The third and last presidential debate had few healthcare moments, but one issue that was raised did have some relevance, particularly for any healthcare and life science companies that have benefited from government funding. Should government back companies or should government stick to research grants?
The clearest example of healthcare companies that have benefited from federal dollars is the HITECH Act’s EHR Incentive Program. It provides incentive payments to eligible professionals and hospitals to implement certified electronic health records technology that conforms to Meaningful Use requirements.
On a more regional level, states like Pennsylvania, Minnesota and Ohio have taken a few different approaches to invest directly in early stage companies, leading one publication to question whether states have become some hybrid form of venture capitalist. Minnesota created an Angel Investment tax credit program. Pennsylvania’s Ben Franklin Technology Partners is an economic development agency that invests in technology and life science startups. The state also allocated funds from its tobacco settlement toward investment in life science and technology companies. There’s also a proposal before the state’s House of Representatives to review a new program to boost investment in life science startups.
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Here are five ways healthcare and life science companies have benefited from government funding at the federal and state levels:
1. Digitizing patient records for healthcare providers and physician practices: Perhaps more than any other program, the HITECH Act’s EHR Incentive Program has stimulated entrepreneurship and helped companies grow. The government stimulus has indirectly pumped $53.7 billion into the U.S. healthcare market. That includes $35 billion in Medicare and Medicaid incentives for physicians and hospitals that implement meaningful use of qualified electronic health record systems, and $18.7 billion for research, condition management and other initiatives. The primary aim of the program is to reduce the risk of medical errors and improve the quality of care by making it easier and faster to exchange patient information with other providers so the data isn’t siloed and can be accessed by everyone who needs to view it.
Big and small, startups and established companies have benefited from the incentive program to digitize paper patient records. Companies like Cerner, Epic and other technology companies that provide health IT services have been well positioned to benefit from the rush of new provider customers. Cerner has recorded back-to-back double-digit growth since 2009.
2. Building services for health information exchange for Medicaid patients: The $4.2 million public-private partnership organized by the New York eHealth Collaborative New York is investing up to $300,000 in eight growth-stage health IT companies. The goal is to invest in emerging technology that will facilitate the exchange of patient information for the state’s Medicaid program through the state’s health information exchange — SHIN-NY — to improve costs and reduce unnecessary hospital readmissions.
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3. Head injury diagnostics: Several startups and growth-stage companies have received government funding to develop technology to more rapidly and effectively diagnose concussions. Bethesda, Maryland startup Brainscope recieved $2.67 million from the U.S. Army Rapid Innovation Fund Research Contract to advance its hand-held diagnostic device for triage patients with head injuries. Although the motivation is to treat injured soldiers, it is also finding its way onto the football field and has applications for other sports where getting a concussion is not unlikely. Infrascan, a Philadelphia-based, growth-stage medical device company, has a hand-held diagnostic device that can pick up signs of bleeding on the brain. It was first used by the U.S. Navy and Marines in Afghanistan. The company secured a Small Business Innovation Research grant before it received 510(k) approval from the U.S. Food and Drug Administration at the end of last year.
4. Coronary heart disease: Minnesota-based AUM Cardiovascular is developing a noninvasive hand-held device called CADence to assess the risk of coronary heart disease. It’s received backing through the state’s angel tax credit program as well as from angel investors.
