Innovations: Using software tools to strengthen bonds between nurses and patients

(This article has been updated with a correction.)

Losing revenue after failing to meet Medicare's performance standards is a painful prospect for hospitals. But for CipherHealth, it's a growth opportunity.

The New York-based company is among a flood of venture-backed digital health start-ups developing software tools and related services to help hospitals wring waste from operations, improve patient satisfaction and capitalize on their investment in federally subsidized health information technology.

CipherHealth, launched in 2009 by an angel investor and four employees, began life as a start-up incubator. It has since morphed into a rapidly growing software developer with 90 employees and four products that help nurses improve patient satisfaction and engagement.

Its software aids nurses during hospital rounds and enables follow-up after patients leave the hospital. Sentara Healthcare, Norfolk, Va., and OSF HealthCare, Peoria, Ill., are among the clients using its software to track and respond to patient needs. Revenue has doubled each year since CipherHealth signed its first three hospital clients in 2010.

The playful atmosphere at the firm's Midtown Manhattan offices seems far removed from the pressure of that kind of explosive growth. During a tour, two employees sat in a ball pit with laptops. Harry Potter posters hung from a wall. But that relaxed arrangement has fostered a highly responsive development team, which has emerged as the company's best shot at long-term viability, investors and customers say.

Nearly all of its major products have been developed as a response to specific customer needs. One of its early products—Voice—uses automated phone calls to contact patients who have left the hospital and to identify those at risk of readmission. Those at highest risk are transferred to hospital staff for one-on-one intervention. “Voice was the only tool that we essentially built by ourselves,” said co-founder Alex Hejnosz, a 28-year-old former emergency medical technician and graduate of the University of Pennsylvania.

Voice allows hospitals to triage those patients who need the most help but keep labor costs low. “Everybody wants to do follow-up phone calls,” Hejnosz said. “The problem is the human capital issue.”

Since launching Voice, the company has added rounding software, patient activity monitors and a tool to repeat hospital discharge instructions once patients return home. “Everything else came from requests and input from nurses at our existing clients,” Hejnosz said.

CipherHealth software automates the follow-up from rounds that can drain nurses' time, said Genemarie McGee, chief nursing officer for Sentara. “You could spend your whole day rounding and following up on issues.”

She praised CipherHealth's development team. They are “nimble, innovative and hungry,” she said. “Other vendors try to sell you what they have. These folks allow you to develop together.”

OSF HealthCare contracted with CipherHealth in March to standardize the questions and data collected from patient rounds. Executives there hope to see better satisfaction scores from patients as a result.

Rounds give patients an opportunity to voice their concerns and needs, which CipherHealth software can direct to appropriate staff, said Lori Wiegand, OSF HealthCare's CNO. The information can also be aggregated to identify trends that need to be addressed.

OSF selected CipherHealth from among five companies competing to provide rounding software.

The company's target market is nurses. “Their focus was patient experience, reducing readmissions and patient engagement,” Hejnosz said. “Yet they had no tools to help them.”

Just as it has gotten its best ideas from its customers, CipherHealth is seeking to foster the same spirit among its growing workforce. Workers do not have titles, which encourages everyone to come up with new ideas, said Zach Silverzweig, another company co-founder.

CipherHealth does use labels to identify employees' roles within its loose organizational structure, however. The company's programmers are called jedis; its salespeople are rainmakers.

It also holds competitions to reward work that otherwise might go unrecognized. Employees are divided into teams named for the four wizard houses in the Harry Potter books, with the teams selected, of course, by the sorting hat. “Family,” Hejnosz said, “is the closest description to what we're trying to build here.”

(The article has been updated with a correction. The article had incorrectly named AVIA as an investor in CipherHealth's third round of funding.)