Monday, June 4, 2012

Rock Health’s Healthcare Boot Camp

Rock Health and Chicago Health/Tech 2.0 organized a fantastic event this past weekend with several informative speakers and healthcare industry experts.  Here were a few of my favorite highlights from the speakers:

Keynote speaker, Simmi Singh (Senior Advisor, Health Innovation): My favorite comment was the reference that the trait most associated with Millennials is connectivity. We value being connected 24/7 with our friends, families, co-workers, and even our health. Our generation creates change and momentum at an unfathomable pace and by focusing on healthcare, we can help change the healthcare industry at that same accelerated rate.

Orlando Saez (Director at IL Office of Entrepreneurship): The problem that the state of IL struggles with is that we are affected with “middleness” syndrome. Not only are we physically in the middle of the country, but in terms of healthcare, we are neither at the top or the bottom of the rankings when it comes to issues such as public health, obesity (67% of people in Chicago are obese), and smoking (20% of adults smoke in Chicago vs. 12% in CA and 15% in NY).
  • Some good IL health resources he also mentioned to check out included:, Illinois Hospital Report Card, and Biosense 2.0.
  • It was also exciting to hear that Chicago was selected for the International Biotechnology Conference coming up in June 2013
  • And if you weren’t already aware of this additional source of funding, the state of IL has $20mm set aside as a VC fund and the application can be found on their website here. They have already received 80+ applications and have 40 industry experts who have helped them complete 14 deals. 
VC/Angel Investor Panel: The most exciting part of investing in healthcare is focusing on quality of care to manage costs effectively, which is currently the largest problem the industry faces today
  • Investors typically look for entrepreneurs who understand regulatory factors very early on and the company hopefully already has the software, some customers (who may or may not be paying yet), and more than just a minimum viable product (MVP).  Also, they like to see the company selling into very big pain points, so that way you will know that people will want to adopt quickly or regulation will force them to adopt.
  • Investors are looking to invest in trends or lines, not dots (which I hear from every VC panel that I attend), so start relationships with angel and VC investors early on. The best way to go about this is to mention to them the accomplishments you hope to achieve in the next three months and tell them you would like to follow up with them then. When you go back to them, they would love to see that you accomplished everything you mentioned and more, which gives them that much more confidence in you and your product. It also never hurts to get a warm introduction, so aim to get close to advisors who can give your company more credibility and help make introductions for you.
  • And of course, you can’t have a VC panel event without the question that everyone is always curious about: “What is more important to investors, the team or the idea (i.e. the jockey or the horse)?” Not surprisingly, all four of the investors on the panel mentioned that for early-stage companies, the team is much more important, but the space/industry trends are still a major component.
  • There was also a great question about how the JOBS Act would affect the investors on the panel. The main answer was more of a warning to entrepreneurs who are considering crowdsourcing. The JOBS act and crowdsourcing actually makes it more difficult to attract institutional investors, since the process becomes much more complicated and messy if you have to deal with 100 other investors who came in before they do
  • Also, some trends to be focused on right now in early-stage healthcare include:
    • Primary care physician shortage
    • With all the data now available to consumers (through devices such as FitBit, Zeo, Withings Scale, etc.), there needs to be a way to process all this info for consumers
    • Consumers need to take more ownership of their data. We need to focus more on consumer-led health and wellness applications as preventative measures, since the rising cost of healthcare is becoming more and more unaffordable in the U.S. 
    • Products should aim to enable consumers to take the behavior they want to take vs. forcing them to change their behavior (which is often too challenging)
    • Investors like to see regulation that quickly forces adoption and has significant long-term benefits such as cost reduction, quality of care, improved staffing on provider side
Lyle Berkowitz (Northwestern Memorial Physicians Group, Director of IT & Innovation):
  • Entrepreneurs should focus on how your product/service affects:
    • Time (physician, staff, patient)
    • Quality of Care
    • Cost of Care
  • Questions investors should ask new healthcare startups include:
    • Does it require behavior change?  (it’s better and easier to require process change instead)
    • How are incentives aligned? (for providers, physicians, payors, patients)
    • What has been your physician involvement with development of your product? (make sure to involve the customer in the development phase)
Amy Schwartz (IDEO Healthcare Lead):
  • Design thinking should consist of all three of these components: technical (feasibility), business (visibility), human (desirability)
  • She also provided great advice on ways to help with the design-thinking process:
    • Learn about real people in their real world for insight and inspiration. In order to figure out how to innovate, you cannot just ask people what they want and need because half the time they won’t know and the other half the time they’ve already created a make-shift way to deal with the issue.
    • Find inspiration from analogous examples
    • Learn from “extreme” users
    • Consider the context at a conceptual level
    • Think across all of these segments: physical, cognitive, psycho-social, cultural
    • Prototyping is the best way to think through things and be sure to pilot test to learn from the launch, develop proof of concept and create a formal assessment
    • “In the end it’s not about what we make, it’s about what we make possible”
At the end of the event, I was very excited to hear that the first annual Chicago Health 2.0/Tech Conference is taking place September 28-30th. I’m sure there will be just as many great speakers, so if you’re interested in attending more healthcare startup events, be sure to get on their mailing list:


  1. Wow, this blog has been so helpful. Great stuff Irem! I had a question about what Lyle Berkowitz said about the focus of the product/service. Is he saying that products have to address ALL three focuses of time, quality, and cost for it to be of value and interest to investors?

    -Justin Lee

  2. Thanks Justin! Lyle was referring to the idea that your product should address at least one of those three concepts to be of interest to healthcare investors, but of course a product that addresses all three would be that much more impactful and would most likely command a higher valuation. And if I had to pick two of those three to focus on, I would stick with quality of care and reducing costs since those are the most difficult challenges the industry is facing today.

    1. I totally agree. One of the things that disturbs and frustrates me though is that providers aren't rewarded for improving care. It seems to me that when you pitch something that improves care, there is always resistance. One of the things I hear a lot is, "If my patients get better too quickly, i lose visits and i won't get paid."
      I'd like to believe that improving quality of care has a tremendous value, but at times it is hard to shake the feeling that, ironically, our health care system doesn't really care about the health of people. It's almost a deterrent to wanting to build a product that improves healthcare because it seems like an uphill battle. Any perspective?

    2. You're right that at times it does feel that way. I think more and more people are realizing that as well and there is a shift to change that view and the reward system so that providers will receive economic incentives to improve care.

      I also think that as consumers will start paying more and more for healthcare out of pocket (as the govt cuts back on spending), you'll find people doing more research into their healthcare providers and start looking for how each provider differentiates itself in terms of quality of care. Although some providers may not appreciate quality of care right now, one way to consider pitching it would be to say if you don't use my product/service which improves quality of care, other providers who appreciate quality of care and do start using it will start attracting more patients away from you (and then you'll lose even more money that way).

  3. Irem, I completely agree. Especially with all of the cutbacks in reimbursements to providers, the only way to survive is by offering better quality of care.

    But at the same time, cutbacks also encourage providers to cram as many people through the door as possible to maintain revenues--which naturally will decrease the quality of care they provide to their patients. At the end of the day, the "bottom line" matters for providers, and it is hard to pitch them a product that does not offer a direct, financially visible value proposition.

    On the surface, pay-for-performance policies seem to be a great way to counteract this way of thinking, but do you really see the healthcare system making a significant shift from the traditional fee-for-service model in the near future? I'd be really curious to hear your thoughts.

    Thanks Irem! Great post!

    1. Thanks for the great comment and question Mike. I do see our healthcare system making the shift away from the traditional model, but unfortunately I think it will take years and it will start out with small changes and pilot programs, such as the fee-for-service model with bonuses based on performance. Check out the new post that goes into more detail on the new value-based contracts that payers are looking to implement.