Deal Flow

Showcasing firms, entrepreneurs as stars of health innovation may miss the mark

In an age of health care disruption, in the age of the ACO, the traditional pipeline may no longer work the same way

Photo by Scott Kingsley

Erik Wernevi of Nordic Technology Group was one of 10 presenters at a June 10 event hosted at the Founder's League and sponsored by MedMates. But the key conversation took place after the event, when ConvergenceRI introduced Wernevi to Peter Andruszkiewicz, the president and CEO of Blue Cross & Blue Shield of Rhode Island.

By Richard Asinof
Posted 6/15/15
The pipeline for new products being developed in Rhode Island’s health innovation ecosytem needs to adapt and adopt to the changing landscape of health care delivery as the business model moves toward global payments and the new age of the ACO, or Accountable Care Organization.
How will Rhode Island’s health innovation ecosystem redefine itself? Is it merely about describing companies and products and job opportunities according to traditional metrics? Or, does it require a different kind of mapping process, where research and pilot programs are as much a part of the mapping as health equity zones and community-based health interventions based on wellness and prevention? Is there a way of tracking and making visible the new alignments within the health care delivery system and insurance products? What role will patients and patient advocates be accorded within the new health innovation ecosystem?
Not all primary care practices or patient-centered medical homes are the same. And, the transition to a PCMH model of health care delivery, while promising a more efficacious, cost-cutting approach to health care, does not address the overarching problems of health equity and the social determinants of health. As the musical chairs plays out within the health care landscape, there are competing visions around primary care: community health centers as practitioners of managed care; primary care as a function of an ACO; primary care as a function of care transformation promoted by the Care Transformation Collaborative, and place-based community-based neighborhood health stations. Understanding the strengths and weaknesses of the competing models – and how data will be analyzed in each model – will be a critical challenge moving forward.

PROVIDENCE – Erik Wernevi, the CEO of Nordic Technology Group, should not really need an introduction to entrepreneurs and practitioners that inhabit Rhode Island’s emerging health innovation ecosystem.

Wernevi’s firm is a 2012 MassChallenge Gold Medal Winner; it won the Rhode Island Business Plan Competition in 2014. [See link to ConvergenceRI stories below.]

His firm’s health monitoring product employs a 3D wireless sensing system, enabling warnings to be sent to care givers if a senior falls or is incapacitated. The new product is undergoing testing in two pilot programs at Rhode Island senior care facilities – at Tockwotton House and at St. Elizabeth.

On June 10, Wernevi was one of 10 company executives to showcase their products at a MedMates event at the Founder’s League, in front of a team of executives from Blue Cross & Blue Shield of Rhode Island.

Yet, at the end of evening, Wernevi, came up to ask a favor: could ConvergenceRI introduce Wernevi personally to an executive at Blue Cross?

Sure, let’s go meet Peter Andruszkiewicz, the president and CEO of Blue Cross, ConvergenceRI said, deftly navigating through the screen of the insurance team.

And so Wernevi had a chance to chat with Andruszkiewicz, who had recently returned from San Francisco, where all four of his adult children live and work, including one working at Aging 2.0, whose mission is to accelerate innovation to improve the lives of older adults around the world.

More than pitching the product and responding to questions about whether the target market was institutional or home-based, the kind of personal conversation between Wernevi and Andruszkiewicz is what such events should be about, turning Rhode Island’s small size into a tactical advantage, with an emphasis on nimbleness and convergence.

It was, as ConvergenceRI wrote, in response to a thank-you email from Wernevi the next day, exactly the kind of conversation and convergence that the newsletter seeks to promote and facilitate within Rhode Island’s health innovation ecosystem.

But, upon reflection, it led ConvergenceRI to pose another question: why were the others in the room not stepping up to the plate to play that role?

At a crossroads
The evening captured a moment in time when Rhode Island’s health innovation ecosystem is in flux, when the traditional business model of the health care delivery system is the midst of major disruption, and when the state’s most prominent accelerator program, Betaspring, is shifting its emphasis and opening a Boston office.

In introducing the evening, Andruszkiewicz said as much about health care. “We don’t have all the answers,” he said. “We don’t know how [the changes] are going to end.”

At the heart of the transformation is the changeover from fee-for-service to a bundled payment business model, known as an Accountable Care Organization.

What that means is that hospitals will become an integrated health care network, providing care for patients across of continuum, “from birth to death, from soup to nuts,” as Dr. Al Puerini, the medical director of Care New England’s new ACO, Integra Community Care Network, recently told ConvergenceRI. [See link to ConvergenceRI story below.]

To do that, it requires rewiring the health IT systems, because the population health management analytics used to measure and benchmark the health of patients in a continuum becomes the key in determining who gets paid for what.

“I would say that whomever has the most of the best data, will win,” said Dr. James Fanale, the chief clinical officer at Integra, in an interview with ConvergenceRI. “What that means is data is becoming a marketable commodity. And, people are trying to figure out, who’s going to have it, and who’s going to own it. Who’s going to control it?” [See link to ConvergenceRI story below.]

That recognition of the disruption and potential within the way that health IT connects with the patient is a major reason why Ximedica has launched its new interaction design division. [See link to ConvergenceRI story below.]

Ximedica, one of the nation’s – and the world’s – leading design and engineering laboratories when it comes to marrying technology to health care and connecting medical devices to patients’ experiences and outcomes, has always put an emphasis on innovation as a process and not just product creation – researching what it has labeled human design.

Its new interaction design division will, according Jeff McCloud, focus on how “social networks can also be leverage to provide encouragement and empathy to help those suffering from chronic diseases and other ailments. Tracking progress can help individuals can take an active role in their care and promote self-efficacy.”

A number of the entrepreneurs and companies featured on June 10 play in the landscape: Angelo Pitassi from HealthID, whose wrist band tracks and reminds patients and caregivers about the need for medication for diseases such as Type I diabetes, and Joel Schwartz from Sproutel, who has developed a talking toy bear to assist in with children’s care.

For entrepreneur Nick Adams, co-founder and president of Care Thread, a firm straddling the chasm between start-up and early stage, his smart phone technology package, now part of a pilot program to connect emergency rooms with primary care physicians through Care New England’s ACO, Integra, seeks to create, in real time, connections between patient’s health care team.

Adams was another of the 10 presenters at the June 10 gathering, and as he told ConvergenceRI before the event, it’s important for entrepreneurs in health innovation to understand the business dynamics of health care in the new age of the ACO.

Musical chairs
Adams’s insight reflected the fact that there is a kind of musical chairs being played out around the alignment of health insurers, primary care providers, hospitals and provider networks. That insight was not something that appeared to be well understood by many in the room who were attending the event – outside of Andruszkiewicz, who is grappling with the demands of the changing landscape.

Andruszkiewicz hinted to ConvergenceRI that there would be announcements soon regarding new potential realignments in the Rhode Island marketplace.

The nuance of how that realignment changes the traditional pipeline of new products into the health care delivery market did not appear to be well understood by many of the entrepreneurs and companies that showcased their products.

There was also an apparent disconnect between the size and purpose of companies being showcased: Edesia, a successful non-for-profit firm that produces nutrition supplements for a global market, a company that has scaled up and is building a new manufacturing facility at Quonset, one that is now looking to develop a national market for its products here in the U.S., compared to Phoenix Medical Technologies, an early stage firm that has developed non-invasive technology to combat ADHD, and Increment Studios, a startup that creates toys for children of all abilities.

Both Phoenix Medical Technologies and Increment Studios had been previously featured at a MedMates showcase of companies in February of 2014. [See link to ConvergenceRI story below.]

Showtime
Melissa Withers served as emcee for the event, and she introduced each of the companies as being her “favorite” Rhode Island company.

Withers, managing director since 2012 of Betaspring, an accelerator mentoring program, and co-founder the Founder’s League, an entrepreneurial support platform created in 2013, is now managing director of RevUp, the latest “evolution" in Betaspring’s mission.

The move to RevUp, with its focus on “revenue first” companies, includes adding a new office in Boston’s financial district. The branding language around the change from equity to revenue is slick: “Bye-bye equity. So long unicorn hunting. Say hello to RevUp, the next evolution in Betaspring’s mission to build great companies.”

Allan Tear, the co-founder and managing partner at Betaspring, has not yet returned ConvergenceRI’s request for a time to sit down and talk. “Two open slots left for office hours in Boston on Monday, if your startup is focused on revenue, drop a line,” Tear tweeted on June 11, indicating the Betaspring’s new emphasis will be on developing a Boston base for its operations.

Unanswered by the new venture was the status of Betaspring’s federal audit, which is reported to be ongoing, regarding an award by the U.S. Treasury of $2 million in 2011, and whether the federal government will seek its return from the state of Rhode Island. Also unanswered is what will happen to both the Founder’s League and Betaspring’s Rhode Island location if and when the building where they are located is sold.

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