Software Developers Get Boost from New York Consortium

IW 500: 10 Healthcare IT Innovators

The New York eHealth Collaborative (NYeC) and the Partnership for New York City Fund announced that eight emerging health IT companies will receive up to $300,000 each, along with mentoring from New York healthcare providers, as part of the New York Digital Health Accelerator (NYDHA) program.

Besides the initial investment of $4.2 million, some of which may fund additional companies or later go to the original grantees, venture capital firms are expected to invest $150-$200 million in these companies after the program is completed, according to the NYDHA announcement.

NYDHA was created partly to support the "health homes" that New York State's Medicaid program will soon launch to improve care coordination, especially for patients with complex medical needs. "We're hitting the ground running with our health homes," noted NYeC Executive Director David Whitlinger in an interview with InformationWeek Healthcare. Consequently, applicants for the NYDHA awards had to have mature applications that could be implemented within 30 days.

When the NYDHA program was announced last April, NYeC predicted that a dozen companies would receive grants. The reason only 8 of the 250 applicants received them is that the requirements were so particular, explained NYeC Executive Director David Whitlinger.

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Besides offering an application that is ready to use, the winners had to have the right kind of management team and business model to succeed, and their product had to meet the "collaborative and team-based-care needs" of the provider community, Whitlinger said. Representatives of the venture capital firms and providers made the final selection after interviewing 20 finalists, he added.

Because team-based collaborative care that spans hospitals, primary care, and long-term care is fairly new, he noted, not many firms had mature products that fit that kind of workflow. "That's why it netted out to eight companies that both the VC and provider communities wanted to work with."

One of the unusual characteristics of the NYDHA program is that the software developers will work closely with healthcare providers to refine their products--all of which are already on the market.

"The software engineers will be shoulder-to-shoulder with clinicians who are actually practicing the new workflow of team-based collaborative care," Whitlinger said. "While the developers might go into this program with a product that is mostly right, we expect them to leave the program with a product that is dialed into this workflow and that will work in these new care models."

In addition, the NYDHA grantees will be among the first software vendors to have access to the Statewide Health Information Network of New York, which NYeC runs for the state. This is important, Whitlinger said, because it means the applications can be used with the data from any EHR that is connected to the health information exchange, with the appropriate privacy and security policies in place.

Among the NYDHA awardees are AdhereTx, Aidin, Avado, CyperHealth, Cureatr, MedCPU, Remedy Systems, and SpectraMD. The firms will be partnered with 22 healthcare providers across the state, including Albany Medical Center, Hudson Valley Initiative, Maimonides Medical Center, Mt. Sinai Medical Center, NYC Health and Hospitals Corp., New York-Presbyterian Hospital, North Shore-LIJ Health System, and NYU Langone Medical Center.

The investment capital was provided by a syndicate of investors, including Aetna, Janssen Healthcare Innovation, Milestone Venture Partners, New Leaf Venture Partners, Partnership for New York City Fund, Quaker Partners, Safeguard Scientifics, and UnitedHealth Group. The Empire State Development Corporation, Health Research Inc., and NYeC have provided additional funds to operate the NYDHA.

The investors will receive 2.5% of the equity in all of the companies that are funded, Whitlinger noted.

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