By Brian Sodoma
Developing, testing and refining new health software can overwhelm a startup. But an informal support network that links entrepreneurs with funding and mentorship in Colorado is helping businesses get off the ground.
This ecosystem comprises investors and investment matchmakers, shared labs and workspaces, and incubators and accelerators whose activities are punctuated by conferences where nascent ideas take shape. The results speak for themselves.
In 2009, Denver-based Welltok was little more than a thought conjured up by company founder Scott Rotermund. From 2011 to 2014, the company grew more than 1,800 percent, adding 189 of its 210 employees. In the last of those three years, privately held Welltok generated revenue of more than $10 million.
Its success has come from a mobile app called CaféWell Health Optimization. Developed in collaboration with IBM, the app harnesses artificial intelligence to provide individualized advice about ways to improve health. It also leads users to healthcare resources and helps them understand insurance benefits.
Welltok is one of about 130 digital health companies now operating in Colorado. Research firm Rock Health recently named the state as having one of the top 10 digital health clusters in the nation.
Nonprofit Spurs Innovation, Creates Community
This cluster is thriving thanks in part to Prime Health. Founded in Denver in 2012, Prime Health has grown into a digital health community populated by academics, entrepreneurs, investors, technologists and healthcare providers and administrators. Since becoming a nonprofit, membership has doubled to 1,400, according to the organization’s 2015 annual report.
Led by CEO Jeffrey Nathanson, Prime Health applies a multipronged approach: identifying critical healthcare problems that can be solved by digital health solutions; qualifying digital health products and the companies behind them; and introducing their products into healthcare environments for testing. Prime Health’s goals are to provide Colorado with the best digital health ecosystem in the nation and to make Coloradans the healthiest citizens of any state.
Colorado is addressing both goals through its support of Welltok’s app for state employees. Six months after launching the CaféWell health incentive program in July 2013, the state reported more than 10,000 of its employees had participated in a range of health activities encouraged by the app. Half of the participants had completed a health risk assessment using CaféWell, a 650 percent increase over the prior year.
Building a foundation for digital health companies goes hand-in-hand with making Colorado healthier, Nathanson said. Collaboration among companies, established ones and newbies, is the key.
Prime Health uses its annual Digital Health Challenge to qualify companies and pair them with industry players. At the meeting, digital health startups pitch their products to a panel of healthcare executives, vying for the chance – and $150,000 in seed capital – to test their products in Colorado.
Since September 2014, with only two challenges under its belt, Prime Health had qualified 70 companies, which went on to raise more than $34 million. Their technologies include the online physical therapy app Telespine, which seeks to reduce medical costs due to low back pain through employee engagement.
Using Colorado as its base, Prime Health wants to expand its model of industry engagement. Its Innovation Summit in May is expected to draw leaders from tech clusters in other states, according to Nathanson. Among the goals are bolstering development of technologies that establish positive patient engagement, improving patient outcomes and reducing healthcare costs.
In the coming year, Prime Health expects to be among the first residents of a health innovation campus being built in downtown Denver. The hope, according to its founder, Mike Biselli, is to better integrate industry and innovation.
The 300,000-square-foot campus is being designed to provide startups with co-working space and incubator environments, while serving as home to a wide range of small to large healthcare enterprises. Among them will be the Medical Group Management Association, which provides education, data and legislative information to medical practice managers; data management company Burst IQ; and telehealth enterprise CirrusMD.
Accelerating Development
Colorado already provides several corporate incubators and accelerators. Galvanize, Techstars and Innosphere have helped nurture clean technology, bioscience and digital health startups.
Mike Freeman, CEO of Innosphere, which began in Fort Collins in 1998, describes the best candidate for his incubator as a company that is “laser-focused to reach short-term milestones” like funding, forming management teams and mentoring.
Flexible workspace at startup hub Galvanize in Denver. Credit: Galvanize
Incubators and accelerators can serve as valuable links to funding. In 2015, Colorado’s digital health companies generated $145 million, according to Prime Health. Advanced industries accelerator grants have helped many Innosphere companies, according to Freeman. Venture capital enterprises are also growing in the state, while outside money is eyeing digital health startups.
Colorado brings a unique collaborative culture, something that goes beyond dollars and big ideas, according to Welltok founder Rotermund.
“As you look at the competitive market, with many people holding their cards close to the vest and not sharing, I would tell you that’s not the case here,” he said. “We’re about helping each other find better solutions.”
Brian Sodoma is a journalist who covers business and health. He lives in Southern Nevada.
