David Sylvan is vice president and executive director of University Hospitals Ventures, an 18-month-old investment arm at University Hospitals that aims to drive an innovative culture and serve as an alternative revenue source for the system in the future.
"Most nonprofit integrated healthcare systems, like ourselves, are destined to experience a material revenue gap looming in the not too distant future," said Mr. Sylvan. "That is largely a function of the pace that we are transitioning to value-based care, as well as the impact of market forces and shifting patient demographics. All of these factors are likely to collide simultaneously and it's clear to us that the health systems that haven't already commenced an aggressive attempt to capture alternative revenue sources will find themselves in a precarious situation. There will be smaller, regional and community hospitals where this will be an existential crisis."
The Cleveland-based UH Ventures has already invested in a few companies and aims to grow rapidly over the next few years. Mr. Sylvan and his team invest in differentiated innovation platforms. "We are largely focused on technology commercialization and investing and co-developing commercial innovation with strategic partners," he said. "These activities aim to create material return on investment within the next five to 10 years. But those activities take a substantial amount of lift, support and resourcing to become commercially viable."
Here, Mr. Sylvan outlines his strategy for UH Ventures, building a culture of innovation and headwinds for 2020.
Question: What types of innovation are most attractive for investment?
David Sylvan: The volume of intake is not sustainable if we were to attempt to do everything that came our way. To help ourselves, we prioritize all of these against various strategic priorities so that we aren't distracted by things that will not serve our mission and mandate. The categories we focus on are designed to capture the vast volume of opportunities within our system, specifically where we can solve well-defined problems. Our four core tenets are: population health, clinical tools, business tools and patient-as-consumer.
We consider addressing population health as core to our broader mission. Secondly, the more traditional innovation support of our clinicians in the medical device, diagnostics and therapeutic spaces. Thirdly, to the extent we can help ourselves in critical business areas, such as supply chain, billing, employee onboarding or credentialing amongst others, as we examine solutions and business tools that would be beneficial investments and potentially optimize operations. Finally, we focus on the patient as a consumer. Consumerism is one of the last few bastions of industries, from the retail world to hospitality and beyond, that healthcare has yet to crack. There are massive improvements that we can make in that regard, and a lot of the innovative tools we look at aim to improve the patient’s experience, both within the hospital’s four walls as well as in their homes.
Q: How do you see the patient experience aspect of your innovation investments expanding?
DS: We are focused on the patient’s experience commencing at the point of determining that he or she needs access to our system, physically or virtually. This might include navigating the environment within our physical plant as well as the post-procedural; follow-up and treatment compliance phases. All of these things are siloed activities now, and we are looking to build technologies that will create a seamless experience. For example, an experience management platform that would facilitate the patient's appointment scheduling; their insurance pre-approvals & authorizations; navigate them from their home to the point of care, enable a variety of transportation alternatives, might include indoor wayfinding, and also provide a pertinent and appropriate pre and post treatment education.
The overall strategy might also include artificial intelligence driven chat bots to consistently and mindfully remind patients of where they are at in their journey, in tandem with their providers. This is critical regardless of whether the appointment in in-person or virtual.
Q: What is your strategy to build a great portfolio?
DS: Part of our the mandate of our ventures and innovations group is to activate and motivate the base. We do that with a variety of programs as well as direct outreach. The idea here is to source problem areas within our system, against which we would curate potentially scalable solutions. Certainly, we can do research and conjure up a problem to be solved, but there is nothing more meaningful than going to the impacted stakeholders and observing and determining the problems that need to be solved. Healthcare invariably gravitates quickly toward solutions, and we spend a lot of time ensuring the problem is appropriately understood so we can approach the solution from the appropriate perspective.
For example, we also piloting a robust crowdsourcing tool we developed in-house. Essentially an intake mechanism for the problems that need to be solved. Obviously, we can't tackle all of these instantaneously; we want to look at a narrow slice of our clinical or administrative domain, solicit opportunities and use those responses to help curate for ourselves a tight internally or externally sourced solution.
We want to get to the point where we have a set of opportunities that represent the spectrum of our system’s unmet needs and are matched against our strategic imperatives.
Q: How do you build a team for UH Ventures? What are the key roles?
DS: That is a material differentiator for us. We set out very purposefully to find individuals who didn’t necessarily have a clinical background. We wanted to avoid the potential blinders that might handcuff us when building an innovations’ team. We wanted people who had innovative track records from other industries and who were captivated by our mission and mandate. We have to remember at all times that there is a patient at the end of every conversation and a provider who is responsible for their treatment, well-being and recovery.
Many of the team members have some element of design in their background, whether that be human-centered, product, experience or industrial.
Of course, there are many facets of our activities where specific expertise, such as business development, commercialization, intellectual property management, amongst others are also critical. We also want people who have the capacity to work beyond the narrow definition of their designations. The cross pollination of skills is important for projects, investment decisions and the ability to really begin to tackle the breadth of our opportunities from a variety of lenses. This is a differentiator in our minds.
Q: What headwinds are you preparing for in 2020?
DS: Most of our headwinds are the traditional headwinds of healthcare: what might legislative changes bring that we anticipated or did not anticipate? How will that impact reimbursements and the pace at which revenue models changes? To what extent are these technologies we are looking at non-starters either from an adoption perspective or because they ignore work-flow norms – the list is endless.
M&A activities by our competitors may impact our capturable patient base; there are litigation threats, as well as a variety of other unknowns that can’t be modelled. Again, there are innumerable potential threat elements that we have to take into consideration.
Another factor to consider is the extent to which we can combat physician, nurse and other provider fatigue. How can we boost attraction and retention and employee engagement and satisfaction? These represent additional and very prevalent headwinds, but they are also challenges that UH Ventures is excited to help solve.
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