Monday, January 21, 2013

A different kind of soup: Building a Health Incubator within a Hospital

The foundation of building a successful business is identifying the solution that solves someone’s problem. When that solution is a game or a restaurant app, testing for value has it’s own challenges, but at least the entrepreneur can go to a coffee shop and just ask random people if they like the idea. Although that entrepreneur may be faced with a few reflexive “no thank you’s” and perhaps some cold shoulders, eventually, someone will likely take a few minutes away from checking Facebook to give feedback on their app idea.

Testing an idea in the healthcare space tends to be more difficult than just randomly approaching people in a coffee shop unless it was a coffee shop exclusively serving hospital CIOs, insurance company CFOs, pharmacy regional sales managers, or intubated patients. Additionally, health systems and payers in particular, are very risk averse, making them even more difficult to convince to give an unproven intervention a try.  So testing for healthcare market validation is an extremely challenging process, and this doesn't even take into account the regulatory challenges associated with FDA approval.

Fortunately, there is a rapidly growing culture of health-related incubators that are trying to address this problem. The incubator invites a select set of entrepreneurs to receive mentorship from health experts to facilitate the creation of the next big health app. As a participant in one of the premier health IT incubators, Rock Health, I have seen first hand the benefits and limitations of such an approach to health care innovation. I am very grateful for my experience at Rock Health and I believe their recipe will produce successful healthcare companies. But the mix of heavy IT and startup guidance with a dash of healthcare mentorship makes for an overly techy innovation gumbo that hasn't been adequately taste-tested against the sophisticated palate of the health system consumer.

I propose inverting the recipe to have more of a healthcare base with accents of tech and startup mentorship. Putting aside metaphors, I propose building an incubator within the walls of a hospital and importing the tech and startup expertise. Two clear benefits arise from this approach: 1) the target market of patients, providers, and payers is accessible at the entrepreneur's fingertips; and 2) it’s easier to teach a clinician to be an entrepreneur that it is to teach an entrepreneur to be a clinician.

The subsequent series of posts will elaborate on the mechanics of building such an incubator, the value that it may provide, it’s relationship to the existing academic culture of hospitals, and the deliverables that could be expected.

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