One of the toughest challenges for health care startups is to get an audience with health systems. They are short on time, and they tend to be pretty cautious about making investments without thoroughly vetting the technology.
A group of angel investors who are also health care industry veterans have used their connections with integrated delivery networks to screen early stage startups before presenting the best ones to hospital groups. If the health systems like them they’ll test their effectiveness in pilot programs.
“Our strategy is focused on true cost reduction, better clinical outcomes and patient and provider safety,” said Joe Mayernik, in a phone interview with MedCity News. He’s one of four partners at Alliance Healthcare Partners. The partners raised $6 million last year and work with angel investors across the country. So far they have built a portfolio of seven companies. Among them are:
- Vestagen: Medical uniforms, scrubs and patient clothing with innovative technology that’s fluid repellant and is designed to prevent reduce and eliminate contaminants using medical textile technology.
- InRange Systems: remote medication management system used to manage a patient’s drug therapy in their home.
- Physician Referral Network: a telemedicine platform solution taking high-resolution retinal photography that’s initially focused on proactive treatment of diabetic patients.
- Intelliblast Health: a targeted, instant communications system to simplify shift changes for a hospital’s or health system’s staff that sends messages and captures real-time responses.
- Patient Conversation Media: Its cloud-based platform creates new content, co-branded, and syndicated text and video content for networks of healthcare providers.
- Flower Orthopedics (@FOthopedics): The Horsham, Pennsylvania-based company develops implants for orthopedic surgery.
- PrivIt: Its software helps people involved with organized sports to collect, protect, and distribute personal health information.
Here’s how it approaches investments. Once it sees a company that ticks at least of the three criteria — true cost reduction, better clinical outcomes and patient and provider safety — it circulates them around its angel investor community to get their feedback. If they pass that test, Mayernik will take them to a health system or integrated delivery network.
Mayernik says it helps companies grow by adding their C-suite expertise to the company’s management teams. Some entrepreneurs it has worked with in their 30s and are interested in seeing their dream move on. Others have been drawn to the healthcare path and have come up with a better technology and want to see their company acquired by a larger corp.
“We kind of individualize our strategy to the founder of the business and see if it fits in our timeframe. We are not interested in a seven to 10-year horizon or two to three year program either because it’s either too much or not enough time to penetrate the market or build up value.” Its goal is to make a return in five-year timeframe.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Mayernik says hospitals believe there are a lot of good ideas out there but they don’t have the experience to take these ideas to market. “A lot of great ideas have gone nowhere because they can’t be implemented.
Each of the partners has a background in healthcare. Richard Ferreira and Tim Einwechter founded Intralign last fall to help hospitals improve efficiencies in total joint replacement procedures. They also built Ascent Healthcare Solutions, a medical device reprocessing and remanufacturing company that was sold to Stryker in 2009. Goodrich was a vice president in marketing at Stryker Sustainability Solutions and its predecessor companies — SRS Inc., Alliance Medical Corp. and Ascent Healthcare Solutions. Mayernick was the founder and CEO of Healthcare Waste Solutions for 10 years until it was sold to Stericycle in for $245 million in 2010. He also led an organizational restructuring firm specializing in the healthcare and waste industry called Human Resource Services.
