Health Care Ops Industry Report

1. Health Care Ops Industry Report • A deep-dive into the Healthcare Operations industry • August 2019 • Prepared by:Jack Moore

2. Table of Contents page page page 4 10 12

3. Who am I? My name is Jack Moore. I’ve spent the last year steeped in the Health Care Operations sector in a role as Senior Product Manager at Qventus - a Health Care Operations software startup with 70+ client hospitals. Over that year, I’ve regularly observed and researched frontline nurses, care managers, doctors, other supporting hospital staff, and the executive teams - working with them to create products which leverage artificial intelligence to improve patient flow. I’ve focused the majority of my career on crafting products which leverage data science across a range of industries, and I’ve always demonstrated a hunger to learn what compelling challenges a new industry might have to offer me. I also have a successful blog which I use as a platform to meet and learn from entrepreneurs and product thinkers, and as such I’ve learned how to spot and correct inefficiencies in product organizations.

4. Industry Trends

5. Why Health Care Operations? The medical industry is extremely wide-ranging, there is an incredible breadth of areas that one could dive into. Each year, Hospitals and patients accrue billions of dollars in costs for non-clinical avoidable days, or time that the patient was only in the hospital due to clerical, scheduling, or process delays. These inefficiencies are the sorts of things that motivate and excite makers, and we’re starting to see a burgeoning landscape of compelling companies spring up looking to take on this incredibly complex problem. The nonclinical side of Healthcare is more highly conducive to rapid change, as there’s less regulatory overhead to navigate through when innovating in this space. Global health care expenditures are expected to continue to rise as spending is projected to increase at an annual rate of 5.4 percent between 2017-2022, from USD $7.724 trillion to USD $10.059 trillion Delloite An opportunity to rapidly deliver unique value in a space badly in need of disruption.

6. Industry Trends of Note • Avoiding Traditional Hospitalizations • With the push towards value-based care, Hospitals and insurance providers are increasingly looking for alternatives and non-traditional technological aids to traditional hospitalizations, as well as ways to prevent discharged patients from readmitting to the hospital. • Intelligence Integrated • AI has, to a certain extent, penetrated diagnostics and treatment - a computer is very good at assessing an imaging study, but the same cannot be said for operations. • Healthcare is increasingly embracing the idea of using intelligence to reduce the time that staff spends doing things other than caring for their patients.

7. Reducing Hospital Stays & Readmissions • As hospitals focus more on reducing LOS and optimizing resource utilization, the industry turns an eye towards a counterbalancing problem - hospital readmission. • “Hospital Readmissions is the largest problem that we’re going to face over the next 10 years” - Mike Gao, MD, New York Presbyterian • Patient readmission is becoming a larger problem for health systems. Medicare’s HRRP, the most prevalent system of financial incentives (and disincentives) for hospital readmissions has assessed • billions of dollars in penalties to • health care systems in the US. over the past decade. • Readmission adversely affects the poorest among us, among the populations that have seen the least change, or growth, in readmission rates are the uninsured and those on Medicaid. • The industry is looking for tools techniques (such as telehealth) that make it easier for care teams and patients to prevent hospital stays altogether through preventative care, habitual change of high-risk behaviors, and increased compliance for follow-up appointments and medication. Readmission Rate Change by provider 2010 → 2016 (% change) Medicare: 18.3 → 17.1 (-6.7%) Medicaid: 13.7 → 13.7 (0.1%) Private Ins.: 8.8 → 8.6 (-1.3%) Uninsured: 10.4 → 11.8 (13.7%) source

8. Embracing AI & ML The hospital is an incredibly complex machine with too many moving parts. This complexity results in incredibly inefficiency in the administration of a patient’s care plan and the process of discharging patients. “To get a patient discharged, we have 279 moving human parts and don't have a way to anticipate barriers in advance.” - Grant Wicklund, CEO, Lutheran Medical Center Causes of patient avoidable days are often non-clinical, including factors like post-discharge placement and the administration of in-hospital services in support of provider Approvals. Furthermore, it often takes hospitals too much time to compile data necessary to make important decisions for that information to be useful. As such, hospitals are increasingly turning to Artificial Intelligence as a way to pilot the systematic decision-making involved in coordinating the hundreds of moving pieces required to carry a patient from admission through to discharge. These areas include sensor-driven inputs, intelligent communications systems, and analytics tools which integrate these systems to give leaders visibility into how their processes are affecting patients.

9. Other Industry Trends Staffing The healthcare workforce is aging and value-based care is leading to higher nurse-to-patient ratios. As such, solutions which aim to optimize hospital staff utilization have become a growing industry focus. Intelligence Beyond EMRs Healthcare systems have realized that their investments in Electronic Health Record implementations has resulted in incredible amounts of potentially insightful data, but very little in the way of actionable intelligence derived from said data. Systems are hungry to figure out ways to gain full value from EMR data. Industry Consolidation Healthcare systems saw a record 803 M&A’s in 2018. Larger health care systems means more hospitals will have access to better technology through their affiliations with larger systems. Consumerism Patients are quickly growing more savvy consumers of healthcare products. As such, tools which put more information in the hands of patients are going to see growth. Internet of Things Healthcare is a distributed & constantly shifting landscape, and distributed intelligence unlocks novel contextual data sets that centralized EMRs are not capable of capturing. Healthcare systems and providers are going to increasingly look to gather data more contextually using IoT devices and leveraging information from patient wearables as a way of delivering personalized care and driving improved outcomes. Definitive Healthcare - Top 8 Healthcare Industry Trends 2019

10. Venture Capital Landscape

11. Some of the Players Alexandria Venture Partners The #1 Healthcare industry venture capital investor by deal volume (Forbes). $688.5M Total Cost (as of March 31, 2019). 38 Deals in Healthcare in 2018 Website | Crunchbase Comprehensive list of healthcare VCs Keiretsu Forum A California-based angel group that offers early, seed, and later stage venture, and debt financing investments. 27 Deals in Healthcare in 2018 Website | Crunchbase New Enterprise Associates A global venture capital firm investing in technology and healthcare. They have a stage-agnostic focus on healthcare and technology. 28 Deals in Healthcare in 2018 Website | Crunchbase

12. Startup Landscape

13. Selection Criteria Opportunity Irrespective of Stage I attempted to capture a range of companies from across the spectrum of capital funding stages. Support from Institutional Investors In line with the Alumni Venture Partners philosophy, I looked for companies with support from established players Teams with proven track records I looked for teams with real experience in healthcare or healthcare technology. Business Opportunity & Market Traction I looked for companies which addressed unmet industry needs, as measured by traction in the marketplace. I also looked for companies which I believe are anticipating the next wave of industry trends.

14. Qventus Leveraging AI to drive automated and proactive health care operations Qventus is an intelligent platform for automating decisions surrounding health care operations, with a focus on Emergency Department and Inpatient flow. Qventus provides multiple technologies that leverage AI to provide prescriptive operations guidance to hospital leadership. Qventus is an interesting company because of its opportunity to drive intelligence in hospital workflows. Most hospitals perform tasks such as establishing patient discharge plans take place on paper or whiteboards, and hospital leadership struggles to get the information necessary to make decisions in time for it to matter. Website Crunchbase Dicslosure - I currently work here

15. XSolis Intelligently connecting payors and providers to provider smarter utilization review XSolis allows hospitals and health care systems to more intelligently determine whether resources are being used appropriately (for example, whether inpatient MRIs are being used only in cases where medically necessary). With hospital resources tapped out already, and health systems being increasingly taking on the financial burden of paying for procedures that providers determine to be unnecessary. Being able to perform utilization review more appropriately decreases costs by improving patient flow and increasing compensation for resource utilization. Website

16. BotMD A more intelligent health care communications application Bot MD instantly answers your clinical questions, transcribes your dictated case notes, and automatically organizes your images and files. “It’s 4 AM. You’re frantically scrolling through your group chats trying to find the last patient update. With Bot MD, you never have to scroll endlessly again. Search all your chat content at once.” This is the sort of intelligent and inherently usable chat app that healthcare sorely needs. It’s head-and-shoulders better than the out-of-the-box solutions provided by EPIC and players in this space. Website Crunchbase

17. Apprentice Health Helping care teams keep their workdays personalized, smooth, on-time, and profitable. Sensors and software for hospitals with goals of 1) increasing the number of patients that can be treated at a hospital or clinic, 2) improving the patient experience, 3) and improving workdays for care teams. They do this by deploying sensors and analytics that create smarter hospital workflows. All-in-all, they don’t seem to be using sensors to do all that much that isn’t being done now, but one great way to differentiate in this space is by gathering proprietary datasets through means like sensor deployments. Website Angelist | Pitchbook

18. Dispatch Health At-home care provider partnering with health systems DispatchHealth is a provider of mobile and virtual healthcare. It offers on-demand healthcare for people of all ages in the comfort of their own home. It was founded in 2013 and was formerly known as True North Health Navigation. It aims to create an integrated, convenient, high touch triage, and care delivery solution that extends the capabilities of the patient's care team and provides quality care in the home while decreasing costs. Website Crunchbase

19. Diagnostic Robotics Helping people develop healthier habits A stealth-mode startup based out of Israel. This company is increasing the flow efficiency of the emergency department by automatic triage and doctor assignment. “We imagine a world where the most advanced technologies in the field of artificial intelligence are harnessed to make healthcare better, cheaper, and more widely available. We are solving a world-wide challenge strained health budgets and workforces, with a cutting-edge solution a human-machine hybrid AI diagnostic system that represents the future of medicine. Diagnostic Robotics is a provider of an AI layer on top of the healthcare system, providing services to governments, providers, insurers and patients.” Website

20. Twiage Better coordination between EMS and Hospitals Twiage is an award-winning mobile healthcare IT company that provides a novel prehospital triage and care coordination system enabling hospitals and EMS to accelerate life-saving care by reducing the need for antiquated radio communication. Hospitals spend millions of dollars per year waiting for medical transport for patients who have already been deemed ready to go home. Platforms like Twiage open up possibilities for hospitals to improve patient flow through proactive in- and outbound communication with medical transport providers. Founded by a hospital system Chief Innovation Officer - YiDing Yu, MD Website Crunchbase

21. Noom Helping people develop healthier habits Noom provides mobile health coaching, focused on combating chronic and pre-chronic conditions such as obesity, diabetes, and hypertension. It combines the power of technology with the empathy of real human coaches to deliver successful behavior change at scale. Noom's direct-to-consumer weight loss and exercise tracking mobile applications have reached more than 47 million users worldwide. Leveraging the success of their ground-breaking health and fitness programs, Noom developed a behavior change platform to treat chronic and pre-chronic conditions, beginning with the CDC's Diabetes Prevention Program (DPP). On the first day, the CDC began recognizing mobile and online DPP providers, Noom was there. Since then, Noom has expanded its curricula across the acuity spectrum and now features programs for pre-hypertension, hypertension, and diabetes management in addition to its flagship weight loss and diabetes prevention programs. Website Crunchbase

22. Memora Health Automated follow-ups for better patient outcomes “For health care organizations who are spending valuable time and labor on phone follow-up with patients, Memora Health provides enterprise productivity software that automates patient follow-up, instructions, health coaching, and collection of patient-reported outcomes via text message.” Many health systems are looking for ways to automate the reduction of hospital readmissions, and Memora Health is one of the few platforms which has demonstrated an intelligent way to integrate medication and follow-up appointment communications into hospital workflows. Website Crunchbase

23. Hospital IQ Data analytics for better demand forecasting and resource utilization planning “Planning for patient demand is a critical, ongoing, daily challenge for hospitals. Without advanced warning of patient surges and declines, hospitals become managed chaos, affecting everyone in the health system…ultimately diminishing the quality of patient care, staff morale and enterprise margins. Hospital IQ solutions provide forecasts of patient demand and prescriptive recommendations that help hospital leaders make better decisions that optimize capacity, scheduling and staffing operational performance in the hospital’s most important operating units.” Website Crunchbase

24. Other Companies I Considered GritLink - easing access to specialized care for endurance athletes LyfLinks - Easing the lives of family caregivers through a provider-connected platform HeyDoctor - on-demand primary care Meru Health - Digital clinic for mental health Call9 - Providing alternatives to hospital admission for nursing home patients Karen (formerly Care3) - Collaborative technology to reduce health care inequality Amplicare - Tools for improved Pharmacy customer service and billing Nimble Pharmacy - a full-service free delivery pharmacy PatientSafe - High quality secure messaging for hospitals Collective Health - bringing AI to employer health plans

25. Zipdrug Delivery of medication via app or phone Letter from the editor: Though interesting, this ultimately got booted out of my top 10 companies for not lining up as closely with industry trends as others on my list. Health Plans partner with Zipdrug to transfer eligible members’ recurring prescriptions from big chain and other non-preferred incumbent pharmacies to Zipdrug’s network of preferred pharmacies who offer the lowest Rx cost, best quality of care, and highest likelihood of adherence. Zipdrug pharmacies compete for market-share on quality, cost, experience & adherence. All prescription data, transfers & patient communications are conducted on Zipdrug’s platform, CareControl. As medication compliance is one of the main sources of hospital readmissions, solutions such as this are going to increasingly garner attention from healthcare systems and insurance providers. Website Crunchbase

26. Zocdoc Providing an alternative healthcare experience online Letter from the editor: Ultimately I decided that it was unlikely that the healthcare industry at large would lean this far into alternative care, and their offering isn’t as compelling as I thought it would be relative to other players in the digital health market, given their relatively high total investment. ...no offense Dave... Zocdoc is the tech company at the beginning of a better healthcare experience. Each month, millions of patients use Zocdoc to find in-network neighborhood doctors, instantly book appointments online, see what other real patients have to say, get reminders for upcoming appointments and preventive checkups, fill out their paperwork online, and more. With a mission to give power to the patient, Zocdoc’s online marketplace delivers the accessible and simple experience patients expect and deserve. Zocdoc is free for patients and available across the United States via Zocdoc.com or the Zocdoc app for iPhone and Android. Website Crunchbase | Angelist