For the midwestern U.S., a key magnet for healthcare investment is in the medical device sector. That’s one of the primary conclusion of a new survey rolled out last month by BioEnterprise (Cleveland), a business development group pumping the area, especially around its own particular region in Ohio, as prime life science investment territory. The survey polled a broad range of venture capital groups throughout the country, and BioEnterprise said that these groups rated the performance of their Midwest health and med-tech investments as “equal to” those in the rest of the country, and they identified the sub-sector of medical devices as a key strength in the bioscience category.

Paul Nickels, director of corporate communications for BioEnterprise, described the organization as “a unique beast” because operating as a kind of “VC firm without the money.” As a non-profit group, BioEnterprise does not make investments. Its “money-less” mission, Nickels told The BBI Newsletter, is to “translate out” the technologies of its founding groups into start-up companies, and hopefully then on to commercialization. It was founded three years ago by four Cleveland-area groups: the Cleveland Clinic, University Hospitals Health System, Case Western Reserve University and Summa Health System.

Baiju Shah, president of BioEnterprise, told BBI that the “basic nut” of the organization “is to position companies to raise capital,” with special focus on those companies in the Cleveland area. The purpose of the survey, Shah said, was to raise the profile of both the Midwest and the Cleveland area as an opportunity for investment, and thereby better distinguish it from the Northeast and California healthcare investment hothouses. “Success” for BioEnterprise, he said, “is simply defined: to move Cleveland from a minor league to a major league center of healthcare investment.”

A particular metric for this “major league” is measurement against the states of Minnesota and North Carolina, Shah said. Over the last seven to eight years, those areas consistently attract more than $150 million a year in investor capital, he noted. “That amount isn’t a blip on the screen,” Shah said. “And when you sustain $150 million to $200 million each year, that demonstrates you’ve laid the foundation of ongoing innovation and company development.”

He said that as a “halfway-point” marker, the Cleveland area has brought in $68 million in investment thus far this year and hopes to reach the triple-digit point for 2005, thus just one year away from reaching a five-year plan goal by BioEnterprise. “We hope to get there and hope to stay there,” Shah said, adding that BioEnterprise doesn’t claim even primary credit for the area’s success to date, but that it is one part of the regional “group effort.”

The survey, conducted over a 10-day period beginning July 26, asked respondents to offer their impressions of Midwest healthcare investment opportunities and regions. While the survey didn’t pinpoint specific sub-sectors of medical device opportunities, Shah said that one-to-one conversations clearly had identified new cardiovascular technologies as a clear leading investment target, with neuromodulation/neurostimulation systems and orthopedic technologies also especially attractive.

Besides identifying medical devices as a strong Midwest investment magnet – about 50% of those responding saying medical device deal flow overall in the region is “strong” or “very strong” – these respondents said Midwest deal flow is on the increase. About 68% of those responding rate as average the healthcare services and IT opportunities developing out of the Midwest, and 67% rate biopharmaceutical investments opportunities as weak.

“What is encouraging is that nearly 60% of the respondents felt that deal flow from the Midwest has been increasing, and nearly 90% indicated interest in expanding their Midwest activity,” BioEnterprise said in a statement. “That bodes well for continued growth in healthcare venture investment across the Midwest.”

In pursuing the goal of matching Cleveland-area companies with venture capital firms, Shah said, “We spend a lot of time out in the investment marketplace, talking to venture firms one-on-one, understanding exactly who’s looking for what. We understand that map at an incredibly minute level and [then] come back to Cleveland and look at the pipeline of opportunities and the matches to help [startup companies] advance to having that incredible conversation for an investment round.”

Creating this understanding actually does much of the work for the venture firm by making the match more exact, Shah says. “When we meet with a fund, we’re not pitching one idea. Because we understand what they like and don’t like, we aren’t wasting their time ... That approach is welcomed by the venture fund because we’re making their search much more efficient.”

Besides BioEnterprise’s founding partners, additional technology partners include the NASA Glenn Research Center, Cleveland State University, OMERIS (Columbus) and NorTech. BioEnterprise said that, working with its founding members and partners, it has been involved in recruiting and accelerating more than 30 companies over the past two years

EHRs not always improving profits, care

While electronic health records (EHRs) have been frequently touted as being more efficient than the paper type, and therefore providing higher profits and better clinical care, this may be a goal still theoretical and not yet accomplished. In fact, they may have the opposite effect for some in small-practice settings, according to a new study.

Published in the journal Health Affairs, the study looked at 14 individual or small practices, finding that, on average, these practices paid for the cost of their investment in an EHR system in 2.5 years, and after that found it produce profits “handsomely.” “But some practices could not recoup their costs quickly, and three experienced serious financial problems,” the researchers said in a statement. Additionally, some providers reported “modest” improvement in care with use of an EHR system, but that “overall, concerted efforts to improve healthcare quality were limited.”

The difficulty may be systemic, rather than related to technology change itself, according to Robert Miller, lead study author and professor of health economics at the Institute for Health and Aging, University of California, San Francisco. Thus, he faulted current patterns of reimbursement, saying that the system “does not reward primary care physicians for providing better care or for taking the initiative to systematically improve care. Instead, the system continues to reward physicians for billing certain types of visits that are perceived as having more work effort.”

Miller’s study, financed by the Commonwealth Fund, found that initial EHR costs averaged $44,000 per full-time provider and that ongoing costs averaged $8,500 per provider per year. And at first, most providers had to work longer hours to get up to speed with the technology, although several practices reported that, in time, the EHR systems made providers’ work lives easier and more satisfying.

The authors of the study recommend that policymakers establish performance incentives and practice support services to spur EHR adoption and use among solo and small-group practices. That was the same conclusion as other reports in the study which found a “stagnate” rate of adoption by small practices and other health providers falling even further behind – chiefly home health agencies and skilled nursing facilities.

Health Affairs is published by Project HOPE (Washington).

Brain monitors on radar but not boosted

Brain function monitors have been recently touted by their developers as helping to avoid surgical consciousness, but a recent draft advisory by the American Society of Anesthesiologists (ASA; Park Ridge, Illinois) specifically states that such systems have been proven to be no better than other methods for avoiding this rather elusive problem. The draft report, titled “Practice Advisory for Intraoperative Awareness and Brain Function Monitoring,” developed by a task force of the ASA, concludes that these devices “have the same status” as other current modalities used to measure consciousness of patients under general anesthesia.

On the upside for the manufacturers, however, the study indicated these systems may be useful in a variety of circumstances. And the report enlarges the presence of these systems which have been offered as assessing the surgical patient’s depth of consciousness to avoid either under- or over-administration of anesthetics. Under-administration may result in the patient’s being awake, but unable to move during surgery, and over-administration can slow recovery and release from the hospital. And the benefits of brain function monitoring have been most often bannered by Aspect Medical Systems (Newton Massachusetts), market leader in this sector with its Bispectral Index (BIS) system, and its primary competitor, Physiometrix (North Billerica, Massachusetts), with its Patient State Analyzer (PSI) system.

These systems collect and analyze the electrical activity of the brain, converting the information into a measurement scaled 0-to-100, with the 40-60 range indicating a low probability of consciousness under general anesthesia, the unhappy circumstance in which a patient appears totally sedated but afterwards reports having experienced the pain and trauma of the surgery – essentially being awake during the procedure but unable to respond. Both Aspect and Physiometrix offer the claim that brain monitoring is the priority method for reducing, or even avoiding, surgical awareness,

If brain function monitoring is used, this decision, according to the advisory, “should be made on a case-by-case basis by the individual practitioner for selected patients (e.g., light anesthesia, cardiac surgery).” This consensus, it says, is based “in part, on the state of the literature and survey response patterns from consultants and ASA members regarding specific risk factors.”

In reviewing the brain function monitoring systems, the advisory gives most space – nearly two pages of 33 pages of explanatory text – to Aspect’s BIS system, and it briefly reviews five other technologies: Entropy from GE Healthcare (Waukesha, Wisconsin); Narcotrend from German-based Monitor Technik; the Patient Stage Analyzer from Physiometrix; SNAP index from Everest Biomedical Instruments (St. Louis); Cerebral State Monitor/Cerebral State Index from Danmeter (Odense, Denmark) – and also, in the evoked brain electrical activity monitor category, the AEP for auditory evoked potentials) Monitor/2 from Danmeter.

The ASA is currently accepting comment on the draft advisory on its web site, and the society’s membership will vote on adoption of a final advisory later this year.

No Comments