Investment in Healthcare IT

The healthcare IT investment area has been really interesting lately. We have all sorts of healthcare focused incubators popping up. The Startup Weekend mega event had healthcare as one of its three focuses (I was sad I couldn’t attend this event). Lots of people are talking about healthcare as a place ripe for IT innovation.

Dan Munro latched on to some of this health IT investment in a really interesting post. Here’s a section of his post near the end:

I have no insight into the applications for either Healthbox or Blueprint, but Rock Health had over 350 applications for their first cohort of 11 companies. That ratio is farily common – although Y-Combinator’s Winter 2011 cohort was 43 companies (99 founders). The sheer number of applications to Rock Health indicates the strength of the Rock Health program (location + strong network + zero dilution). It also highlights the sheer volume – 350 teams (worth repeating) – committed to making a difference in healthcare. That. Is. Awesome! We need to foster, encourage and promote all those people and that activity – collectively – in every way that we possibly can. Maybe he should be, but the next Mark Zuckerberg isn’t toiling away inside Harvard thinking how he can move the U.S. Healthcare system into the 21st Century. Whatever “it” is at that age and location – it better involve large doses of the opposite sex, a different type of pharmaceutical and some form of loud music.

Simple math says that 20 companies (2 cohorts per year) at $20k each plus rent, payroll, legal and all the other expenses should be less than $2M per incubator per year. Our $8M “innovation” fund (from the $395M balance) could easily support 4 more incubators – in say San Diego, Austin, Seattle and Phoenix. 7 incubators running 20 companies equals 140 companies innovating in healthcare – per year.

Of course, the biggest problem with Dan’s idea is that the government doesn’t like to invest money this way. For some reason, that almost seems unacceptable for a government to invest money in these companies that have a high probability of failure. Even if we can see how this type of innovation could provide some really interesting benefits to healthcare. Plus, $8 million for 140 companies. That’s a pretty interesting number to me.

I love the incubation idea and I’m glad that it’s started to go in healthcare. I hope it’s incredibly successful. Either way, it’s going to be really fun to watch the innovations coming out of these investments. An EMR company has already come out of the most famous incubator: Y Combinator. I don’t see why other EMR and healthcare IT companies couldn’t do well also.

Note: I think one of those incubators should be in Las Vegas. Although, I’m admittedly biased towards Las Vegas Startup companies.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

   

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