Mobile PHR startup Cognovant shuts down, blames delay in MU2

By Neil Versel
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PocketHealth CognovantWhen Babyforyou.net.ua first reported on personal health records (PHR) startup Cognovant in May 2012, the story warned about a "graveyard" of PHR failure. Cognovant, like many others before it, saw PHRs as the potential hub of interoperability for healthcare consumers that so far has eluded many provider-centric electronic health records (EHRs).

Cognovant, of Kansas City, Mo., recently joined that graveyard, shutting down in March after burning through its $500,000 in seed money from angel investors and failing to close a full-fledged round of venture capital. "We were trying to get a Series A round and couldn't get it funded," former Cognovant President and CEO Dr. Joseph Ketcherside tells Babyforyou.net.ua in a candid postmortem interview.

Ketcherside has since joined another startup company as chief medical officer of Memphis, Tenn.-based health IT and analytics firm and the related , which adds structure to raw genomics data. But he still thinks "untethered" PHRs have a future, particularly once Stage 2 of the "meaningful use" EHR incentive program Stage 2 begins, with its requirement that providers engage patients in their own care.

When Cognovant started in 2011, the principals were counting on Stage 2 to begin in fiscal year 2013, as originally scheduled. But when the final regulations came out, federal officials delayed the second stage by a year, to no earlier than October 2013 for hospitals and January 2014 for physicians and other individual providers. (The exact start date depends on when a provider first attains Stage 1.)

Cognovant built its PocketHealth mobile PHR for Android and Apple iOS to follow the Continuity of Care Document (CCD) standard so it would be compatible with any EHR certified for meaningful use. Stage 1 requires providers to give patients electronic copies of their own records in CCD format upon request. In Stage 2, EHRs will have to be able to import CCD data and providers will have to convince at least 5 percent of their patients to upload data through a portal or other interface such as a PHR.

The delay threw a wrench into Cognovant's business model.

"We were well into it when they pushed meaningful use Stage 2 into 2014, which is kind of like telling a startup to wait a year before you have any revenue," Ketcherside says. "We knew that timing was a big part of it." Without the boost from Stage 2, patient engagement remains slow, and thus demand for PHRs continues to lag.

"It's an early market and it takes a lot of capital to do it, but we didn't have it," Ketcherside says.

Another thing that helped sink Cognovant was its initial focus on direct-to-consumer sales. There really has never been much of a market for DTC health IT, as others have found out the hard way over the years. The company was just starting to shift its focus toward organizational sales through health plans and employee wellness programs when the money ran out, according to Ketcherside.

Ketcherside reports some outside interest in buying the dormant Cognovant intellectual property, but no deal is done. "It's a really good product and I would hate to see it just go into the bit bin," he says.

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