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New Report Details Health System Investments in Innovation

Analysis  |  By Eric Wicklund  
   October 13, 2022

The Center for Connected Medicine has released a new report identifying the 15 health systems who are investing in biotech and therapeutic startups and spinning out their own companies.

Large health systems are fueling healthcare innovation by making their own investments in biotech and therapeutics startups and supporting intriguing new startups.

A new report from the Center for Connected Medicine has turned the spotlight on this little-known and often secretive trend. Titled "A New Player in  Biotech Investing," it highlights a growing movement in healthcare to support companies and technologies that could someday change the way clinical care is delivered.

“There’s a notion across the industry that we’re just seeing the tip of the iceberg when it comes to what medicine is capable of achieving to treat disease,” Matthias Kleinz, senior vice president of UPMC Enterprises, the innovation and venture capital division of UPMC and one of the 15 organizations included in the report, said in a press release. “Organizations like ours bring unique resources and expertise to efforts that seek to turn groundbreaking scientific research into life-changing therapies for patients around the world.” 

According to the study, the increase in health systems support mirrors the increased activity that has been seen in digital health and telehealth in general, some of its sparked by the surge in telehealth use during the pandemic.

The study identifies four characteristics of a health system that's investing in new biotech and therapeutic startups:

  1. They're large enough to dedicate resources to venture startups;
  2. They have relationships with academic researchers;
  3. They include dedicated venture capital organizations; and
  4. They focus on internal spinouts.

 

"There is also near-term benefit to health systems beyond the potential return on their investments," the report notes. "By working to ensure more personalized and custom therapies, such as stem cells, CAR-T, and others, are accelerated from laboratory to patient bedside, health systems not only greatly improve patient care but also have the potential to capture commercial upside through new service revenue."

At the same time, investments don't guarantee success, and a successful investment includes support from the top down, significant guidance and coaching from healthcare experts, and an understanding that risk is involved.

“Can you build the support within your organization and invest for the long term?" Kleinz noted in the report. "It’s hard to take a long view when you have more immediate short-term needs.”

The health systems included in the report are:

  1. Cleveland Clinic Ventures;
  2. Intermountain Ventures;
  3. Jefferson Innovation;
  4. Johns Hopkins Technology Ventures;
  5. Kaiser Permanente Ventures;
  6. Mass General Brigham Ventures;
  7. Mayo Clinic Ventures;
  8. Michigan Biomedical Venture Fund;
  9. Mount Sinai Innovation Partners;
  10. NYU Langone Health Technology Opportunities and Ventures;
  11. Orlando Health Ventures;
  12. OSF Ventures;
  13. Penn Center for Innovation/PCI Ventures;
  14. UCSF Innovation Ventures; and
  15. UPMC Enterprises.

 

Eric Wicklund is the Innovation and Technology Editor for HealthLeaders.


KEY TAKEAWAYS

Fueled in part by the surge in telehealth and digital health during the pandemic, health systems with the resources available are investing in healthcare innovation and supporting their own startups.

A new report from the Center for Connected Medicine identifies 15 such health systems and 4 common characteristics that they share.

To foster innovation, these health systems have to not only have access to resources, but commitment from the top down and a willingness to accept risk.


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