There is a growing trend in healthcare where venture capital firms are partnering with healthcare systems to identify needs and implement innovative new technologies. This can address resource limitations in healthcare and can help startup vendors gain real-world experience with their technology in hospitals.
An example of this in action is the collaboration between GSR Ventures, which has $3.5 billion in assets under management investments in early-stage digital health companies, and the University of Rochester Medical Center. The partnership aims to accelerate the integration of promising technologies into clinical care services. The university and GSR spoke with Health Exec at the 2023 Healthcare Information Management Systems Society (HIMSS) meeting, where they presented together about their collaboration.
"At the University of Rochester, one of the things that we have struggled with is bringing new technology in because we have had limited resources, limited IT resources, and limited financial resources. So some of the best-of-breed solutions out there to address problems we're trying to solve, we just can't afford to bring them in," explained Michael Hasselberg, PhD, RN, PMHNP-BC, chief digital health officer and associate professor of psychiatry and nursing at the University of Rochester Medical Center.
Thinking outside the box, he searched for non-traditional relationships with vendors and found GSR Ventures. The company makes investments in promising, cutting-edge technologies.
"We said, 'Hey, we would love to work with you, essentially develop a pipeline where if you have a company that you're interested in that potentially solves our problems, we can potentially help de-risk that investment and with onboarding that company right into our health system.' And so it's been a really cost-effective and efficient way for us to bring in some of the most promising technologies into our clinical care services," Hasselberg said.
Justin Norden, MD, Partner at GSR Ventures, said startups trying to sell to health systems have maybe 24 months to get sales going before they will run into serious financial trouble keeping the business afloat. So he emphasized the importance of startups partnering with health systems to navigate the slow healthcare sales cycle.
"A normal healthcare system sales cycle might be 12 to 18 months, so these companies need to figure out ways to partner, get in faster, find partners where you can get that technology implemented and out the door. If you get them wrong, you're sunk. And if you get them right, you could be off to the races. So finding a partner with Michael and his team at the University of Rochester was a system that fundamentally knows they want to change, has a strategy for digital transformation and buy-in from the leadership at the top to actually make this happen," Norden explained.
They spoke about how their partnership helped enable the implementation of behavioral health applications to address long wait times for child and adolescent psychiatry services.
"Despite being a large academic medical center with a robust department of psychiatry, we had a wait list for kids getting into our services that were months out to get into our ambulatory services. And these kids would go on that wait list without getting treatments and a lot ... would end up in our psychiatric emergency department where the kids shouldn't be," Hasselberg said.
Regarding the broader healthcare landscape, they mentioned the increasing trend of hospitals establishing their own venture funds or forming these partnerships with venture capital firms. This approach allows health systems to tap into innovative technologies and diversify their revenue streams.
These partnerships also can be very helpful to validate the technology, which is needed to gain reimbursement for clinical technologies. This is especially true for the large number of artificial intelligence (AI) algorithms now being approved by the FDA. Norden said academic medical centers make the best partners for this because they can run an initial pilot study to make sure the technology is working. The center can then publish the results of the study so there is real-world evidence of it working. This is key for getting reimbursement codes from the American Medical Association (AMA).
"Healthcare moves slow," Norden said. "The AMA is not going to invest tons of resources to go push some new code through that no one is actually using yet. So as a startup, if you are doing something new and we're going to see an explosion of AI startups with the new technology coming out, how do you find the right partner to test, validate, tweak what you're doing, and then ultimately prove it's effective?"
He also said venture capital firms can guide health systems as they select the right technology partners to solve a specific problem they are facing.
Dave Fornell has covered healthcare for more than 17 years, with a focus in cardiology and radiology. Fornell is a 5-time winner of a Jesse H. Neal Award, the most prestigious editorial honors in the field of specialized journalism. The wins included best technical content, best use of social media and best COVID-19 coverage. Fornell was also a three-time Neal finalist for best range of work by a single author. He produces more than 100 editorial videos each year, most of them interviews with key opinion leaders in medicine. He also writes technical articles, covers key trends, conducts video hospital site visits, and is very involved with social media. E-mail: dfornell@innovatehealthcare.com