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Snapshot: Rock Health

Rock Health
Name: Halle Tecco, MBA
Title: Co-Founder and CEO
Company: Rock Health
Location: San Francisco, CA
Rock Health
Website: www.rockhealth.com
Social Media: @rock_health
www.facebook.com/rockhealthfund
Year Founded: 2011
Number of Employees: 6
Number of Companies Currently Incubated: 14
Number of Companies Total Incubated: 35
Description: Rock Health is a non-profit foundation focused on supporting entrepreneurs innovating at the intersection of health care and technology.
Focus, Expertise, Stage: Digital health, early stage
Resources, SqFt., Etc.: Office space, operational support, mentorship, access to a network of partners including investors, corporate partners, and academic medical institutions
Success Companies: Cellscope, Omada Health, Skimble, Pipette/Ginger.io, Sano Intelligence

What is your incubator focus?

Digital health

What are the resources you provide for companies?

Office space, operational support, mentorship, access to a network of partners including investors, corporate partners, and academic medical institutions

Why are incubators needed?

Rock Health provides critical support and guidance in bringing early stage businesses to fruition. Traditionally, health care is a highly siloed industry with little collaboration or integration across different stakeholders. Health incubators not only provide momentum and industry context for technologists who may not have a background in health care, but also provide infrastructure for major health care networks to collaborate with these early stage businesses.

What funding sources do the companies have?

We have corporate sponsors and venture partners. Our full list of partners is here.

Can you tell me about a success story?

CellScope’s mission is to build mobile hardware and software systems for disease diagnosis. They entered Rock Health’s first class of startups with a working product and a technology out of UC Berkeley. They focused their time on developing their first product- an otoscope- that can be attached to smartphones to perform remote diagnosis of ear infections, later adding functionality that let consumers share images of the ear drum with remote pediatricians for diagnosis, treatment, and monitoring. Rock Health connected CellScope with Vinod Khosla (Khosla Ventures) who provided $1M in seed funding. The CellScope team plans to go to market in the next year.

Skimble powers the mobile wellness movement with fun, dynamic, and social coaching applications. When they entered Rock Health’s first class of startups, they already had traction with two applications in the iOS store, including Workout Trainer. During their time at Rock Health they extended the reach of Workout Trainer across other platforms, including Android, Kindle and Apple TV. Shortly after graduating in November, 2011, they brought on their first hire and have since been a top Android and iOs application with over 10M downloads. Today, Skimble is still bootstrapped and profitable, and recently announced a content distribution partnership (rev share agreement) with Harvard Medical School: http://www.health.harvard.edu/press_releases/skimble-and-harvard-medical-school-team-up-on-workout-trainer-app

What are the factors in success of companies?

Idea, team, market

What are the hurdles?

Providers—local markets and fragmentation: Health care is delivered locally by 800,000 physicians in nearly 6,000 hospitals, creating a series of micro-markets that make it challenging to sell the same solution nationally. Every market exhibits unique dynamics in terms of incentives and outcomes based on the interactions of hospitals, physicians, payers and employers—Boston is very different from Bentonville when it comes to health care delivery. For startups, this can mean that while it is easy to do a pilot in any one market and meet the requirements of a single unique customer, it can be difficult to scale to an enterprise solution for all markets.

Health plans—market consolidation: After 40+ horizontal mergers in the last two decades, the health plan sector has consolidated tremendously, with the five largest companies (UnitedHealthcare, WellPoint, Aetna, HCSC and Cigna) now owning nearly 50% market share across all segments. For startups, this means that getting access to the millions of customers and reimbursement for new solutions (lowering the effective price paid by consumers and/or giving providers an incentive to change existing clinical practices) requires being able to strike partnerships with the large plans—a challenging proposition as a new entrant, particularly as the health insurers themselves move to diversify into health information technology.

Self-insured employers—gatekeepers and intermediaries: The self-insured employer market is essentially brokered through benefit consultancies (such as Mercer, Towers Watson, and Aon Hewitt)—there are no other established B2B distribution channels and selling directly is cost-intensive at best or fruitless at worst. It is a risky proposition for benefit consultancies to recommend a startup solution over an incumbent to their Fortune 500 customers; however, that endorsement is critical to startups seeking distribution efficiency and sell-through to self-insured employers.

Devices and clinical solutions—burden of evidence: New clinical solutions that take advantage of shifts in technology (ubiquitous wireless coverage, portable computing, app distribution) to better prevent, diagnose or treat disease can require overwhelming evidence to gain approval by the FDA and traction in the market. This pathway can take multiple years and significant capital investment, not to mention specialized expertise—an advantage incumbents clearly hold over new entrants.

Read more: http://rockhealth.com/2012/07/4-potential-roadblocks-for-health-startups/

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