Hospital funds boost startups with more than money
Carm Huntress, CEO of RxREVU, says he’s happy for the tens of thousands of dollars that the UCHealth has invested in his start-up software company, which offers physicians point-of-care prescribing guidance.
But beyond financing growth, UCHealth’s partnership with RxREVU has elevated the company’s credibility among customers and potential customers and provided RxREVU developers with invaluable feedback from the front-line emergency room physicians who use the software, Huntress said.
“It’s been a real point of validation,” Huntress said of the two-year partnership.
Across the country emerging health technology companies like RxREVU, Binary Fountain and Augmedix are finding it beneficial to hitch their wagons, at least in part, to hospital venture capital funds.
More and more health systems are starting venture capital funds for healthcare investment after seeing the returns enjoyed over the years by pioneers such as Ascension, Dignity Health and Cleveland Clinic, said Vice President Derek Baird at Chicago-based AVIA, a national network of health system innovators that itself receives venture capital from health systems.
Conversely, tech companies increasingly are tapping into the capital, expertise and connections that these hospital-sponsored funds can bring, Baird said. “We’re seeing even mid-sized regional health systems start 8- to 9-figure venture capital funds,” he said.
Over each of the past three years, venture capital funding of digital health companies exceeded $4 billion, according to a recent study by Rock Health. The data show that more venture investment went into digital health companies during the first month of 2016 than all of 2011, Rock Health said.
Huntress said RxREVU benefited enormously from UCHealth contributing a chunk of the nearly $4.7 million it has raised since early 2014. Denver-based RxREVU’s software helps busy clinicians pick the right prescription for patients in emergency rooms and other healthcare settings.
It got its first trial in the emergency department of the University of Colorado Hospital in early 2016, Huntress said. Sitting side-by-side with clinicians and staff in the hospital, RxREVU worked for months massaging the software so that the medication information it yielded could be obtained readily as part of the ER workflow.
Having that access was invaluable and only possible because the hospital made it a technology priority among the dozens of others it has to constantly choose from. “We need that tight-knit collaboration,” Huntress said. UCHealth participated in RxREVU’s first funding, which raised $540,000 in 2014, as well as some of the other four.
The first application of the RxREVU software was for prescribing antibiotics, said Dr. Richard Zane, Chair of the Department of Emergency Medicine for UCHealth’s seven hospitals and 22 other ERs scattered over 100 ambulatory locations in Colorado, southern Wyoming and western Nebraska.
Physician acceptance of the technology has the system looking at how to get all drugs prescribed in the emergency department built into the software, Zane said. When that’s accomplished, UCHealth wants to offer it in all its ERs.
Zane underscored the word “offer.” Use by emergency physicians is not mandatory. Yet, since its installation, adherence to recommended guidelines for specific antibiotic use has jumped from 45% to 65%, Zane said.
The health system decided to invest in RxREVU because it met the criteria of being able to improve quality and cost; it was simple to use; and it was scalable across the enterprise. “We figured if it was important to us it would be important to the 400 other major healthcare systems out there,” Zane said.
Hospitals that participate in the venture funding and trials of the technology get products that they know will work inside their systems, said Zeshan Muhammedi, CEO of the New York City-based venture capital firm FundRx. “Feedback loops are critical in product development so the more end-users that are involved the better,” Muhammedi said.
As investors, those systems also can accelerate product roll out because they can take it to many users simultaneously instead of the technology company spending time and money marketing it to many smaller customers, Baird said.
Augmedix has grown quickly by having such large health systems as Dignity Health and Sutter Health among its biggest investors, said Pelu Tran, the 28-year-old president of the technology-enabled medical transcription business. Since 2013, Augmedix has raised $60 million in venture funding.
Augmedix saves its physician users several hours per week on clinical data entry simply by wearing Google Glass to record patient visits. An Augmedix employee remotely inputs the data into the office’s electronic medical record system in real time.
Tran said the technology improves productivity and patient quality because physicians have more time to spend with patients. It saves individual physicians an average of 15 hours a week by reducing the time spent on entering clinical patient data.
What’s more, the transcriptions are more accurate with a remote scribe entering the data since the physician doesn’t have to go back later and try to remember exactly what was said, Tran said.
With big health systems funding the company and championing its use at their clinics, Augmedix has been able to grow to 1,000 employees worldwide, with 200 in the United States. “We’ve benefitted from their scale,” Tran said.