Category Archive For "Investing"
If there has been one overarching theme over the past few years, it is that healthcare delivery systems are consolidating at a stunning pace. As Kaufman Hall reported in January of this year, the average size (in revenue) of the sellers in M&A deals has grown at a compounded annual growth rate (CAGR) of 13.8 percent since 2008. That is to say that, not only are more deals happening, these deals are worth an ever-increasing amount of money.
A more recent trend has been the “merger of equals” when it comes to healthcare consolidation. We’ve seen this in deals like Baylor/Scott & White/Memorial, as well as with Carolinas/UNC, and with Advocate/Aurora. These deals raise all new opportunities for management teams to capitalize on areas of revenue and expense that synergize between the companies.
To further complicate matters, names like Amazon and Apple are now commonplace in healthcare. Cigna’s acquisition of ExpressScripts, CVS acquiring Aetna, and Optum swallowing DaVita are all prime examples of how consolidation is reaching across the industry.
For many startups, and even to investors, this culture of consolidation can lead to uncertainty. It is critical that these companies and their investors have the tools at hand to identify transformative technologies. Ultimately, we’ve built the AngelMD network to be the vehicle by which this identification happens. But reaching even further, the healthacare industry as a whole can rely on AngelMD to be a litmus test for new technologies that can fuel its growth.
How, you might ask? The answer itself is simple. Getting the pieces to work together is the challenge that we meet every day.
Above all else, it’s the network. Our ever-growing base of physician/investors is the ideal network to rapidly identify, score, invest in and advise the very best in healthcare innovation. These members are, more often than not, in senior clinical leadership roles and they are working inside of this rapidly-consolidating landscape. The benefit here is two-fold:
These positions provide a critical level of access which can shorten the startup evaluation process.
Health systems CIOs can leverage the AngelMD network and our Metis AI engine to identify the innovations that best align with the needs of their organization.
For AngelMD, the consolidation of the healthcare industry simplifies the process of identifying potential exits for the best healthcare startups. With over 1,000 startups on the network, we are already pulling from one of the deepest benches in healthcare. Combine that number with our Metis scoring engine and the industry could source the very best ideas that compliment their portfolio while driving revenue growth.
In short, AngelMD is working toward the future. Consolidation doesn’t have to be a scary practice. With the right information, it can be a boom rather than a bust for healthcare startups, their investors, and the companies that buy them.
Each of the following startups joined AngelMD in the past month. Check out a new company in a specific innovation category.
VR / AI
As the parable says, the road to hell is paved with good intentions. The healthcare IT (HCIT) segment is suffering from a meaningful use hangover that has been created by our government’s best intentions. The goal was to improve care delivery in the United States. The method was to provide incentives for using HCIT — most notably electronic health records (EHRs). The end result? Almost any physician will tell you, we’re caught in EHR hell –a net negative impact on cost, quality, and deliverability of healthcare.
How Did We Get Here?
First, a history lesson: EHR adoption in the US healthcare market had, historically, been quite slow. This was a multi-faceted problem that touched on changing the behavior of physicians, issues with interoperability, and of course the associated expenses of moving to an EHR system. The US government committed $27 billion inside the HITECH Act of 2009 to support adoption of “meaningful use” of EHRs. The idea was that incentivizing the use of EHRs would lead to faster adoption and overall better care for patients.
The HITECH act was successful in unnaturally accelerating the adoption of EHRs through financial incentives. Health Affairs published an abstract in August of 2017 that found annual increases in EHR adoption rates among eligible hospitals went from 3.2 percent in the pre-period to 14.2 percent in the post-period. Ineligible hospitals experienced much smaller annual increases of 0.1 percent in the pre-period and 3.3 percent in the post period, a significant difference-in-differences of 7.9 percentage points.
The End Result
By September of 2018, more than $24.8B in HITECH incentive payments had pushed EHR adoption forward without the expected positive impacts on cost and quality of care delivery.
“Since its inception in 2011, the MU program has been criticized more than praised by practicing physicians for increasing non-value-added work during patient encounters,” said authors of the study, which was published online in the January issue of the Journal of the American Medical Informatics Association.
“In recent years, increasing negative sentiment has led to a range of commentary comparing physicians to highly paid data entry clerks and mocking the MU Program as ‘meaningless abuse,'” they wrote.
American Academy of Family Physicians (AAFP) published a study in February 2018 attempting to quantify the impact of meaningful use on physician practice. Their summary finding revealed the following:
“Roughly one-third of MU criteria were perceived as useful in less than 50 percent of patient encounters, which means that time is taken away from typical patients for these non-value-added tasks (i.e. system waste) that must be performed for compliance.
Hence the policy becomes a burden on the quality of care that physician can provide to their patients. In total, these findings provide insight into CMS’ comment that MU has ‘lost the hearts and minds of the physicians.'”
While it’s easy to quantify the results (or lack thereof) of the Meaningful Use incentive program, its public perception is perhaps even worse. In fact, CMS went so far as to change the name of the program in April of 2018. It is now known as Promoting Interoperability.
The hangover phase, which follows the stupor from nearly $25 billion in incentivized spending, now has buyers of HCIT solutions wary. If billions of dollars in incentives couldn’t do much to move the needle of patient care, how can they be sure that any of the promised benefits are real? There is now a slowing in adoption, and many health systems have even experienced increased operating expenses as a direct result of their EHR implementation.
Hope for the Future
That is not to say that all is lost. The delayed gratification for government’s investment could ultimately come through the application of artificial intelligence (AI) and machine learning applied to the codified data creating through the meaningful use standards. These learnings in combination with the genomic makeup of individuals holds the promise for personalized treatments responsive their genetic makeup, demographic and psychographic characteristics. AI and machine learning will become a key decision support tool for physicians when making treatment decisions.
The meaningful use hangover may ultimately result in a greenfield of opportunities as AI and machine learning are applied to the vast longitudinal data sets gathered through the technology choices mandated through HITECH.
Early stage investing is not only inefficient, but almost entirely driven by varying levels of guesswork and amateur efforts. In the meantime, virtually every other industry is getting smarter through the adoption of big data or artificial intelligence (A.I.). The primary goal of AngelMD is to revolutionize early stage investing into a legitimate asset class, combining the power of an expert network and artificial intelligence.
To understand the role of A.I. in investing, it’s important to recognize a core weakness of all investors: subconscious bias. Many of you are familiar with Moneyball, the Michael Lewis book chronicling the rise of data in the world of sports (baseball). It has had a fundamental impact on a sport that has remained largely unchanged for a hundred years. For years the statisticians swore that metrics like batting average and home runs should be the focus of scouts and managers. Billy Bean applied real statistical rigor to baseball decision-making and the rest is history. Concepts from Moneyball are now being applied to retail, insurance, travel, real estate, public market investing and more.
Lots of startups talk about being based around “big data”, or being A.I. centric. The reality is that saying you are a big data company doesn’t mean anything until you not only have the data, but you are also using it to make better decisions than you did without it. That’s why the early stages of AngelMD focused on growing the various member types within the network: startups, physicians, investors, and industry. We needed to harness the collective expertise of this community to more effectively identify trends and make better investment decisions.
Now, every time a member of our community logs onto the site, provides a valuation on their startup, reviews a company, follows a startup, takes a poll, attends an event, or invests in a company, we are able to gather that data. As this proprietary body of data grows, we are able to form that data into what we refer to as the Meta Knowledge Engine “Metis”.
The product team at AngelMD is always working to build features that can help you, while also engaging you. This “sticky” factor, where members of the AngelMD network return to the site and complete different actions, enables us to gather more proprietary data than anyone else.
We have also begun to augment this information with third party data sets including external investment transaction information, mergers and acquisitions data, patent data, and much more. All of this feeds an artificial intelligence engine that will get increasingly accurate and predictive with time.
It’s important to understand that adding A.I. to AngelMD does not mean that we are eliminating human judgement. Quite the contrary. The AngelMD network and platform grows from a center of physicians and other allied health experts. It is their input, cultivated and analysed by software, that allows AngelMD to outperform any methodology or system that has come before it.
Today AngelMD announced that it completed a syndicate investment comprised of its members into Noninvasix. This represents the second investment AngelMD has made into Noninvasix in the past year.
To reduce the incidence of neonatal mortality and morbidity, Noninvasix is developing a patient monitor to directly, accurately, and noninvasively measure brain oxygenation in preterm babies in the NICU. Early detection of inadequate brain oxygenation will allow neonatologists to intervene before cerebral function is permanently compromised.
Leading the AngelMD syndicate of investors was Jagjit Khairah, DO, FACOG, Department of Obstetrics & Gynecology, Kelsey Seybold Clinic who had this to say about Noninvasix: “The technological advances used with by Noninvasix to detect levels of oxygenation without needing a blood sample is remarkable. To have instant results using acoustic and laser sensor related probes will enable health care teams across many specialties of medicine to expedite critical care. Graham and his team have an amazing vision and are poised to help us change the way we address the needs of our patients on many fronts using this innovative technology.”
“Raising money through AngelMD is basically raising money from our future users. These are the people who understand best how Noninvasix’s technology can be a solution to some of their biggest issues.” said Graham Randall, CEO Noninvasix. “While we value all capital investment, having a group of engaged and supportive physicians backing us brings value well beyond the money.”