Venture investment strategies from Northwell, UPMC, OSF + more

More hospitals with substantial cash pools have decided to think like venture capitalists, ramping up their investments into digital health startups.

A growing number of systems also have begun rolling out their own subsidiaries that focus wholly on venture opportunities, with their own set of governance models and processes allowing them to jump more quickly on potential forward-looking opportunities. Here, executives from four health systems with venture fund arms spoke to Becker's about how and where they decide to spend their investment dollars.  

Editor's note: Responses have been lightly edited. 

Brenton Burns. Executive Vice President of UPMC Enterprises (Pittsburgh, Pa.). At UPMC Enterprises, we are on a mission to solve some of the most complex problems not only for UPMC but the broader healthcare industry. There is no single path to investing in and supporting a successful digital health company. At a high level, we work closely with our internal stakeholders — including hospital leadership, clinicians, operators, service line leaders, IT, etc. — to understand some of the most challenging problems at the patient, provider and health plan levels. We also listen and partner to determine if there are innovative approaches that we are already using that may be applicable outside of UPMC, and to see if we can add value by commercializing those approaches.

Externally, we conduct a lot of market research, spend time with start-ups and talk to other health systems to understand their challenges, as well as different ways to approach a challenge. As one of the nation's largest integrated payer and provider systems, we look for ways to provide value above and beyond financial investment or a customer contract. We look for companies that want to partner on piloting new solutions, validating their approach and growing their companies, while working alongside our comprehensive team of product managers, engineers, designers, analysts and others.

What differentiates companies that come through our door is the aspiration to solve a meaningful problem and provide real value for the patients and providers, while also having the ability to engage with our clinical stakeholders. These companies have a cultural fit and potential to be good partners, with leadership that listens and adapts to the changing external and internal environment. We are looking for strategic partners who want to work through the challenges with us.

Richard Mulry, President and CEO of Northwell Holdings (New Hyde Park, N.Y.). We have an abundance of deal flow, so the investments we gravitate toward are novel and innovative solutions that align with our desire to improve patient care or bring efficiency to processes and services, while generating attractive risk adjusted returns. When we invest in startups, we consider the ease of adoption, scalability and value that is brought to the system. There is also strong consideration given to the strength of the management team and the respective advisory boards. Ultimately, we want our investment and demonstrated use of the product to be accretive to the company, wherein we can materially support the company's growth trajectory, and in the process, sustain a culture of innovation.

Mayank Taneja. OSF Healthcare Director of Venture Investments (Peoria, Ill.). OSF Ventures, the investing arm of OSF HealthCare, a 15-hospital health care system in Peoria, Illinois, was launched in 2016 on the belief that scaling investments through partnerships and practical collaborations with budding tech companies from across the globe could help us bring emerging healthcare solutions to OSF HealthCare clinics and hospitals, most often before they are broadly marketed and deployed. 

OSF Ventures has $250 million in assets under management and invests primarily in series A and B funding rounds using a strategy that links investments to key priorities — improved patient care, better outcomes and greater operational efficiency. 

We invest in companies that appreciate the opportunity to collaborate and receive feedback from OSF HealthCare clinicians and other professionals within the organization. Our focus is on digital solutions, tech-enabled services and medical technology including medical devices, diagnostics and therapeutics. 

There are so many great ideas and passionate inventors, but we insist on solutions that solve a relevant need at scale. Apart from the solution or technology itself, our team assesses other key factors such as the company's leadership, the competitive landscape, regulatory and reimbursement risks, and the startups' ability to scale the business.

Matt Warrens. Managing Director of Innovation for UnityPoint Health (Des Moines, Iowa). UnityPoint Health Ventures makes direct investments in ideas and partners that provide an easier, more personal experience for patients and providers and this is our guiding principle.

We look to invest broadly across healthcare, and we strive to invest in companies poised to benefit as much — if not more — from the strategic partnership as the financial investment. This approach heavily influences our focus on digital health, Health IT and tech-enabled services. 

We take a more opportunistic approach with devices and diagnostics and maintain a focus on meeting needs within care delivery organizations, including our own. We make it a priority to align our investments with our strategic roadmap, and many portfolio companies contract with UnityPoint Health. The healthcare industry faces immense pressure to adapt and evolve, and technology (along with consumer and end-user expectations) will be a key component of industry transformation.

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