How are hospitals responding to startup queries to use de-identified patient data? Cautiously | MedCity News

Access to large amounts of de-identified patient data has to be like oxygen to healthcare IT startups. They need the data to show that their software and algorithms function correctly and (a recurring theme) that they can credibly save money for their customers. This is critically important in attracting investors and scaling up to more customers.

Unfortunately for startups, the CEOs, CFOs, and CIOs of large hospitals and healthcare systems know exactly how valuable this patient data is. While they may have granted easy access to it once upon a time, those days are largely in the past. You will have to earn their trust and pay in some form to get access today and in the future.

If I were the CEO of one of these companies, I would do everything possible to get access to this data. Here are a few things that one should try in order to get to the precious data:

Partner with the hospital/healthcare system that owns the data. Easier said than done for a startup. Yes, you will need to make some sort of gain-sharing agreement. You will also need to indemnify the partner against legal and financial penalties resulting from your improper use of the data, e.g., HIPAA violations and any willful or inadvertent patent infringement. Essentially, you will need to guarantee the hospital that your startup will assume all of the downside (risk) and cut them in on the upside.

Partner with one of the hospital’s primary IT providers. They have far more influence and access to key decision-makers in the hospital. There is a veritable alphabet soup of systems out there, from EMR to HIS to RIS to PACS and beyond. None work perfectly and who knows? You may find the perfect corporate partner along the way.

Partner with a prominent and/or influential physician on the staff and preferably on the management team of the hospital. This could take the form of a consulting agreement, part-time employment, or membership on your medical advisory board. All of those should include a generous helping of stock options if permitted by the physician’s primary employer.

Offer to conduct an onsite beta trial with the data and aggressively identify all patient and economic benefits. Also offer substantial discounts for sale, installation, and support of your software.

If you live in a state or congressional district with a Democratic representative or senator, contact their offices and ask to speak to the aide responsible for healthcare liaison.  They are motivated to help anyone who has the slightest promise of showing that Big Data can help patients and save money, all key components in the promise of the Affordable Care Act (aka “Obamacare”). Their help and influence will be mostly indirect, however, and the most you could hope for is a phone call from the elected official to an executive at the hospital.

Conduct a PR campaign highlighting your company’s efforts to save money and improve patients’ lives. This works best if there are competing hospitals or healthcare systems in your area so you can play one entity against the other.

If nothing else works, expand your geographic scope and consider other metropolitan areas.

Read more: How are hospitals responding to startup queries to use de-identified patient data? Cautiously | MedCity News.

Here’s where the angel money is flowing in the U.S. | GeekWire

OK, fellow Seattle-area entrepreneurs, this is what we’ve been suspecting all along: it’s getting  tougher to raise angel money here.

According to an article just published by the Angel Resource Institute, angel group investing dropped in the six-state Northwest region, from an 8.3 percent share of the national total in 2012 to 6.4 percent during Q1 2013. Interestingly, the Seattle-based Alliance of Angels was named as one of the top six angel groups in the country in terms of number of deals. Unfortunately, the AoA does not typically invest in medical device companies although they recently made one notable exception with an investment in Mobisante, the smartphone-based ultrasound startup.

The Northwest’s 6.4% share of the country’s total angel investment in Q1 2013 is the lowest of the nine regions assessed in the report. Conversely, the Southwest is red hot for angel investment, rising from 11.9% to 18.1%. It even beat out perennially top-ranked California.

More useful information:

The Halo Report finds that the median premoney valuation for early-stage deals by angel groups stayed consistent at $2.5 million during the first quarter. It also found that the median amount invested was $680,000 per deal, which sets a five-quarter high and is up from $550,000 one year ago.

The hottest sectors are Internet, healthcare, and mobile technology, comprising 72% of the total deals and pulling down 64% of all angel investment dollars. Healthcare is second behind Internet in terms of share of deals and share of dollars.

81% of investments are made in angels’ home states. So much for the conventional wisdom that says to go elsewhere if you can’t find investors locally.

Not sure how to reconcile the angel stats with this recent article: The top 3 cities for startups: Austin, Seattle and Boulder – GeekWire. Of course, the reasons that startups may be attracted to a city or region may not correlate with the somewhat obscure reasons for angels to invest. Hmmm…so what exactly are those 10,000 Microsoft millionaires doing with their money?

According to a report from GoodApril, a San Francisco-based tax-planning service, the best places to start a company are Austin, Seattle and Boulder. GoodApril based its findings on median tech-employee earnings, personal income tax, property tax, the cost of housing and the cost of office space.

Read more: Here’s where the angel money is flowing in the U.S. – GeekWire.

Health IT startups, “physicians” shouldn’t be a target market. Get more specific. | MedCity News

This is good advice and good practice for all medical device companies, not just startups. Market segmentation is difficult but, properly done, leads to successful launches.

Here are a few other ways to categorize and target physicians beyond medical specialty:

Career status: Resident, senior resident/fellow, young attending, mid-career attending, late career attending, emeritus.
Decision-maker status: Department head, Chief of practice, second-in-command, member of purchasing committee or similar group, “worker bee.”
Case load: low, medium, high, unbelievable.
Geographic region: There are clear differences around the USA in medical practice as well as from country to country.
Corporate affiliations: You may or may not want to target physicians with strong ties to your competitors. And the ties can be VERY strong!
Primary type of practice: Hospital, research/academic/teaching, private practice, VA/military, standalone surgery centers. There is a lot of overlap in this category with physicians working in multiple settings so it can be a bit fuzzy.
Technology adopter status: Innovator, Early Adopter, Early Majority, Late Majority, Laggard
Influencer/Key Opinion Leader/Notoriety Status: Prolific article author, leads or participates in numerous clinical trials, frequent speaker at medical conferences, frequently interviewed and/or quoted in news and media.

You can purchase lists of physicians with some demographic data relatively inexpensively. You should then create a database and augment that data regularly with information you or your commercial team finds. Before you make final decisions about targeting, be sure to talk with actual prospects and test your model!

As for what happens after a company has decided its target specialties, Kim offers this advice: “If we could do it over again, we would have spent at least six months to one year working on site or near-site with a handful of actual customers.”

Read more: Health IT startups, “physicians” shouldn’t be a target market. Get more specific. | MedCity News.

Life Science Innovation Northwest Conference 2013 – medical device startup perspective

I attended LSINW last Wednesday and Thursday July 10-11 as a poster presenter. I’m serving as acting CEO for a University of Washington startup we’ve named SimpleCirc. The simple, safe, swift, and inexpensive adult male circumcision device is intended to address the HIV/AIDS epidemic in Africa (you can download our poster here: SimpleCirc LSINW 2013 Poster)

The LSINW poster submission and conference admission process is a bit of a bargain. Not all posters are accepted, but the ones selected are placed prominently in the main hallway of the conference. Most of the conference attendees walk through the poster exhibits several times per day. There are many opportunities for interaction. The presenters are given coaching and two full-conference admissions for $175. That compares to $350-$1500 per person for full price admission. Needless to say, we took full advantage of every opportunity.

Overall, LSINW is very professionally produced and run by WBBA, the Washington Biotechnology and Biomedical Association. Printed materials are high quality, the presentation venues have up-to-date AV equipment and adequate staffing, the various presentations and panels run like clockwork, and the food/refreshments are more than adequate in quantity and quality. The conference schedule is made available in a brochure, a digital PDF file, and in a tablet/smartphone app called Guidebook (more about that later).

There was a cocktail/networking event at the end of the first day but the organizers also scheduled an event honoring local women in life sciences AND had a rock band made up of (amateur?) musicians in the Seattle life sciences scene. There was too much going on for me. The noise level was high and it was difficult to hear in that space.

A Life Science conference necessarily has a wide variety of attendees: small, medium, and large medical device company executives, biotech execs, a few pharma people, consultants, service providers, grant-making officials, physicians, researchers, and academics, angel investors, VCs, media, etc., etc. Not every person had an interest in what we’re doing but it is always fun and interesting to look for a connection.

LSINW created several tracks for the two-day agenda: Biopharmaceutical, Medical Technology, Emerging, Health Information Technology, and Innovation. There truly was something for everyone and I often found myself torn between two compelling but simultaneous presentations.

The Opening Keynote speaker, John Crowley, CEO of Amicus Therapeutics, was unable to attend due to a family emergency but the conference organizers came up with a last-minute substitute, Charles Baltic, Managing Director of Needham & Co. He was an OK speaker but I’m sure he repurposed an existing presentation – very heavy on info about financings and IPOs.

The first day lunch keynote speaker was Steven Burrill, CEO of Burrill & Co. He updated his talk about the state and future of healthcare in the USA from last year but it was entertaining and extremely interesting. I’m impressed with his presentation abilities. He blows through ~150 slides in under an hour and apart from looking at a monitor to see what slide was being displayed, never looked at a note the entire time.

The panel discussions were good. Most of the moderators were well-prepared with stimulating questions and the panels – usually (but not always) executives with Seattle connections. Most of the discussions were non-controversial with panel members sticking to relatively “safe” positions. That is, until the last panel, “Blood from a Stone – Who is Left in Life Science Investing Today?” moderated by Luke Timmerman of Xconomy who did a fine job by staying out of the spotlight.

Sparks flew as three panelists more or less representing the Venture Capitalist side of funding sources sparred with Gregory Simon of Poliwogg, a relatively new crowdsourcing site for angel investors. For sheer entertainment value, this was the best panel of the conference. The perspective of the VCs seemed to be that “we are smarter than everyone else” and the “average investor” needs to be protected from the risk of losing their entire investment. Excuse me, but I don’t believe any VC fund offers money-back guarantees.

Gregory Simon was entertaining, if a bit of an iconoclast. He did make a number of good points and also noted that very recent changes by the SEC have enabled crowdsourcing of angel investments – details are still forthcoming but it is very exciting from my perspective. There are few opportunities in Seattle for early stage device companies to get seed or Series A funding. Once those have been exhausted, it’s off to California and overcoming the challenges of being unknown and from out of town in order to raise capital.

An added bonus was the participation of James McIntire, Washington State Treasurer, giving the perspective of a pension fund trustee, and Tracey Mumford from the Michael J. Fox Foundation representing the “venture philanthropy” segment. As an attendee remarked during the audience Q&A, democratization in venture investing is coming whether or not you want it or are prepared for it. He also served up the example of the meltdown in the investment banking industry over credit default swaps and mortgage derivatives to show that “the smartest guys in the room” are not infallible.

I’ve attended a number of LSINW conferences, starting in the days when they were held at the Bell Harbor Conference Center on Elliot Bay in Seattle. The Washington State Convention Center is the perfect place for this meeting, in my opinion – centrally located downtown, spacious, clean and accessible. No, there are not great views but that may be the only drawback.

I mentioned the Guidebook app earlier. It’s a nice compendium of the various events – and it auto-updates whenever there is a revision (like the keynote speaker change). You can even make a schedule for the entire event. BUT, you can’t upload the schedule to your Google Calendar or Outlook calendar. And you couldn’t sync the schedule in your phone to your tablet or vice-versa. Also, there was another event called Biopartnering where interested parties could arrange brief get-to-know-you meetings. Unfortunately, that function could not be integrated with the Guidebook schedule, meaning I had to juggle three different schedules over two different devices. Not for the technology-challenged!

As for my perspective as a startup CEO, I’m often left wanting…more from these events. Many of the panel discussions focus on biotech or later stage financing like VC or IPO. I would like to see a panel of startup medical device CEOs who recently completed an angel round to share their experiences, do’s and don’ts. I would also like to see a stronger presence from Angel groups like WINGS.

On the other hand, Seattle is a small town when it comes to life sciences. You can get to just about anyone with one or two requests for referral or introduction. The LSINW conference is a great way to do that in person every year. If you are a startup CEO or are thinking about a startup, I strongly recommend that you attend next year, June 19-20, 2014.

Medtech inventor claims Ethicon lawyer tricked him into divulging trade secrets | MassDevice

This is an excellent cautionary tale for anyone with an idea or invention who is thinking of approaching a corporation: Talk to an attorney first!!!

“In court documents Nicolo spelled out his prior disputes with Ethicon, noting that, in light of his previous experiences,” Dr. Nicolo adopted a heightened level of discretion and caution in approaching Ethicon and sharing any business proposals and technical developments with Ethicon.”

Nicolo said that he and another inventor jointly developed a proprietary surgical stapling system for intestinal reconstruction and resection, which was the subject of U.S. Patent issued in September 2000. While the patent was still pending in 1998, Nicolo met with representatives of Ethicon, including Federico Bilotti, to discuss the stapling technology, according to the complaint.

Just 7 months later Ethicon filed its own patent, naming Bilotti as its inventor, describing a surgical stapling instrument that included “hemorrhoidectomy device technology” that Nicolo claims was derived directly from his conversation with Ethicon.”

Now, who knows what really happened in this particular case? People file lawsuits all the time; it doesn’t mean that they are right and the other party is wrong.

For start-up novices or entrepreneurial inventors, it may seem like a good idea (and it may actually be a good idea) to talk with larger medical device companies. They have resources (= cash) and they need new products. However…I’ve heard similar stories from entrepreneurs, physicians, and inventors claiming that some big corporation stole their idea.

Here are some tips and other issues to consider. These are from my experience and perspective as an entrepreneur and medical device professional. As the saying goes, I am not a lawyer:

  1. If you must approach a big company, try to get them to sign an NDA (non-disclosure agreement, also known as a CDA, confidential disclosure agreement). You need a one-way NDA to document what you are disclosing to the company. Many times, the company will ask for a two-way NDA to cover anything they might disclose in the course of the discussion. Of course, many times the corporation will tell you that they will not sign an NDA as a matter of policy. In that case, you need to decide if the benefit of the discussion is worth the risk of compromising your intellectual property (IP).
  2. Read the NDA form very closely before signing it. If it’s your NDA form that is being used, review it carefully with your attorney beforehand. Also review any changes requested by the corporation’s attorneys. The NDA spells out very specifically what you have to do to be covered by the NDA. Usually, that means putting all disclosures in writing within a certain time period. This is especially important for anything that is disclosed orally during a meeting.
  3. Know in advance what you are willing to disclose in the discussion and do not waver. You can always ask for another meeting! Also know what you want. If you wait for the corporation to make a proposal, you will be negotiating from a weakened position. 
  4. Keep in mind that the other company probably has done investigation or perhaps even R&D into the topic you are discussing. They will not tell you any of this information. Also keep in mind that the corporation’s representatives are only interested in itself and themselves, not you. Corporate employees may whisper sweet nothings in your ear, but keep your wits about you and maintain a high level of skepticism.
  5. If you have intellectual property, protect it. At the very least, file a provisional patent application. These are relatively inexpensive and you have one year to file a formal patent application.
  6. If you have trade secrets, do not reveal them. You can show the results or output from application of the trade secret but trade secrets are by definition unprotected intellectual property. Think of the trade secret as a handful of precious gems. Once they are out of your possession, how do you prove they belong to you?
  7. Document everything. Keep notebooks, in a secure place (or the online equivalent, with reliable backups), detailing the invention, all inventors, dates, times, circumstances. Document every interaction you have with the corporation. Note names, titles, dates and times of meetings, all attendees, take notes, and publish meeting minutes.
  8.  Do not assume anything about your interaction with the corporation. Nothing is certain unless it is in written form – and even then, can be the subject of much legal wrangling if the parties disagree about something.
  9. Sure, you always have the option to file a lawsuit if things go awry, BUT the corporation has more and better lawyers and much, much more money. Consider this option your very last resort.
  10. It is possible for a small business to license or sell technology, IP, or a product to a larger company. Most of the risk falls on the little guy, unfortunately. As Ronald Reagan once said of his dealings with the USSR, “trust but verify.” I would modify that aphorism for this subject to “engage but document.”

Read more: Medtech inventor claims Ethicon lawyer tricked him into divulging trade secrets | MassDevice.

Five VC Firms That Invest in Early-Stage Device Startups (slideshow) | MDDI Medical Device and Diagnostic Industry News

Good to know that there are VCs still active in the medical technology startup space. Their portfolios are full of impressive companies, many of which have already exited. Of course, as a startup CEO, you give up quite a bit of control when you accept VC funding – perhaps even your job.

My preference would be to bootstrap and use seed/angel funding as long as possible. If you absolutely have to have VC money, get that valuation up first!

Read more: Five VC Firms That Invest in Early-Stage Device Startups (slideshow) | MDDI Medical Device and Diagnostic Industry News Products and Suppliers.

Is This 3-D Printed Cast the Future of Healing Broken Bones? | Wired Design | Wired.com

Innovation comes to the humdrum cast. What a great concept! I’ve worn plenty of plaster and fiberglass casts. The only good part is when they are removed. This story shows that ideation can be applied just about anywhere, a valuable lesson for the budding entrepreneur in many of us.

The concept, created in a school project,  is to use 3D scanning and printing to create a custom cast that is as strong as, if not stronger than ordinary casts and is open (so you can scratch it!), lightweight, and waterproof (no more garbage bags and tape – hooray!).

I suppose it could be printed in different colors and patterns as well.

I believe this is one invention where patient demand will overcome the usual resistance to new technology.

And young Jake Evill has to continue his studies to get a PhD or MD – we need a real-life Dr. Evill!

Cortex Cast
The Cortex Cast is a 3D-printed alternative to traditional plaster and fiberglass casts. Image: Jake Evill

“The young designer began by researching the structure of the bone. He found that the trabecular, the tiny lattice-shaped structures that form the inner tissue of a bone, to be the perfect inspiration. “It was this honeycomb structure that inspired the Cortex pattern because, as usual, nature has the best answers,” he said. “This natural shape embodied the qualities of being strong whilst light just like the bone it is protecting within.””

Read more: Is This 3-D Printed Cast the Future of Healing Broken Bones? | Wired Design | Wired.com.