After raising $9 million in a series A round, Boston-based digital health startup Cohealo is poised to take its shared economy model for medical equipment to a broader stage, targeting what could be a unique market for multi-hospital systems.
Cohealo, founded in 2011, has identified the use of non-emergency medical equipment as a largely inefficient and wasteful area, particularly for large health systems that often don’t coordinate with each hospital on what equipment is being used regularly or shoved into a storage closet.
“The way hospital systems work, everyone operates in their own little silos,” said Mark Slaughter, CEO and co-founder. “That’s how capital gets deployed. Everyone ends up owning the exact same things.”
So wouldn’t it make sense, Slaughter said, to devise a cloud-based software solution where, say, a 20-hospital system can see, via the cloud, what equipment is where and seemingly utilize the equipment system-wide versus each facility renting or purchasing its own equipment. In a sense, it’s the Uber approach to medical equipment, at least from the software end of things. By getting multiple health systems in participate in the cloud-based approach, one hospital could have access to hundreds of thousands of different equipment versus what’s within its own walls.
The American healthcare system spends more than $100 billion on medical assets. Cohealo aims to improve the efficiency for all aspects of that, except for emergency and trauma equipment that needs to be accessed immediately. But other medical assets, say cancer-screening machine needed for a patient in two days, can be transferred within a system much more easily. The same is true of surgical equipment and just about any other piece of equipment, according to Slaughter.
Referring to other industries, like ride sharing, Slaughter said the notion of cloud sharing can and should be applied to the hospital setting.
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.
“They access it from a central pool,” he said. “The hospitals can do the exact same thing. It’s taking the same sort of aggregation and bringing it to the enterprise.”
Of the $100 billion spent on medical equipment, there’s no estimate on how much it wasteful spending, Slaughter said. But he suspects this area can be overhauled and that millions of dollars could be saved long-term.
“It’s a massive problem,” he said. “Depending on the hospital size … there’s several millions worth of inefficiencies.” Hospitals often buy equipment that goes unused, and it’s “incredibly expensive to rent,” he said.
Slaughter himself used to sell minimally invasive robotic and laparoscopic surgical equipment. The idea for Cohealo stemmed from his experiences seeing expensive equipment just sit in storage closets. To prove his theory, he said he tracked a single piece of surgical equipment at a Florida hospital for six months, finding that about 75 percent of the time, the $120,000 device went unused. This was true at other hospitals within this particular system, he said.
Cohealo, which is looking triple its 25 employees within the next year, said it is focusing first on creating regional networks, starting in the Boston area but then expanding. The second phase will focus on large hospital systems. Eventually, the company would like to take the approach to smaller hospitals and smaller systems, perhaps creating a regional approach for disparate stand-alone hospitals.
“Our goal is to lock up some of the major health systems,” Slaughter said. Cohealo, which started in Florida but relocated to Boston to be within a major healthcare hub, has raised close to $10 million to date, including friends and family funding. Slaughter said he expected more news on the major healthcare systems front within the next 90 days or so.
Assisting health systems, and thus healthcare workers, can likely lead to better outcomes by letting the practitioner focus more on the patient, not having to worry about what equipment is where and how long it will take to get access, Slaughter said.
“We like to say we enable health systems to function like a health system,” he said.
