Next Things First

Why Seattle? A few thoughts on the Health Care Technology Network… by Rob Coppedge

A few weeks ago, my colleagues at iMedExchange hosted the first meeting of the Health Care Technology Network. It was a remarkable event, especially considering that given the local density of health care-oriented start-ups this was the first time we had all had the excuse to be at the same table.

I was asked to speak about why I chose to move to Seattle to set up Faultline Ventures (if you are inteersted in reading more about the event and my comments, iMedExchange blogs about the event here).

Despite the crticial mass of resources in this region (human capital, entrepreneurial culture, academia, innovative payor and provider organizations, etc), there was broad agreement that it is difficult (if not impossible) to raise venture capital for health care companies locally.  One of the most interesting comments of the evening came from the CEO of an early stage company that is actively raising money and has intentionally positioned itself in the software as a service industry (not health care) with potential investors… because there are more of them.

The sheer number of innovative early stage health care companies in the region should be enough to draw outside capital to the region (it is why we moved here)…and I believe capital it is the last key ingredient needed for this regional cluster to see explosive growth… but with the lack of new investment activity by exisiting funds it is unclear that the venture market will (or can) respond to the opportunity.

If the Health Care Technology Network catches on as a formal group for regular networking (and potentially the promotion of the opportunities in this cluster) it could help the cause of attracting capital. It could certainly provide an platform for raising awareness of companies operating in this region. The most successful organization of this type, the Nashville Health Care Council, has succeeded in bringing cohesion and a professional framework to the Nashville market place.

As someone said at the first  meeting of the Network: “Seattle is a brand”. Now, for those of us in the health care business,  we need to make sure we agree on what that brand is conveying to our industry and begin turning up the volume.

(By the way, visit some of the very interesting companies in attendance at the first meeting of the Network:  iMedExchange, Array Health Solutions, Clarity Health Services, Health Phone Solutions, Health Unity, Limeade, QTrait, Raffetto Herman and SnapForSeniors.)
Posted by RobC


Not Sure Which Game Inside Baseball Is Watching by Rob Coppedge
September 23, 2008, 1:36 pm
Filed under: economy, health it, nashville market | Tags: , ,

Nashville-based PR firm, Jarrard, Phillips, Cate and Hancock, released the results of a recent survey of health care “players'” views on the recent economic turmoil. Like Jarrard’s regular publication, Inside Baseball, the survey had a slightly humorous tone – but reading the results hammered home that the traditional, for-profit health care services establishment in Nashville might be so focused on their own inside baseball that they are actually watching the wrong game.

Reading these results – and, for that matter, any issue from the Inside Baseball archive – I worry that the Frist family might need to get a restraining order. The adoration for HCA and the wisdom of the Frists isn’t misguided: They have certainly built a strong and iconic company that in its repeated private to public to private transactions and the convection current of M&A around its hospital assets has made the Frist family, and oftentimes their shareholders, a considerable fortune. And the Inside Baseball team captures the sentiments of many in Nashville:

…the financial world is upside down; Cressey [Senator Bill Frist’s firm] has more money than just about anybody in town – and now the Frist Family has been named by our readers as the most likely survivor of one of the most dramatic financial fallouts … ever. (That China expansion thing is making more sense every day.)… Just who will benefit from the fall out? You said hospital giant HCA (shocker) and the city’s endless crop of country music songwriters.

However, it is uncertain that the business model that HCA has ridden for all these years is going to be a winner this time. Thriving through superlative lobbying efforts to optimize reimbursement levels and underinvesting in technology, it is questionable how this legacy player will compete as demographic and economic necessity shifts care out of the facility. Burdened by a significant debt load and leadership that doesn’t waste money on newfangled innovations, the company has its sights set firmly on doing business as usual.

And as we learn from Inside Baseball: As HCA goes, so goes everyone else in town.

What a frustration to the real entrepreneurs in Nashville who can’t raise money for new business models and innovative health care-focused technologies. The lack of capital and support has driven many of these young management teams out of the city and into new markets.

This is Nashville’s loss, but also theirs – as the strong ecosystem of “legacy” health care companies – which among other things own and manage hospitals, clinics, surgery centers, etc. – is the target client base for this next generation of health care services companiea with business models focused on making the big guys faster, smarter and more agile (really correcting for years of under, or incorrect, investment in information technologies).

As the financial crisis ripples through Wall Street and Washington, perhaps an unintended consequence will be an increased focus on administrative and clinical efficiency driving solutions from a new wave of innovative health care companies. Perhaps our nation’s fiscal crisis and both political parties’ commitment to health care reform will refocus our attention.

Or, maybe as more than a third of Nashville’s health care elite said:

…drinking is the best course of action right now.