Top Ten Tech Trends: Nurturing Digital Health Startups

March 25, 2016
Almost every week brings the announcement of another health system opening a center to commercialize innovations or a business accelerator to work with digital health startups in the region. What are the driving forces behind these developments?

Almost every week brings the announcement of another health system opening a center to commercialize innovations or a business accelerator to work with digital health startups in the region. Providers are encouraging electronic health record (EHR) vendors to open their proprietary systems to offerings from app developers. In addition, digital health companies received $4.5 billion in venture capital funding in 2015. What are the driving forces behind these developments and why do health systems now see investment in innovation centers as a vital component of their broader organizational strategies?

Paul Nagy, co-director of the Johns Hopkins Medicine Technology Innovation Center in Baltimore, says clinicians there continue to lead workflow and clinical decision support optimization efforts. “In some cases, software is better developed closer to the problem,” he says, “but figuring out what you should and shouldn’t be doing is not a clear-cut thing.” He also said innovation centers are being created as tools for employee engagement and talent development. “It sends a message within an organization that this is a place where innovation happens,” he says.

Nagy adds that commercializing developments at Hopkins also is a motivator. “We do an enormous amount of grant-funded research, yet we haven’t commercialized that much of it. It is a different skill set. We have this great engine for knowledge creation, but just haven’t built the pathway to commercialize it.”

Hopkins opened its Innovation Center in 2014 and ran its first internal accelerator last year. “The whole industry is learning about what is the right recipe for bringing providers together, leveraging your investment in large EHR platforms, and being able to find the right areas to drive clinical impact,” he explains.

Nagy says it is important for the Innovation Center to have close ties to the clinical IT leadership and CIO’s office to make sure priorities are aligned.  Many startups need a place to validate their idea but don’t have the resources to comply with regulations and requirements to work in Hopkins’ IT environment, he says, adding that the center can provide a safe “sandbox” data environment and infrastructure to make sure a new widget or algorithm is not going to expose production data to a breach.

Carla Small, director of innovation at Boston Children’s Hospital, says innovation is taking place all the time in hospitals, but often there is no vehicle to enable it to happen. “In our case, clinicians are innovative in pediatrics because they are having to do workarounds. Historically the enterprise of an academic medical center is not an agile environment for pushing these things out, so people get frustrated,” she says. “Institutions are starting to see success with startups, as we have. Some of our digital health initiatives have turned out to be revenue generators for the institution. Sitting on know-how and not doing anything with it just doesn’t make sense.”

Last fall Boston Children’s Hospital announced a partnership with venture fund Rock Health to support digital startup companies.  Boston Children’s is acting as a clinical advisor, helping companies pilot technologies in the pediatric market. Small says one advantage of working with startups is that they are agile. They see a pain point and can quickly build a solution around it. “The challenge is that sometimes they can’t scale to the size we need,” she adds.

Addressing Pain Points

Housed in a 100,000-square-foot, state-of-the-art facility TMCx is a digital health accelerator program launched in 2015 by the Texas Medical Center’s Innovation Institute. Texas Medical Center is the world’s largest medical complex, with 21 hospitals on its campus. Erik Halvorsen, director of the TMC Innovation Institute, says one key focus is addressing the hospitals’ pain points. Before selecting the startups for the 2016 TMCx program, his team spoke to the CIOs of all the major hospitals that are part of TMC about their unmet needs and created a list of about 15 topics that became part of the selection criteria. “We bring these companies in and accelerate them, incubate them and connect them at an early stage so they can use these relationships to get feedback,” he explains. “That ensures they are building something that somebody actually wants.”

Because of that effort, Halvorsen says, the IT leaders are more eager to provide advice and act as mentors for the startups as they go through the program and more likely to serve as pilot implementation sites. Some have sophisticated processes to bring outside products and vendors in and set them up in a secure yet isolated fashion so they are not in the workflow. But there is variability among them about how involved it is to set up a pilot. The startup executives get to do behind-the-scenes tours of several hospitals and sit down with five to 10 key opinion leaders who have something to do with innovation within those organizations. They also get to observe how hospital staff members are using the products that the startups are trying to displace.

Not Just For Academic Medical Centers

Large health systems aren’t the only ones looking to innovate, but for smaller community hospitals it can be more of a challenge. “Your starting point is the vendors you have. The level of innovation they bring is what you bring because typically we are not writing software,” says Tom Martin, CIO and chief strategy officer for two-hospital EvergreenHealth in Kirkland, Wash.

To foster innovation, EvergreenHealth has partnered with other local organizations on a Digital Health Pilot Program. On a “reverse pitch day,” EvergreenHealth executives discussed business challenges and “pitched” four problem statements to a group of startup companies, whose responses were narrowed down through a “shark tank” approach, Martin says. The winner was a startup called EHR Works, whose solution EvergreenHealth will pilot this year. “We liked the team. They are hungry, eager to please and bring a new energy to the organization. The problem they were solving was the most generalizable across the broadest set of users, and addresses an immediate problem we had,” he explains. “In this case, we didn’t have an immediate tool for self check-in at a clinic. What we were offered from our EHR vendor was expensive, so this looked like a possible solution, and if they do that well the technology could extend well.”

Martin sees working with these startups as more than a pleasant experience and a boost to local economic development. “In a hypercompetitive environment, if you want to retain some autonomy you have to find ways to innovate,” he explains. “That is the driver for us. Most people are opting to become part of a bigger system. We are saying we want to stay independent. To do that, we need to tackle this part of the problem.”