Start-ups and "Walled Gardens" of Healthcare IT

In February 2018, I served on a panel at Cambia Grove in Seattle. This was part of a series for healthcare technology start-ups, discussing healthcare verticals. As a practicing emergency physician with MultiCare Health System, it was fascinating to dialogue with entrepreneurs who were passionate about the promise of technology in healthcare. A recurring question afterward was “How can I get a meeting to discuss my idea?” I replied that access to decision makers is a challenge. Frankly put, access to the healthcare ecosystem is incredibly difficult.

Healthcare systems hold three important elements for the success of healthcare technology start-ups: access, support, and capital.

Our healthcare technology ecosystem is a closed system, much like Apple’s iOS operating system. Also described as a “walled garden” operating system, the entry and exit points to Apple’s information services are tightly controlled. This closed approach provides great control over the end-to-end user experience and yet limits access for developers. Likewise, because of the need for the highest security for patient data, healthcare information systems require tight control over access. This need for security means that entrepreneurs have a significant challenge in accessing healthcare systems. There is little hope to trial and iterate using actual patient data. Healthcare tech start-ups need a mechanism, a path, to work with healthcare systems and real patient data, in order to develop a meaningful technology.

Access to clinicians and administrators is another key that healthcare systems hold. At Cambia Grove, I heard several solutions that sought a problem to solve. Discussion with physicians and nurses, who provide bedside care, is critical to building innovations that are needed. Healthcare executives and decision-makers are also difficult to access. With tight schedule demands and competing priorities, it is very difficult for a start-up to pitch their concept. The “walled garden” makes it hard for start-ups to access customers (clinicians and administrators) as well as decision makers within healthcare systems. A dedicated innovation mechanism is needed to provide this access.

Innovation with a healthcare system requires support, both technical and with security, that most start-ups are not able to provide or afford in early stages. The regulatory and compliance needs of healthcare systems may not be easily shouldered by a start-up. Support from healthcare systems once invited into their “walled garden” is critical, both for the healthcare system and the start-up.

Capital is the third element that healthcare systems can provide. The barrier to entry for non-healthcare tech solutions continues to lower with the advancement of cloud-based services. The security and technical needs of healthcare startups require more capital to get to a minimally viable product. 

Capital investment presents an opportunity for healthcare systems to invest in companies early with seed or angel rounds of investment. Capital investment also offers creative and substantive input into start-ups and their new technologies.

Providence Ventures is part of Providence St. Joseph Health (PSJH) and an example of a forward-thinking effort to partner with health technology entrepreneurs. Providence Ventures manages a $150 million venture capital fund. They provide capital as well health system expertise and access to clinicians and the PSJH technology infrastructure. Another example is Cedars-Sinai Accelerator which has a three-month program in Los Angeles for entrepreneurs. The Accelerator provides start-ups with funding and access to clinicians and executives to help bring innovative healthcare technologies to market.

Healthcare system innovation efforts would provide a means for start-ups to gain the necessary elements of access, support, and capital. With infrastructure, support and funding available, it would allow healthcare start-ups a path to partner with healthcare systems, inside the “walled garden.” These relationships hold the potential to improve the lives of patients and clinicians, as well as provide much-needed cost-improvements across the U.S. healthcare system. With innovation accelerators/incubators supported by healthcare systems in place, it would be much easier to direct budding entrepreneurs to the right person to “discuss my idea.”

An innovation center or program would provide a forum for pitching ideas to leaders and access to clinicians and administrators and the problems that need fixing. Access to patient data could be provided within the bounds of security and privacy needs to allow testing and iteration of technology solutions. Finally, healthcare systems could provide an important source of venture capital for start-ups in the healthcare space.

Our U.S. healthcare system is in dire need of transformation to meet the Triple Aim. Technology has transformed nearly every industry in the U.S., yet healthcare is behind for a myriad of reasons. Healthcare technology start-ups have the potential to fuel this needed transformation but need a partnership with healthcare systems in the form of access, support, and capital. Healthcare system innovation efforts can bridge the gap and allow our industry to catch up and be transformed. Further innovation platforms and access points should be developed by healthcare systems to enable growth in and partnership with the healthcare start-up ecosystem. It’s time to invite healthcare technology start-ups inside our “walled gardens.”