By Claire Jeong, Senior Research Analyst, LSN
An increasing number of health systems are seeking to form strategic partnerships with early-stage companies that could serve as a meaningful solution for the various complexities within the healthcare system. These strategic partnerships would be tremendously valuable for a start-up entrepreneur, as the value-add that health system organizations can provide are not limited to direct equity investment. Through working with large health/hospital systems, companies gain access to various channels, abundant resources, and relationships with key clinicians or medical professionals that they otherwise may not be able to manage on their own.
So how can companies seek to access these channels, and what exactly does each organization have to offer? At RESI Boston on September 6th, we had the tremendous pleasure of inviting 5 panelists from health systems – all with a unique approach to working with early-stage innovations – to speak about their work and perspectives in fostering novel innovations that can impact the course of healthcare.
For those who missed this session, we have prepared a shortened video of the panel that highlights the main discussion points. If you are someone seeking to leverage relationships with health systems, I hope you find these insights helpful!
Our panelists included:
- Brent Stackhouse, Vice President, Mount Sinai Ventures, Inc. (Moderator)
- Richard Gordon, Director, Inova Strategic Investments
- Anne Wellington, Managing Director, Cedars-Sinai Accelerator
- Eric Feinstein, Investment Director, Northwell Ventures
- Sarah Lindenauer, Product & Portfolio Manager, Boston Children’s Hospital IDHA
A brief profile for each organization:
Mount Sinai Ventures – Mount Sinai Health System is a hospital system in New York. Their venture arm, Mount Sinai Ventures, started in 2008 with the goal of investing in care delivery (urgent care, ambulatory services). About 4 years ago, their interests diversified into medical devices and digital health. The group invests $500K in average, as little as $50K and as much as $1.5M, with about 20 investments in the portfolio. Mount Sinai Ventures is constantly trying to find ways to partner with other individuals within the health system and build or create value for portfolio companies.
Inova Personalized Health Accelerator (Inova Strategic Investments) – Inova is a hospital system in the Northern VA area, and IPHA is their accelerator arm. Inova has historically made several strategic investments, generally to drive innovation into the hospital system. They have a $150M balance sheet commitment which they are aiming to allocate over a 24-month period. The firm invests in multiple ways – they are a fund of funds and have a LP position in several like-minded funds. With regards to their seed portfolio, the average investment size is around $500K-1M. IPHA has a fixed price, fixed equity structure ($75K for 10% equity stake, with potential for $250K investment in follow-on).
The Cedars-Sinai Accelerator – Cedars-Sinai Accelerator is the accelerator program of Cedars-Sinai Medical Center, through which they invest $120K in participating companies. This has been in partnership with Techstars in the past but they will soon be operating independently. In partnership with MemorialCare, Cedars-Sinai is also involved with seeking investments through Summation Health Ventures that focus on Series A/B investments in the $5-10M range.
Northwell Ventures – Northwell Ventures is a venture equity practice at Northwell Health. Northwell is the largest health system in NY state, with 23 hospitals in the network. They are about to close on their 16th investment. Their investment areas of interest ranges from medical devices through digital health and other services. They also participate in corporate carveouts, where they put seed capital into non-core assets within the system and partner with external capital in efforts for revenue cycle management.
Boston Children’s Hospital IDHA – Based in Boston, MA, Boston Children’s Hospital’s Innovation & Digital Health Accelerator (IDHA) is Boston Children’s Hospital’s accelerator arm and is supported by a 50-person team. Of this team, about 25 people are technologists, software developers, etc. and is very deep on team/resources. While there is no investment arm, IDHA provides very high-touch, customized support, and software development resources that provides strategic value beyond capital.
