Chicago-based Procured Health was one of nine companies to participate in the first class offered by Blueprint Health, an accelerator in New York City. After three months spent learning about how healthcare providers make decisions about clinical resource management and supply chain, the company secured $1.1 million in seed funding from institutional investors and a number of healthcare entrepreneurs, including athenahealth CEO and co-founder, Jonathan Bush. Following a series A funding round in March 2014, the company secured over $4.2 million.
Procured Health develops solutions to aid providers in managing clinical supply spend and ultimately aims to improve outcomes by enabling clinicians to delivery high-value care to patients. Hani Elias, CEO and co-founder of Procured Health, says the company's origins can be traced back to his experience as a consultant for a medical device company.
"I saw U.S. hospitals really struggling to make value-maximizing product decisions," Mr Elias says. "I saw a tremendous amount of wasteful spending on devices. Providers were paying price premiums when they shouldn't have been. In light of value-based reimbursements and bundled payments, the days of not really looking into overspending on these products are really coming a close."
Here Mr. Elias discusses the problem of information flow in certain areas of healthcare and the industry-wide issue of significant overspending on medical devices.
Question: What was the industry need Procured Health is seeking to address?
Hani Elias: Total hospital spending on medical products is about $150 billion per year. Just from some high-level analysis, we identified that problem added up to about $25 billion in overspending. One of the main drivers of wasteful spending in this space is a lack of information.
Historically, information flow has been driven by sales reps and in no other industry — especially one of healthcare's magnitude — is this really the case. When you look at things we buy all the time, like TVs, cars or homes, there are a lot of tools and resources out there to help you become a more sophisticated buyer, but we didn't see hospitals as having a resource that could help with that information flow. We wanted to create solutions to give clinicians the tools to maximize patient value. We want to be a resource for them as they try to bring value to patients.
Q: What has the feedback been like from hospitals or physicians utilizing these solutions?
HE: We support decision-making at primarily acute care hospitals. The physicians we've interfaced with are surgeons, orthopedic surgeons, electrophysiologists and plastic surgeons, and I think what we've noticed is this trend among physicians who are becoming a lot more sensitive to the way they're going about making their decisions. They've gravitated toward the fact we provide them with unbiased information they can use to make decisions, as well as offering them collaborative technology that allows them to have a different type of relationship with their administrators.
We had one surgeon tell us he didn't know why he used the products he used, and our data gave him the ability to have new perspective. Another told us our solutions gave him a way to engage with his administration about the value analysis process that he didn't have before. We found hospitals rarely understand the entire competitive landscape and understand the vast range of choices they have in regards to devices and products. So much money is being spent with little information to help providers make the right choices for them.
Q: What projects are on the horizon?
HE: In August we released our newest platform called Pipeline Pro. The idea behind that solution is we take a hospital's spend history and spend data and apply our research on top of that to unearth areas where spending practices don't seem to align with clinical best practice or with the state of the evidence.
I think it's a game changer in helping hospitals be more proactive in managing their clinical product spend, which for hospitals is the second fastest growing cost category. So it's really important to get a handle on. We're continuing to develop solutions specifically geared toward helping physicians bring high-value care to their patients. So iterations of our solutions are really physician-focused, whether that be something on mobile or other types of engagement tools and resources, we believe it's now a new day where physicians are eager to take charge over the mandate of delivering optimal care for patients from a quality and cost standpoint.