Providence Health & Services is joining the growing number of large health systems that are tapping into their own expertise to fuel venture capital investments.
The Renton, Wash.-based, 34-hospital system announced it would launch a $150 million digital health care innovation venture capital fund that will rely on both a traditional VC investment team and on an internal digital innovation group, which includes a number of Providence clinicians.
The innovation group will feed the fund with ideas and evaluate potential investments into outside companies. “The team is putting in place a pretty rigorous process for piloting new technologies and working with these early-stage companies to prove that [their idea works] or if they don’t, give them feedback so they can adjust, and get them more focused on products that work," says Aaron Martin, Providence's senior vice president of strategy and innovation and previously an Amazon executive. Providence also just hired another Amazon executive, Mark Long, to be vice president of digital innovation.
Providence executives hope to tap into Seattle's thriving tech community, Martin says. "We're fortunate, we're in Seattle where there are several huge companies working on technology," Amazon and Microsoft being the two biggest names, he says. But there's also a good-sized community of early-stage companies focused on health care and health care IT, he says.
The effort will target six areas for its $150 million fund investment, which will be made over 5–7 years. The areas are: online primary care access; care coordination and patient engagement; chronic disease management; clinician experience, data analytics; and consumer health and wellness services.
"The ones that are getting the most attention from us right now, are online primary care access, and I would also say that we're really focused on coordinated care," Martin says.
Providence may not be the first to jump into venture capital — Ascension Health and Catholic Health Initiatives are two of the systems that have been direct investors in VC for some time — but Providence may be better able to grow health care digital innovation from the ground up. Location still matters when it comes to innovation and the people who are driving it.
Though Martin was not ready to identify any of the companies in which they've invested, it will be interesting to see how it plays out. I was intrigued to hear this spring about a lab testing company called Theranos that was getting investments from big health systems —as well as shout-outs during sessions at the Non-Profit Health Care Investor Conference. Nobody who was involved really wanted to talk about it at the time, but it's the kind of exciting innovation that could result from the clinician-informed investing that health systems are doing. Long says he hopes to be able to discuss some of the investments in the future, and I'm looking forward to that.
Content by Health Forum, Sponsored by: VHA