With eyes pointed westward, New York-based LocalResponse announced today it opened a new office in Chicago and is considering plans for an office in California. LocalResponse, backed by Cava Capital and others, puts a business-to-business spin on the “check-in” market. The startup created a platform that lets brands and other marketers respond with relevant ads and offers to consumers who announce via the social sphere where they are. Kathy Leake, president and co-founder of LocalResponse, says the company opened the Chicago office to expand its reach with retailers and consumer goods clients who are based in the Midwest. “It made a lot of sense for that to be our first move outside of New York,” she says.

Brands such as Coca-Cola, Verizon, Microsoft, and General Electric use LocalResponse’s platform, which aggregates users’ check-ins from Foursquare as well as updates from social networks such as Facebook and Twitter that include mentions of where the users are. Marketers can respond to such users with offers that relate to their whereabouts.

Leake says LocalResponse plans to continue its growth into next year. The company, she says, expects to double its current staff of 20, which includes the Chicago group, by the end of third quarter 2012. The Chicago office is staffed by a team of sales and account management representatives led by Todd Hayes, previously of 24/7 Real Media. Leake says LocalResponse is also weighing its options for a West Coast office.

“Our platform offers a lot of opportunity for the entertainment category so we are thinking about Los Angeles,” she says. “It’s either going to be L.A. or San Francisco.” Leake says LocalResponse’s platform can be used across a variety of industries but her company specializes in retail, consumer goods, entertainment, travel, and leisure.

In October, LocalResponse closed a $5 million funding round led by Cava Capital and Vodafone Group with participation from Advancit Capital and Progress Ventures. “Now that we’ve closed on our Series A round we’re able to hire the talent we need to scale the business in 2012,” Leake says.

Going forward, she says, LocalResponse wants to self-fund its growth with revenue, generated by charging marketers when customers click on the ads and offers, instead of raising a Series B round. “Raising capital in this climate is incredibly difficult and time consuming,” she says.

Leake says her company stands out in the check-in world by aggregating data to help brands target their marketing campaigns and by leveraging so-called natural language when consumers mention a product or place in the social sphere. “For a client like Macy’s, if someone were to say over Twitter ‘I’m at Macy’s', they’re not checking in on a Foursquare per se but they are announcing their location,” Leake says. “We’re able to turn that into a targetable impression for a marketer.”

Leake says LocalResponse wants to open more satellite offices in the future to bring its sales and account management staff closer to its clients. “We have every intention to have people in-market across the U.S. eventually,” she says.

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Microsoft and General Electric are mashing together some of their health IT business lines to create a new company in Seattle that will attempt to bring more efficiencies to the massively inefficient $2.6 trillion U.S. healthcare industry.

The new company, which doesn’t yet have a name, will be a 50/50 joint venture between Microsoft (NASDAQ: MSFT and GE (NYSE: GE), according to a Microsoft statement. Among other things, the new venture will bring Microsoft’s Amalga software, which is supposed to help various proprietary hospital software programs talk to one another, together with GE’s eHealth information exchange.

GE’s Michael J. Simpson will be the CEO of the new company, while Peter Neupert, the longtime head of Microsoft’s health operation, is retiring, according to a report in the New York Times. The new company will have about 750 employees recruited from Microsoft, GE and elsewhere, the Times said. While that may sound like a lot, Microsoft has said previously that its Health Solutions Group, the operation that oversees Amalga, HealthVault and other programs, has had a steady headcount of 750 to 800 employees for several years.

One interesting comment from the Times story, however, was about how Microsoft and GE say they want to reach beyond their walls to make more progress against some very tough healthcare IT problems. One of the issues the new venture plans to wrestle with is how to better track the health of individuals in real-time, but also that of entire patient populations of people with chronic conditions, like diabetes.

“It is the developer community that is going to solve these problems,” GE’s Simpson told the Times. “This is a big bet,” he said.

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Time for our rundown of recent deals and other key biztech news around the Bay Area, from biggest to smallest.

$50 million—Series D venture financing announced yesterday for Marketo, the San Mateo, CA-based startup providing software to help companies manage sales lead generation. New investor Battery Ventures led the round, which was joined by existing investors Institutional Venture Partners, InterWest Partners, Mayfield Fund, and Storm Ventures. Xconomy profiled Marketo earlier this month.

$36 million—Series D funding for Redwood City, CA-based Zuora, which offers subscription and billing management software. Announced yesterday, the round was led by Index Ventures, with Greylock Partners, Workday founder Dave Duffield, Benchmark Capital, Redpoint Ventures, Shasta Ventures, Tenaya Capital, and Salesforce CEO Marc Benioff also participating. Zuora has raised $82.5 million all told.

$30 million—New funding announced November 15 for San Francisco-based BrightRoll, which serves up more than 2 billion digital video ads across the Web every month. New investor Trident Capital led the round, which was joined by existing investors True Ventures, Scale Venture Partners, Adams Street Partners, and Comerica Bank.

$20 million—A Series A funding round announced yesterday for Dublin, CA-based Medley Health, which provides digital marketing and practice management services to physician practices. Cardinal Partners, Technology Partners, and Vivo Ventures ponied up the funds.

$15 million—An expansion round for New Relic, the San Francisco-based maker of software for managing the performance of cloud applications. New strategic investors DAG Ventures and Four Rivers Group led the round, which was joined by existing investors Allen & Company, Benchmark Capital, Tenaya Capital, and Trinity Ventures.

$12 million—A strategic investment announced yesterday for Redwood City, CA-based YuMe, which develops operating systems for Internet-connected televisions. The funds came from Samsung and Translink Capital.

$8 million—A first round of funding for Impermium, a Palo Alto startup developing software for preventing social Web spam such as comment spam. Highland Capital Partners of Lexington, MA, is the lead investor, with The Social+Capital Partnership and Freestyle Capital joining in. The funding was first reported in the Wall Street Journal.

$7.3 million—A first round of institutional funding for San Francisco-based ThisMoment, a producer of digital marketing content for large brands. Sierra Ventures led the round, which was announced November 15.

$6.1 million—A Series A financing round for Palo Alto, CA-based Catalog Spree, maker of a catalog shopping app for the Apple iPad. Comcast Ventures led the round, with BlackBerry Partners Fund and El Dorado Ventures also participating.

$5.5 million—A Series B financing round for San Francisco-based Minted, which sells paper goods such as greeting cards based on crowdsourced designs. Benchmark Capital was in the lead, with IDG Ventures and Menlo Ventures joining in.

120,000—The number of hotels worldwide where rooms can now be booked using Room 77. The Mountain View, CA, startup announced last week that its hotel search site, which is known for providing previews of individual rooms, has been upgraded to allow travelers to compare hotel rooms across all the major online travel search sites, including Orbitz, Expedia, Travelocity, Priceline, Hotels.com, Cheaptickets, and others. Xconomy profiled Room 77 in February.

400—The number of jobs that General Electric expects to create at its new Global Software Center in Bishop Ranch, San Ramon, CA. Announced today, the center will be responsible for developing the software that runs and monitors GE’s industrial machinery, such as locomotives, aircraft, wind turbines, and medical imaging devices.

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“Healthcare is broken. Insurance companies are innovatively bankrupt. There are huge hurdles to entry. The biggest companies in the world can’t solve this problem; even Google can’t build a good personal health record system. Doctors are frugal. Patients are lazy and don’t care about their health. You guys are choosing a very hard path.”

Such was the litany from Ryan Howard, the CEO of San Francisco-based Practice Fusion, who was trying to give some frank advice to a group of budding healthcare entrepreneurs at an event in Mountain View this September.

So, given those harsh realities, what possessed Howard to spend the last six years building a free electronic health record system for small physician practices?

“If I die tomorrow I don’t want my headstone to say ‘Made more money for Wal-Mart,’” Howard says. “I want to have someone, somewhere benefiting from my work, and healthcare felt very powerful for me.”

The idea of digitizing patient records—and, ultimately, connecting them with lab data, prescription systems, and insurance and reimbursement records—is indeed a powerful one. In fact, it’s been beckoning innovators for nearly half a century. One of the oldest multi-user database-driven computer languages in the world is MUMPS, written at Massachusetts General Hospital in 1966 to store health records. It’s still in use today—which tells you something about the power of tradition in this field.

Practice Fusion CEO Ryan Howard

But the pace of change is finally picking up, thanks in part to a system of carrots and sticks built into the 2009 federal stimulus package to spur adoption of electronic health records (EHRs). Doctors who implement EHRs in their practices before 2015 are eligible for up to $44,000 in extra payments from Medicare; if they don’t convert by then, the reimbursements they get from Medicare will be docked by 1 to 3 percent. Dozens of companies, from giants like General Electric to tiny startups like Y Combinator-backed DrChrono, are jumping into the market created by the incentive scheme.

But Practice Fusion may be the fastest-growing of the whole bunch. The company says its Web-based EHR has more than 100,000 users, with a cumulative 25 million patients under their care. The 110-employee company has raised roughly $34 million in venture support—most of it in a big April round led by Peter Thiel’s Founders Fund—and it has nearly doubled its head count in the last six months. In anticipation of further growth, it’s about to move into a huge, 46,000-square-foot space in San Francisco’s Union Square.

The technology so many practices are snapping up isn’t simply a database for patient records—that would be like repurposing Salesforce.com for doctor’s offices, Howard says. The much harder thing to build, and one of the main benefits emphasized by Practice Fusion in its marketing pitches, is its system’s behind-the-scenes connections to pharmacies, labs, and billing services, meaning doctors can get more done directly from the system’s Web-based interface.

But the biggest selling point for Practice Fusion—and the factor explaining its rocket-like growth—is that it’s completely free to doctors. The startup makes money not in the usual ways for enterprise software companies—subscriptions, consulting, training, support—but by showing ads in the browser alongside patient data.

Most of the ads are from pharmaceutical companies, as you might expect, and doctors who don’t like them can pay $100 per month for an ad-free version. But few bother. It turns out that the right price for an EHR system is no price.

Howard says it took some doing to convince his board and investors that the company should make the service free—but that it turned out to be the best decision the company has ever … Next Page »

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I spent the early part of this week attending the Cleveland Clinic Medical Innovation Summit and, despite the fact that the Cleveland Clinic stubbornly insists on holding its conference in Cleveland (aka The Mistake on the Lake), it was well worth attending.

Cleveland is an interesting town. Once upon a time, when old white men roamed the earth in cars driven by chauffeurs, Cleveland was the nation’s fifth largest city and had the highest number of Fortune 500 headquarters of any US city. Today, the Cleveland Clinic is the largest employer in the city, which is known also for a river that used to spontaneously combust and the Rock and Roll Hall of Fame (the perfect song for this occasion is clearly Smoke on the Water). In a way Cleveland is the perfect place to honor aging rock stars, as they can pick up a statuette and an angioplasty on the same trip. By the way, the river doesn’t catch fire anymore I’m told. I was worried because the Clinic hosted a pretty impressive fireworks display over Lake Erie for their 1500 guests and no doubt most of us expected to see even more of a show as the embers hit the water.

Each year the conference has a specific clinical theme. This year’s theme was supposedly cardiology, but that was just a cover. The real theme of the conference, while not explicitly stated, was how the healthcare system is changing and how challenging the environment for innovation has become when it comes to medical devices. Yes, there were several talks about new approaches to treating heart patients and also those with peripheral vascular disease, but the most interesting discussions were focused elsewhere.

The conference audience, in addition to featuring lots of people from the Clinic itself, included the who’s-who of medical device companies, large and small, as well as many healthcare investors and innovators. Because there was so much content at the conference, I’m going to highlight just a few notable discussions and quotes, many of which were made by some pretty high profile folk.

One of the most prevalent themes of the conference was how the confluence of policy changes and economic drivers has changed the locus of control in healthcare from the providers to the payers. It’s not unusual to hear a bunch of doctors complaining how the payers, by which I mean mainly the large insurance companies and CMS, are taking control of the world and ruining medicine. I am pretty sure that this is what physicians who are romancing other physicians whisper in each others’ ears, “Darling, I love you, and don’t health insurers piss you off!?” What was weird was that there was not a single such payer in the room to debate this issue or even defend their alleged hijacking of the system. Not one. No United Healthcare, no Aetna, no CMS (from the payment side-the Innovation Center got to speak at the end of the last day), no one. I thought this was a pretty big oversight.

Moreover, there was not a meaningful acknowledgement by any of the very large employers there, except Xerox and GE, that they themselves are really the large payers that are getting murdered by rising healthcare costs. The CEOs of Medtronic, St. Jude, Pfizer, Abbott and Merck, all of whom were there, must have to fight to keep their own heads from exploding when it comes to how they think about rising healthcare costs. Selling more stuff at high prices grows their top line revenue but … Next Page »

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It was a little over a year ago that Xconomy broke the news that a movement was underway to bring an Entrepreneur Walk of Fame to Kendall Square in Cambridge, MA, modeled after its Hollywood namesake.

The idea makes a lot of sense: If we celebrate movie stars and athletes, why not the top innovators and business leaders of all time? The goal is to inspire young people to make a big impact on the world. As for a location for the Walk of Fame, why not historic Kendall Square, which arguably sits in the densest cluster of technology and life sciences organizations and companies in the world?

Lo and behold, it’s really happening. Today the Entrepreneur Walk of Fame will be unveiled at a 1 pm ceremony in the newly paved plaza in front of the Marriott Hotel in Kendall Square. To get to this point took the collaborative efforts of a lot of people from MIT, the City of Cambridge, the Kauffman Foundation, and several community and private organizations.

Here is the inaugural class of seven inductees (and who will present the awards at the ceremony, which is almost as interesting):

—Thomas Edison (1847-1931), founder of General Electric. Probably America’s most famous inventor, he is credited with pioneering the phonograph, the motion picture camera, and the commercial light bulb. But it’s his contributions to industry that got him in here. (Presented by David Edison Sloane, Edison’s great-grandson.)

—Bill Hewlett (1913-2001), co-founder and CEO of Hewlett-Packard. He was a Stanford and MIT grad. (Presented by Howard Anderson of MIT Sloan School of Management, formerly of Yankee Group and Battery Ventures, and an Xconomist.)

—David Packard (1912-1996), co-founder, CEO, and chairman of Hewlett-Packard. A Stanford grad and General Electric veteran who supplied the garage that housed the early HP. Rumor has it they called it “HP,” rather than “PH,” based on a coin flip. (Also presented by Howard Anderson.)

—Bob Swanson (1947-1999), co-founder, CEO, and chairman of Genentech. He was an MIT undergrad and MIT Sloan grad, as well as a founding board member of the MIT Entrepreneurship Center. (Presented by Tyler Jacks of MIT’s Koch Institute for Integrative Cancer Research.)

—Bill Gates (1955- ), co-founder, chairman, and former CEO of Microsoft; co-founder of the Bill & Melinda Gates Foundation. He is probably Harvard’s most famous dropout, and one of the world’s richest men. (Presented by Dan Bricklin, co-creator of VisiCalc, the PC spreadsheet.)

—Steve Jobs (1955- ), co-founder, chairman, and former CEO of Apple. On his resume: the Apple II, Mac, Pixar, iPod, iTunes, iPhone, iPad…need we say more? (Presented by Dan Lyons, better known as Fake Steve Jobs.)

—Mitch Kapor (1950- ), founder of Lotus Development, creator of Lotus 1-2-3, co-founder of the Electronic Frontier Foundation. Kapor is the one inductee who will be present at today’s ceremony and will speak for himself. Rumor has it there will also be lots of ex-Lotus employees on hand wearing vintage Lotus 1-2-3 shirts.

“This is a hall of fame” for entrepreneurs, says Bill Aulet of the MIT Entrepreneurship Center, who spearheaded the overall effort. “The event itself is kind of like The Breakfast Club. These people are coming together who fought at different times.” (He was talking about Gates, Jobs, and Kapor in particular.)

Each inductee gets a granite star on a 4-foot by 1.5-foot tile that has the entrepreneur’s name, title, and one of his inspirational quotes inscribed. (See photo, left, of the Steve Jobs tile, next to an MIT beaver mascot.) The tiles sit in the plaza next to the Kendall T stop, close to the sidewalk, on either side of the new grassy knoll. As of yesterday morning, about a dozen workmen were sweating to put the finishing touches on the construction in the plaza.

Of course, with any list like this, it’s easy to nitpick or ask why someone is or isn’t on the list. The whole selection process was probably subject to all the usual politics that plague any … Next Page »

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That’s “deals” as in funding and M&A announcements, not as in daily deals. (Though there’s news today about Groupon as well.)

—Crowdfunding startup IndieGoGo of San Francisco said that it has raised $1.5 million in new funding. Metamorphic Ventures, MHS Capital, and Zynga co-founder Steve Schoettler led the round, which the company said will help it “enhance the online experience for customers worldwide, with a particular focus on making the site and its analytics more accessible to consumers, strategic partners and the media.” Xconomy profiled IndieGoGo in April.

—Project Frog, a San Francisco-based maker of energy-saving prefabricated buildings, said today (PDF) that it has raised $22 million in a round of equity-based financing led by General Electric Energy Financial Services. Claremont Creek Ventures, Greener Capital Partners, and RockPort Capital Partners also joined the round. One of Project Frog’s buildings—which combine semi-custom components with pre-engineered kits—is under construction at GE’s John F. Welch Leadership Development Center in Ossining, NY; the GE investment is part of its Ecomagination Challenge, announced last summer.

—BlueArc, the San Jose, CA-based maker of networked storage devices for unstructured data such as video and genomic information, has been acquired by Santa Clara, CA-based Hitachi Data Systems, according to an announcement today. The value of the all-cash transaction was not disclosed. Hitachi Data Systems, a California subsidiary of Tokyo-based Hitachi, says the acquisition is part of its strategy to “transform traditional data centers into information centers—where customers can seamlessly store and access all data, content and information.”

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During my brief time here in Michigan, I’ve heard a familiar prediction: The state is poised to become a cleantech powerhouse because of its expertise in manufacturing and automobile engineering.

So far, that’s mostly been talk. Danotek Motion Technologies, however, is walking the walk.

The Canton, MI-based startup has unique technology and Silicon Valley investors, but importantly, the company is making and selling real stuff to real wind power customers and creating jobs in return. In essence, Danotek is practicing what Michigan often preaches.

Danotek “has done an incredible job in building a sales pipeline,” Rachel Sheinbein, a principal in San Francisco-based CMEA Capital and Danotek board member, tells Xconomy. “We’re excited about the prospects.”

Using permanent magnet technology, Danotek is helping wind turbine makers build smaller, less costly, more efficient generators that can produce up to 3.2 megawatts of electricity.

Danotek has come a long way. In 2009, the company generated $450,000 in sales. As of the first quarter in 2011, Danotek boasts a $50 million backlog in orders from customers like General Electric, Clipper, DeWind (a unit of Daewoo), and WinWinD in Finland. Last year, the startup hired 58 employees from 13 countries, bringing its workforce to nearly 100 strong.

Unlike most high tech startups, Danotek successfully transitioned from a research and development firm to a full-fledged manufacturer thanks to one fateful decision, savvy investors, and an experienced CEO.

Danotek was founded in 2001 by a group of former GE engineers, including Daniel Gizaw, who also worked at Cummins Power Generation, General Motors, and Ford Motor. The company was interested in the idea of generating a constant magnetic field, which in turn, could produce a stable, continuous flow of electricity.

But in reality, “they didn’t have a clue of what this was going to be,” says CEO Don Naab. … Next Page »

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I’m in re-entry mode after a week’s vacation in northern Michigan, which means I’m catching up on everything my colleagues published while I was away. Here’s a quick rundown of last week’s business and technology news from Xconomy San Francisco (including a couple of pieces I wrote before my trip):

—The IPO market may be bouncing back, but not enough to allay the anxieties of venture capitalists, according to a survey by the National Venture Capital Association and the Deloitte accounting and consulting firm. Partners say the current level of IPO activity in the U.S. can’t sustain the venture industry, as my colleague Bruce Bigelow reported.

—Doximity, a new startup from the founders of Epocrates, hopes to bring Facebook-style interactivity to the world of doctors—but with all of the security and encryption mechanisms needed to comply with federal patient privacy regulations. I got the full rundown on the company from founder and CEO Jeff Tangney (who’s also featured in a video that I just added to the story today; I couldn’t find a place last week with enough bandwidth to upload it).

—We also profiled Chirply, a Y Combinator-backed company that’s using a crowdsourcing model to come up with fun, edgy designs for paper goods such as greeting cards, notebooks, and wrapping paper. Chirply’s founders, brothers Gagan and Neel Palrecha, say they were inspired by the success of other crowdsourcing sites such as Threadless to help find a new money-making outlet for illustrators.

—Three Bay Area energy companies were among a group of 10 companies that won $63 million in funding through General Electric’s Ecomagination Challenge, as Bruce reported. San Francisc0-based SunRun, San Mateo-based Hara, and San Francisco-based Project Frog cashed in, receiving investments from a pool formed by GE, Emerald Technology Ventures, Foundation Capital, Kleiner Perkins Caufield & Byers, and Rockport Capital.

—ScaleXtreme, a Palo Alto, CA-based maker of IT management software, raised $11 million in a Series B round led by Bellevue, WA-based Ignition Partners, as my colleague Curt Woodward reported.

—In a similar deal, Ignition and other investors put $10.5 million into a Series C round for StorSimple, a Santa Clara, CA-based maker of cloud-based data storage software, as my colleague Greg Huang reported.

—Bay Area venture funds Andreessen Horowitz and O’Reilly AlphaTech Ventures participated in a $50 million funding round for New York-based Foursquare, as Xconomy’s Big Apple editor Arlene Weintraub reported.

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Danotek Motion Technologies is finalizing a deal to secure $20 million in new financing, company officials told Xconomy.

The startup, based in Canton Township, MI, will use the money to scale up production of its permanent magnet generators for wind turbines.

The company’s existing investors, which include Khosla Ventures, CMEA Capital, GE Energy Financial Services, and Energy Capital Management, are all participating in the Series B round though Danotek may add a new investor, chief financial officer Frank Alex says.

Founded in 2001 by three former General Electric engineers, Danotek in recent years has made a big push into wind power. The startup claims its technology, which generates electricity from a constant magnetic field, can help manufacturers design efficient, lightweight, and less expensive wind turbines.

Danotek used much of the $16.25 million it raised in its Series A round to move from Ann Arbor to Canton Township, where it built its headquarters and production facility.

As of the first quarter of this year, the company has about a $50 million backlog in orders, says CEO Don Naab. The company’s customers include major turbine makers like General Electric, Clipper, DeWind (a unit of Daewoo), and WinWinD in Finland.

Naab expects the facility to hit full production in 2012.

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New York-based TuneSat has scored a $6 million funding round to support its fingerprinting technology, according to a press release. The company’s technology allows the holders of music rights to track the use of their music on TV and the Internet. BMI composer and producer Scott Schreer founded the company. The funding round was led by General Electric Pension Trust, with participation from Scott Jones, founder and CEO of ChaCha, and several existing TuneSat investors.

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San Mateo, CA-based Hara Software, which offers Web-based software to help businesses monitor energy use, has raised $25 million in Series C funding, according to a report today in Dow Jones VentureWire. Focus Ventures led the round, with a range of other investor joining, including Itochu Technology Ventures, Jafco Ventures, Kleiner Perkins Caufield & Byers, Navitas Capital, Nth Power, and Energy Technology Ventures (a joint venture between Conoco Philips, General Electric, and NRG Energy). The company has raised $45 million all told.

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Boston-based Foundation Medicine has only been around for about two years, but it’s already making friends in big places. Today the company—which is developing advanced cancer diagnostics—announced a collaboration with Celgene (NASDAQ: CELG), based in Summit, NJ. Celgene plans to use Foundation Medicine’s genomics testing technology in trials of cancer drugs, in the hopes of identifying patients who are most likely to respond well to the medicines. The deal comes just four months after Foundation Medicine announced a collaboration with Novartis (NYSE: NVS) to optimize a genome panel for use in cancer research.

The financial details of the Celgene and Novartis deals were not announced, but the big-name backing is vital to Foundation, says Michael Pellini, a diagnostics-industry veteran who joined the startup as CEO on May 12. “These are two fantastic partners to have at this stage, because they bring tremendous insight into cancer biology and drug development,” Pellini says. “They will help us refine our tests.”

Foundation Medicine is built around the increasingly popular idea that cancer treatments should be tailored to individual patients. Foundation’s technology, which it’s currently marketing to pharmaceutical companies, uses high-throughput DNA sequencing to analyze tumors for alterations in more than 200 cancer-related genes. Pellini expects that number to reach 300 “in the coming months.”

Even before the Celgene and Novartis deals, Foundation Medicine’s pedigree had helped it win over … Next Page »

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The revolution of cloud computing is poised to have a major impact on the healthcare technology market. Perhaps nowhere is this more evident than in the developments surrounding medical imaging. While concerns over availability and privacy have slowed adoption to date, those are issues are highly addressable and the market is moving forward.

Medical imaging is a $170 billion a year market that includes tools like MRIs (magnetic resonance imaging) and CT scans (X-ray computed tomography). It is full of inefficiencies and redundant imaging which lead to unnecessary radiation exposure.

The American College of Radiology created a standard for medical imaging in 1993 called DICOM (Digital Imaging and Communications in Medicine). This is a standard for handling, storing, printing, and transmitting information across medical imaging. DICOM enables the integration of scanners, servers, workstations, printers and network hardware from multiple manufacturers into a PACS (Picture Archiving and Communication System). While General Electric, McKesson and Philips are the primary suppliers of imaging equipment, the PACS market is highly fragmented. A system comprised of imaging equipment and a corresponding PACS system has traditionally been very hardware intensive and expensive, and access to image studies has been relatively limited. This industry is about to be significantly disrupted.

Over the past several weeks I had the chance to meet with executives from 3 companies looking to transform medical imaging by moving it to the cloud. Each company intends to eliminate the need for patients transporting CDs around with their image studies. Each company also states their intent to expand image availability beyond the 30,000 radiologists in the industry to reach specialists, surgeons, primary care physicians and even patients. Despite the similar stated goals, each company is approaching the solution differently.

SeeMyRadiology: Arman Sharafshahi, one of the two founders of the Atlanta, GA-based company, describes their approach as straight out of the Salesforce.com playbook. Their platform provides three methods for getting images into the cloud including an option for high volume uploads from hospitals or image centers. They set out to build this cloud-based system after years in the imaging space under their corporate name Accelerad. The system includes a basic cloud viewer with a social networking element under the hood. There is no cost to have a basic account and to upload images. All that’s needed is a browser. Generally, larger hospitals and imaging centers are the paying clients while most physician offices access the system at no cost, the thought being that specialists and surgeons are actually benefiting financially from a new patient and the corresponding study. The SeeMyRadiology system will be embedded in some HIE products, and announcements about those partnerships are forthcoming this Spring. The company did announce the introduction of an API at the Healthcare Information and Management Systems Society (HIMSS) conference and Mr. Sharafshahi made a point that they will make a strong push to get images into the hands of patients. The company has venture capital backing and may seek another round of funding at some point this year.

LifeImage: Jackie Walsh of LifeImage shared that things are moving at a very fast clip for LifeImage, a company formed by alums from Amicas, a PACS company based in Boston. LifeImage recently closed a $12M Series B Venture Capital round with Cardinal Partners and Galen Partners, and boasts EMC as a strategic partner. Like SeeMyRadiology, LifeImage includes an appliance option for accounts with higher volume requirements. The company is working with clients to determine the optimal revenue model. At present, each of lifeIMAGE’s services (lifeIMAGE Enterprise, lifeIMAGE DropBox and lifeIMAGE OutBox) are priced as monthly subscriptions, rather than fee per upload or share. LifeImage has integrated its system with Microsoft HealthVault which allows a patient’s images to be easily transferred to their PHR (personal health record).

eMix: Florent Saint-Clair, the eMix General Manager, explained they are taking a different approach than the other two companies in several ways. First, eMix is being incubated inside DR Systems, a long-term leader in the PACS market. It’s worth noting that a client does not need to be customer of DR Systems in order to use eMix. Additionally, the company formed an alliance with virtualization and cloud computing company VMWare and uses its technology at the center of its solution. Interestingly, eMix also uses EMC storage systems in the background. The company is making head-way with 150 customers and counting and how now launched in Germany. Once an organization becomes an eMix customer (which requires no hardware or software), their users may send images to others outside the system. Recipients get a notification prompting them to respond for security verification. Once an initial “handshake” has been completed, a recipient does not need to repeat the process for future image studies.

As of the time of this writing, I am aware of at least two more cloud solutions on their way to the imaging market, but not ready to go on record. One is from an innovative group of technologists and the other from an industry powerhouse.

The increased activity in the space is indicative of the disruptive influence cloud computing will have. Despite a handful of players in the cloud medical imaging space, and more to come, it’s a fragmented market and there is a lot of opportunity to go around.

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In the 1880s, Thomas Edison was locked in a battle with the legendary inventor Nikola Tesla and the entrepreneur George Westinghouse.

Edison argued that alternating current was “impractical” and highly dangerous. He supported the demonstration of electrocution of numerous animals to show the press and the public the danger of alternating current. He even went so far as to commission the development of the electric chair as part of the campaign. Alternating current was also dangerous economically to Edison and his new company, General Electric, as they were set up to exploit direct current and they lost one of their core advantages if the world went to alternating current. It was the classic innovator’s dilemma.

Well, after a fact-based analysis, alternating current was chosen to be piloted for Niagara Falls in the 1890s, and it clearly worked and all the hysteria was swept away. History has shown it to be clearly superior to direct current for most applications. Later in life, Edison came to regret that he had made this clearly off-base calculation, as well as his tactics.

Fast forward to today. Last week on the front page of The New York Times an article titled “Gas Wells Recycle Water, but Toxic Risks Persist” (the title is different in the online version) was yet another example of the publicity campaign to warn people about the dangers of natural gas production if we are not careful. Is this a balanced fact-based dialogue on how to address the problems of a probable energy source that can so dramatically help our country on each of the three fundamental criteria that we should be making energy decisions today—economic security, environmental, and economic? Or rather are we falling into the same mistake that happened in the 1880s with alternating vs. direct current?

Much like the safety considerations of alternating current which were real and needed to be addressed, the concerns with water are legitimate and must be addressed. It is essential to our country that these issues are discussed in a rational manner to avoid a situation where FUD (Fear, Uncertainty, and Doubt) rules as opposed to a constructive, fact-based dialogue.

From what I understand speaking with people who are much more expert than I in this, the challenges for dealing with water and natural gas fall into three categories:

1. Misperception: The fact that people continue to think that natural gas drilling affects the aquifer, is a misperception. Once the facts are understood, this is not a serious consideration.

2. Process: The purification and disposal of water from the fracking (hydraulic fracturing) process—which is where the real issues are—relate to whether the companies and governments are … Next Page »

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The annual Healthcare Information Management Systems Society (HIMSS) just concluded the largest healthcare technology conference of the year with a record-breaking 31,225 attendees in Orlando, FL. The annual event includes the leading technology innovators and healthcare executives in the country. This year there were several distinct themes that will have an effect on any company or investor involved in healthcare. While themes like security and Accountable Care Organizations (ACOs) are staples, the following three represent significant and newer market opportunities.

Meaningful Use: The Health Information Technology for Economic and Clinical Health (HITECH) Act provides the U.S. Department of Health and Human Services with the authority to establish or promote IT initiatives and it’s well underway. The most visible initiatives are those involving cash reimbursements for adoption of electronic health records and efforts promoting health information exchanges—which was really sparked by the $19 billion set aside for this purpose in President Obama’s stimulus package two years ago. Under HITECH, eligible health care professionals and hospitals can qualify for Medicare and Medicaid incentive payments (and eventually penalties for lack of adoption) when they adopt certified electronic health record (EHR) technology and use it to achieve specified objectives (“Meaningful Use”).

It was clear at the conference in Orlando that the angst over Stage 1 Meaningful Use has subsided since the stimulus package created the opportunity two years ago. But there is plenty of uncertainty going forward. There is both a transition from Stage 1 to Stage 2 of the federal EHR incentive program and uncertainty about direction, as national health IT coordinator Dr. David Blumenthal prepares to return to Harvard in April

EHR vendors in particular are anxious given they will have to begin modifying and recertifying their products to meet the next round of requirements. (All products certified under Stage 1 will have to be recertified to meet Stage 2 criteria.)

mHealth – Mobile: The ubiquitous presence of smart phones in clinical settings and now the onslaught of tablet computing has brought mobile health front and center. Among many mobile-focused events at the Orlando conference, FierceHealthIT held a packed breakfast panel presentation entirely focused on the use of mobile devices and applications by leading organizations such as MD Anderson Cancer Center and the U.S. Navy. The general consensus seems to be that providers are demanding access to their applications on mobile platforms and IT organizations must meet the demand. Concerns around security are very addressable as explained by Captain Robert Marshall, MD, the chief medical information officer of the Navy.

Cloud Computing: Cloud computing represents a growing shift in market attitudes about the increasing confidence in the Internet as the platform, versus traditional software installations and sizeable hardware management issues. Not only are several of the giant EHR vendors now offering a subscription-based cloud solution (General Electric, Emdeon) but companies like eMix and LifeImage continue to build traction in delivering medical imaging through the cloud.

2011 will see the vast majority of healthcare IT expenditures flow toward the three categories mentioned above. Meaningful Use and the chasing of federal dollars will eventually fade away, but the second two categories are likely going to have a strong market influence for the foreseeable future.

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The Boston area gets plenty of attention for the software, Web, hardware, and mobile firms it serves as home to. It also has a crop of companies working on renewable energy and efficient battery technology. But it turns out those IT and energy areas aren’t mutually exclusive, as there’s a growing cluster of companies who overlap both these big fields, and they seem to be the shining stars of the cleantech sector, both regionally and nationally, experts say.

Indeed, there’s a bright future for companies that can use information technology to gather data on energy and help businesses and consumers be efficient with their energy usage, says Jon Karlen, a general partner at Boston-based Flybridge Capital Partners and board member of the New England Clean Energy Council.

“Ways to use information, content, and services, [and] media properties that consumers can go to live a more sustainable life—those would all be great things to develop in the U.S.,” Karlen says. As one example, he points to Digital Lumens, a Boston-based firm (and Flybridge portfolio company) that’s marrying networking technology with LED lighting systems to help big industrial-scale facilities cut down on unnecessary energy costs. (Check this out for more information on the company.)

Boston has actually got quite the population of startups developing IT to help companies and consumers get greener. Read below for a list of those we have identified so far, and some milestones those companies have achieved in the last year:

—Boston-based Ember, a maker of wireless networking technologies for helping consumers and utilities manage home energy consumption, saw its first profitable quarter in the first three months of 2010.

—Newton, MA-based Powerhouse Dynamics, a maker of software for showing homeowners which appliances are guzzling the most energy, raised roughly $1.4 million in 2010.

—GroundedPower of Gloucester, MA, which uses energy monitoring software and online community-based goal setting to get homeowners to lower energy consumption, took in about $1.3 million across two different financings last year.

—Boston-based Web startup Practically Green is using gaming elements, social networks, and expert content to help consumers determine how “green” their lifestyles are and take steps to make greener choices. The newly launched startup (CEO Susan Hunt Stevens is an Xconomy board member) raised $750,000 in its first round last year.

—Burlington, MA-based Viridity Software attracted an $8 million Series B round to put toward its technology for helping customers improve energy efficiency in data centers.

—Boston’s Next Step Living is focused … Next Page »

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