Will Dreamit Health Be Transformative For Its Startups?
The digital health and education technology cohorts have buckled down and begun the work of moving their companies along the continuum toward success; the former working out of the Dreamit offices in Philadelphia while the latter are stationed in the New York Dreamit offices. It’s week one of a sixteen-week journey that a group of selected companies will embark on where “success” means something different to each of us. Some have already achieved success merely in being selected — Dreamit received almost 1,500 applications for the Spring 2016 health and ed tech cycle and a mere 3% of applicants made it into the program.
For others, success will be measured with different metrics since Dreamit expanded the program to attract later stage companies with its “Zero/Zero Program” where the traditional accelerator model of taking equity for an amount of capital infusion has been replaced with no cash/no equity and future rights to make an investment in the cohort member. Kermit, my company, is part of the health cohort working out of Philadelphia during the first two weeks of April. The Zero/Zero Program has us co-located during the early weeks of the program with companies at the bookends of the startup phase. Some have established products and paying customers, while others are scrawling ideas for their yet-to-be-built products on the walls (Dreamit has painted the walls of the entire space, ceiling to floor, with whiteboard paint).
At Kermit, we’re four years into our journey. The first two years were about helping hospitals better negotiate and manage their contracts with implantable medical device suppliers. Professional fees for this work were based on the realized savings hospitals would receive each time they purchased an item where we were responsible for the reduced rate. For example, if a particular knee implant previously cost $5,000 and the newly negotiated amount is $4,000, the hospital saves $1,000 and a portion of the savings is billed as the success fee. This model was easy for the hospital to understand and held significant value in that they received a year, or more, of expert consulting services without a direct fee. During the first two years of offering this service, we immediately realized the need to build an application to help us accurately determine the amount of money our hospital clients were saving in order to produce transparent invoicing. That lead to Kermit, which rapidly became a full-featured cost reduction and spend management application for the hospital’s utilization of implants brought in by their suppliers.
Even though we are embarking on our fifth year in business, this is really our second year as a SaaS company. I never intended to be at the helm of a software company and neither did my co-founders. This is where the Dreamit program pays huge dividends for us by:
• Placing us in an environment with 14 other digital health companies to share knowledge, expertise and resources
• Providing us with a dedicated managing director to guide us and get us laser-focused on what needs to be accomplished over the 16-week program
• Creating unprecedented and immediate access to environments to test assumptions, value propositions, positioning and new business opportunities with the nation’s leading health systems, pharmaceutical companies and insurance companies
Reflections at the close of Week 1
I began writing this post on Monday — it was the first full day of the cycle. I’m now finishing it on Friday of the same week as I ride the train from my home in Baltimore to the Dreamit offices in Philadelphia. This is a task that could have been completed in less than an hour, but it has taken a full week. Even for a more mature organization like ours — further in the business fundamentals that others in the cohort — the pace is breakneck. The value injected in 5 days has already transformed out thinking and even our stalwart positioning. I re-wrote our entire pitch on Thursday morning and played it over and over trying to memorize it during the car ride between Baltimore and Pfizer’s Collegeville, PA headquarters for yesterday’s pitch event. We’re fielding intro calls with accounts beyond the marquee partners of the program and setting up second meetings. Its a lot to manage and I’m grateful to have my co-founders here with me. Its Friday. I’m tired. Its a “good tired”. I am looking forward to the weekend — not for rest, but just to reflect on how much we have accomplished this week and taking a break to prioritize how we will use the time and resources offered to us to maximize next week.
Transformative? Definitely. And we’re 1/16th of the way through the program.