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May 11, 2022

These 4 health systems are betting big on innovation

Daily Briefing

    During the pandemic, many health systems began seeking out real estate or renovating old facilities to create new innovation hubs, helping to improve patient outcomes, reduce costs, and more, Jessica Kim Cohen reports for Modern Healthcare.

    More hospitals are creating innovation hubs

    According to Pam Arlotto, president and CEO of Maestro Strategies, accelerators and other innovation centers became more popular during the pandemic as the health care industry began focusing on ways to engage patients outside of the hospital and in their homes.

    Innovation hubs are often costly projects, requiring investments in both real estate and staff to oversee the startups and programs involved. While some hospitals choose to renovate old clinical or administrative spaces, others will build new facilities for their innovation programs.

    Rob Lowe, CEO of Wellspring, said the level of investment needed for innovation hubs depends on the type of work hospitals want to do or the type of incubator. At some hospitals, accelerators are used to identify worthwhile startups or venture capital arms that will provide investments. Other hospital innovation centers are funded partially through local governments to increase economic development in an area.

    Overall, "[a]lmost in all cases of these hospitals that we work with around the U.S., we see dedicated space," Lowe said.

    AlphaLab Health

    Jeff Cohen, chief physician executive for community health and innovation at Allegheny Health Network (AHN), wanted to develop a community health project using one of the health system's existing facilities.

    The facility, a former hospital in the health system, had many unused areas after closing its inpatient units and ED. Although it had transitioned into a nursing facility, this venture closed in 2019.

    Over two years with $5 million dollars in investments, AHN renovated a 10,000-square-foot space to create its innovation hub, AlphaLab Health. The renovated space gives startups access to both wet and dry labs to develop products, as well as space to collaborate with others.

    "It's a demonstration of what you can do to repurpose these assets that are aged but have great bones," Cohen said.

    In 2020, AlphaLab accepted seven startups as part of its first cohort, and in 2021, six startups were accepted. Once accepted, each startup receives up to $100,000 in funding, which is funded equally by AHN and Innovation Works. For 2022, over 100 startups have applied to be part of the innovation hub.

    Of the startups that have gone through AlphaLab, five have raised roughly $10 million in additional funding, and six have started testing their products.

    "We've been very early, but so far we're very pleased with the direction of where this is going," Cohen said.

    Inception Health

    In 2015, Froedtert and the Medical College of Wisconsin partnered to create Inception Health, a separate company that develops innovations and evaluates digital tools.

    Inception Health is housed in a 10,000-square-foot office space that was originally used for outpatient ambulatory services at the health system's North Hills Health Center. According to Cathy Jacobson, Froedtert's president and CEO, the space was renovated with dedicated meeting spaces and other amenities to make it a "classic innovation space."

    Since it began, Inception Health's annual budget has grown from around $2.5 million to $10 million. Its projects often focus on challenges and goals outlined in the Froedtert's strategic plan, including consumer experience, patient access, and population health. Success is determined by return on investment across the health system's portfolio instead of how individual projects are doing, Jacobson said.

    "We want the ability to experiment and fail," she said.

    Currently, Froedtert is working on how to scale the innovations developed through Inception Health beyond just initial pilot programs, including hiring more staff to build implementation capacity.

    The Cedars-Sinai Accelerator

    In California, Cedars-Sinai Medical Center has run its own Cedars-Sinai Accelerator since 2016, allowing it to connect with many early-stage startup organizations. So far, the accelerator has had seven cohorts, each with around eight to 10 startups, and around two or three ultimately end up launching a pilot that provides services to the health system.

    During the accelerator's three-month program, startups work with hospital staff in the Cedars-Sinai Innovation Space, which was originally a retail space across the street from the hospital, to develop potential pilots to tackle problems in the health system.

    According to Jim Laur, VP of technology transfer and business affairs at Cedars-Sinai, having the accelerator close to the hospital was important, since startup founders can easily connect with hospital staff and see their workflows in action.

    "We thought it would be good to have a space that's on its own for a specific purpose … while still being just across the street," he said. "People can still connect really easily."

    Going forward, the accelerator plans to include a virtual model, which it used during the pandemic, for startups that can't relocate to Los Angeles. It also plans to offer virtual educational sessions, which leaders said they hope will allow entrepreneurs with families or other responsibilities to participate.

    The Jump Trading Simulation and Education Center

    Since 2013, OSF HealthCare, in partnership with the University of Illinois College of Medicine at Peoria, has operated the Jump Trading Simulation and Education Center.

    According to John Vozenilek, VP and CMO for innovation at digital health at OSF HealthCare, the innovation center, which is a 168,000-square-foot building attached to St. Francis Medical Center, cost an estimated $55 million to build and was funded through donations from OSF, Jump Trading, and private donors.

    On the first two floors, the building has simulation spaces, including an operating theater, inpatient and outpatient settings, and a home environment with an ambulance for medical training. The upper floors are innovation spaces, including seven labs focused on researching and developing solutions to problems related to children's health care, data science, advanced imaging, and more.

    Lisa Barker, chief medical director at the Jump Simulation center, said the goal of the program is to improve patient outcomes and reduce costs through "innovative training." To measure the center's value, leaders evaluate its programs on how effective they are at decreasing medical errors and complications or improving efficiency during onboarding for new medical professionals.

    "Not only do we have a qualitative impact, but we can have a tangible benefit as well," Barker said. (Cohen, Modern Healthcare, 5/3)

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