Follow the Money in Healthcare: Business Models

1

Geoffrey Baker

Managing Director Michael Uradnik

CEO

www.cascadebh.comwww.venadvisory.com

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• Follow the money

• Healthcare Value Chain – Who, What, Where, and How?

• Opportunities – Changes & Shifts in healthcare

• Finding the Right Business Models

• Where to Play and Not Play - Entrepreneurial opportunities

• Healthcare Business Model Case Study

• Discussion

Session Introduction

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Just Follow the Money

2015, Seattle Start-up Week. Venture Advisory Services, Cascade Behavioral Health

Healthcare Value Chain

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Source: The World Financial Review (9-2012), “The Business of Healthcare Innovation: Convergence in the Marketplace.”

2015, Seattle Start-up Week. Venture Advisory Services, Cascade Behavioral Health

Disruption

& Change

Lacking Open Standards

Data Integration, Interoperability, Connectivity

Aging

Population

Substandard

Healthcare Value, Safety

& Waste

Need for Patient

Centered Care

Unaffordable,

Uncoordinated,

Inaccessible Care

5 A’s

Government

Intervention &

Compliance

Need for Transparency

Precision

Medicine

Drivers of ChangeDrivers of Change

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Paradigm Shift

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Source: #1 HLTH 807

Sources: Frost & Sullivan, June 2015

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Crowded Digital Health Marketplace

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Where Are You In Your Business Model Journey?

Source: Bill Aulet, MIT Entrpreneurship

Center, “Disciplined Entrepreneurship: 24

Steps to a Successful Startup” 2013

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• Profit Model: How you make money.

• Network: How you connect with others

to create value.

• Structure: The organization and

alignment of talent, resource and assets.

• Process: Developing and implementing

unique or superior methods.

• Product Performance:

the development of

distinguishing

features and

functionality.

• Product System: the

creation of

complementary

products and

services.

• Service: supporting and amplifying

the value of your offerings.

• Channel: The way in which your

offerings is brought to customers.

• Brand: The representation of your

offerings and business.

• Customer Engagement: Fostering

compelling interactions.

Why is your Business Model Innovative?

Source: Perkin [2014]; Kelley, L. et al. 2013.

Profit

Model

Network Structure Process Product

Performance

Product

System

Service Channel Brand Customer

Engagement

C O N F I G U R A T I O N O F F E R I N G E X P E R I E N C E

2015, Seattle Start-up Week. Venture Advisory Services, Cascade Behavioral Health

Finding the Right Business Models in Healthcare

Source: Ash Maurya (Running Lean) 2012 adaptation of Business Model Generation (2009) Canvanizer.com

Leanstack.com

Start with Lean Business Canvas Model

Orbits

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(1) Center for Medicare and Medicaid Services, Office of the Actuary, April 2010. (2) CPT code 99490 - chronic condition management $42.60

(3) Steve Blank “The Startup Owner’s Manual”

$635 BN (1)

Chronic Care Conditions

$17BN (2)

CPT 99490

Served Available

Market Target

Market

Total Addressable

Market (TAM)(100% market share) (3)

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What Value Does Your Business Model Create for Customers?

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Metrics Improved

Solution

Value

Growth

Efficiency

LeversValue levers

Customers

New Markets

New & optimized

products & services

Channels

Consumption &

Pricing models

Lower Cost

Process Improvement

Capability

Maturity

Velocity

Quality

Outcomes

General Industry

Healthcare

• Triple Aim

• Better Experience

• Better Access

• Less Disparity

• Better Outcomes

• Lower Cost

• Reduced waste

• Patient Safety

• Care Coordination

• Payment for value

+

Customers

New Markets

New & optimized

products &

services

Channels

Consumption &

Pricing models

Process

Improvement

Lower Cost

Capability

Maturity

Velocity

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What is your Business Model Evidence?

#’s are Illustrative Only

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Live Case Study – MVP lean validation

interview with customer

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PROBLEM

1. Caseworkers must manage

hundreds of patients, but can

only reach 10% on any day.

There’s not enough

resources.

2. Crisis helpline nurses have no

automated intake to expedite

calls or triage.

3. Patient satisfaction and

patient outcomes survey

results are delayed and

expensive to collect.

Mental Health Virtual Intelligent AssistantSOLUTION

1. Supports care health risk assessments, coordination, self-care between

visits, treatment compliance. Notifies nurses and caregivers of progress

results interactions.

2. Outreach prompts patient adherence to advice, medications and

modifies behaviors.

3. Reduce anxiety and information burden on patient to comprehend

complex information with multiple choices. Support patient decision-

making for treatments.

UNIQUE VALUE PROPOSITION

1. Regularly prompt patients to self-report status and progress on therapy

sessions. Therapists have far more information about patients between visits.

2. VIA guides patients in conversation through difficult choices for treatments.

3. VIA interpretation, explanation and alert routing of wearable sensor results.

4. VIA natural conversation call with a patient regarding their satisfaction with

recent service experience.

CUSTOMER

SEGMENTS

1. Health Coaching,

Behavioral

coaching

2. Clinics/Hospitals

3. Call Centers, Nurse

Helpline Intake

COMPETITION

Virtual Care Assistants (Nuance – Nina,

VirtOz, CDI, Gamgee/22 Otters, Get Abby,

Next IT – Alme, IBM Watson, Great Call,

Welltok/IBM). Horizontals.

Mental Health (Ginger IO, Lifegraph,

empower interactive, breakthrough,

Intellicare, Big White Wall, Talkspace,

Optimism)

Patient Satisfaction (Press Gainey)

REVENUE STREAMS

Transaction based,

Cognition- as-a-Service

(API); i.e., $0.004 per

request, Query volume

pricing, mo. subscription

cost for licensing technology

Therapy digital visits at

$40/20 min session

CHANNELS (Licensing Technology)

Medicaid MCOs (Molina, Centene, United Behavorial Health,

Lantern Health),

Telemedicine HIT (MD Live/Breakthrough, Carena, Teladoc, GE-

Intel CareInnovations),

HIT Companies (EMRs, CDI), Urgent Care (QAlliance),

Wearables (biometric, Samsung, ANT, apple),

Care Coordination Outreach (Emmi Solutions, + 100 more)

MARKET SIZE

$3N Market (2020)

(Nuance ~1BN in

HC), 30% CAGR

TIME TO MARKET

11X Mos, High

velocity

Take Aways...What did we learn?

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