Post-MassChallenge, Healthtech Startup ConsortiEX Growing in WI
Consolidation is the name of the game these days in the healthcare industry, as hospitals, clinics, and private physician groups across the country are increasingly teaming up.
While healthcare officials and critics of such mergers and acquisitions might disagree over the real motives behind them, there’s no question that healthcare providers are taking a hard look at how they run their operations. They face monumental changes brought about by the Affordable Care Act and the challenges of an aging population.
“Hospitals are trying to reduce their costs in whatever way they can because reimbursement is being ratcheted down,” says Ernie Anderson, a Boston-area startup advisor and former healthcare executive. “They have to be able to do things less expensively.”
One area of growing importance is efficiently managing the supply of sterile injectable drugs—crucial products that have been in short supply the past few years.
That was the impetus for starting ConsortiEX, a software startup with roots in both Massachusetts and Wisconsin. The company developed an ordering and tracking system for sterile injectable compounds, which include antibiotics and intravenous drips, says Anderson, a ConsortiEX advisor who holds stock in the company.
Anderson—formerly the vice president of pharmacy for the 11-hospital system Steward Health Care in Boston—envisions ConsortiEX helping such healthcare organizations coordinate orders and shipments of sterile injectable drugs from a shared warehouse that makes the products for the member hospitals. And if there’s, say, a recall on any of the drugs, ConsortiEX’s software will know where the product was sent, Anderson says.
“I think for major health systems across the country, I think this is something that’s come along in the right place, at the right time,” he says. “And it is definitely a need that exists out there for health systems.”
The company was formed in May 2013 in response to a request from the University of Wisconsin Health’s pharmacy department in Madison, WI, which sought a safer way to distribute sterile injectable compounds to other state hospitals, according to a Wisconsin Economic Development Corp. (WEDC) press release.
“There are a lot of steps in sterile compounding, and most of them are fragmented,” ConsortiEX co-founder and CEO Neal Long says. His company’s software “documents, manages, and tracks all the elements in the compounding process.”
ConsortiEX wasn’t formed specifically because of the scarcity of sterile injectable drugs, but “one of the problems we’re going to help these hospitals solve is how to manage their shortages,” Long says.
The company’s headquarters are in Andover, MA, where Long lives, but most of its 16 employees and advisors are in the Milwaukee area, he says. The Milwaukee team includes several former Marquette Electronics and GE Healthcare employees who are currently working from their homes. Long says he worked for Milwaukee-based Marquette Electronics (later known as Marquette Medical Systems) for 13 years, which the former GE Medical Systems (now GE Healthcare) acquired in 1998. Long has also held executive positions with Philips and Draeger, and has co-founded two startups, he says.
ConsortiEX has raised $300,000 in seed capital from investors in Massachusetts and Wisconsin, Long says. The company recently graduated from the MassChallenge summer accelerator in Boston, and now is poised to set up its own office and expand, he says.
“MassChallenge has opened up a lot of connections to service providers, potential partners, and potential investors,” Long says.
ConsortiEX is scouting physical spaces in the Milwaukee area, and Long hopes to open an office here “as soon as possible.”
Some might ask why ConsortiEX doesn’t cluster its operations in Boston, or even Madison, WI. Madison, after all, is the home of the University of Wisconsin and Epic Systems, a leading electronic health records software provider. Epic, despite its reputation for being a closed-off system, is an early ConsortiEX partner who has been helpful integrating its data with the startup’s, Long says.
He says ConsortiEX chose to open a Milwaukee office partly because that’s where most of its team lives, and there are several large hospital systems that could become customers.
ConsortiEX may hire up to 77 people in Milwaukee in the next three years, aided by a $250,000 WEDC loan. The company also secured a Wisconsin certification that makes its investors eligible for a 25 percent tax credit.
Investors have so far committed more than $1 million to the company’s next round of funding, Long says, which will allow ConsortiEX to finish developing one of its software products and launch in a handful of hospitals. It has already finished developing a second software product, he adds.
“There are many hospitals we’re talking to right now,” Long says. “The feedback we get is very positive.”