Procured Health, a startup that aims to help hospitals better discover, evaluate and adopt quality medical devices, is today announcing that it has raised $1.1 million in seed funding from a flock of angels and VCs. Investors in the startup’s first round included Zimmerman Ventures, Silicon Badia, Bessemer Venture Partners, Fidelity Biosciences, NaviMed Capital’s Bijan Salehizadeh, CEO of Bloom Health Abir Sen, Kal Vepuri of Trisiras Group, former Athena Health CFO Carl Byers as well as Athena Health co-founder and CEO Jonathan Bush — to name a few.
In a stat that’s both reassuring and anxiety-producing, hospitals spend $125 billion every year on medical supplies. Thankfully, much of that spend is allocated towards devices that will save lives, the problem is that hospitals don’t need to be spending that much money. Procured Health co-founder and CEO Hani Elias tells us that he spent several years as a consultant at McKinsey working with a sizable, national medical device manufacturer that had developed a product that it (and he) believed was a cheaper, more effective alternative to comparable products already on the market. In spite of success with other devices, the company failed to attract any significant adoption for its device with hospitals and care providers.
Taking a step back, Elias quickly came to the conclusion that this was a pervasive problem in the medical world. His research showed that, across the board, companies (big or small) happen to be developing innovative (and affordable) new devices either lack the capital or the know-how to market and attract hospitals and physicians to their devices. On the flip side, there’s little intercommunication among hospitals and health facilities in this country, meaning that hospitals may spend years using expensive pacemakers to their patients, when a cheaper and more effective device is right under their noses.
These conclusions led Elias and co-founders Eric Meizlish and Will Danford to found Procured Health in the fall of last year. After graduating from Blueprint Health‘s accelerator earlier this year, the team begin raising their first round of funding to scale their team and continue developing their product.
Today, Procured Health remains in private beta and is currently testing its network and pilot program with five healthcare systems (including three top-tier academic institutions), and is planning a full-scale launch in early 2013. The startup’s web-based application is designed to help these hospitals discover and evaluate medical devices in order to drive savings in a fast-ballooning cost category.
Today, medical devices make up 20 to 25 percent of hospital expenses, and there’s a limited amount of unbiased information available for these hospitals to identify and discover comparable and more affordable products, the CEO says. Elias compared Procured Health’s product to Bloomberg for hospitals, with the main differentiation being that physicians and hospitals can leave detailed, professional reviews of the products they’re using and testing.
While this sounds a bit like “Yelp for medical devices,” Elias said that the startup’s application allows doctors and hospital staff to share detailed analysis with their peer groups — this isn’t just a star-based ranking system with up and down voting. The value for hospitals, Elias said is that it creates a network for hospitals to share and benefit from professional reviews of medical devices — unlike the pharmaceutical industry for which the FDA imposes a stringent analysis and testing process, for medical devices there just isn’t the same level of standardization or regulation. For medical devices, there isn’t as much transparency, and Procured Health wants to give doctors the opportunity to write and take advantage of head-to-head reviews of the devices they use and prescribe every day.
For the end user — i.e. patients — the value is significant. If the startup can truly help hospitals control their costs by helping them find and administer affordable, more effective treatments, they can improve access to care and lower medical costs for the average patient.
As to the roadmap going forward, Elias says that, over time, the team believes that their database will be able to identify important trends within the market, showing doctors what devices are used most in certain types of procedures alongside the efficacy. Obviously, the more hospitals and physicians put in, the more value they can obtain from the startup’s network.
For more on Procured Health, find them at home here.