Finding solutions to rising health care costs has been a major focus for many life science entrepreneurs starting companies in the health care industry. Enabled by the cost savings derived from using the Internet to gather medical information and analyze data, Web-based health care start-ups are attracting a lot of attention from venture capital investors in the life sciences space.
The proliferation of social media and other Web-related tools is making the process of accessing information about health care a lot more efficient. What is also helping is the willingness of patients and doctors to share information that can help them understand.
“Institutional investors may find that actively working with some of these start-ups provide better savings and better returns than commissioning another health care study,” says Abe Kasbo, CEO of Verasoni Worldwide, a marketing and PR firm that specializes in healthcare.
Indeed, some of the visible projects are simply about collecting information to create transparency. Vitals.com, for example, is gathering data about doctors. The three-year-old Web site aims to work as the centralized source of information on doctors’ performance by providing patients’ ratings and displaying general information on their practices and specialties. The Lyndhurst, NJ-based Vitals.com recently closed on a $9 million round of financing led by Cardinal Partners, a venture capital fund located in Princeton, NJ. Last year, Castlight Health, a San Francisco start-up raised $60 million in a second round of financing from a venture capital group that includes Oak Investment Partners and Venrock.
To be sure, these financings reflect the spendthrift ways of venture capitalists, a carryover of the millions that have been poured into Web 2.0 companies to make them grow faster. Neither Vitals nor Castlight Health have been heavily promoted by their venture backers, and they have yet to demonstrate they are viable business models, some analysts say.
The “real” business may be in gathering data that can help shape research and contribute to research efficiency. In Seattle, Stephen Friend and Eric Schadt co-founded Sage Bionetworks in 2009 to aggregate disease and research data for more efficient drug design. Sage Bionetworks and its academic and commercial partners employ global coherent molecular and clinical datasets to create validated disease models that improve the speed and efficiency of therapeutic drug development.
One of the more intriguing new start-ups is Pricecare.com, a New York-based medical information company designed to give health care users more choice by allowing providers to post procedures and prices along with their experience. The site hopes to deliver price transparency to patients and provide health care users with more choice.
It was after Bill Clinton’s abortive attempt at reforming healthcare in 1993 that New York anesthesiologist George Neuman decided that he wanted to take a stab at the problem. Neuman wasn’t the only one trying to solve the problem of rising healthcare costs but his approach was somewhat unique.
Neuman was convinced that one reason prices were as high as they were was because health care users had little price information with which to make decisions. More information – especially if it provided a real basis for comparison – could give users choices as well as savings.
So Neuman decided to work on a program that would try to make procedures easy to compare. He finally founded Pricecare.com in 2008 with the vision of not only helping healthcare professionals compare and contrast procedures, but also to assist patients in locating affordable health care providers. He applied for and received a process patent.
Neuman had to convince hospitals that putting up their procedures and the prices would not only be good for users, but also for the hospitals themselves. “It’s not been an easy sell,” admits Neuman. Nobody wants to be first. But as hospitals have recognized the benefits of the project they are beginning to come on board.
Neuman now is signing up new hospitals as partners. “The strength of Pricecare.com will be in its ability to provide patients with data previously unavailable to allow them effectively to shop for medical services in the U.S. and in helping hospitals address capacity issues. As a result, Pricecare.com will also be a tool for providers to help them design a more effective delivery protocol and facility operations,” says Neuman
