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Portfolio June 24, 2014

Our Investment in Grand Rounds

Saving People's Lives And Lowering Healthcare Costs

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Healthcare spending in the United States is approximately $3 trillion per year and nearly 20% of the annual GDP and growing. Healthcare costs generally follow the “80/20 rule” which means the vast majority of costs are from a small number of complex and challenging cases. These are things like treating cancer, heart disease, complex orthopedic issues, infertility and the like.

When one of these complex cases occurs, most people have few tools to find the best doctors and often receive substandard care. This results in unnecessary spending, and even worse, less successful treatments and outcomes.

This is why we are so proud to lead the $40 million dollar series B in Grand Rounds, with participation from the existing investors Bryan Roberts of Venrock and Michael Deering of Harrison Metal.

Grand Rounds focuses on improving health care outcomes by helping patients with more challenging cases find the best quality doctor. Their service has a materially positive impact on patient outcomes as well as long-term, overall cost. They do this by providing a software as a service platform and care coordinators that connect patients with the top medical specialists in the country, as selected by the company’s proprietary quality algorithm.

It is a problem near and dear to my heart — or more precisely, to my back.

A little over a decade ago, I was riding my bike on a steep and wet downhill. I squeezed my brakes a bit too hard and the rear wheel slid out and I ended up sliding 25 mph into a 4×4 wood post.

I shattered my L4 vertebrae, punctured my lung, and broke three ribs. Not fun.

I was taken to the hospital and placed in the ICU due to the potential of being paralyzed. While there, the neurosurgeon assigned to my case suggested a surgery to fuse several vertebrae together. There I was, laying in my hospital bed, taking morphine for the pain, barely conscious, and having to decide on a very invasive surgery — about which I know nothing. Scary stuff.

Thankfully, I have an amazing set of friends that all rallied to help. Through good fortune, a friend of mine knew one of the preeminent neurosurgeons in the country. My friend collected copies of all my medical records and hand delivered them to the Doctor, who reviewed my files and then provided an expert, second opinion. Based on his expertise, he suggested that I probably would not need the surgery. Instead, the doctor recommended that I recover in the hospital for a few more days, and then use a back brace for 3-6 months while starting physical therapy.

More than 10 years later, (while I have very occasional back pain) I am quite healthy and continue to ride my bike. And the cost of the back brace was on the order of $1000 — compared to $60,000 for the surgery.

I was very lucky.

As you can imagine, after I met with the CEO Owen Tripp and Dr. Rusty Hofmann, the co-founders of Grand Rounds, and they explained how they had built a platform to help people in situations exactly like the one I had experienced, I was immediately on board.

Their first product, called Opinions, leverages their proprietary ranking model and selects an expert doctor from within their network. In the majority of cases, the doctor is geographically remote from the patient. To facilitate the consultation in the most efficient manner, the Grand Rounds software platform aggregates all the medical records electronically and prepares them for review. The specialist Doctor uses the platform and offers an expert opinion for the patient. The patient can then review the case and share the expert opinion with their primary doctor or others to make a more informed decision about the course of care.

In addition, Grand Rounds recently rolled out two other products, Visits for scheduling the best local doctors for the specific type of care needed, and Stat, for expert opinions in the case of emergency room care.

While it is still the early days for Grand Rounds, the results have been impressive both in terms of lowering costs, and even more importantly, in providing people with better care. The company also announced today that they now cover one million people on the service. The coverage is primarily provided as part of a company’s health benefits.

We look forward to being our partnership with Owen, Rusty and the rest of the Grand Rounds team as they grow from one million to tens of millions of covered lives.

“While it is still the early days for Grand Rounds, the results have been impressive both in terms of lowering costs, and even more importantly, in providing people with better care.”