Healthcare, agriculture, and manufacturing remain the bread and butter of the private sector in Madison, WI, and the surrounding region, but healthcare IT has arguably become the area’s most buzz-worthy industry.
Today, Xconomy is adding to the conversation about healthtech’s ascent in the local economy. A new analysis of data gathered by the Madison Region Economic Partnership (MadREP) found that there are at least 43 healthtech companies in Dane County employing around 10,000 people. (The list may not be comprehensive, so e-mail us if we missed any companies.)
The data primarily come from business database ReferenceUSA. Xconomy supplemented MadREP’s research with additional information and used it all to create a detailed list (see bottom of this story) and a map of the area’s healthtech companies that can be viewed by clicking here. (Disclosure: MadREP is an Xconomy underwriter, but our coverage is determined independently by our editors.)
The research reinforces the popular narrative of Madison’s healthtech scene from the past few years. The gist is that fast-growing Epic Systems undoubtedly remains the anchor of the local sector, but more healthtech companies are constantly popping up (some either directly or indirectly because of Epic’s presence) and are building solid, if not yet gargantuan, businesses here.
Epic, the 36-year-old electronic health records giant, employs between 5,000 and 9,999 people on the outskirts of Madison, according to MadREP research. The wide range is a result of the way ReferenceUSA tracks and groups companies of different sizes. Recent news reports have pegged Epic’s current employee count at 8,000.
Take Epic out of the equation, and Madison still has at least 1,500 people, and perhaps as many as 5,000, working in healthtech. Those aren’t huge numbers, but they’re encouraging to observers like Michael Gay, MadREP’s senior vice president of economic development, who has closely watched the local healthtech cluster pick up steam in recent years. “To be honest with you, the list is impressive considering that really all of this has happened in the last decade, or a lot of it has,” he says.
Epic, despite being the proverbial matriarch of Madison healthtech, has experienced its most explosive growth in the past several years as it has capitalized on the federally subsidized shift from paper to digitized medical records. Meanwhile, 30 of the 43 companies on our list were founded within the last 10 years—21 of those since 2010, by Xconomy’s count.
The investment mix for Wisconsin Investment Partners (WIP), a Madison-based angel group that is the most active in the state, started to shift toward more healthtech companies around 2011, co-manager Andy Shrago says. WIP has invested in four companies on our list, plus at least one other healthtech company that’s not on the list because it’s based outside the region.
Those deals have come amidst a rise in healthcare IT companies nationwide, as entrepreneurs try to use software to make healthcare “better, faster, cheaper,” as Shrago puts it.
Healthtech has “definitely become a bigger part of the portfolio,” Shrago says. “It’s not so much that we have changed what we invest in, it’s that the market has changed what we’re seeing.” That includes “a lot of interesting ideas” coming out of Madison’s “strong” healthtech cluster, Shrago says.
Some of the biggest bets placed on Madison healthtech companies include more than $38 million in venture capital for Nordic Consulting Partners, $23 million raised by Propeller Health, and about $14.4 million for Wicab.
The biggest catalysts for the local scene, Shrago says, are Epic, which recruits lots of young, talented people to the area, many of whom quit after a few years and sometimes decide to create their own healthtech startups in Madison; a well-respected computer science program at the University of Wisconsin-Madison; and the entrepreneurial culture that Madison has developed.
“This is a sector where you can choose to be anywhere, and these companies choose to be here,” Gay says.
It’s worth mentioning that neither Shrago nor Gay could recall any large healthcare IT companies that have abandoned Madison for greener pastures in other states—a problem that has at times stunted the growth of other industries in Wisconsin, such as biotech and some types of software.
Madison will need its core healthtech companies to stay home if the growth seen over the past decade is going to continue. Among other challenges, it will also need
