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The Billion Dollar Reason UPMC Enterprises Will Change Healthcare

By Mandy Roth  
   February 25, 2020

The organization's billion-dollar investment in translational science and digital solutions could 'fundamentally change' care for the sickest patients.

Many healthcare systems talk about changing the way healthcare is delivered. UPMC Enterprises has put $1 billion behind that notion. In January, the innovation and investment arm of UPMC announced a substantial financial commitment to develop new drugs, diagnostics, and devices by 2024. The entire sum is coming from UPMC's investment portfolio.

Launched in 2014, UPMC Enterprises has invested more than $800 million in its entrepreneurial efforts to date, primarily in digital health solutions, which have returned more than $1.5 billion to the organization. 

Related: UPMC to 'Deploy' $1B for Medical Start-ups

The organization is focusing its investments where UPMC's experts think the industry can have the greatest impact on the future of healthcare delivery: translational science, specifically in the realm of immunotherapy; and digital solutions.  

The institution already has gained traction in the former sector, says Tal Heppenstall, MS, president of UPMC Enterprises and executive vice president and treasurer of UPMC. Over the past two years, according to a news release, UPMC Enterprises has formed five companies in the translational sciences sector and invested in external biotech company Werewolf Therapeutics, as well as more than 30 research projects internally. With an initial focus on the use of immunotherapies for cancer, transplantation, and diseases related to aging, the investment group has expanded its focus to include retinal and respiratory disease, autoimmune diseases, neuroinflammation, and others. 

The billion dollar commitment includes $200 million that has already funded an immunotherapy-focused partnership with the University of Pittsburgh. Further exploration in these endeavors is planned, as well as expansion of ventures that connect the entire health system with technology that empowers clinicians and payers to provide patient-centered, high-quality, compassionate care at the lowest costs, as well as solutions that allow consumers to access medical services and information to become more engaged in their healthcare journey, says Heppenstall.

HealthLeaders spoke with Heppenstall to gain insights into how the organization is setting itself up for successful ventures and discover what other healthcare systems can learn from this experience. Following are excerpts from the interview, lightly edited for space and clarity.

HealthLeaders: What accounts for your investment success?

Heppenstall: We like to recruit [professionals who] have the same kinds of skills that venture capitalists do, but where we really find our approach to be successful—both on the translational sciences side and the digital solutions side—is when we deploy UPMC's other assets. Those other assets on the life sciences side are primarily our researchers at Pitt. The $200 million we've deployed so far has primarily been in things that we are working on with our existing researchers.

The future is about attracting more assets from outside of Pittsburgh to join that bolus of intellectual property and companies that we've started here.

HealthLeaders: You're switching your focus to encompass more external ventures. How are you going to vet those opportunities so that you can continue to experience a return on your investment?

Heppenstall: As we started this effort, really in early 2017, the translational sciences operation at UPMC Enterprises was a start-up itself. We've grown the team, led by [UPMC Enterprises Executive Vice President] Jeanne Cunicelli, to a group of 20 people. We now have the capacity to focus externally. Frankly, we've been looking for external opportunities for a while. Werewolf Therapeutics is a good example of an investment that we made that complements our efforts, but it was not invented here.

Related: How UPMC Turned Innovation Into an Enterprise

HealthLeaders: Why have immunotherapies for cancer transplantation and diseases related to aging important to you?

Heppenstall: We see these areas of investment as the future of clinical care. [With transplantation, for example,] the biggest challenge for patients isn't the surgery; it's the immunosuppression drugs they receive afterwards. If we can figure out how to do it right and eliminate the need for anti-rejection drugs and transplantation, we can change that basic method of care. In addition to that … immunotherapies [can have] a miraculous impact on patients who are near death. When it works, it will fundamentally change the way we care for many of our sickest patients. We would prefer to be on the cutting edge of that effort as opposed to sitting back waiting for our hospital beds to empty when those patients don't need the years of care that they used to.

HealthLeaders: Are there any other focal points for your investments?

Heppenstall: Most of it'll continue to be in this area, but [we also will] broaden the focus area from what we call translational sciences to digital solutions. But nothing is off limits for our investment focus; we'll consider a wide swath of things.

HealthLeaders: Are you using any particular criteria or processes to help de-risk those opportunities?

Heppenstall: We understand the risks of these investments. That is something that differentiates us from some of our nonprofit peers in this space. In so many places, if you have one investment that goes south, the organizational pushback of, "Wow, how could you have invested $3 million? I can't believe you did that!" doesn't exist at UPMC.  The culture of UPMC, going back when [former UPMC Vice Chancellor] Thomas Detre, MD, got here in 1973, is really about accepting the risks and the rewards, but understanding the risks. We don't look at it as de-risking each one of these investments; we understand that some of them aren't going to work.

HealthLeaders: How do you test new innovations?

Heppenstall: It's easier to explain on the digital solutions side [of our investments]. When one of the 50 companies that approaches us every week says, "This is the greatest technology application; it's going to solve this particular problem," we actually look internally for the department or the user [that would be impacted by that innovation]. We say, "These guys claim to have a new idea. [Does this solve] a big problem for you? If we get the reaction from our internal personnel: "That's a great idea; I'd love to hear more," we start to pursue it. We will move it into the first stage of our pipeline, which is due diligence. Then we move it to the next stage, piloting it internally.

HealthLeaders: UPMC Enterprises also is working on a cloud-based platform, called the hcOS (health care operating system) to overcome the issue of data silos. How does that fit into this $1 billion investment—or does it?

Heppenstall: It does. It's more of a strategy than a product. It is similar to what many players in the healthcare space want to get accomplished, which is to surface the correct data with the correct security and governance for the correct participant in the healthcare market. If you look at its highest level in the healthcare market, you have consumers, payers, providers, clinicians, and pharmacy companies.

Our goal would be to have the infrastructure that would let the consumer say, "I'm comfortable sharing my data for these reasons with my physician, but not for these [other] reasons"—not allowing UPMC to sell their data [for example].

Our vision around hcOS is to actually get that data out of the existing silos into a place where it can be surfaced to UPMC to accomplish its mission. Most important, it's really the consumer's data. That's true of health data, and it's starting to be true of data generally. Our goal is to build a technology infrastructure that allows that control to happen at the appropriate levels.

HealthLeaders: What are you doing to protect data security and patient privacy?

Heppenstall: Everything we have to. Our commitment is to maintain the confidentiality of the communications between our patients and our clinicians, subject to all the rules and regulations that are continuing to change. UPMC is an interesting place because when you walk through the Pittsburgh airport and see all the UPMC signs, you see our clinical services and you see our insurance services. [UPMC also functions as a payer through the UPMC Health Plan.] As an organization we have to be very careful with the data between those two [entities] because the regulations are different.

HealthLeaders: How do you weigh concerns about protecting patient privacy with the need for innovation?

Heppenstall: I would say patient privacy comes first, and innovation comes second.

HealthLeaders: You're making the remainder of the $1 billion in investments over the next five years. When we look to 2025, what will have changed UPMC's healthcare landscape?

Heppenstall: On the [UPMC] Enterprises front, we are confident that large pharma and large technology companies will be more active in the healthcare space, and they'll be a larger threat to hospital providers—specifically academic medical centers. Our efforts to deploy that money are about investing in UPMC's future to keep pace with those two players in the healthcare market.

“The future is about attracting more assets from outside of Pittsburgh to join that bolus of intellectual property and companies that we've started here.”

Mandy Roth is the innovations editor at HealthLeaders.

Photo credit: Randy Tarr Photography /


Understanding that some ventures will fail is essential to the innovation process.

A cloud-based platform to eliminate data silos is an essential component of UPMC's initiative.

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