MedStack raises $2.4M to help digital health apps with privacy compliance

Steven Loeb · February 26, 2019 · Short URL:

The Toronto-based company is currently being used by 50 digital health apps

While privacy in healthcare is paramount, as patients don't want their medical information to get out and to be potentially used against them, it can also be a bit of hindrance for companies trying to enter the healthtech space, given all laws and regulations that they need to follow to be compliant. It's not what those companies specialize in and it can be overwhelming for them

That is where a company like MedStack enters the picture. The company builds and manages healthcare privacy compliance into cloud hosting tools, making it so that apps can onboard them faster and without accidentally breaking regulations. 

"Healthcare desperately needs a deeper infusion of cloud technologies to address its capacity issues and deliver care anywhere, make decisions faster and improve workflows.  But onboarding digital solutions is incredibly difficult because of the stringent nature of privacy tracking laws when it comes to health data," Balaji Gopalan, co-founder and CEO of MedStack, told VatorNews in an interview.

Right now, he said, healthcare vendors are spending over $100,000 a year "in architecture and security technology and legal feels to cover the minimal requirements of hospitals and insurance companies."

MedStack's solution helps app developers meet privacy, security and interoperability regulation up front, so the apps can onboard digital innovations faster and not risk making potentially big mistake when it comes to patient privacy.

On Tuesday, the company announced that it raised a $2.4 million CAD ($1.8 million USD) in an oversubscribed seed round led by Telus Ventures, with participation from ScaleUP Ventures and Panache Ventures. Existing investor Ontario Centres of Excellence and several previous angel investors also participated in the round. The company had previously raised $500,000 USD.

In addition to the funding, it was also revealed that Telus Ventures and ScaleUP are joining the company’s board of directors. 

"MedStack's success is a story of what our brave customers are doing, from transforming the way surgical recovery works, to helping premature babies get out of the hospitals and to their families faster to bringing more healthcare support through different channels, families, consumers and professionals to more patients. It's a story of bringing bleeding edge technologies such as AI, mobile, augmented reality and blockchain to healthcare to create real benefits," Gopalan told me. 

"This funding round, and our strategic relationship with TELUS, the biggest digital health system provider in Canada, and their growing partners around the world, is a celebration of that initiative and the necessary collaboration to improve this industry."

Launched in 2015, the Toronto-based MedStack customers are vendors of digital health applications, building medical devices, medical research data managers, healthcare scheduling and billing workflows and chronic disease management apps. By using the MedStack platform, the company's customers can get through their sales audits 60 percent faster than before.

"They're usually early-stage startups focusing on a single solution in a single area in healthcare, inspired by personal stories as patients or healthcare workers," Gopalan explained. 

Right now, MedStack has over 50 digital health apps on its platform now and is "growing aggressively." In September of last year, the company launched MedStack Control, which gives its customers real-time control over their infrastructure, as well as more flexibility.

"The launch of MedStack Control this year will accelerate the pace and ease with which customers can discover and onboard and gain value from our platform," said Gopalan.

The new funding will be put towards channel development for MedStack Control.

"We've proven that our Active Compliance automation technology has the broad reach and technical robustness to support our customers as they grow their digital health solutions.  The next thing we've built is a new generation platform that makes it easier for them to onboard and manage their deployment over time,"Gopalan said. "With the launch of MedStack Control, we're building a bigger, stronger team backed by a wider suite of industry certifications and attestations to onboard more customers more rapidly, while focusing at the same time on servicing larger, more strategic partnerships."

The funding will also go toward expanding its 10 person team by growing its engineering, sales and support teams.

According to Gopalan, MedStack is the only cloud automation platform dedicated to healthcare data privacy compliance in Canada, though there are companies like Datica, ClearData and Aptible that are based in the United States. 

"Our focus is on the turnkey solution particularly relevant to early-stage individual digital health companies, with privacy policies and training built-in, and machine-auditable, and broad flexibility for Developers across technology stacks, cloud providers and deployment tools so that they can get to market faster," he told me.

There are a few key trends happening in the healthcare space over the last few years that have allowed a company like MedStack to operate, the first being, "a general realization that workflow-specific endpoint applications are what make the biggest difference to patient service and value in this industry."

"Yes, data systems such as electronic health records are vital and there is still a ton of work to be done there, but we also need to think about the user experience, for patients, families, researchers, providers etc, in everything from family health clinics to chronic disease monitoring to the operating theater. One vendor can't do it all, so everyone, from the EMR vendors themselves to accelerators, venture funds etc is looking to build a developer ecosystem," Gopalan explained.

The second trend that he sees is an increasing need for this technology than ever before due to "capacity constraints, in both public and private healthcare systems." That is due to an aging population with chronic diseases. 

Finally, there's the fact that the consumer is now more accepting of cloud technology in healthcare, thanks to technologies lke wearables.

"All this is happening against a backdrop of the biggest focus on digital personal data privacy ever, both in the healthcare space and in general. We all want the benefits that data integration gives us in terms of better quality services and quality of life, but not at the risk of data breaches to malicious entities. Privacy protection and data security must be the cornerstones upon which this transformation happens."

Ultimately, the goal with MedStack, Gopalan said, is to build a new ecosystem, "on the fundamental foundational assumption that only entrepreneurship and grassroots technology innovation can make the necessary changes to modernize and make more effective established, integrated and essential industries like healthcare. And startups have a responsibility to tackle these big problems." 

"Ultimately we see MedStack as powering a multi-sided marketplace, where healthcare service enterprises from hospitals to insurance companies to research networks can collaborate with digital health innovators, backed by and integrated growing system of incubators, investors, data sources and advisors to bring more technology to healthcare.  The app store for healthcare, if you will. We're starting with a defined, tangible and first-level problem and will be expanding from there."

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