Published in Health Care

Investors ‘put some gas into the engine’ for Facility Health to scale

BY Sunday, March 01, 2020 06:00pm

ELMONT — A Grand Rapids-area software company that uses artificial intelligence to help health care providers monitor and maintain their facilities and equipment plans to scale operations with the backing of nearly $1.3 million in capital raised from investors.

Facility Health Inc. wants to build product and sales staff and diversify into other sectors beyond health care that can benefit from improved planning for capital expenditures.

Facility Health co-founder and CEO Christian Fernando COURTESY PHOTO

The company secured the capital investment after more than tripling revenue on a year-over-year basis to $2.5 million in 2019. Facility Health for 2020 is on track to again more than triple revenues, co-founder and CEO Christian Fernando told MiBiz.

“We feel like we’re getting some momentum from the marketplace that, ‘Yes, this is not just unique, but we need this right now and it’s very applicable in capital planning,’” Fernando said. “Now that we’ve gotten to a point where we feel that this can be scaled, it was time to get a little bit of capital and put some gas into the engine to grow this thing.”

Belmont-based Facility Health works with about 15 health systems in Michigan, Indiana, Florida, North Carolina, Colorado and Arizona. Those clients collectively have 50 million square feet of space and 75,000 infrastructure assets with a combined replacement value of $4 billion, Fernando said.

The company’s software uses artificial intelligence and predictive analytics to help clients plan their capital budgets and decide when to upgrade or replace equipment or infrastructure such as heating and cooling systems. That can help avoid breakdowns and costly disruptions, as well as mitigate risk, particularly for clinical areas such as operating rooms when medical equipment goes out and forces a shutdown for repairs.

Solving problems

Facility Health raised the seed capital round from 12 investors, according to a recent filing with the U.S. Securities and Exchange Commission. Grand Rapids-based Wakestream Ventures LLC led the investment round in Facility Health. Other investors included Grand Angels Venture Fund III and members of the affiliated Grand Angels investor groups across the state, as well as Invest Detroit Ventures and the Ann Arbor-based Michigan Angel Fund.

“Facility Health is solving an age-old problem around capital planning for highly regulated and asset-dense industries, like health care, where the (capital expenditure) budget is much smaller than the real need,” Kim Pasquino, a partner at Wakestream Ventures, wrote in an email to MiBiz.

Facility Health’s software “helps by allowing the continuous capital plan to be accurate and applicable at all times,” Pasquino said.

Grand Angels views Facility Health as a high-tech software company that creates “significant value for regulated businesses by helping them manage their physical infrastructure,” said Managing Director Paul D’Amato.

D’Amato cites examples including the ability of health systems to improve how they allocate and spend money to maintain and replace equipment such as power generators for emergency rooms, heat exchangers and air filters in operating rooms, or even roofs on their facilities.

“Hospitals and hospital groups are very complex organizations where people’s lives depend on everything working 100 percent of the time,” D’Amato said. “Facility Health helps hospital organizations achieve the highest level of health care and reliability through a knowledge base of predictive analytics and machine learning.”

‘Collaborative effort’

Facility Health began in early 2016 from what Fernando describes as a collaborative partnership between himself, co-founder Hans Nelson and executive leaders. Each brings an expertise and background to the operation, he said.

Fernando previously was vice president of product at Blue Medora LLC, a Grand Rapids-based enterprise software firm. Nelson, Facility Health’s chief engineering and strategy officer, has more than 15 years of health care engineering experience.

Mark Mochel, senior vice president of customer growth, is a board member for the Michigan Society of Healthcare Engineers and has more than 20 years of experience in technology deployment and program management. Brian Crum, senior vice president of product, is a certified health care facility manager who formerly worked at Spectrum Health and first identified the potential for addressing a problem, Fernando said.

“It’s a collective. It’s not one person. All of us do it together,” he said. “It’s a very collaborative effort from all of our parts.”

Facility Health starts out with a new client by doing a condition assessment of infrastructure and equipment and uses algorithms and predictive analytics to develop future costs and a capital plan for maintenance and replacement, Fernando said.

On average, 45 percent of the assets at a 500,000-square-foot hospital are past their useful life and would cost $30 million to replace, Fernando said. Through better monitoring and maintenance, a health system can extend the life of infrastructure and equipment, he said.

“We can start putting projects together and then we have data around that to say, ‘OK, what are some ballparks and what is that going to cost?’” he said. “Everybody does that to some extent now. We feel we’ve found kind of a unique way to bring a powerful data set, and we keep on saying, ‘It’s all about the data.’ It gives the technicians, the managers, the directors in the executive suite a way to talk about this problem with the same kind of data in a similar language.

“We can show the data that might lead to something happening and we can show how big the problem is across the system, and then we come up with costs and say, ‘This is what you can do to mitigate that, not just over one year but over five, 10 years.’”

Growth ahead

Facility Health employs 10 people and Fernando expects to add seven to 10 positions by next year.

The company began with a focus on health care “because that was kind of an obvious place to start and we knew some people, and we were able to build and validate the product and get it out within that space,” Fernando said.

Facility Health has considered extending into the food processing industry and late last year was approached by a large real estate company that owns 35,000 buildings worldwide and was interested in the company’s service. The company did a test project, its first outside of health care, and “we’re making inroads there,” Fernando said.

Read 2210 times Last modified on Wednesday, 04 March 2020 16:44
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