The deal has been in the works for many, many months, but Wednesday, February 7, marked the official opening of a related pair of startup firms in Kingston, both headed by Woodstock resident and entrepreneur Anula Courtis. Courtis and three employees of the two custom software companies in the healthcare field occupy a small office at the 721 Media Center on Broadway, along with the 31 varied other businesses and services in this busy building, upon one outside wall of which an LED sign flashes the message: “Need an office space? Only 2 left. Inquire within.”
In 1990 Congress passed a Medicaid drug rebate program called 340B requiring pharmaceutical manufacturers selling to Medicaid beneficiaries to provide rebates to federally funded public hospitals and clinics serving a high proportion of low-income and uninsured patients. A variety of intermediaries offer software solutions to manage drug procurement. They get paid, in the words of one purveyor, for tracking “all drug activity from the pill to the purchase to the patient to the payment.”
As drug prices increase, the number of media reports of people who can’t afford the medications they need to survive have become more numerous. The $5000 pill to keep someone alive has become a $10,000 pill. Such situations are a fact of life — and of death. A rebated rate often makes an impossible financial situation merely very difficult.
The fact the prices of pharmaceutical products and the profits of the pharma companies have been rising rapidly is no secret. In November 2017, the federal General Accounting Office (GAO) produced a report on the subject entitled “Drug Industry Profits, Research & Development Spending, and Merger and Acquisition Deals.” Bottom line is that average annual profit margins among the top 25 pharma firms from 2006 to 2015 averaged between 15 and 20 percent, while profits at equivalent-size non-drug firms fluctuated between four and nine percent, according to GAO report 18-40.
In most situations, it’s Medicaid — our taxes — that pays the hospitals or clinics for the medication at discounted rates. The intermediaries who handle the transactions can play a vital role in reducing the overhead of the participating hospitals and clinics. As for patients, the calculus is more urgent: They die when they don’t get the medicines that keep them alive.
Anula Courtis owned a healthcare consulting business called GenEx Consulting in Princeton when she and her spouse fell in love with Woodstock. The couple bought an artist’s house on Lasher Road, in woods a mile or so from the Village Green. Could she run her evolving business, which was transitioning toward an emphasis on healthcare, from Woodstock?
Courtis concluded she could just as well innovate from Ulster County as from New Jersey, eventually finding both institutional customers and employees in the Hudson Valley. Having heard about the often-maligned Start-Up New York, Courtis found her enterprises might qualify for the ten years of tax breaks the state economic development program, offered. It was an idea worth exploring. It took almost two years to bring it to fruition, but it has now happened.
340Best, Inc. provides custom software and technical and analytical support for the 340 program. The company has promised Empire State Development it will create six new jobs and invest $25,000. Its closest regional customer is Ellis Hospital in Schenectady.
GenEdge Health, Inc. will develop proprietary software to support prescription benefit management companies, unions and others in managing some aspects of their healthcare. GenEdge promises to create three new jobs and invest $10,000.
Start-Up, rebranded in 2017 as the Excelsior Business Program, is an acronym for SUNY Tax-free Areas to Revitalize and Transform Upstate NY. Participants need to be businesses new to the state or expanding in the state. They need to partner with a local college and university. And they needed to create new jobs.
Start-Up’s not been a success. After state expenditures of at least $53 million in advertising and eight million in benefits for the program, about 1650 new jobs have been promised, a drop in the bucket in a state workforce of about 9.7 million. In the latest round, as projected by Empire State Development in late January, 270 new jobs will be created under the program in New York City and Long Island and 274 elsewhere in the state, including 28 in the mid-Hudson region, the nine at the two firms at 721 Broadway plus 19 jobs promised at two Newburgh-area startups, Osborne Technologies, a maker of educational tech products, and Vuff Inc., a manufacturer of leashes for pets.
GenEdge Health and 340 Best qualify for the state program because of their affiliation with SUNY Ulster. The two other regional firms are associated with St. Mary’s College. Courtis said that Suzanne Holt of Ulster County executive Mike Hein’s office and Chris Marx of SUNY Ulster had been particularly helpful in working to meet Empire State Development’s requirements.
The room at 721 Broadway is maybe 15 or 20 feet wide and 25 to 30 feet deep, with a glass separator toward the rear, behind which is a desk with a computer. That’s Courtis’ workspace. Three desks with computers occupy the front part of the room near the door. There’s no excess furniture.
Everybody is local. Mike Doyle, who relocated from New Jersey to work with Courtis and now lives in Walden, sits closest to the door. On the right is Jared Beattie, a recent SUNY New Paltz graduate in marketing who still lives in the village where he went to college. The desk against the wall on the left is occupied by Matthew Meck, who lives in Hyde Park.
In the state program as nationally, small startups like the Kingston ones headed by Courtis far outnumber the larger ones. In mid-2017, only 22 of the 156 firms in the Start-Up program had more than ten employees. Despite extensive business research, it’s difficult to identify beforehand those enterprises which will be capable of “scaling up,” expanding the number of jobs they offer and creating successful collaborative learning environments.