Health IT, Hospitals

Goldman Sachs plows $40M into California predictive analytics startup

The California-based software company is focused on hiring staff, developing new products and convincing healthcare executives to take its products for a spin.

Mohan Giridharadas is working to banish idle operating rooms.

His company – software developer LeanTaaS – has raised another $40 million to pursue that goal – and chase new ones.

The money will go, in part, to hire salespeople tasked with convincing healthcare executives that LeanTaaS’s software can help get the most out of the resources they oversee, from operating rooms to MRI machines. Based in Santa Clara, California, LeanTaaS uses lean principles, predictive analytics and machine learning to improve the efficiency of healthcare. It also has an office in Charlotte, North Carolina.

Although the software can deliver returns, it is not always an easy sell, Mohan Giridharadas, founder and CEO of LeanTaaS, said in a phone interview. “This is a disruptive technology and it is solving a pain point that health system executives have come to accept.”

Executives also are often skeptical about potential fixes, he added. “They tend not to believe it’s possible.”

But, he said, the industry will need greater efficiency as demand for health services outpaces the supply. Patients facing long waits may be unable or reluctant to vote with their feet, he said. “But at some point, it starts to become a problem.”

He compares what LeanTaaS can do for healthcare to what others have done for air travel, allowing airports and airlines to handle more and more flights and passengers without significantly adding capacity.

Investors are bullish. They have sunk $101 million into LeanTaaS over the last two years, including the most recent investment of $40 million, which came from Goldman Sachs.

“LeanTaaS has developed a powerful prescriptive analytics platform that helps bend the access and cost curves in health systems, enabling customers to achieve tangible operational improvements,” Antoine Munfa, a managing director with Goldman Sachs’ merchant banking division, said in a press release.

The Goldman Sachs funding will go toward hiring in sales, marketing, research and development, Giridharadas said. The company hired over 100 people in 2019 and could hire the same amount in 2020, he said. The company also could be looking at another funding round in the second half of 2020. New products are in the works, as well.

“For us growth is what matters,” Giridharadas said. “We’re not focused on trying to hunker down and milk the products we’ve got. We’re much more focused on accelerating the creation of new products.”

Giridharadas – who helped start the lean service operations practice at McKinsey & Co. before becoming an entrepreneur – founded LeanTaaS in 2010. The firm was not focused initially on healthcare but settled on the industry in 2015 after developing a software product for infusion centers, called iQueue for Infusion Centers. It is now in use at 180 infusion centers in the U.S. The software has increased capacity at the centers by between 15% and 25% while cutting wait times by up to 50%, according to LeanTaaS.

Since then, the company has introduced an iQueue product for operating rooms. In use at 105 hospitals representing 24 health systems, the product is designed to ensure operating rooms do not sit idle more than necessary.

The newest product from LeanTaaS is tackling medical clinics. The company spent several years on a solution to optimize appointment scheduling, accounting for variables such as how long individual doctors spend with new patients versus returning patients. “Getting that mathematics right is very hard,” Giridharadas said.

Future products will address inpatient beds, labs and imaging. Giridharadas said.

Most LeanTaaS customers start off by trying iQueue in a segment of their operations, Giridharadas said.

Among those customers is Memorial Sloan Kettering Cancer Center, which uses the infusion center product to reduce wait times. At a center in midtown Manhattan, the average wait time fell 31% overall, according to a case study on the LeanTaaS website.  Other customers include NewYork-Presbyterian Hospital and the Stanford Cancer Center.

Other companies are using AI to optimize healthcare operations. They include Qventus, which raised $30 million in 2018. Makers of electronic health records also have indicated an interest in adding predictive analytics to their products, Giridharadas said. But he said they were unlikely to move ahead given the steep investments required in developing products for narrow uses.

Photo: metamorworks, Getty Images

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