Tech Ventures in Georgia Prosper As Health Care Law Kicks In

Jan 9, 2014
Originally published on January 9, 2014 5:36 pm

Georgia is fighting the health care law at every political turn.

Gov. Nathan Deal, a Republican, chose not to expand Medicaid, despite the increased federal funding made possible by the Affordable Care Act. And Ralph Hudgens, the state's insurance commissioner, publicly vowed to obstruct the law.

But that doesn't mean that Georgia isn't seeing some financial benefits from the law.

Take Premedex, a 2-year-old company that works with hospitals and doctors to keep hospital readmissions down. Founder and president Van Willis says that just a few years ago, a company like his would've been a hard sell. Impossible, even. But financial incentives for hospitals to reduce readmissions are getting a boost from the Affordable Care Act.

Scattered around a half-dozen office cubicles, Premedex employees put on telephone headsets on a recent morning and sit down in front of computers that automatically dial patients. After telling patients they are calling on behalf of doctors and hospitals, the workers ask some simple but important health questions: Have you had any fever? Are you in any pain?

How patients answer could mean the difference between a hospital's profit and loss. A persistent fever could signal that a patient is having trouble and should see a doctor. Under the Affordable Care Act, hospitals are penalized if Medicare patients are readmitted within a month for several specific illnesses. Private insurers will probably follow Medicare's lead. Willis says that's creating a new market for companies like Premedex.

"We've got clients across the country — small clients, large clients — they all feel the same pressures," he says.

Premedex started with five employees. It's up to 25 and growing. The company's story is one told over and over across Georgia, says Tino Mantella, who heads the Technology Association of Georgia.

Health information technology companies have become essential for digitizing the health care system, providing tools to help doctors and hospitals improve the quality and efficiency of patient care.

Georgia is seeing a boom. "We like to say it's the health IT capital of the nation," he says. Tech jobs, including those in health IT, pay well — an average of $81,000 a year. Mantella says the Atlanta suburb of Alpharetta actually has as many tech companies as startup mecca Austin, Texas.

Medical device company EndoChoice is one company that calls Alpharetta home. It manufactures equipment like flexible cameras used to check for polyps in the colon.

Mark Gilreath, EndoChoice's founder and CEO, says the company's workforce has grown exponentially in almost no time. "We were in my basement a few years ago with an idea, and today we're approaching 400" employees, he says.

Gilreath says the company's technology helps doctors perform procedures more effectively, reduce infections and give better care to patients. Those are all things encouraged by the Affordable Care Act.

Despite EndoChoice's success, Gilreath is concerned a provision in the health law will stifle innovation and kill medical device startups before they get off the ground.

The law imposes a 2.3 percent tax on medical device sales. "It's shaking the investment community," he says. "It's shaking the device industry. It's forcing companies to do dramatic things, and it's just not healthy for the United States."

Gilreath says he's cut back on research and development as a direct result of the tax. Even so, his company is on track for more than $100 million in revenue this year.

This story is part of a partnership among NPR, WABE and Kaiser Health News.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

AUDIE CORNISH, HOST:

To Georgia now and talk of the Affordable Care Act. The state has opposed the law at every turn. Its governor has chosen not to expand Medicaid, and the state's insurance commissioner publicly vowed to obstruct the law.

But as Jim Burress of member station WABE reports, Georgia is still benefiting financially from the rollout.

JIM BURRESS, BYLINE: Van Willis knows just a few years ago, a company like his would've been a hard sell.

VAN WILLIS: Health care was very reactive.

BURRESS: Willis is president of Atlanta-based PREMEDEX. The two-year-old company contracts with hospitals and doctors' offices to call patients after the hospital discharges them.

WILLIS: From a hospital standpoint, there was very little, if any, communication with patients once they leave. A logical way to communicate with patients if you can't be in their homes is, of course, through the telephone.

UNIDENTIFIED WOMAN #1: And we wanted to check on you.

UNIDENTIFIED WOMAN #2: OK.

UNIDENTIFIED WOMAN #1: How are you doing today?

BURRESS: Scattered around a half-dozen office cubicles, a handful of PREMEDEX employees don telephone headsets. They identify as calling on behalf of the clients and they ask simple questions.

UNIDENTIFIED WOMAN #1: And do you have any difficulty breathing?

BURRESS: How patients answer could mean the difference between a hospital's profit and loss. Under the Affordable Care Act, hospitals are penalized if Medicare patients are readmitted within a month for several specific illnesses.

Willis says that's creating a new market for companies like PREMEDEX.

WILLIS: We've got clients across the country - small clients, large clients. They all have to feel the same pressures.

BURRESS: PREMEDEX started with five employees. It's up to 25 and growing. And its story is one told over and over across Georgia.

TINO MANTELLA: We like to say it's the health IT capital of the nation.

BURRESS: Tino Mantella heads the Technology Association of Georgia.

MANTELLA: There's 20,000 technology companies in the state. That came out to be $113.1 billion of impact, which represents about 17 percent of the overall economic industries of the state.

BURRESS: And health IT is a fast-growing segment. Mantella says the Atlanta suburb of Alpharetta actually has as many tech companies as startup mecca Austin, Texas.

Medical device company EndoChoice is one company that calls Alpharetta home. It manufactures equipment like flexible cameras used to check for colon polyps. Here, workers assemble and wrap in green plastic single-use EndoKits.

MARK GILREATH: It has a dual enzymatic detergent...

BURRESS: Mark Gilreath is EndoChoice's founder and CEO. He says the company's workforce has grown exponentially in a short amount of time.

GILREATH: We were in my basement a few years ago with an idea. And today, we're approaching 400.

BURRESS: Gilreath says the company's technology helps doctors perform procedures more effectively, control infection and give better care to patients. That kind of efficiency is a goal of the Affordable Care Act. Despite his company's success, Gilreath is concerned a provision in the health law will actually stifle innovation. That's because a law imposes a 2.3 percent tax on medical device company revenues.

GILREATH: So it's shaking the investment community. It's shaking the device industry.

BURRESS: Even so, his company is on track to generate more than $100 million in revenue this year. EndoChoice is a textbook example of the type of tech venture Georgia wants. A recent Commonwealth Fund study projects in 2022, the state will spend about $1.3 billion to attract such companies.

For NPR News, I'm Jim Burress in Atlanta.

CORNISH: This story comes to us through our partnership with NPR, WABE and Kaiser Health News. Transcript provided by NPR, Copyright NPR.