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1Mby1M Deal Radar 2011: Healthcare Interactive, Glenwood, Maryland

Posted on Tuesday, Aug 9th 2011

A report issued by the U.S. Census Bureau in September 2010 stated that in 2009, more than 50 million people living in the United States did not have health insurance. According to Wikipedia, more money per person is spent on health care in the United States than in any other country in the world. It makes sense that anything that helps to reduce the overall cost of health care while improving the quality of care that people receive is a good thing. Founded in 2006, Healthcare Interactive, Inc. (HCI) is a health care technology company that helps organizations consolidate disparate health care data and applications into one platform called HealthSpace. HealthSpace is a software as a service, service-oriented architecture (SaaS-SOA) health care operating system (H-OS) that uses an inheritance-based organic network architecture to leverage a unique combination of identity management, knowledge management and an application framework in a single cloud-based environment. The company believes that this approach enables all concerned in the health care continuum to better measure and manage health care costs by using real-time data to increase transparency, foster engagement among professionals and patients, and facilitate decisions to improve care and lower costs.

When HCI was established, most health care technologies existed as point solutions, meaning that applications were purpose-built to meet a functional need. Often, these systems lacked meaningful integration and interfered with the efficient administration and delivery of health care.

Henry Cha, CEO of HCI, founded the company because he believed that true integration of health care technology is necessary to improve care and outcomes and lower costs. Before founding HCI, Cha served as the CIO and COO of Healthcare Strategies, a care management company, for eight years. He, co-founder, Keith Lemer, and company chairman, Harry Kovar, believed that existing business performance measures (BPM) and processes such as ERM could be applied to health care.

As health care reform became a reality, Cha, Lemer and Kovar saw that there were wider, more enterprise-focused applications for the HealthSpace platform. New health care laws require the industry to change the way health care is delivered and managed, which presents new business and operational challenges for everyone in the marketplace. The combination of emerging business models, legacy apps, and a variety of point solutions have created a “perfect storm” for all concerned in the health care. 

As HCI sees it, most federal, state and local government agencies, as well as commercial health care organizations, do not have the time, expertise, or money to meet these new challenges by using a traditional software deployment approach.  Traditional approaches used to modify health care systems will not satisfy the legislative mandates, requisite time lines, data, performance, and knowledge management requirements.  These changes can be solved only by a paradigm shift in the operational models and supporting technology of health care businesses.  The company believes that shifting existing apps to the cloud doesn’t solve the fundamental limitations inherent in legacy systems. HCI addresses the problem by providing a cloud-based platform that functions as middleware, connecting legacy systems without changing existing infrastructure and by transforming the data and applications into a system that can meet current health care administration and delivery requirements.

The HealthSpace “middleware engine” is layered on top of existing applications to allow rapid and flexible integration between systems. Existing mainframes, legacy systems, health plan applications, and data sets are retained. The middleware is added to these systems to expose data and applications and leverage them to meet the needs of emerging health care business models. This framework makes it easier to develop new operating models and business processes such as healthcare performance management that can reduce risk, improve clinical outcomes, and turn health care data into business intelligence and actionable insight.  This has the potential to reduce costs, improve productivity, and increase profits.

Similar to other enterprise BPM systems such as ERP, CRM and HRM, HealthSpace provides a health care decision support and operational performance management system. The identity and access management sub-system support both central and distributed means by mimicking the natural interactions of a social network.  Knowledge management is embedded within security roles, and each owner of the information is also given the ability to share information and programs, similar to Facebook. The knowledge management subsystem is capable of integrating both local and remote data.  This flexible framework allows for search capability across data stores and provides a higher level of knowledge management and decision support.

Built on the HealthSpace cloud, Point to Point Healthcare is a suite of applications that transforms health care data into actionable insight using analytics and predictive modeling. It uses workflow, member engagement, and campaign tools. Clients can take specific action to change behaviors and improve health. Real-time trend analysis and reporting provides instant feedback on a program’s success and makes it possible for clients to continuously improve the process. The member engagement portal allows members to participate directly in their own health care in a secure, familiar Web 2.0 environment.

The U.S. health care market is estimated at $6 trillion, and HCI’s competitors in health care platforms include Covisint, PegaSystems, IKAsystems, and HealthX. The company aims to differentiate itself from the others by offering a new architecture for integrating data and developing applications on one platform. The company’s top target segments are medical management, benefit consultants and brokers, health plans, managed care organizations, insurers, and third-party administrators (TPA), among others.

HCI’s early market penetration came through the company’s relationship with WellNet Healthcare Group, a provider of PBM, TPA and disease/care management solutions. Healthcare Interactive sells through a reseller channel model through its top target segments.  Through these partners, the company has approximately 150 end user clients covering 150,000 members. The company’s pricing components include setup, integration, configuration and per member per month. The setup base package costs $10,000. Data mapping costs $250 per source. Configuration and professional services cost $125 per hour. Depending on the modules selected, per member per month could cost anywhere from $1 to $5.

Growth, they say, relies on scaling the company’s technology and developing a strong network of channel partners. To achieve this goal, HCI will introduce the Healthcare Interactive Developer Network (HIDN) in 2012, a program similar to Force.com. The HIDN will combine SDK and integration tools that will allow those in the health care space to create their own solutions on the HealthSpace platform. HCI is profitable and has revenue of more than $1 million a year. Funded entirely by the founders, HCI is considering equity funding to finance the development of the HIDN and expand the company’s channel sales capacity.

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This segment is a part in the series : 1Mby1M Deal Radar 2011

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