How three startups found success in the current digital health market

At the start of 2013, Kyle Samani was in Austin, Texas, leading development at EMR vendor VersaSuite. "I was there during the golden era of EMRs, when that was the buzzword," he says, recalling his recognition that healthcare would soon be moving past EMRs to the next big thing.

And then in the spring of that year he saw it — Google Glass. "My eyes just lit up, and I saw the possibilities of hands-free computing in healthcare," says Mr. Samani. He and cofounder Patrick Kolencherry launched Pristine in May 2013.

So far, Pristine has developed several HIPAA-compliant apps for Google Glass to allow the technology to be used in a healthcare setting. The EyeSight app allows for secure video streaming and has been used to facilitate remote consults during a procedure and allow attending physicians to remotely supervise residents, among other uses. Pristine Checklists projects clinical checklists in front of a clinician, allowing a clear view of the checklist and the ability to add notes without the clinician needing to turn away from the patient.

The app has proved popular among hospitals investigating uses for Google Glass in care delivery. Pristine currently has 17 hospital clients, such as Rhode Island Hospital in Providence, the first hospital to use Google Glass in the emergency department. The company also just closed an oversubscribed Series A funding round.

Mr. Samani credits his success both to Pristine's development team and to the quick recognition of a significant market opportunity in Google Glass. "It was seeing the potential of Glass and seeing what we could do with it, the different use cases, and seeing them in a time sensitive situation," he says.

That type of market recognition and quick mobilization is something San Francisco-based digital health accelerator Rock Health looks for in startups for its annual class. The full-service seed fund wants to invest in entrepreneurs who have the right product at the right time, says Teresa Wang, strategy manager at Rock Health, "Timing is so important," she says. "You need to understand the market and what it's ready for."

Rock Health leaders saw this thorough market understanding in Adrian James and Sean Duffy, cofounders of disease management solution platform Omada Health and members of Rock Health's inaugural class in 2011. Mr. James and Mr. Duffy met at design consultancy firm IDEO where Mr. James, who had been with the company for years, and Mr. Duffy, a Harvard MBA candidate, were paired to conduct preliminary research on feasibility of using well-designed technology for disease prevention.

The pair interviewed a large sample people who had recently been diagnosed with prediabetes. "We wanted to see if that moment [of diagnosis] was meaningful for them, if it was a catalyst to take a new direction," says Mr. James.

Turns out, it was. The interviews revealed that people with prediabetes often had the desire to change course and avert disease but lacked appropriate resources. "We were so compelled, we kept digging," says Mr. James, and the pair began combing through clinical trials about disease prevention and consumers' use of health tracking technology. They soon broke off from IDEO and formed digital therapeutics firm Omada Health in 2011, and the startup was recruited by Rock Health three weeks later.

Omada Health's flagship product, Prevent, is an online diabetes prevention program designed to promote the behavioral changes that can stave off type 2 diabetes. Users receive personalized coaching through a digital platform the former IDEO employees and their team designed to integrate as seamlessly as possible into the user's daily life.

Since its launch, Omada Health has enjoyed considerable success. To Mr. James, a point of pride is the fact Omada Health has self-insured employers, traditional health plans and integrated delivery systems all as customers. Prominent clients include Oakland, Calif.-based Kaiser Permanente, Blue Cross Blue Shield Louisiana and Stanford (Calif.) Hospital and Clinics. In April, Omada Health announced $23 million in a Series B funding round that included Kaiser Permanente Ventures.

Mr. James credits much of Omada Health's success to the company's focus on designing a product that works for the people Mr. James and Mr. Duffy had interviewed while at IDEO. Diabetes results in about $176 billion in direct medical costs every year in the U.S. A product that keeps users with prediabetes engaged in a prevention plan has tremendous value to Omada Health's real customers — payers and providers. Understanding that dynamic is key to success in the digital health marketplace, says Mr. James. "Without understanding how healthcare is bought and sold, it would be really hard to make traction," he says.

Rock Health's Ms. Wang says not all health IT startups understand the healthcare market in this way. "A lot of companies come in with good ideas but without an understanding of how people are going to use their product," she says. "There's so often a misalignment about where the value is added."

Understanding what would be valuable for healthcare stakeholders is not a problem for Evolent Health, founded in 2011 by UPMC Health Plan and The Advisory Board Company. The company's proprietary software platform, able to integrate and analyze clinical and demographic information to identify at-risk subpopulations and help devise interventions, was created by industry stakeholders with an in-depth knowledge of both the necessity and challenge of moving to a fee-for-value world.

In September 2013, Evolent announced $100 million in Series B funding and in January 2014 was named to Forbes' annual list of the most promising companies in the U.S. Currently, Evolent's clients include some of the country's largest health systems, such as Nashville, Tenn.-based Vanderbilt University Medical Center and Piedmont Healthcare in Atlanta.

"It is these partnerships I’m most proud of across the nearly 25 markets we serve," says Frank Williams, CEO of Evolent. "Pursuing a new way of delivering care, of doing business really, is no small thing... Seeing the results these systems are driving is immensely rewarding."

Mr. Williams credits his company's success to the Evolent's powerhouse founders and investors and the company's culture, but mostly to the fact Evolent has created a useful tool for healthcare providers.

"You need to solve a real problem," he says." Better yet, do it in a way that empowers providers and physicians to design, lead and own the ultimate solution."

More articles on health IT startups:

athenahealth launches health IT accelerator
Digital health funding to hit $6.5B by 2017
UC Berkeley students launch student-run health tech incubator

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