The Inland Northwest health care system is celebrated for the quality of care given to patients and for its growing capacity to train new providers, with two medical schools in Spokane and each of the colleges and universities expanding their training options to fill the need for workers. But the system is also rich with research programs and innovation opportunities.
On June 11, Greater Spokane hosted a State of Health Care forum. The panel was moderated by Marcelo Morales, the founder of A4 Ventures and co-founder of Allele Diagnostics.
This transcript was edited for clarity and brevity.
The panelists included Stephen Bone, the chief executive of Crimson Medical Solutions.
Stephen Bone: If you have a nurse in your life, I'm sure you know how burnt out and busy that they are. We help nurses specifically in the critical care world, inpatient, where patients need a lot of medications delivered through IV lines and the current practice for doing that is handwritten tape and labels to identify those. We make a multi-purpose label organization and identification tool to make it easier for those nurses to manage those IV lines and ultimately improve patient safety and quality. It was actually started out of WSU as our capstone class for our biomedical engineering program.
We came to Spokane. It's been very student and first-time health care entrepreneurial friendly. We came up for an entrepreneurial program and we've gotten access to funding through GSI as well through a grant from them and it's been really low cost of living, cost of business to get a company going and off the ground.
Kim Leiser is the co-founder, with Marcelo Morales, of Allele Diagnostics.
Kim Leiser: Allele Diagnostics is a genetics lab here in Spokane and doing diagnostic testing for a lot of babies, pregnancies and what makes us special is we do it very, very quickly. We have the fastest microarray in the world. I can say that confidently. We're doing testing for lots of NICUs all across the country.
What brought us to Spokane actually were all the co-founders except for Marcello were part of Signature Genomic Laboratories. That was a very successful lab here in Spokane, but was acquired and then shut down and so we kind of rose from the ashes.
Those of us that founded Allele have lived in Spokane for a long time, wanted to continue to live here. We very much cherish what we have here in Spokane and wanted to raise our families and continue to work together and so that's how Allele came to be and why Spokane is our home.
Dan Roark is the chief executive of Gestalt Diagnostics.
Dan Roark: Gestalt Diagnostics were focused on pathology. Seventy percent of a diagnosis, be it cancer, if there's a biopsy or a blood smear, that's handled by a pathologist. His tool of trade today is a microscope. If ten pathologists were in the room, nine of those guys would still be using a microscope.
We're reimagining medical imaging for pathology, like radiology, like cardiology, have been doing for 20 plus years. It's an exciting time in pathology because of the scale that's happening around cloud and how we can do compute with things that are happening. We're all hearing about that.
Dylan Avatar is the founder and chief executive of Credential Network.
Dylan Avatar: I'm sure everybody here has been participating in the AI hype. Everybody, I hope, has at least tried ChatGBT or one of the other consumer grade AI products. They're phenomenal. All of them come with a little disclaimer in there that says you can't really trust the results. Right, they all hallucinate. They have inaccuracies. And so in turn, it doesn't really work for regulated spaces, at least not yet.
What we're building is a platform with a heavy set of rules so that way it can then utilize AI to drive efficiency for administrative burdens for regulated industries. That means specifically for health care, what we're doing is we're trying to supercharge credentialing specialists to help people get through the process faster.
So that way, there's this huge workforce shortage, and I think workforce development is going to largely close that gap. But there's still this problem of we have all these people who are credentialed, but there's a massive burden or a process they have to go through to actually get to work. We're trying to shorten down that time significantly so it can be days rather than weeks or months. And so that's the small role we're going to play in helping solve that problem.
Marcelo Morales: Tell us your story of why your company is here.
Dylan Avatar: About 10 years ago, I founded a verified identity platform with a group of friends down in Silicon Valley. We were originally Mountain View based. COVID allowed us to be completely remote. At the same time, my grandmother passed away, and I moved back in with my grandfather to support him. And we decided to find him a new home.
We kind of just like closed our eyes, picked a spot on the map. Fortunately for us, it was Spokane that we found, and we moved him up here. I found a house right next to him, and we ended up, now we're neighbors or we share a little property.
It's pretty cool. When I chose to leave the last company and transition to start this new company, I had two other co-founders. One's based in Arizona, down in Phoenix. One's based in Portland. And quite frankly, we had a long discussion. Obviously for me, I love Spokane. My family's here. Spokane has brought a tremendous amount of happiness to my family, and I'm grateful for that.
I had an accident and I got a lot of medical care done here in Spokane, right over on the hill there. And I went from hobbling to back to walking to be able to walk you on this stage. So I have a tremendous amount of gratitude for here.
But at the same time, I had co-founders that have their own stories, and they aren't based here. So Spokane had to earn it, I guess is a good way to put it. And it was people like Dan Roark, sitting right next to me, and Tom Simpson at Ignite and Bill Kalivas at LaunchPad. The moment I started tapping into the startup community here, I was nothing but impressed. There's this kind of lagreement or alignment that Spokane has this underdog startup community. And so rather than driving a level of heavy competition, it's this heavy collaboration that I was blown away by.
I brought my founders here and they all they came and visited multiple times since. They've been nothing but impressed. So I like to say that Spokane has earned our headquarters being here.
Marcelo Morales: I want to pivot to what makes this community advantageous for your business. We've talked about access to talent and grad graduates from universities, access to research, possibly cost of business, got access to funding. Stephen, why are you still here? And what are the advantages of here economically that you take advantage of and you want to expand on?
Stephen Bone: One of the biggest pieces is low cost of living, low cost of business. First time healthcare entrepreneur.
It's definitely taken some time to figure out the company and get it off the ground. And this has been a friendly place to do that. And then added on top of that, places like Ignite and a bunch of other organizations in the area that provide educational resources for early stage entrepreneurs. It makes it really easy to learn and adapt. That's really my main perspective here as a first-time entrepreneur.
Kim Leiser: I know it was mentioned earlier, but we have some really great universities here in the area that have really great grads that have the same mindset that we do. Every one of us in this room has that patient care, that overall care for humans mindset, and it's been nice to be able to recruit people with that same mindset and culture.
Dan Roark: You know the ecosystem in Spokane is really strong, from hiring new students to the businesses in the room here. We don't try to "steal people" from each other. Sometimes people do move around a little bit, but I found it's really easy to either get people here locally, come out of the universities or attract people here from other regions.
When I moved back home in 2002, traffic was way lighter than it is today. And today it's really light, [compared to] my view coming from Los Angeles, which was gridlock. So I think we're very, very fortunate even though we see a lot of growth. You know, me and some friends like Tom Simpson, we joke about maybe we've said too much because a lot of people are taking our advice and coming here.
The universities, we've gotten a ton of students from from all of them, up to master's level, etc. We've got people spread across the country.
I like to say now I'm really one hop away from getting to Europe through our airport. That wasn't the case when I came here. We can get direct to Atlanta. That seems pretty crazy to me.
I think the ecosystem here is great. And getting more PhD level programs, what we can get from grants is huge with HSSA and Innovate Washington. Those things help drive tech companies.
We need money. You know, $52.5 million was raised in the last six months in Series A level funding. These are companies now like mine that are past a minimum viable product. We have customers. They're scaling and, you know, and we're commercializing our business in a deeper way. And that funding is critical.
Dylan Avatar: I'm actively convincing parts of my team to move here and I have two team members moving here. It's easy to be able to get them here. The other team members, I would say exclusively, it's because they have kids in schools where they're based out of. But, everyone I bring here loves Spokane. Access to the outdoors, the small-town feel, but the full access to any resource you need. We found Spokane to be, to be perfect. Like I was saying, on a startup level as well, there's a good amount of resource.
There's definitely room to grow from a mentorship and support perspective in the startup community. But, by all means, it's warm and it's collaborative and I don't think you could ask for much more as a starting point.
Marcelo Morales: We talked a little bit about there's challenges at a governmental level, let's say federal government level, which might create some challenges around planning. Our customers are the hospitals and the hospitals, when they sneeze, we catch a cold. The ripple effect is pretty dramatic. What challenges would you say are in your immediate future that you want to mitigate?
Dylan Avatar: I think there's an immense amount of talent coming out of universities here and that's very clear.
There's no large tech employers that are putting out talented AI engineers. There's always that next level beyond education. And so for early companies like us, access to senior developers is something that's enticing. I think that's one of the gaps here.
We're opening up a few roles as we expand our funding, and I think most of them we'll be able to fill, like, more standardized software engineer roles, like, front-end developers, not a problem whatsoever. I think the community has that, but there's some specialized roles that I think is going to be a challenge.
I also think that the fundraising scene here is small. In turn, that plays a huge benefit in a lot of ways. But on the other side, there's a little less competition than you'd get from a San Francisco or a New York, even a Seattle. And so, in turn, there's less of a hunger, an appetite. I think that's going to be interesting as we keep moving forward with our fundraising. Again, we've seen nothing but support so far, but I think it's something that's worth noting.
Dan Roark: I would just say from a funding standpoint, there's some freezing of budgets, that sort of thing. We've had a large medical school that's lost their funding for our platform. That's a million and a half dollars. They're trying to figure out how to come up with that to go through the whole RFP, or Request for Proposal, process, which was like almost a year, then get it awarded and then have their funding held. It's rather crushing, I'll say. That's one of the impacts of what's going on in our economy.
Stephen Bone: We're currently updating our contract manufacturing, and that has had some difficulties recently around getting quotes and uncertainties around that. One of our mentor companies that's in nursing innovation, their financial picture has really changed because of where they had their manufacturing set up, and having to make updates around moving their manufacturing and finding new vendors.
Kim Leiser: I would just say, I know it was mentioned earlier, Medicaid cuts and that sort of thing really does impact not just hospitals, but everything that touches. We receive samples from all over the country and Medicaid for every different state is different and will definitely impact our ability to provide them services.
Marcelo Morales: Last question. Next three years, what is the single area of excitement you're really jazzed about? What is the innovation that you're developing? What are you doing that's not being done at all?
Dan Roark: I'll take that. We've just hired a medical director, our chief medical officer. We actually have somebody that knows what they're doing on staff after eight years. We think we're smart programmers and such, but they're looking at cell division and all of these other things. We can write cool code, the bits and bytes, line by line. But we need to have these people lean in with us.
And for eight years, it's been hard to get in front of these folks. But now we've got huge health care groups that are using our product like Northwell Health. And so I'm excited to see where that goes.
AI in our space, there's been a $2 billion investment over the last seven or eight years towards that. We're all hearing about it. But to me, it's been used to land airplanes. Now we're using it for better quality and faster diagnosis.
From a rural standpoint, we're using our solution so that doctors don't have to jump in cars to go between Pullman and Moscow or Colfax or Spokane. They can actually do all of that from their office digitally. So it's a game changer.
I talked to doctors in L.A. who have that similar commute that I gave up. And they're like, hey, this is pretty cool. So, it not only helps rural, but it helps people in the big city move faster.
And we're just starting to work with pharma, which is a really exciting area as they're trying to build better drugs. I've been in life science for 30 some years, and it took 12 years to bring a drug to market 30 some years ago. It still takes 12 years, 30 some years later.
So all this innovation hasn't made that process less expensive, but some of the stuff we're doing as they do toxicology, as they bring new drugs to markets, means really cool and interesting and getting back to some of what I've done in my past careers, I think will be really fun.
Marcelo Morales: Anyone else want to talk about what are you doing that's super exciting?
Dylan Avatar: We're pretty excited to use AI to cut administrative burdens, specifically credentialing from months to weeks, and hopefully days.
One of the things I'm incredibly excited about is one of the missions I've been trying to accomplish for quite some time. We have a tremendous amount of military service members who are being trained in the military. And right now, it's a big challenge to apply that over to civilian life. And so for service members who are transitioning or retiring, our goal is to help expedite their credentialing so that they're licensed to actually start working the moment they leave service, rather than being forced to spend months waiting, sitting, and then hopefully starting to apply. I think that we've got an exciting solution, and hopefully we'll be a part of solving that.
Marcelo Morales: In the not-too-distant future, you are going to receive pathological information from whatever procedure. It's going to be fully digitized and that's going to be standard. That was created here by Dan, and that's going to be standard of care.
In the future, you're going to have a baby or you're going to have a grandchild, and the baby's got some condition that the parent is a little concerned about, and they're going to want to assess it quickly through genetics. Kim's organization created the way that's done, and that'll be standard of care.
Right now, credentialing with health care is a very, very exhaustive process. Dylan's company is going to fix that. They're going to solve that solution. If anyone who is in the NICU, and you see all the lines in the NICU and you see a little baby that's like literally this big and they're encompassed by machines and tubes and lines, then you're going to see one where it's streamlined. It's absolutely elegant. Stephen's company is doing that. Appreciate the innovation that's happening in your community.
Thank you for the panelists. Questions?
What is one thing our community can do better at supporting the growth or establishment of life science businesses in Spokane?
Stephen Bone: I think a gap that we currently have is a really robust graduate level program for student or early stage entrepreneurs. If you look over in Seattle, you can see some really good startup incubators. And I think that's something that we're lacking. There are organizations working on those kind of things. But I think that's a current gap in our ecosystem.
Marcelo Morales: What types of employee skill sets do you need here when you're hiring for talent? We talked about access to talent, but we really didn't talk about the kind of talent you need.
Dan Roark: Like Dylan, we need strong software developers, data scientists. I have two PhD data scientists on the team. They don't live here locally currently. I would like to recruit those here, but I haven't been able to do that yet.
Kim Leiser: We hire a lot of lab techs with undergrads in biology, chemistry, those types of degrees. Giving high school students access to those ideas of what's out there. Allele has participated in some of those high school career fairs. A lot of students don't even know that genetics, you can make a career out of genetics and lots of other areas in the life sciences.
Marcelo Morales: The organization HSSA [Health Sciences and Services Administration of Spokane County] was mentioned earlier. HSSA is a very unique funding opportunity. It's incredible. Simply because it's so unique and it is so impactful for innovative companies in the health and life sciences. And the question is, can anyone on the panel speak to the impact your organization's had in working with funding sources, particularly HSSA?
Dylan Avatar: It's been such a hugely impactful part of our decision-making and being able to bring our team here in the first place. There were a lot of external factors and team dynamics I had to navigate. And the fact that HSSA doesn't just exist, but has decided to support us, it's tremendous and we're super grateful and that's a major reason why. Every decision we make, when we're looking from an employment perspective, is we need to do our best to hire that in Spokane first. If we can't find it, we'll look elsewhere. But, plain and simple, it has shifted not just my mindset, but my entire company's mindset. And I'm really excited by it.
Stephen Bone: We've gotten a grant writing grant from HSSA, which has allowed us to apply for an STTR [small business technology transfer] grant with the University of Washington School of Nursing. It's still pending getting that larger grant, but we wouldn't have been able to do that without HSSA.
Dan Roark: Yeah, I would say just going after grant funding, you know, is non-dilutive. That's important for any business if you don't have to give up ownership. So I think that's huge. I got an NIH grant years ago with a past business of a million dollars, you know, half a million from HSSA. This money, you know, is transformative in terms of jobs locally here.
