are named after landmarks — no numbers. A few minutes of elevated heart rate leads to a discovery—23rd floor! You get off on the 23rd floor, and, again, look for conference rooms. No such luck. You walk down the corridor of hotel rooms. Whoa, room 2317. Could it be? Seriously? You knock. The door opens. There are numerous men dressed [10] in those flat-front, skinny lapel suits that only the “I’m training for an Iron Man right now but I’m doing a half in April” triathlete crowd wears. This is your meeting location.

Think of the scene in the hotel room like the pre-party before the house party hosted by the older brother of your new college roommate’s friend’s cousin. You “know” only one person in the room—the analyst guy who emailed you to setup the meeting. There are not enough chairs. The bed has been moved into the corner to serve as a sectional sofa. The coffee table is in the corner serving as a buffet table /business card holder [11] / collection point for half-emptied water bottles. There are more butts than there are flat surfaces. Someone will be standing the entire meeting.

The hotel room door opens often as new people in skinny suits enter the room and current participants exit gracefully. That is, until one of the bed-sitters has to be excused for another meeting. This is what triggers the coffee or juice or soda spill. Thankfully, the beverage vessel is usually half-empty [12] and your analyst friend quickly jumps in with a bathroom towel to avoid a dry cleaning situation.

Though I did not attend JPM this year, I have few regrets [13]. If you are an entrepreneur and you are contemplating JPM in 2016, make your hotel reservations [14] soon. Your email invitation from that analyst is already in the queue.

Michael Barbouche [15] is founder and CEO of Madison-based Forward Health Group. At the 2014 JPM, Michael had dinner with Marty Felsenthal in the Wednesday evening 7:00 PM-8:00 PM slot.

[1] Note for Millenials–this is a reference to an HBO program that has not aired in years. You should be able to stream from your parent’s HBOGO account.

[2] True confession—I TiVo “College Gameday” to watch Lee Corso put on the headgear.

[3] Yeah, I’m talking to you, Goldy Goopher fans.

[4] Unclear if Epic has exclusive use of this term in the health IT space, so thought it was prudent to footnote. Further research needed on specific citation required.

[5] See below for explanation.

[6] If someone refers to you as “Jugdish, Sidney, or Clayton,” and that is not your name, the investors are likely to be working their iPhones before you have even finished your intros.

[7] The people who email incessantly to set up a call to pump information out of you.

[8] If you want to spend $145, you can verify with your lawyer—this simple inquiry is not the legal equivalent to a court-issued summons.

[9] During JPM, it is not uncommon to hear numerous exclamations that contain the phrase, “F*#@%ing Google Maps!”

[10] Ties are strictly prohibited. Obviously.

[11] At one of my meetings in 2014, there were business cards (face up) from two of my direct competitors.

[12] For the record, I view the vessels as half-full.

[13] I’m overdue in connecting with Ben Rooks and Michelle. Guys, we should chat soon!

[14] www.hotwire.com

[15] When I was in college, adding footnotes to your paper was complete pain in the ass. Now, it is so simple.

Startup CEOs and Investors: Michael Burke

Accelerators and Incubators: Have They Jumped the Shark?
By Michael Burke

image

It seems lately that startup incubators and accelerators have become like belly buttons — everybody has one. The number of healthcare-specific platforms has increased dramatically over the past few years. A skeptic might ask if we are in an accelerator / incubator bubble. A more important question might be, “Why should I care?”

If you’re an aspiring startup founder, you may care. The well-known accelerator/incubator platforms like Techstars and Y Combinator can serve the same purpose for a startup founder as a Harvard MBA does for a young executive who wishes to climb the corporate ladder. They open doors and provide a measure of validation.

The jury’s still out on whether the newbie platforms will offer similar cachet. One of my fellow “villagers” at the Atlanta Tech Village, Kyle Porter (Founder/CEO of SalesLoft) mentioned that his experience at Techstars Boulder with Brad Feld immediately prequalified him and his company in the eyes of investors, partners and potential employees. He states:

“Accelerators taught us how to navigate the investor landscape, put together a presentation, and connect with relevant mentors.  And the networking benefits are insane.”

If you are an investor, you definitely care. A friend of mine, Greg Gottesman, is uniquely qualified to comment. Greg is an informal advisor to Clockwise.MD (my startup), and he has a vested interest in the topic. In addition to founding Rover.com and serving as Managing Director of Madrona Venture Group, he also leads Madrona’s recent leap into the incubator world: Madrona Venture Labs. Here’s what he has to say:

“To the extent that accelerators and incubators enable more ideas to be tested quickly, I think they are a good thing. But most of these early concepts won’t and shouldn’t get funded with significant dollars. The best teams and ideas — the ones with customer traction and viable business models — will stand out relatively quickly. I wouldn’t look at the percentage of successes these accelerators and incubators create over time, but rather whether they can produce a small number of meaningful winners.”

Accelerators and incubators can clearly help investors sort the wheat from the chaff early in the life of a startup. David Cummings is a serial entrepreneur, partner in Atlanta Ventures (which has its own accelerator), and creator of the Atlanta Tech Village( a “community of innovation powered by a 103,000-square-foot building”). The Tech Village is a big laboratory of over 100 startups ranging from companies consisting of a single person to upwards of 50. In addition to the ping pong tables, gaming consoles, and free Cokes, there’s also a ton of exciting stuff happening — lots of big successes and big failures, all of which are observable to the community there. It’s not strictly an accelerator, an incubator, or even a co-working space. It sort of combines the best of all those platforms. David states the advantages simply:

“[These platforms] help bring structure to a messy process and increase the likelihood of success.”

That’s fine for an aspiring founder or an investor, but how does that help the purchasers of the innovation these platforms are supposed to generate? What’s in it for health IT customers?

My company has had a number of big customers choose us over larger competitors. These customers know that a startup (i.e., a company whose size makes them more flexible and responsive) can give them a greater measure of control over the process of solving a problem with technology. They assume (correctly) that they’ll have more influence over the final deliverable than they might if they worked with a bigger company. A startup from an accelerator, incubator, or “community of innovation” can – as David Cummings pointed out – increase the likelihood of success and mitigate the risks for the customer.

Donna Hyland is the CEO of Children’s Healthcare of Atlanta (CHOA). CHOA is one of the largest and most recognized health systems in the US dedicated to the care of children. She and her staff have been regular visitors to the Atlanta Tech Village and work with several companies from the village, including Clockwise.MD. Here’s what she has to say:

“Atlanta is very fortunate to have a burgeoning community of technology innovators and entrepreneurs. Children’s Healthcare of Atlanta is continuously looking for ways to better care for and serve our patients and families. We are working with companies from Atlanta Tech Village on great tools to improve care and the patient experience. We are grateful to have so much technology talent in our community.”

Back to the original questions. Are there too many incubators and  accelerators? Do they add value?

I don’t know if there are too many of these platforms, but I suspect that many if not most add value. If we revisit the business school analogy, we see that not everyone can get into Harvard, but most will probably still get a great education at a lesser B-school. I assume the same is true for these innovation platforms. I further assume that accelerators and incubators themselves are subject to the same Darwinian forces that send the majority of startups out of business, and that we’ll see a changing of the guard, if not a thinning of the herd, over the next several years.

Michael Burke is an Atlanta-based healthcare technology entrepreneur. He previously founded Dialog Medical and formed Lightshed Health (which offers Clockwise.MD) in September 2012.

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Reader Comments

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  • Friday Interoppin': Re: Commonwell (by way of Ex Epic) So, 29,360ish Cerner-using facilities have the capability of sharing clinical docu...

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