Accelerators and incubators have been popping up left and right over the last few years, becoming, as Peter Relan recently put it, “an industry segment in their own right.” And while that industry segment has become more and more crowded, the family of accelerators focused exclusively on healthtech and digital health has remained small — in spite of huge opportunity.
Formed by a partnership between the New York eHealth Collaborative and the Partnership for New York City Fund, the accelerator is geared towards early and growth-stage health startups building products and services in care coordination, patient engagement, health analytics and messaging.
The accelerator offers a nine-month program in which chosen startups receive up to $300K in funding, access to clinical and technical feedback from provider organization, integration into a statewide network of Electronic Health Record (EHR) data and mentorship from a group of healthcare entrepreneurs, investors and executives.
When we covered the launch of MedStartr in July, the appeal of the heath-focused, Kickstarter-style crowdfunding platform seemed to be its ability to act as a screening ground for investors interested in the space.
Not only that, but by incorporating partner programs, the startup could allow doctors, CIOs or health executives to not only gain a channel for deal flow, but a venue to test products and reward those that meet certain benchmarks. For example, if a company were to reach previously-agreed-upon benchmarks, like a certain amount of feedback or funding, the investors or provider could reward them by funding their first pilot study.
Why is this important? Because, beyond the challenge of finding access to and attracting health-focused or health-savvy investors, early-stage digital health startups often struggle with getting their products or devices in front of doctors, health providers and hospitals. What’s more, legacy vendor architecture, poor incentive structures, lengthy sales cycles and a health system focused on expediency and not patient outcome means there’s plenty of friction facing startups in today’s medical landscape.
To address these problems, the partnership is not only investing more capital in its startups than the majority of health accelerators, it believes it is the first to offer companies access to “senior-level healthcare providers” who are actually “committed to their success.” That sounds like BS, so what does that mean, exactly?
The accelerator has partnered with 20+ providers (represented by more than 50 senior executives at those organizations) and a group of health investors, who collectively reviewed the 250+ applications and ultimately made the decision on which companies were chosen to participate in the program. In exchange for participating in the selection process, the organizations, executives and investors then commit to working with the chosen companies for the duration of the 9-month program.
Dave Chase, a contributor to TechCrunch and the co-founder of Avado (which was selected as one of the accelerator’s startups) told us that, while the companies don’t guarantee that they will purchase from the startups, the program matches the providers who have a particular need with the companies that provide solutions. That makes it easier for them to find supporting capital and a network of customers and resources to help get their products off the ground. The participating investors, hospitals and clinics (like Mount Sinai, New York Hospital Queens and New York-Presbyterian) want to work with these startups and help test their products.
In fact, according to Chase, the investors who were party to the selection process said that the process alone made it worth the entire program, as they heard exactly what the senior decision makers at these huge organizations and providers actually want to buy (or not buy) from young companies. Providers get to dictate the capital injection (or reward) structure, while startups and investors get to see first hand what they need — or what part of their infrastructure is most broken.
For example, Aidin, one of the companies that recently won Morgenthaler and Health 2.0’s event to find “the most fundable digital health companies” and a member of the accelerator’s first class, was seeded with $100K at the start of the program and will receive the remaining $200K after three months if it is able to hit its partnering hospital’s projected targets.
It may sound like a system that puts way too much power in the hands of hospitals and clinics, but the truth is that these are the players that digital health startups struggle to get access to and are, in the end, the ones who become the buyers or customers of startups. They get to help dictate which companies are chosen, but also basically ensure the initial success of those startups.
On top of that, the NY Digital Health Accelerator is also setting fairly ambitious goals for itself (and its companies) in terms of outside/VC funding over the course of the program. Representatives from the accelerator said that it expects its startups to attract upwards of $150 to $200 million post-program over the next five years. If they continue with 8-company batches over that time, that’s as much as $5 million-per-company after graduation, which would put it on par or ahead of even the most well-known incubators.
To that point, for its debut, the accelerator selected eight companies as part of its inaugural batch, which were chosen from more than 250 applications. Again, for committing to opening offices in New York State, the companies are each given up to $300K (far more than 90 percent of accelerators, healthtech or otherwise) as well as access to mentorship, feedback, and direct access to the tech platform that connects EHRs across New York State, called the Statewide Health Information Network of New York (SHIN-NY).
The investment capital comes from a syndicate that includes Aetna, Milestone Venture Partners, Janssen Healthcare, Safeguard Scientifics and UnitedHealth Group, to name a few.
So, without further ado, here’s a brief look at the NY Digital Health Accelerator’s inaugural class of eight:
KnowMyMeds’ AdhereTx is web-based, interoperable software that supports team-based medication management and reconciliation for high-risk patients at the point of care. KnowMyMeds enables healthcare practitioners to perform clinically validated, cost-effective medication review for high-risk patients, including “dual eligibles” and the chronically ill, to reduce their drug-related hospitalizations and re-admissions.
Aidin is a web-based referral platform for hospitals discharging patients to post-acute care. Aidin collects hard data about how well post-acute providers perform and makes it easy for hospital staff to present that information to patients when they are choosing their post-acute provider – helping patients choose better providers for better outcomes. [Check out TC's coverage of Aidin here.]
Avado, a TechCrunch Disrupt finalist, allows clinicians and patients to securely communicate, track, and manage health information. The startup centralizes data from EHRs and makes it usable for all stakeholders. To attract providers, Avado exceeds typical “Meaningful Use” requirements for patient engagement, while also addressing requirements for medical homes and accountable models. [Check out TC's coverage here.]
CipherHealth helps hospitals avoid government penalties by reducing preventable re-admissions, improving outcomes, better coordinating care, and creating a positive patient experience. CipherHealth reaches out over the phone, through tablets, via email, text, or the web, better engaging patients in their care and building stronger relationships between patients and providers.
Cureatr is on a mission to improve how healthcare providers communicate and coordinate patient care. The startup’s lightweight, HIPAA-secure group messaging system integrates with existing directories, scheduling and paging systems, making it easy to use while coordinating care within or between organizations.
MedCPU delivers accurate, realtime clinical care advice through its next-gen “Advisor Button” technology. The startup captures the complete clinical picture from clinicians’ free-text notes, dictations and structured documentation entered into any EMR, and analyzes it against a growing library of best-practice content, generating realtime prompts for best-care consideration.
Remedy Systems leverages the power of mobile to lower the cost and improve the quality of healthcare via its flexible care coordination platform that enables physicians and nurses to concentrate on delivering the highest quality of care possible while fostering engagement from patients and family/friends.
SpectraMD maximizes the value of data across the continuum of care with business intelligence solutions. Their FOCUS™ Actionable Analytics platform enables stakeholders in hospitals and ambulatory care settings to improve outcomes, increase revenues, succeed in quality-based initiatives including “Reducing Preventable Readmissions” and leverage analytics for the “Health Home” initiative.