It has been eight years since Lissy Hu won Harvard Business School’s annual student business-plan competition, with an idea for a tech startup to help patients transition out of hospitals and into facilities such as nursing homes and rehabilitation centers.
That startup became CarePort Health, and earlier this month Hu’s company was acquired for $1.35 billion by the Kansas health technology giant WellSky. CarePort was previously owned by Allscripts, of Chicago.
It’s the kind of billion-dollar deal that sometimes flies under the radar in a town full of tech and health care transactions.
CarePort, a Web-based software company headquartered in Boston, aims to streamline the process of finding patients care after their hospital stays. The transition typically involves nurses or health care representatives faxing and calling multiple facilities to inquire about availability and the services a patient may require.
“There is a ton of back-and-forth, which leads to delays, and sometimes patients end up at facilities that are not optimized for what they need,” Hu said. “They bounce right back into the hospital.”
Hu, 35, is an alumna of Harvard Medical School and Harvard Business School, where she pursued a joint degree and originally saw herself as a physician — not a tech entrepreneur. But she was drawn to the startup world upon realizing she could apply technology to a problem in a way that would affect patients on a larger scale.
In particular, she saw plenty of companies providing online reviews and information to consumers.
“There are so many other analogues . . . Hotels.com, TripAdvisor, Yelp . . . where they have been able to take very fragmented markets and bring them together,” Hu said. “I knew technology could be very powerful when applied in this context.”
Hu turned out to be right: CarePort’s software integrates with electronic health record systems and now processes about 30 percent of patient transitions out of hospitals in the United States. This year, it is expected to handle 18 million referrals in 43 states.
With CarePort, nurses can generate a list of facilities that patients can go to, based on criteria including care type, insurance, and location. CarePort also rates facilities by quality, so just as consumers can search for five-star hotels, health care providers can search for five-star nursing homes.
“Physicians get asked all the time by patients, ‘If you were my son or daughter, where would you send me?’ And it is very difficult for them to answer that question,” Hu said. “Oftentimes, you could get more information from a hotel halfway around the world than the nursing home you are sending mom and dad to down the street.”
When CarePort debuted in 2012, it had about five employees and two hospitals signed up for pilot programs: Baystate Health in Springfield and the Cleveland Clinic in Ohio. Hu said the company culture was “all hands, all in.”
“Hospitals don’t want barebones products; they want one that works,” she said. “We felt a need to perfect [the product] even before we had the first nurse testing it.”
Eight years later, early customers are still using the technology.
Joel Vengco, the senior vice president and chief information and digital officer at Baystate Health, said in a statement that “CarePort’s solutions have become core to the workflow of our discharge nurses and case managers.”
Health tech company Allscripts bought CarePort in 2016 — which then had about a dozen employees, roughly $3 million in funding, and deals with about two-dozen US hospitals — and married it to one of its similar tools. The price of the Allscripts deal was not disclosed.
Hu said CarePort operated fairly independently of its parent company, which she said was important, since CarePort had a broader customer base and worked with other electronic health record companies, or Allscripts’ competitors. Under Allscripts, CarePort grew to about 200 employees, with over 1,000 hospitals using its software.
While Allscripts helped CarePort expand, the startup’s area of focus was separate from the mission of its parent company. Eventually, CarePort customers were asking for more post-hospital services to be added to the platform, like behavioral care and homelessness services, something WellSky specializes in.
Hu said WellSky had always been a business the company admired, given its market leadership and its national footprint of care providers.
The two companies had been in conversations for a couple of years before deciding “the time was right,” said WellSky’s vice president of communications, Amy Kaminski. WellSky is owned by the private equity firms TPG Capital and Leonard Green & Partners.
Under the new parent company, Hu said, the path forward for CarePort is growth, specifically double-digit growth in overall revenue. She added that CarePort is profitable.
WellSky’s existing network should allow CarePort to more easily enter new areas of the country. In markets where CarePort has a smaller network, Hu said, it can be harder to get customers to sign up for the subscription-based service. Hospitals are only interested if there are care providers to receive referrals, and providers are only interested if there are hospitals to send them.
“WellSky has a great network in those areas, so now we can go to those hospitals and say, ‘There is no chicken-and-egg problem,’” Hu said. “Our chances of success are much higher in the WellSky home.”
Asked how she was able to turn a tech company with $3 million in funding into a business worth over $1 billion, Hu laughed.
“A part of it is me, but the big part is the team you assemble and where the market has gone,” she said, adding that about 10,000 people in the United States turn 65 daily, and that demographic shift favors her business. “And it’s investors that believed in me as a first-time entrepreneur who was a doctor without business or tech experience.”
Anissa Gardizy can be reached at firstname.lastname@example.org. Follow her on Twitter @anissagardizy8 and on Instagram @anissagardizy.journalism.