#StartupsEverywhere Profile: Tony Hyk, CEO, TheraTec
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Using Technology to Improve Health Outcomes
TheraTec is a digital health startup whose platform helps improve outcomes for patients with musculoskeletal conditions while also lowering their cost of care. We recently spoke with Tony Hyk, CEO of TheraTec, to learn more about the company, policy challenges they’ve encountered, their experience as the target of a patent troll, and what they see on the horizon.
Tell us about your background and how it led you to TheraTec.
I got my undergraduate degree in accounting and then spent several years in finance at the Target Corporation. To advance my career at Target, I went back to school for my MBA, where I met people outside of my industry. I was reminded that other sectors exist besides retail, and got interested in medical devices. That led me to several different roles at a handful of medical device companies, and I fell in love with it.
For me, the big interest in medical devices stems from the core work of getting tools into the right hands. There’s definitely a sense of higher purpose and I find it really motivating. So it seemed natural when the opportunity to join TheraTec presented itself. The startup excitement and technology aspect gives TheraTec an energy that you can’t find in too many other roles. And unlike in a large corporate environment, where you’re a replaceable cog, at TheraTec I’m able to have an impact—both in the company and for the well-being of individuals.
Tell us about TheraTec. What is the work that you’re doing?
TheraTec is a digital health company. Often, people think of telehealth as just a video call with their doctor, but we’re showing that it can be so much more than that. We have an impactful digital platform that is useful on its own or utilized in tandem with our wearable sensor that measures range of motion. Right now, our primary uses are for physical therapy and chiropractic care, but we have a platform technology that could also be used, for example, in surgery prep or wound care.
We focus on sustained connections between clinicians and their patients through an app on the patient’s mobile device. Through the platform, a clinician is able to assign at-home exercises, provide instruction, send reminders or give encouragement, and keep track of patient progress. Soon, providers will also be able to suggest products to their patients through our forthcoming digital store.
TheraTec does not replace visits; instead, it supplements patient and provider interaction between visits. For example, the platform enables patients to instant message their provider and give feedback while they are performing an exercise. The patient can say “this hurts,” and their provider can make adjustments in real time. Patients don’t have to wait for their next visit to give that feedback. This can streamline care by shortening timelines, lowering costs, and improving outcomes.
Our sensor technology adds another layer to allow providers to stay connected with patients during therapy. So, our product is especially useful for situations where the patient, provider, or payer have a vested interest in verifying compliance with an at-home treatment regime. In the end, driving compliance drives outcomes. Simply, when people do what they’re supposed to do, they get better, and get better faster.
What structural and regulatory issues have you encountered along the way as TheraTec grows?
Before the coronavirus pandemic, it was especially difficult to get insurers to pay for telehealth. While Current Procedural Terminology (CPT) codes exist for telehealth, for example, to reimburse smaller amounts for services that facilitate remote patient monitoring, until recently insurers weren’t actually paying for services under those telehealth codes. This is starting to change. We are talking to major insurance companies and making the case about how reimbursing for our technology can both save them money and improve outcomes. But presently, getting reimbursement is still a pain.
On the regulatory front, we are not currently subject to FDA regulations, but we voluntarily follow their and others’ guidelines because it is the right thing to, and we know we will be at that stage one day. Still, keeping in line with regulations is tough for a company of our size, because of the time commitment it takes to understand and keep up with the regulatory environment.
Regarding privacy, our team has a medical device background which has made compliance with HIPAA familiar enough. Privacy is of utmost importance to us, and although we don’t take in all that much user information, we are developing and improving our software in line with those privacy rules. It can be arduous at our size, but it is important to keep up with those rules as we are making changes to our tech. We’re also taking a look at the California Consumer Privacy Act and other state laws, and figuring out what those mean for our platform as we expand to do business in, e.g., California. Likewise, we have dipped our toes into the water in the EU, and as we expand our platform to Europe there will be additional things we have to build into the platform to be fully compliant with the General Data Protection Regulation.
What has been your experience courting investment in TheraTec, and how has that been impacted by the pandemic?
We are looking for both investment and to generate revenue right now. Finding investors was not easy pre-COVID, but it is even harder now. The pandemic has also made people hold on to their cash. We have some relationships with venture capital and private equity, but being pre-revenue, we really aren't able to turn heads in that world.
The PPP was a godsend for us earlier on in the pandemic. It allowed us to hunker down and continue our development. We have our fingers crossed about getting that loan forgiven, and would love to see the government revisit another round of PPP. We have also applied for grants from Minnesota, and I am always keeping my ear to the ground for grants or any other funding opportunities out there. We don’t need that much to keep the company going, as we are all taking minimum wage right now, and just $20,000 would cover a month of burn.
At this point, we are really looking for angel investors because of our size, the fact that we are pre-revenue, and the amount of money we are trying to raise. Location matters for investment, too—there aren’t all that many angel investors in Minnesota. If we were in California, like our competitors, I’m confident that we would be fully funded.
Some lawmakers have floated programs that would allow the government to make equity investments in startups across the country, on the condition that recipients find private, matching investment funds. The idea would be to spur private investment, especially outside of existing tech hubs. Do you think this would be helpful to TheraTec?
I would be interested in that approach to government funding. It would be important to consider what the government’s long-term ownership would look like, and whether or how the public sector funder would interact with the startup—the way other institutional investors do. But this is an interesting and potentially attractive way to inject funding into startups.
I understand that you’ve had some experience with the patent system.
We currently have six approved patents and a seventh in process. And while IP, in general, can be a great asset for many businesses, I realize it has its limitations. In addition, we recently had an unpleasant experience with a patent troll—one of these companies that doesn’t really exist anywhere but on paper, and just buys up patents in order to sue people. Earlier this year one sued us, and at the same time sued several of our competitors and suppliers, trying to assert a meaningless patent. The patent was just to the process of anonymizing data, not a patentable exercise. It was a nuisance because we had to pause our development and spend resources defending the meritless suit. We eventually got it dismissed and spent as little as we could in the process, but if we had had more money, I would have wanted to go forward and invalidate the patent. I could not really justify spending a lot more money on the case, but would have rather paid our lawyers than pay the troll.
What is your goal for TheraTec moving forward?
Our immediate goal is to take the company from pre-revenue to revenue stage. That will probably happen in the next few months. We are going to have our digital store fully operational by the end of the year. The store is something that adds a lot of value for some providers because it is an easy way for them to recommend products, improve patient outcomes, and increase their returns when using our platform. We’ll also be working with insurers to grow our usage that way. We have a lot of great ideas for the versatile platform, but we’ll focus on taking things one step at a time.
All of the information in this profile was accurate at the date and time of publication.
Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email edward@engine.is.
