100health Aims to Incubate Health IT Startups, Put Madison on Map

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time to develop. Local healthtech startups face the same barriers that most Wisconsin entrepreneurs must overcome, like a lack of nearby institutional investors. But Madison’s nascent health IT startup scene is starting to grow, often led by Epic veterans. (Xconomy has reported on the launch of two such companies in the last week, Branch2 and now 100health.)

“If we do what we want to do and we’re successful [with 100health], we’ll be the beginning of the next round of companies and organizations that continue the community on this path and start to really become a name that gets talked about at a national level,” Bonney said, referring to Madison.

100health100health aims to speed up that process, but don’t put it in the category of healthtech accelerator programs around the country like Rock Health, Healthbox, and Blueprint Health.

There has been an explosion of such organizations in the past five years, as the Y Combinator and Techstars model of three-month startup boot camps has grown more popular and become more specialized in sectors like digital health, hardware, and clean energy.

Xconomy is among the observers that have suggested there’s an accelerator bubble that will pop at some point. (My colleague Wade Roush made this prediction more than two years ago.) Whether that plays out or not, 100health’s co-founders initially considered following a similar accelerator model, but later decided they didn’t want to compete in such a crowded sector.

Why not join the fray? For one thing, those programs are often backed by major healthcare players like Blue Cross Blue Shield and Kaiser Permanente. 100health will begin raising funds in the next month or so, but at this point it doesn’t have a deep-pocketed backer. Epic might seem like a logical choice, but it is unlikely to make such an investment because that’s not part of the company’s mission, Skievaski said. (Epic founder and CEO Judy Faulkner has a notorious focus on running her business—which has never taken on debt or outside investment—and doesn’t seem inclined to make any gestures to support the local healthtech industry, as a recent article in Isthmus, a Madison alternative weekly publication, pointed out.)

Furthermore, 100health’s co-founders are skeptical that healthtech lends itself to a three-month accelerator model. Startups making consumer or business apps can put out products and pick up customers more quickly and easily than health IT startups that are working with health systems that are often slow to adopt new technologies and require months to hammer out a contract. It takes about five minutes to choose between Dropbox or Google Drive, but it could be a six-month, $100,000 project for a hospital’s chief information officer to pull the trigger on a software solution meant to reduce readmission rates, Lloyd said.

“This high switching cost means it ends up that there’s lots of companies solving the same problem, with a low penetration rate,” Lloyd said. “None of them can gain a real stranglehold on the market.”

The advantage of 100health’s model, its co-founders say, is … Next Page »

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Jeff Bauter Engel is Deputy Editor, Tech at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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