Scott Murphy AVG Blog May 5, 2020

Simplifying the Supply Chain to Supporting Patients

How Parachute Health is giving patients a better way to order medical equipment



Parachute Health: Modernizing Medical Equipment Procurement

May 5, 2020 | Scott Murphy

For patients, getting the proper medical equipment after a major surgery can often be more painful than the procedure itself. Now Parachute Health is using a technology-first approach to get Durable Medical Equipment into the hands of patients faster and with less friction. AVG accessed this deal through a relationship between the company’s CFO Zach Fleitman, a Northwestern Alum, and the investment team for Purple Arch Ventures, AVG’s fund for the Northwestern community.

 

Addressing an Outdated Process

Durable Medical Equipment is defined as equipment that provides therapeutic benefits to patients, is generally prescribed by physicians, can withstand repeated use, and is used in a patient’s home or care facility. Examples of DME include wheelchairs, walkers, hospital beds, CPAP machines, crutches, oxygen equipment, and canes.

These items are largely covered by health insurance and therefore subject to strict billing and reimbursement codes, which require complex coordination between discharge facilities (hospitals, nursing homes), DME suppliers, payors (Medicare, Medicaid, and private insurance), and ultimately the patients receiving the equipment. Traditionally, this process has been managed via phone calls, snail mail, and fax machines.

Parachute solves this surprisingly complex problem with their standalone cloud-based website and an app in Epic’s “App Orchard” that digitizes the process of determining insurance coverage, selecting providers, and sending and tracking orders for DME.

 

 

How It Works

Parachute launched in 2016 in New York after founder David Gelbard saw his father, a pharmacist and medical equipment company owner, wait weeks for a walker following back surgery. “By the time the walker arrived several weeks later, I had watched my father nearly re-injure himself several times as he struggled to get around without the equipment he so desperately needed,” Gelbard recounted. “Despite undergoing a miraculous surgery and rehabilitation process that cost tens of thousands of dollars, my father’s inability to procure a $40 walker is what ultimately nearly sent him back to the hospital.”

Gelbard could not believe the inefficiencies in the process and set out to build a platform that would deliver a better patient experience. Since 2016, Parachute has grown steadily, integrated its software with mid-market care facilities, major medical recordkeeping platforms, and the leading DME suppliers.

On the supply-side, suppliers have to adhere to complex reimbursement processes and regulatory changes that can impact margins. Parachute can reduce costs by cutting out waste in order processing and revenue collection. On the demand-side, patients and facilities experience high reorder rates, delays at discharge, lack of transparency, and long wait times for equipment delivery. Parachute provides simple ordering, tracking, and customer support so that patients know when to expect their equipment. Finally, integration with electronic medical records (EMR) vendors can be difficult to obtain. Parachute is already integrated with Epic and Cerner, which account for more than half of the acute care EMR market.

 

How We’re Involved

Alumni Ventures Group deployed capital in Parachute Health’s 2019 Series A funding round led by Insight Venture Partners. Our participation was led by Purple Arch Venture, our fund for Northwestern alumni and friends, and included Chestnut Street Ventures, and AVG’s Total Access Fund.



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