Mark Slaughter is the Co-Founder and CEO of Cohealo, an asset mobilization and analytics platform for the healthcare industry. The company helps US hospitals use their non-emergency medical equipment more efficiently and save money on their future equipment purchases.
1. The US Healthcare system is renowned for being a complicated beast, as an entrepreneur what made you think you could crack this market?
What I experienced was a lot of very passionate and very smart people who have dedicated their entire careers to making it better. I knew I wanted to be part of that, no matter how hard and frustrating it can be sometimes. What keeps not just me, but our customer partners going everyday are the patients and the physicians. People are at their most vulnerable, and they put explicit trust in this industry to literally save their lives. It is something very special to be a part of, and I will be forever.
Challengingly enough, a positive development has caused all of the underutilization of clinical assets. The medical device industry, companies like Boston Scientific and Medtronic, have developed amazing technologies. As technology has progressed, it has become very procedure specific, meaning that it only does one thing but it does it very very well, which is a great thing. Twenty years ago equipment was more generalized, it could be used in a wider scope of procedures, but it only did a so-so job. The phenomenal R&D departments have, over the last twenty years, been iterating and improving clinical efficacy. In doing so, they have had to have the equipment become more specialized, which is a good thing for all of us. In fact, if you look at surgical specialties, they are sub segmenting into sub-specialties as well. Again, a good thing for us all as they become stronger experts in a more narrow set of clinical challenges. It’s what true advancement looks like.
The hard part for hospitals is that as a response to these developments, they have to own at least one of everything. With the hyper-segmentation of procedural equipment you naturally use it less frequently. Hospital have built up huge inventories as a result. And with capital tied up on expensive lower-use assets, it prevents them from rapidly redeploying capital to new technology. Its put both the hospitals and the medical device companies into a sort of perfect storm of inefficiency. Our model is designed to extract the most value of clinical assets for both sides to keep improving clinical efficacy and technology advancement.
3. How does Cohealo plan change the way hospitals can utilise and share their resources?
Health systems as an entity did not really exist until the last ten to fifteen years; the market was a bunch of independently operating facilities. As market dynamics, deregulation, the economy, and technology changed it became essential for them to band together in health systems to extract economies of scale. And they very much should do this for a multitude of reasons. It’s still in its earliest of stages, but many of these systems operate as a loose federation of hospitals, with their own agendas and decision making power. Some of that is good, some of that is bad. The inefficient parts like finance and supply chain decisions need to be consolidated to truly extract value that can be passed along to patients and physicians.
Cohealo is designed to do just that, enable a health system to behave and function like a unified system. We bring the collaborative consumption model seen in many consumer services like AirBnB, Uber, etc to the enterprise healthcare space. Our goal is to create a platform that can bring the best technology to as many points of care that is mathematically and logistically possible. Our long term goal is to coordinate the technology used at every point of care on the planet.
I am always amazed at how well health system executives balance clinical efficacy and economic returns. It’s a very challenging balance and I believe the most unique market in the world. Most companies want to always do the right thing for their customers based on all of the mission statements we hear thrown around. It’s one thing to make a great laptop like a MacBook or a great car like a Mercedes, but to literally put the needs of others ahead of the “best business decision” is something that’s powerful to see. And they do it every day in some capacity.
Don’t get me wrong, health systems need to be economically healthy or they wont exist or reinvest in the best care. That would be utterly catastrophic. It’s challenging sometimes, but the integrity and genuineness of the providers we work with is humbling to be a part of. We are very pleased at Cohealo to be able to provide them a solution to extract the maximum value for their patients and their staff.
I think that is the opportunity. It’s a very challenging one, but I believe that in circumstances like you describe is where we as society will see the most progress. Healthcare is a cornerstone of day-to-day life, we should be allocating more brain power and capital resources to making it better. I also believe there is a mix of both economic and altruistic upside to this market. It’s not making toys for your mobile phone, it’s saving lives, one day you or your loved ones. That’s fun and it’s a never ending driving force.
I would say the hardest thing in healthcare is change management. The systems and processes in place have been rigorously engrained to minimize variability and the opportunity for failure. That’s because people’s lives depend on it. The only way to overcome this challenge is to build trust and confidence day by day. It takes execution and value being delivered on a compartmentalized scale before it’s ready for ubiquity. Removing the fear of the unknown or the fear of uncertainty of outcome needs to be done very mechanistically and safely.
Market complexity is your friend. It presents a natural barrier to entry but the opportunity to get an early lead if you are able to demonstrate product-market fit and an order of magnitude in increased value. Big complex systems won’t change or even acknowledge minor incremental improvements. The pain of change is just not worth it. Focus on pain points that if solved can have a material impact at scale, always easier said than done, but the truth. Complex markets are usually the biggest in the world, so if your able to get that product-market fit, the economic rewards and addressable market are huge. You must have a BHAG (big hairy audacious goal) as Vinod Khosla likes to say and the fortitude to bring it reality.
Cohealo in numbers:
- Cohealo started in only 3 hospitals in late 2012 and is now currently deployed in almost 50, and is on pace to triple that by the end of the year.
- The Cohealo ecosystem has over 200,000 clinical devices used in the Operating Room departments across several health systems.
- The company has helped facilitate thousands of surgeries since its inception, and is growing at a MOM rate of 20% over the last year
