Start-Ups in HIT Can Help Health Care Giants Zero in on Patient-Centric Solutions

Start-Ups in HIT Can Help Health Care Giants Zero in on Patient-Centric Solutions

By James F. Jordan, Vice President and Chief Investment Officer, PLSG; Managing Director,

Measuring health care is muddled by numerous sub-measurements that can be summarized by the desire for improved outcomes. For our dialogue, improved outcomes is measured as: Outcomes = é accessibility to care + é quality of care + êcost of care.

Over the past two years, there has been a significant shift in health care information technology (HIT). From what was once a focus on financial and operational management in HIT applications, to what is now a focus on an emerging sector in patent-centric solutions and more effective clinical management, many providers are looking at how start-up life sciences companies can help them achieve their goals.

Specifically within the clinical management sector of HIT, the vast improvements in capturing health records electronically allows for new opportunities for growth in clinical decision support and patient safety. Big population management health systems are going to find that the intimacy of the consumer is going to be where all the knowledge is gained in the future of health care. That’s where small start-up companies in new markets are going to be able to provide resources for these large providers.

Patients are demanding access to their information and a faster speed of being treated along with cost-effective health care. At the same time, providers are getting squeezed for profits, all-the-while having to adhere to strict regulations that limit speed and accessibility of information. Operating on a smaller scale, start-up life sciences companies are able to help close the gap between patients and providers by providing real solutions that effectively optimize the acquisition, storage, retrieval and use of information in health care and biomedicine under less strict regulations.

There has also been a shift in how the investor community is looking at the HIT industry. Angel investors can play a significant role in bringing patient-centric solutions to the forefront by helping start-ups get the financial boost they need to get started. Working with smaller companies enables angels to provide smaller amounts of money, versus what a VC is contributing to larger providers (like a pharmaceutical company) before they see an exit.

Smaller start-up companies require smaller dollar amounts to get the cash flow positive and also have an exit. With limited economic development monies from organizations like the Pittsburgh Life Sciences Greenhouse (PLSG), we can work with smaller companies and have a shorter lifecycle from investment to exit because of less regulatory requirements. This is attractive to not only providers, but also the entire angel community.

It’s an exciting segment to be a part of and we are eager to continue to help our HIT portfolio companies lead the patient-centric movement in HIT.