MedVentive is getting a big endorsement for its technology for helping healthcare groups use their growing volume of electronic medical data to save money and improve treatment of patients. The Waltham, MA-based software firm has tapped one of its largest new customers, Indianapolis-based Clarian Health, to help wrap up a $10 million Series C funding round, according to the company.
HLM Venture Partners and Excel Venture Management, both of Boston, led the third-round financing, which included investments by new backers Clarian Health Ventures and Core Capital Partners. Long River Ventures, a previous investor in the company, also funneled capital into the funding round. Nancy Ham, president and CEO of MedVentive, says that the company has now raised more than $18 million since the firm’s founding in 2005. The company first revealed the close of the latest $10 million round in an SEC filing posted on the Web in February, though it did not reveal the investors in the round at that time.
Clarian Health Ventures’s investment is notable because its parent organization, the healthcare provider Clarian Health, has recently adopted MedVentive’s software. Clarian Quality Partners, the firm’s statewide physician network, is using the MedVentive technology to analyze patient information for such uses as measuring the quality of care in doctors’ practices.
“I think the fact that Clarian did an investment as well as a commercial relationship is a great validation of our technology and our business plan,” Ham says. “Indiana is one of the most wired and connected states when it comes to healthcare information exchange, and that’s why we were particularly excited to be working now with the largest health system in Indiana.”
MedVentive’s Web-based software, which was initially developed at CareGroup Healthcare System in Boston, analyzes data from such sources as pharmacy prescriptions, insurance claims, and patients’ health records. The analyses enable healthcare providers and insurers to spot trends that can be used to improve patient care or reduce costs. For example, the software could alert healthcare organizations that a patient could be taking a more affordable generic drug rather than a branded treatment. Or, it could identify which patients frequently end up in emergency departments, indicating to their doctors that they need to improve the patients’ treatment plans to keep them healthy.
Ham says that healthcare groups’ desire to improve the quality and efficiency of their patient care has driven adoption of MedVentive’s technology over the past five years. Recent healthcare reforms in Washington aren’t hurting business either, she says. Medicare and other healthcare payers are moving away from the traditional fee-for-service model that pays doctors every time they see a patient, she says, to what is sometimes called pay-for-performance compensation, which gives doctors monetary incentives to keep their patients healthy and for providing quality care—rather than for the quantity of patient visits.
Investors see big potential returns in backing companies like MedVentive that have technology to measure the quality of healthcare. Boston-based Humedica, for example, says it raised $30 million in its first round of funding in 2008 to commercialize its Web-based analytics system that enables hospitals track quality of care, among other measurements.