Through UH Ventures, University Hospitals Health System hopes it can become a powerful force to enable the next generation of health care. Formed in 2017, the venture is a critical part of the system’s innovation strategy to improve patient care and diversify revenue, says CEO Thomas F. Zenty III.
“That’s why we created this entire vertical,” Zenty says. “We want to develop business models that leverage and expand existing capabilities and position us as a leader in implementing new clinical and non-clinical transformational endeavors.”
Most venture innovation in health care is more internally focused, as health systems explore opportunities to improve from within. And that is an important component of what UH Ventures does, says Erik Beck, the company’s president.
“The activities in our portfolio include identifying some business units inside of the core that have been under-potentialized and really helping them to grow and blossom,” Beck says. “They may be within the system, or we may be creating new businesses in the spaces adjacent to our delivery model.”
Last year, for example, UH Ventures spun a startup out of an internally developed software platform for a clinical decisions support tool, licensing a variety of models. However, what makes the venture unique is that it also partners with outside organizations, including early-stage startups and more mature industry partners.
Beck says, “These companies have technology solutions and opportunities for collaboration in which they are looking for health system partners, whether it be for capital, or more valuable, the clinical expertise we have with physicians, nursing and health care operations — as well as a laboratory where they can validate early-stage solutions.”
In January, UH heard presentations from eight U.S. companies with innovative ideas and technologies to combat the nation’s opioid epidemic. “Our goal would be to collaborate with them either to help validate their tool in a clinical environment or to provide clinical expertise and potentially to partner with them in a more formal business relationship,” Beck says.
The opportunity to meet face-to-face with the leaders of each company and hear them tell their stories was invaluable, notes Todd Federman, managing director at North Coast Angel Fund and one of the panelists listening to the presentations.
“Very few of us in the investor community have deep expertise in this space,” he says. “It’s helpful to provide a narrative for us that talks about not just the problem upfront, but the individuals experiencing the problem — and demonstrating that the entrepreneurs really understand where the problems are, where resources in the community are and specifically what problem they are trying to solve.”
Beck adds, “Large health systems tend to move at a very deliberate cadence. Being able to work with the UH Ventures team to connect and facilitate the convening of the right stakeholders, map out the problem and explore the business case and collaboration framework helps to shorten the timeline and improve the likelihood of success.”
UH Ventures is heading into its third year with both confidence and curiosity. A thought-provoking series of questions on its website spells out the approach that it’s taken to identify worthy startup concepts. The objective, of course, is to empower life-changing ideas that can make life better for patients across a wide range of conditions.
It can happen in Northeast Ohio — as we learned when Dealmakers spoke with Baiju Shah, former CEO at BioMotiv.
“We have 67 health care companies in the Cleveland region in the last 15 years that have gone on to be purchased or become public,” Shah says, adding that they all had help on the road to success. “No one organization — no one set of individuals — has all the necessary resources, be it the funding or the skillsets, to take innovation all the way from idea to the point where patients benefit.”
Everybody needs help. And through collaboration and partnerships with other health systems and technology companies — both in Ohio and globally — Zenty hopes UH Ventures can be that resource to “disrupt traditional industry methodologies” with the goal of improving health care quality while enhancing the patient experience.
Enduring success will come down to the ability to match innovative ideas with the necessary capital and then help facilitate a path forward. UH Ventures is already building and strengthening relationships with local early-stage venture capital firms and growth equity funds.
“Each type of activity in our portfolio has a different time horizon to return and a different risk profile,” Beck says. “How we balance across all of those metrics is how we really ensure that value is created both in the short term and the long term.”