Investing & Startups| January 7, 2019
SonarMD received $10M in funding to expand and change clinical practice
SonarMD, a company that helps complex patients better manage their chronic medical conditions, recently received $10 million in funding through a joint investment from BCBS Venture Partners and Arboretum Ventures.
Chicago-based gastroenterologist Larry Kosinski of the Illinois Gastroenterology Group is confident in SonarMD and its assumed mission. The health company he founded, and for which he serves as Chief Medical Officer, has managed to convince investors, as the recent funding proves. Kosinsky initially embarked on a project with IGG and Blue Cross Blue Shield of Illinois to reduce costs associated with complications from Inflammatory Bowel diseases such as Crohn’s disease. His involvement led to the development of the clinical decision support and patient engagement tools that evolved into the current company, which is now ready for expansion.
What health related services does SonarMD provide?
The main purpose of SonarMD is to provide specialized services to patients suffering from chronic diseases in order to help them better manage their condition and live a healthier life with lower costs, outside of hospitals. The company partners with payer organizations and specialist groups to improve care for these patients, whose clinical outcomes may vary quite a bit, but who are all typically treated with highly priced drugs. What SonarMD tries to do is turn this variability into a great potential for care improvement, while keeping the treatment as cost effective as possible.
How is this achieved? Basically, SonarMD’s reroutes incentives so that the right specialists, those who have the most appropriate clinical knowledge to help chronic sufferers and the closest relationships to the patients, are more motivated and better equipped to provide value-based care. SonarMD ensures care management and tools for better patient engagement, while payers provide the financial incentive. The aim of this combination is to achieve a transformation in clinical practice. The desired result is to have healthier patients, via more holistic, preventive care, with fewer costly adverse events, and better use of expensive drugs.
What do fund providers think of the SonarMD model?
“We see great promise in this model,” said Anna Haghgooie, Managing Director of Sandbox Industries, on behalf of Blue Cross Blue Shield Venture Partners. “Although SonarMD is starting with inflammatory bowel disease in GI practices, their strategy could easily expand into a number of other ‘high beta’ specialty areas where there’s room to improve on care, cost, and outcomes.”
This is not the first occasion for which the Illinois insurer is showing interest in solutions to improve patients lives. Last August, for instance, Blue Cross Blue Shield (BCBS) announced a partnership with Fitbit to get its 60 million members a special deal on the fitness tracking devices.
The goal is to “help consumers create and maintain healthy habits,” the insurance association said.
Of course, more cost effective managed medical conditions are good news for both patients, and insurers.
The new capital infusion will help SonarMD expand, by ensuring the company attracts key new team members who can infuse their expertise into more growth and expansion. Next to Founder and CMO Larry Kosinski, the company is led by CEO Devin Gross, who signed on last August. Gross took on the position after previously heading patient engagement company Emmi Solutions, where he and his team registered rapid growth throughout a period of seven years, finally prompting an acquisition. “I’m truly excited to be a part of this group,” said Gross. “We’re focusing on an area no one is paying much attention to right now, and there’s so much opportunity to make things better for all parties.”
SonarMD is proven to keep patients healthier and out of the hospital
SonarMD has already shown that its model can work. So changing clinical practice, although hard, is not impossible. In this process, the human factor is a key point. “Getting the specialists on board is crucial,” said Dr. Kosinski. “They’re the key players in this space, and when they’re properly set up to support value-based care, that’s when the tides will shift.”
Reduced copay and improved life stability are SonarMD’s promises. So far SonarMD has proven that its method keeps patients healthier and out of the hospital. One feature that is extremely important to patient mental wellness: through the engagement tools, patients are more involved in their own treatment, and are better able to take a more active role in their own care.
Investors seem convinced the company will be able to further expand and that its model will become more popular throughout the healthcare system.
“Arboretum is very excited to co-lead the investment in SonarMD,” said Tom Shehab, MD, managing partner of Arboretum Ventures and a gastroenterologist. “SonarMD is in a unique position to improve the quality and cost of care for patients with chronic disease. Current care delivery systems are too often fragmented, and that hurts patient experience and outcomes. It’s encouraging that SonarMD’s model relies on strengthening the patient-provider relationship and maintaining continuity of care to improve the overall outcome.”
SonarMD manages patients with conditions that have high variability in both cost and clinical outcomes. Currently deployed in patients with inflammatory bowel disease, the model is conducive to expansion to other chronic disease states with high variability. Through sophisticated patient engagement, targeted care management and specialty pharmacy optimization, SonarMD drives down costs and improves patient outcomes. SonarMD contracts with payers to manage this population of patients and works with existing in-network providers. For payers, it provides a holistic perspective on managing medical and drug costs for these patients. For providers, it supplies the tools and resources needed to better engage and manage patients in a value-based care model as well as share in the cost savings.
About Arboretum Ventures
Arboretum Ventures is a venture capital firm specializing in the healthcare sector. Founded in 2002, the firm manages $450 million across four investment funds. The investment team targets capital-efficient companies that can meaningfully reduce healthcare costs and improve efficiency in focus areas of medical devices, diagnostics, healthcare IT and healthcare services. Arboretum is headquartered in Ann Arbor, Michigan.
About Blue Cross Blue Shield Venture Partners
BlueCross BlueShield Venture Partners, L.P. is a corporate venture fund licensed by the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield companies. The fund invests in promising emerging companies of strategic relevance to Blue Cross and Blue Shield Plans. Sandbox Industries is the exclusive provider of investment management services to BlueCross BlueShield Venture Partners.