Follow the Money in Healthcare: Business Models

Geoffrey Baker
Managing Director

www.venadvisory.com

Michael Uradnik
CEO
www.cascadebh.com
1

Session Introduction
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

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

Just Follow the Money

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

Healthcare Value Chain

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

Drivers of Change
Lacking Open Standards
Data Integration, Interoperability, Connectivity
Unaffordable,
Uncoordinated,
Inaccessible Care
5 As

Need for Transparency

Substandard
Healthcare Value, Safety
& Waste
Government
Intervention &
Compliance

Disruption
& Change

Aging
Population

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

Need for Patient

Centered Care

Precision
Medicine

Paradigm Shift

Source: #1

Sources: Frost & Sullivan, June 2015

HLTH 807

Crowded Digital Health Marketplace

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

Where Are You In Your Business Model Journey?

Source: Bill Aulet, MIT Entrpreneurship

Center, Disciplined Entrepreneurship: 24
Steps to a Successful Startup 2013

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

page 8

Why is your Business Model Innovative?

Profit
Model

Network

Structure

Process

Product
Performance

CONFIGURATION

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
System

Service

Channel

OFFERING

Brand

Customer
Engagement

EXPERIENCE

Product Performance:
the development of
distinguishing
features and
functionality.

Service: supporting and amplifying

the value of your offerings.

Channel: The way in which your

offerings is brought to customers.

Product System: the

creation of
complementary
products and
services.

Brand: The representation of your

offerings and business.

Customer Engagement: Fostering

compelling interactions.

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

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

Finding the Right Business Models in Healthcare

Start with Lean Business Canvas Model

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

Canvanizer.com
Leanstack.com

Orbits
$635 BN (1)

Chronic Care Conditions

$17BN (2)
CPT 99490
Total Addressable
Market (TAM)

(100% market share) (3)

Served Available
Market

Target
Market

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

11

What Value Does Your Business Model Create for Customers?

General Industry
Value levers

Growth

Metrics Improved

Levers
Customers
Customers
NewMarkets
Markets
New
New & optimized
New & optimized
products &
products & services
services

Solution
Value

Channels
Channels

Consumption
Consumption &&
Pricing models
Pricing
models

Healthcare

Quality
Outcomes

Process
Improvement

Triple Aim
Better Experience
Better Access
Less Disparity
Better Outcomes
Lower Cost
Reduced waste
Patient Safety
Care Coordination
Payment for value

Process Improvement

Efficiency

Capability
Capability
Maturity
Maturity
Velocity
Velocity

LowerCost
Cost
Lower

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

12

What is your Business Model Evidence?

#s are Illustrative Only

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

13

Live Case Study MVP lean validation

interview with customer

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

14

14

Mental Health Virtual Intelligent Assistant

PROBLEM

SOLUTION

1. Caseworkers must manage

1.
hundreds of patients, but can
only reach 10% on any day.
Theres not enough
2.
resources.

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

visits, treatment compliance. Notifies nurses and caregivers of progress
results interactions.
Outreach prompts patient adherence to advice, medications and
modifies behaviors.

2. Crisis helpline nurses have no 3.

automated intake to expedite
calls or triage.

Reduce anxiety and information burden on patient to comprehend

complex information with multiple choices. Support patient decision- CUSTOMER
SEGMENTS
making for treatments.

3. Patient satisfaction and

patient outcomes survey
results are delayed and
expensive to collect.

1. Health Coaching,
Behavioral
1. Regularly prompt patients to self-report status and progress on therapy
coaching
sessions. Therapists have far more information about patients between visits. 2. Clinics/Hospitals
3. Call Centers, Nurse
2. VIA guides patients in conversation through difficult choices for treatments.
Helpline Intake
3. VIA interpretation, explanation and alert routing of wearable sensor results.

UNIQUE VALUE PROPOSITION

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

COMPETITION

CHANNELS (Licensing Technology)

REVENUE STREAMS

MARKET SIZE

Virtual Care Assistants (Nuance Nina,

VirtOz, CDI, Gamgee/22 Otters, Get Abby,
Next IT Alme, IBM Watson, Great Call,
Welltok/IBM). Horizontals.

Medicaid MCOs (Molina, Centene, United Behavorial Health,

Lantern Health),

$3N Market (2020)

(Nuance ~1BN in
HC), 30% CAGR

Mental Health (Ginger IO, Lifegraph,

empower interactive, breakthrough,
Intellicare, Big White Wall, Talkspace,
Optimism)

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

Transaction based,
Cognition- as-a-Service
(API); i.e., $0.004 per
request, Query volume
pricing, mo. subscription
cost for licensing technology

Patient Satisfaction (Press Gainey)

Telemedicine HIT (MD Live/Breakthrough, Carena, Teladoc, GEIntel CareInnovations),

Wearables (biometric, Samsung, ANT, apple),
Care Coordination Outreach (Emmi Solutions, + 100 more)

Therapy digital visits at

$40/20 min session

TIME TO MARKET
11X Mos, High
velocity

Take Aways...What did we learn?

10/28/2015

16