Long considered a powerhouse for government contracting, defense and aerospace companies, the Washington, D.C. metro area has become a leader in the health IT marketplace. One of the organizations that’s been integral to driving the growth of the region’s healthcare technology community is Inova Health System.
Widely known as the region’s preeminent provider of world-class healthcare services, the Inova Health System has become committed to investing in new, innovative health technologies. They’ve been aggressive in training health IT entrepreneurs on how to grow and scale their companies, and in training investors on how to identify promising health IT companies.
We recently caught up with Rick Gordon from Inova’s Personalized Health Accelerator. Rick will be a panelist at this year’s health IT focused WTS, and is one of the individuals leading Inova’s efforts to grow the region’s health IT marketplace.
During our discussion, Rick talked about Inova’s mission and role in the region’s health IT community, discussed the innovative technologies that he anticipates will have the largest impact on the future of healthcare, and talked about what attendees can expect at this year’s WTS.
Here is what Rick had to say:
Ryan Schradin: What is the Inova Personalized Health Accelerator (IPHA)? When did it get started and what is its mission?
Rick Gordon: IPHA is designed to provide seed capital alongside Inova’s corporate venture arm, Inova Strategic Investments. Our objective is to leverage our ability to invest to attract innovations that can be inserted into our health system to improve outcomes, reduce the cost of delivering health services, or enable us to reach underserved markets.
Inova has been investing off its balance sheet in interesting technologies for a number of years. About two years ago, my colleagues Hooks Johnston and Pete Jobse helped Inova create a more formal, disciplined approach – using venture capital best practices and rigor to make these investments in a way that would be relevant to the hospital system and also drive top-quartile venture returns to the hospital system.
Ryan Schradin: How is the larger health system benefiting from this?
Rick Gordon: First, we intend to generate strong returns for the health system by making good investments. We are also helping to fill critical needs that are present in our delivery of care.
Because we are a strategic fund, we won’t make an investment unless there’s advocacy from within our system, that means that everything we invest in needs to solve a problem. This also means, in addition to our financial returns, we can immediately make a positive operational impact to our system by deploying a next-generation capability.
RYAN Schradin: What is the Personalized Health Accelerator’s Entrepreneur Training Program? What is it intended to do?
Rick Gordon: Part of our commitment with Inova is to drive more innovation into the health system by inspiring an innovative culture, not only within the health system, but also within our region. We accomplish that, in part, with our training program.
Other accelerators offer training programs that are exclusive – available only to companies that they’ve invested in. Typically, they teach technical or clinical founders – or scientists – about commercializing innovative healthcare technologies. If you’ve never commercialized technology before, it can be an enigma. Those accelerators receive equity in exchange for teaching these founders how to build a company and raise capital.
We give that away.
We felt that it was more important from a community-building perspective to leverage the assets of the Inova health system to teach a generation of regional entrepreneurs how to do this. We believe our efforts are inspiring an innovative culture of entrepreneurs that know how to commercialize healthcare technologies.
Perhaps in a more self-serving way, the training program serves as the top of our funnel. We get the opportunity to engage with, get to know and coach founders as they’re in their formative stages. Then, as they mature and get through those critical milestones, we’re ready to invest.
Right now, we have more than 110 local entrepreneurs that are signed up for the program, and we expect that to continue to expand.
Ryan Schradin: What is personalized health? Why is it important? What role does health IT and new technologies play in enabling it?
Rick Gordon: There is a wide spectrum of definitions for personalized health or personalized healthcare. And, defined broadly, it really is developing care, treatment and engagement that is tailored personally to individuals.
Regarding health IT, it means things like having access to a patient’s records and being able to evaluate what is unique about the patient. It also means being able to engage the patient on a continual basis, leveraging AI systems or other cloud-based applications, not just in the same episodic approach that health systems have used in the past.
With well-built applications with good user interfaces that are capable of building relationships with the patient/customer, we can help them become healthier, even when we’re not directly engaged with them at the hospital.
Ryan Schradin: Why is now such a transformational time for the healthcare industry? Why does it seem that all this innovation is happening at once?
Rick Gordon: There are a lot of factors driving change in healthcare that are – perhaps – forcing health systems out of their traditional “technology late-adopter or laggard” positions.
For instance, cloud technology is making advanced computing technology easier to adopt. I’m a cloud zealot. I think cloud solves a lot of the traditional problems that healthcare institutions have had to deal with from an IT perspective and analytical perspective. Leveraging affordable elastic infrastructure on demand has enabled genomic analysis. It has allowed the use of machine learning to identify non-obvious relationships between genetics, therapies and outcomes. Those were things we couldn’t do in the past because we didn’t have the affordable computing horsepower. We’re starting to wake up and realize that the use of machine learning is in reach.
That’s one piece. I think another is related to the portability of data.
Our industry has navigated the process of adopting electronic medical records (EMRs). And now, there are individuals that want to do use that data across large populations of patients. Cloud infrastructures empower that in a way that wasn’t available before.
Also, healthcare is becoming more consumerized, which means it’s becoming competitive. Fee-for-service is giving way to quality-based care. This requires health systems to focus not only on “doing no harm”, but also on “doing more good”. And that’s causing a huge sea change in healthcare, overall.
Quite frankly, given the shrinking margins across healthcare, we have to turn to technology to be competitive. In the future, the health systems that are more automated – leveraging computational capacity to do more good – are going to win.
Ryan Schradin: What are the health IT solutions and innovations that you anticipate will have the largest scale impact on how we deliver care?
Rick Gordon: With molecular diagnostics and genomics we are really just starting to scratch the surface. Demand for molecular diagnostics and genomics has been slower than hoped – constrained largely by the need for more clinical evidence that they’re relevant. I believe we will get there in a few years.
Data portability will become increasingly important from a population health perspective. We are going to see a lot more innovation related to making EMR data accessible and creating opportunities to analyze large healthcare data sets in a cost-effective way. This notion that hoarding medical data creates a competitive advantage in the marketplace is going to go away.
Also, machine learning is important and will dramatically impact various areas of medicine. Two areas that come to mind immediately are pathology and radiology. In the seventh hour of a shift, pathologists and radiologists aren’t as sharp or focused as they could be. Machines don’t face those challenges and will improve the accuracy and efficiency in both disciplines.
Ryan Schradin: The Washington, DC Metro Area appears to be one of a few hubs of healthcare innovation. What about this region makes it so attractive to health IT companies?
Rick Gordon: It’s the availability of intellectual capital. A lot of the funding for healthcare-related research and development comes from here. Whether from the National Institutes of Health (NIH), National Science Foundation (NSF), or Department of Defense (DoD), a lot of the funding comes from this geographic area.
Where we may be lacking capacity is in availability of capital from private investors. We also lack a large population of individuals that know how to commercialize and scale healthcare technology. But those are things that Inova is committed to helping fix over time. I believe we are already making a dent and will help close the gap with other regions as our investments mature and those founders and executives start new health technology companies.
RYAN SCHRADIN: You’re going to be one of the panelists at the upcoming, health IT focused Washington Tech Showcase. Why is IPHA participating in this event? Why is this event important today?
Rick Gordon: Inova is committed to driving growth of a healthcare focused economy in this region. This effort will require us to catalyze a thriving venture ecosystem in health technology.
We accomplish that by making good investments and working with other area investors to do the same. We also accomplish that by engaging the community. So much of what we do is related to teaching entrepreneurs and training investors on how to invest in this space.
This is a wealthy region. There are many people that have become financially successful in the govcon, aerospace and defense markets. Many of these people want to leave a legacy, and investing in health technology to improve the healthcare industry is an excellent way to accomplish that.
The Washington Technology Showcase provides a platform and forum to help us share best practices and drive the growth of that venture ecosystem.
Find out more about this year’s health IT -focused Washington Technology Showcase here.