This week, a healthcare start-up seeks a prescription for winning over investors. –Dan Beyers
Shameet Luhar and co-founder Philip Rub were part of data analytics start-up, Resolution Health, that was purchased by the health insurance giant WellPoint, now known as Anthem. Luhar and Rub stayed with the company five years after the acquisition, really learning how its disease management operations worked. They took note of what was missing: Leveraging technology-enabled services to engage their highest risk members, who contribute 80 percent of costs to the health plan. Luhar and Rub used that knowledge to spin out their own company in 2013, Columbia, Md.-based Vheda Health. Now the company is using a $100,000 state grant to work with the Center for Health Information and Decision Systems at the University of Maryland’s Robert H. Smith School of Business to develop health IT solutions for chronic illnesses.
Luhar, co-founder and CEO
“We work with health insurance plans to reduce hospitalization expenses for their highest cost chronic patients. We’re doing that with clinically validated interventions using smartphones and other mobile devices that save insurers an average of $15,000 per prevented hospitalization, compared to $500 saved with traditional methods like paper messages and phone call reminders. The result is higher care plan compliance, engagement, and reduction in acute events. Our initial target is people on Medicaid who suffer from chronic conditions.
“Once we’ve partnered with a health insurance plan, patients enroll in our program. Then we send them a care package with an activated smartphone loaded with our application, information on how to set it up and use the app, and digital tools, including a wireless weight scale, a glucose meter and an activity tracker. Once they log into our app, they are asked to complete an assessment to help us identify any traditional clinical and psychosocial issues – including things like mood, anxiety, family dynamics, etc. –impeding them from following their care plan. We generate a patient profile and use the data to pair them up with a health coach to check in weekly over a 16-week period, through live video conferences from our mobile app. The biometric devices serve as data points, allowing Vheda Health to track care plan compliance and provide real-time feedback. If members fall out of compliance, our systems knows and our care teams intervene. The key is building relationships. By giving patients attention, you increase their compliance thereby reducing the likelihood of a hospitalization.
“We’re removing the access-to-care barrier that a lot of these patients face. We give patients attention and deliver everything they need to take care of themselves to their home. If they have questions, they have access to their care team and a 24/7 help line.
“We are live with a Medicaid health plan now. Our compliance rates far surpass the typical industry standard 7 percent: We have 86 percent of our members following their care plan regularly, 94 percent engaged with their health coaches, and 98 percent member satisfaction. This is unheard of in health insurance today.
“Right now, we are raising money from investors. In any stage of trying to attract funding and communicate with investors, what are the things that we need to make sure that we nail?”
Elana Fine, managing director of the Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business
“Be specific in who you target as investors. You want smart capital. Target investors who can help you get into some of those large health plans. Looks for investors who can make connections for you and provide validation for your company. Find health plan executives as advisors who can go on to become investors.
“As you pitch, be mindful that this can be a confusing market. You’re at the intersection of disease management and telehealth. There is a lot going on there, so be as clear as you can about where you fit in that space and how you compete there. Investors aren’t sure which companies will be successful, so you need to point out why you will be.
“Be very specific about your plan. Your plan is very dependent on getting one of the very large health plans, but also spell out your Plan B. Is there any other way to get into this market without ‘elephant hunting?’ Investors might be skeptical about how far you will get in the next year. Because of that, always be pitching a bit on where your company is right now, plus where you plan to go in the future. Make sure potential investors understand where their money is going to go right now.”
“The feedback we are getting from investors is that the key to winning in our space is getting large health plans. We plan to use the capital we raise to hire sales executives that will help us close these large accounts.
“We also realize the big insurance companies want to see our outcomes data. Our focus over the next 12-18 months is getting regional health plans using us. They function just like a start-up — more nimble with much flatter organizational structures, where it’s easier to get to senior leaders fast. By focusing on these plans first, we can gather early data, prove our outcomes, and take our success to the big players.”
Looking for some advice on a new business, or need help fixing an existing one? Capital Business and the experts at the University of Maryland’s Dingman Center for Entrepreneurship at the Robert H. Smith School of Business are ready to assist. Contact us at firstname.lastname@example.org.