Hospital and insurance groups are increasingly jumping into the technology development game to shore up revenue and evolve their core businesses.
During a panel discussion at Healthegy’s annual Digital Health Innovation Summit, health care executives discussed why their organizations were investing in innovation development, particularly digital health solutions. Panelists included representatives from Brigham and Women’s Hospital’s Brigham Innovation Hub; Blue Cross and Blue Shield of North Carolina’s Mosaic Health Solutions; University of Colorado’s CARE Innovation Center; and California-based Providence St. Joseph Health.
“There’s a common theme of recognizing and capturing value from innovation not just for financial return but also as a means of accelerating the evolution of their legacy businesses,” said moderator Paul Wallace, managing director of the Heritage Group.
According to Lesley Solomon, executive director of Brigham Innovation Hub, the Boston-based hospital decided to take the plunge after seeing results from an internal survey on in-house innovation.
“We did a survey and found innovators were innovating in spite of us, not because we were supporting them, so we realized there was a need for really supporting our internal innovators,” she said. The Innovation Hub, which focuses heavily on digital health care solutions, held its first “hackathon” in 2013.
Meanwhile, shrinking margins have helped spur Blue Cross and Blue Shield of North Carolina’s move into the space. It’s investment arm, Mosaic, invests in all stages of development, including the venture capital level. Mosaic is in the process of merging with Oregon-based Cambia Direct Health Solutions.
“Margins were becoming more and more compressed, and there is a lot more government intervention in our business,” Mosaic president Maureen O’Connor told listeners. “So for that reason and others we decided to create this investment arm that would look at services and health IT companies that really could begin to move the needle in driving the kind of transformation system we think is needed to make our health care system better.”
Dwindling revenue from academic research helped push the University of Colorado to create its CARE Innovation Center.
CARE Innovation founder Jennifer Wiler said that prior to the center’s establishment, the system’s three “pillars” were clinical care, research, and academic performance.
“If you haven’t heard, academic medicine doesn’t pay what it used to,” said Wiler. “So innovation has really now become our fourth pillar. We think there’s an opportunity to leverage the assets in our system.”
California-based hospital group Providence St. Joseph Health said it has cast a wide net into the innovation sea.
“We’re building a digital platform for health care on the one hand and then making direct investments through Providence Ventures to help power that,” said Providence St. Joseph Health’s chief digital officer, Aaron Martin.
According to Martin, the group has established four innovation entities: a venture capital team, which manages a $150 million venture capital fund that has made nine investments to date; a software development team that is “stitching together the different pieces of technology we’re investing in”; a consumer health incubator; and an online marketing channel, which includes apps and websites.
Held on November 2 in Boston, the Digital Healthcare Innovation Summit, chaired by Robert Mittendorff, MD, MBA, of Norwest Venture Partners, and Bill Geary of Flare Capital, brought together leading innovators, investors, and industry executives to share their valuable insights on the future of health care.
Contributed by Val Kennedy
Paul Wallace serves as Managing Director for Heritage Group, a venture capital firm sponsored by some of the nation’s leading health care organizations.
Aaron is Executive Vice President, Chief Digital Officer, Providence St. Josephs Health (PSJH), and Managing General Partner, Providence Ventures (PV).
Maureen O’Connor is president of Mosaic Health Solutions, a subsidiary of BCBSNC, created as a catalyst for accelerating innovation and driving growth for early and growth stage companies by strategically deploying financial and intellectual capital with investment partners.
Lesley Solomon is Executive Director of Brigham’s Innovation Hub and Director of Strategy and Innovation in the Brigham Research Institute.
Jennifer Wiler, MD, MBA
Dr. Jennifer L. Wiler MD, MBA is Founder & Executive Director of the University of Colorado (CU) CARE Innovation Center; Executive Vice Chair, Department of Emergency Medicine, CU School of Medicine; and an Associate Professor, CU School of Business.