Experiences at a San Diego Startup

by Andrew Ajello

San Diego is at the forefront of development of new medical technologies in a time of vast change to the health care regulatory infrastructure. Demographic shifts in the U.S. population are adding more than 30 million people to a health care system already experiencing a shortage of health care providers. The Aff ordable Health Care for America Act has fundamentally altered the way health care works in America. With the purpose of making health care more aff ordable for everyone, some of the changes will significantly impact business locally. Currently some of the business problems that are most relevant to San Diego and the health care industry are reduction of readmissions to hospitals, increased fraud protection, detailed billing, solutions for the increase of patients with chronic illnesses, and solutions for quality the of care.

The Rady School of Management students involved in the Venture Capital Management (that oversees the Rady Venture Fund), technology commercialization, and Lab to Market classes are in a great position to take advantage of the myriad of business opportunities that are springing up in our own backyard. There are more than 600 local life sciences companies and nearly 2,000 wireless technology companies here. San Diego venture capital firms continue to invest hundreds of millions of dollars into startups annually, and some are saying that San Diego is poised to be a mini Silicon Valley. The Rady School of Management has complemented this trend through its entrepreneurial curriculum. I am one example of a student who successfully used the Rady programs to aid in the success of a local startup wireless health care company.

Leveraging Academic Oppurtunities

The Rady School of Management provides a wide range of programs, classes, and networks to support entrepreneurship within its students. One very effective class that lets entrepreneurs get their feet wet is the Venture Capital Management series. This program oversees the Rady Venture Fund's deal sourcing and investment due diligence. Participating students evaluate the pitches of promising companies looking for venture funding.

The technology commercialization program, meanwhile, pairs promising students with incubated startup companies in a symbiotic arrangement. The students learn the process of how a startup company operates on a shoestring budget, and the companies get free labor from business students.

Finally, the Lab to Market series is a three-course program that supports students' startup ambitions from idea to investor pitch. Here the students work collaboratively to brainstorm products and services that will transform the future of genomics, biotechnology, health care, and consumer products, to name a just a few. Once the program is complete, students pitch business plans to local venture capitalists and angel investors. The insights gleaned from the series allow for a community of Rady alumni to create innovative organizations and viable local startups.

This curriculum "will offer our MBA students real-world experience and promote business growth in the region," said Lada Rasochova, a Rady School alumna who manages the Rady Venture Fund, in a press release. "We would like to build longterm relationships with these companies, and help them as they grow," she said. "In addition to receiving help from our students as part of the incubator program, companies can apply to the Rady Venture Fund, and we provide mentoring, education, facilities, utilities, introductions to domain experts and other services for startup companies before they have achieved sustainability through revenues or private funding."1

I used the Rady Venture Fund, technology commercialization and Lab to Market programs to consult with startup companies and eventually found a good match with telmedx, an mHealth startup whose telemedicine platform allows doctors to remotely examine patients over mobile phone cameras at any time. Leveraging the skills I learned at Rady, the telmedx team and I were selected to join Janssen Labs, a Johnson & Johnson incubator based in the Torrey Pines area of San Diego. Fewer than 10 percent of all applicants are accepted to Janssen Labs. In a recent press release, Diego Miralles, the head of Janssen Labs, highlighted San Diego's mHealth competitive advantage. "We have an entrepreneurial community within us," Miralles said. "That is a great source of inspiration."2

Developing Telmedx

One of the major themes from the Lab to Market series at Rady was talking to and engaging with customers during the early stages. Customers' insights, needs, and demands will help shape the direction of marketing, product development, and advertising. This key lesson from Rady was directly applicable to the task of honing ideal markets and customer segments for telmedx. This insight helped the company gain traction with hospitals and concierge medicine practices. Similarly, the due diligence processes that were a hallmark of the Venture Capital Management program helped telmedx craft investor-friendly business plans and pitch slide decks.

Through talking with customers, we determined that the telmedx system should be used to remotely monitor follow-up care and help reduce hospital readmissions. Accountable care organizations can maximize reimbursement revenue as well as realize rewards for meeting patient quality measures. Deploying the telmedx system allows earlier and better medical decisions to be made from more immediate live patient interactions and highresolution still images that provide critical medical information from a mobile phone camera.

Excess health care costs in the U.S. reflect needless emergency room visits and preventable hospital readmissions, adding up to about $39 billion annually; telmedx's solution can easily be integrated into existing medical routines and workflows. In San Diego alone, one health care provider estimates that the addition of visual information about individual patient triage calls prevents unnecessary emergency room visits, saving approximately $14 million per month.

Although there is reason to believe that telemedicine enables better care and reduces health care costs, the technology has had only limited market penetration. The lack of integration with medical practice business processes and the lack of inexpensive FDA-certified, HIPAA-compliant3 telemedicine systems are all contributors. The telmedx platform addresses these problems.

Our core platform architecture is complete and has been deployed in usability trials in a variety of medical settings ranging from long-term care, concierge or direct medicine, clinical trials, and sports medicine. Contracted sales and other trials are currently being developed in multiple countries in several medical scenarios.

I am just one of the many entrepreneurial-minded Rady students who have leveraged the school's spirit of innovation to create promising startup ventures. San Diego is at the bleeding edge of the intersection of business and science, particularly evident in the mHealth industry. Rady's entrepreneurial culture is instrumental in leading change locally, resulting in intangible economic growth.

Andrew E. Ajello (Rady MBA, 2013) is a serial entrepreneur and business consultant with experience in the mHealth and clean tech sectors. He focuses on corporate strategy, business development, due diligence, and venture fundraising for his clients.

Endnotes
  1. "Rady School of Management and EvoNexus Form Partnership." CommNexus press release, http://www.commnexus.org/news/press-releases/rady-school-of.php/.
  2. Fikes, Bradley. "Lab Incubates Life-science Startups." San Diego Union-Tribune. February 26, 2013, http://www.utsandiego.com/news/2013/feb/26/room-to-grow/.
  3. The Health Insurance Portability and Accountability Act of 1996, focused on patient privacy and security rules.
Summer 2013

Table of Contents


Editorial & Production Staff

Michael Taylor (’13), Editor-in-Chief

Elizabeth Han (’13), Managing Editor

Conor Jarvis (’14), Staff Editor

Patrick Kelly (’13), Publisher

Brian Wittmayer (’15), Business Development

Faculty Review Board

Robert S. Sullivan, Founding Dean,
Stanley and Pauline Foster Endowed Chair

Christopher Oveis,
Assistant Professor of Management and Strategy