Seeking Alpha

Jim Bloedau's  Instablog

Jim Bloedau
Send Message
Jim Bloedau is managing partner of Information Advantage Group, a healthcare consultancy with a strategic focus on the verticals that comprise the provider side of healthcare and the technology that serves hospital, clinical, financial systems and secure communications of patient data across the... More
My company:
Information Advantage Group
My blog:
Information Advantage Group
  • JP Morgan Conference Not Like CES By Jim Bloedau

    I spent an annual couple of days at the concurrent JP Morgan and OneMedPlace investment conferences this week in San Francisco. The JPM conference is exactly as it has always been - very crowded with successful public companies chumming the waters for stock support, funding or take over. GE, MedAssets, AthenaHealth, Greenway, Express Scripts, Wellpoint were the more prominent high-tech companies and a whole channel dedicated to large provider organizations with many major health systems like InterMountain, Catholic Health and Kaiser presenting.

    The OneMedPlace conference remains mostly early stage startup show with lab, diagnostics, implantables, device and pharma companies pitching for funding. The discussion panels here were the most interesting to the emerging remote care technology markets - I've listed panel highlights below. The one disappointment was that although there was frequent reference to the goals of remote care, the agenda was a bit thin on companies representing this emerging market.

    The one overarching theme across both of these conferences was the response to a healthcare market that is seeing and will continue to see increasing margin squeeze as it shifts from fee-for-service to value-based payment schemes. No one denied that this genie is out of the bottle for good, but some anticipated a bit of opportunistic pullback in federal funding for some programs just as future funding for health exchanges not yet started were cut as part of the recent "fiscal cliff" settlement in Washington.

    Within the subtext of this theme, a couple of very strong clinical imperatives were repeatedly expressed by the investment community. First, the story about your product must improve clinical and fiscal outcomes for multiples of less cost to generate funding and create magnetism in the market. Secondly, healthcare is driven by technology and this orientation is shifting to the "delivery of two separate products - health and care" rather than just tech. As one panelist stated, "If you are not thinking about this, then you need to go sit on a rock and rethink what you are doing."

    As anticipated, these investment conferences were very pragmatic and tuned in to what will be successful in the market. When laying them up against HIMSS (what is working in the health IT market) and the Digital Health Summits at CES or Health 2.0 conference in San Francisco (what could work in the health IT/social/mobile market), the glaring fact is that there is a wide and sobering gap between the "what are" and "what could be" camps that takes some experienced healthcare thinking to navigate.

    Ultimately, to get our products to market successfully we come down to answering questions and working the problems. Who likes consuming healthcare, why and why not? How are we going to incent the patient to stay engaged and be compliant to best practices? How can tech be molded to fit our lives and yet help us optimize health and care for less?

    Interesting Panels:

    The JOBs Act: Passed with bipartisan support, the JOBS Act (Jumpstart Our Business Startups) panel covered the major provisions of the act that is intended to ease the security regulations for funding small and emerging businesses. A deeper dive into this act by the "Crowdfunding" panel pointed to the Reg. D provisions of the JOBs Act which is seen as a pivot point for securing funding for emerging healthcare and life science companies. Among the key points made, the easing of the prohibition of general solicitation under Reg. D will dramatically improve growth company access to investors and opens up new avenues to use the Internet and social media to reach investors. For start-ups, crowdfunding could radically change the traditional seed capital fundraising process. The SEC is still writing the enforcement rules for this 2012 act and should present a final guidance this spring.

    Bootstrapping Funding: The "Bootstrapping Funding" panel started with the bold statement that traditional medical device business models are shifting from only being based on reimbursement to a stronger private pay position. The squeeze on provider margins not just in the US but globally as the worldwide "boomer" birth curve progresses is the main driver of this trend. This format is very similar to what has already happened in the EU and thus touted as an easier market to launch in. However, panelists strongly guided that you have to be very careful as to which country you try to launch in, Turkey is not like Germany. The FDA can be of great help introducing you to distributors offshore.

    Connected Health: This panel of investors saw big data, predictive genomics, disease registry, senior living/telemed and connectivity platforms as interest areas again driven by anticipated tightening of healthcare margins. Enterprise IT and the wellness/fitness niches have lost their glimmer they are staying away from those.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: healthcare
    Jan 11 6:36 PM | Link | Comment!
  • The Healthcare Information Exchange Market Second Round of Consolidation

    A review of the leading Health Information Exchange software vendors brakes out into three competitive segments.

    •  Electronic Health Record Vendors: Most of these vendors have developed inhouse or acquired this capability and are targeting their installed base and includes Allscripts, Cerner, eCW, Epic, GE, McKesson.  Because of the closed and proprietary nature of these systems, traction is expected to be limited and will not penetrate far outside their installed base.
    •  A Varied Group of High Tech Service Firms: ACS, AT&T, CSC, Dell, IBM/PWC, Verizon are targeting the larger public and enterprise markets.  Their greatest traction is expected in large complex environments.
    • Core HIE Vendors:  These are mostly smaller software companies and consolidation is rapidly occurring in this sector due to entrance by the larger vendors wanting into the market and them not having enough competitive girth.

    Within the last three years there have been nine significant acquisitions out of a total of over 21 in the HIE market.  This first round of consolidation is characterized by HCSC and Aetna [both large insurance carriers], IBM, Harris Corporation, Covisint, and Lawson buying market niche leaders.  This is leaving a host of smaller companies that are ripe for acquisitions with the top nine including CareEvolution, dbMotion, ICA, Intersystems, Kryptig, Misys, MobileMD, Orion Health and PatientKeeper - all of these are privately held.

    Because of entry by the large, deep-pocketed enterprise players and publicly held vendors who can quickly fill the need for deeper analytic capabilities and due to the smaller companies being stretched and inevitably not being able to keep up, consolidation is expected to continue for at least the next eighteen months.  A key trend to watch is how analytic software companies will enter this market due to a flood of data and reporting on it being required in the future.

    Roll-ups and consolidation runs across the board for all of healthcare.  From home health to hospitals and physicians, non-licensed caregivers to ACOs – it is the name of the game in a continuing financially restrained environment of healthcare. 

    Source: Chilmark Research

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Apr 13 7:51 PM | Link | Comment!
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.